Why N.S. could be losing some of the affordable housing it's funded
Some older affordability agreements with builders have already expired
Each day, Darren Surette sits down at a table in his living room and learns something new.
He's creating a podcast, enrolled in an entrepreneurship program, and working toward starting a small business. He credits his cozy one-bedroom apartment in Dartmouth, which he rents for $600 a month.
"This place basically saved my life," he says.
Earlier this year, Surette moved into one of 10 units at Affirmative House, a supportive housing building run by a non-profit organization supporting people dealing with a disability or mental health diagnosis.
"When I was looking for a place, I was two weeks [with] no fixed address, and then I had another two weeks that I stayed with my mom," he says. "I was totally out of options and I didn't know where to go."
Surette's home was built using funds from all three levels of government, including a provincial loan program known as the Affordable Housing Development Program (AHDP).
The program is key to the province's efforts to encourage affordable housing construction. But some in the housing field are concerned it hasn't created enough new units, and some of the units already built could lose their affordable status over time.
That would make a critical difference for many in Surette's situation.
'Extraordinarily important'
John Lohr, Nova Scotia's minister of municipal affairs and housing, says AHDP has been an "extraordinarily important program to encourage new units to be built."
Lohr's department provided CBC News with a list of all the new units it's contributed to over the life of the program, which dates back to 2007.
In total, 2,710 units had been funded as of September. Of those, 1,965 were considered "affordable units," which have to cost tenants no more than 80 per cent of the average market rent. In Halifax, average market rent for a two-bedroom unit has risen to $1,449, the CMHC said in January.
The program has cost approximately $84.2 million since its launch, with roughly half of the units being committed in the last five years alone.
The units are all over the province. Some are new construction, while others are old commercial buildings, hotels or schools that have been converted to permanent homes. Some were built by for-profit companies and others by non-profit organizations.
15-year agreements expiring
To date, 1,216 of the affordable units are in buildings with 15-year loan agreements. That means the Nova Scotia government has agreed to provide a forgivable loan to the developer, and in return the developer has said it will keep a certain number of units affordable for the length of the agreement.
The loan amount can increase if the developer is willing to charge less than 80 per cent of average market rent for its affordable units. Once the agreement period is over, the loan is forgiven and the province no longer has a stake in the building or a say in the rent being charged.
Lohr has said in recent years the department has been trying to make agreements that last longer than 15 years, and has been focusing on partnering with non-profits.
"We're seeing some of them sign on to this and we're trying to see if we can get longer periods of affordability because 15 years goes by pretty quickly," he says.
Fifteen of the department's newest agreements have term lengths of 20 years or more. But the province's oldest AHDP agreements date from 2007 — 16 years ago — which means some have started to expire.
According to data released to CBC News under an access to information request, as of September, 192 affordable units had expired agreements and 78 more affordable units have agreements that will expire in 2024.
Just under 500 affordable units fall under agreements that are set to expire between 2025 and 2030.
This doesn't necessarily mean the building owners will increase the rents. Lohr points out that older buildings tend to be more affordable and non-profit developers have a goal of keeping rents below market.
He also notes the province's temporary rent cap will protect tenants from large rent increases for now. The measure caps such increases at two per cent this year and five per cent next year. It will end in December 2025.
"Two years from now, or three years from now when the rent cap program is off and we have these expired agreements, I mean, at that point there would be a decision point on, do we do something else? Do we find another way to deal with this?" he says.
"And I'm not sure, I can't speak to that right now."
'One step forward and then one step back'
But Catherine Leviten-Reid, an associate professor at Cape Breton University who has researched similar loan agreements in the United States, says the evidence suggests for-profit developers will raise rents to market value.
"I think that there is an incentive there for the for-profit developer to raise rents once the agreement expires because there is such demand for housing across the province," she says.
"As far as our housing needs in the near future, what it does is it creates a situation where we are moving one step forward and then one step back."
Leviten-Reid points out the level of affordability isn't tied to the tenant's income but to market rent, which the CMHC says is increasing rapidly. In its rental market report, the CMHC says average rents rose 8.9 per cent in Halifax in 2022, following increases in 2021, 2020, and 2019.
She also worries the program hasn't built enough units to meet the need in the province.
Lohr acknowledges that's the case, but says the department has other programs to supplement it.
There are also units funded by federal or municipal governments or public housing, which is owned and operated by the province. On Wednesday, the province announced plans to build 222 new public housing units, the most significant such commitment for Nova Scotia since the 1990s.
But accessing all of these is competitive.
Lori Edgar takes calls every day from people looking for housing, even on weekends. She's the operations director of Affirmative Ventures, the organization that runs Surette's affordable building in Dartmouth.
"The situation is dire," she says.
"All the organizations in the city who are doing this type of work are very stressed for the people that they serve," she says. "Whoever would have thought 10 years ago that we would be here?"
A new appeal to non-profits
Affirmative House's 15-year provincial forgivable loan of $500,000 was discharged last year, but that didn't affect the rent tenants pay.
The price of a one-bedroom has gone up since the doors opened in 2007, but only by $65 dollars. Affirmative Ventures has no great desire to raise the rent, Edgar says.
"That's not even on the table," she says. "That's not who we are."
The province wants more groups like Affirmative Ventures to get involved. It revamped AHDP last spring, lowering some barriers to entry to make it more attractive for non-profits. They don't have to bring as much cash to the table as they used to.
Department officials told CBC News the program's annual budget has increased from about $2 million in 2021-22 to $18.1 million this fiscal year.
Some in the non-profit sector say they're seeing the most investment and activity "in a generation."
But Edgar says it's still not enough. She's seeing the housing situation grow worse and worse.
"These are some of the stories that we hear," she says of the people who are reaching out for help. "They're not eating. They're isolated from their families. They're a little bit embarrassed.
"Affordable housing is such a big issue, and it's part of our conversation every single day."
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