Present Crisis: The Expiry of Social Housing Funding in B.C.

The already dire housing crisis in Vancouver is about to worsen with the mass expiration of funding and operating agreements for twenty-five thousand social housing units. By 2033, 99% of operating agreements across the country will have expired if current austerity measures are not reversed, amounting to $3.5b of reduced government expenditures annually.[1] Presently there are no federal or provincial plans to initiate new or extend existing operating agreements. The forecasted federal funding for non-profit housing providers in BC for the year 2030 is zero.[2] This process of funding-expiry has already begun, with tenants experiencing the first wave of this unprecedented withdrawal of public housing funds. Unless a popular struggle takes shape, the entire country will move in the direction of a massive loss of public housing.

Neoliberal policy makers and urban think tanks have framed this mass expiry in optimistic terms. The disappearance of funding is presented as an “emerging opportunity,” to quote a recent report by the BC Non-Profit Housing Association. [3]  In the report, the Association explores how the opportunities of austerity can be “capitalized” upon, paving the way for the implementation of disaster capitalism. As it has often been proven under neoliberal governments, the deployment of a shock becomes the necessary grounds for the introduction of market reforms, with the ultimate goal of privatizing public assets and services.[4] In the case of affordable and non-market housing, the disaster comes in the form of a funding expiry, for which the recommended strategies of “ensuring future viability” entail the introduction of market reforms. In a drastic change in direction, not-for-profit housing operators are slated to be phased out to make way for pro-market operating bodies.

Hitting the poor hardest: The uneven effects of funding expiry

As set out by the terms of their operating agreements, most non-profit housing societies are in one form or another subsidized. 90% of British Columbia’s 41,588 non-profit housing units are funded through ongoing operating agreements with 25 to 50-year terms.[5] Of these, 80% are set to expire within the next 25 year, also bringing associated subsidies to an end, forcing the providers to survive off their rental revenue alone.[6]

Historically, the rationale for the imposition of limited-term operating agreements has been that once the mortgage (the largest expense for housing providers) is paid off, the provider should in theory be self-reliant and able to continue to provide housing at affordable rates. The majority of subsidies are therefore linked to the building’s mortgage and are set to expire simultaneously. However, recent research into the timing and impact of expiring operating agreements in the city conveys a different picture.

To put it simply, the effects of expiring operating agreements will depend upon the type of agreement, the condition of the building and the income and rental mix of tenants. The post-expiry viability of non-profit housing will therefore vary widely across buildings and providers. According to a 2009 BCNHP report only 36% of BC’s non-profit stock are in a “positive” financial state, while up to a quarter of the non-profit housing providers are deemed to be in a vulnerable position and highly unlikely to be viable post-expiry. The remaining 40% are in an indeterminate state, with their viability hinging on whether they implement market reforms to improve their revenues.[7]

Although some providers will be “viable” after their expiration date (partly because they have already undergone harsh neoliberal reforms), what should be stressed is that the providers who are found least likely to be viable post-funding are precisely those who currently house the highest proportion of low-income and precarious households, with the rare exception of a handful of new supportive housing projects.

For example, in Steve Pomeroy’s 2006 study of the impacts of the expiring agreements in Canada found that the Urban Native housing projects in northeastern Vancouver (450 units) are among those least likely to be viable after expiry. The report concludes that unless these projects are provided with extended funding, “many low income urban aboriginal household will be displaced (and potentially made homeless)…In the strong Vancouver market, these properties could be made financially viable but only by changing the income and rental mix.”[8] Pomeroy extends this dire forecast to the majority of Urban Native housing, as well as to the majority of the Public Housing projects in Canada, based on their high proportion of Rent Geared to Income (RGI) tenants and the high proportion of tenants with deep subsidies (low income tenants). These building are also likely to be older and in need of significant repair, further lessening their ability to be viable without continued funding.

Solutions to the crisis put forward by Pomeroy’s report, as well as similar reports by the BCNPHA fall under the common title of “strategies for ensuring future viability.” In each case, recommendations have a decisive neoliberal flair and are equivalent to aggressive privatization strategies. A list of these strategies include: strategic public-private-partnerships (P3), re-development and densification (“leverage of land for highest and best use”), market based development, purchasing market rental properties, social enterprise for-profit ventures, and adjusting rent mix within buildings. These strategies will entail a significant reduction of low-income units through demolitions, re-development, gentrification and a shift towards housing tenants with higher incomes, squarely contradicting the mandate of social housing: to create and maintain affordable housing for all.

