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HOUSING RESEARCH REPORTSummary of Case Studies on Land Transfer Practices for Affordable Housing

This study was conducted for Canada Mortgage and Housing Corporation (CMHC) under Part IX of the National Housing Act. The analysis, interpretations and recommendations are those of the consultant and do not necessarily reflect the views of CMHC.

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Summary of Case Studies on Land Transfer Practices for Affordable Housing

November 2018

Prepared for: Canada Mortgage and Housing Corporation

Prepared by: R.A. Malatest & Associates Ltd.

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Land Transfers for Affordable Housing – Summary of Case Studies R.A. Malatest & Associates Ltd. Canada Mortgage and Housing Corporation November 2018

Executive Summary Canada Mortgage and Housing Corporation (CMHC) contracted R.A. Malatest & Associates Ltd. (Malatest), an independent research firm, to conduct a series of 10 case studies with provinces, territories and municipalities across Canada, examining how public land was transferred to third parties, in support of creating affordable housing. This report summarizes the findings of these case studies, identifying key trends in approaches, best practices and lessons learned. An example of a case study is included in appendix A. Approaches to partnering and selection of site recipients varied among the provinces, territories and municipalities (PTMs) studied. Broadly speaking, however, approaches could be summarized as falling under one of two branches: working with private developers and working with non-profit organizations. PTMs that preferred a private developer approach tended to be regions with high land values and demand for residential units. As a result, private developers in these regions were more likely to be motivated to build affordable housing units within a larger housing development, in exchange for a discount on the land (relative to market prices). Working with private developers allows PTMs to minimize financial losses on the site transfer, particularly when a bidding approach is taken to make the final selection of site recipients. This private developer approach can be used with both sale and lease agreements for land transfer. The second approach, working with non-profit organizations, prioritizes leveraging the skills and experience of existing non-profit housing providers to create housing developments wholly dedicated to providing housing at affordable rental or homeownership rates. PTMs that used this approach were more likely to follow a formal request for proposals (RFP) process, as RFPs allow for PTMs to identify non-monetary scoring criteria, such as past experience in working with vulnerable groups or depth of affordability that the organization would be able to offer to tenants. This approach saw benefits in terms of long-term stability of affordable units, as once a non-profit organization had established and begun operating an affordable housing development, its non-profit mandate allowed the organization to continue operating beyond the “bare minimum” affordability period. Also, such organizations were in a strong position to leverage funding from various levels of government (since they required funding only for ongoing operations and maintenance, not large capital investment). As with the other approach described above, both lease and sale agreements were compatible with this approach to land transfers. Some PTMs leveraged other levels of government in order to more effectively administer land transfers and/or more carefully target supports in areas where they were needed. One PTM, for example, required that CMHC Seed Funding approval be obtained as a qualification for bidding; the use of the CMHC Seed Funding review process was leveraged to reduce the administrative burden on the PTM to conduct in-depth financial and technical reviews of the organizations and their proposal. Many PTMs that took a non-profit approach to eligibility also encouraged or required buy-in from other levels of government, in terms of operating agreements for providing affordable housing on a long-term basis. These approaches successfully leveraged existing programs at other levels of government, to reduce costs and maximize each project’s chances of success.

