By Randy Hatfield
You can stop questioning whether provincial taxpayers get their money’s worth from New Brunswick’s Auditor General. And if you’re worried that the federal poaching of Michael Ferguson to serve as federal AG would diminish the quality or relevance of the work of the province’s AG, you can relax.
The latest report from the Auditor General is a truly informative document. The chapter on social housing, in particular, is educational. It’s also a call to action for this government.
Tim Ross, the coordinator of Fredericton’s Community Action Group on Homelessness, wrote a thoughtful and passionate op-ed in the Telegraph-Journal. It’s worth reading.
Below are selected portions of the AG’s report which address the current state of social housing in New Brunswick. You can learn a lot more by reading the entire report. Here are some highlights:
4.23 The waiting list for social housing has varied in past years… the number of clients on the waiting list has been relatively stable since 2007, averaging at about 4,200 clients per year… the waiting list for social housing is greatest in New Brunswick’s three largest cities (Saint John, Moncton and Fredericton).
4.33 The Department of Social Development (the Department) owns and manages a number of public housing units and rural rental units located throughout the Province. At 31 March 2010 there were 13,157 social housing units in New Brunswick.
4.35 The average age of the units owned and managed by the Province (public housing and rural rental units) is 40 years;
4.37 Though the overall budget has increased 25% (from $66.9 million to $83.7 million), the budget for Property Management has remained relatively stagnant since 2000/01, increasing by only 2% to $31.9 million. The only increase can be seen in the Repair Assistance and Community Initiatives component, described in Main Estimates as “assist low income homeowners occupying existing sub-standard housing to repair, rehabilitate or improve their dwellings to acceptable levels of health and safety and to assist community groups in housing initiatives.” This component increased by 290% since 2000/01 (from $5.6 million in 2000/01 to $21.9 million in 2009/10). It is also noted that funding for Home Ownership Assistance is negligible in recent years ($651,000 in 2009/10 compared to $1.8 million in 2000/01).
4.41 In October 2009, consultants assessed the overall portfolio as being in “fair” condition, though they predicted that unless additional funds for maintenance were provided, the condition would fall to “poor” in 2012 and further deteriorate to “critical” in 2022. The assessments are based on a Facility Condition Index (FCI) that has been assigned to all properties. The FCI is a representation of a facility’s deficiency and renewal cost in relation to its current full replacement cost. A facility’s condition is considered good if the FCI is less than 5%; fair between 5% and 10%; poor between 10% and 30%; and critical between 30% and 65 %. If the FCI exceeds 65%, the cost to repair the facility is considered prohibitive, and should be under consideration for redevelopment, demolition or sale.
At current funding levels, the overall housing portfolio will fall to “poor” in 2017 and “critical” in 2027.
4.44 The CMHC Social Housing Agreement was designed with a declining federal contribution toward social housing, with funding ultimately ending in 2034.
4.45 Our main concern is whether the Department can maintain the social housing units with declining federal funding. No agreement has been reached for continued funding once the agreement expires in 2034 and the Department indicated there has been no commitment from the federal government to renew the funding once the Agreement expires.
When coupled with an aging housing stock, and the liability to maintain it, the sustainability of social housing in New Brunswick is in question.
The Department’s Policy Framework and Housing Strategy and NBHC’s “Hope is a Home – New Brunswick’s Housing Strategy.” states:
“New Brunswick has some of the oldest housing in the country. The majority of the public housing owned and managed by the Housing Corporation was constructed over 40 years ago. The age of this housing combined with the limited availability of repair dollars over the years has resulted in the deterioration of this housing stock. The state of repair of some units is substandard to a point where the health and safety of their residents are a concern. This is especially true with the rural housing stock, where some units remain vacant because of their condition. Clients struggle to pay their utility bill because these old units are not energy efficient and are costly to maintain. Many units were designed for larger families and no longer meet the need of our changing demographic. Subsequently, some clients may be in the position of having to heat units that are larger than they require given the size of their household.”
4.55 Over the next ten years, the gap between CMHC funding and social housing expenditures will continue to grow, while the reserve funds in the Special Purpose Account will be completely exhausted by 2018. This is much sooner than an earlier projection provided to us by the Department, where they estimated the funds would only be exhausted in 2028. They had also estimated that the decline in the account would only begin in 2014, while the decline actually began in 2009, as seen in Exhibit 4.17. All of the programs in the portfolio covered by the Social Housing Agreement are funded 50% or more by CMHC. In fact, over half of the programs are funded 100% by CMHC. By 2019/20, we can see that expenditures will exceed revenues by almost $50 million/year, at a time when the Special Purpose Account will be exhausted. This gap will require either additional funding from the Province, a commitment to further funding from the federal government, or the elimination of programs…. Based on our analysis, the impact of the declining funding will be more and more evident in the coming years, making it vital for the Department and the Province to find solutions now to address the impending challenges they will face.
It’s a stark portrait of social housing in the province. Legislators need to heed this report.
While we wait for the federal government to implement a national housing strategy (don’t hold your breath), it’s time for the province to draw up a plan!
Randy Hatfield is the Executive Director of the Human Development Council.
Photo caption: The Crescent Valley Resource Centre is located in the Crescent Valley social housing development in the north end of Saint John.