With affordable housing disappearing, one local non-profit is purchasing residential properties to help keep unit prices low with the help of a unique source: the community.
The Ottawa Community Land Trust (OCLT) offers an investment opportunity in the form of community bonds, with the capital then utilized to purchase buildings that either have been or could be used for affordable housing.
It’s a model that has been gaining traction in the non-profit sector across Canada, according to executive director Mike Bulthuis.
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“We have some amazing operators and non-profits and co-ops that are developing and building,” he said. “But there wasn’t really an entity that had its focus on this: how do we raise capital and try to build a model that will allow us to actually acquire some of these multi-unit residential properties, whether they’re for sale or in transition from a private speculative market to community or non-profit ownership.”
The demand for affordable housing, defined as units that cost less than $1,000 a month, has been on the rise for years. But Bulthuis said Ottawa is losing units faster than it can replace them. For every new unit of affordable housing built in the city, Builthuis said about 31 are lost.
With these circumstances in mind, Bulthuis said non-profits in the community housing sector have been looking for ways to scale up. For OCLT, community bonds are part of the solution.
“We have a lot of organizations that have limited equity or limited capacity to grow. So even though we have all these buildings, some of them have significant capital expenditures that need to be made and some simply have their equity locked up,” he said.
“So what the land trust is trying to do is establish an acquisition fund, a revolving fund that gives us flexibility to respond to opportunity. Very few have the capacity to go out and buy an apartment building on our own, but if we pool our assets together, we can do some pretty amazing things.”
A community bond, according to Bulthuis, is an investment product that anyone can purchase, from individuals and small businesses to other non-profits and large corporations.
OCLT’s community bonds, called Housing Forever Bonds, start at $1,000 with no maximum, with a term of three to seven years. Investors receive interest, either as an annual interest payment on their principal, or one large balloon payment at the end of the term.
Last year, the organization sold $3 million worth in community bonds, with 133 investors.
“The idea of pooling your wealth, your assets, in a fund that would help us prevent the displacement of folks, evictions and people losing their housing — I think folks are responding to that message and the idea that by working together, we can actually do something,” said Bulthuis. “There is a significant amount of wealth within our community already and what we are trying to do is create an opportunity to invest that wealth right here, for their neighbours.”
The money from the latest offering of bonds went toward the acquisition of two rental properties, with work underway on a third. Bulthuis said if that deal is closed, the organization will have transferred 46 units from private to community ownership.
It’s a move that he said ensures the units’ ongoing affordability.
“I think ultimately non-profits — within the housing space — we’re not financialized actors,” said Bulthuis. “We don’t prioritize revenue and return to our shareholders of the company itself. Our top priority is to ensure the availability of households affordable to people who need them. We’re trying, like other non-profits, to de-commodify housing.”
Over time, he said the organization is working to build a portfolio that will accrue value that can be put toward the development of more affordable housing.
Bulthuis said the long-term goal is to establish an acquisition fund that will make OCLT a competitive buyer as properties hit the market. He added that that could include office properties and other vacant commercial buildings that may be suitable for residential conversion.
The organization is set to launch a new campaign in September, this time to sell $25 million worth of bonds in partnership with Centretown Citizens Ottawa Corporation.
“If we do this, then we can start to look at larger projects and larger buildings,” said Bulthuis. “Our overall vision is to turn more and more of our lands and our buildings from that kind of segregated (private) market to community ownership. There are a lot of opportunities right now in a softer market that we would love to capitalize on. I think it would only serve to benefit the community.”
