RENTAL HOUSING IN RURAL AND REMOTE COMMUNITIES April 2014
INTRODUCTION The Government of the Northwest Territories (GNWT) is facing increasing challenges in providing the programs and services residents of the NWT require. One of these challenges arises from an inability to recruit and retain staff in communities due to concerns with housing. Given the linkages between recruitment of staff, housing availability and affordability for staff and service delivery, the Northwest Territories Housing Corporation (NWTHC) has overseen the development of options to reduce the barriers to recruitment associated with a lack of housing. As part of an initiative called Rental Housing in Rural and Remote Communities, the NWTHC is providing partnership opportunities to community developers for the construction of new rental housing, the purchase of existing surplus NWTHC housing stock, the conversion of an existing homeownership unit to rental, or the repair of existing rental housing not currently habitable. ELIGIBLE PARTICIPANTS Eligible participants (hereinafter referred to as developers ) include private entrepreneurs, development corporations, unsubsidized private non-profit corporations and cooperatives. 1
ELIGIBLE COMMUNITIES The eligible communities are: Zone 1 Behchoko Dettah Enterprise Fort Liard Fort Providence Fort Resolution Fort Simpson Gameti Hay River Reserve Jean Marie River Kakisa Nahanni Butte N Dilo Trout Lake Wekweti Whati Wrigley Zone 2 Aklavik Colville Lake Deline Fort Good Hope Fort McPherson Lutselk e Norman Wells Paulatuk Sachs Harbour Tsiigehtchic Tuktoyakuk Tulita Uluhaktok 2
DEVELOPER SUPPORT The NWTHC is providing to developers a forgivable loan for the construction of new rental housing, the purchase of NWTHC housing units, or the repair of existing rental housing not in use. FORGIVABLE LOAN A forgivable loan of $25,000 (Zone 1) or $50,000 (Zone 2) per unit depending on the specific community is available from NWTHC for the purpose of the development of rental units. The proceeds of the loan are transferred after the rental unit is made available for occupancy. Eligibility for Forgiveness The earning of the forgivable loan is conditional upon the developer adhering to the terms and conditions outlined in the Forgivable Loan Agreement including the following conditions: a. Each year on the anniversary of the completion of the project, if the developer is not in default of the terms of the forgivable loan agreement, the NWTHC will forgive an amount equal to one-tenth of the initial loan; and b. The loan will be forgiven over 10 years if all conditions of the agreement are adhered to. APPLICATION PROCESS There are a limited number of forgivable loans available. Developers can apply by submitting a proposal to the NWTHC. In a developer s application, there should be descriptions on how the developer intends to satisfy the following criteria: Project Scope The application must include project scope information as follows: a. Projects may be new construction, purchase of NWTHC assets, conversion from homeownership to rental, or renovation to a unit not available for rent due to condition. b. The developer must provide a construction/renovation plan. 3
c. The application should demonstrate that a new rental unit will be added to the existing housing stock d. For new construction, indicate the details of the type of structure to be developed (e.g. four-plex, two-storey, 850 sq. ft. per unit). e. For renovation projects, the age and current condition will be considered to determine whether a reasonable investment sufficiently extends the useful life of the dwelling. f. The developer must indicate project cost including contingency. Project Team s Knowledge, Skill, and Experience a. The developer is to describe the capability of the resources proposed to develop the project. b. The developer should indicate their capacity to operate and property manage the housing project once available for rent. Project Schedule a. The developer should show how closely the developers schedule meets the project requirements in a logical manner delivering a quality service. Energy Efficiency a. The developer should demonstrate how new construction and renovations will incorporate energy efficient features to affect cost savings. Finances a. The developer must indicate how they intend to finance the project. b. The developer must indicate how much their financial contribution to the project will be. c. The developer should detail any contributions provided by other partners. Rent Affordability a. The developer must indicate the amount that they expect to charge for a monthly rent including what utility expenses are included in the rent. b. An estimate for utility expenses should be provided by type of expense, e.g. heating and water and municipal services. Land Management a. The developer must indicate that they have appropriate land tenure for the project or their plans for acquiring land. b. The developer will confirm that site and subsurface conditions of the project are suitable for the proposed building and foundation design. 4
