The Legault government’s record on housing has earned it numerous criticisms. With reason.
It does not invest enough in social and affordable housing.
He gives the impression of being disconnected. It doesn’t help when the Prime Minister doesn’t know the average price of rent in Montreal or claims that tax cuts are the solution to the housing crisis1. It is not with an average tax cut of $370 per year that we will overcome the housing crisis.
As we saw earlier this week, his reform of the main affordable housing program (PHAQ) did not yield the expected results either.2.
But the Legault government also had an intriguing and promising idea: doing a second affordable housing program with Desjardins, the Fonds de solidarité FTQ and Fondaction, private social investors who know the construction sector well.
In June 2022, Quebec essentially subcontracted to them the mandate to build 3,000 affordable housing units within three years (June 2025), with subsidies equivalent to the usual government program. Basically, Desjardins and the Fonds de solidarité FTQ manage the Quebec grant for affordable housing, choose the projects, invest capital in the projects, supervise them and then report to Quebec. The management rules are more flexible (see capsule).
We call it the “tax-advantaged funds” program, because to invest, Desjardins, the Fonds de solidarité FTQ and Fondaction use their tax-advantaged funds, those which give right to tax credits for savers.
The Legault government was betting that this second program would help increase the rate of construction of affordable housing, which is reserved for Quebecers earning less than $45,000 per year.
Quebec’s Minister of Housing, France-Élaine Duranceau, makes no secret of it: with this program, she also wanted to “inject a little competition into the traditional community ecosystem,” she said in an interview with The Press.
For now, it’s a successful bet. This tax-advantaged funds program has not worked miracles, but the results are interesting.
We came to bring in people (tax funds) who have been doing this for a long time, who know how much it costs to build housing, who put in their own money. The budget is managed tightly to achieve this. This gave a little shock in terms of budgetary rigor.
France-Élaine Duranceau, Quebec Minister of Housing
“No one before me had questioned construction costs across the entire ecosystem,” said Minister Duranceau. I dare to ask questions, I live with the consequences. I think it’s important. My goal is for us to create as much housing as possible with our envelopes. (…). We cannot be against efficiency. »
Building Your Neighborhood, a non-profit organization that coordinates affordable housing projects, likes both the Quebec Affordable Housing Program (PHAQ) and the tax-advantaged funds program.
“We use all the tools available for the development of community housing,” says Édith Cyr, general director of Bâtir son district. The approach with tax-funded funds is interesting, we work with open partners who want to build community housing. Multiplying the tools so that we can build more is correct. »
In addition to new construction, tax-advantaged funds can also finance renovation projects and the purchase of existing housing. Renovating costs less, and it’s quicker.
In June 2022, Quebec provided 395 million in subsidies to finance the construction of 3,000 social housing units with Desjardins, the Fonds FTQ and Fondaction. As 40% of the projects are renovations or purchases, the three tax funds were able to finance 4,135 social housing units with the public funds granted.
PHOTO EDOUARD PLANTE-FRÉCHETTE, LA PRESSE ARCHIVES
France-Élaine Duranceau, Minister responsible for Housing
Twenty-two months later, 46% of the 4,135 units are either under construction (19% of units) or delivered (27%). Out of 66 projects, 7 have been delivered, 16 are under construction, and 43 are in development.
Last September, Minister Duranceau said that “most” of the tax-funded projects would be under construction in the fall of 2023 and the beginning of the winter of 2024. So that did not materialize.
At first glance, 46% of units under construction or delivered is much better than the Quebec Affordable Housing Program (PHAQ), which delivered only 21% of its announced units at the same time. But this performance is mainly attributable to renovations and purchases. If we compare apples to apples and only take new construction, the performance of tax-advantaged funds is barely better than that of the PHAQ.
The cost per unit of tax-advantaged fund projects is also lower than that of the PHAQ, but this is, again, essentially because there are more renovations.
But let’s not shy away from our pleasure. On the ground, we hear that Desjardins, the Fonds de solidarité FTQ and Fondaction make life easier for everyone. They are also partners who are highly motivated to build social and affordable housing. In the current context, this is valuable.
“All programs are necessary. Providing affordable and social housing is part of our mission. We are bringing out doors in significant quantities,” says Marianne Duguay, senior vice-president of the Fondsimmobilier de solidarité FTQ.
“We are connected to the needs of our communities. Our proximity to the community means that we can carry out projects more quickly,” says Jean-Yves Bourgeois, first vice-president, business services, of Desjardins.
In an interview, Minister Duranceau confirmed that the two affordable housing programs (PHAQ and tax-advantaged funds) will continue to exist in parallel.
This is an excellent decision.
1. Read the article “Tax cuts will help buyers, pleads Legault”
2. Read the column “Despite new delays, the CAQ remains optimistic”
What do you think ? Participate in the dialogue
How does the “tax-advantaged funds” program work?
Instead of submitting an application to the Quebec government (through the PHAQ), municipal housing offices or non-profit organizations submit their affordable housing project to Desjardins or to the Fonds de solidarité FTQ, which chooses the projects and supervise them, while reporting to Quebec. The level of subsidies, the amount of rent and the maximum income threshold for being a tenant are modeled on the PHAQ. In practice, Quebec pays between 40% and 50% of the cost of building affordable housing. Desjardins or the Fonds de solidarité FTQ also invests in each project (5-10% of the financial package). The rest is paid by the mortgage on rents (30-35%), as well as cities, the federal government and private foundations (20-25%). The program is somewhat different at Fondaction.
What is affordable housing?
- Affordable housing, partly subsidized by Quebec, is the property of municipal housing offices, housing co-ops or non-profit organizations;
- they must rent 100% of the housing to Quebecers who have a modest annual income (e.g. in Montreal, less than $44,000 for one person and less than $62,000 for two people);
- the amount of rent and the maximum income threshold for being a tenant are determined by the government of Quebec and vary according to region;
- Each affordable housing project in practice reserves a certain number of housing units for social housing, for people with even more modest incomes, whose rent is paid in part by Quebec.
reference: www.lapresse.ca