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Should Hamilton's social housing provider cash in on the housing boom?

Hamilton has had a real estate boom, which means a lot of social housing is on land worth drastically more than it was when CityHousing Hamilton first bought it. Now at least one city councillor says the agency should take advantage.

Sam Merulla says the agency should sell single-family homes in lucrative spots and build apartments elsewhere

Hamilton's social housing provider is looking at whether the city's housing boom has created a chance to sell off its housing stock in lucrative locations and build cheaper elsewhere. (Fred Prouser/Reuters)

Hamilton is in the midst of a real estate boom, which means a lot of social housing is on land worth drastically more than it was when CityHousing Hamilton (CHH) first bought it. And at least one city councillor says the agency should take advantage.

CHH has apartment buildings and single-family homes across the city, but never enough money to keep up with rising costs and demand.

Coun. Sam Merulla says the non-profit should sell some of those single-family homes and use the windfall to build more apartments. That way, CHH makes money and more families are served.

You could house three or four families for the return on investment on a single-family home being sold.- Coun. Sam Merulla, Ward 4

"You could house three or four families for the return on investment on a single-family home being sold," said Merulla, who sits on the CHH board.

Bargain-seeking home buyers have created a staggering change in Hamilton's housing market in the last 10 years. In the first quarter of 2015 alone, the average price of a home in Hamilton increased by eight per cent.

CHH, meanwhile, faces a perennial shortage of cash. The agency had a shortfall of $1.8 million in 2014, largely because of increasing utility and maintenance costs, said acting CEO Tom Hunter.

Bed bugs eating into the budget

Its units are aging, and the heating costs of one harsh winter are enough to push CHH into the red. CHH balanced its 2014 budget through an operating surplus from the year before, and energy-saving incentives from Horizon Utilities and Union Gas. 

CHH also struggles with the growing cost of fighting bed bugs. CHH spent $1.75 million on pest control alone in 2014, Hunter said, and all but $100,000 was for bed bugs. The agency has since hired in-house exterminators to try to cut costs.

Tiny homes are a better idea and a movement that has great value.- Renee Wetselaar, affordable housing advocate

CHH is already acting on a variation of Merulla's idea. A new portfolio committee is looking at 13 properties that need repair, and deciding whether to fix them or rebuild in the same spot or another location.

As the committee does that, Hunter said, it factors in the value of the land. It's particularly looking at a MacNab Street property on the waterfront.

Renee Wetselaar, a social planner and affordable housing advocate, takes issue with the idea of taking residents from single-family homes and putting them into apartments. 

'Tiny homes are a better idea'

Larger multi-unit buildings are more expensive to manage, she said, and would add to CHH's maintenance pressures. This is particularly true for tall apartment buildings, which are "dinosaurs," she said. And multi-unit buildings are a downgrade from single-family homes.

"Tiny homes are a better idea and a movement that has great value," she said. 

"You can get the same density with tiny houses or lower-density buildings in areas with many unused parcels of land."

No matter what happens, the idea is to keep social housing in the same neighbourhoods, and the same number of units, Hunter said. And CHH will reinvest any profit into social housing.

Hunter spoke at the annual shareholders meeting of CHH on Tuesday.

Here are some highlights of his presentation:

  • Utilities cost CHH $10.9 million in 2014. That's up from $9.8 million, and $9.9 million in 2012.
  • Maintenance cost more in 2014 too. It ran CHH $13.3 million compared to $12.3 million the year before.
  • Bed bugs have siphoned money from other areas of the budget. In 2014, CHH spent $1.75 million on pest control, and all but about $100,000 of that was on bed bugs.
  • CHH is six months into a new program to try to curb bed bug costs. It has a new crew of about 15 staff who monitor, take calls and prepare units for exterminators. It also has four exterminators on staff. The program costs $1.2 million per year. So far, tenants are pleased and the program is on budget, Hunter says.
  • Despite a waiting list of more than 5,000 families, CHH has a vacancy rate of seven per cent. Those are residences that need to be repaired. 
  • About 16 per cent of rent money owed to CHH was in arrears in 2014 — in other words, the tenants didn't pay their rent. CHH wants to decrease that to 10 per cent this year, which Hunter says is ambitious.

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