Housing trickling onto surplus federal land

The effort to unlock surplus federal land for housing is further away from welcoming residents than the touted numbers may indicate. A new report from the Auditor General of Canada urges administrators of the Federal Lands Initiative to draw a clearer distinction between units that are planned and those that will actually be built before the end of 2028. However, the auditors conclude that Canada Mortgage and Housing Corporation (CMHC) is making progress on the targets the government has set for the program.

“If well managed, repurposing surplus federal land and buildings can help increase the supply of sustainable, accessible and affordable housing,” the report observes.

The audit primarily focuses on the program’s first phase, launched in 2018 with a budget of $200 million over 10 years and a goal to obtain commitments for 4,000 housing units, including 1,200 that meet affordability criteria. More recently, the 2024 federal budget topped that up with an extra $113 million meant to underwrite an additional 1,500 homes over five years, including 600 affordable units.

As the overseeing administrator of the initiative, CMHC is tasked with securing development proponents for sites that are either in the Canada Lands Company’s inventory or have become available from other federal departments and agencies. These can be sold or leased, at a discount or no cost, for the conversion of existing buildings on the site, new construction or a combination of those two activities.

A range of non-profit, community-based and Indigenous housing providers are encouraged to participate. Under phase one, there are also expectations that:

• all new housing will meet stipulated energy performance standards;
• projects will be barrier-free and reflect universal design principles, and at least 20 per cent of units will comply with CSA and Accessibility Standards Canada’s standards for accessible design for the built environment; and
• at least 30 per cent of units will be available at no more than 80 per cent of median market rents for a minimum of 25 years.

As of Sept. 2024, the auditors found that CMHC had secured commitments for 3,946 units. Thus far, 309 units have been built; 1,642 are expected to built by 2027-28; and 1,995 are slated to be built after that time period. The auditors also quibble with some double-counting related to 856 units that one proponent had agreed to build under another federal program, but have been included in CMHC’s tallies.

Although CMHC’s mandate is simply to obtain commitments, not completed units, the auditors recommend a more detailed breakdown of statistics be made available on a quarterly basis. They suggest it would be in the public interest to report: the number of units built and occupied; the number of units that have been delayed; and the number of units linked to joint agreements that are affiliated with other government housing programs.

On the affordability front, the auditors conclude the program is providing little opportunity for low-income households to attain adequate accommodation for no more than 30 per cent of their monthly income. The designated threshold (no more than 80 per cent of the median rents in the regional marketplace) exceeds what Statistics Canada classifies as affordable, and there is also something of a misalignment between the project locations and the markets with the highest demand for affordable housing.

The program targets a range of housing types, including shelters, supportive and transitional housing and affordable ownership housing, but successful proponents have thus far been rental housing providers. The program allows for mixed-income tenancies and mixed-use developments, provided the commercial component accounts for no more than 30 per cent of gross floor area, which may be key to long-term project viability.

“CMHC officials told us that they are limited by the location of available government properties that are brought forward to be leveraged for housing, and these may not always be in areas with the greatest core housing need,” the report states. “CMHC officials told us that because the Federal Lands Initiative provides land at a discounted price but does not provide continuing financial support, CMHC had difficulty accommodating different projects along the housing continuum.”

The report concludes that targets for energy efficiency and accessibility are being met. It also commends CMHC’s direct engagement with Indigenous communities in areas where surplus federal land became available.

As part of the program review, auditors interviewed five of the seven Indigenous participants and learned that all were “generally pleased” with CMHC’s outreach efforts, Two confirmed they would be interested in participating again in the future, while three outlined difficulties meeting requirements for raising capital and producing project budgets before gaining access to funds.

“They also identified the CMHC’s legal framework for the acquisition of property as complex to navigate. These groups indicated the need for more support during the application, contracting and project management processes,” the report advises.

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