The term “viability” originates from the ancient Latin word vitabilis, meaning being capable of life. Yet in the context of expiring operating agreements, its current meaning in policy jargon could not be further from its origins. In the context of neoliberalism’s dogmatic homo economicus, economic viability neglects the basic viability, the capability of life for tenants who are publicly housed, not to mention renters’ more broadly. Ultimately the policy recommendations, increasingly implemented, have been focused on finding ways for non-profits to sustain themselves outside of an ongoing government funding structure, regardless of its effects on tenants.

Devolved responsibility and the economics of pragmatism

The expiry of social housing agreements is coinciding with a shift towards devolved responsibility from the federal to the provincial level. This shift has been ongoing since the federal Liberal budget cuts of 1993 and finalized with the official transfer of responsibility in 2006.[9] This shift has also been accompanied by a shift from government provision towards provision by “civil society,” including for-profit corporations, non-profit societies and charity organizations, such as the Cause We Care and StreetoHome Foundations, with board members entirely from the private financial sector.

By transferring financial responsibility to the non-profit housing organizations and cutting funding itself, federal and provincial governments have been able to shift responsibility while at the same time retaining indirect power through selective (targeted) and competitive project funding. The devolvement of responsibility has also been accompanied by a trend from core long-term funding towards time-limited project based funding.[10] These competitive funding mechanisms make it more likely that the providers will neglect accountability towards tenants as accountability towards “stakeholders” is prioritized, including private stakeholders and investors.

Through these “competitive” funding mechanisms, non-profits are forced to constantly compete for scarce funding in a situation where one non-profit’s gain is another’s loss. As a result, non-profit funding and provision increasingly starts operating like the open market, where efficiency and willingness to negotiate and compromise with the changing agendas of those in power is rewarded with extended lines of funding. Contrary to any competition, however, the result is a decreasing number of providers, leaving a small number of large-scale players who act as unaccountable extensions of government power.[11]

The viability studies previously cited found that the housing providers most likely to be viable post-expiry are large-scale  providers with significant economies of scale. This fact is telling of both the current and future landscape of non-profit housing providers. This is all-too-visible in the DTES, where today a few non-profits have monopoly control of funding for supportive housing projects. According to the 2009 BCNPHA report, the acclaimed benefits of large-scale providers are that they can “better harness market intelligence and develop increased influence over and access to decision makers within both the public and private sectors.”[12] This is undeniably a benefit for those that seek to model the public sector on the private sector but remains a worrisome trend, particularly for smaller housing projects who today find themselves with expiring operating agreements, particularly if they are like Heather Place, positioned within the destruction-path of gentrification.

This free market model for project funding forces non-profit operators into survival mode, breeding pragmatic relationships, opportunism, and sometimes-absurd compromises with the market. In this setting, the privatization of public housing becomes intimately intertwined with the urban gentrification strategy in which non-profit housing providers are playing an increasingly important role. These organizations take on a role as both entrepreneurs and as the main carriers of the social, ethical and ideological aspects of developer-funded gentrification projects such as Woodward’s, 60W Cordova and the proposed Atira and Rennie collaboration of the redevelopment of United We Can, for example.

In each case, the overarching goal of planners has been to create and sustain “social enterprises” and profitable partnerships that can harness the market in place of government subsidy.[13] But the real result can only be ever-greater levels of precarity, bringing in new rounds of gentrification and demolition alongside a new-found charity model for the provision and funding of housing. The new housing for single parents above the Strathcona library, for example, is going to be called “Cause We Care House.” To quote housing activist Jean Swanson:

Imagine living in a place like that if you’re a child, with the stigma of relying on charity. Housing is a basic human right and you can’t really depend on charity for basic human rights. But housing is becoming like food, where poor people have to rely on food banks, and’s going to the be same with housing, its completely inadequate and stigmatizing.

The project funders quote Theodore Roosevelt: “Do what you can, with what you have, where you are.” But without considering why we are where we are today, this form of pragmatism can only exacerbate a worsening situation. Speaking to the Woodward’s redevelopment, which saw the closure of an equal number of affordable housing units in the immediate surrounding area, the Portland Hotel Society has insisted that their decisions are value-neutral when it comes to the balance of affordable housing. “We weren’t political, we were just pragmatic,” states Mark Townsend.[14] But yet gentrification is political because it involves the displacement of one group by another in a society that hasn’t even resolved the crisis of colonization, yet alone acknowledged the blatant contradictions of charity in the midst of a real-estate economy like ours. Until there is gentrification without displacement it is hard to see how pragmatism and philanthropy are not political.

