City budget burdened by expiring Federal support for affordable housing

kingston-city-hallIt’s the time of year for City Councillors to do the difficult but critical job of setting priorities and determining the municipal budget and possible property tax increases.

The federal government’s lack of attention to affordable housing is making this job harder. Here’s why:

Affordable housing is an important issue for our community, an issue that involves municipal, provincial, and federal levels of government. It is in short supply. Moreover, the City of Kingston is legislatively required to provide a certain amount of rent-geared-to-income housing.

The federal government’s support for affordable housing includes support for operating costs and mortgage payments through long term operating agreements (35 to 50 years) which began decades ago. The majority of them will be expiring over the next 15 years or so.

As these operating agreements expire, they are not being renewed. So federal support for affordable housing in Kingston is steadily eroding and those funds must be replaced by spending cuts in the City of Kingston budget, or property tax increases.

These numbers summarize the financial implications for the City of Kingston:

A) Federal funding for affordable housing was $3.58 million in 2008, $3.34 million in 2012, and is budgeted to drop to $3.15 million in 2017.

B) Total subsidy costs to Kingston were $11.93 million in 2008, $12.84 million in 2012 and are budgeted to rise to $14.18 million in 2017.

C) As a result, the City of Kingston taxpayer contribution was $8.35 million in 2008, $9.50 million in 2012, and budgeted to rise to $11.04 million in 2017.

This issue has been presented to Kingston City Council in a report 13-181 to City Council dated May 7, 2013 which contains details about federal support for affordable housing and the financial impact to the City from these expiring agreements.

This phenomenon is not limited to Kingston. It is a national phenomenon. Here is a graph from a paper by Stephen Pomeroy entitled, “Where’s the Money Gone? An analysis of declining government housing expenditures”. It was published in 2007, but the situation has not changed substantially.

The same graph is reproduced in the Senate report ”In from the Margins – A call to action on poverty and homelessness”, authored by Liberal Senator Art. Eggleton and local Kingston Senator, Hugh Segal.

I know that the current Conservative government has increased the federal government debt from about $450 billion to $600 billion (about $4000 more debt per person!) and wants to find cuts to balance our budget by the 2015 election. But I think it would reasonable to simply ask that any federal subsidy for affordable housing from expiring agreements, be replaced with new agreements. That is, at least stop the erosion of federal support for affordable housing. The need is there. Housing is an important need for communities like Kingston.

Surely there is a better way to balance the budget?

Here is a video of my colleague, Liberal MP Mauril Belanger, and Liberal Advocate for Co-operatives speaking to the impact on low-income housing co-operatives:

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Here is a statement I made in the House of Commons:

http://openparliament.ca/debates/2013/10/29/ted-hsu-1/

 

which led to coverage from the Kingston Whig-Standard and reporter Paul Schliesmann:

http://www.thewhig.com/2013/10/31/hsu-sounds-alarm-on-housing-funding-cuts

 

and a reply to from Minister of State for Social Development, Candice Bergen:

Nothing being cut

I read with interest the article “Hsu vows to ‘make noise’ over cuts” and would like to offer comment.

Budget 2013 renewed our commitment to affordable housing. Every year, together with our partners, our government provides support for over 880,000 individuals and families with affordable housing.

With regards to MP Ted Hsu’s assertion that we’re cutting subsidies, the Canada Mortgage and Housing Corporation provided mortgage subsidies for long-term 25-50 year agreements. Those agreements have matured and are coming to their end; they are not being “cut.”

In fact, through our investments, the provinces can choose to use some of the federal funding for maintenance of social housing units where these mortgages have been paid in full.

While Ted Hsu and Justin Trudeau’s Liberals stand up for the legalization of street drugs, our government will continue to stand up for Canada’s most vulnerable citizens.

Hon. Candice Bergen, P.C., M.P.

Minister of State for Social Development

 

Minister Bergen’s reply made me feel like Question Period had come to Kingston and the Islands!

 

Here is my reply which has been submitted to the Whig-Standard:

Dear Editor,

I do not believe that Minister of State for Social Development, Candice Bergen’s reply to the Whig article, “Hsu vows to ‘make noise’ over cuts”, addresses the actual financial impact to Kingstonians.
Minister Bergen said that long term mortgage and operating agreements for affordable housing “have matured and are coming to their end; they are not being ‘cut’.”

Call it “matured” or “cut,” but the bottom line in Kingston is this:

A) Federal funding for affordable housing was $3.58 million in 2008, $3.34 million in 2012, and is budgeted to drop to $3.15 million in 2017.

B) Total subsidy costs to Kingston were $11.93 million in 2008, $12.84 million in 2012 and are budgeted to rise to $14.18 million in 2017.

C) As a result, the City of Kingston taxpayer contribution was $8.35 million in 2008, $9.50 million in 2012, and budgeted to rise to $11.04 million in 2017.

These are the budget numbers from Report 13-181 to Kingston City Council. As City Council sits down  to decide on program cuts or our property tax increases for 2014, they are constrained by this decrease in support from the federal government. All the while, Kingston is mandated to maintain 2003 Rent Geared-to-Income units, and on top of that we continue to have an obligation to do what we can about the tight market for affordable rental units.

Because of the erosion in federal government support for affordable housing, there is direct pressure to raise property taxes or to cut services.

Minister Bergen mentioned federal “investments” that could fund the maintenance of social housing units. She probably refers to the federal Investment in Affordable Housing program, whose funding has been held constant for about six years and certainly does not make up for the slow and steady loss from the expiry of operating agreements and mortgage supports.

Finally, it should be mentioned that this is a national phenomenon and it is poised to accelerate over the next 15 years as $1.5 billion in operating agreements and mortgages expire and are not replaced.  Here is a graph from a paper by Stephen Pomeroy entitled, “Where’s the Money Gone? An analysis of declining government housing expenditures,” prepared for the Canadian Housing and Renewal Association.

This graph was published in 2007 and highlighted in a 2009 Senate report on poverty. The Conservative government has not addressed the problem yet. I’d like to congratulate Minister Bergen on her recent appointment as Minister of State for Social Development. Perhaps her government could take a new look at this problem, which it has known about for several years.

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