Vancity Community Investment Bank (VCIB) and Habitat for Humanity Canada recently announced a new $30 million impact-driven partnership designed to support the non-profit organization aggressively scale its delivery of affordable housing across Canada.
And it couldn’t come at a better time. “Housing insecurity and the continuous decline in the availability of affordable housing in Canada is a growing concern for all Canadians,” says Julia Deans, president & CEO of Habitat for Humanity, Canada. “The ability to build strength, stability and independence through affordable home ownership is a dream that is slipping away.”
VCIB will deliver the $30 million credit facility to Habitat for Humanity, which will finance the construction of up to 414 units of affordable housing over the next three years. Habitat Canada will extend loans from the credit facility to local Habitat organizations across the country, streamlining and expediting their access to capital. Habitat Peterborough & Kawartha Region, for example, will be using the credit facility to push forward the development of 41 new and affordable homes at its Leahy’s Lane project.
Habitat Canada’s biggest challenge is meeting the growing demand for affordable housing while dealing with the ever-increasing costs of land and building a home, Deans adds. Which is why this collaboration is so vital – and appreciated.
“Our values-aligned partnership with VCIB provides local Habitats across the country with access to affordable capital they can invest in more affordable housing for Canadians,” offers Deans, adding that it’s an important example of collaboration between the private, non-profit and public sectors. “The more we work together, the more effective we’ll be in creating more affordable housing in Canada. We all have a role to play.”
Jay-Ann Gilfoy, CEO of VCIB, would agree. “To succeed in tackling the housing crisis, capital needs to flow to the organizations that are creating affordable housing options for all Canadians. Our partnership with Habitat for Humanity is an example of how financial institutions can help tackle the affordability crisis, and we are committed to continuing to develop key innovative partnerships across the country.”
Financing by VCIB will be used to support Habitat’s innovative home ownership model. Habitat buyers purchase their home through a no-down payment mortgage geared to their income, which provides families living with low income the opportunity to step onto the housing ladder.
What’s unique about this financing is that the borrower and the user are two different entities: Habitat Canada will borrow the funds from VCIB and provide it to local Habitats to construct affordable homes for Habitat partner families. Habitat Canada has negotiated preferred rates of interest, which in most cases are lower than what local Habitats could negotiate on their own.
Keep in mind that Habitat for Humanity Canada is a federation of 50 independent Habitats across Canada. Some small and medium-sized Habitats have no experience of taking commercial financing, explains Deans. “They operate using only their own capital and are sometimes forced to pause projects midway through construction for lack of funds. This financing will allow them to complete their projects without disruption.”
As for VCIB, Canada’s first and only values-driven bank, it has a long track record of financing affordable housing and supporting local communities. Since 2009, Vancity Group has funded investments of more than $1.48 billion to support the development of affordable housing stock across Canada – recently, VCIB announced a first-of-its-kind agreement with Canada Mortgage and Housing Corporation (CMHC) to finance up to $100 million towards affordable housing solutions by September 2021.
CMHC is also providing funding to Habitat for Humanity through the National Housing Co-Investment Fund, and VCIB’s credit facility has been designed to complement this government funding to further accelerate Habitat’s ability to deliver affordable homes.