In the most extreme case of blaming the victim, the devolution of responsibilities from federal to provincial levels places not only charity groups and non-profits, but tenants themselves on the hook for evaporating lines of funding, calling on them to “make an opportunity” out of the disappearance of their housing. In a dark and sobering rendition of this logic, Geoff Meggs recently told the tenants of Heather Place to “take some ownership for the future.”[15] Despite the fact that their housing is slated for demolition to make way for market condos, and despite the fact that current rents will be literally doubled, Meggs urged tenants to embrace the vibrant city and make good out of a bad situation: “you have a chance, in my view, to take some ownership and direction over the future…”[16]

The problem is that in the oligopoly-controlled housing market of Vancouver, there is currently no affordable housing available for voluntary relocation, nor is more being built. Tenants who fight back are either deemed blind for not seeing the “new opportunities” or they are called trouble-makers for defending their housing rights.

Strategic privatization: The language of public-private partnerships

Government interventions into the real estate market requires a balance between two contradictory imperatives: on the one hand, the primary need to maintain and sustain the conditions necessary for capital accumulation, and on the other hand, the need to manage potential political consequences.[17] To avoid a confrontation, and in order to provide a sense of ideological closure — if only at a very superficial level — public relations balancing-acts are necessary. Increasingly, the PR of “consensus building” and “partnerships” has latched onto new planning models capable of obscuring the underlying operations at work in the privatization of housing. The model of Public-Private-Partnerships (P3) has proven an instrumental tool for a public relations discourse of “everybody wins,” recommended today as a “strategy for ensuring future viability” in the face of expiring operating agreements.

Proponents of the P3 model espouse a perfect marriage of the public and the private, where each compensates for the other’s shortcomings. What the proponents of P3s fail to acknowledge is the uneven playing field upon which any partnership is built. At Little Mountain the private developer has been given superior rights in the contract and is now using those rights to stonewall the overall project, holding up promised social housing as a make-or-break bargaining chip to earn maximum profits and subsidized rezoning from the city. Despite being demolished in 2009, the removed social housing has not been replaced, and is not slated to be completed for several years down the road as the housing crisis worsens.

Public-private partnerships (P3) have been at the forefront of the push towards “social mix” developments and the privatization of social housing nation-wide. In 2005, a P3 collaboration spearheaded the destruction and gentrification onslaught of Canada’s largest social housing project, Regent Park, Toronto. With the appointment of Olga Illich as the chair of Vancouver’s Affordability Task Force, heading a committee with appointments almost exclusively from the private sector, the use of P3’s are on the rise locally in Vancouver. Not surprisingly, P3s also directly complement the agenda of the developer-backed city hall, given that the expiry of funding opens up news investment opportunities and redevelopment markets. As the expiration of operating agreements proceeds, we can expect more P3 developments to take advantage of the current crisis, emerging from the ruins of privatized social housing.

Conclusion: Learning from past struggles

Despite the neoliberal optimism about post-expiry reforms, nothing could be more alarming and concerning for the under-housed, precariously housed, low-income and working population of BC. At the same time, far from presenting a deterministic chain of events culminating in the expiration of funding, it should be recognized that the very existence of social housing today is a testament to the determined and prolonged fight of past generations.

There would be no social housing in Vancouver today without actions like the post-war occupation of Hotel Vancouver or the squats of the 1940s, events that themselves came on the heels of decades of working-class struggle in all areas of the BC economy, flaring up in the battle of Ballantyne Pier (1935), the uprisings of the relief camp workers, the Vancouver Museum occupation (1935), as well as the Vancouver Post Office occupation (1938). By the time militant pensioners and renters began occupying luxury hotels in Vancouver in the 1940s, the ruling class was forced to concede its power in the demand for social housing. Renters, fed up with the housing crisis and a system of ineffective “market incentives” for developers under the National Housing Act (1938), left Prime Minister MacKenzie King and local officials with little choice but to turn their backs on ruling class housing policies, “fearing public insurrection at the failure of privately funded low-rental housing projects.”[18]

