While creating adequate housing for all Calgarians or Canadians has become top of mind today, the need for more housing for low income and high needs individuals has been around for decades and no government really wants to tackle the issue.

While some want to blame the greedy developer for the current housing crisis, in reality it is the fault of government (all levels), from charging too low rents in some existing affordable housing projects, to poor maintenance management policies and immigration policy.

Let’s have a look.

Midfield Park provided affordable housing for over 200 Calgarians. The City gave eviction notices in 2014, closed the trailer park in 2019, approved a plan for redevelopment in 2021 and now the site sits vacant. Residents received $10,000 compensation. Trailer Parks should be part of the City’s affordable housing program with new sites being developed as needed so these residents could have been moved to a modern park at the City’s expense allowing the City to redevelop the site.

Government Red Tape

Recently CBC Calgary posted an article about how Calgary Housing Company is sitting on dozens of empty affordable apartments because they are waiting to be renovated. On the surface this looks like a no brainer – spend the few thousand dollars, get them fixed up and let people live in them. But it isn’t that easy.

Link: Rental Units Sit Empty At Calgary Housing for months.

The government requires projects costing more than $5,000 be put out for tender. Painting, flooring, plumbing, cabinet repairs / replacement for a single apartment lived in for several years can easily exceed $5,000 so each home renovation would have to be tendered. Bundling renovation costs is more efficient (making the taxpayers’ dollar go further), so affordable housing operators typically wait until they have 20 or so homes needing renovations to get better prices.

Obsolete Buildings

Also, these small apartment renovations must compete for government funding with larger building renovations that will benefit all tenants. Many subsidized apartments were built between 1970 and 1984, so they now require huge updates to improve accessibility, energy efficiency, and safety.

Each year the operator may submit say $5 million for specific improvements for government approval but often much less is approved; this means the operator must prioritize a boiler replacement, elevator modernization or roof repairs over apartment renovations.

For example, one boiler replacement for $250,000 can result in 25 suites remaining vacant for over a year. Meanwhile another sector of the government might approve millions for new affordable housing construction while homes in older buildings sit vacant waiting for renovations.

Unfair Low Rents

The management of affordable housing is further complicated by the provincial government’s restrictions on what affordable housing agencies can charge tenants. Currently individuals receiving AISH pay $240/mth, and those on welfare $120/mth for rent. This rent rate hasn't changed since 1980, when the cost to operate an apartment suite was significantly lower than it is today. Adjusting for inflation those numbers would be $877 and $438 today. I am told the current estimated cost to manage a suite is $350 to 400/mth. So affordable housing operators like Calgary Housing Company must rely heavily on government grants to repair/maintain their facilities.

One of the unintended consequences of the very low rent is that some AISH clients will never move and give up their big subsidy, so other AISH clients who are paying market rates sit on the waiting list. The current AISH maximum monthly living allowance is $1,787 so if they were required to pay 30% of their income, i.e., $536/mth for rent, it would allow the operators to have sufficient revenue for ongoing renovations and maintenance for existing affordable homes.

But no government (NDP or Conservative) has been willing to change the 1980 rent policy.

Ironically, Calgary seniors are charged 30% of their income (which is the common definition of what a person should pay for housing). Typically, a low-income senior has an income of about $1600/mth so their rent is $480/mth which covers the cost of managing and maintaining the home. This makes it easier for a group like Silvera or Trinity Place Foundation of Alberta to manage their homes compared to Calgary Housing Company which houses very few seniors.

If this prediction is even close to being right, the affordable housing crisis is about to get a whole lot worse.

Record Immigration / Refugees

Last year Canada welcomed over 405,000 newcomers - the most ever in a single year. The Federal Government has set a target of 465,000 new permanent immigration residents in 2023, 485,000 in 2024 and 500,000 in 2025. While this initiative is meant to grow the country’s economy it has increased the demand for housing which in turn increases the price for housing.

It is irresponsible for the Federal government to create a policy to increase immigration without linking it to projected available housing and the capacity to approve and build new housing.

The City of Calgary website indicates that from 2016 to 2022, 106, 937 new immigrants moved to Calgary. That is a huge number, larger than the city of Red Deer, Alberta’s third largest city.

