Canadian Funding Corporation Reports on Somerset Gardens
April 1, 2009admin Comments OffInnovative financing makes affordable housing possible in a sought-after neighbourhood
Low-income families in Ottawa have few options for purchasing houses: down-payments can be a barrier even if their incomes are stable, and high housing prices are driving people farther from the core, increasing the burden on transportation systems.
Somerset Gardens, an attractive, 11-storey, 119-unit condominium is proof that a development can be 100 per cent affordable in Ottawa’s sought-after downtown neighbourhood, without any ongoing government subsidies—and it’s the result of collaboration among some very different players, notes Martin Lapedus.
Teron Inc. is a private developer that created a subsidiary (Somerset Gardens) dedicated to affordable housing. Teron reduced the selling price to 20 per cent below market and all units are affordable to people within the 40th income percentile. Through an agreement with the City of Ottawa, Teron set up an Assisted Home Ownership Program (AHOP), under which the City and Teron deferred the payment of a total of $11,315 per unit. For purchasers to qualify, they must be within the 40th income percentile and live in the unit. Interest accrues while they own the unit, but is deferred until they sell. If they sell to another qualifying purchaser, the deferral can continue; 42 purchasers have taken advantage of the program. CMHC recognizes this deferral as the down payment and therefore Teron requires the purchasers to contribute only one per cent towards the down payment.
Multifaith Housing Initiative (MHI) is a charitable organization created in 2002. Its members come from Christian, Jewish, Muslim, Hindu, Sikh and Unitarian faith communities. One of its members, St. John’s Anglican Church, sold its parking lot as land for the building of Somerset Gardens.
Action Ottawa, the City’s affordable housing program, provided MHI with a grant towards purchasing 10 of the units, requiring at least six to be rented to people on the city’s Below Market Rent (BMR) Housing Registry. MHI also received funds through the Canada-Ontario Affordable Housing Program Agreement, and was able to leverage more than $200,000 in loans and donations from faith communities and individuals—all of which contributed to creating six affordable rental units at $460 per month. Four units are rented at $793, well below the true market value. Members of St. John’s Anglican Church purchased four additional units that are being rented at subsidized rents—creating several levels of affordability in the same building.
With balconies, lots of natural light, barrier-free mobility throughout, and a rooftop garden managed by a residents’ club, Somerset Gardens blends with the neighbourhood and creates a mix of all ages and family types. While it features only 23 parking spaces for 119 units, it is close enough to the downtown core that most residents do not need a car.