Social housing | 1 billion funds in the dark

To resolve the housing crisis, you need to have a clear picture of the situation. However, I had all the misery in the world to find answers to three simple questions, which are nevertheless essential.

The first: how much social housing does Quebec have? The second: what has been the evolution of the social housing stock in recent years? The third: which governments finance this housing?

We agree, these are not complicated questions. But because the programs have been superimposed over the years, with various clienteles and objectives, it is very difficult to navigate. And therefore to propose a clear strategy in this file, to which we devote about 1 billion per year, all the same.

“It’s a nightmare to fully understand. And it’s worse in the region, ”confirms housing analyst Allan Gaudreault.

First, a preliminary question: what exactly is social housing? For the common people, it is an HLM, owned by the government, or a low-rental housing.

But HLMs have not been built in Quebec since 1994, so much so that the public housing stock is stagnant… and in poor condition.

Instead, the state subsidizes low-income tenants, by paying their landlord a certain amount, calculated so that the tenant does not pay more than 25% of his income in rent, as with low-rent housing. The money from this Rent Supplement Program (PSL) is paid to owners in the private market, especially non-profit (housing cooperatives, NPOs, etc.). The funds are paid by the Société d’habitation du Québec (SHQ).

Until then, how are you?

In addition, rather than helping tenants, there are programs that finance the construction of buildings intended for low and moderate income households. We speak of “aid to the stone”, as opposed to “aid to the person”.

That said, be careful, a household can both live in a home that has benefited from a “stone aid” and be beneficiary of the rent supplement (PSL). ¹. Or rather benefit from another personal assistance program much less generous than the PSL, the Housing Allowance program.

Capiche?

I unfortunately have to add a layer. In some cases, poor tenants benefit directly from federal rent assistance, the responsible federal body, the Canada Mortgage and Housing Corporation (CMHC), told me.

And remember this: the so-called affordable housing promised by the City of Montreal during the election campaign or by CMHC have nothing to do with social and community housing. They target tenants with, say, average incomes², based on complex criteria of comparison with the market.

A nightmare, you say?

One thing is certain, the SHQ was the subject of very severe criticism from the Auditor General of Quebec a year ago for its management of the main social and community housing program, called AccèsLogis. The report published in the midst of the pandemic has gone virtually unnoticed.

15% increase in social housing?

So, how much social housing in Quebec?

For the purposes of the exercise, let us first focus on “very social” housing, those of low-rent housing-PSLs.

While searching, I made two discoveries. First, the number of these dwellings has increased every year for 10 years in Quebec, contrary to what one might think.

Another discovery, less glorious: in 2021 the SHQ reduced the budget it devotes to these housing units for the first time since 2011, which is surprising in the context of the crisis in which we find ourselves.

In 2021, therefore, there are 109,037 households benefiting from an HLM or a rent supplement (PSL), according to the SHQ statements. This number has increased by 15% since 2011 (or by some 14,600 households).

The SHQ devoted 596 million in 2021 to HLM-PSL. This amount has risen sharply since 2011 (+ 48%), but down 3% compared to 2020, which is the first decline in 10 years.

But let’s try to be more inclusive. To these 109,037 households, we could add those who are installed in housing cooperatives or NPOs that have received advantageous state funding (AccèsLogis, etc.) in recent years. According to my discussions with expert Allan Gaudreault and FRAPRU, we could estimate at around 50,000 the number of these dwellings that are not targeted by the PSL. Combined total: 150,000 to 160,000 social and community housing units. Impossible to be more precise.

Despite the increase over the past 10 years, there are still some 37,000 households on the waiting list for an HLM or rent supplement.

The peak was reached in 2016 (41,000). It should be noted that nearly half of HLM buildings are considered to be in poor or very poor condition.

By breaking down the figures, we can see the difference in nature of the various programs. For HLM-PSL, the average state assistance per household is around $ 5,500, compared to only $ 800 for the Housing Allowance program.

