City’s Affordable Rental Housing in Jeopardy

In 2011, Halifax’s rental housing stock amounted to roughly 61,000 units.1 72% of them would have been ‘affordable’ to households with an income of less than $40,000/year, based on a shelter-to-income ratio (STIR) of 30%. In other words, 44,000 units rented for less than $1,000/month. Their number would have included all of the city’s ‘subsidized’ units. The rest would have been a mix of units from the ‘secondary’ and ‘purpose-built’ sectors. Of course, few of these units would have been affordable to households at the bottom of the income range. For example, of the 7,235 households whose incomes were less than $10,000/year, just 2.3% had STIRs of less than 30%, while 90% had STIRs of 50%+. By comparison, of the 9,015 households whose incomes were between $30,000 and $39,999/year, 63.4% had STIRs of less than 30%, while just 3.0% had STIRs of 50%+.

For the sake of this discussion, and until the 2016 Census is fully available, our stock of affordable rental housing totals 44,000 units. And yes, there is a significant shortfall. It’s not in the demand for decent, rental housing; there’s plenty of that. Shortage of supply is not the problem; the Halifax CMA has more than enough stock. The shortfall is due to our collective inability to meet the full cost of operating, maintaining, improving, and sustaining the stock of housing that all of us should enjoy. Poverty is the issue, not supply. We don’t need to build more affordable housing; instead, we need to address the income poverty issue, so that our existing stock of affordable housing is more accessible to the thousands of households who need it so desperately.

Our existing stock of rental housing is still widely affordable. It’s out there: hundreds of semis, duplexes, triplexes, 4/6/8-plexes; low-rise, mid-rise, and high-rise apartments; ‘subsidized’ housing for co-ops, non-profits, families and seniors; basement apartments, flats above shops, and so on. It’s in neighbourhoods throughout the Halifax Centre Plan area: in accessible, convenient, diverse, inclusive, and mixed-income communities that are well served by public transit and commercial, institutional and recreational facilities. It should be obvious that these neighbourhoods and their irreplaceable stock of affordable rental housing play pivotal, strategic, and absolutely foundational roles in the life of our city; however, we believe they are now at considerable risk from several sides.

Subsidized Housing

Only 9.3% of our rental stock (5,675 units) is ‘subsidized’. Most of it is very badly outdated. Much of it is in poor condition, after years of neglect and mismanagement. Many units are beyond recovery and many others face a short life-span. Even now, many public housing units remain empty, despite long waiting lists. Others are bug- and vermin-infested. Still others are deteriorating rapidly. Meanwhile, local non-profit societies have been shedding tenants, boarding up buildings, and selling off units in an attempt to salvage what remains. In other words, significant numbers of government-funded, non-profit units have been sacrificed and many others are on the chopping block.

Upscaling and Condo Conversions

We’ve also stood by idly as dozens of modest, well-situated, and previously affordable walk-up apartment buildings in downtown Dartmouth and on the Halifax peninsula have been snapped up and evacuated, leaving their former tenants to seek shelter elsewhere. After extreme make-overs, their freshly hung front doors invite a more affluent class of owners or tenants.

 Speculation and Spot-Rezoning

Our record of carelessness, inaction and benign neglect is one thing, but we’ve also been threatening our existing stock of affordable rental housing in another way. Predatory real estate speculation is occurring on a grand scale, actively destabilizing stable, mixed-income, mixed-tenure neighbourhoods. When changes to the allowable land use, floor area ratio, and population density result in quantum increases, there is no way to limit major collateral impacts on property values, taxes, and the ‘peaceful enjoyment’ of private homes and small, local businesses in the surrounding area. This process is both insidious and inexorable. Walk along Pepperell, Yale, or Creighton Street and you’ll experience streets that have become ‘gap-toothed’ over time as property owners on Quinpool Road and Gottingen Street expanded into the neighbourhood. Property lines have purpose but are largely symbolic, offering scant protection against invisible, inflationary threats from high-intensity real estate speculation nearby. In recent months, City staff and Council have opened the gates to a flood of Plan Amendment applications and zoning changes in the draft Centre Plan that would jeopardize hundreds of units of affordable rental housing in the city’s established neighbourhoods.

Property Development Cascades, Avalanches, and Floods

Real estate cascades have other consequences that are predictable – if only we could toss them a backward glance beforehand. Remember, best practices in planning are measured growth and change, not ‘shock and awe’.

