How to create affordable housing units with no government subsidy or involvement

A friend of mine recently wrote me saying that he was about to give up on the idea of creating affordable housing units in a mixed use place he is developing (with others) in east end Ottawa. 

Here’s what I wrote back:

Hmm. I would not give up on that yet, Sebastian (not his real name).

If there is an 14-story apartment building on-site, you might be able to use a “cross subsidization” program similar to one I helped create more than two decades ago for Blue Heron Housing co-op in Kanata, https://www.facebook.com/Blue-Heron-Co-operative-Homes-129956850372331/. 

More recently, one of my clients will be using it in a 15-microsuite building he is developing close to the University of Ottawa (actually in Overbrook near the new Adàwe Crossing, a pedestrian/cycling bridge over the Rideau river, which has given tens of thousands of Sandy Hill students access to less expensive housing not only in Overbrook but in Vanier as well). 

Here’s how the program works… note it needs 0 government help to get it off the ground or run it over time:

there are 15 microsuites
2 will be affordable units using a cross-subsidy within the building
How does that actually work?
Here’s how—say each microsuite rents for $1,100 a month
On 13 of them add an extra $95 a month to their rent earmarked in their lease as a “charitable” donation
This raises $1,235 extra per month
Thus, the rent on each affordable unit can be reduced by ½ x $1,235 = $617.50
So the affordable units pay $482.50 a month instead of $1,100
The developer will ask a nearby church to recommend folks who need the help…

Adàwe Crossing, photo by Bruce M Firestone September 2017

What does this do?

Gives the developer extra cred with the city, with the province, and with his tenants…

Differentiates the building from its competition (by the way, the building itself will be named so rather than living at, say, 1234 Anywhere street, tenants will be living at “Henderson” House…)

Makes residents feel good about themselves.

The developer also feels like he’s done a good deed or two.

The cross-subsidy is a way to NOT rely on the city or province for funding—it’s SUSTAINABLE…

I think the units that would be subsidized would be the lower level ones.

That’s it, that’s all.

Prof Bruce

Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD, Ottawa Senators founder, Real Estate Investment and Business coach, ROYAL LePAGE Performance Realty broker,  1-613-762-8884 bruce.firestone@century21.ca twitter.com/ProfBruce profbruce.tumblr.com/archive brucemfirestone.com

MAKING IMPOSSIBLE POSSIBLE

-more photos of

Adàwe Crossing leading to Rideau Lawn and Tennis Club, prof Bruce and friends…