The Canadian Funding Corp reviews an update from the CMHC about an affordable housing project in Nova Scotia.
A prominent Nova Scotia developer shows it is possible to build rental housing that is affordable to tenants with limited resources, in the downtown of a small thriving community. Careful management of assets by Fairwyn Developments also ensured the success of the project.
Fairwyn Developments found a way to use the incentives provided under the Affordable Housing Initiative (AHI) to deliver 22 units of affordable housing in Truro.
The Affordable Housing Solution 11 Braemar was fully rented within three weeks of opening. Fairwyn Developments received CMHC Seed Funding to help cover the costs of conducting a need and demand analysis and feasibility study for the project. The need and demand analysis revealed a need for affordable rental housing in the community. Over the past few years, Truro has experienced a significant boom in multi-unit residential construction.
The majority of these units however have been targeted toward higher-income households.
At the same time, a portion of the traditional rental stock for mid to lower income tenants has been lost as the Victorian homes revert to single-family dwellings or commercial use, for example.
11 Braemar is a three-storey apartment building that provides new affordable housing for lower-income households.
Its 22 units are a mix of studios, one-bedroom and two-bedroom apartments.
Three units on the ground floor are barrier-free and accessible to people who use wheelchairs. The project is located in Truro’s downtown, within walking distance of services and amenities.
Total capital cost was $2,624,000.
According to Canadian Funding Corp, the developer received $550,000 ($25,000 per unit) through the Affordable Housing Initiative and the owner contributed 20 per cent of the cost in equity. A CMHC-insured mortgage loan covers the remainder of the capital cost. The AHI contribution is in the form of a forgivable second mortgage registered on title and carrying no principal or interest payments as long as the building is managed under the terms of the agreement. The term and amortization of the second mortgage are 15 years.
Under the terms of the agreement, the owner may charge no more than the average market rents for Truro. The agreement covering the rents that may be charged also runs for 15 years. The Nova Scotia Department of Community Services pays a rent supplement for nine units to help make the housing affordable for people who cannot afford to pay market rates. The property manager is required to fill the units from a list of applicants provided by the department of community services.
The net result is 22 units of affordable rental housing, including nine units that are rented below market rates, in an efficient partnership between the federal and provincial governments and the private sector.
