Panel to UCP government: Privatize affordable housing

In July, I wrote a story about the new Affordable Housing Review Panel that Josephine Pon, the minister of seniors and housing, announced.

The 10-member panel was stacked with real estate developers, property managers, and people who’ve donated to the UCP, as well as its two predecessors: the PCs and the Wildrose.

The panel appeared to have no representation for users of affordable housing.

Pon indicated in her announcement that the panel received 4 considerations from the government:

1. The role the government plays in providing affordable housing
2. Simplifying or easing regulatory structures that create costs and red tape for housing providers
3. Gaps in the current affordable housing system
4. Innovative approaches that will enable government and its partners to meet increasing demand for affordable housing

I pointed out in July that 1, 2, and 4 seem designed to increase benefits the private housing sector would receive through changes to affordable housing in the province.

On 5 October 2020, the panel submitted their final report (with recommendations) to Pon, which was based on feedback from 44 engagement sessions and interviews with 96 organizations and 150 participants, as well as 124 emails from 41 current residents of affordable housing units, people experiencing housing issues and other concerned citizens, 22 housing management bodies, 8 residential developers and builders (not counting the ones on the panel), 5 private sector companies (not counting the ones on the panel), 7 municipalities, and 32 civil society organizations, housing advocates and government advisory councils. (see here for a list, p. 36)

Two months later, the provincial government finally released the report. And, well, I’m not surprised.

The report includes 19 recommendations. I’m not going to go through them individually, since several can be grouped together based on the effect they will have on the province’s affordable housing stock. But I do have a lot to say.

So, grab a cup of tea and a cozy chair. Here we go.

1. Develop a provincial strategic plan for housing with short- and long-term objectives aimed at addressing Alberta’s affordable housing needs and achieving housing stability for all Albertans.

On the surface, I’m okay with this. I mean, ultimately it’d depend on what that strategic plan actually contains, but having a strategic plan is good.

2. Develop a provincial asset management plan as a first step to move the Government of Alberta from being an owner of affordable housing assets to regulating and funding housing programs.
3. Develop and implement a strategic asset transfer plan that achieves equity, safety, flexibility and sector financial sustainability by working with key stakeholders, including housing management bodies, not-for-profit organizations, private landlords, private developers and Indigenous organizations.
4. Ensure all proceeds from transfer of assets are maintained within the affordable housing system and invested in a manner that grows the financial resources available to meet affordable housing needs.

These are designed to benefit the private housing sector.

First, the government sells off its housing stock, which give private developers and property managers more opportunities to increase revenue, both through more units they can use to profit off renters’ need for housing and through the ability to leverage the equity of these additional properties to build new developments.

Then, since the government no longer needs to manage housing, it can layoff workers in the Seniors and Housing ministry. Oh, sorry. I think the politically correct word is “streamline”. And they already planned to streamline the ministry by 5 full-time positions this year (p. 218).

Now they can cut more!

Spending less on wages means they can cut the ministry budget. They already cut the Housing department budget (p. 135) down to $11 million last year and this year from $12 million in 2018–2019. Next year, they plan to cut it further to $10 million.

Now they can cut more!

Plus—and here’s the best part:

The Panel recommends that the proceeds derived from the transfer of assets be held in a dedicated investment fund, with the income derived to be reinvested into affordable housing initiatives.

Final Report of the Affordable Housing Review Panel, p. 15

That seems like a good idea, right? Then the government can’t do anything shady with the money—you know, like Klein did when he sold off AGT and liquor stores to the pawn shop and used the money to “pay off the debt”.

Except if the government is using this investment fund to finance housing initiatives, that means it doesn’t need to finance those initiatives with general revenue.

And since you don’t need as much general revenue, you can continue cutting expenses—or even taxes—in other areas.

In the end, the result is the same.

5. Work with housing management bodies to build capacity within the sector, improve and redevelop the affordable housing stock, improve service delivery to those in need and prioritize applications for subsidized housing based on local need.

You know what else comes with selling off publicly-owned infrastructure, especially all at once? I mean other than profit and cut budgets?

