An update on the collaborative research proforma with Rental Rescue, University of Toronto (U of T), and the Institute inspired by the collaborative Social Finance & Housing event held in Meaford Hall last November. More of the formula for success will be shared in the June virtual event Getting to Affordable!
By Jack Vanderkooy, Co-lead Social Finance & Affordable Housing Group
It started with a “gleam in the eye” for our Social Finance & Affordable Housing Group “what if we can find our local nonmarket/affordable housing developers and support their capacity to do more through social finance?” Who would we work with and how would this accelerate finding solutions to our housing crisis? The biggest thing we struggled with was how could we get the numbers to work and use real case studies in our region.
This all became a reality when we met the principal of Rental Rescue, Krystal Valencia, at last November’s affordable housing event. Rental Rescue empowers Canadian nonprofits to compete in the real estate market through acquisition of existing affordable housing stock, retaining affordable rental rates, and safeguarding tenants at-risk of precarious housing. Krystal had connections with Mr. Bo Pelech, a lecturer and advisor at the Rotman School of Management, U of T. He had a group of students who were keen to dig into this case study. The U of T students’ project was partially funded by a major Canadian builder – EllisDon, who provided valuable information to the students as they developed their financial calculations.
During the winter semester, the students got to work on four identified properties – two in Collingwood, one in Owen Sound and one in Meaford. They did the research as to what could be built on these sites as-of-right, based on zoning bylaws. They also produced a robust pro-forma document which identified the costs related to developing a multi-unit purpose built rental building on each site and identified the cost savings by using modular building techniques vs traditional stick-built structures. They also identified the funding shortfalls and how local investors though a community bond with several tranches could assist in the financing of these projects. A sub-team of the Social Finance & Affordable Housing Group met bi-weekly with Mr. Pelech and his students to discuss their findings and to challenge their assumptions based on the knowledge we held about our unique communities.
Some of the learnings:
- There is a significant funding gap when building affordable housing for the needs in our communities. This can be partially offset by including a mix of market rent and affordable rents in the complex.
- This funding gap can be further reduced through donated land, reduced municipal development charges and other concessions, including mortgage rate discounts from CMHC and through municipal support to streamline processes.
- The remaining funding gap can be made up through a community investment offering, which gets paid out as revenues from the completed project come in.
- A prefabricated solution can significantly reduce soft costs such as design and financing costs during the planning process. By reducing the build and operating costs through efficiencies, the funding gap remains but the ratio of affordable to market rental units can be increased ie – from 20% to 40%.¹
So what did this project actually deliver? Through the diligent work of the students under the supervision of Bo Pelech, we now have a fully developed working paper on four potential projects which can be customized to any available piece of property designated for affordable housing. This information can be made available to non-market developers and builders or not for profit housing groups to use as they determine the potential scale and feasibility of a housing project and what tools are available to fill the funding gaps that exist in our current economy.
We thank Krystal Valencia from Rental Rescue, Bo Pelech and the students: in fact, we encouraged the students to move to our beautiful area, as they would be a great asset to our community!
Asna Akhtar
Asna Akhtar, an MBA candidate at the Rotman School of Management, University of Toronto, specializes in strategic planning and data-driven analysis. Her prior experience includes roles as a Commercial Banking Analyst at Meridian Credit Union, Canada, and as a Business Strategy Manager at Goldrush Capital Services Pvt Ltd in India. Asna excelled in her Bachelor of Business Administration at Amity University, majoring in Finance and Accounting. During her MBA, she engaged in start-up mentorship and contributed to various associations, showcasing her leadership and commitment to diversity in management.
Summary of Work: In her recent work, Asna focuses on analyzing Canadian real estate crowdfunding platforms, assessing investment structures, and streamlining project evaluation templates for enhanced investor accessibility and clarity.
Dania Asahi Ogie
Dania Asahi Ogie is a second-year Master of Science in Planning student at the University of Toronto, having completed her bachelor’s degree in Political Science with a minor in Diaspora and Transnational Studies. Her current research delves into the implications of the rising number of vacant houses and abandoned land in Japan. Beyond her research, Dania has a keen interest in urban planning topics related to housing, climate resilience, equity, and adaptation.
Summary of Work: In her recent progress, Dania has been working on as-of-right development estimations for sites in Collingwood. She is focusing on identifying the necessary development application materials and estimating the time, resources, and costs required for publishing essential reports, contributing to the overall understanding of potential developments in the region.
Jonah Levitt
Jonah Levitt is a first-year graduate planning student with a concentration in Transportation Planning and Infrastructure at the University of Toronto. Prior to pursuing his graduate degree, Jonah worked for two years on the investment team at Maniv Mobility, a global transportation-focused venture capital firm. His undergraduate studies at McGill University included an Honours B.A. in Urban Systems, with a thesis focused on the usage patterns of shared dockless electric scooters.
Summary of Work: Jonah has been actively involved in conducting background research on the soft costs associated with development in the Georgian Bay area. Additionally, he is working on building a skeleton pro forma outline for Meaford and Collingwood sites, serving as a foundation for comparing costs between traditional and pre-fab development.
Genevieve Drouin
Genevieve Drouin is a second-year MSc Planning candidate at the University of Toronto, focusing on incentives and barriers to deep energy retrofit uptake in Toronto’s high-rise residential buildings while ensuring housing security for low-income tenants. Prior to her current degree, Genevieve worked as a sustainable development consultant for government and civil society organizations, overseeing projects related to affordable housing, climate resilience, and inclusive and sustainable cities.
Summary of Work: Genevieve’s recent progress involves compiling a zoning review and development analysis for the Godfrey Apartments site in Meaford. This comprehensive analysis serves as the foundation for understanding as-of-right development possibilities and potential opportunities on the site, contributing to the broader pro forma.
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¹ We define affordable as 80% of Average Market Rents (AMR) which in this case meets the 30th to 40th income decile in our community where 30% of gross household income is applied to housing. For this proforma, that equals monthly rent of $930 for a one bedroom apartment.