Old hospital land redevelopment faces uncertain future

A plan to turn two vacant hospital buildings into almost 140 affordable apartments now faces an uncertain future after a $13.5 million grant proposal by charity developer Indwell was rejected by the Canada Mortgage Housing Corporation (CMHC), forcing the development to seek more expensive sources of funding. 

It's a major step backward for a city grappling with a simmering housing crisis — one being blamed for chasing away businesses in the city's core and eating up hundreds of millions of dollars each year from the city's budget. 

I think it's the classic left hand doesn't know what the right hand is doing.- Graham Cubitt, on why the CMHC rejected a grant based on its own advice

Six non-profit housing developers were supposed to break ground on the Vision SoHo project this summer, a major redevelopment of the former Old Victoria hospital lands, which would see historic hospital buildings redeveloped and the addition of several new buildings to bring some 682 housing units to the area, half of which would be affordable. 

On Monday, Indwell said CMHC rejected its proposal for a $13.5 million dollar grant to bankroll the transformation of the former War Memorial Children's Hospital and Victoria Health Services Building into 138 supportive apartment units, where tenants would pay about $500 a month in rent.  

The 'left hand doesn't know what the right is doing'

The proposal was rejected based on the CMHC's own advice: to create a collective ownership structure for the affordable apartment buildings akin to a condo board, to make maintenance of the buildings easier and cheaper, said Graham Cubitt, Indwell's director of projects and planning.

"CMHC's lawyers helped us decide that this was the right legal structure," he said. "In the end, that became the Achilles heel for the rapid housing program application because they said that rapid housing was just for so-called 'simple' projects.

"I think it's the classic left hand doesn't know what the right hand is doing," he said, adding that Indwell has already tried telling the Crown corporation the application was rejected based on its own advice. 

"We've tried that," he said. "It's very frustrating. The program guidelines seem to basically preclude this project from being reviewed."

"We are not able to discuss specific projects or applications," Audrey-Anne Coulombe, a senior media relations officer with the CMHC wrote to CBC News in an email. 

The CMHC's rapid housing intiative is a $4 billion program created by the federal government as part of the wider National Housing Strategy — a decade-long $82-billion fund that aims to alleviate the nation's housing crisis by getting more homes built. 

Project has lost time, money

The $13.5-million Indwell was hoping for from the federal government represents 70 per cent of the money needed to make the 138 affordable apartments a reality, Cubitt said. There is no way to appeal the decision.

"It took three months to be rejected," he said. "If we'd known that they weren't going to review it, then we would have used those three months to turn our attention to a different business plan."

Indwell will now be forced to look at cobbling together other grant programs or maybe even loans through private financing to make it happen, which will be more difficult and create will more debt, which is difficult to manage with affordable housing because there's no revenue to pay back the mortgage, Cubitt said. 

"It's going to add unnecessary costs to what is a phenomenal, phenomenal project," said London Mayor Josh Morgan Monday. "I fundamentally disagree with the CMHC decision on this."

"The federal government, the provincial government and municipal government have all committed to saying, 'We need to build housing projects fast,'" he said. "To have CMHC add this level of bureaucracy and make this decision is counter to all of the work that we're trying to do."