Bill Hulet Editor

Here's the thing. A lot of important local issues are really complex. And to understand them we need more than "sound bites" and knee-jerk ideology. The Guelph Back-Grounder is a place where people can read the background information that explains why things are the way they are, and, the complex issues that people have to negotiate if they want to make Guelph a better city. No anger, just the facts.

Wednesday, September 12, 2018

Social Housing and Guelph


Social housing is controlled by the county, yet the lion's share of the county's units are in the city. In addition, most of the money that gets spent on it comes from the federal and provincial governments. And those two levels of government have a long history of using that money as a "political football" that comes and goes in response to the back-and-forth battles between left and right. Put into the context of the entire economy and the private development sector, however, the average financial commitment has tended to be woefully inadequate. Indeed, it is hard to believe that any government would be willing to put the amount required to actually deal with the enormous housing problems that we currently face. To this end, it is pretty clear that any municipal government that really wants to address the housing backlog in Guelph is going to have to undertake actions that will be profoundly unpopular with a large part of the electorate. 

What is "Social Housing"?

It's important to realize that there are two components to the idea of "social housing". First, there is the actual building being constructed, which generally has some sort of subsidy towards its creation. An equally important element is a monthly subsidy by the government to the landlords of individual tenants, which is called "rent-geared-to-income".

Rent-geared-to-income is a provincial program governed by the Housing Services Act of 2011 (this link provides updates to 2018.) It is really, really, really hard to understand this act and obviously requires a social worker to navigate through the dense legal language to understand who is and is not able to get this help. (Just to give you one example, the people who are helped out under this program aren't identified as "people", "families", "households", "clients", or, "recipients" but rather as "benefit units".) But as a general rule, people who qualify for rent-geared-to-income find that the cost of their housing is restricted to about 30% of their income. You cannot get rent-geared-to-income in just any apartment, however, as this would encourage private landlords to gouge the province. Instead, the money is tied to specific units that are generally built with money provided by the federal government or the province through specific funding programs. These housing units come in a wide variety of forms---depending on who lives there, and, how they are owned and administered.

One way to think about the different types of housing is to consider how they are owned and managed. In the city of Guelph there are 52 different complexes that provide a total of 2,473 units of social housing. You can break these down into five categories of ownership:  
  • non-profit corporations (952) (these can include both Non-Government Agencies (NGOs) and the city of Guelph)
  • housing co-ops (253)
  • county-owned (882)
  • Affordable Housing (27) (defined as being 20% below the average market rent)
  • "Rent Supplement Housing" (183) (housing that is privately owned but which has units that the County assigns to people where rent-geared-to-income money is paid directly to the landlord)  


A non-profit corporation is an incorporated, limited liability company. "Limited liability" means that under the law the individuals involved do not have any personal financial responsibility for the company (unlike a partnership.) A "non-profit" corporation has no obligation to shareholders to make a profit (this is the "fiduciary duty" that I mentioned towards the end of one of my articles about solid waste issues.) Instead, the  duty of the organization is towards the ends that the incorporation articles set out in their charter---in this case, providing low cost housing for people in need. A non-profit need not be a "charitable" company, as that specifically refers to the ability of a group to issue legal tax receipts to donours, which is tightly regulated. (Even though as a matter of fact, some housing non-profits are charities.) Some of Guelph's non-profit housing corporations do have a relationship with larger charities---such as the Abbeyfield Houses Society of Guelph, which is part of a national charity that began in Great Britain.

As a general rule, however, non-profits tend to act as "subcontractors" for the federal and provincial governments who take on the task of applying for money from government programs that fund social housing. They also apply for grants from "hands off" government-supported charitable agencies---like the Trillium Foundation---to build and administer these social programs.

In addition to the Non Government Agencies (NGOs---like Abbeyfield), we also have the Guelph Nonprofit Housing Corporation. According to it's website it has 512 rent units", of which 80% are rent-geared-to-income and the rest are "market priced" (that's something like 410 units.) It has a contract with the county that means that all of the Guelph properties are managed by the same staff that deal with county-owned ones.


In contrast, a housing co-op consists of people who band together to create and manage a housing complex that they "own" co-operatively. It's important to realize that is a system that is different from standard "freehold". There are two ways that a co-op can be organized: "equity" and "non-equity". An equity co-op allows each individual owner the right to sell their property (the individual apartment or townhouse unit they live in) to another person in order to recoup the money that they personally put into it. These sorts of co-ops are very common in other countries, but exceedingly rare in Ontario. (A condo is different in that it is organized and built by a private developer for a profit. A co-op is organized by the owners at-cost.)