A significant proportion of housing providers . . . might not have an adequate size to achieve efficiencies through economies of scale or might not have the capacity required to own and leverage the newly acquired assets.

Final Report of the Affordable Housing Review Panel, p. 15

And the panel’s recommendation to address this newfound inadequacy?

Well, the clue is in recommendation 5. Oh, whoops. I left part of the recommendation out:

Where appropriate, encourage housing management bodies to reorganize, collaborate and/or consolidate operations to increase capacity, including fiscal capacity and development and operational expertise.

If local housing non-profits merge, then that means there are fewer organizations the government must provide operating grants to. Oooo. More budget cuts!

As well, it gives large private providers the chance to buy up smaller ones, thereby increasing their housing stock—and the corresponding profits—even more.

Or, as the panel said: “key stakeholders” and “leverage them to generate new housing options.”

During engagement sessions, key stakeholders said that it would be desirable to encourage housing management bodies to amalgamate or find other ways to collaborate (i.e., sharing services) in order to increase capacity to deliver services, reduce their operating costs or combine their portfolios and leverage them to generate new housing options in their respective communities.

Final Report of the Affordable Housing Review Panel, p. 13

6. Engage and facilitate collaboration among housing management bodies, not-for-profit organizations, private industry and Indigenous organizations/governments to build increased capacity and develop appropriate housing solutions.
7. Update the 2015 review of the Seniors Lodge Program with a view to increasing the effectiveness of lodges in meeting housing needs, the flexibility in their use and their financial sustainability as a housing choice for Albertans.

“Build capacity”, “increase effectiveness”, “flexibility”, “financial sustainability”. All code for privatization.

The report mentioned that a single approach to affordable housing can’t address the unique local differences, that diverse tools are required to address housing needs, and that local challenges are best addressed by local organizations.

And all that is true. But those can all be addressed without the provincial government selling off all its housing stock or no longer managing affordable housing.

The government could, for example, empower local housing authorities to take on a larger role in managing the provincial properties and tenants.

Anyhow, regarding these two recommendations, there was one more point the panel raised that I found interesting. Apparently, there’s been quite a bit of federal housing funding not being used because “provincial and municipal governments did not have funding and processes in place to take advantage of these funding opportunities” (p. 16).

One proposal the panel gave to help the Alberta government to access this federal funding was to “provide underutilized land at below-market value for the development of affordable housing” (p. 16).

And since the province is selling off all their properties, who’s going to use this discounted land to develop housing? Well, housing developers, of course.

This would create the equity that affordable housing providers require to secure financing for new projects and could be leveraged to encourage greater levels of investment, as land would be considered as an in-kind contribution under some federal funding programs that require cost-matching.

Final Report of the Affordable Housing Review Panel, p. 16

If private developers have to invest less of their money into a new project, well, I guess that means higher profits for them?

And if the provincial government “donates” the land in kind, then they don’t need to actually spend any of their general revenue on the project. Private developers keep more of their profits, and the provincial government can cut their budgets even more.

Win, win.

To be clear, I’m fine with updating the 2015 review of the Seniors Lodge Program. In principle. What the update ends up looking like may be another story.

But there’s more.

This presents an opportunity for the Government of Alberta to work with private landlords by providing rent supplements to leverage private stock that is currently vacant and could be used as affordable housing.

Final Report of the Affordable Housing Review Panel, p. 17

If the problem is that rent is too high, which is contributing to Alberta’s 5.4% vacancy rate, maybe the solution is to implement rent control, not subsidize landlord profits.

8. Identify opportunities to maximize and leverage federal funding to increase the supply of affordable housing in Alberta, such as providing provincial land and buildings as in-kind contributions to trigger federal fund-matching programs.
9. Work with Indigenous stakeholders, including Metis governments, to advocate to the federal government for continued, long-term supports to address the housing needs of Indigenous communities in Alberta.

I’ve already touched on #8, and #9 makes sense. Indigenous nations have their treaties with the federal government, not the provincial government, and housing is a treaty right (p. 3).