Surprisingly, the number of beneficiaries of the Housing allowance program has been falling steadily for five years (32% or 32,800 households). Can this be explained by a tightening of the program or an improvement in the economy? Our questions to the SHQ on this subject remained unanswered.³.

Another observation: funding from the federal government has reached an all-time low for two years. Federal money paid by CMHC represents less than 40% of the funding for programs administered by the SHQ, compared to an average of nearly 50% in previous years.

The bilateral agreement signed in August could raise the bar in the figures for the 2021-2022 financial year. Among other things, the Shelter Allowance program will increase from a maximum of $ 80 to $ 150 per month.

Note that part of the funds for the construction of social housing comes from the community (a few million dollars).

And for those who do not know, let us specify that the social housing promised by the municipal politicians are all financed by the SHQ, essentially. So we make promises with other people’s money …

Harsh criticism of the Auditor General

The crown corporation that manages the funds intended to build social and community housing is doing a poor job, according to a report by the Auditor General of Quebec.

The VG report published in October 2020, which went almost unnoticed in the midst of the pandemic, makes a very severe assessment of the work of the Société d’habitation du Québec (SHQ) on the AccèsLogis program.

Since 1997, this program has helped finance the construction of buildings as opposed to direct aid to individuals. AccèsLogis has funds of some 175 million per year out of the 950 million of the SHQ’s budget⁴.

According to the VG, the SHQ poorly analyzes the needs for affordable housing, does not develop strategies to use funds wisely and does not exercise the appropriate financial controls on projects, among other things.

Consequence: housing that should be affordable becomes too expensive, or requires additional subsidies. These additional costs reduce the number of housing units that can be built with the funds available.

For example, in Montreal, building affordable housing cost $ 240,000 in 2019, on average, but there was a gap of $ 196,000 between the cheapest ($ 162,000) and the most expensive ( $ 358,000).

According to the VG, the financial controls of the SHQ do not make it possible to ensure that the operating budget of the projects is realistic. These inadequate controls mean that at the end of their implementation, a third of the projects sampled had expenses (mortgages and others) much higher than expected.

“A balanced budget is an essential condition for the acceptance of a project, which means that the undervaluation of expenditure favors the acceptance of the project,” writes the VG.

On a sample of 30 projects, the VG found that the costs were 45% higher than the market value of the buildings, as reflected by their real estate value.

Surprisingly, the VG found that the SHQ uses two median rent tables to evaluate projects. The first grid, used for their acceptance, is 10% higher, which increases the projected income and promotes their acceptance. The second, used for current operations, is lower, and thus undermines profitability.

Conflicts of interest

Affordable housing projects, it should be noted, are carried out by community organizations, which have to resort to what are called technical resource groups (GRT) to help them, given their lack of knowledge and experience. The organizations pay fees to the TSOs for their work.

However, the SHQ does not ensure the integrity of the TSOs and their independence vis-à-vis development organizations in the area.

The VG thus noted that administrators of a TSO are also administrators of a developer organization, thus exerting significant influence on the organization. This TSO received $ 3.8 million in fees for the projects, in addition to an annual management fee of $ 380,000.

Another example: an employee of a TSO is also one of the partners of an architectural firm, which has received significant fees for projects from developer organizations.

The VG recommends that the SHQ ensure that the affordable housing needs for each of the projects are clearly demonstrated, that costs are better controlled and that the TSOs and developer organizations are not in conflict of interest.

At the time of writing, the SHQ had not answered my questions about the report. I wanted to know if the VG’s recommendations had been followed since it was published a year ago.

In the report, the SHQ says it “takes note” of the AG’s recommendations and commits to implementing an action plan to respond to them.

1. About 20% have specific problems (mental health, homelessness, domestic violence, etc.)

2. It is for this category of housing financed by CMHC that my colleague Maxime Bergeron recently discovered that a rent of $ 2,225 per month could be considered affordable.

3. In 2019, 80% of housing allowance was paid to households earning less than $ 15,000 per year, but who were unable to benefit from low-cost housing or a rent supplement.

4. I took an average of the last three SHQ budgets