Housing math fails to add up

The Star Phoenix July 20, 2013 - It's tough to fault the city's good intentions when it decided to address Saskatoon's shortage of decent affordable housing by investing in 2010 to create a Pleasant Hill Village revitalization project that saw 36 townhouses built in the area around the new St. Mary's School.

However, as civic officials are now finding out, good intentions in the absence of a sound business plan and supportive policy can lead to a costly headache three years later.

Eighteen of the townhouses were bought by non-profit housing groups Quint Development and Cress Housing to be rented to their clients. The city ended up buying the rest under an incentive it offered to get developers interested in building the townhouses - to acquire, at a fixed price, any units that remained unsold after six months.

Sales continuing to be slow, and with only four of its units sold, the city subsequently offered a 10 per cent "equity grant" that could be used toward a down payment on the homes, which sell for between $190,000 and $240,000. Meanwhile, upkeep on the units was costing taxpayers $50,000 a year.

Even the enticement of $19,000 to $24,000 in "free money" attracted only seven buyers, leaving city hall now contemplating a "rent to own" program that a civic report suggests will give the renter $40,000 to put toward the purchase after about three years.

The problem is that the people who want to buy the units "aren't getting over the goal-line at the bank," according to Alan Wallace, the city's manager of planning and development. This raises questions about the assumptions that went into creating the housing units about who might qualify, and whether market studies, if they were done, indicated that those who could qualify for a mortgage in the $200,000 range would want to live there.

The civic report's suggestion that the rent-to-own portion is open to those with incomes in the $42,000 to $52,000 range might also provide a hint as to the problem, considering that only those who earn a minimum of $20 an hour in a full-time job would qualify - not exactly a going rate for many who would be considered low income and in need of affordable housing.

Besides, city council's policy of wanting to spread out social housing around Saskatoon instead of concentrating such developments in the inner city also plays against the sale of the seven Pleasant Hill townhouses, with other real estate developers offering qualifying buyers incentives to locate in newer neighbourhoods that have fewer social issues involving a transient population and poverty.

There's no doubt Saskatoon needs to bring onto the market affordable housing units for seniors, students and lowincome people, and the city should be lauded for stepping up. Yet, as this case shows, some hard-nosed number crunching needs to go with doing the right thing if the city - and taxpayers - are to continue making the investments needed to stabilize neighbourhoods and improve the quality of life in Saskatoon.

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