Instead, what we generally have are non-equity co-ops that were built under a federal program that operated in the 1970s and 1980s. Under that system, governments supplied start up capital that citizens used to build the housing complex under the understanding that a certain percentage of the units would be set aside for low-income individuals under a rent-geared-to-income scheme. In exchange for this help, the co-op members forgo building any equity in the complex---all capital accrued instead is deemed as belonging to the co-op as a whole. Theoretically, once the money loaned by the government is paid back, rents might be lowered. But in actual fact by the time this happens most of the money raised by rents end up being ploughed back into maintenance. Rents tend to be lower in general, however, because their is no owner taking a profit.

The program to create co-ops were primarily introduced on the assumption that they would prevent a city from shunting all lower-income people into one area. This had been attempted in many social housing programs in the 1950s and 1960s, and it was believed that they failed because a certain fraction of the poor tend to make "bad life choices" (think crime) which tended to drag under other people who were struggling to "get ahead" but who were poor through no fault of their own. Co-ops were designed to have a mix of people from all classes, which would prevent this problem. For a variety of reasons (beyond the scope of this article) the program that supported them was cancelled in the 1980s and they are no longer being built as part of social housing.

(Having said that, there is no reason at all why individuals cannot use their own private capital to build equity co-ops---and I know of at least one current Guelph project "in the works". But these would not be independent from the current market forces---so they would not necessarily be any more affordable than any other type of housing. As such, they have nothing at all to do with social housing.)

County Owned

Wellington county also owns outright a large number of properties that it provides to people of limited income. The lion's share are in Guelph---because that's where most of the need exists. But having said that, it also owns properties in other parts of the county:  Fergus, Elora, Erin, Rockwood, Eramosa, Mapleton, Minto, Arthur, and, Mount Forest. Since this blog tries to deal exclusively with Guelph matters, I won't be dealing with any of these properties. Suffice it to say that there is a need for social housing just about everywhere.

Affordable Housing

As part of the on-going attempts by Council to help the housing crisis, the city of Guelph has been attempting to negotiate with developers to bring in new affordable units whenever a new proposal comes before them. (I talked about this in a previous post.) Some of this has been done through the use of subsidies---either directly or through deferred taxes. The result has been a stock of so-called "affordable housing" units, which is defined as being "20% below the market average".

According to the numbers I found in my first article on housing, here are the average rent costs for various sized apartments, followed by their "affordable cost" (ie: 80%), then the yearly income that a household would have to make to make this equal to at most 30% of their gross income. The way to understand the math is that if you are paying 30% of your monthly income in rent, you can get your monthly income by multiplying your monthly rent by 3.33. And that translates to your yearly income by multiplying by 12. But you can simplify the calculation by multiplying the 3.33 by 12, which gives you 40. So to find out the yearly income of people who are only paying 30% of it in rent, you just multiply the numbers by 40. Unless a rent really is 30% or less than your income, it is hard to say that it is really "affordable". The last number is this hypothetical income where what the city calls "affordable rent" is only 30%.
  • bachelor apartment: $750 (average), $600 ("affordable"), and income of $24000.
  • one bedroom: $980 and $784, and income of $31,360
  • two bedroom: $1,124 and $899, and income of $35,960
  • three bedroom: $1200 and $960, and income of $38,400
  • average cost of an apartment: $1,066 and $853, and income of $34,120

And again, as I mentioned in my other articles on this subject, the problem is that household income is too low for this definition of "affordable" to be of any service to the poor. That is, if you break down Guelph household income into six groups, you see the following:
  • less than $20,000/year, 5,770 or 10.5%
  • $20,000 to $40,000, 8,320 or 15%
  • $40,000 to $60,000, 8,920 or 16%
  • $60,000 to $80,000, 7,635 or 14%
  • $80,000 to $100,000, 6,690 or 12%
  • $100,000 and over, 17,530 or 32%
The numbers aren't precise, but at the very least 10.5% plus some other figure---let's assume 4.5%---of the households in Guelph (ie: 15%) make less than $24,000/year in gross income. This means that what Guelph defines as affordable really isn't "affordable". For this reason, it's hard to believe that "this affordable housing" category really has an significant impact on housing issues---especially since there are only 27 units in the city.

