One Thing We Can Do About the Ottawa Housing Affordability Crisis

This is a reprint of an article published May 23, 2024 by Neil Saravanamuttoo in the 613 (see original post here). It is reprinted here with the permission of the author.

As community members, we often feel powerless to address the crises hitting our city.

For the housing affordability crisis, there is something we can do.

Be a part of the Ottawa Community Land Trust.

What exactly is a land trust?

A land trust is simply an organization that owns real estate for a specific purpose —other than the usual reason of having a place to live or a place to invest money.

Land trusts exist across the country, and indeed around the world. In Canada, land trusts normally refer to organizations that buy real estate for a social purpose.

It might be charities that purchase land for conservation.

Or it might be a community group that buys a building to preserve a piece of history.

Or it might be non-profits that buy an affordable housing property to keep it as affordable housing forever.

Ottawa Community Land Trust

In this case, the Ottawa Community Land Trust is:

• a not-for-profit organization

• funded by people like you

• that purchases affordable rental properties

• with the intention of keeping them affordable in perpetuity

• before a private developer buys and renovates the property, jacks up the rent and transforms it into more expensive rental housing.

The OCLT is a community initiative started in 2021. It was instigated by a group of housing co-operatives and individuals who care about the loss of affordable housing in Ottawa, and wanted to do something about it.

Its core operations are supported with grants from the community and the Canadian Housing and Mortgage Corporation, as well as membership fees.

It is not affiliated with the City of Ottawa or of any other level of Government.

Kirkwood Ave purchase

OCLT made its first property purchase in 2023. It bought a 6-unit rental building on Kirkwood Ave.

OCLT bought the property to prevent it being acquired and gentrified, with tenants evicted and rents sharply increased.

It financed that purchase through a loan, an anonymous donation and an allocation of “Section 37” funds championed by Ottawa City Councillor Jeff Leiper.

(Section 37 of the Ontario Planning Act, also known as the Community Benefits Charge, are fees that a developer pays in order to increase density on a site beyond what zoning bylaws permit. The City can spend those fees on capital projects such as public spaces, cultural and recreational facilities and affordable housing.)

Housing Forever Bonds

To pay for future purchases, OCLT is issuing a community bond.

A community bond is like a government bond. It pays out interest, of about 4% a year, and returns the original investment after a period of 3-7 years.

A community bond is an investment, not a donation.

You get your money back, with annual interest comparable to what you can currently get on a GIC or government bond.

But unlike other investments, the money is used in our local community.

Early investors in the Housing Forever Bonds include the United Way East Ontario, the Sandy Hill Housing Co-operative and the Lowertown Community Resource Centre. All three that have a legal responsibility to members to effectively manage their organization’s money. They have each chosen to invest a share of their organization’s reserves in Housing Forever Bonds, rather than simply parking those reserves in the usual GICs or government bonds.

OCLT is aiming to raise $1.7 million through the bond, to purchase affordable housing units that end up on the property market. They are raising that money through individuals or organizations investing $1,000 or $5,000 or even $50,000.

Like any investment, there are risks. But importantly, OCLT is purchasing property that has tenants paying monthly rent. So there is a cash flow to service the bonds. A risk management framework is provided in a Business Plan along with other investor materials.

(As an aside, this is not investment advice. Please do your own due diligence.)

Why isn’t the government doing this?

We are quick to put the blame on government for the housing affordability crisis. And that is a valid critique of all levels of government.

The federal government announced a $1.5 billion fund earlier this year, designed to acquire affordable housing units before they get bought up, renovated and removed from the affordable rental stock.

That’s a good start, but the volume of funding required is much larger. Solving our housing challenges is complex and will require inputs from all sorts of different contributors. Including many of us.

I hope that OCLT will be able to use funds raised in the community to leverage a large contribution out of the federal fund when it goes live.

Today’s Victory Bonds

During the First and Second World Wars, the Canadian government issued war bonds, commonly known as Victory Bonds. This was an opportunity for the community to support the war effort.

It feels like we are in a war right now around housing affordability. Middle class families struggling to pay for shelter. People getting evicted so that landlords can renovate and boost rents. Parents doing everything they can to prevent their kids from living homeless.

The Ottawa Community Land Trust is saying we can all be a small part of the solution.

Housing Forever Bonds allows us to invest our hard earned money and benefit the community at the same time.