Yahoo Finance Frustrated by affordability crisis, these residents take action to build new housing
"We're really looking to connect with people in our community who, like us, are noticing the housing crisis"
As the affordable housing shortage continues to worsen across the country, one B.C.-based organization, along with city residents, are taking matters into their own hands to finance a new mixed-use affordable housing complex.
Propolis Housing Cooperative, a volunteer run non-profit, is leveraging community bonds, a type of social financing, to help fund the project in Kamloops.
“There wasn't any other organization in Kamloops that was working on actively developing more cooperative housing. So we just think this is a niche that we can fill for the community,” Lindsay Harris, president of Propolis, told Yahoo Finance Canada in an interview.
Harris co-leads the development team with Miles Pruden, the owner of NexBuild Construction, a Kamloops-based general contractor focused on net-zero emission buildings.
Their vision for the project is clear.
The planned building will be six-stories with 50 living units ranging from bachelor to three-bedroom apartments. A 9,300-square foot commercial space at ground level will be home to a daycare and a theatre, according to Propolis’ website.
The rent will be priced at roughly 80 per cent of Canada Mortgage and Housing Corporation’s (CMHC) median market rent for Kamloops, Harris says.
As of Oct. 2022, CMHC reported the median monthly rent for a two-bedroom unit in the city was $1,350, up from $1,154 a year prior. The rental vacancy rate was an extremely tight 1.1 per cent, a slight improvement from 0.8 per cent.
The project is still in the early planning stages though. Propolis is in the process of buying land from a private corporation that includes a commercial building. Next steps include obtaining development permits and construction. The goal is to open the housing complex in March 2026.
Propolis estimates the project will cost about $15 million, a conservative number that accounts for possible budget overruns and timeline delays.
Why community bonds were the right route
For regular city residents willing to put money on the line for this project, they can read through a detailed investor package that includes a 10-year financial model.
Propolis has partnered with Tapestry Community Capital to conduct the community bond campaign.
We're really looking to connect with people in our community who, like us, are noticing the housing crisisLindsay Harris, President of Propolis
There are three investment tiers ranging from $1,000 to $10,000. They each have three-year terms and return rates range from 2.5 per cent to 3.5 per cent. While the returns are less than what an investor could get in the capital markets, Harris says investors can physically see the "good" they're doing for the community.
“[Community bonds] allow us the flexibility to structure our own terms for the offering and to structure the timing for when it works best for our project. So it really gives us this ability to access the community for investment support in a way that's nimble and flexible and meets the needs of the timeline for our development project,” Harris says.
Propolis aims to raise $1.1 million in community bond investments.
The bond offering launched earlier this month and more than 40 investors pledged roughly $220,000 in the first five days.
“When you think about who our target investor is, we're really looking to connect with people in our community who, like us, are noticing the housing crisis, want to make a difference but might not know how to help,” Harris said.
If, for whatever unforeseen reason, the project doesn’t come to fruition, she says investors could be repaid via the sale of the existing commercial property or a refinancing could take place, but adds many contingencies have been built into the plan so the project not going through is the “absolute worst case” scenario.
Key stakeholders come to the table
Propolis intends to tap other financing options such as CMHC programs, a housing initiative through the Federation of Canadian Municipalities and commercial mortgage lending via credit unions.
Meanwhile, the city has struck a deal with Propolis to sell a piece of unused roadway directly behind the planned development at the corner of Aspen and Tranquille for a symbolic $1, in exchange for operating the affordable housing complex
“Projects like this can really only be successful if key partners come to the table,” Harris says, “so knowing that the city of Kamloops is supportive of the project is huge for us.”
Housing and the economy go hand-in-hand
Harris, who has a background in economic development and food security, is no stranger to witnessing the direct impact inadequate housing can have on the health of an overall economy.
Access to affordable housing can help attract businesses by providing a dependable workforce, lower worker turnover rates and increase the spending power of residents, she says.
“The housing sector is very, very complex. And, you know, there's a reason why we don't see a lot of cooperative housing being developed because it really takes a great team of people with lots of diverse skills,” she said.
“We wouldn't be able to do it if there wasn’t such a committed group of people who really, really want to make a difference on this.”
Note: A previous version of this story stated the median monthly rent for a two-bedroom unit in Kamloops was $1,150, and that the rental vacancy rate was 1.9 per cent. Those were statistics for Canada as a whole. This story now reflects the correct data.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
Download the Yahoo Finance app, available for Apple and Android.
