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June 22, 2006

Is the Sky the Limit?

Finding solutions to Calgary’s affordable housing problem

Natasha Evdokimoff

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Imagine that you’re a working-class guy from Regina. You’re married with two young children and you want to move your family to Calgary for a piece of the economic pie.

You’ve accepted the fact that you’ll have to downsize to move here, but while looking into the steadily increasing price of housing in Calgary, it dawns on you that you may not be able to afford a home here at all.

Imagine you’re a fresh university grad who’s just landed his first relatively low-paying job. (You’ve got to start somewhere, right?) You want to get in on the real estate game early because you know prices aren’t going anywhere but up. But at $35,000 a year salary, your chances of qualifying for a $200,000+ mortgage are pretty slim. Or maybe you’re a single mom holding down two part-time jobs. Between childcare and other monthly bills there’s barely enough money left over to put food on the table, never mind scrape together a down payment for a home.

These kinds of scenarios aren’t what most people think of when they think about cash-flush Calgary. For many people, this is the land of milk and honey – an immensely prosperous city with a booming economy and Help Wanted signs in every window. But while many Calgarians bask in the province’s enviable economic status, enjoying the kind of lifestyles only an oil & gas boom can provide, many more people are struggling to gain a foothold in a housing market where prices continue to climb further and further out of their reach.

It’s no secret that the price of real estate in Calgary is at an all time high. In March 2006, the average price of a multi-family unit in the city was $222,349.00 – the kind of figure that can make even some gainfully employed people catch their breath in their throats. When you consider that thousands of people in Calgary live well below poverty level (many earning less than $20,000.00 per year) it becomes frighteningly clear that the city is facing a huge affordable housing crisis.

“I think the problem is very real,” says Bruce McKenzie, Principal at Poon McKenzie Architects in Calgary. “From my own personal exposure to [it] through Inn from the Cold, it’s obvious to me that affordable housing is a very broad, encompassing issue. There are lots of working poor people in the city and very few options for them.”

Over 1,700 Calgary families and singles are currently on waiting lists to get into one of the city’s 7,700 subsidized units. It isn’t uncommon for applicants to wait years before a unit becomes available. The question of affordable housing, then, isn’t whether or not it’s needed; the question is, in a red-hot real estate market, what constitutes affordability?

According to CMHC guidelines, the cost of “adequate shelter” should not exceed 30 per cent of household income. Any housing that costs less than this amount, therefore, would be considered affordable.

The problem with this is quite obvious: incomes vary. If you can only afford $6,000 in housing payments annually (30 per cent of a $20,000 salary), affordable options are almost non-existent.

Although no builder wants to be known for creating “ghetto housing”, McKenzie believes most want to be part of the solution. “People assume that builders and developers don’t have a heart – that they’re all about the bottom line,” McKenzie says. “But most are very sensitive to the housing crisis and want to address the issue. The trouble is they don’t know how to begin. They need clear-cut rules to follow. The simple answer is to legislate it – deem that a certain percentage of units in every new development have to be affordable. That takes some of the risk out of it for builders because the rules are the same for everyone. Tying density bonuses to projects falling within this type of legislation would help make the system fairer for developers as well.”

Calgary isn’t the first city to face an affordable housing problem. Many major centres worldwide have long since taken the bull by the horns and implemented policies aimed at leveling the real estate playing field for all buyers. In 1998, the city of Vancouver passed a law stating that 20 per cent of all major residential developments must be dedicated to affordable housing – a mandate that has since created the capacity for more than 2,700 new affordable units across the city. A virtually identical policy has been in place in London, England for years.

McKenzie suggests a strategy whereby affordable units would be donated back to the city and managed by Calgary Housing, who would in turn provide units to qualified applicants either via rent control or subsidized mortgaging – similar to the system currently utilized by Habitat for Humanity.

“Affordable housing doesn’t have to look different from regular housing, and it certainly doesn’t have to be separated,” McKenzie says. “It shouldn’t carry that stigma. There may be subtle differences to interiors that could be incorporated to accommodate the needs of the physically challenged, or single parents, or what have you, but exteriorly they can be all the same. By creating inclusive communities and opening up housing to everyone, we’d create very vibrant, diverse neighbourhoods all over the city. From a social perspective, that’s better for everyone.”

While the City of Calgary encourages builders and developers to create affordable housing options (the Planning and Regulation section of the city’s affordable housing strategy states that a primary goal is to “encourage competition and choice in the housing marketplace”) it has yet to implement any firm legislation or policies in this regard. If comes to pointing fingers, the city points directly at the Municipal Government Act of Alberta which prevents cities within the province from dictating affordable housing policies to any private builder or developer. As it happens, the Act is due for review in November of this year, leaving the door on affordable housing legislation wide open.

“We have to lobby government for the change,” says McKenzie. “We need a massive strategy to address the problem, and we need it quickly.”

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