Housing plans fall short for low incomes

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This article was published 05/06/2024 (504 days ago), so information in it may no longer be current.

Governments at all levels are paying more attention to the housing crisis. While spring budgets included investments to expand the affordable housing supply, these investments are expected to continue to primarily benefit middle- and high-income households. Those in greatest need will continue to be left behind.

Housing costs are considered affordable when they are less than 30 per cent of household income. Rent-geared-to-income housing is designed to meet this criteria. Nearly one in five Winnipeg households can only afford rent under $1,000. Two per cent of households (4,740) require rent under $400. These rents are scarce in the private rental market. Governments must add 7,500 new public, non-profit, and co-op owned rent-geared-to-income units in Winnipeg, as per the Manitoba Non-Profit Housing Association’s 2023 housing needs assessment. Another 5,000 units are needed for people experiencing homelessness.

Expanding rent-geared-to-income housing requires capital to build or acquire properties, and ongoing subsidies so non-market housing providers can cover operating costs while charging such rents. Federal and provincial governments have the financial tools to fund these investments at the scale needed to address the crisis. The City of Winnipeg has a more limited role, but it too has tools to support its development. The city can advocate for federal and provincial governments to expand and maintain such housing.

What are governments doing to expand it?

Canada’s 2024 budget invests $1 billion in rent-geared-to-income housing through the Rapid Housing Initiative. Previous funding rounds suggest this will add fewer than 5,000 units over five years across Canada — one per cent of the need. In comparison, $15 billion went to the apartment construction loan program to add 30,000 new homes for middle- and high-income households. Manitoba’s 2024 budget invests in bringing vacant rent-geared-to-income housing back online. It also adds 350 such units across Manitoba but sets no targets for future years. While the city cannot develop rent-geared-to-income housing alone, it administered Canada’s Rapid Housing Initiative funding and offered municipal incentives to support 191 units between 2020-23. All levels of government need to show greater leadership to reach the target of 7,500 rent-geared-to-income units.

Many of Winnipeg’s housing incentives primarily benefit middle- and high-income households. For example, city council passed a density bonus pilot in December to allow higher density rental projects that could include some affordable housing. The program criteria loosely defines affordable and makes no requirement for affordable or rent-geared-to-income housing. Instead, it “will aim towards a 20 per cent inclusion of affordable units” and says units “should” rather than “must” be affordable. Unless program criteria includes a requirement for affordable or rent-geared-to-income housing for low-income households, developers are unlikely to provide it.

Winnipeg recently secured funding from Canada’s Housing Accelerator Fund. Unlike the Rapid Housing Initiative, funds don’t have to be used for rent-geared-to-income housing. Instead, applicants receive additional funds if they commit to creating affordable housing, with the city left to define what that means. Winnipeg was approved for $122 million and committed to add 3,166 new housing units, including 931 affordable units over three years, of which none is targeted as rent-geared-to-income. At least 70 per cent of units created will be targeted for middle- and high-income households.

City council recently voted to approve the grant programs that will guide how the city allocates a $25-million portion of the Housing Accelerator funding. None of the grant programs requires rent-geared-to-income housing, but a financial top-up is offered if developers make half their units in that category and build outside downtown. Combined grant incentives for rent-geared-to-income units are rightly higher than incentives for market units. Oddly, incentives for rent-geared-to-income units are lower than those for higher rent below-market units built downtown. As a result, the 931 affordable units developed through these grants are less likely to be affordable to those in greatest need.

It’s important to note that the Housing Accelerator funding can only be used for capital spending. Housing providers will need to secure funding from another level of government for the ongoing operating subsidies required to develop rent-geared-to-income housing. In fact, all city housing initiatives need to be accompanied by operating subsidies from other levels of government to produce rent-geared-to-income housing.

If addressing homelessness and poverty is a priority, governments must focus investments on rent-geared-to-income housing for those in greatest need. This means designing housing programs that require rent-geared-to-income housing owned by public, non-profit and co-op housing developers. It also means working collaboratively to bring every level of government’s fiscal and policy tools to the table to acquire, build, operate, and maintain the 7,500 units of rent-geared-to-income housing Winnipeg needs right now.

Kirsten Bernas and Yutaka Dirks are members of the City Working Group of the Right to Housing Coalition.