Moncton policy aims to boost affordable housing construction

Moncton is planning to pilot a new policy it hopes will boost the number of developers building affordable housing in the city. 

The policy, outlined at a committee meeting Monday, would provide developers a grant to offset the cost of municipal building permits and other fees based on the proportion of a structure that has affordable housing. 

Staff say the grant program could help those building affordable housing then secure other funding from CMHC or the provincial government. 

"We're helping to spark those federal and provincial grants by signalling our level of participation," Vincent Merola, Moncton's community development officer for social inclusion, told councillors. 

He said many of the apartment buildings under construction in the city are "upper end" housing. He said the low apartment vacancy rate means it's easier to make money when charging about market rent. 

The policy is a result of the city's affordable housing plan passed last year. 

The plan was based on a report that found 5,370 families in Moncton and Dieppe in 2016 had a household income of $26,131 or less. To afford an average rent of $758 a month, a household would need an annual income of more than $30,000. 

The policy would consider housing affordable if it is 80 per cent or less of the median rent in the city, a figure published annually by Canada Mortgage and Housing.

Merola said the type of housing the policy would apply to isn't necessarily meant for someone transitioning out of a homeless shelter.

"It's trying to balance enticing developers to put affordable units on the market," Merola said. 

The policy uses a formula, awarding a project points based on various criteria such as affordability, environmental efficiency and proximity to transit and trails. The point total affects how large the grant may be. 

Staff provided an example of a 36-unit building with 30 per cent deemed affordable housing. Under the formula, the building would have $25,000 in development fees. 

That building would be eligible for a grant of $6,667.50.

Coun. Brian Hicks suggested that would be a relatively small cost compared to the total building cost that staff estimated could range from $3 million to $4 million for a 36-unit apartment building. 

Hicks said he'd support the policy but felt the grant amount "isn't a lot of incentive unless it's topped up by the federal government." 

In response, Merola read a letter from the John Howard Society about an affordable housing project it is building that was used as a test of the policy and enabled it to access funds from other sources. 

"In fact, without it, our project application would have been denied," the letter read by Merola said. 

Coun. Blair Lawrence pointed out the policy doesn't stop developers who receive the grant from raising rent costs after the building opens. 

Enforcement problematic

Nick Robichaud, the city's general manager of legal and legislative services, said staff considered the issue but found enforcement to be problematic. 

"It's a grant that's paid up front," Robichaud said. "So what do you do if five years down the road the developer converts? … Do we commence legal action against a developer? The property may have changed hands." 

The program applies to fees or costs for development permits, demolition permits, subdivision applications, zoning amendments, variances and planning advisory committee applications. 

It can be used for new construction or renovations of existing buildings. 

The policy requires approval at a future city council meeting but has been tentatively set to take effect July 1 and run for three years.