Heather Withnell is moving on up.

After a six-year cycle of shunting her young family from one low-rent housing project to another in a continuing search for affordable housing, the Calgary mom has finally found a home of her own through the Habitat for Humanity program.

Withnell is one of many working Albertans bearing the brunt of a provincewide shortage of low-cost housing. A strong economy is shrinking housing options in the rental and starter-home markets, while rising development costs, regulatory barriers and a shortage of skilled labour in the house-building trades are proving barriers to building more social housing.

“The place I’m renting now is $800 a month, and that’s cheap for what’s available,” says Withnell, who first experienced the lows of low-cost housing six years ago when she and her two children moved into city-subsidized accommodation.

Larry MacDougal, Business Edge
Heather Withnell and her children Samantha, 8, and Brandon, 7, are all smiles as their Habitat For Humanity-built home begins to take shape in southeast Calgary.

“It was really rough times, and I had no money,” she said.

“It wasn’t so much the condition of the place . . . it was more that everybody in the whole (subsidized) community has problems, including yourself. So it’s a problem-filled community, and it’s stressful.”

She had heard of the internationally renowned Habitat organization, but never dreamed she would be one of the six families selected each year in Calgary to move into a volunteer-built home with an interest-free mortgage.

After contributing 500 hours of sweat equity – no small feat for a single mom with a full-time job – Withnell and her kids will take possession of her new half-duplex in the southeast community of Ogden later this summer – and finally escape the tedious cycle of constantly moving and changing schools in the search for an affordable roof over their heads.

“We know that home ownership helps build stability in a family,” says Habitat spokesperson Diane Reid.

“We’re working with families who are one paycheque or one life crisis away from homelessness. But at this point, they have a job and a place to live. Their problem tends to be that every time the rent goes up another 50 bucks, they have to look for a marginally less expensive rental.”

The Habitat program, which doesn’t accept government funding, relies on volunteer labour and corporate contributions, along with generous support from builders and developers including Qualico, Broadview Homes and the Urban Development Institute.

Thirty homes have been built in Calgary so far, while Edmonton’s program has seen 39 Habitat houses built since its inception in 1992 with the help of companies including Home Depot, ATCO Gas, Dow Chemical and NAIT.

The program is open to families with income below the poverty line – defined as $34,000 a year or less for a family of four – and the mortgage payments from the families are used to pay for new homes.

But Habitat can only help so many families, while housing challenges for low-wage earners or those on fixed incomes continue to grow – despite government efforts to pump more money toward the problem.

According to a recent census, Alberta attracted 142,980 newcomers from 1996 to 2001.

And with last week’s revelation that Calgary’s population has soared past the 900,000 mark – with more new residents than any other Canadian city – the issue isn’t about to go away.

In late June, the federal government announced a new five-year agreement with Alberta that will see $67 million in federal funds matched by an equal contribution from the province toward affordable housing.

The deal is part of a larger $680 million announced last December that is earmarked for cheaper housing across Canada.

There have been similar government/industry partnerships in the past that have produced visible results in Alberta.

In Calgary, the federal Canada Lands Co. donated 65 houses and six acres on the former CFB Calgary military base for affordable housing as part of a $12.4-million
infrastructure project.

In Edmonton, the Canadian Mortgage and Housing Corp. joined with builders to help redevelop an inner-city community in a city that needs 5,000 affordable housing units within the next 10 years to house its low-income and special-needs citizens.

The provincial Alberta Seniors department, which will administer the latest funding agreement, says the money will provide affordable rental or ownership housing for low-income families, seniors and those with special needs.

The provincial government spends about $37 million each year to subsidize these citizens.

But some Alberta builders are taking a wait-and-see approach over this latest announcement, noting that more money won’t necessarily stimulate the creative solutions needed to tackle the multi-pronged issue of affordable housing.

“What we’ve seen with a number of these get-fixed-quick schemes in the past, is that there is a lot of red tape involved,” says Grant Ainsley, executive director of the Edmonton-based Alberta Home Builders’ Association.

“It’s our wish at this time (with this grant announcement) that we’re not spending a lot of money going into housing that doesn’t go into housing, if you know what I mean.”

Ainsley says builders hope that “appropriate” low-cost housing options will emerge from the funding agreement.

But both the Alberta and federal builder associations support an alternative vision – a direct subsidization plan that would see federal and provincial money go directly into the pockets of the client, rather than being filtered through several layers of government bureaucracy into large-scale projects that may look good on paper, but will not address the root causes of low-cost housing shortages.

“Instead of putting $50,000 a door on rental-type housing, put it towards the person who can have a little bit more income to afford a first mortgage payment or a rental payment,” Ainsley says.

“The housing is out there, it’s just there are people who are out there who don’t have the money to afford it.”

Short-term fixes of government money distort the market, create stress on the system and drain away precious labour resources – and don’t address the long-term problems, which can be better tackled by giving the money to low-income families who can choose their own accommodations, he says.

