5) Description of housing product/service offering: CAHDCO, a non-profit corporation, is a sister organization to Centretown Citizens Ottawa Corporation (CCOC) one of the largest private non-profit housing organizations in Canada. CAHDCO’s mandate is to make home ownership affordable for low income households and to ensure the units remain affordable in the long term. In June 2003, CAHDCO completed a 30-unit "not-for-profit condo” in downtown Ottawa. 19 of the 30 units were sold to households which would otherwise qualify for a rental subsidy in social housing. CAHDCO’s tenure model protects the equity of homeowners while ensuring future resales of the units are at an affordable price. Long-term affordability is accomplished by controlling the resale price of the unit and income testing future purchasers. CAHDCO's tenure model is targeted at households not traditionally served by the private market. Households with incomes at or below the Canada Mortgage and Housing Corporation (CMHC) Core Need Income Threshold (CNIT), which is the benchmark for affordable housing need in Canada. The purchasers are first time homebuyers, young couples, single parent families and persons living on fixed incomes. A significant number of clients are non-profit housing tenants looking to purchase their first home. For example, 10 of these purchasers came from CCOC. This frees up subsidized housing for households on the local waiting list for affordable housing. The model allows the sponsor (CAHDCO), to remain at arm's length from homeowners, except when a home is resold and ensures the sponsoring organization has minimum ongoing costs and responsibilities associated with the project. It also gives autonomy to owners and avoids a paternalistic or controlling relationship.

6) Description of innovation: In the absence of rental housing development programs with capital and operating subsidies, home ownership is increasingly seen as the only way to extricate low-income families from the continuing cycle of dependence on unstable and often inappropriate rental housing.

The CAHDCO tenure model provides purchasers with an affordable unit, stability of housing costs and ownership tenure and gives them control over their own housing while building equity instead of paying rent. Our research has indicated that CAHDCO's non-profit ownership model is unique to Ottawa and the Province of Ontario. In our discussions with the Ontario New Home Warranty Program and the Canada Housing and Mortgage Corporation (CMHC) construction financing underwriters, we were informed ours was the first project of this nature they had seen. The Agreement to sell the unit back to CAHDCO at a controlled price is a departure from the usual home ownership expectation. CAHDCO's model would be a barrier to purchasers if they are committed to realizing market appreciation. However, from the point of view of a low income household currently paying rent and not able to purchase a unit on the market, it is a very good option. Controlled market appreciation and the opportunity to realize equity is much more attractive than paying rent. CAHDCO has taken unusual steps to keep the condominium fees for the project as low as possible. Instead of taking a profit from the sale of all of the parking spaces, CAHDCO chose to allow the condominium lease nine of the fifteen parking spaces to owners, thereby generating revenue to the condominium. The resultant reduction in condominium operating costs was an important factor in achieving a monthly payment that made the unit affordable to lower income owners.

7) Benefits to clients: Marketing One of the first steps CAHDCO took was to commission a study of CCOC’s tenants and prospective tenants on CCOC’s housing waiting list to determine interest. The study confirmed our assumption that there was significant interest in the concept by households receiving or eligible to receive a rental housing subsidy. The marketing program, which did not recreate the typical sales techniques used by private developers, was as follows: - Brochures sent to all CCOC tenants and members, - Brochures sent to applicants with appropriate incomes on the Ottawa Social Housing Registry waiting list, - Brochures circulated in the neighbourhood, - Sale signs erected on the property, - Circulation in newsletters of other affordable housing providers, - Articles about the project in community newspapers.

In the last three years, the Clarence Gate units have become increasingly affordable. The rate of increase in market home re-sales is much greater (about 30%) than the rate of increase of the indexed buy-back formulae based on a housing component of the cost of living(about 10%). CAHDCO is currently maintaining a waiting list for potential new purchasers of the Clarence gate affordable units and potential purchasers of affordable units at out next project.

