Halifax officials worry provincial bill will block efforts to collect money for affordable housing

A new housing bill proposed by the provincial government has alarmed officials in the Halifax Regional Municipality who say it removes decisions traditionally made by the city, and may hurt their efforts to collect money for affordable housing.

A provincial bill put forward last week would freeze municipal fees for two years.

That would affect a program the city started in late 2020 called density bonusing. It's used when developers are allowed to increase the size or height of their planned buildings in exchange for paying fees that go into a fund for non-profit housing organizations.

"We're concerned that we may not be able to continue on with grants for affordable housing," city CAO Cathie O'Toole told reporters when the bill was first revealed.

Originally the funds could only be used for projects in the city's urban centre, but in March councillors voted to expand the program to suburban and rural areas.

Seeking answers

At Tuesday's regional council meeting, HRM's director of regional and community policy, Kate Greene, told councillors staff are still trying to understand the exact effect of the province's plans. Greene said her interpretation is that existing density bonusing programs could continue in the regional centre, but could not expand to the rural and suburban areas.

"We have fairly large projects happening in our suburban areas right now, where we would have anticipated creating density bonusing agreements," Greene told CBC on Wednesday.

Michael Kabalen, the executive director of the Affordable Housing Association of Nova Scotia, says his group plans to use money from the fund for renovations at three properties that it bought on Pepperell Street in Halifax, and Pinecrest Drive and Burke Street in Dartmouth.

Michael Kabalen said density bonusing is an important tool for the city of Halifax. (Daniel Jardine/CBC)

"That's really going to be targeted at making really meaningful repairs," he said. "Things like balconies that need replacing, some doors and windows that are falling in disrepair, some roof repair."

The buildings house approximately 36 units where the tenants are paying between $535 and $860 a month.

"The idea is we'll take that funding and do those repairs, and then we won't have to put rents up to cover the costs of those repairs," Kabalen said.

Kabalen acknowledged a developer of market-rate units might see density bonusing as a tax, but he called it a "really important program" the city can use to strengthen the subsidized housing sector.

"We're saying, if you want to build that bigger building, you need to pay into something that creates public good," he said.

About $7 million in fund

City staff shared a breakdown of what was in the fund with the CBC.

As of mid-September, the fund balance was $7,186,548.

Twenty-eight projects have paid a density bonusing fee, with the largest payments being $1.8-million for 6015 Quinpool Road, the Parkland at the Common seniors complex development, and about $1-million for a development on Albemarle Street by Crombie REIT.

The other payments were less than half a million dollars.

Construction workers walk through a job site in Halifax's south-end. (Rob Short/CBC)

Non-profit groups have applied to use the density bonus funds for things like new bathrooms, new roofs or heat pumps in existing buildings, construction of affordable units, or land surveying and preparation work.

Over the last two fiscal years, 10 non-profit housing projects have been approved for funding through the program, but only Compass NS has received the money.  The city has earmarked money for the other groups, including:

• Affirmative Ventures, Dartmouth ($162,636).

• Welcome Housing and the YWCA, Halifax ($180,327).

• Compass NS, Halifax ($472,282).

• North End Community Health Association, Halifax ($163,300).

• The Elizabeth Fry Society of Mainland Nova Scotia, Dartmouth ($24,610).

• Longhouse Housing Co-op, Halifax ($268,932).

• The Affordable Housing Association of Nova Scotia, Halifax and Dartmouth ($472,991).

• The Nova Scotia Housing Trust ($300,000).

• The Roman Catholic Archdiocese of Halifax and Yarmouth ($66,621).

• Dartmouth Non-Profit Housing Society ($133,379).

'I would call it a tax'

Municipal Affairs and Housing Minister John Lohr said Tuesday there are some "minor tweaks" coming to the bill, but overall he's "absolutely committed" to it. He said governments should examine everything they do that adds cost to the construction of units.

Municipal Affairs Minister John Lohr introduced the bill on Oct. 12 at Province House. (David Laughlin/CBC)

"I would call it a tax," Lohr said of the bonuses. He added he is "not aware" of exactly what HRM is doing with the money for affordable housing.

"Maybe they have done something and I just don't know, but as far as I know that just still remains a pot of money that they intend to use somewhere," he said.

Developer Peter Polley, president of Polycorp, said he has not yet paid a density bonus on any of his developments and he supports the new bill.

Peter Polley is the president of Polycorp, a development company based in Halifax. (Shaina Luck/CBC)

He told CBC in an interview he is planning a large development in Herring Cove and believes a density bonusing fee on it could "easily exceed two or three million dollars." And development fees affect the price of units Polycorp sells or rents.

"It's pretty clear that all the costs that we incur need to get recovered from our customers," Polley said.

He said Polycorp is currently targeting customers who can afford about $2,000 a month for housing, but due to interest rates and construction costs the company needs to "struggle very, very hard" to do so.

"I know a lot of people wouldn't say that's affordable housing, but that's still less than what a lot of projects are, which I would call more luxury type living," he said.

Polley said removing fees like density bonusing wouldn't make enough of an impact that his company could deliver housing for the lowest-income families.

"You can't get into that sort of territory without some other sort of significant financial mechanism," he said.

Useful in cities with 'high development pressure'

Ren Thomas, an associate professor of planning at Dalhousie University, said for many years Halifax did not use density bonuses because they only work in areas with "high development pressure."

While other cities have used it to produce units, it is "not the best tool we have" for encouraging affordable housing due to the length of time it takes to produce results, Thomas said.

Ren Thomas is an associate professor who specializes in urban planning at Dalhousie University. (Jennifer Chevalier/CBC)

"Sometimes cities have collected that money from developers for quite a long time before sort of deciding how to use it for affordable housing. So there is sort of a lag time in terms of collecting that money and then deciding how to use it," she said.

However Thomas noted it's not profitable for developers in Nova Scotia to build deeply affordable units, and this is "one of the only ways" for them to contribute directly to housing for those with the lowest incomes.

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