Community bonds proposed as a solution to the housing crisis in Canada

BY PAUL JUNOR

There are no easy answers to the housing crisis that has gripped municipalities, provinces, territories, and towns across Canada. On the federal level, the Liberal government of Prime Minister Justin Trudeau has proposed several initiatives to kick-start the housing market. On the other hand, the rising interest rate by the Bank of Canada in the past few months has significantly increased the cost of borrowing for the average Canadian and contributed to record-high mortgage payments. On the provincial level the PC-led government has proposed opening the Green Belt to ensure that badly needed homes are built by 2027 as the population increases in the Greater Toronto Area.

The lack of affordable housing is an issue that is pervasive across Canada. In the region of Peel, according to a report to City Council on December 21^st, 2021, there were more than 28,000 people on the Region’s Centralized housing waitlist. Martin Reid, Councillor for Mississauga’s Ward 9 states in the March/April 2023 Tough Times newsletter, ”There is a homelessness crisis in Peel. Shelters are at capacity. Approximately 1,000 people are using the shelter system, with countless others living in encampments, on the street or couch surfing.”

There is no doubt that the removal of tax incentives and extra inducements to developers in the 1970s and 1980s had a major impact by drastically reducing affordable rental units. By building financially profitable condominium units instead of rental ones, there was a loss of moderate rental spaces for the average Torontonian.

The downloading of the costs of maintaining affordable housing in municipalities by the PC-led government of Michael Harris in the 1990s did not help either. The resultant transition from municipalities building homes and emphasis on public housing lead to huge problems from Toronto Community Housing which is still dealing with a backlog.

The Ford government passed Bill 23 – The More Homes Built Faster Act in 2023 that intends to build up to 2,200 units of affordable and supportive rental housing by 2027. Then there is the fact that about 7,400 acres of protected greenbelt watershed, and farmland will be destroyed to enable these high-priced residential developments.

On Saturday, June 17^th, 2023, an important event was held inside the Centre for Social Innovation (CSI) at 720 Bathurst Street in Toronto. It was billed as a farmer’s market for community bonds. Tim Nash from Good Investing communicated via email with diverse organizations and invited them to the “Good Investment Fair.” Tim acknowledges the housing crisis and housing is a fundamental human need that could be solved through community bonds.

Many people may be familiar with bonds, which are debts that are loaned to corporations or governments as a way to raise funds. Tim notes, “A community bond works the exact same way, except we are loaning that money to a non profit or co-op in our local community.” The fact that the money remains in the community and you earn a financial return means that it can help the individuals to build assets.

Tim mentioned three community bonds that he personally has acquired from:

• Solar Share
• Centre for Social Innovation
• Sketch

Tim believes that community bonds, which are intended for affordable housing across Canada, will be the most interesting developments in the next few years. Propolis in Kamloops, Places for People in Halliburton and Kensington Market Community Land Trust in Toronto are examples.

Anyone interested in purchasing community bonds should do their homework. They are low-risk investments, although they are riskier than GIC’s or government bonds. There is regular liquidity, duration risk and a high degree of default risk. Tim notes that individuals should invest no more than 10% of their total portfolio and possibly 1% or less initially.

For a list of available community bonds check the website: https:www.goodinvesting.com/impactinvestments