Rent Supplement Housing

These are privately-owned apartments that the county has entered into an arrangement with to provide rent-geared-to-income. The supplement is paid directly to the landlord. Obviously in a hot rental market like Guelph most landlords would rather rent to the general public. But there are some buildings that for one reason or another the landlord is happy to rent out this way and the county considers "value for the money".  I suspect that there could be issues to pursue here---but this article is already ballooning in size, so I'll leave it at that.


Federal and Provincial Social Housing Initiatives:  History 101

I had mentioned early on that the federal and provincial governments had been involved in building social housing. I also mentioned that housing co-ops were primarily built under a program that was cancelled in the 1980s. There have been a great many different programs and it would take a lot of time to explain the timeline. Luckily, the Ontario Non-Profit Housing Association (ONPHA) has created this nifty graphic that shows the various programs that the federal and provincial governments have set up, starved for funds, and, eliminated over the years between 1945 and 2011. I'd suggest that anyone who is interested in this subject take the time to linger over it, and make the effort to think about what was going on in the larger Canadian society. Consider, for example, that Jean Chretien was prime minister at the time (1993) that the federal government decided to stop funding any social housing---I assume as part of the general attempt to balance the budget. You can also see that Mike Harris was premier of Ontario when the provincial social housing program was also cancelled (1995.) (I suspect that this was when I remember seeing beggars show up in downtown Guelph for the first time. Politics has consequences in people's lives.)  (Sorry, but this is the best resolution of the graphic that I could get.) 

The Context

I don't have the time to write a complete history or synopsis of federal and provincial social housing policy---and I'm pretty sure that most of you wouldn't read it if I did. But I think it's important to realize a few points.

First of all, ask yourself "What fraction of society is this housing program supposed to be helping?" Canada has several different housing problems going on all at the same time. These include housing on First Nations' reserves. It also includes providing housing for people who are in crisis because of mental illness, drug addiction, physical disability, or, spousal abuse. As well, there are huge geographic areas---like the Greater Toronto Area (eg:  Guelph)---where the commercial real estate market has decoupled from the incomes of most people and no longer provides affordable housing for many middle and lower-income people. All these needs are something that different levels of government need to deal with, but require a huge amount of money. Equally important, each constituency has dramatically different levels of influence over public policy. In a democracy there always is a tendency for politicians to deal with the problems of people who carry lots of votes over those who objectively may have more real need---simply because of electoral concerns. So, when a proposal comes forward for social housing, it's important to ask "social housing, for who?" As I pointed out above, the fraction of housing called "affordable housing"---as defined as being 20% less than the average market rent---appears to only be aimed at lower middle-class people instead of the genuinely poor.

Secondly, it's really important that any program that a government puts forward be placed in a context. When a government minister announces that so much money has been set aside to provide housing for so many households, it is tremendously important to always find out what percentage of the budget the money provides and what percentage of units this will provide to the entire housing market. For example, according to the 2016 federal census, there were 55,900 places to live in Guelph. Of those 5,470 were social housing of one sort or another---or 9.8%. As I showed above, the actual need---as defined as rents for 30% of gross income or less---is really something like 15% of the population, or, 8,390 households. This suggests that if the only way that Guelph can provide affordable housing for the poor is through social housing, it has a backlog of almost 3,000 units.

I don't have a figure for how much it costs to create an average unit of social housing---and I would be dubious about any such number if it was presented to me simply because there are so many different types of housing that fall under that umbrella, and, the cost would fluctuate wildly from community to community based on the cost of land. But to get a feel for the amount of money involved, let's look at something that the city staff have developed a figure to describe. As I mentioned in my last article, city staff have suggested that a subsidy of $60,000/unit is necessary to get private developers to create new "affordable" housing. What this means is that if the County, Province, Federal Government, etc, were to use this subsidy mechanism it would cost something like 174.9 million dollars in Guelph alone to deal with the shortfall in social housing. And let's not forget that this isn't the real cost for creating social housing. Instead, it's the price of creating apartments that are 20% less than the market average for a limited amount of time. And at this price they are unaffordable by that bottom 15% of the market that are most in need of housing. Social housing units that really do help the desperately poor would cost a lot more per unit. Just to put this figure of $174.9 million into context, the entire operating budget for Guelph in 2018 is $233 million.   

