Download - Financing housing alternatives
© The Wellesley Institutewww.wellesleyinstitute.com
Financing housing alternatives
Michael Shapcott, Director, Affordable Housing
and Social Innovation,The Wellesley Institute
Social Economy SeriesUniversity of Toronto
March 23, 2011
© The Wellesley Institutewww.wellesleyinstitute.com
Housing finance 101: Three bags of money required for housing
Development/acquisition $$$s
Operating $$$s
Reserve $$$s
© The Wellesley Institutewww.wellesleyinstitute.com
Ownership housing
innovation – 1940s
Long-term mortgage and
mortgage financing assistance
“Job for life,mortgage for life”
© The Wellesley Institutewww.wellesleyinstitute.com
Long-term mortgages
Owner obtains loan, various gov’t
subsidies and incentives
Operating $$$s
Reserve $$$sDevelopment/acquisition $$$s
Owner pays, various gov’t
subsidies
Owner pays, various gov’t
subsidies
© The Wellesley Institutewww.wellesleyinstitute.com
Ownership housing
innovation – mid-2000s
Sub-prime mortgages;
complex derivatives
“NINJA financing:no income, no asset”
© The Wellesley Institutewww.wellesleyinstitute.com
Sub-prime mortgages
Owner gets financing, risk bundled into
MBSs, etc.
Operating $$$s
Reserve $$$sDevelopment/acquisition $$$s
?????????
???????????
© The Wellesley Institutewww.wellesleyinstitute.com
Social housing innovation – late 1940s
Government-developed,
government-owned,
government-managed
“The garden city”
© The Wellesley Institutewww.wellesleyinstitute.com
Public housing financing
Government finances
Operating $$$s
Reserve $$$sDevelopment/acquisition $$$s
Tenant rents and government subsidies
Capital reserves (??)
© The Wellesley Institutewww.wellesleyinstitute.com
Social housing innovation
– 1973
Funding for community-based non-profit, co-op
and municipal housing
“Affordable housing is a social right of all Canadians”
© The Wellesley Institutewww.wellesleyinstitute.com
Social housing financing - then
Various capital subsidy mechanisms,
gov’t backstops mortgage
Operating $$$s
Reserve $$$sDevelopment/acquisition $$$s
Tenant rents, RGI subsidies
Capital reserves
© The Wellesley Institutewww.wellesleyinstitute.com
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.50%
0.60%
0.70%
0.80%
0.90%
1.00%
1.10%
1.20%
Erosion of government investment in social housing over two decades
Federal housing investments as percentage of GDP
© The Wellesley Institutewww.wellesleyinstitute.com
As government housing
investments erode,
homelessness, precarious
housing grows
Precarious Housing 2010
© The Wellesley Institutewww.wellesleyinstitute.com
Construction budget – 50-unit seniors housing in Kitchener 2007
Project cost: $6,100,000
Federal / provincial $2,100,000Municipal $ 194,750 Total government $2,294,750
Government share 38%
Donations (land, cash) $1,195,000Mortgage financing $2,610,250
Total sponsor $3,805,250Sponsor share 62%
© The Wellesley Institutewww.wellesleyinstitute.com
Fede
ral b
udge
t 200
9
© The Wellesley Institutewww.wellesleyinstitute.com
Government of Canada says housing investments are great for economy
© The Wellesley Institutewww.wellesleyinstitute.com
Federal housing agency projects growing net income……as major cuts set for housing investments
CMHC net income: Up 11.5%Overall housing spending: Cut 23.5%
Assisted households: Cut 10.4%
© The Wellesley Institutewww.wellesleyinstitute.com
Innovative options required
Development/acquisition $$$s
Infrastructure
Ontario affordable
housing loan fundCommunity
housing loan funds
Housing bonds
Housing trust funds
Social impact bonds
Social venture
exchange
Social finance
© The Wellesley Institutewww.wellesleyinstitute.com
Innovative options required
Operating $$$s
Universal housing benefit
Social impact bonds
Impact
investing -
SROI
© The Wellesley Institutewww.wellesleyinstitute.com
Thank you!
www.wellesleyinstitute.com