8) Key operational partnerships: CAHDCO Equity - $700,000 (in the form of start-up loan from Centretown Citizens Ottawa Corpoartion) - CMHC insured bank construction loan - $3,240,000 (Bank of Montreal) - Home owner mortgages: most of the affordable owners used CMHC insured high ratio mortgages. - Municipal Relief of Development Charges, Parkland Levy and Building Permit fees, about $7,500/unit. - Municipal relief of Encroachment Fees - approximately $25,000. - CAHDCO received a Federal Government Job Creation Grant to undertake web page development and to provide CAHDCO with a statistical analysis and a data base of potential affordable home ownership clients. - CCOC provided the security for the the bank construction loan and Ontario New Home Warranty Program Letters of Credit ($225,000).

9) Financial model: The key to the projects affordability is modest design and low profit (actually none). 1/3 of the units were sold at market prices to provide a capital subsidy to the affordable units.. Because of the high number of potential customers, the bank offered a reduced mortgage interest rate. CAHDCO worked with a mortgage broker and a community credit union to faciliate mortgages for owners turned down by the bank. Most parking spaces are rented out by the condominium. This revenue reduces common expenses. CAHDCO lobbied to ensure property taxes reflect the controlled, indexed value of the home as opposed to the much higher market price. Further costs savings are created bwecause Owners do some common maintenance tasks to keep costs down.

          • Costs as percentage of income: n/a

          • Financing: Construction Financing - A CMHC insured loan from the Bank of Montreal was used to provide 85% of the funds necessary to construct the project. The remaining funds were lent to CAHDCO by CCOC. Mortgage Financing - The mortgage package for purchasers included CMHC mortgage insurance. The Bank of Montreal offered a mortgage package that includes a reduction of 1% of their prime mortgage rate for all purchasers, plus special promotions available at the time the mortgage was approved. In situations where the Bank of Montreal would not provide a mortgage, CAHDCO worked with a mortgage broker to find alternative mortgage financing.

10) Effectiveness

          • Project outcomes: 63% of the units are affordable. To date, none of the affordable owners has asked CAHDCO to exercise their option to buy back their unit. CAHDCO has provided information and documentation about its tenure model to many other non- profit agencies across Canada. We have forwarded documents to groups in Montreal, Halifax, Ottawa, Toronto, Winnipeg, Kelowna and Vancouver. CAHDCO’s experience in developing Clarence Gate also highlights a small role for government in facilitating the production of affordable housing by providing land. While the project was developed under market conditions, our analysis indicates if we had obtained the property at no cost, all of the units could have been affordable, potentially to households with very low incomes.

          • Number of clients in past year: None. CAHDCO is currently in the early stages of developing its second project.

          • Percentage of clients that are poor or marginalized: 63%

          • Potential demand: There are currently about 40,000 households in "core housing need" in Ottawa. Core Housing need is defined as households living in inadequate accommodation and/or paying more than 30% of their income on housing. Across Canada, there are about 1.5 million households in Core Housing Need. CAHDCO's home ownership model can be easily replicated in other jurisdictions. We believe the buy-back option registered on title will be applicable in all other Canadian provinces.

11) Scaling up strategy

          • Stage of the initiative: Mature stage.

          • Expansion plan: CAHDCO plans to start construction on newr affordable home ownership projects in 2007 and 2009.

12) Origin of the initiative: CAHDCO was incorporated, in 1996, as an arm’s length organization from CCOC, but able to take advantage of CCOC’s extensive development and housing management expertise. In the years following the withdrawal of provincial funding for new affordable housing (mid -1990's) CCOC was the only non-profit housing organization in the province that retained their development staff. It began a diligent search for new ways of providing affordable housing. Affordable home ownership was chosen because it enabled low income households to acquire assets that otherwise would not have been available to them and because it was potentially economically possible to create home ownership with out government capital and operating subsidies.

Contact Information:
Dennis  Carr
Development Coordinator
Centretown Affordable Housing Development Corporation
(non-profit (NGO))
P.O. Box 2787 Station D Ottawa, Ontario, K2P 5W8
Canada
Tel: 613 235-2408 x229
Fax: 613 235-4026
Email: dennis.carr@cahdco.ca
Website: www.cahdco.ca