Ottawa pledges $2-billion in low-cost loans for new B.C. housing effort

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The federal government will help boost British Columbia’s pioneering rental-housing construction program with $2-billion in low-cost loans for builders, doubling the amount of construction-loan money the province had previously committed.

Prime Minister Justin Trudeau formally announced the support in Vancouver on Tuesday, saying it will help spur 8,000 to 10,000 new homes through the BC Builds program launched last week. Mr. Trudeau said Premier David Eby’s efforts to increase housing supply were the spark for the federal government’s move.

“This is exactly the kind of visionary, progressive housing solution that people need. B.C. is providing $2-billion in low-cost loans so we can build more homes for the middle class faster. The federal government is now doubling that funding.”

The BC Builds program, which is unlike anything elsewhere in Canada, will see the province provide construction financing and some other targeted incentives to help many different kinds of groups – non-profits, Indigenous governments, private developers, church organizations – to build a new kind of more affordable housing in the middle ground between the two options that have traditionally existed.

At one end of the standard approaches has been government-supported housing, for which non-profits would get financing help and continuing subsidies to build homes where about a third of the apartments would be rented at welfare rates, a third would be rented at rates equivalent to 30 per cent of household income for those in lower-wage jobs, and a third at close to market rates.

The other approach was private-developer housing, where cities would negotiate with builders to provide 20 per cent of apartments in a project at below-market rates, while those developers could charge whatever they wanted in the rest of the building. Cities negotiating those deals would often give developers permission to build higher and bigger as well, in return for the below-market units.

With BC Builds, any group that is willing to put in a contribution of its own – most often land – can get up to 100-per-cent financing for their project, which can save millions. In some cases, there could be a $225,000-a-unit capital grant.

For non-profits and Indigenous builders, the housing operators have to reserve 20 per cent of the units for below-market rents. The remaining 80 per cent have to be rented for 35 years at rates geared to the incomes of “middle-class households” – those earning between $85,000 and $191,000 a year. That works out to rents of between $2,550 and $5,730 using the 30-per-cent standard.

The building has to be self-sustaining, without any additional subsidies after the initial financing or capital help.

It’s not clear yet what the rules are around projects initiated by private developers, as the province is not planning to consider those proposals for another year.

Critics have said the proposed rental rates will not help many of the households most in need. But Mr. Eby and B.C. Housing Minister Ravi Kahlon have repeatedly emphasized that the new projects are meant to help the kinds of middle-class households of nurses, plumbers, teachers, firefighters and others who are now shut out of home ownership.

“This will be transformational for thousands of families in British Columbia,” Mr. Eby said.

B.C. spent almost $3-billion in 2023-2024 on all of its other housing programs, which range from direct subsidies, to rent-supplement payments, to the operations of homeless shelters.

So far, four projects have been announced under BC Builds, with the most recent one on Tuesday being a 112-unit co-op project in Yaletown, in Vancouver’s downtown peninsula, which will go on city land.

The three others include an 18-storey mass-timber project in the City of North Vancouver, on city land; a 199-unit project near Duncan, B.C., on land owned by the Cowichan Tribes; and a 33-unit apartment building on the Sunshine Coast on land owned by the Town of Gibsons.

Mr. Trudeau observed that the country’s housing problems “won’t be solved by simplistic solutions or buzz words.” And both he and Mr. Eby talked extensively about the need for governments to keep investing heavily in social benefits as a way of making the country strong.