CFAA’s Goals Important for
Calgary Landlords
WHAT IS THE CFAA?
The CFAA (Canadian Federation of Apartment Associations) consists of thirteen apartment associations across Canada, including the Calgary Apartment Association, collectively representing owners and managers of close to one million rental units. The CFAA’s main political goals are:
- Obtaining more favourable tax policies for the rental housing industry.
- Restricting the government funding of social housing to housing for “special needs” tenants, whose needs cannot otherwise be met by the private sector.
- Increasing funding for housing allowances or other demand-side solutions for housing affordability issues.
Over the last 20 or 30 years, many negative federal tax changes have reduced private investment in rental housing. Unfair tax treatment has a negative impact on private investment, and the lack of private investment leads to increased public investment. Currently, public investment tends to be directed largely to the building of social housing, which is extremely costly and not affordable in practice. Moreover, by competing with the private sector, public spending crowds out much of the private investment that would still take place. Since three new social housing units may stop two private units from being built or restored, the public spending is even less cost-effective than it appears.
Economist Stephen Mayo compared the US and German experiences with housing policies in a 1988 article in the Journal of Urban Economics. He found that a dollar of spending on social housing produces 37 cents of additional housing, whereas if spent on housing allowances the same dollar would have led to 85 to 90 cents of additional housing.
The CFAA supports federal funding for housing allowances, which are much more cost-effective, can be spread among far more needy tenants, provide maximum choice, allow tenants to stay where they are, and directly and immediately address affordability problems. In our view, the CFAA’s policies would lead to a better situation for tenants, landlords and taxpayers. Tenants would gain more housing, and would see more choice and better maintenance and services through private competition. Landlords would see better after-tax returns, more investment opportunities, and a greater ability to buy or sell as their investment goals change. Taxpayers would save money because the cost of helping tenants directly with their affordability problems is far less than the cost of the government subsidizing the building of new social housing.
CURRENT INITIATIVES
Over the last two months, the CFAA has focussed its government relations on obtaining more favourable tax policies for the rental housing industry and on obtaining flexibility for the provinces in how they spend federal funds for housing, so that these funds can be used on demand-side housing assistance.
CFAA President John Dickie has met with various government officials to discuss federal tax policies, federal funding for social housing, and housing allowances. John also met with Steve Pomeroy, a well-known housing consultant who wrote the recent update report for the Federation of Canadian Municipalities (“FCM”). The FCM report, “Moving Forward: Refining the FCM Recommendations for a National Affordable Housing Strategy (October 2004)”, includes the following recommendations that support CFAA’s positions:
- Directly address affordability problems by addressing deficiencies in the shelter components of provincial income assistance programs.
- Directly address affordability problems by creating a new shelter allowance program for working poor renters.
- Maximize the use of, and investment by, the private sector through reform of the tax treatment of rental investment.
- Expand the supply of affordable housing by encouraging construction of single room occupancy (SRO) units to meet the housing needs of low-income urban singles.
- Expand the supply of affordable housing by making refinements to the Federal/Provincial/Territorial ("FPT") Affordable Housing Program to change to larger per unit subsidies in order to target rents to the income levels of the working poor.
- Facilitate the preservation of existing affordable housing through increased grants for rehabilitation of existing private and social housing units.
Support from other associations, especially those like the FCM, is an important tool for advancing the CFAA’s arguments.
The CFAA will be writing a response to FCM to welcome the positive recommendations. Landlords can certainly use the FCM report as support for arguments that the CAA or CFAA advances. You can obtain a copy of the report at www.fcm.ca/newfcm/Java/housing.pdf
The CFAA will continue to push for more favourable tax policies for the rental housing industry and increased funding for housing allowances or other demand side solutions for housing affordability issues.
