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Bridge Beat

National Housing Co-Investment Fund



Last May, as part of its National Housing Strategy, the Federal Government launched the new National Housing Co-Investment Fund (NHCF). The NHCF, which amounts to a $13.2-billion capital investment over the next ten years, is expected to fund the construction of up to 60,000 new affordable units (allocation of $7.5-billion) and the renovation and repair of up to 240,000 affordable and community units (allocation of $5.7-billion) through a combination of low-interest loans and grants administered by the Canada Mortgage and Housing Corporation (CMHC). This investment, which integrates the previously announced Rental Construction Financing Initiative and Affordable Rental Innovation Fund, represents a significant and tangible step by the Federal Government towards supporting the construction, repair and renewal of mixed-income, mixed-use affordable housing.

NHCF funding, under either the construction or renovation stream, is available to a wide variety of affordable housing providers, ranging from non-profits to government to private sector developers, and is available to fund a variety of projects including new and existing affordable rental housing developments, mixed market/affordable rentals, as well as transitional and supportive housing. 

In order to qualify for funding, a project must contain at least 5 housing units, be primarily used for residential, and meet the following program requirements:

1. Co-Investment from another level of government:

As the name of the fund suggests, a key eligibility requirement of the program is that a project must have the support of another level of government. The partnering level of government could be a municipality (any level), Province, Territory, or Indigenous Government. The co-investor must provide its support either by way of financial contributions (monetary or in-kind) or in a form of a letter demonstrating support for the project.

2. Maintain minimum affordability levels throughout the term of the  funding agreement:

In order to ensure long-term affordability, all NHCF funding recipients will be required to commit to maintaining certain affordability standards for at least a 20-year period. Under the NHCF, a proponent is required to ensure that rent for at least 30% of the units in the project is kept at a rate equalling no more than 80% of the Median Market Rental rate published by CMHC. These affordability requirements will apply to all projects regardless of the funding source (loan vs grant).

3. Be financially viable:

While the NHCF represents the government's commitment to affordable housing, it has also indicated that it will not be the sole financier of these projects. Under the NHCF, a proponent must demonstrate that the project is viable in order to be eligible to receive funding. A viable project is one with both the financial capacity and operational capacity to complete and successfully manage development, and be in a position to manage cost over-runs and delays, if they should occur.  

In addition to the above requirements, a project must also meet minimum accessibility requirements and energy efficiency thresholds.

Once a project qualifies, it will be scored and prioritized on the basis of the following factors: affordability, energy efficiency, accessibility, proximity to transit, amenities and community supports, collaborations/partnerships, social inclusion, and whether the project supports a federal priority group such as seniors. The prioritization process will occur on a 60-day cycle and selected applications will proceed to further financial and borrower assessment with CMHC staff. Lastly, a scoring grid will be used to determine the eligible loan and/or grant amount.

While the NHCF is a welcome initiative, the program is not without its faults. One concern is that NHCF funding is limited to affordable rental housing projects and excludes innovative affordable home-ownership projects including those being developed by organizations such as Options for Homes, Trillium Housing, or Habitat for Humanity. Another concern is that a number of the prioritization factors, such as access to transit, appear to favour projects located in urban or suburban communities as opposed to Canada's rural communities. Finally, a consequence of the co-investment model is that housing providers will need to ensure that their operation complies with at least two different sets of program requirements, some of which might not always align.  

Overall, the NHCF is a welcome addition to the affordable housing world,  and the hope is that this program is just the start of the Federal Government's continued commitment to the development of affordable housing across the country.