Most of the commentary I have read regarding the cancellation of the Yukon Housing Corporation’s so-called “affordable housing” program has focused on what landlords see as the government’s reckless interference in the housing market and what affordable housing advocates see as the government’s abandonment of those who are in need of quality, affordable housing.
What is missing from this debate is any mention of what an outrageous giveaway of taxpayer money the now abandoned “affordable housing” program actually was. Details are fuzzy, but from what I can piece together from news reports and government press releases, the now-cancelled program would have resulted in $11.7 million dollars being given to a handful of developers to build somewhere between 75 and 130 units. The only string that was to be attached to the money was that the developers would have to rent the units out for 95 per cent of median market rent for 10 years.
So what would taxpayers get for their $11.7 million?
Reports have stated that median rent is somewhere around $900. If the developers are required to rent out the units for 95 per cent of market rate, then the taxpayers are essentially buying a $45 rent reduction per unit per month. $45 multiplied by 12 months a year multiplied by 10 years equals $5,400 in rent reduction per unit.
If this program resulted in 75 units being constructed (the more commonly cited figure) the total rent reduction would be a whopping $405,000. Even if this program resulted in 130 units being constructed (the highest estimate I have read) the total rent reduction would still only be about $702,000.
In other words, $11.7 million in spending that would lead to between $405,000 and $702,000 in savings. What a deal!
To top it off, there would be no guarantee that the properties would actually be rented to those who need subsidized housing and no obligations are imposed on the developers after the 10 years are up.
I understand that the analysis above is a little simplistic, and I appreciate that if we are going to have more affordable housing in Whitehorse the government may need to “sweeten the deal” to some extent to actually get the units constructed. After all, going into business as a residential landlord for lower cost units does not sound like a particularly lucrative investment.
But is it such a poor investment for private interests that it requires an $11 million sweetener? I find that a little hard to swallow.
So why give away the farm? It makes no sense to me why the government would undertake a major capital investment and the turn around and essentially give it away to private interests.
I know that we here in Lotus Land have grown accustomed to successive governments that make spending decisions without any real world cost-benefit analysis. But in this instance I think that government should go back to the drawing board and demand a little more bang for its buck.