ELIGIBLE PROJECTS Eligible projects include: a. The construction of new rental housing; b. The purchase and conversion of existing homeownership units for rental purposes; c. The purchase and conversion of surplus NWTHC housing units for rental purposes; and d. Repairs to qualified current rental housing not in use. New Construction New construction that qualifies for the forgivable loan must contain one or more self-contained units rented or intended to be rented. The accommodation must be intended to serve as permanent rental accommodation. Eligible construction may include: Single detached units Multi-unit buildings Additions to existing buildings The developer will ensure that: a. They provide appropriate land tenure for the project; b. A construction plan is provided to NWTHC to ensure that the project is eligible for the forgivable loan; c. The project has all the necessary development approvals and is in compliance with all legal and zoning by-law regulations of the area; d. Building permits have been issued for the project, where necessary; e. Builders insurance has been put in place; and f. The site and subsurface conditions of the project is suitable for the proposed building and foundation design. Purchase and/or Conversion of Homeownership to Rental Converting existing homeownership units to rental units is an eligible project under Rental Housing in Rural and Remote Communities. Purchase of NWTHC Units The NWTHC may have units available for sale in some communities under this initiative. Developers wanting to purchase NWTHC housing units should contact 5
the appropriate NWTHC District Office for information on eligible NWTHC units in a particular community. The purchase price of units will be based on the NWTHC s appraisal calculation. Repairs to Current Rental Housing Not In Use To be eligible for assistance for repairs to current rental housing not in use, the property must contain one or more self-contained units intended to be rented. The accommodation must be intended to serve as permanent rental accommodations. The unit must not currently be rented or available for occupancy. The unit would become available for occupancy through repairs to the unit that would bring it to accepted health and safety standards as determined by the NWTHC. Developers may be required to submit proof of ownership of the property (Certificate of Title or Federal or Commissioner s Lease), or Agreement of Purchase and Sale where applicable. Proof of financing for repairs required that exceed NWTHC s support is also needed. The housing unit or project must be substandard or deficient and require major repair or be lacking in basic facilities in at least one of the following categories: structural; electrical; plumbing; heating; or fire safety. A major repair is one required to correct a serious deficiency in one of the five categories above. A serious deficiency is the defective integrity of a structural component or building service or system that is obvious to an NWTHC technical officer or other expert. An NWTHC technical officer may conduct an inspection to determine the need for repairs of the property. An inspection would identify mandatory repairs required to ensure that the property meets accepted health and safety standards as determined by the NWTHC. Cost estimates for repair work should be clearly outlined in the scope of work including the listing of all inspection reports from applicable authorities having jurisdiction that may be required to determine the condition of any building services. The completed scope of work should further provide estimates for professionals (e.g. Engineer, Architect, etc.) hired for construction management and/or project monitoring where applicable. 6
All mandatory repairs must be completed to bring the property up to accepted levels of health and safety as determined by the NWTHC and extend the property s useful life. Ineligible Properties Ineligible properties are those which do not meet the criteria of properties operated as bona fide rental enterprises and include: hotels, motels and bed and breakfasts; existing rental properties being sold to another developer hospitals, nursing homes and special purpose housing; residential care facilities; emergency shelters; student housing including dormitories and privately owned projects primarily rented to students; communes; company housing provided to employees; rectories and convents; and recreational/seasonal properties. Eligible Project Costs Eligible project costs include the cost of mandatory repair or rehabilitation to eligible units, including labour and applicable taxes, plus the costs of legal fees, building permits, certificates, drawings and specifications and consultant fees where required. Ineligible Repairs Ineligible repairs include: a. Work carried out prior to loan approval; b. Repairs to any commercial or non-residential component of the rental project; and c. Non-mandatory repairs. Initiation and Completion of Repair Work The forgivable loan may be cancelled if the repairs are not started within six months and completed within 12 months of the date of approval. 7
APPLICATION EVALUATION Each application will be evaluated using the following criteria: Project Scope 10 points; Project Team's knowledge, skill, and experience 10 points; Project Schedule 10 points; Energy Efficiency 10 points; Financing 10 points; Rent Affordability 10 points; Land Management 10 points. ADMINISTRATION OF RENTAL UNITS Developers are responsible for all administrative duties related to the operations of rental units including: Setting of affordable rental rates for each rental unit under administration; Processing lease application and consent form(s) to applicants and ensure the information is complete, including credit, landlord references and social insurance numbers for completing a credit check; Administration of securities deposits; Conducting credit reference checks; Advising successful applicant of move-in date and arrange an appointment for the check-in; Preparing and signing of leases with tenants; Administration of rent payments; Management of utility payments; and Maintenance and repairs. ANNUAL REPORTING On an annual basis, the developer will provide to the NWTHC a summary of the occupancy of the unit (s) including months rented and occupation of tenant(s). 8