10. Direct current and future provincial funding allocations to a mix of rent supplements and capital funding that maximizes affordable housing choices for Albertans.
11. Building on the current review of the rent supplement program, rebalance funding to include a modest subsidy for people who are currently not able to access deeper subsidy programs to enable them to stay in their housing or find housing of their choice in the private market.

I’ve already addressed rent supplementation, but there was a further point raised in the report that I wanted to address:

In the 2019 budget, the Government of Alberta committed to a redesign of its rent supplement program to focus on supporting people who already have appropriate housing but who are paying more than 30% of their income for housing costs.

Final Report of the Affordable Housing Review Panel, p. 19

If the problem is that rent is more than 30% of their income, maybe rather than try to subsidize landlord profits as a solution to that problem, the government can find ways for workers to have higher wages.

12. Encourage municipalities to develop local housing and homelessness needs assessments and action plans to better understand local needs; identify local priority populations; help guide local, provincial and federal investments in affordable housing; and develop solutions to address the unique needs of urban, rural, and remote communities.

I’m fine with this. But, once more, this is possible to do without selling off assets.

13. Direct the Government of Alberta to update the approach to determining eligibility and calculating rents to include additional household income and assets and allow for more local control over prioritization to promote local solutions, rebalance fairness and generate more stable revenue.
14. Work with housing operators to develop a centralized housing portal to manage waiting lists, including vacancies, and develop standardized application forms for the community housing and seniors lodge programs.
15. Direct the Government of Alberta to improve its approach to capital maintenance funding, including the establishment of an expedited process for project approvals and setting benchmark timelines for project approvals.

There are a couple of points offered in the report’s preamble to these recommendations that I wanted to respond to:

Housing operators also stated that the rents they can charge are not sufficient to cover operating costs, leading to deficits that have to be funded by the government and causing an increasing drain on taxpayers.

Final Report of the Affordable Housing Review Panel, p. 20

Wait. I thought the private sector is better and providing public services than the government.

While average rents for a three-bedroom apartment in Alberta have increased by about 85% from 2000 to 2017, the rents for families receiving income support have seen no increases over this same period and the rents for families receiving AISH have increased by only 11%.

Final Report of the Affordable Housing Review Panel, p. 20

You know what else hasn’t risen by 85% over a 17-year period? Wages.

The problem isn’t that AISH rents have increased by only 11%. The problem is that non-AISH rents have increased by 85%!

Do these people even hear themselves?

Rent is up by 85%; 500,000 Albertans are spending more than 30% of their income on housing costs; 250,000–300,000 households can’t afford the average rent in the province; and vacancy rates are over 5%.

These are related.

And you know who increased market rents by 84% in 17 years? It wasn’t renters. It was the developers, and property management companies, and landlords—the same people who now complain that they can’t charge higher rents for people on AISH.

16. Encourage the Government of Alberta to examine how it can update the provincial regulatory regime to facilitate and expedite the expansion of affordable housing supply, such as streamlining planning approval processes and encouraging innovative forms of housing.
17. Encourage municipalities to update local planning policies, processes, and regulations to facilitate and expedite the development of affordable housing and permit and encourage innovative forms of affordable housing
18. Work with housing partners to support and encourage innovative forms of affordable housing, such as the use of prefabricated homes, container housing, repurposing buildings, Passive House design, net zero housing, and other solutions that will increase the efficiency of affordable housing and effectiveness of housing funding.
19. Work with housing partners to support and encourage the development of innovative operating models, which will create community benefits and increase the sustainability of affordable housing.

I’m generally okay with finding innovative housing solutions, like some of the examples given in the report: tiny homes, secondary suites, co-housing, mixed-income, mixed-use, and mixed tenure housing developments, and repurposing of non-residential buildings into affordable housing units.

The usage of “innovative” and “sustainability”, when it comes to housing provided by private developers, particularly regarding affordable housing, makes me nervous however.

That’s it. We reached the end. Thanks for sticking with it. I know it was a lot.

But the gist of it is that a panel of private developers and property managers wants the government to privatize their public housing stock. And in the long run, renters will suffer.