If somebody needs $600 a month to find decent housing and they only have $300, the money is better spent by giving them $300 a month, allowing them to make the choice where to go, says Ainsley.

“I know it sounds strange coming from a home-builders association,” he adds, “but the subsidy shouldn’t go to the builder, it should go to the person so they have a top-up between what they have and what’s out in the market already.”

His remarks are echoed by second-generation Edmonton house builder Greg Christenson, president of Christenson Developments Ltd. He notes that the cost of housing is rising more rapidly than the core rate of inflation, with low-income earners bearing the brunt of the impact.

“I call it old-school government. Writing cheques and ribbon cutting is not the solution,” says Christenson, president of the Canadian Home Builders’ Association who is active on the Mayor’s Task Force on Affordable Housing in Edmonton.

“We’d like to see some kind of competition to encourage creativity and market-driven solutions and sustainability. It’s a carrot approach, rather than having the cash be the end-all, be-all.”

Many home builders agree capital spending won’t resolve the shortage of low-cost housing in the face of systemic barriers such as taxation and government regulations.
“Governments are writing cheques as Band-Aid solutions for problems that are fundamentally created by government policies,” Christenson says.

Leveraging government money by encouraging market-driven solutions is the answer, he adds, while offering tax incentives or capital roll-over provisions for rental projects would help stimulate interest and create a level playing field for low-cost developments.

“Builders typically have to turn their capital over,” he says. “If you build a project and sell it, if you could roll your investment into other rental properties, you’d see it happening more frequently.”

Home builders are prepared to accept and work with government capital grant programs as long as everybody realizes short-term initiatives will not change the economics of rental housing, and will not rectify the situation in a sustainable manner. Ramming through $67 million worth of units isn’t the solution, Christenson adds.

“If this just becomes a handout to government agencies to run internal operations on supply-side programs, the industry will just shut down in terms of interest,” he says.

Escalating building costs are also putting the squeeze on builders in Calgary and Edmonton.

“From a cost basis, both land and construction costs prevent us from producing a low-cost product. Certainly everybody wants to be able to provide affordable housing, but costs are prohibitive,” says Brian Higgins, general manager of Broadview Homes in Calgary, who adds his company is in a “wait-and-see mode” to discover exactly how the government monies will be downloaded through the building and development communities.

“Cost issues prevent us from delivering a true low-cost housing product. And that’s where the government support is certainly appreciated,” Higgins says.

When Christenson started building Edmonton homes in the 1970s, the capital cost of a typical apartment building in Riverbend was in the $23,000 range. Today, that same
building would cost $85,000.

“Ironically, the interest is the same or less. The land is the same, but the building cost has gone up,” he says. “If you try and solve the affordable problem by building new units, you can see where there will be an arithmetical disconnect.”

Karin Finley, a development manager for Qualico Homes in Calgary, says while the company built its 50-plus-year reputation on quality starter homes and affordable housing, it’s getting more difficult to provide low-cost options.

Five years ago, Qualico could sell a starter house and lot for just under $100,000. Today, it’s closer to $140,000.

She, too, hopes the federal-provincial funding agreement will be a constructive blueprint for the future. “Within our company, and I would say the industry as a whole, there is a willingness to look at any and all possibilities to provide lower-cost housing than what we have out there now,” she says.
“And there’s definitely a recognition from all of us at the development and builder level that there are issues out there – and it’s becoming more problematic. We know, because we’re the ones setting the prices, so we’re also aware of the costs.”

Builders also recognize that low-cost housing is a complex problem that cannot simply be solved by an infusion of money. “It’s a much greater issue,” she says, “as to why are these people not making enough money to be able to afford a home.”

Another social issue – the not-in-my-backyard or NIMBY effect – has hampered the acceptance of low-cost housing alternatives in or near established communities.

“There are whole suburban communities who would just as soon the affordable housing issue just disappear and go away,” says Christenson. “We’re not living in a tolerant and generous society when it comes to putting affordable housing next to someone’s dream home.”

The latest federal funding announcement is intended to help leverage an equal contribution from provincial and private-sector sources over a five-year period, but Alberta Seniors spokesperson Jan Berkowski says it will depend on what housing needs municipalities wish to address first.

Local communities are in the best position to identify their own housing needs, and the government will await their proposals, she adds. “We know there are some proposals out there already just waiting for such a program to begin.”

Soon-to-be new Habitat homeowner Heather Withnell only wishes that decent housing was within every family’s grasp.

“A lot of people don’t have much hope that things will change,” she says. “I’ve always tried to keep the philosophy that things can only get better because they can’t get worse. But it’s slow steps. For a long time, it felt like skid row for us. It seemed like we would never get out of (subsidized) housing.”

“I’m glad to hear that there’s somebody looking to figure out a solution.”

Web watch:
www.hfh.org
www.calgaryhabitat.com
www.ahba.ca