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Résumé La Société canadienne d’hypothèques et de logement (SCHL) a engagé à contrat R.A. Malatest & Associates Ltd. (Malatest), une firme indépendante d’études de marché, afin de mener une série de 10 études de cas auprès de municipalités, de provinces et de territoires canadiens. Les études portaient sur la façon dont des terrains publics ont été cédés à des tierces parties concourant à la création de logements abordables. Le présent rapport résume les conclusions de ces études de cas, cernant les tendances clés, les pratiques exemplaires et les leçons tirées. Vous trouverez un exemple d’étude de cas dans l’annexe A. Les approches liées aux partenariats et à la sélection des acquéreurs de site varient selon les provinces, les territoires et les municipalités (PTM) étudiés. En résumé, on peut cependant dire que les approches peuvent être catégorisées dans l’un ou l’autre des volets suivants : collaboration avec des promoteurs privés et collaboration avec des organismes à but non lucratif. Les PTM qui préfèrent l’approche de la collaboration avec des promoteurs privés tendent à être des régions caractérisées par une forte demande d’habitations résidentielles et des terrains à valeur élevée. Par conséquent, les promoteurs privés dans ces régions sont plus susceptibles d’être motivés à bâtir des logements abordables dans un grand ensemble de logements, en échange de l’obtention d’un rabais appliqué au prix du terrain (comparativement aux prix du marché). La collaboration avec des promoteurs privés permet aux PTM de réduire au minimum les pertes financières liées au transfert de site, surtout lorsqu’on adopte une approche d’appel d’offres dans la phase finale de la sélection des acquéreurs de site. L’approche des promoteurs privés peut être utilisée dans le cas d’une vente ou d’un bail aux fins d’un transfert de terrain. La deuxième approche – la collaboration avec des organismes à but non lucratif – a pour priorité de tirer parti des compétences et de l’expérience de fournisseurs de logements à but non lucratif pour créer des ensembles entièrement voués à l’offre de logements abordables à louer ou à acheter. Les PTM qui utilisent cette approche étaient plus susceptibles de suivre un processus officiel de demandes de propositions, qui permet aux PTM de définir des critères de notations non monétaires, comme l’expérience de travail auprès de groupes vulnérables ou le degré d’abordabilité que l’organisme serait en mesure d’offrir à ses locataires. Les avantages de cette approche se mesurent sur le plan de la stabilité des logements abordables à long terme, car une fois que l’organisme à but non lucratif s’était établi et avait commencé à exploiter un ensemble de logements abordables, son mandat de but non lucratif lui permettait de l’exploiter au-delà de la période minimale d’abordabilité. De plus, ces organismes étaient en position de force pour tirer parti de financements issus de plusieurs paliers de gouvernement (puisqu’ils demandaient du financement destiné uniquement à l’exploitation courante et à l’entretien, et non pas d’importantes dépenses en immobilisation). Comme dans le cas de l’autre approche décrite ci-dessus, les baux et les contrats de vente sont tous deux compatibles avec cette approche des transferts de terrains. Quelques PTM mettent à contribution d’autres ordres de gouvernement afin d’administrer plus efficacement les transferts de terrains ou de cibler plus prudemment le soutien financier dans des domaines où il est nécessaire. Une PTM, par exemple, a exigé que l’approbation d’un financement initial de la SCHL soit obtenue comme qualification pour soumissionner; on s’est servi du processus d’examen d’admission au programme de financement initial de la SCHL afin de réduire le fardeau administratif de la PTM pour mener des examens financiers et techniques approfondis de l’organisme et de sa proposition. Beaucoup des PTM qui ont opté pour cette approche d’admissibilité fondée sur la collaboration avec des organismes à but non lucratif ont également favorisé le ralliement d’autres ordres de gouvernement, sur le plan des accords d’exploitation pour fournir des logements abordables à long terme. Ces approches ont bénéficié de programmes existants à d’autres paliers de gouvernement, afin de réduire les coûts et de


maximiser les chances de réussite de chaque projet. Ces approches ont bénéficié de programmes existants à d’autres paliers de gouvernement, afin de réduire les coûts et de maximiser les chances de réussite de chaque projet

La SCHL fera traduire le document sur demande.

Pour recevoir une copie traduite de ce document, veuillez remplir la partie ci-dessous et la retourner à l’adresse suivante :

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Table of Contents Executive Summary .............................................................................................................................................. i

Résumé ............................................................................................................................................................... ii

Section 1: PROVINCIAL, TERRITORIAL, AND MUNICIPAL APPROACHES TO LAND TRANSFER FOR HOUSING AFFORDABILITY ...................................................................................................................................................4

Partnering Approaches .............................................................................................................................4

Eligibility Requirements ............................................................................................................................4

Affordability Requirements................................................................................................................5

Land Management Approaches ................................................................................................................6

Approaches to Land Transfer .............................................................................................................6

Approaches to Long-Term Management of Transferred Sites ..........................................................6

Summary ...................................................................................................................................................6

APPENDIX A: CALGARY CASE STUDY ................................................................................................................ A1

