Provincial Funding Reductions for Affordable Housing

March 4, 2020

The provincial budget, announced on February 27, 2020, included significant funding reductions for affordable housing in Calgary. These reductions will reduce the number of Calgary households in need of housing who can be served through Calgary Housing Company (CHC).

The following is an overview of the announced funding reductions and the anticipated impact on Calgarians in need of affordable housing.

From Affordable Housing Provincial Budget 2020 Impacts

Presented to Strategic Meeting of Calgary City Council, March 2, 2020

Major cut to Capital Maintenance Funding – Budget 2020

• This funding reduction applies to the almost 4,000 units of Social Housing under Provincial responsibility, managed by CHC.
• February 2020 – Province announces $53M (32%) reduction to capital maintenance funding across province over three years.
• In 2020 CHC will receive only 50% of the budget required maintain Social Housing units.
• In 2021 it is estimated that this will be reduced again to only 25% of required funding.
• CHC anticipates having to close about 100 units in 2020 due to insufficient funding to maintain minimum housing standards. Additional closures are anticipated in 2021.
• A potential risk to building safety has been identified due to year-over-year unfunded repairs.
• Unit closures are anticipated to occur when homes are vacated by tenants.

$1.7M Reduction to Operating Funds in 2020 – Previously Announced

• November 2019 – Province announces a province-wide reduction of 3.5% to social housing operating funds; Calgary’s portion of this is a 9.3% reduction to the operating budget for the almost 4,000 units of Social Housing under Provincial responsibility.

Rent Supplement Program Reduced 24% – Previously Announced

• October 2019 – Province announces a province-wide reduction of 24% to the Rental Assistance Program (Rent Supplement).
• The 2020 Rent Supplement budget for CHC is not yet known.
• 24% cut could eliminate as many as 500 households or significantly reduce benefits to all program participants.
• CHC administers a $19.2M annual Rent Supplement program, providing assistance to approximately 2,300 households.

No new funding for affordable housing development – Budget 2020

• Budget 2020 contains no new funding for affordable housing development beyond what has already been committed; the Province will pause and consider additional investment and delivery strategy in late 2020 and 2021.
• The City of Calgary requested $46M for seven new projects to contribute 475 homes toward the Province’s target of 2,000 new and regenerated units.
• The City of Calgary and Federal governments have committed $62M to new developments, leaving un-matched federal funds on the table – a missed opportunity for Alberta.

Background

Capital Maintenance Funding Reduction

• Capital maintenance funding pays for maintenance work when units are vacated to ensure they meet minimum housing standards.
• Capital maintenance funding is for the almost 4,000 Social Housing units in properties owned by the Province or Social Housing properties owned-by The City of Calgary for which the Province has funding responsibility.
• Social Housing is the deepest subsidy affordable housing serving tenants most in need of housing support. The average monthly rent is $380, or 30% of the tenant’s income.
• CHC has been requesting significant increases in Capital Maintenance funding to address decades of underfunding for properties mostly built in the 1970s and 80s. This reduction goes in the opposite direction and will require the closure of units and possibly entire buildings.

No Funding for New Development

• Across Canada, non-market housing represents 6.0% of housing stock on average. In Calgary, 3.5% of housing is non-market. Calgary requires 15,000 additional units of non-market housing to get to the Canadian average, assuming all currently operating affordable housing is maintained.
• The City of Calgary has a plan to develop 1,000 more homes over 10 years, however this plan requires Federal, Provincial and City investment.
• The City is also supporting non-profit and private sector developers to increase the supply of affordable housing through the Corporate Affordable Housing Strategy.

Operating Funding Reduction

• CHC operates nearly 4,000 social housing units under provincial responsibility.
• 9.3% funding reduction means less funding for maintenance.

Rent Supplement Funding Reduction

• The Rent Supplement program provides a supplement based on same criteria as the Social Housing program.
• Recipients are able to locate a rental opportunity that meets their needs in the private rental market and rent supplement funding offsets a portion of their rent costs. The value of the benefit is directly comparable to other housing programs.
• A key value of the program is enabling Calgarians with needs not met by CHC’s housing inventory to find appropriate housing – accessible units, desired location, more bedrooms, etc.
• The average daily subsidy for households in a CHC-managed rent subsidy program is $23/day. For Social Housing the cost is $16/day (not including cost to build). The average daily cost for a bed in an emergency shelter is $69/day.

The Future of Calgary Housing

• The City of Calgary and CHC are working with the province on a new agreement to be finalized by March 31.
• We have a modern, innovative deal on the table that could achieve this and move some of our housing to a more progressive, mixed-income model with less reliance on government funding over time.
• Our key areas of focus are expectations for predicable funding, asset management and housing stability.