The Affordable Housing Development Journey

You need to own the property on which you plan to build, or at least demonstrate a commitment to the property via a letter of understanding or first right of refusal with the current owner in order to obtain funding for pre-development activities. The pre-development phase includes several activities, such as:

1. Business case - market analysis and feasibility studies, including completing a proforma 
2. Identifying infrastructure needs
3. Preliminary building and site plans
4. Permitting
5. Branding and marketing
6. Arranging financing
7. Target residents

Most of these activities can be funded by FCM, CMHC, or RDC, all of which require applications for funding. NBNPHA prepared this Housing funding worksheet template to identify all potential process steps and which organization could fund those activities.

1. BUSINESS CASE

A business case report summarizes all aspects of your development. These reports can be written in-house of subcontracted. Typical report elements include:

• Site selection
• Needs and demands assessment
• Community consultation
• Financial model
• Corporate profile - history, mandate, values
• Portfolio profile - operations, programs and facilities
• Role in providing housing
• Development plan - project overview, zoning, design, permitting, execution
• Financial plan - financing, funding and forecast

2. INFRASTRUCTURE

Water supply, wastewater system, roads, electricity, and communications (Internet, telephone, cable) all are necessary components of your project. Key activities need to include:

• Confirm water supply is in place.
• If yes, the pipe diameter from the water main must be calculated.
• If no, what is the maximum allowable well capacity, or cost to run a line to the property.

• Confirm there is wastewater capacity.
• If yes, what is the cost to run the line, and who will pay cover the cost.
• If no, engage an engineering company to assess the capacity and cost estimate. This process step could take several conversations with the Departments of Health and Environment, and government and municipality.

• Does the development need a new road?
• If yes, it could be a private road, which is less expensive than a public road. However, the development owner will be responsible for maintenance and upkeep.
• If yes and a public road - the municipality and provincial Department of Transportation and Infrastructure (DTI) should be engaged. Note the process of building a municipal street could take at least a year.
• If the development does not need a new road (the preference), then how many parking spaces are required? All municipalities typically have bylaws that require no less than X number of parking spaces per units, usually around 1.25. These requirement could possibly obtain a variance depending on the type of housing being built, i.e. knowing residents have few, if no vehicles.

• Are electricity and Internet access close by?
• If yes - excellent.
• If no - what is the cost and who will pay for getting these utilities to site?

3. PRELIMINARY BUILDING AND SITE PLANS

The preliminary building plans are used to help various stakeholders visualize the project. These are not the final constriction drawings, but do share information and renderings of floor plans, number of units, elevations, 3D renderings. 

The site plan identifies where the budling(s) are located on the property, where and how services run, where parking spaces are located, landscaping, drainage plan, elevations, i.e., ensure the property does not flood, and the elevation of the buildings.

A building less than 600 square metres (6,450 square feet) can be designed by engineers or designers. Architects are needed for designing buildings over 600 square metres, as required of the National Building Code (NBC). For example, a 10-unit affordable apartment building (multi-unit residential building, otherwise known as a MURB) with an average square foot per unit of 900 square feet, plus common space such as hallways, would have an area of about 11,000 square feet. That said, ten single homes or five duplexes on the same property do not require an architect.  Full construction drawings must meet the NBC and local requirements to obtain the necessary building permits.

The preliminary building and site plans are of value to the following stakeholders:

• Owner - help visualize the project and make changes before they get too expensive down the road
• The community - communicate the scale, scope and design of the project
• Funding partners - help visualize the project
• Architect / designer - feedback from the owner with respect to design, size, aesthetics, etc.
• Municipality - understand where the building(s) is/are located on the property with respect to setbacks (the distance a building is allowed to be relative to its property lines) as well as other factors, such as parking spaces, and other bylaw related inputs that may include landscaping (such as number and type of trees).

4. PERMITTING

All projects require a building permit. That said, the process can vary by municipality and/or regional service commission (RSC). Permit information and requirements could include an overall building permit, electrical permit, plumbing permit as well as completion of forms that address water demand, energy efficiency, etc. 

Check with your own municipality to access their building permit requirements. Building permits typically cost about $5 per $1,000 value of a project (this could vary slightly by jurisdiction). For example, a building permit for a $1,000,000 project (say five units at $200,000 per unit) would cost about $5,000. These costs need to be included in the budget.

5. BRANDING AND MARKETING

The reality on today's housing market is that there is already a waiting list for every new rental unit that is built, regardless of demographic. That said, branding the project is important so that potential residents can visualize their new home from renderings and community members can visualize the new property. 

That said, managing the narrative around the project is important as well for all stakeholders - who are the target tenants? What benefits will the project bring to the community? What are the social values of the owner? Etc. A simple website, community consultations and local media engagement should be combined to brand your project.

6. ARRANGING FINANCING

See Section E. Financing below for more details.

7. TARGET RESIDENTS

Who your target residents are can determine potential funding sources.  For example, the SD Affordable Rental Housing Program (ARHP) provides financial assistance to private entrepreneurs, private non-profit corporations (includes off-reserve Indigenous population), and co-operatives for the construction, rehabilitation, and conversion of rental housing projects. Sourced from the SD ARHP website:

Assistance is in the form of a forgivable loan and is based on the cost of eligible work and the number of eligible self-contained units or bed units within a project. The maximum forgivable contribution for projects sponsored by non-profit groups is up to $70,000 per unit and may include 100% of the units within a project. Private entrepreneurs are eligible for a maximum forgivable contribution of up to $60,000 per unit, limited to no more than 50% of the total units within a project. Borrowers will enter into a Mortgage Agreement with this department to ensure that units remain affordable to low and moderate income households. 

Interest free personal development funding loans are provided to assist eligible non-profit & co-operative sponsors of projects to carry out the activities required to develop a project proposal to the point where a commitment of assistance can be made.

Where situations warrant rental subsidies (Rent Supplements) may be provided to ensure units are affordable to low-income households. Tenants qualifying for assistance through the Rent Supplement Program will have their rents reduced to 30% of the adjusted household income. Landlords will receive the difference between the rent paid by the tenant and the market rent agreed to under a rental agreement. 

Projects that receive ARHP funding must comply with the GNB Green Building Policy and Barrier-Free Design Building Code Regulation – Building Code Administration Act.

RESOURCES

• FCM Sustainable Affordable Housing Program
• Housing funding worksheet template
• CMHC Seed Funding
• NB Power Save Energy

Barrier-free specifications that address items such as ramps, accessible bathrooms, kitchens and bedrooms are in place to ensure resident safety and accessibility. Projects that receive federal and ARHP funding are required to meet accessibility specifications. The provincial Barrier-Free Design Building Code Regulation – Building Code Administration Act provides the specifications. NBNPHA is leading a project to convert the regulation into functional drawings to help accelerate the approval of projects that comply with the regulation.

Now that all of the above work is complete, you can start building!