Background ............................................................................................................................................ A1

Selection of Sites for Transfer ................................................................................................................ A2

Zoning and Community Liaison .............................................................................................................. A3

Entering into Contracts with Purchasers or Lessees of Sites ................................................................. A3

Managing Impact of Site Transfer on Housing Market .......................................................................... A5

Best Practices and Lessons Learned .................................................................................................... A5


Section 1: PROVINCIAL, TERRITORIAL, AND MUNICIPAL APPROACHES TO LAND TRANSFER FOR HOUSING AFFORDABILITY The introduction of Canada’s National Housing Strategy at the beginning of 2018 has reinvigorated federal government interest in ensuring appropriate, affordable housing is accessible to all Canadians. The National Housing Strategy will incorporate numerous policies and programs to meet this goal. In support of the development of new policies and strategies for delivering affordable housing, Canada Mortgage and Housing Corporation (CMHC) is interested in learning more about best practices in supporting affordable housing projects undertaken by provinces, territories, and municipalities (PTMs). This report focuses on one particular method of supporting affordable housing by PTMs – through transfer of existing public land assets (e.g., surplus land) to organizations that will develop the land and provide affordable housing on the site. The report is based on the findings of a series of ten case studies undertaken with provinces, territories, and municipalities throughout Canada. Each jurisdiction examined in these case studies had different approaches to land transfer for affordable housing – in terms of issues such as how to define affordable housing, transfer mechanisms, length of transfer, and others – but all used the approach of leveraging existing, non-liquid assets of land to partner with external organizations to provide needed housing in communities. The following sections in this report summarize approaches to these different aspects of land transfer. An example of a case study is included under Appendix A.

Partnering Approaches

All of the jurisdictions examined in the ten case studies partnered with external organizations to undertake building of housing units on transferred sites, and subsequent management of those units. The types of organizations that PTMs partnered with, and requirements for the housing built through these partnerships, however, varied considerably. Different approaches are discussed in the sub-sections below.

Eligibility Requirements

Provinces and territories varied considerably in their requirements for recipients of land transfers for affordable housing. Among those that had dedicated programs in place for transferring surplus land to support affordable housing projects, formal processes to select recipients were in place. One jurisdiction used a three-stage brokerage process. The first stage involved soliciting statements of interest from potential bidders. The second stage involved consideration of bidders based on past experience in similar projects, proposed partnering with a non-profit housing provider, and other project-specific considerations; none of these considerations were mandatory “must-haves” but they were used to select top-ranking bidders for the third stage of the process. The third stage was the bidding for sites, at which point the final selection for the site recipient was entirely based on which party offered the highest bid. Another jurisdiction preferred to use Request For Proposal (RFP) processes to select recipients for site transfers, due to the ability to identify and score important, non-price factors involved in providing affordable housing, such as past experience in providing similar housing and ability to serve the needs of vulnerable groups such as the hard-to-house. The remaining provincial and territorial jurisdictions did not have a defined approach for determining eligibility for receiving land transfers; in a couple of cases, these transfers were done on an ad hoc basis, and in another, the province or territory was not involved in providing land for transfer but instead relied on municipalities to identify land and select recipients (the province/territory was instead involved in other supports for building the housing on the site once transferred).


