The B.C. government is adding $2 billion to a fund that provides low-cost construction loans to developers who commit to providing affordable housing.
“For far too long, housing in British Columbia was viewed as a commodity and a tool for building wealth, rather than a basic necessity of a home,” said Finance Minister Selina Robinson Thursday, announcing the spending ahead of Tuesday’s budget.
“With this investment we’re taking a big step in making life more affordable while supporting the strength of our economy by ensuring that housing is available for the workers that growing businesses need.”
The announcement brings the amount available through the BC Housing Hub, which was started in 2018, to $2.8 billion. The fund takes advantage of the government’s ability to borrow money at relatively low interest rates.
“It provides profit and non-profit developers with loans with much lower interest rates than would otherwise be available,” said David Eby, the minister responsible for housing and attorney general. “It uses government’s interest rate to provide that benefit to developers in exchange for commitments to provide affordability to British Columbians.”
How much the program saves any particular developer will depend on that developer’s credit rating and relationship with lenders, he said. “There is a significant spread — and often it can be as much as five per cent or more — between government borrowing and the borrowing that’s available for construction financing to developers.”
The money developers save, which can be significant on a large project, gets passed on to the public through more affordable housing for rent or purchase, Eby said. Units need to be kept affordable for at least 10 years after a developer has received a loan through the program.
When construction is complete, developers take out more traditional financing and pay the government back, he said. “The money is a catalyst. It doesn’t get used up. It can be loaned out again, and again, and again.”
Already some 3,000 homes for people with middle incomes have been completed or are underway through the program, Eby said. With the added funding, the expectation is it will deliver more than 8,000 units over the next three years for families with household incomes of $75,000 a year on average.
There’s significant demand for the program, Eby added, noting BC Housing is aware of more than 10,000 units of housing across the province that could benefit from the funding and where the developers are interested in participating.
There’s competition for the funding and BC Housing will evaluate applications based on how many affordable units they will provide and just how affordable developers will make them, he said.
Also participating in the announcement was Marla Zucht, the general manager of the Whistler Housing Authority, a non-profit that used funding from the program for the Granite Ridge development that opened in March to 100 residents who will be paying “well below” average Whistler market rents.
She called the funding “exciting and meaningful” and said the investments are “tangible actions for making a difference in the communities around the province that are struggling with housing affordability for our local residents.”
Ahead of the government’s announcement, BC Liberal MLAs in the legislature criticized what they described as a lack of progress on affordable housing and the failure to deliver promised rebates for renters.
“The price of an average B.C. home has jumped a staggering 20 per cent from last year,” said Lorne Doerkson, the MLA for Cariboo-Chilcotin. “Instead of taking action, the finance minister said that she wants to wait ‘as things rebalance themselves.’”
Robinson responded that low interest rates have increased demand and rising home prices, and that the government’s efforts ahead of the pandemic were working, though there’s more to be done. “We won’t go back to the way it was before, because the people on the other side of the House, frankly, didn’t do what they needed to do in order to address a crisis that grew for 16 years unabated.”
During the announcement, Eby stressed the $2.8 billion in the BC Housing Hub fund is 17 times what the previous BC Liberal government provided to a similar construction financing program.
“Too many middle-income families have been unable to find an affordable home to rent or purchase and they’ve been forced to leave the community they call home or commute long distances to work,” he said.
“These homes will help people stay in the community where they live and work, something that everyone deserves.”
The government came to office in 2017 committed to creating 114,000 homes over 10 years. It says there are 26,000 new homes either complete, under construction or in development due to the province’s investments.
In the legislature, Stephanie Cadieux, the Liberal MLA for Surrey South, pointed out that BC Housing’s latest progress report says just 3,246 of the units promised under the government’s plan are actually open and only 161 of them are rental units for middle-income households.
Eby called the number from Cadieux “absurd” and said it represented just one stream of the funding the government is putting into housing. He said there are 6,681 units completed, 9,272 under construction and 9,934 in planning.