As planned, the fund is armed with $500M that will be distributed to non-profit organizations to help them purchase existing affordable rental housing across British Columbia, with an overall goal of acquiring 2,000 units. This will essentially shield that rental stock from being redeveloped into less affordable housing.
The one-time capital contributions will be limited to just the acquisition of the property, and will not include ongoing funding for operations.
Applicants seeking funding will adhere to a three-stage process.
In the first stage, applying non-profits will be evaluated based on the fund's financial and operational requirements, including their capacity, experience, mission, and more. Those who pre-qualify in this stage will then be able to bring forward an inquiry to the Rental Protection Fund with details regarding the property they are hoping to acquire with the funding. The fund will then assess the property identified to confirm whether it meets the fund's eligibility criteria.
The third and final stage will then see applicants submit a formal acquisition proposal, including their underwriting and a confirmed commitment from their lender of choice.
Acquisition proposals will then be reviewed by the Investment Advisory Committee (IAC), which will be comprised of eight to 10 people with experience in property acquisition, financing, and sustainable management of non-profit housing.
The fund is currently in the process of finalizing the IAC. Two members will be appointed by the Province, while the remaining members will be appointed by the Fund's Board of Directors: Jill Atkey, CEO of the BC Non-Profit Housing Association; Margaret Pfoh, CEO of the Aboriginal Housing Management Association; and Thom Armstrong, CEO of the Cooperative Housing Federation of BC.
Committee members will serve one-year terms, with the possibility for renewal, while members appointed by the Province cannot serve as the IAC Chair.
After the IAC reviews the acquisition proposals, it will then recommend projects to the Rental Protection Fund CEO for a final decision.
In late-May, the three member organizations announced Katie Maslechko as the fund's CEO. Maslechko was most recently the Director of Development at Beedie and also served as a Development Manager at Civic Builders, a non-profit lender and developer in New York. She also chairs the Urban Land Institute's Public-Private Partnership Product Council.
In an interview with STOREYS, Maslechko discusses some of the finer details of how the Rental Protection Fund will work, ways it could eventually evolve, and more.
I'm aware that this probably happened before you joined the fund, but what can you tell me about the development of the concept of the Rental Protection Fund? Were industry stakeholders involved at all?
The fund itself has really been something the entire community housing sector has been advocating for, for many years. In particular, our partners who are overseeing the fund have been a huge voice in all of that advocacy on behalf of their members, who kind of represent the community housing sector across the province. So I think, by way of that, there has been immense amount of consultation and I for one commend the Province and the sector for the collaboration, and the Province putting it in the hands of the community housing sector, so they can continue to leverage that expertise.
I've seen some organizations, such as the Canadian Housing and Renewal Association, push for programs like this, so it's kind of cool that we appear to be somewhat of a vanguard on this front.
Absolutely. We're continuing to see a lot of interest from across the country, kind of watching us as things roll out.
Regarding the properties that will qualify for funding, is that a clear-cut definition? Is there a threshold in terms of the age and/or size? Will it be by the rents in the building?
We've certainly defined some of the fundamental criteria, such as they have to be self-contained units, must be on freehold land, and not currently government-owned, and at risk of significant rent increase or redevelopment. So those things are always going to be fundamental to any property that we consider.
But the other factor here is that we have our criteria, but there's also the matchmaking of the applicants/non-profits' criteria as well, so what may be the right size, scale, location, tenant mix, and rents is going to be highly contextual to their growth plan, their operational capacity, and all those sorts of things. So beyond our criteria, it's really finding the right synergy between property and proponent.
How much of a factor will location be? Will the fund take into account housing needs in various cities?
Location is a big factor in a few ways. One, we want to make sure that we're able to be responsive in how we structure the fund, so that it's equitably accessible across the province, no matter what local market you're operating in. That's a really important factor there. It's highly contextual and we want to continue the conversations we've been having to ensure that the fund can work in all communities across the province, no matter what their size, or geographic region is.
But the other big factor is that I hope to see municipalities also taking a look at this themselves, in terms of their own local communities, the housing needs in those communities, and considering -- in a whole variety of creative ways -- that they may be able to support affordability and the community housing sector in their cities by collaborating alongside the fund and leveraging each dollar that much further.