Municipalities varied considerably in their approaches to eligibility requirements for recipients of land transfers. In some cases, a market-led approach was favoured in which for-profit housing developers had the opportunity to bid on land at a discounted rate, in exchange for offering a set proportion of their units at affordable rents or affordable ownership prices. This approach offers a few benefits: it allows municipalities to sell land at a reasonably high price, even if it remains below strictly market value; it promotes involvement of private developers in providing affordable housing; and, it limits the municipality’s ongoing involvement or responsibility for maintaining these sites, which can be a benefit when resources for these types of services are limited. On the other hand, this approach is likely dependent on the level of developer interest and desirability of land; developers may not be willing to bid on sites in regions or municipalities where there is low demand for private-market rental and/or homeownership options. Other municipalities elected to emphasize a non-profit approach to offering affordable housing, by incorporating requirements into their process that recipients be non-profit housing providers. Other relevant issues to ensure the success of the projects and their ability to offer affordable housing are also scored in the bidding process, such as the bidder’s past experience in developing and managing affordable housing and the level of affordability that they intend to offer. Notably, one municipality identified that the ability to use an RFP process, which offers flexibility in assigning which components of a bid will be most heavily weighted, had allowed them to transfer land to a number of well-established non-profit organizations that chose to continue offering housing at affordable rates, even after the initial affordability period required in the transfer agreement expired. Because these organizations’ mandate was to provide affordable and/or social housing, they saw no reason to stop offering housing at a site where they had already invested and had a track record of providing housing to those in need and had already established good relations with neighbours. One best practice that arose out of these case studies was the use of CMHC Seed Funding to pre-screen applicants for these projects. Because municipalities have limited resources to conduct in-depth reviews of housing project applications, a couple of municipalities instead made pre-qualification of developers for CMHC Seed Funding a requirement for bidding on the project. This provided municipalities with peace of mind that the bidders had done their due diligence in planning the project, and had the financial resources and backing to complete the project, without having to do that “deep dive” on each bidder themselves.

Affordability Requirements

While CMHC does have a definition of “affordable” housing – that total shelter costs, including rent or mortgage payments, utilities, and other housing costs do not exceed 30% of a household’s gross income – this definition is not uniformly used by non-federal housing programs. Among the PTMs examined in this series of case studies, nearly all based their definition of affordable on the current market rate for housing in the private market. In these cases, “affordable” was defined as varying proportions of the average private market rate, ranging from 75% of average market rent to 100% of average market rent. Recipients of sites had the freedom to rent or sell units at rates lower than what was defined as affordable by the PTM that they worked with, but not higher. The proportion of units required to be affordable under the transfer agreement also varied. Among those PTMs that took a private-market-heavy approach, a minority of the units in the building (30% or less) were required to meet the definition of affordable. Other approaches, which tended to support non-profit-led affordable housing projects, required that all units in a building be affordable. Notably, there were no


approaches that required a majority, but not all, units in a building be affordable; this may be because of a perception that private-market units in a majority-affordable building would be less desirable to those able to afford private market units, and thus would not easily be rented anyways. Affordability periods also varied considerably; the shortest affordability period specified by a PTM for site transfer was 15 years, and the longest was 99 years.

Land Management Approaches

The purpose of all land transfers examined in this series of case studies was to provide support for the development of affordable housing. The previous section outlined how the various PTMs studied defined affordable housing and what types of affordable housing projects they opted to support. This section discusses the technical aspects of transferring public land to private parties (whether a for-profit developer or a non-profit organization).

Approaches to Land Transfer

Provinces and territories were more likely to offer land for sale than municipalities, although a few also did utilize leases in land transfer as well, when appropriate, for the project. Municipalities tended to prefer lease arrangements over outright sale. Some municipalities provided reasons for preferring this. One municipality prioritized ensuring that their land bank didn’t deplete over time; another was concerned that including the municipality on the land title may not be an effective or enforceable way to ensure that the sites remained affordable over time, and felt that a lease agreement with affordability terms would be more effective. The prices set by PTMs, whether for lease or for sale, were discounted to varying degrees to make offering affordable housing possible on those sites. The discount offered on market price, however, varied considerably. In one case, sites were donated to third-party organizations; in some other cases, the money received by the PTM was maximized by having pre-screened recipients bid on the sites, and the bidder offering the highest price was awarded the site (though all bids remained below market value).

Approaches to Long-Term Management of Transferred Sites

As referenced in the section above, management of site affordability over time was addressed through lease terms in some cases. The specifics of lease terms ensuring affordability of units varied among the PTMs, and penalties incurred if the lessee was ever in breach of the affordability terms ranged from financial penalties requiring payment of the difference between the affordable rate the site had been leased at (for the entire lease period to date) and the market value of the lease, to termination of the lease entirely. Other PTMs used sale mechanisms to ensure affordability over time. Several held a second mortgage on the site, which included terms for penalties in the situation that a housing provider failed to maintain the specified affordable units within the affordability period. Some PTMs also used covenants on the land title to ensure the use of the land for affordable housing purposes. Finally, for housing projects where ongoing support was available (e.g., subsidies for affordable housing units or other financial support), operating agreements were also used in conjunction with these other methods to ensure affordability over a minimum period of time.

