The business case for affordable housing: what price homelessness
Submitted by Helen Goodland on Mon, 15/05/2006 - 06:56.
The following article in Canada Free Press, called "Homelessness: The Bottom Line" comes from Mark Borkowski president of Toronto based Mercantile Mergers & Acquisitions Corporation. What struck me is that based on the government's own statistics, building affordable housing (a key component of a sustainable urban future) is actually the smartest financial move. Mark is using Toronto data so it would be intersting to compare with Vancouver. Here is what Mark says:
I’m a businessman and I look out for the bottom line. So, what is the cost of homelessness in Toronto? Let’s see now … have a look at these statistics — thanks to the Parkdale Community Legal Services website - that were prepared by the Community Partners Program of the Ministry of Municipal Affairs and Housing in 2005.
Monthly Costs for One Person Type of Housing Cost per Month
Correctional Facility: Adult $3,920
Correctional Facility: Young Offender $8,317
General Hospitalization $4,800
Psychiatric Facility $11,400
Shelter/Hostel: $40 to $90 per day $980 - $2,400
Homeless (health, police, support costs) $4,883
(Ministry of Municipal Affairs and Housing, 2004)
Compare these numbers to the monthly cost of providing a new non-profit unit - $1,100, according to the Ministry. Even the monthly carrying charges of a new condo unit are less than the cost of keeping someone homeless!
According to the City of Toronto’s own statistics, there are 4,798 shelter beds in the city, costing on average $59.88 per night per person, or about $19,966 annually. On average, there are 3150 people using a shelter bed any given night. On the other side, the city says that average rent for a Toronto one-bedroom apartment is $910.00, a month. If you add EHPP, this totals $12,457 per year.
Now, compare the two numbers: $19,666 for a shelter bed $11,631 for a one-bedroom apartment. To the bottom line, this means an annual savings on average of $8,035 per person if that homeless person was moved to that one-bedroom apartment. That’s about 40% savings! And, we are not counting either way for personal allowance needs, transit pass or food subsidies! That’s just over $25 million dollars! That’s the kind of money that really gets anybody’s attention! Now, what would I do with that kind of money?
According to a study commissioned by the Greater Toronto Apartment Association and conducted by Will Dunning Inc., economic researchers, dated May 2005, the average rent for a one-bedroom apartment in Toronto was $888, based on data supplied by CMHC dated October 2004. It reported that about 11,000 apartment units of different sizes are vacant. With social assistance maximum shelter allowance of only $325, the report suggests that with a rent supplement of $563 monthly, the supplement would cost annually $6,756.
Divide that quarter billion dollars by that amount, you can see that we can house about 37,000 individuals. 37,000! If we use the Dunning figures, the rent supplements for that one-bedroom unit times 2,500 for a period of five years amounts to $87,897,000. Over 15 years, that cost would be $292 million. Of course, we have homeless families too, with kids sleeping on shelter basement floors. So, the rent supplements for a two-bedroom apartment would be $507 or $6,084 annually.
It is not so important that some of the numbers that the city and the report supply do not match — the difference being about $1,056 — what really matters is that with a rent supplement program, we can certainly take a huge chunk out of the homelessness total.
Between 1992 and 2004, the number of assisted rental starts has dramatically dropped from 15,667 new homes to 18! Somebody’s got the wrong map. Everywhere I keep reading, everyone’s doing a lot of talking, but no walking. Lots of press conferences announcing big money to build new social housing and to implement rent supplements. Lots of talk.
Let’s cut the Gordian knot! Let’s use that 40% savings and put it to better use, now. In fact, let’s use the whole budget. First priorities should be to the truly homeless, not just those with a place already and wanting to upgrade. Families with children, older individuals and persons with any kind of disability should get first crack at those 11,000 vacant apartment units.
And I’ll bet that this will be a huge incentive for developers to build more units, thus speeding up the process of riding this city of this plague. As a tax-paying businessman, I want better use of my tax dollars to solve problems, not simply to put band-aids on them. And that should be everybody’s bottom line!
Thanks for the insight, Mark. The social dimension of sustianbility cannot be ignored. The SBC's "parents", Ecotrust Canada and Simon Fraser University Centre for Sustainable Community Development are both recognized for their work in advancing community economic development of which housing affordability is a central issue: particularly in the BC lower mainland.
I would love to hear from Vancouver's affordable housing and homelessness experts as to how their experiences compare to Toronto and what the sustainable building community can do to move the agenda forward.
Topics:
City of Richmond's Affordable Housing Strategy
The City of Richmond will be forwarding an affordable housing report to Planning Committee on May 8th, 2007. The report will require that at a minimum, developers will contribute $2.00 / sq. ft. towards an affordable housing reserve fund for town houses and, that a $4.00 / sq. ft. will be levied on higher density projects. For development projects that contain more than 80 units, a minimum of 4 affordable units will be required plus as many other units as possible that can be included so that the maximum number of units is equal to at least 5% of the total buildable area. The details of the strategy have yet to be confirmed, however, the City is planning to implement the new affordable housing strategy by July 1st, 2007.
The strategy will make use of a Density bonus Bylaw and Housing Agreement that should be available on the Richmond website by May 4th, 2007 at 5:00 pm. The January 16th, 2007 report to Planning Committee on a City Wide Amenity Contribution related to this issue can also be found at the above link.