I think that the magnitude of the housing problem really needs to be understood. The federal government recently created a "National Housing Strategy" that commits to spending $40 billion over ten years. This sounds like an astronomical amount of money, but the casual reader needs to remember a couple things. First, this only comes down to $4 billion per year. Secondly, this is for the entire country. Think of it this way, Guelph only has a population of 131,900 people. Canada has 36.29 million. This means that Guelph has only .3635% of the population of the entire country. That means that proportionally the federal government has committed to providing $14.54 million to Guelph. This is nowhere near enough money to effectively deal with the crisis we are currently facing. And don't forget that Guelph's population is growing rapidly and it's stock of existing, low-cost housing is shrinking because of gentrification. 

We also have to admit to ourselves that social programs---like creating and maintaining social housing---is always going to be treated like a political football. That means that programs will be "spun" to look bigger than they actually are, and, cancelled for totally capricious reasons. To cite a couple specific examples, consider the fact that the federal Liberal party announced that their funding was "$40 billion over ten years" and that $500 million dollars was set aside in the provincial Climate Action Plan to maintain and upgrade social housing in Ontario. Trudeau's government has no way of knowing what will happen to their government after the next election---let alone in ten years. And our dear, beloved new Premier just ripped up the cap-and-trade agreement that was funding the Climate Action Plan---which means no money for social housing buildings to replace worn-out heating systems.  

I've discussed social housing in some detail because I've had local politicians tell me that the real solution to the housing crisis is to get the federal and provincial governments to build more social housing. But when I began to understand the scale of the problem, it seemed to me to be total moonshine to think that the electorate will let politicians of any stripe make that size of social investment. It might actually be true that this would be the best way to do things (see the example of Vienna I raised in my last article), but it just doesn't seem politically feasible in Canada. Moreover, social housing has historically seemed to be easy to cut when voters are more concerned about taxes than they are about homelessness. Once you accept this unpleasant truth, the interested citizen is left with the question "well, what exactly are we supposed to do?"


I'm not about to suggest that the federal government shouldn't be building new social housing. But we need to see social housing as a last resort instead of the be all and end all. Government simply lacks the financial resources that would be needed for the task at hand. The only answer that I can think of to solve the mess we are in is to bring in private developers. Whether individual readers agree with capitalism or not, the fact of the matter is that Canada is a social democracy. And that, fundamentally, is based on the idea that we allow private business people to run huge swaths of the economy. But it isn't a libertarian utopia---we believe that democratically-elected governments should step in and nudge businesses in directions that serve the public good. That's why we have inspectors to ensure that butchers don't sell people contaminated meat. It's also why we have public planners who force developers to build housing that doesn't immediately degenerate into slums. But somewhere in the planning process the idea that zoning should ensure that there is an adequate supply of housing for everyone has been forgotten.

As I have pointed out in various articles, there are a variety of ways in which our zoning seems designed to make housing not affordable. We pass zoning bylaws that mandate far too much required parking---which mean that it is illegal to build walkable "down towns" with apartments over the top of stores. It also means that the driveways for houses cannot be widened to provide parking for basement apartments---and that owners who lack the extra parking can't even rent to people without cars. For years the OMB ruled that any type of increased density was illegal in any area where people lived in individual houses---so as to "protect the neighbourhood character".  We have rules against building towers any higher than an arbitrary limit "to preserve the sight line". We mandate what seems to be a very large amount of parkland (one hectare---the size of a football field) per 1,000 residents (about 300 apartments.) We have regulations to prevent sprawl in order to prevent encroachment on farmland and water recharge areas.  The last of these regulations is important and should be preserved, but the others should be relaxed in order to let developers increase the housing stock at least to the point where everyone has a place to live that they can afford.


There is an important real estate concept that I came across while reading a Parliamentary Research Paper on the history of social housing in Canada: "filtering".  This is the idea that when a building gets to a certain age the rents it charges tend to decline. I'd never come across this term before, and further research told me that housing policy rarely considers it's impact on affordability. But once I understood the concept, I immediately understood its importance. When I was a student and afterwards when I was working at crappy janitorial jobs I lived in nothing else than old, cheap apartment buildings or run-down shared houses. Guelph used to be filled with them. But when I think about where I lived then, every single one of those buildings has been renovated and "gentrified". Indeed, my current home is an old, middle-class home that had gone through a "filtering" process over 100 years. First it was duplexed in the 1950s, then it ended up a run-down boarding house for students before I bought it. Over twenty years I fixed it up and is now worth a great deal of money. This is "gentrification" and that's a concept that everyone understands. What they don't is that filtering and gentrification are the opposite ends of a housing continuum. When there is an adequate, optimal, or, surplus supply, housing for the poor is created by filtering. When there is an inadequate supply of housing, what little does exist gets removed by gentrification. Filtering has ceased in Guelph and gentrification has dramatically cut the supply of housing for the poor. The solution to this change is not to chastise people for fixing up old houses and apartment buildings, but to instead increase the supply of new houses to the point where there isn't so much competition that filtering gets totally eliminated.


