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Creating Affordable Housing: SEED Funding / PDF Funding

Creating Affordable Housing: SEED Funding / PDF Funding. Overview. What is affordable housing? Who creates it? What approaches work? What programs are available?. What is Affordable Housing?. What is Affordable?. 30 per cent of gross household income is generally considered “affordable”.

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Creating Affordable Housing: SEED Funding / PDF Funding

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  1. Creating Affordable Housing:SEED Funding / PDF Funding

  2. Overview What is affordable housing? Who creates it? What approaches work? What programs are available? CANADA MORTGAGE AND HOUSING CORPORATION

  3. What is Affordable Housing? CANADA MORTGAGE AND HOUSING CORPORATION

  4. What is Affordable? • 30 per cent of gross household income is generally considered “affordable”. • However, affordability criteria typically differs by program and funding authority. CANADA MORTGAGE AND HOUSING CORPORATION

  5. Affordability Criteria – Two examples CANADA MORTGAGE AND HOUSING CORPORATION

  6. Who creates affordable housing? • Community leaders including non- profit service organizations and housing providers, churches, private sector developers, and municipalities. • Each partnership brings value to the deal, such as business knowledge, financial resources or regulatory flexibility. CANADA MORTGAGE AND HOUSING CORPORATION

  7. What approaches work? Municipal Tools Used In Canada CANADA MORTGAGE AND HOUSING CORPORATION

  8. Ideas that have worked There are many approaches to creating affordable housing. • Benevolent financing & funding • Donate money • Lend money • Property • Sell property, with conditions • Lease property • Donate property • Developers • Acquire and rehabilitate • Build new housing CANADA MORTGAGE AND HOUSING CORPORATION

  9. Programs Available Seed Funding Proposal Development Funds (PDF) CANADA MORTGAGE AND HOUSING CORPORATION

  10. 1. Seed Funding CMHC’s Seed Funding program offers financial assistance to housing proponents who are in the early stages of developing an affordable housing project. • Up to $10,000 in the form of a grant • Up to $10,000 in the form of an interest-free loan CANADA MORTGAGE AND HOUSING CORPORATION

  11. Seed Funding What Types of Housing Projects are Eligible? • Housing project must be affordable • Housing Project must be located in Canada • No restrictions on: • Building form • Tenure type • Future residents of the • housing project • Type of housing proponent • organization

  12. Seed Funding What is Affordable? • rental housing project in which units will have rents within CMHC’s Affordability Criteria • homeowner project - the units must be modest and the purchase prices must be below the market for units of similar type, size and number of bedrooms in the subject housing market and neighbourhood CANADA MORTGAGE AND HOUSING CORPORATION

  13. Seed Funding Who is Eligible? • Not-for-profit organization • Housing co-operative • First Nations • Private entrepreneur • Group of individuals who may or may not intend to become incorporated • Municipalities CANADA MORTGAGE AND HOUSING CORPORATION

  14. Seed Funding What activities are eligible? • Housing market studies to evaluate need and demand for the proposed project • Development of a business plan • Exploration of funding sources or options • Evaluation of procurement options • Preliminary financial viability analysis • Environmental site assessment • Preliminary design of the housing project • Incorporation of a not-for-profit organization CANADA MORTGAGE AND HOUSING CORPORATION

  15. Seed Funding What Expenses are not Eligible? • Not related to the development of the housing project • Expenses carried out prior to CMHC’s written approval of Seed Funding • Expenses related to “hard” project costs, example - lot servicing, construction, renovation, and so on • Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental • Retainer fees paid to consultants or any other professionals for work to be completed in the future CANADA MORTGAGE AND HOUSING CORPORATION

  16. Seed Funding Conditions of the Funding Must enter into a Contribution Agreement with CMHC Must provide a need and demand study satisfactory to CMHC and an acceptable business plan before further funds will be advanced Funds will be transferred only for eligible expenses confirmed with invoices or receipts Eligible activities are expected to be completed within 12 months of the date of the Contribution Agreement. A longer period may be negotiated. CANADA MORTGAGE AND HOUSING CORPORATION

  17. 2. Proposal Development Funding CMHC’s PDF program provides interest-free loans to facilitate the development of affordable housing. • Up to $100,000, determined by CMHC • Depending on the size and complexity of the proposed housing project and how much development work needs to be done. ** Not available for housing proposals whose viability or level of affordability depends upon approval for a Provincial or Territorial program funded under the Affordable Housing Agreement

  18. Proposal Development Funding Eligible criteria Must have at least five (5) housing units If rental – majority of rents must be below market rent limits established by CMHC for units of similar type, size and number of bedrooms in the subject housing market If home ownership – the sale price must be below the market value for similar housing in the neighbourhood Units – whether rental or homeowner – must be modest in size and design There must be a demonstrated need for the proposed project CANADA MORTGAGE AND HOUSING CORPORATION

  19. Proposal Development Funding Who is Eligible? • Not-for-profit organization • Housing co-operative • First Nations • Private entrepreneur • Any other housing proponents who can demonstrate their ability to produce a viable affordable housing project which meets CMHC’s criteria CANADA MORTGAGE AND HOUSING CORPORATION

  20. Proposal Development Funding What activities are eligible? Soil load-bearing tests Environmental site assessments Project drawings and specifications Professional fees Cost estimates Management plan Option to purchase Development permits Contract document Application fees CANADA MORTGAGE AND HOUSING CORPORATION

  21. Proposal Development Funding What Expenses are not Eligible? • Not related to the development of the housing project • Expenses carried out prior to CMHC’s written approval • Ongoing operating expenses of the organization, example - salaries and benefits, travel, office rental • Retainer fees paid to consultants or any other professionals for work to be completed in the future CANADA MORTGAGE AND HOUSING CORPORATION

  22. Proposal Development Funding Conditions of the Funding Must enter into a Contribution Agreement with CMHC Must provide a comprehensive description of the project proposal, along with a need and demand study and a preliminary viability analysis and business plan Funds will be transferred only for eligible expenses confirmed with invoices or receipts CANADA MORTGAGE AND HOUSING CORPORATION

  23. Proposal Development Funding Loan Repayment Requirements • To be repaid out of the project’s capital financing, normally from the first advance of the mortgage loan • Only the principal amount is repaid • If project is successful in producing an affordable housing project, it may be eligible for a portion of the loan to be forgiven • If project is successful but unable to produce affordable housing units, the full amount is repayable, without interest CANADA MORTGAGE AND HOUSING CORPORATION

  24. www.cmhc.ca/affordablehousing

  25. Locked up suites Harmony House

  26. www.cmhc.ca Jeff Kolibash Corporate Representative Northern Ontario www.cmhc.ca jeffrey.kolibash@cmhc.ca CANADA MORTGAGE AND HOUSING CORPORATION

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