A $300-million aboriginal housing fund created by the Conservative government is falling far short of its promise of creating thousands of new homes on reserves that desperately need dwellings.

A CBC News investigation has found the First Nations Market Housing Fund helped build just 99 homes to date and is nowhere near meeting its ambitious target of 25,000 privately owned dwellings by 2018.

"Frankly, it's taken us a little longer than anticipated," says John Beaucage, chair of the fund's board of trustees. "We're not going to hit that target."

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A dwelling in the First Nations community of Pikangikum in northwestern Ontario shows the need for better housing. The $300-million fund meant to alleviate housing shortages on First Nations across Canada has built only 99 homes. (Coleen Rajotte/CBC)

The fund was created with fanfare by the Harper government in 2008 as a bold new way to help solve the severe housing crisis on First Nations reserves, where populations are booming. The money would be used to backstop bank mortgage loans, allowing eligible applicants to build and own their own dwellings — and someday sell their houses in a thriving housing market.

In the last eight years, the fund has grown to $344 million through non-housing investments, with administrative expenses, including stipends and travel, now costing about $3.6 million a year. But the take-up for actual fund-backed mortgages has been dismally low.

Ken Coates, a professor of public policy at the University of Saskatchewan, says the delays are no surprise, because housing on reserves has long been seen as a treaty right and the responsibility of the federal government, while market-based housing is a new concept that arouses skepticism among some First Nations.

Change of mindset

"For some people, that's not the logical extension of government commitments," he said in an interview. "The fund misunderstood that this was a fundamental change of mindset."

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Public policy professor Ken Coates says bringing market-based housing to Canada's First Nations will take years, because mindsets have to change. (Ken Coates)

Beaucage agrees. "The idea of market has not been there before in the majority of communities across Canada," he said. "There has been some resistance.… We have to be a little patient because it's extremely new."

Many First Nations reserves are remote, rather than near urban centres where housing markets already function, so homeowners on reserves have few assurances they could recoup their investment when it's time to sell.

Mortgages also require a credit history and a steady income, neither of which may be available to residents of reserves, some of whom already pay little or nothing for their existing subsidized housing provided by the band council.

'Things are going to get better.' — John Beaucage, chair of board of trustees, First Nations Market Housing Fund

Coates says it will require much more time and work to get individuals and then band councils to buy into the market housing concept — a "double jump," as he calls it — and even then, it will be only one tool among several to get houses built.

"I never like it when governments announce big pots of money for anything," Coates says. "We rarely make the targets."

A 2012 evaluation by Aboriginal Affairs and Northern Development Canada, recently made public, raised the question of whether the fund is needed at all.

Should be stopped, evaluation says

"There is no definitive evidence that there is a need for a fund explicitly designed for this form of credit enhancement, and no evidence that this fund in particular will meet its stated objectives of increasing home ownership and reducing reliance on federal assistance for social housing," it found.

A housing specialist in Saskatchewan with the Prince Albert Grand Council says the fund was created without proper First Nations consultation, in a typically paternalistic way.

"I think the program should be stopped," Frank Bighead said in an interview. "Nobody consulted with us."

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John Beaucage, chair of the board of trustees for the First Nations Market Housing Fund, says initial targets were unrealistic but the program is gaining momentum. (THE CANADIAN PRESS/Adrian Wyld)

He said $300 million could be spent on housing in more effective ways, and called for a national roundtable to come up with a better plan.

Beaucage acknowledges the fund's initial plans were a "little naive," but says the fund is "starting to gain momentum.… Things are going to get better."

He cites the $5.4 million spent last year on so-called "capacity development," helping to educate First Nations in planning, governance and finance for new market-based housing. That requires much travel across the country, paving the way for perhaps 10,000 to 15,000 homes he says can still be built by 2018, the fund's 10th anniversary.

The fund provides a 10 per cent backstop for housing loans guaranteed by a First Nation, which can then negotiate lower interest rates and other breaks with lenders.

The fund's board of trustees is appointed by the minister responsible for the Canada Mortgage and Housing Corp., Pierre Poilievre, and by Aboriginal Affairs Minister Bernard Valcourt. CMHC manages the day-to-day activities.

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With files from Chris Hall and Jason Ho