Land Trusts, Community Loan Fund, Community Bonds: Can These Social Finance Tools Accelerate Our Progress On Housing Needs?

The Institute of Southern Georgian Bay > News/Newsletters > Newsletter > Land Trusts, Community Loan Fund, Community Bonds: Can These Social Finance Tools Accelerate Our Progress On Housing Needs?

By Shirley Keaveney, Deputy Mayor, Meaford and member of the Institute’s Social Finance Learning Group. This is an abridged version of Shirley’s remarks at the Institute’s Sustainable, Attainable, Affordable Housing event held on December 1, 2021. You can watch the video of the event here.

Land Trusts, Community Loan Fund, Community Bonds: Can These Social Finance Tools Accelerate Our Progress On Housing Needs?

I’m delighted to have been invited to participate on this panel this afternoon. Being the final speaker, I’ll try to be brief, but I will take time enough to share:

  • A few personal experiences on the topic at hand
  • Some information from our Social Finance Learning Group
  • Some insight on actions from our municipal and county levels of government regarding affordable housing

First of all, I am not going to be shy in saying social finance has been a new concept for me. I am pleased to have been included in the Institute’s regional discussions that have been occurring since last February. I’m happy to represent Meaford in this regard for the benefit of our whole region.

I am coming to understand what social finance is about. There are many definitions, but one that resonates with me comes from a social finance group based in Boston. It reads: Social and Economic Systems should enable all people to thrive. We can create meaningful and measurable change in our communities when governments and markets work together. We must put people first. Social finance spans public, private and social sectors. We need to challenge ourselves and our partners to use funding and data in innovative ways to create lasting impact”.

According to Wikipedia: Social finance is “a category of financial services which aims to leverage private capital to address challenges in areas of social and environmental need. It is a mechanism for creating shared social value”.

As a member of Grey County Council, I can say that affordable housing is the #1 priority for this term of council. I have the privilege of being a member of our Grey County Affordable Housing Committee. This committee made the successful recommendation to the council to support a commitment to dedicate an additional 1% of our county budget to affordable housing. This equates to more than $600,000 annually. The overall affordable housing budget for the county topped $1.1M in 2021.

The need for affordable housing is urgent. I had an email this week that really caught my attention. This is not an uncommon story, but it is one I hope we can eventually find a solution for. A young woman in her early thirties wrote to me to express her frustrations and difficulties with attempting to purchase a house locally. She is educated and has a good job; she’s saved $40,000 for a down payment. She is looking for a home for $400,000 or less. Every house she has offered on has sold way over asking, which she can`t compete with. We need our youth to remain in this area to support our workforce challenges.

In my own business, a fast-food franchise, I lost many staff members because they couldn’t source suitable/affordable accommodations. I found out after the fact that one girl slept in her car for three weeks last January because she had nowhere to stay. It broke my heart.

These experiences brought me to seek out membership in our local Social Finance Learning Group. The dedicated members of this committee are committed to making a positive difference in this area. We meet every two weeks. That tells you something of our desire to make progress.

We met all through July and August last year with a “summer camp” specially focused on housing and social finance. Those discussions were so valuable that, as a Social Finance Learning Group, we`ve decided to focus entirely on creative solutions for affordable housing going forward. The new name for this renewed group of people is the Social Finance & Housing Working Group.

This focus has brought us an invitation to participate in a National Housing Lab run by Social Innovation Canada under the leadership of our first speaker today, Andrea Nemtin. There we will present our ideas for initiatives that could encourage and hopefully excite the development community and those who may be able to participate financially in such projects.

We are exploring a number of initiatives such as land trusts, community loan funds, and community bonds.

A land trust is a legal entity, a quasi-public body, chartered to hold land in stewardship for all present and future, while protecting the legitimate use rights of its residents. Community land trusts are usually developed by non-profit, tax-exempt corporations as one relatively new form of affordable housing provision that could help maximize housing opportunities for low- and median-income families. Community land trusts are one land use planning innovation that exists to allow people to purchase a home while the land beneath is held in perpetuity by the trust. Some trusts require the homeowner to share any home price appreciation with the trust. Through this model, owners can build equity in their homes, but a significant portion of the equity growth stays with the trust and therefore benefits the next homebuyer. The first land trust was created in Canada in 1986. Colandco is located on Toronto Island and was created by the Cooperative Housing Federation of Toronto.

A community loan fund is a non-profit community development financial institution whose purpose is to promote sustainable community development efforts for economically underserved people and communities. Capital from investments and donations is pooled and re-lent to non-profit organizations primarily. Loan and investment funds play an integral role in community economic development strategies aimed at providing affordable housing projects. Successful lending efforts result in economically stronger communities and workforces.

Community bonds are a combination of financial and social returns that satisfy investor appetite and provide funding for a specific cause such as affordable housing. The interest-bearing bonds can only be issued by a non-profit organization. There is growing interest amongst investors for socially responsible investments, which is propelling community bonds into the spotlight.

As an example, the Centre for Social Innovation raised $2 million to buy and restore the CSI Annex in Toronto. The property is now a work and event space for local community groups.

To raise the $2 million, CSI sold a series of $1,000 bonds, or higher, to investors with 4% return for 5 years with interest calculated semi-annually and principal and interest paid upon maturity. The investors would receive roughly $1,219 after the 5 years for each $1,000 invested. The plan was to pay the return using money generated by CSI’s many leasing agreements and other revenue streams. CSI has published a how-to guide that perhaps our group will take a look at. To date, these funds have been very successful with minimal losses to investors. To make these bonds more secure, our municipalities could consider first loss guarantees to investors.

Another opportunity to consider is an ethical investment fund. The objective of an ethical investment fund is to achieve positive returns for investors while prioritizing environmental, social and governance considerations in its investment decisions. Ethical investment is designed to deliver a social impact, defined as investing according to your values and investing in a better community.

The key to all of these financing initiatives is broader community engagement towards solutions that benefit all.

Many times, we have spoken to the need for partnerships and working together. This is a regional problem, and the more minds we can bring to the table, the better chance we have of finding innovative solutions and funding sources. One of the biggest challenges is the location of affordable units. It seems no one is comfortable living next to such a complex. I think affordable housing needs to be redefined; social housing and affordable housing are two different things. Social housing provides supports for people in need, while affordable housing in my mind is homes for people working in service, hospitality, tourism, health care and so on– homes they can afford to rent or own. We like the term being used by our neighbours in The Town of the Blue Mountains: “Housing for All”.