CMHC has been tracking developments in the Halifax condominium market for many years. Previously the data were reported elsewhere, but in Fall 2016 the condo data were included in CMHC’s Fall Rental Market Report. As presented, it appeared as if 9,300 condo units had arrived in the span of just 12 months. What appeared to be a real estate avalanche of enormous proportions was not that at all; it was simply the sum of several years of condo construction.

The fact that more than a quarter of these condos (2,532 units) were being sublet as rental units, but not previously reported as such, is pertinent to this discussion. When these sublet units are added to the 371 new rental units in 2016, we have an annual total of 2,903 new rental units, a 3.6-year supply for the city’s typical demand of 800 new units per year. Although this flood may seem minor, it was sufficient to push vacancy rates up and rents down. According to the grapevine, even our largest residential property owners are now under such stress that they’ve been seriously under-reporting their vacancy rates. To protect themselves from ‘fast-foraging’ tenants, they’re also resorting to four-month leases.

Locked in a Race-to-the-Bottom

In some parts of the city, rents can’t go any lower. They’re so low that much of the housing stock is in financial and physical jeopardy after long-deferred maintenance and repair. Its condition discourages potential tenants, even those in the greatest need. In turn, vacancies mean lost income for small, low-end property owners, many of whom are barely holding on. Our research clearly shows this is happening in north Dartmouth. Assuming that conditions are similar elsewhere in the Halifax CMA, we are at significant risk of losing hundreds of units from our dwindling stock of relatively affordable, private-sector rental housing.

For many property owners, rents are already too low, while for many tenant households, rents are already too high. Meanwhile, all of the parties involved – tenants, property owners, and all three levels of government – are heavily subsidizing an unsustainable proposition. In the private sector, rental income must be sufficient to cover overhead, operation, management, maintenance and replacement costs. Tenants – particularly those in the first income quintile and the lower half of the second – cannot afford to spend more than 30% of their very low income on housing. As for government, much of the blame for the deterioration of this housing stock and the impoverishment of its neighbourhoods must be placed on the unrealistically low shelter component of the Income Assistance Programme (IA) administered by the Nova Scotia Department of Community Services.

On Stewardship

Finally, there’s the matter of the stewardship of our whole stock of housing, including tens of thousands of affordable rental units in the public, non-profit, and purpose-built or secondary sectors. That housing stock is in serious jeopardy. It has no one steward. If due diligence is exercised at all, it is a hit-or-miss affair, never considering the housing stock as a whole. As a result, we have no comprehensive inventory of its physical condition or replacement value, and no way to monitor our housing universe as a system of interrelated parts. We have no way to judge how much is needed, where it’s needed, or when to add it. By ‘lowballing’ the shelter component of the Income Assistance Programme, the Nova Scotia Department of Community Services has placed many units of subsidized and private-sector rental housing in jeopardy. For its part, the Municipality has no accurate inventory of the city’s complete housing stock. It also seems unconcerned about units lost to upgrading, condominium conversion, episodic demolition, and spot re-zoning. Meanwhile, non-profit societies that were funded under earlier federal/provincial programmes are shedding tenants, boarding up buildings, and marketing properties as a last-ditch effort to save what’s left of their dwindling portfolios. At the same time, approximately 4,300 units of family and seniors public housing must cope with year-to-year budgetary processes and just-in-time patch-ups, rather than being treated as a long-term asset and managed as a portfolio.

We simply cannot afford to replace our existing stock of affordable rental housing. It is irreplaceable and therefore must be secured, upgraded, and rendered sustainable. Furthermore, it is essential to recognize that housing is not an autonomous issue. For housing to be viable, its surrounding neighbourhoods must provide acceptable standards for community life: food, health care, education, transit, etc. Improving certain parts of the city will require urban and social planning that is broader, deeper, and more integrated. Only in this way will the apparent contradiction of vacant units despite high demand be understood, and the desolate communities at the low end of the rent scale be addressed. Leadership, stewardship and proactive due diligence are long overdue.

 Note

  1. The 2011 Census of Canada accounted for more than 61,000 rental housing units across the Halifax CMA. Of this total, almost 5,700 were identified as ’subsidized’, including 4,300 seniors and family public housing units managed by the Halifax Housing Authority; roughly 1,400 units owned and managed by private non-profits and co-operatives; and the balance in the form of rent supplements. Of the 55,700 private-sector rental units, 45,200 were in the so-called ‘purpose-built’ sector (in buildings of three units or more), and the remaining 10,500 units made up the ‘informal’ sector.

J. Grant Wanzel / 8 May 2017; last modified 23 May 2017

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