On Apr. 29, Kitchener Council approved a new housing incentive policy with the goal of creating more not-for-profit affordable rental and cooperative housing projects. The city will provide up to $10,000 per unit for qualifying projects, up to a maximum of 50 units ($500,000/project). The grants will be distributed incrementally at key milestones to help advance projects to a state that positions them for other critical capital funding.
“Upfront costs related to development design and approvals have been identified by affordable housing developers as a significant financial barrier to beginning projects,” Tanya Roberts, Project Manager, Planning and Housing Policy Division for the City of Kitchener, said.
“The intention of this program is to help cover upfront, non-capital costs involved in advancing projects to shovel-ready construction,” she said.
Eligible projects must ensure that the applicant is a ‘non-profit housing developer’, incentives only apply to the creation of new affordable dwelling units and the project is in the early stages of concept development through building permit review. Projects with a building permit issued for the proposed new units are not eligible for this program. The grant money can only be applied to certain expenses, including preliminary financial feasibility, land surveys and environmental site assessments.
This is a pilot project that will run from this June until Sept. 1st, 2026. According to the staff report, this program has the potential to support the creation of up to 520 units of non-profit affordable units in Kitchener.
“Many of these projects end up being in the 50-100 unit size so with the goal of achieving 520 units, we’d be hoping to see anywhere from 5-10 projects come to fruition over this time,” Rosa Bustamante, Director of Planning and Housing Policy for the City of Kitchener, said.
The $5.2 million dollar cost for this initiative is funded by the federal government’s Housing Accelerator Fund, providing $3.9 million, and the City of Kitchener will cover the remaining $1.3 million from the city’s affordable housing reserve fund.
“We need to acknowledge that we couldn’t be dealing with this project both in the amount of dollars nor the number of units we are talking about without the very significant contribution of the federal government through the housing accelerator fund for this project,” Kitchener Mayor Berry Vrbanovic said.
Justin Readman, General Manager of Development Services at the City of Kitchener responded to questions from Council about why this is a pilot project as opposed to a permanent one.
“We have limited funding for this program so part of the reason this is a pilot is to see how well it incentivizes new supportive and deeply affordable housing units,” Readman said.
Some councillors wondered if an incentive program would result in more affordable and cooperative housing being built. Numerous delegations at the Apr. 22, 2024 council meeting spoke to the importance of incentives in creating more affordable housing.
Eric Philip, CEO of Thresholds Homes says that incentives are essential to seeing more non-profit organizations become affordable housing builders, too.
“Not-for-profits previously may not have thought of themselves as developers. Now, incentives like this one, allows them to take the key next steps in building affordable housing,” he said.
Ann Biodeau, from KW Habilitation also believes that incentives change what’s possible for non-profits to build.
“As a charity, we decided to get into (building affordable housing) because there were incentives,” she said.
The staff report also notes that this program would not be operating in a vacuum. The City of Kitchener currently incentivizes affordable housing through the Affordable Rental Housing Incentive which waives planning and building application fees. Also, a ‘concierge service’ which was first piloted in 2021 with YWKW’s supportive housing project, eventually became formally established later that year to help navigate affordable housing projects through the approvals process.
“The City did align our definitions with the Development Charges Act so part of the reason for the ‘not-for-profit developer’ terminology is because that’s what required to be exempt from development charges which is one of the key things that usually makes a project viable or not,” Bustamante said.
Scott Higgins, President of HIP Developments, believes that every small step is helpful.
“While the numbers are not substantial in terms of relating the $10k per unit to underlying development and construction costs, it remains a useful program for those trying to build affordable and cooperative housing in Kitchener,” he said.
“The collective results from a thousand small things are equal to one big thing. We still need more, but good intentions followed by incremental action is always how things get done,” Higgins said.
The funds are intended to be used for early upfront costs which can help to advance a project beyond conception to a shovel-ready state. However, there is no guarantee that these grants will necessarily result in completed units.
“These new incentives will provide much needed funding and fill current funding gaps for getting a project off the ground (however) there is still some risk that this funding alone cannot guarantee that a project will advance to a shovel ready state and progress to construction,” staff say.
Therefore, staff recommend that the incentives created through this grant be distributed in stages.
Staff state that priority will be given to deeply affordable and supportive units. As well, the policy encourages the creation of cooperative housing which is generally more affordable than other private rental housing.
Marg Johnston, councilor for ward 8, has lived and worked in cooperative housing and is excited to see Kitchener incentivize that housing model.
“The cooperative housing model is built on member ownership. You all have a say in collective decisions and there are expectations of giving back to the collective. Another benefit is living in a mixed income community and everyone has equal status in the collective,” Johnston said.
Several councilors expressed the need for higher levels of government to contribute more towards supportive, deeply affordable and cooperative housing. Some support may now be available through recent incentives at the federal level such as the elimination of the Goods and Services (GST) tax from new rental apartment projects and co-ops, and the $1.5 billion Cooperative Housing Development Program to support a new generation of co-op housing in Canada.
“The fact that (Council) had many delegations showing their interest in being participants in this is extremely encouraging. Even if it does only help a little, through all the collective steps Council is taking, it will add up,” Johnston said.
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