In October 2022 a CBC Calgary report identified that according to the Calgary Catholic Immigration Society (CCIS), 5,400 Afghan refugees arrived in Calgary between September 2021 and August 2022, with about a third planning to stay in this city. Another roughly 1,500 government-sponsored refugees came from other countries in the past year. In addition, 26,500 Ukrainian refugees have arrived in Alberta since the Russian invasion, with approximately half looking for housing in the Calgary area.

Most of these families and individuals require not only housing but other needs to integrate into Calgary’s schools, workplace, education health, recreation and social sectors all of which are already max out.

The Province of Alberta is actively trying to recruit Canadians from other parts of the country to move to Calgary and other parts of the province, which if successful will increase the demand for housing raising the prices for all types of housing, ultimately driving up the price of rents and home ownership.

The huge increase in immigrants, refugees and Canadians moving to Calgary has resulted in a huge increase in demand for all types of housing including affordable housing. And while Calgary set a record with 17,000 housing starts in 2022, it was only about 2,000 more than in 2021.

Mandating Low Income Housing

While some progressives are calling for governments to mandate developers include a small percentage of “below market housing” in every multi-family infill project of a certain size or in major new community development; this comes with complications. The term “below market housing rates” means a home that rents or costs 10 or 20% below the market for the rest of the building. However, this still may not be affordable for a single mom earning minimum wage. And in some cases, the agreement is such the developer only has to agree to keep the home below market for 10 or 20 years, meaning they aren’t affordable in perpetuity. Then there is the red tape in the ongoing monitoring what is the neighbourhood’s market rent and ensuring the building owner is meeting the regulations.

While some are suggesting the government should implement rent controls, The Brookings Institution found “Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood.”

FYI: The Brookings Institution an American think tank based in Washington, D.C., conducts research and education in the social sciences, mainly in economics, policy, government, foreign policy, global economy and development.

Canadian Mortgage Housing Company Delays

As I was finishing off this piece, this news came out, which will result in further ncreases the cost of housing. It is like “death by a thousand cuts.”

The Government of Canada, through CMHC, works with provincial and territorial partners to providing funding to build affordable housing under the Investment in Affordable Housing (IAH) program.

CMHC has $550.8M in an Affordable Housing Innovation Fund to invest in affordable housing by 2028. However, several experienced housing developers both not-for-profit and private declare that accessing these funds is tedious and can take 24+ months after applying to get approval. FYI: I am told banks can often approve financing for housing developments in 30 days.

Not only does this delay the completion of the much-needed affordable housing, but it also increases the cost, so less affordable homes are built.

I am told for many private developers working on mixed-income projects it just isn’t worth the time and effort to apply for CMHC funding.

If the Federal government and CHMC are really interested in providing more affordable housing they would be streamlining the approval process to allow for quick approvals.

Getting Worse Not Better

From an affordable housing perspective, the City of Calgary identified back in 2020 there was a need for 15,000 new affordable rental homes in the next 10 years. Given the new immigration and refugee numbers this estimate is low.

The City of Calgary’s website indicates it has “supported the creation of 3,600 non-market homes for low and moderate-income Calgarians since 2017 (about 600 per year), helping to prevent and reduce poverty in Calgary.”

It should be noted the 3,600 non-market homes is not a net increase as each year hundreds of low-rental homes are demolished for new infill developments.

FYI: Providing more affordable housing does not necessarily “prevent or reduce poverty” it just provides a space to live, the individuals will still have to struggle with poverty and other issues.

Calgary needs to build 1,500+ new affordable homes per year over the next 10 years to meet the pent-up demand for affordable housing but we are nowhere close to that, so the problem just gets worse.

Last Word

In fact, all levels of government will need to stop paying lip service to the need for more affordable housing and start to fast track number of affordable homes being built in Calgary, Alberta and Canada, each year for the foreseeable future if it wants to meet the growing demand, which they have created.

While the development community has and will continue to help with the increased demand for affordable housing (e.g., $74 million was raised by the Calgary Home Builders in a 2018 capital campaign), ultimately it is the government’s policies and bureaucracy that have and will have the biggest impact on the creation and management of affordable housing to allow all Canadians to live with dignity.

Learn More:

Providing Affordable Is The Government’s Responsibility Not the Developers'!