To solve the housing crisis, we must have a clear picture of the situation. However, I had all the trouble in the world to find answers to three simple questions, which are nevertheless essential.Posted Nov 1 , 2021
The first: how much social housing does Quebec have? The second: what has been the evolution of the stock of social housing in recent years? The third: which governments finance this housing?
We agree, these are not complicated questions. But because the programs have overlapped over the years, with varied clienteles and objectives, it is very difficult to find your way around. And therefore to propose a clear strategy in this file, to which we devote approximately 1 billion per year, all the same.
“It's a nightmare to fully understand. And it's worse in the region, ”confirms housing consulting analyst Allan Gaudreault.
First, a preliminary question: what exactly is social housing? For ordinary mortals, it is an HLM, owned by the government, or low-rent housing.
But no HLMs have been built in Quebec since 1994, so the HLM stock is stagnant… and in poor condition.
Instead, the state subsidizes low-income tenants, paying their landlord a certain sum, calculated so that the tenant does not pay more than 25% of his income in rent, as for HLM. The money from this Rent Supplement Program (PSL) is paid to landlords in the private market, especially non-profits (housing cooperatives, NPOs, etc.). The funds are paid by the Société d'habitation du Québec (SHQ).
So far, how are you?
Moreover, rather than helping tenants, there are programs that finance the construction of buildings intended for low- or modest-income households. We speak of “help with the stone”, as opposed to “help with the person”.
That said, be careful, a household can both live in a dwelling that has benefited from “help with the stone” and be a 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.
Unfortunately, I have to add a layer. In some cases, poor tenants benefit directly from federal rental assistance, the responsible federal agency, the Canada Mortgage and Housing Corporation (CMHC), tells me.
And remember this: the so-called affordable housing promised by the City of Montreal during the election campaign or even by CMHC has nothing to do with social and community housing. They target renters with, say, middle incomes 2 , 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 a pandemic went virtually unnoticed.
So, how many social housing units in Quebec?
For the purposes of the exercise, let's focus first on “very social” housing, that of HLM-PSL.
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: the SHQ reduced in 2021 the budget it devotes to these accommodations 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 a HLM or a rent supplement (PSL), according to the SHQ surveys. This number is up 15% since 2011 (or 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 comprehensive. To these 109,037 households, we could add those who are settled in housing cooperatives or NPOs which have been the subject of advantageous financing from the State (AccèsLogis, etc.) in recent years. According to my discussions with the expert Allan Gaudreault and the FRAPRU, we could estimate at around 50,000 the number of these dwellings that are not covered by the PSL. Combined total: 150,000 to 160,000 social and community housing units. Couldn't be more specific.
Despite the increase over the past 10 years, there are still some 37,000 households on the waiting list for a low-rent housing or a rent supplement.
The peak was reached in 2016 (41,000). It should be noted that nearly half of the HLM buildings are deemed to be in poor or very poor condition.
By dissecting the figures, we are able to see the difference in nature of the various programs. For HLM-PSL, the average state aid 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 in constant decline 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 a historic low for two years. Federal money, paid by CMHC, represents less than 40% of 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 fiscal year. Among other things, the housing allowance program will go 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 sector (a few million dollars).
And for those who don't know, it should be noted that the social housing promised by municipal politicians is all financed by the SHQ, essentially. So we make promises with other people's money...
The Crown corporation that manages 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's report published in October 2020, which went almost unnoticed in the midst of a pandemic, draws a very severe observation of the work of the Société d'habitation du Québec (SHQ) concerning the AccèsLogis program.
Since 1997, this program has helped finance the construction of buildings as opposed to helping people directly. AccèsLogis is endowed with funds of some 175 million per year out of the 950 million in the SHQ budget 4 .
According to the AG, the SHQ poorly analyzes the needs for affordable housing, does not develop strategies to use the funds wisely and does not exercise the appropriate financial controls of the projects, among other things.
Consequence: housing that should be affordable becomes too expensive, or requires additional subsidies. These additional costs reduce the number of dwellings that can be built with the available funds.
For example, in Montreal, building an affordable home cost $240,000 in 2019, on average, but there was a gap of $196,000 between the cheapest project ($162,000) and the most expensive ( $358,000).
According to the AG, the SHQ's financial controls do not make it possible to ensure that the operating budget for projects is realistic. These inadequate controls have the effect that at the end of their implementation, one-third of the projects sampled had expenses (mortgages and others) much higher than expected.
"Budgetary balance 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.
In a sample of 30 projects, the AG found that the costs were 45% higher than the market value of the buildings, as reflected in their land value.
Surprisingly, the AG found that the SHQ uses two median rent grids 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 day-to-day operations, is lower, and thus undermines profitability.
Affordable housing projects, you should know, are carried out by community organizations, which have to resort to what are called technical resource groups (TRGs) 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 the developer organizations in the area.
The AG thus found that directors of a TSO are also directors of a developer organization, thus exercising a 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 AG recommends that the SHQ ensure that the affordable housing needs for each project are well demonstrated, that costs are better controlled and that the TSOs and developer organizations are not in conflict of interest.
As of this writing, the SHQ had not responded to 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 undertakes to put in place an action plan to respond to them.
1. About 20% have specific issues (mental health, homelessness, domestic violence, etc.)
2. It is for this category of housing financed by the 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 the housing allowance was paid to households who earned less than $15,000 per year, but who had not been able to benefit from an HLM or a rent supplement.
4. I averaged the last three SHQ budgets