Summary


The table below summarizes some of the approaches to land transfers in support of affordable housing that were taken by PTMs in the case studies conducted.

Table 1.1 Summary of Approaches to Land Transfers for Affordable Housing

Issue Approaches Best Practices or Lessons Learned Eligibility Requirements • Private market-centered – private

developers bid on sites to develop mainly private market housing, but are required to offer a proportion of units at affordable prices

• Non-profit-centered – bidders must be non-profit housing providers to be eligible

• Private market approach generates developer interest and minimizes revenue loss for the jurisdiction; may only be a feasible approach in regions where demand for housing and land is high

• Non-profit approach supports existing non-profit providers and tends to ensure longer-term, more stable affordable housing provision

Affordability Requirements • All PTMs used a market-based definition of affordability for these land transfers; none used CMHC’s definition of affordability

• The minimum period of time for maintaining affordable units was 15 years, and the maximum was 99 years

• It remains to be seen whether this market-based definition will be effective in providing for low-end-of-market affordability; given the increasing gap between average wages and ownership / rental options in the private market, a definition of affordability based on market rates may in time prove insufficient

Land Transfer • Lease • Sale

• Lease agreements ensure that the land remains under ownership of the jurisdiction, which may align with long-term land planning and strategy, but means that the PTM must remain in a landlord-lessee relationship for that time period and take on the associated responsibilities

• Sale is more final and reduces responsibility on PTMs long-term, although sale of land can have impacts on land banks (and provinces and territories are required to undertake Indigenous consultation before sale)


Issue Approaches Best Practices or Lessons Learned Maintenance of Affordability Terms • Lease: Affordability terms on the

lease • Sale: Second mortgage on the site

(land) with terms for financial penalties or other recourse if affordability requirements are not met

• Sale: Covenant on land title related to affordability terms

• Either: Ongoing operating agreements

• Terms in the lease agreement are simple to include and relatively straightforward to enforce

• Second mortgages ensure involvement and legal recourse to PTMs in situations where site recipients fail to meet affordability terms


APPENDIX A: CALGARY CASE STUDY

Case Studies for Options for Federal Land and Building Transfer City of Calgary

Background

Calgary, Alberta is the largest city in the province. In 2011, the Canadian Census indicated that of over 1.2 million households in Alberta, more than 439,000 of them were in Calgary. Both Calgary and Alberta generally have higher average household incomes and higher average shelter costs than the average across Canada, although the shelter-to-income ratio (STIR) is comparable across all three. However, the recent downturn in oil and other commodity prices has significantly impacted Alberta, including Calgary; the rental market has become considerably more “renter-friendly” in the past few years. The overall vacancy rate among rental units was 7.0% in 2016, which reflected an increase from 2015, and the average monthly rent fell by 7.6% from 2015 to 2016. These changes are likely due to a downturn in economic conditions, and subsequent out-migration of workers (and their families). Calgary’s Affordable Housing Strategy1 for 2016-2025 identifies a household as in need of affordable housing when the household income is less than 65% of the area’s median income, and spends more than 30% of gross income on shelter costs. The Affordable Housing Strategy report identified 88,000 Calgary households as in need of affordable housing, according to this measure. However, compared to other major Canadian cities, Calgary has a smaller stock of affordable housing units per capita. The City is facing a straining demand for affordable housing, with 4,000 households on the Calgary Housing Company’s waitlist for social and affordable housing; it is likely that overall demand is greater than this. Calgary’s Affordable Housing Strategy includes six key objectives2:

• Get the Calgary community building more housing units, including affordable housing units;

• Leverage City land;

• Design and build new City-owned affordable housing units;

• Regenerate City-owned properties to maintain and improve the supply of affordable housing;

• Strengthen intergovernmental partnerships to leverage funds, programs to more efficiently deliver affordable housing projects; and

• Improve the housing system to ensure that Calgarians using affordable housing have access to homes and services that meet their families’ needs.