The history of BC tells us that the development of social housing – if not its very existence – is shaped by struggles, not by the seemingly fatalistic mechanisms of the market. But those struggles are the same ones that have been unable to survive in the present, resulting in the gradual loss of the right to housing. Why has so much changed in the span of forty years? As a starting point, recognizing past shortcomings should include recognizing that the necessity of social housing was from the beginning and is still today shaped by colonization and the government’s role in facilitating the advance of market forces through the enforcement and regulation of monopolistic land ownership models. It is for this reason the current crisis represents not only an opportunity to re-ignite old post-war struggles for housing, but to rethink the concept of social housing itself – a concept that, despite its current form of state management through undemocratic non-profit organizations, contains a revolutionary kernel. Through the mass organization of renters it is possible to challenge models of social housing that assume an underlying economy of colonial land ownership, predicated on expropriation and displacement, and instead fight for a model of social housing based on social justice, resident control and the needs of everyone.

Many of us have been told that we are a “precarious generation,” which really means a generation with no future. The future is precarious because our present is held captive by the anarchy of capital, whose destiny is profit. There is no future, because there is no present that we can call our own. Looking towards vanishing prospects, all hope may appear lost. Only if we collectively build a power determined to fight for our homes and a dignified way of life will we have future that we can call our own.



Photo Courtesy of Chris Bevacqua

[1] Steve Pomeroy, ”Was Chicken Little Right? Case Studies on the Impact of Expiring Social Housing Operating Agreements,” Canadian Housing and Renewal Association (2006) pg. ii

[2] Alexandra Moskalyk, “The role of Public-Private Partnerships in Funding Social Housing in Canada,” Canadian Policy Research Networks Inc and Social Housing Services Corporation, (2008) pg. 16

[3] Christine Wenmann, “The financial state of British Colombia’s Non-profit Housing Stock: Current and Emerging Opportunities,” B.C. Non-Profit Housing Association (2009)

[4] Naomi Klein, Shock Doctrine: The Rise of Disaster Capitalism (USA: Random House, 2008)

[5] Haley Mousseau, ”Housing Policy Trends and Implication for BC’s Non-Profit Housing Sector,” B.C Non-Profit Housing Association (2008) pg. 8

[6] Haley Mousseau, ”Housing Policy Trends and Implication for BC’s Non-Profit Housing Sector,” B.C Non-Profit Housing Association (2008) pg. 16

[7] Christine Wenmann, “The financial state of British Columbia’s Non-profit Housing Stock: Current and Emerging Opportunities,” B.C. Non-Profit Housing Association (2009) pg. 4

[8] Steve Pomeroy, ”Was Chicken Little Right? Case Studies on the Impact of Expiring Social Housing Operating Agreements,” Canadian Housing and Renewal Association (2006) pg. 50

[9] Christine Wenmann, “The financial state of British Columbia’s Non-profit Housing Stock: Current and Emerging Opportunities,” B.C. Non-Profit Housing Association (2009) pg. 16

[10] Haley Mousseau, ”Housing Policy Trends and Implication for BC’s Non-Profit Housing Sector,” B.C Non-Profit Housing Association (2008) pg. 13

[11] “A devolution agreement would provide the province with 100 per cent ownership allowing for Public Private Partnership (P3) redevelopment of these sites to ensure that the government’s housing priorities are met.” BC Housing Service Plan (2004/2005 – 2006/2007) pg. 15

[12] Christine Wenmann, “The financial state of British Columbia’s Non-profit Housing Stock: Current and Emerging Opportunities,” B.C. Non-Profit Housing Association (2009) pg. 48

[13] John Irwin, “Home Insecurity: The State of Social Housing Funding in BC,” Canadian Centre for Policy Alternatives BC and Tenants Rights Action Coalition (August 2004) pg. 11

[14] Robert Enright et al, Body Heat: The Story of the Woodward’s Redevelopment,  (Simply Read Books, 2010) pg. 166

[15] Geoff Meggs, Minutes Heather Place Meeting, February 23, 2012

[16] Ibid.

[17] Rachel Weber, “Extracting Value from the City: Neoliberalism and Urban Redevelopment”, Antipode, Vol. 34 Issue 3 (2002)

[18] Rhodri Windsor Liscombe, The New Spirit: Modern Architecture in Vancouver, 1938-1963 (Vancouver: Douglas & McIntyre, 1997) p. 184