By Liz MacKenzie
Affordable home ownership was a pretty heady idea 20 years ago. There was a lot of talk, talk, talk about various models of ownership, but finally CAHDCO (Centretown Affordable Housing Development Corporation), a sister corporation to Ottawa’s social housing innovator the Centretown Citizens Ottawa Corporation (CCOC), made the decision to stop talking, choose an ownership model, get shovels in the ground and build the first Affordable Home Ownership project in Ontario.
A vacant, city-owned site at the corner of King Edward and Clarence was available. The price was not negotiable and the City only included a flat allowance in the event of contaminated soil. (Yes, the soil was contaminated and yes, the City was responsible and no, the allowance did not cover the cost of remediation and no, the City would not increase their allowance.)
CAHDCO bought the land, hired an architect, settled on a design for 30 units, in 4-storey stacked townhouses, and sent the drawings out for bid. The project was named Clarence Gate. As with CCOC housing, the design brief put emphasis on being a good neighbour providing quality family housing, built within the zoning, with materials compatible with the neighbourhood, and contributing to the urban canopy.
Domicile, a premier contractor and good friend of CCOC came in with the lowest bid. Domicile, of all the builders in Ottawa, understood that these properties had to be built to the highest standard, so owners of modest means would have minimum repairs bills, low heating costs and stable condo fees.
To be eligible to purchase the homes, income criteria were the same as for affordable rental properties. Monthly costs could not exceed 30% of income, which meant that juggling housing costs, down payments, mortgage costs and expected condo fees were balanced on a knife edge.
The shared-equity financing model seemed pretty straightforward. Owners could act in every way as a market homeowner, but when they sold their property CAHDCO would reset the value based on the increase in the Consumer Price Index. The increase in equity would be shared between the owner and CAHDCO.
To keep the homes affordable, new purchasers had to meet the original affordability criteria.
Prices ranged from $94,000 for a one bedroom + den, to $138,000 for 3-bedroom models. When funds ran short, (Remember the extra expense for soil remediation?) it was necessary to sell ten units and seven parking spaces at market prices with no strings attached. That put the Clarence Gate construction budget in the black.
Despite the unusual shared-equity ownership arrangement, the Bank of Montreal agreed to finance the construction and to provide owners with mortgages. However, it soon became clear that buyers of very modest means, some paying off student loans, and many without an established credit rating, faced financing challenges.
A sympathetic mortgage broker helped smooth out financing difficulties for many purchasers who could not meet the “big bank” regulations. Every mortgage approval was a massive cause for celebration.
Over time, cracks appeared in the financial underpinnings of CAHDCO’s shared-equity financing model. Banks consistently balked at renewing mortgages. Property taxes were also an issue because homes were assessed at their market value, not the limited resale value. CAHDCO did not have administrative resources to manage the evaluation, resale and remortgaging issues that faced owners. After some tense consultations, a buy-out option was proposed, which allowed owners to purchase their home outright or continue under the shared-equity agreement.
There are ongoing challenges. Seventeen years ago it was a quieter corner, but now King Edward Avenue is a highway on the doorstep, and the issues with homeless people struggling with mental and health distress have increased exponentially. The looming threat of new projects towering above permitted zoning is ever present as a new development paradigm ravishes Lowertown.
Clarence Gate, “the little condo that could”, will continue to house residents who are engaged in our community and who put kids in our neighbourhood schools. It is a lasting reminder of what housing could have been before intensification spun Lowertown in a completely new direction.