The City’s land transfer initiative falls under the second of these objectives by identifying municipal surplus land that would be usable for affordable housing, and offering these sites for sale to non-profit organizations with strong track records as affordable housing providers at below-market values for the purpose of building affordable housing in the City. Under this land transfer program, a variety of types and

1 http://www.calgary.ca/CS/OLSH/Documents/Affordable-housing/Corporate-Affordable-Housing-Strategy.pdf

2 http://www.calgary.ca/CS/OLSH/Pages/Affordable-housing/Affordable-Housing.aspx


levels of affordability are considered; the cut-off for rental housing being considered “affordable” is no more than 90% of the area’s average market rent for a comparable unit, however, deeper affordability was encouraged and long-term care, designated supportive living and affordable homeownership options were also considered. Beyond the key objective of providing surplus City land for affordable housing in Calgary, the land transfer initiative had two additional priorities: 1) to assist and increase capacity of non-profit housing providers in the City, and 2) to add affordable housing units to the City’s stock as quickly as possible, given the low number of units available to the population currently. These two additional priorities had influences on the process of the project. The City of Calgary has concluded its call for submissions, and completed its process of reviewing applications. The call for submissions was a formal process that began with reaching out to various non-profit affordable housing providers to seek feedback on the development potential of the surplus lands before bringing them forward to Council for approval to sell. Once Council approved the sites for sale, The City created objective selection criteria to meet the primary objectives of the program, as well as to align the criteria with The City’s Housing Incentive Program and CMHC’s Seed Funding criteria to enable a streamlined process for accessing lands and funding. The call for submissions was open for a large window of time (3 months), to provide the non-profit applicants with adequate time to gather all the required information and to develop project details, timelines and to confirm funding commitments prior to making a submission. Applications were received on six of the seven parcels. The City notified the successful applicants of five of the sites in early December, but stated that success was pending on whether they provide clarification on some items such as funding in place. Evaluation of applications received on a parcel located in downtown Calgary required a more rigorous review as many of the proposed projects were complex and involved multiple partners. Proposed sale terms were accepted by the successful applicants in January 2018 and The City’s Corporate Approval was granted to sell the six parcels of land to three non-profit affordable housing organizations, including HomeSpace Society, Habitat for Humanity Southern Alberta and Homes for Heroes Foundation. Negotiation of transfers and contracts will be finalized by Q3 2018. The program anticipates that new affordable housing units will be completed mid-2019 up to late-2020.

Selection of Sites for Transfer

The land transfer program at the City of Calgary used a newly-developed GIS mapping tool to identify a shortlist of candidate sites for land transfer. The GIS tool was created by the City to identify potential sites for building affordable housing; although one of its first uses was to identify land for this site transfer initiative. The tool used common criteria identified for siting community / family oriented affordable housing, and was further supported by The City’s 2015 Housing Needs Assessment such as proximity to transit, schools, and grocery stores, to quickly identify sites. The tool identified 110 sites, from the full City surplus land inventory, for further review and selection prior to submission to the City Council. The tool allowed for multiple factors relevant to providing sustainable affordable housing to be quantified and incorporated into the planning process, as well as greatly reduced the need for staff time to review all surplus land sites in the City. A review of the 110 shortlisted sites were further evaluated against additional criteria such as the suitability of the land itself for building (i.e., geological considerations), additional zoning concerns that may arise, site cleanliness or anticipated need for remediation, and other issues related to the feasibility of quickly turning


sites around into affordable housing projects. Several parcels were then circulated to all City of Calgary business units to ensure they were surplus to municipal need and to identify any other development constraints. Once a final list of seven sites was identified, the sites were submitted to City Council for review and approval to be offered for transfer to qualified parties.

