On Wednesday, the Canada Mortgage and Housing Corporation (CMHC) launched a new "frequent builder framework" that could help to accelerate the construction of new homes by allowing applications for funding to be fast-tracked.
The frequent builder framework will allow established builders to access an expedited application process for the Apartment Construction Loan Program (ACLP) and Affordable Housing Fund (AHF), which are two of the largest funding programs under the Government of Canada's National Housing Strategy.
To be eligible, for-profit organizations must have conducted a minimum of $50M of business with CMHC, and loans accessed through a National Housing Strategy program and mortgage loan insurance for multi-unit buildings can count towards that $50M.
For-profit organizations must also meet three of four criteria: own over $1B in multi-residential assets, have a minimum net worth value over $250M, have a debt coverage ratio of 1.30 within their multi-residential portfolio, and have more than $500M of effective outstanding exposure (insurance and lending) with CMHC.
For non-profit organizations and co-op housing corporations to be eligible, they must have conducted a minimum of $20M of business with CMHC and manage a large portfolio — 500 units or more — of rental housing.
For government organizations, the requirement is just to have conducted a minimum of $20M of business with CMHC.
Aside from these requirements, CMHC will assess builders on their financial strength through a credit assessment (except for governments, which are exempt); their operational capacity, ensuring there has been no default within the last 10 years; and their track record when it comes to delivering projects.
Those who are approved will be given "frequent builder" status, which comes with benefits such as having priority assignment of CMHC resources, expedited loan approvals, underwriting and advancing flexibilities, and conditional funding approval for future funding years.
"Across Canada there is an urgent need for both affordable and rental homes," said CMHC in a press release. "One the biggest challenges facing housing providers and the communities they supply homes to, is the time it takes to get new housing through planning and approval stages to being shovel-ready, with construction financing secured. With the significant housing supply shortages the country is facing, it is imperative we support the homebuilding industry to build more homes, faster."
"We are excited to launch the Frequent Builder framework as it will better support housing providers in building the housing we need and do it more quickly," added CMHC President and CEO Coleen Volk, who stepped into the role last month. "This new framework will also support CMHC's new service standard of Affordable Housing Fund and Apartment Construction Loan Program applications receiving conditional approval within 30 days and full approval within 60 days."
Earlier this week, the Government of Canada made three large announcements regarding funding through the Affordable Housing Fund. On Tuesday, the federal government announced $97M for projects across Hamilton, $59M for projects across Montreal, and $172M for projects across Alberta.
