Income cap couldn’t save affordable housing projects

The possibility of an income cap for renters was considered in the final days of a doomed government plan to build affordable apartments.

The possibility of an income cap for renters was considered in the final days of a doomed government plan to build affordable apartments.

But even that wasn’t enough to save the much-heralded project from last-minute government cancellation.

The problem is, no one can quite agree on how that part of the plan fell apart.

Last month the Yukon government scrapped plans to help subsidize 75 affordable apartments in Whitehorse. The developers were going to get federal money to help cover building costs if they agreed to keep rents at 95 per cent the median rate for 10 years.

Housing minister Brad Cathers says, even with the last-minute addition of an income cap, the deal brought to the government for final approval was not good enough.

One developer, who was ready to build, says he was willing to make changes but the government slammed the door.

The lack of an income cap for the new rentals was one of the central complaints about the plan.

Critics argued that, without the cap in place, people who could afford higher rents would be given the cheaper options, skipping over those most in need.

In an interview yesterday, Cathers said he asked the housing corporation in late May to look into adding an income requirement for renters of the new apartments.

The letter is dated May 28 – 28 days before the Yukon Party cabinet, through its management board, cancelled the project after the housing corporation’s board had approved it.

“That was in direct response to the concerns we’d heard from a number of Yukoners, including landlords and realtors who were concerned about the potential impact of the program,” Cathers said.

The final recommendation from the housing corporation was to add an income cap of $68,300 for a third of the affordable rental units being built, the minister said.

Cathers calls $68,000 “almost at the point that someone could afford home ownership based on most calculations.” He says the proposed project was “not clearly targeting the people most in need.”

Government officials have maintained all along that these affordable rentals were not meant to be social housing – government subsidized housing for people with an income of less than $40,000.

Instead, the affordable apartments were intended for those who didn’t qualify for social housing but could not afford to buy a house.

The most recent Statistics Canada numbers, from the National Household Survey, puts the median household income in Whitehorse at $82,345 in 2010.

If the income cap was set at $68,300, that works out to 83 per cent of the median income – a lower percentage than the government was going to require rents be set at.

Cathers maintains that developers were only willing to cap the incomes of renters in a third of the affordable units.

“If you have an income cap of $68,000 on a third of the units, and they won’t agree to even that high of an income cap on the others, what confidence can anyone reasonably have that the renters of those units would have been the people most in need, instead of people who could afford other rental units that were on the market?” he asked.

But Antonio Zedda, one of the three Whitehorse developers approved by the housing corporation to build in Whitehorse, says he was more than willing to put income limits on more units.

Cathers describes the process of coming up with the cap as a “negotiation.” Zedda paints a different picture.

“They presented it as a new condition and we agreed in principle. Basically, we would have had to get a proof of income from tenants so that total family income did not exceed $69,000 to be eligible,” Zedda said in an email.

“We suggested that it apply to one-third of the apartments we were proposing but we would have gladly increased it to higher percentage if pushed. However, we were never given the opportunity.”

Unspent housing funds

yielded $2M in interest

Without affordable rentals to build in Whitehorse, Yukon is again left with millions of dollars in unspent Northern Housing Trust money that was first deposited into the government coffers in 2007.

The $17.5 million dollars given to the Yukon government was earmarked by Ottawa to be spent on affordable housing. The interest from that money comes with no such strings attached.

Of that, $4.5 million was spent on Betty’s Haven, a 10-suite transition home for women fleeing violence that opened in 2013.

While plans for Whitehorse builds were cancelled, $1.3 million from the trust was spent on two one-bedroom apartments in Carcross and six two-bedroom apartments in Carmacks.

Based on data provided by the Finance Department, the News has calculated that the $17.5 million has earned more than $2 million in interest since it was deposited.

“It’s another example of their lack of understanding for the housing situation in the territory,” said NPD critic Kate White. “If they understood how tenuously people were housed and how they had to balance survival, then maybe they would have been more free spending that money.”

“It seems disingenuous to say we’re going to hold back money and not spend it as the crisis worsens and then instead of investing the money that we earned, we’re going to call it a part of our savings account, and the housing money still sits there.”

Calling the fund the Northern Housing Trust may be a misnomer. The money is not actually in its own trust account. It is held with all of the government’s general revenue.

Cathers says the government has spent a lot of money on housing from other federal sources.

He points to the low-income seniors housing complex being built at 207 Alexander Street. Canada will invest $2.55 million towards the $12 million project.

“We made a very deliberate decision to spend the time-limited funding because those funds were ‘use them or lose them’ rather than spending Northern Housing Trust money and lapsing those other funds,” Cathers said.

Keeping the Northern Housing Trust money in the bank will allow the government to maintain capital spending in years when the federal money available might be lower, he said.

Cathers said he’s not concerned about the message that sitting on this money sends to Ottawa.

“I think the federal government recognizes that the Yukon has made a very deliberate and careful effort to maintain a positive cash position and to keep some money in the bank instead of doing as most other Canadian jurisdictions are doing and being fairly heavily into debt.”

Minister defends real estate connections

Not long after Cathers cancelled the affordable housing plans, critics began to point out the cozy ties between him and the realtors whose advice he heeded.

The minister says there is no conflict of interest, although the president of the Yukon Real Estate Association worked on his last election campaign in 2011. Val Smith is also listed as a director on the Yukon Party executive.

“I don’t see how a citizen who chooses to be involved in Yukon politics or volunteer groups loses the right to express their opinion,” Cathers said.

The minister denies that the opinions of realtors were given more weight in the decision to cancel the affordable housing projects in Whitehorse.

Realtors publicly complained that the plan would hurt the market and other landlords who didn’t get the same perks.

“Government considered the perspectives of the landlords, the realtors and many Yukoners we heard on this situation and gave equal weight to every individual viewpoint, evaluated information on the basis of its accuracy and came to the decision we believe was best,” Cathers said.

NDP critic Kate White calls the connection “something that circulated an awful lot around the community.”

“The Yukon Party is notorious for listening to their friends and supporters. We’ve got examples all over about that. Let’s just chalk it up to one more example of ignoring the needs of Yukoners and listening to the faithful.”

Cathers calls White’s comments a “political smear attack.”

Contact Ashley Joannou at

ashleyj@yukon-news.com

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