Zoning and Community Liaison

A variety of housing types were eligible for proposal under this bidding process, including affordable homeownership, affordable rental housing, assisted living facilities, and long-term supportive care facilities (provided that the latter two met provincial criteria for affordability). For this reason, it was not possible to know in advance what type of housing would be built on the surplus sites, so project-specific public consultation was not undertaken for the seven sites selected. During the creation of the Corporate Affordable Housing Strategy, extensive engagement had been done with both the public and the non-profit housing sector and with a particular emphasis on the strategic approach of municipal programs rather than the specific sites being considered for affordable housing. The final zoning requirements for these sites will not be known until recipients, and their proposed plans, of the land transfers are known. Therefore, while site selection did incorporate consideration of current zoning of these sites, any variances or rezoning applications will be made after the selection of the recipients of the surplus sites. Additional supports for any necessary zoning applications will be available for surplus site recipients (discussed in further detail in Section 1.4 below).

Entering into Contracts with Purchasers or Lessees of Sites

The City of Calgary’s process to solicit project proposals for the surplus sites followed a public invitation for applications rather than a formalized procurement or Request for Proposals (RFP) process. This decision was made primarily due to the additional requirement to create an RFP document with subjective evaluation criteria, which would be subject to procurement legislation; this would have resulted in additional time needed to market the sites, select the winning proponents and would delay the start of projects. Because RFPs are not necessary on land transactions, the City of Calgary instead created a Purchaser Application Form and had the option of releasing the sites for sale and soliciting proposals through a variety of outreach methods (i.e., press release, the Community Housing Affordability Collective, and email campaigns to members of the non-profit and for-profit housing community). A variety of types of affordable housing were eligible under this bidding process, including affordable homeownership, affordable rental housing, and affordable assisted living and supportive housing facilities (affordable as defined by provincial legislation). The bidding process also encouraged submissions from groups serving all types of populations (e.g., families, hard-to-house, Indigenous people, and other groups). A partnership was also created between the City of Calgary and CMHC, whereby projects submitted for consideration in the bidding process were also pre-qualified for CMHC’s Seed Funding program, which provides up to $50,000 (in the form of a contribution that is not repayable) per project for early set-up work such as feasibility studies and development of a business plan (other eligible activities include professional fees, project drawings, designs, specifications, and development permits). The purpose of this requirement in the bidding process was two-fold. First, it allowed the City of Calgary to leverage CMHC’s rigorous review of both financial capacity and project viability for proposed projects; the “deep dive” review that the Seed Funding program is able to do on an applicant’s project was used as a way for the City of Calgary to pre-screen for project proposals that have a sound approach and a good chance of success. Second, the Seed Funding awarded through the program provides an additional source of funding for proposed projects that


can contribute to the project’s overall success. This collaboration between the municipal and federal governments allowed for a stacking of programs to respond to local need and can be a model for future intergovernmental partnerships to fulfill the objectives of the National Housing Strategy. In addition to pre-qualification for CMHC’s Seed Funding Program, projects submitted for consideration in the bidding process are also pre-qualified for The City of Calgary’s Housing Incentive Program. The Housing Incentive Program (HIP) is a limited-term project that covers City fees and expenses incurred on qualifying Affordable Housing developments. The program has two components: a grant of up to $50,000 to cover pre-development activities and a rebate on eligible City development application fees. On May 29, 2017, Council approved the extension of the program to cover expenses incurred until the end of 2019. To date all the program funds have been fully committed, including an estimated $1,800,000 set aside for the surplus site projects. Applications continue to be accepted and placed on a wait list in case more funding becomes available.

