High construction costs hit Ottawa's affordable housing projects

The John Howard Society of Ottawa says the 40 supportive housing units it's building on Carling Avenue are desperately needed in the midst of a housing crisis, but construction started at a bad time.

The not-for-profit won the bid in 2019 to build permanent housing for the homeless on city-owned land near Dow's Lake, then broke ground in September 2020 only to face soaring construction prices, labour and material shortages, and pandemic protocols on the work site.

• City seeks Dow's Lake area land for supportive housing
• Homebuilders under pressure as material costs go through the roof

"You couldn't have had a worse time to start a capital project," said executive director Tyler Fainstat, who considered delaying the $19-million building to not put the organization's other programs at risk.

"We're a not-for-profit. We don't have large money bags, unfortunately."

Fainstat said the John Howard Society is lucky the City of Ottawa is now stepping in to supplement the project with as much as $1.2 million to cover extra costs. The city is using money that is being repaid from a housing-related loan.

Fainstat expects the building, which will also house a new head office for the John Howard Society of Ottawa, to finish construction in March as planned.

Moving from shelter to permanent apartment

That project is just one of several affordable housing efforts facing expensive construction.

The city's list of capital spending for 2021 also includes $750,000 to be given to the Shepherds of Good Hope for cost overruns at its new building on Montreal Road near the Aviation Parkway. Those 42 units also offer supportive housing — residents get a permanent home as well as programs on-site to help manage their alcohol.

Over the past decade, city staff say there has been a big shift to get people out of shelter beds and into such units.

The trend sped up during the pandemic because of federal and provincial funding programs such as the federal "rapid housing initiative," staff said, leading to such projects as the planned Shepherds of Good Hope expansion on Murray Street.

While that's a good thing — the city could soon have 800 supportive units — they don't come cheap.

Each supportive unit can now cost more than $400,000, city housing director Saide Sayah told councillors at a planning meeting last week.

Along with construction prices, the programs themselves added costs, Sayah explained, because they required units to be built quickly using modular construction, but a limited number of builders could do so.

City housing officials expect other projects to face rising costs so it's putting more money into a contingency fund than it would in normal times.

Long list of projects

Overall affordable housing capital spending could total more than $40 million for 2021. City staff listed how it will spend its own $15 million, along with another $4.7 million and $22.4 million expected from the provincial and federal governments, respectively.

For instance, $2.7 million of provincial money goes to the Centretown Citizens Ottawa Corporation to build an extra 18 units — for a total of 49 — on Forward Avenue in Mechanicsville, where a city-run family shelter closed in 2018.

Meanwhile, $5 million in city money is earmarked for 40 affordable units on municipally owned land off Jasmine Crescent in the ward of Beacon Hill-Cyrville.

That will also mean a new facility for the Gloucester Food Cupboard, which operates on the site of an old condominium sales centre. The food bank envisions a kitchen where it can be a modern-day food centre.

"Ottawa needs more deeply affordable housing," said executive director Erin O'Manique. 

"That's the reason why so many people come to our food bank, because after they've paid the rent there isn't enough money left for groceries."

The spending plan approved by the city's planning committee last week must still receive council approval Sept. 8.