In terms of the actual dollars, how will the amounts be determined for each application?
I think this is also going to be very specific, application to application, as we're going to be reviewing the acquisition proposals as a whole for their overall impact, and that may necessitate different kinds of contributions for different sorts of circumstances.
Of course, people can do the math of 2,000 units and $500M, so roughly $250,000 per door, so applicants shouldn't necessarily expect to receive more than that, but they also shouldn't necessarily expect to receive that amount either, particularly because we want to ensure that the funding is distributed across the province.
And to that end, one of the key things we'll be looking for as we review the applications is how the applicants leverage the use of those dollars, in terms of the amount per home, the amount of the total cost of the acquisition it's contributing to, the affordability that it's maintaining, and the way they've been able to attract other capital or support.
Back in January, after the Fund was announced, Jill Atkey told me that the fund may consider properties with a commercial component. Is this still the case?
Yes, that is still something we are open to, particularly if it helps the overall community that's being sustained and the operational capacity of the non-profit.
Jill has previously mentioned the possibility of allowing investors to contribute to the fund in exchange for a small return. Is this something that's been finalized?
It's certainly early for that, but there is lots of interest in evolving the fund in a way that would support this, as a means to further leverage the investment the government has already made, so we hope to continue to explore that as others bring forward creative ways that may align with that. Leverage is going to be the name of the game here. We want to encourage that as much as possible.
She also mentioned the possibility of tax breaks for sellers to the non-profits. Is that still a possibility?
That is probably more of a question for the Province, or for the individual municipalities. There are extents to which they can work with their own tax systems and support the community housing sector and acquisitions made through the Fund, so we certainly hope to see that, but on both fronts, it's probably outside our direct control.
Has there been any indication of another round of funding from the government?
Right now we're really just focusing on delivering a really powerful and compelling proof of concept on this. I think $500M is a really meaningful start. It can't be the end in any regard, so we want to ensure that this is a meaningful proof of concept, not only for the potential of additional government funding, but also for other forms of capital that may want to play a role in preservation of affordable housing supply in BC or further beyond the province.
There's been a critique of the Rental Protection Fund that questions the concept of using taxpayer money to buy old buildings that may need more more maintenance. How would you respond to this? What is the counterargument?
Retention and renewal is a big part of this, so a portion of the funding will go to supporting renewal of these assets and ensuring that their useful life is extended, and that they're more efficient -- both from an energy perspective and operation perspective.
But really, the way I look at this is that when it comes to affordable housing, we are already spending taxpayer dollars to provide that, whether it's new supply or preservation in many ways, and even with the renewal that's required for these assets, we are still securing them at an overall cost -- not just the fund contributions -- that is a fraction of what it takes to build them brand new.
And a critical part of what the acquisitions made under the fund do is that they also require no ongoing operating subsidies. They're self-sustaining on their own, with support from the fund at acquisition [only], so they don't require ongoing subsidies in perpetuity. So the overall cost of taxpayer dollars into preservation strategies like this is much more cost-effective. And, again, we need both. We can't just stop here and not produce new supply. We need both. But this is a tool that has proven successful in countless cities around North America and beyond that provides a really meaningful tool in the toolbox.
Once they are acquired with the support of the fund, while they are existing supply, they become secured existing supply that is going to remain affordable, that is going to remain in the non-profit's hands.
On a personal level, you were previously at Beedie on the development side. Do you see any similarities between the two roles? What experiences are you taking from Beedie to the Rental Protection Fund?
I think one of the really unique things about the fund is it's requiring a lot of different segments of our overall housing sector to collaborate together in new ways, and I think that, on a personal level, having the experience I'm fortunate to have on both the non-profit and private sector side, is really valuable in that, because I can kind of place myself in the shoes of all sides of this equation to make sure this process will work for everyone that needs to be involved in order for it to work well.
I was very fortunate to work on some very unique projects at Beedie with some very forward-thinking and innovative companies who were kind of driving forward new ways of doing things, and that's what this is all about too. This is a brand new tool in our housing affordability toolbox. It has not really been innovated up here in Canada before so we have incredibly passionate people on all sides eager to make this solution work, and that's what I love to be a part of as well.