Affordable Housing Programs Are Not Relevant To The Homeless

The Houston government’s speech from the throne ran to more than 3,900 words. More than half of it was, consistent with the party’s platform, dedicated to reforms of health care delivery.

Opposition leaders did not have much to say about that. Rather they chose to focus their ire on a 29-word paragraph on housing:

“There is a housing crisis in Nova Scotia. We have a plan to address this crisis – and attracting and training more trades people is critical to its success.”

Both opposition leaders were critical of the lack of substance, with the NDP’s Gary Burrill in particularly high dudgeon.

He and others tend to talk about the need for affordable housing and assisting homelessness as if they were two sides of the same coin. They are not. They have different dimensions and require materially different responses. The responses so far to both are inadequate.

According to the Canada Mortgage and Housing Company (CMHC), housing is considered to be affordable when a household spends less than 30% of its pre-tax income on adequate shelter.

Some CMHC initiatives are remarkably misaligned with that goal. Consider for example a program under which it provides builders with financing at below market interest rates.

The builder is required to offer rents at least 10% cheaper than the market rates in the zone where the building is located. That can still be a big number in high demand areas such as Bedford West or the peninsula. A recently completed building in the former qualified for the program with maximum rents of $1,350.

That would be “affordable” for families making at least $54,000. But there is no requirement on the owner to ensure that the people renting units are those most in need. As a practical matter landlords prefer tenants with ample income as opposed to those living on the edge.

Worse, the test is applied on an aggregate basis, not individually. So the landlord might rent some units at much lower prices to friends and relatives and make up the difference by charging $1,500 on the rest.

The Trudeau government needs to make all of its affordable housing support programs work for those that actually need it.

CMHC partners with the province on a better designed program administered by Housing Nova Scotia (HNS). Under it a builder is subsidized up to $50,000 per unit but the units must rent for a specified percentage (10% – 20%) below average market rents per month.

Eligible projects include new construction, preservation of vacant rental units, and conversion of existing structures.

HNS provides funding for up to half the units in a project to maintain a desirable income mix; however, other ratios can be considered. Prospective tenants must be means tested. The $25 million made available for this can support at least 500 units.

Responses to housing affordability should include the income side of the equation, in particular the minimum wage level.

This week the Canadian-born economist David Card shared in the Nobel Prize in economic sciences for research nearly three decades ago that found, contrary to textbook models of the labor market, a higher minimum wage didn’t reduce low-wage employment.

This space has repeatedly urged a $15 minimum. In Nova Scotia many employers in the hospitality sector and elsewhere have struggled to find enough people. Some have moved to $15 and more voluntarily in order to get enough staff.

The government should set the minimum wage at $15 an hour no later than the beginning of 2022 and have it increase annually by cost of living plus 2% until it reaches $20.

That will also raise the pay for many of those making a little more than minimum wage. It will mean we pay an extra dime for a cup of coffee or an extra dollar for a restaurant meal. Know that the money is going to a good cause.

None of the affordability programs are relevant to homeless people, some of them living in tents in public parks. As of October 12th, there are over 400 homeless, three quarters of whom are chronically so.

Homeless people often have substantial issues beyond a lack of income. Some have physical or mental health issues or are experiencing substance abuse. Those individuals need other services which should be integrated with the response to their lodging needs.

Supportive housing facilities like those managed by Shelter Nova Scotia, Souls Harbour Rescue Mission, and Adsum House are the right response to homelessness. We need a lot more of them.

Premier Houston has promised announcements on housing soon. Programs for affordability and for homelessness should be announced on different days, because they are different topics and need different responses.


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