Other criteria applied to applications in this bidding process included: years of experience in developing, operating, and managing affordable housing; a minimum of 50% of capital funding in place, including letters of support from financial institutions indicating that they would provide loans to the applicant if their bid was successful; and commitments to a minimum length of time that applicants would keep housing units at these sites affordable. The City of Calgary provides additional support to affordable housing providers through the Customer Coordinator, Affordable Housing (CCAH). The CCAH position was created in 2016 as a resource to both the non-market housing industry and City staff to facilitate and enable the successful development of non-market housing in Calgary. The position was established in direct response to concerns voiced by affordable housing providers regarding the need to expedite the planning approvals timelines for non-market housing applications. The CCAH serves as a point contact for customers, working with them from pre-development stage through to occupancy, to facilitate prioritized review of their development applications. The City of Calgary’s approach to enforcing the purpose of the land transfers – to provide affordable housing – is currently heavily contractual, as opposed to a registered option to repurchase covenant on title. There were two reasons noted for this. First, feedback received from the non-profit community suggested that options to repurchase registered on title are challenging and create a large barrier for these groups to access the value of the land through a mortgage – the possibility that land could be repurchased by the City if the project fell behind expected timelines creates a considerable risk to the project and potential financing. Second, as provincial legislation currently stands related to the Municipal Government Act, any significant terms on the land title may not be transferrable if the property were to be sold; however, the City of Calgary Charter Regulation may change this and the inclusion of some terms (short of an option to purchase) on the land title may be explored should surplus land transfers occur after the finalization and passage of the City Charter. The City may soon have the opportunity to register a housing agreement on title to land transferred under this initiative in the future, but currently it is not clear what that will look like. Contractual terms that are currently in place for these land transfers include the right of the City of Calgary to refuse to provide the housing provider with assistance or payments for future housing projects, to refuse to waive certain municipal taxes for the provider, and other items related to the future financial relationship between the provider and the City; these contractual terms do not include any options for repurchase should the housing provider fail to use the site to offer affordable housing.


Terms and conditions are also applied to the transfer of the site itself; several reiterate the contractual terms stated above (e.g., the City reserving the right to refuse to enter into future contracts with the Purchaser should the goal of providing affordable housing not be met) and transfer of responsibilities and rights (e.g., responsibility for permit applications). Some terms on the transfer also set clear expectations on the use of the property for the medium to long term. For example, the sites are not to be transferred from the Purchaser (unless a joint venture where the Purchaser retains a minimum 50% stake in the property) for a minimum of ten years after the transfer of the site, and the sites are to be used to offer affordable rental housing (if affordable rental housing is the proposed project) for a minimum of 20 years following transfer of the site, with “affordable” defined as no more than 90% of the local average market rent.

Managing Impact of Site Transfer on Housing Market

As noted in Section 1.4 above, the City of Calgary is currently relying considerably on contractual measures to ensure that the surplus sites are used for affordable housing rather than market housing. These contractual measures only impact the rights of the City of Calgary to conduct future business with the housing provider (including the refusal to do so) should the housing provider breach the contract. The City of Calgary may also consider registering housing agreements to the land title. Housing agreements would provide assurance to The City that the sites will be maintained as affordable for a period of up to 40 years, even after an owner re-sells the property, as the Agreement would be a condition running with the land.

Best Practices and Lessons Learned

The highly flexible approach to offering the surplus sites to housing providers was identified as a considerable strength of the program. The City of Calgary representative noted that it allowed staff members to focus on the main priorities of the project – in this case, timeliness and boosting the capacity of non-profit affordable housing providers –. It was suggested that this flexibility could serve a number of priorities if replicated elsewhere, depending on the objectives of the program, such as providing support to housing providers that offer additional social supports, or leveraging existing relationships with housing providers and/or existing affordable housing projects. The partnership between CMHC and The City of Calgary, which leveraged the use of the Seed Funding program, is a practical example of how different levels of government can work together to build affordable housing. This partnership allowed The City of Calgary to add affordable housing stock that responds to local, community needs, and takes into account the expertise of established local non-profit housing providers, while also accessing federal opportunities. Should The City of Calgary take this approach to releasing more City-owned land for affordable housing in the future, an intergovernmental partnership with the Province of Alberta would further enhance the success of the program and is something that The City of Calgary would actively pursue. This project released the seven surplus sites for transfer to be bid on all at once. This proved to have benefits in the application process. By releasing the sites all at once, applicant housing providers were better able to be strategic in their applications; rather than “gambling” on whether a more appropriate site would be available in the future when deciding to submit a proposal for a site, applicants were aware of all the sites that would be available for transfer at the same time. This allowed them to review all the opportunities available and submit applications based on what they believed they would be most successful in offering and ultimately receiving.


A drawback associated with the transfer was around carrying unforeseen land costs, such as snow removal, utilities, security, boarding / fencing, etc., until such time the properties are sold. These were added costs to the program which were not anticipated in its initial conception. In the future, considerations will be made for these costs and budget will be allocated.

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