OTTAWA, Ontario — Credit unions can help expand Canada’s limited supply of permanently affordable housing by adapting existing financing tools and partnering with community land trusts, according to a new Canadian Credit Union Association study.
The study, “Closing the Affordable Housing Equity Gap,” examines how credit unions can use their products, expertise and resources to help the community-based nonprofit organizations acquire properties and preserve affordable housing.
Community land trusts hold properties for social benefit and help keep housing affordable over the long term. But below-market rents can limit the mortgage financing available to buy existing buildings, leaving projects short of the equity needed to proceed, CCUA said.
The association brought together credit union and land trust experts in a solutions lab to identify barriers in property acquisition and financing, then develop and test possible responses. The Canada Mortgage and Housing Corp. funded the lab through the National Housing Strategy Solutions Lab, with facilitation support from Scaled Purpose.
‘Access Can be Significant Barrier’
“Community land trusts are an important part of the affordable housing ecosystem, but access to equity can be a significant barrier to bringing projects forward,” said Jeff Guthrie, CCUA’s president and CEO. “This work demonstrates how credit unions can build on their existing products, expertise, and resources to explore practical financing solutions that help more affordable housing projects move forward.
Four Proposals Being Piloted
The lab developed nine financing and capacity-building prototypes. The first four are being piloted, according to CCUA:
- Blended financing: Combine a conventional first mortgage with subordinated financing and impact capital to increase the financing available to a land trust.
- Tenant debt refinancing: Connect tenants experiencing financial difficulties with lower-cost credit union financing to help reduce rent arrears and turnover.
- Small business tenant loans: Use existing government-insured lending programs to support commercial tenants and strengthen building income.
- Advocacy and training: Use existing financial literacy resources to build land trusts’ capabilities while improving credit union employees’ understanding of the model.
