City of Ottawa not hitting affordable housing targets, but has tools to do it: audit

A construction worker uses an articulating boom lift to move a piece of construction equipment at the site of an affordable housing project in the Thornecliffe Park region of Ottawa, on Thursday, Sept. 28, 2023. (Spencer Colby/THE CANADIAN PRESS)

The City of Ottawa's auditor general says the city has not been hitting its affordable housing targets in recent years but it has the tools to do it.

A new audit released by Auditor General Nathalie Gougeon says some of the reasons the city hasn't been hitting its targets are out of its control, but there are still things the city can do to improve the housing situation in the capital.

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"The City has not met its new affordable housing unit goals in recent years, primarily due to funding availability from all levels of government and the capacity challenges in the housing development sector," Gougeon wrote. "Despite this, the City has structures, programs and tools in place to progress this portfolio."

According to the audit, the Housing Services Long-Range Financial Plan has a goal of adding 500 new affordable and/or supportive housing units annually, but the city has been far from reaching that goal in the past several years. According to figures, only 19 new affordable or supportive units were completed in 2020, 222 were completed in 2021, 30 were completed in 2022, and 214 were completed or anticipated in 2023.

"Though the number of new units created is below the targets, progress has been made including the development of a pipeline of projects to be built in the short and medium term. However, without increases in capacity and funding from all levels of government, these targets may not be realistic given the current trends in the housing sector," Gougeon writes.

Among the issues Gougeon's audit found were a lack of formalized collaboration structures, a narrow definition of lands that, when sold, contribute to affordable housing reserves, and a lack of a formal definition of what qualifies as "affordable" housing.

On the latter point, Gougeon notes the city works from several different definitions of what constitutes affordable housing, sometimes more than one at the same time.

Common definitions include housing where the occupant does not pay more than 30 per cent of their gross income on shelter; rent priced at 80 per cent of CMHC average market rent; or even just the CMHC average market rent.

"Without a consistent definition of affordability, the reliability and consistency of monitoring and reporting is reduced, which can negatively affecte decision-making. Inconsistent definitions can also create confusion for stakeholders," Gougeon says.

City missing out on millions through land sales

Gougeon's audit found that the city has a narrow definition of which land sales qualify for transfers to the affordable housing reserves.

The Affordable Housing Land and Funding Policy states that: "when City-owned Land is sold, [the City must] ensure that 25 per cent of any housing development on that land meets the definition of affordable housing or where affordable housing is not provided, ensure that 25 percent of the City’s Net Proceeds be transferred to the Affordable Housing Reserve Fund to fund the development of new affordable housing elsewhere."

However, as Gougeon noted, this only applies to surplus land deemed appropriate for residential development. This means the city only raised $5.9 million between 2018 and 2022 for affordable housing through surplus land sales.

"If 25 per cent of sales were allocated to the Fund from all City and [Ottawa Community Lands Development Corporation] (OCLDC) sales since 2018, an additional $9.8 million would have been transferred and available for affordable housing development," she wrote. "Since the OCLDC’s inception in 2009, if 25 per cent of all sale proceeds had been allocated to the Fund, it would account for an additional $20.8 million available to fund affordable housing."

Departments working in silos

Gougeon says that while there is strong collaboration between affordable housing stakeholders in the city, structures for communication are not formalized, which can lead to some groups working individually.

"Despite affordable housing being one of Council’s top priorities, there is currently no cross-functional oversight body that governs affordable housing developments from the identification of strategic lands to development application stage, through to construction completion and operation, that has the authority to prioritize and expedite projects," the audit says.

Currently, collaboration between departments relies largely on existing relationships between team members and decision-makers. Gougeon says that with legislation constantly changing, lacking formalized structures for making housing decisions can slow down the city's ability to meet its goals.

"Without a holistic governance structure, delays, missed opportunities or foregone revenue could result due to untimely decision making," she said.

Recommendations

Gougeon's audit makes nine recommendations to the city, all of which city management agreed with.

She recommends:

1. The creation of a cross-functional oversight body for affordable housing;
2. Expanding the High Social Impact Projects program;
3. Reviewing the Municipal Capital Facility agreements with non-profit housing providers;
4. Centralizing the tracking of how affordable housing tools are used;
5. Formalizing the affordable housing land strategy;
6. Expanding the types of properties including in affordable housing land funding policy proceeds transfers;
7. Clearly defining "affordable housing";
8. Ensuring all commitments made on reporting against targets or outcomes are reflected in the annual 10-Year Housing and Homelessness Plan Update; and
9. Creating a quarterly affordable housing dashboard that displays key affordable housing indicators.

You can read the full audit on the auditor general's website.