A Trillium staff person suggested Places for People share its model for creating and managing affordable rental housing in a small rural community.
Places for People Haliburton County has developed a portfolio of 7 (8th pending) affordable rental units over 11 years, with no government assistance other than rent supplements. What follows is a brief description of the model, which P4P thinks is replicable and particularly appropriate for rural communities.
Haliburton County is cottage country: it’s beautiful. It’s also poor: it has the dubious distinction of being the poorest or second poorest census jurisdiction in Ontario over several censuses. The county has a permanent population of 17,000, spread over 4000 square kilometres (that’s a density of 4 people per square kilometre), that hosts a seasonal population of 4 or 5 times that. About 75% of the tax base is from seasonal properties, which makes it very difficult for municipalities to champion affordable housing. Consequently, there had been no new affordable housing built for several decades when Places for People (P4P) incorporated as a not for profit in 2007, and gained charitable status the following year.
The P4P model has three key elements:
P4P buys existing property and renovates it using community input (kinda like Housing for Humanity without the volunteer management infrastructure)
it selects tenants who intend to use affordable housing as an opportunity to make positive progress in their lives, whatever that means to them
it helps tenants to do so by offering a 2-pronged support service: it puts a small portion of the rent into a Trust Fund which tenants can access on negotiation, and it assigns a ‘coach’ who meets regularly with them to nurture progress toward whatever goals the tenant has set.
Since February 2010, when P4P got into the landlord business, it has served 14 families comprising 20 adults and 39 children. All its units to date are 3- and 4-bedroom family housing in single family homes or duplex properties in villages where normal life is possible, if not optimal, without a private vehicle. (Haliburton County has no urban centres - it has two sizeable villages in which four of the six schools are located, and several smaller settlements. It has no public transportation.) The pending 8th unit is a one-bedroom secondary suite, which will introduce P4P to the population with the longest wait list - 6% of Haliburton’s housing stock is one-bedroom, while 77% of the population are one- and two-person households.
The P4P model has proven effective. Six of the 9 families who have moved on from P4P housing have graduated to home ownership, many with a nice Trust Fund balance in hand. In only one month of 220+ tenant-months has P4P not received the full amount of rent to which it was entitled, demonstrating an important and stabilizing financial management skill. Interestingly, the tenants who have had most difficulty paying rent on time have been in the labour force - which probably says more about the work world than about their skills and ethics.
P4P’s business model is to purchase and renovate a property and then to fund-raise in the community to reduce the debt load to the point where the rent can carry the full cost of the property, at which point it begins to look for the next acquisition. Fund-raising is also an opportunity to raise awareness about the importance of affordable housing in personal and community health: P4P considers housing a foundational determinant of health. Tenants are supported to participate in community events if/as they are willing and able.
P4P inadvertently moved toward a collaborative place-based impact investing strategy that has allowed the acquisition of a portfolio with $750,000+ book value over 9 years, about half of which is paid down. Mortgage on the first property is held by the local Community Development Corporation, the only financial body that would fund a neophyte organization. Subsequent mortgages, however, are held by individuals in the community: they came to P4P with an offer to invest, in all cases motivated by a desire to see their money at work making their community a better place - while getting a reasonable return. Even the first mortgage was made possible by the independent investment of local citizens. The investors to date are year-round residents; P4P has not begun to explore the investment potential of seasonal residents, who tend to be high-asset individuals.
P4P also pragmatically moved into financial partnerships with several sister not-for-profit agencies (e.g., food banks, farmers’ markets) by borrowing their reserve funds, which languished in chequing accounts or short-term GICs earning miniscule interest, for 2-3% on promissory notes of varying lengths, and using the money to buy down more expensive loans. This increased borrowing capacity on existing properties, should it be needed, and operates like a secured line of credit.
At present, P4P is entirely run by volunteers - it has no staff. Some property maintenance functions are out-sourced, but all other program components are carried by board members and other volunteers: they collect rent, do tenant selection and support, supervise and/or do property maintenance, manage the corporation, and fund-raise. The board began to be over-extended about the time the corporation was buying its 5th property, which was located in a corner of the County distant from established community connections (but fulfilling the goal of having properties in each of the four townships that comprise the County). P4P is currently in the throes of figuring out how to make the transition from a volunteer to a staffed model.
Making the move from a hands-on board to a governance board is a complex step.
P4P has promoted that only 2% of fund-raised money goes to administration (mostly D&O insurance; the organization’s ‘office’ is a post-office box and a website - two websites, actually, one for the Highland Yard, its primary fund-raiser); that would change with hired staff, but how much change will the established support base accommodate? How important is the construct of self-sufficiency in motivating P4P’s board, as well as its supporters?
Housing provision is a 7/24 proposition but how many hours of staffing can the current portfolio support, and/or how big does the corporation need to become to afford the hours of staffing it needs to function well? How fast/slow should the transition be? How can the transition itself be funded without creating a dependency on transitional funding?
Currently about half of P4P’s income is from rent, and the remainder from donations and fund-raising. Is this ratio sustainable? Could P4P monetize its successful financial history and social capital by developing a more sophisticated community bond mechanism to increase the rate at which the housing needs of the community can be addressed - perhaps managed by P4P, but perhaps by other organizations where P4P is the fiduciary partner? Might it perform a broader community-foundation function in a community that has oft considered but never proceeded in that direction?
Should / how could P4P share its model with other rural communities with similar challenges and opportunities? Movement in that direction has been serendipitous to date, but could it / should it be monetized? P4P borrowed the model from P4P Orillia (which folded shortly thereafter - P4P learned some important lessons from their experience) and perhaps should pay it forward? P4P has developed a very anecdotal how-to ‘manual’ at the request of a community that is considering the model that it would be pleased to share more broadly.
Places for People is very interested in talking more about what we do and how we do it, and learning from others about how to do it better. Check out (dusty but still serviceable) website www.placesforpeople.ca.