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Affordable housing file marked by ineptitude and indifference

Brad Cathers should grow a backbone. As the political boss of the Yukon Housing Corporation, Cathers is entitled to call the shots.

Brad Cathers should grow a backbone. As the political boss of the Yukon Housing Corporation, Cathers is entitled to call the shots.

As the political boss of the Yukon Housing Corporation, Cathers is entitled to call the shots. But he is also expected to keep his word - something he has failed to do by scrapping plans to spend nearly $12 million on bolstering affordable housing in Whitehorse.

Cathers had long given this plan his blessing. What’s more, back in April, the minister told the legislature that he would leave it up to senior mucky-mucks at Yukon Housing Corporation to decide how these funds would be doled out.

“It will be the board of Yukon Housing that will review the recommendations made by the internal committee,” Cathers said. “They will then make the final decision on approval of projects.”

So much for that. Upon learning that realtors and landlords were enraged by the plans, Cathers caved, overturning the housing corporation board’s approval. (He now claims he misunderstood his role in things when he spoke in the House. Is this supposed to be reassuring, that Cathers apparently didn’t understand his job as minister?)

The affordable housing scheme would have seen the territory pay half the cost of private developments, provided that rents were kept below the city’s median rate - currently around $900 - for a decade. The housing corporation reckons the funds could have supported construction of about 75 bachelor or one-bedroom apartments. By bolstering the number of units with middling rents, the hope was to make rents in general more affordable, particularly for those at the bottom rungs of the ladder.

Sounds good if you’re a renter. Not so much if you’re a landlord. But when it comes to the thorny issue of resolving Whitehorse’s shortage of affordable housing, it’s unlikely that any solution will make everyone happy.

Landlords and realtors warned this plan would hurt mom-and-pop owners of rental suites by causing rents to plunge, while enriching a small number of fat cats able to bid on the affordable housing money. Brighter minds than ours remain stumped about exactly what consequences would have ensued from the plan, yet these concerns seem overblown.

As Keith Halliday recently noted in his Yukonomist column, this project would have only seen a modest increase to the total number of rental units in the city, comparable to what the housing corporation has directly built over the past few years, so it’s hard to hard to take too seriously predictions of a big crash.

Cathers has defended his decision by pointing to a developer who had threatened to cancel his project if the affordable housing works proceeded. Apparently, these units will offer affordable housing too, sans subsidy. Yet everybody can’t be right. According to the reasoning of realtors, wouldn’t these units drive rents into a death spiral, too?

Any claim that the market is about to self-correct should be taken with a grain of salt, too, given the failure of such a thing to happen until now. As a report commissioned by the housing corporation explains in detail, the underlying problem is that building affordable housing isn’t terribly profitable.

The proposed project probably would have slimmed profit margins for landlords. If it didn’t, it wouldn’t have done its job. But small-time landlords who have invested in a rental suite, if they have been prudent, would have enough of a buffer to endure a modest price drop. Nobody ever said a rental property was a risk-free investment.

And it’s important to remember that the current arrangement also creates winners and losers. Perhaps mom-and-pop landlords benefit now, but this may come at the cost of throttling the city’s broader economy. That’s certainly the contention of the Whitehorse Chamber of Commerce, which has long maintained that the lack of affordable housing makes it difficult to recruit new hires. Needless to say, many renters are currently losers under the status quo, too.

Realtors and landlords insist that any government-supported housing should require tenants to be income tested. But there’s a word for that: it’s called social housing. We already have that - certainly not enough, judging by the long waitlists - but the idea here was to try something different, to help working families who struggle to pay the rent, but aren’t eligible for social housing.

Cathers urges us to consider unintended consequences, but the Yukon Chamber of Commerce asserts that he has created a few of his own:

businesses have a new reason to be leery about sinking money into preparing bids on government tenders, following this one being scuppered. Given the similar shenanigans during the tendering of work to rebuild F.H. Collins Secondary School, such fears are not unwarranted.

The Yukon government now finds itself in a strange bind of its own making. It has promised to help out struggling renters. Will this still somehow happen, and if so, how?

One solution could be to offer a subsidy to renters within a certain income bracket. But, as the chamber has noted, this could simply end up driving up rents even higher, and in doing so, harm those who aren’t eligible to receive this money.

It’s a tricky issue. Then again, the Yukon Party has had six years to think it over since Ottawa first shipped up a big pile of money earmarked for affordable housing. It’s a testament to the government’s ineptitude and indifference that we’re now back at square one to sort out what to do with it.