According to an article by Christopher Chung in The Tyee, Vancouver politicians are beginning to seriously consider tackling that city's housing crisis by changing the zoning policies across the entire city---including the hitherto sacrosanct areas that consist exclusively of single family houses. As he reports
Independent mayoral candidate Shauna Sylvester is also for zoning reform. Yesterday, she tweeted points from her housing platform: “Instead of just stacking people along big, busy streets and arterials or building condo towers at busy centres, I want to create opportunities for human-scaled homes in real neighbourhoods.”
Doesn't the line "stacking people along big, busy streets and arterials or building condo towers at busy centres" sound familiar? If it does, it's because that is exactly what is being done in Guelph. The downtown and the Gordon Street bus line seems to be the only place in the city where developers are allowed to really pull out all the stops and build a lot of intensive housing.

According to Chung this idea isn't just something being put forward by fringe candidates, either:
Outgoing Mayor Gregor Robertson wants staff to go farther and look into the possibility of allowing “triplexes, quadplexes and other multi-unit forms to significantly bring down the purchase cost per unit of housing in low-density neighbourhoods.”
Indeed, I listened to a Vox "The Weeds" podcast on this subject this summer and it seems that the core problem with housing just about everywhere is not that there isn't enough housing being built in the poor parts of town, but rather that most of the land belongs to the more well-off and they don't want any new housing built in their neighbourhoods. (Unfortunately, I don't seem to be able to add a link to the episode due to a compatibility problem between Linux and the Apple universe. If you want to see if you can get it to work, the episode is titled "We're Not Going to Pay Rent" and was originally aired on August 17th, 2018.) And when you look at the rules that Guelph has governing zoning, it is very hard not to believe that ultimately this is what underlies a lot of it---the people who already own houses simply do not want to be even slightly discomforted in order to provide housing for other people. Indeed, at a recent municipal breakfast meeting I had this attitude starkly presented to me. A fellow baby-boomer told me that he wants the value of his house to go up and up forever because that's money in his bank. When I suggested that we need to think about other people, he said "I own my own home, and so do my children. I don't care about my grandchildren, and I certainly don't care about anyone else's. I did OK and they can find their own way." 


I will let that statement speak for itself. Thus ends my series on housing in Guelph. My next article will be on a very different subject. 


And now a word from a poorly paid, yet hard-working writer---.

For many years I was quite bitter about the quality of journalism I was reading. For example, I would get angry when a reporter just repeated a figure from a politician instead of attempting to describe it as a percentage so the reader could put it into a context. I'd say to myself "why couldn't that guy to a little bit of research to figure out whether or not this is a substantial issue or just more empty spin?" Writing this blog has given me some insight into this. Research takes a LOT more time than simply showing up, asking a few questions, and, editing the response into a story. 

I have also learned to respect those reporters. By hammering out those little stories they were recording the history of the community. Now that they are gone we aren't creating a record of the city for future generations. Some future version of myself will not be able to go to the public library and wade through volume after volume of copies of the old "Guelph Mercury" to learn in detail what was happening in the city back in the early 21st century. That really is a tragedy. We do have a group of people trying to fill the gap---guys like Adam Donaldson and myself. But we need community support if we are going to make this business model work. Nothing that requires this level of effort can be sustained unless people get paid to do it. (And certainly, unless some more money comes down the pipeline, everything we do is just one computer crash away from disappearing forever.) 

I get new supporters as I publish new articles. (Thanks to Stephanie, Ralph, and, Nina for being so awesome!)  But I need to keep reminding folks to support the Back-Grounder. As little as a dollar a month helps---if lots of people do it. You can use the Patreon button at the upper right side to set up a regular subscription and there is also a "tip jar" for one-time contributions.  Even if you can't afford to help financially, it really helps if you spread the word through your favourite social media. My last article went viral, and that works wonders for subscriptions.