Social Policy

Falvo – 10 Things to Know About Yellowknife’s Northern Property Conundrum

Blogger and researcher Nick Falvo comments on Northern Property’s decision to “tighten” its policy on renting to income assistance recipients.

On May 20, I was a guest on The Trailbreaker (CBC North) with host Loren McGinnis discussing a controversial decision by Northern Property, the NWT’s largest for-profit residential landlord.  The 8-minute podcast is available here.

Northern Property has been in the news lately for announcing that it will “tighten” its policies on renting units to recipients of income assistance.  According to a company spokesperson:  “two-thirds of its tenants currently on income assistance are behind in rent payments.”

Here are 10 things to know about this conundrum:

1.  Rental housing in Yellowknife is expensive.  Average rent for a two-bedroom unit in Yellowknife is $1,600.  (For more on Yellowknife’s housing market, see this report.)  If $1,600 sounds high to most readers, it ought to:  average rent for a two-bedroom apartment in Toronto is approximately $1,200; in Vancouver, it’s less than $1,300.  (To see rent levels in other Canadian municipalities, have a look at this spreadsheet.)

2. There is unemployment in the NWT.  Like most Canadian jurisdictions, there are not enough jobs in the NWT to keep all working-age people employed, and the NWT has an official unemployment rate of almost 9%. With that in mind, it should not come as a surprise to most readers that a substantial percentage of the NWT’s population receives “income assistance” (which in other jurisdictions is known generically as social assistance).  In 2012, a “single employable” person on income assistance in the NWT received just over $17,000 a year to live on; a single person with a disability received just under $22,000; and a single parent received just under $27,000.  (For more on these rates, see this 2013 publication.)  While these figures may sound high, readers should remember that average monthly rent for a Yellowknife two-bedroom apartment is $300 higher than in Vancouver and $400 higher than in Toronto.

3. Northern Property is big.  Northern Property owns almost three-quarters of rental properties in YellowknifeIn a recent interview, the company’s vice-president of residential operations said “we have a business to run…” (which, I would argue, is another way of saying “we have profit to make”).  And businesses, as we all know, often seek to maximize their profits.  Key question:  To what extent should the territorial government rely on a for-profit firm to own and operate units for low-income tenants?

4. Northern Property may be in a monopoly situationWhy is average rent in Yellowknife considerably higher than in Vancouver or Toronto?  Admittedly, harsh climate, the high cost of construction and high utility costs explain part of this differential; but I’m not entirely convinced that these factors explain everything (especially considering that median monthly rent for a two-bedroom apartment in Whitehorse is just $900).  If one or two other for-profit entities were to enter Yellowknife’s rental housing market (with some encouragement from the Government of the NWT) would Northern Property keep charging rent at the current levels?

5. The for-profit vs. non-profit debate is old.  The role of the private sector in the provision of housing for low-income households has been debated for decades.  I have argued before that a key advantage of non-profit entities (such as the YWCA Yellowknife) owning and operating rental units is that they have a clear interest in keeping rent levels low for their tenants over the long term.  For more on this debate, see this blog post.

6. The Government of the NWT can pay now or pay later.  It is more cost effective to provide a subsidy for a household to live in an apartment than it is to deal with the downstream effects of homelessness.  For example, a $6,000 annual subsidy from government could keep a person housed in a privately-owned rental unit in Yellowknife.  But keeping that same person in an emergency shelter might cost three times that amount.  And if a person loses their housing and ends up in jail, it might cost 10 times that amount. (For more on the “costs of homelessness,” see this 2005 report and this 2012 report.)

7. This problem may get worse.  I believe that the current tension between Northern Property and the recipients of income assistance will only intensify, for two reasons.  First, the apartment vacancy rate in Yellowknife is approximately 4% right now, which is relatively high by historical standards.  In such a context, one would expect a landlord to be relatively eager to fill units.  Going forward, should vacancy rates dip down to 2% or 1%, one would expect a landlord to be less eager to fill units, meaning that it would not be unreasonable for Northern Property to become even more selective in terms of tenants.  Second, the federal government has recently tightened eligibility rules for Employment Insurance (EI) in Yellowknife.  Effective October 14, in order to quality for EI, workers in Yellowknife will have to have “worked 700 hours in the previous 52 weeks, up from 420 hours…[while b]enefits will only be able to be collected for a maximum of 36 weeks instead of 45…”

8. The Government of the NWT could expand the TRSP.  The Government of the Northwest Territories’ has something called the Transitional Rent Supplement Program (TRSP), which currently provides subsidies of up to $500 per month for low-income households who currently rent from for-profit landlords.  The subsidy is paid directly to the landlord.  At present, eligible tenants can only receive assistance through the program for a maximum of two years.  Also, people who are currently in arrears with a public housing provider in the NWT are ineligible for the TRSP.  As a short-term remedy for the current Northern Property challenge, why not extend the maximum period of TRSP receipt to three years?  And why not use some discretion when assessing an applicant’s arrears situation with public housing, keeping in mind that some tenants fall into arrears through no fault of their own?

9. The Government of the NWT could fund more head leases.  Another possible way to respond to the current situation (at least in the short term) would be for the Northwest Territories Housing Corporation to provide additional funding for the Yellowknife Housing Authority (a non-profit entity that administers social housing in Yellowknife) to enter into additional ‘head lease’ arrangements with Northern Property.  In such situations, the Yellowknife Housing Authority is the de facto tenant on units; it has a lease with the for-profit landlord (Northern Property) as well as a sub-lease with the household residing in the unit.  With a 4% vacancy rate, now would be a relatively good time for the Yellowknife Housing Authority to enter into negotiations.  A year from now, if the vacancy rate is lower, Northern Property might be less eager to engage.

10. Over the long term, the role of the federal government is crucial.  If there’s a constant theme in Canadian housing policy, it’s that vastly more housing gets built for low-income persons when the federal government plays a leadership role with respect to funding. (For more on the role of the federal government in housing throughout Canada, see this blog post.)  Going forward, this role must be borne in mind as residents of the NWT look for long-term solutions to the lack of affordable housing.  As I wrote last year: “much of Canada’s social housing stock exists because of funding agreements that have been in place for several decades.  Typically, these agreements were to last anywhere from 35 to 50 years, and have involved commitments from senior levels of government to fund operating costs (including the ongoing cost of hydro and maintenance).

With much of Canada’s social housing having been built in the late 1960s, some of these agreements have already begun to expire; and many more agreements are set to expire over the next decade.  The Harper government has been quite silent on what (if anything) it plans to do about this emerging problem.” Though this declining federal funding applies directly to housing that is owned and operated by non-profit entities (such as the Northwest Territories Housing Corporation) this will have serious repercussions for Yellowknife’s broader housing market going forward.  Indeed, as I also wrote last year: “Expiring operating agreements will hit Canada’s northern territories especially hard, due largely to the fact that operating costs for housing in northern jurisdictions are higher than in other parts of Canada.”  For an overview of the potential impact of expiring operating agreements on Canada’s northern territories, see this 2007 report by Luigi Zanasi.

Acknowledgements. I wish to thank George Lessard, Steve Pomeroy and Luigi Zanasi for assistance with this blog post.  Any errors are mine.

Postscript.  In 2011—under the supervision of Dr. Frances Abele and in partnership with Arlene Haché—I wrote two policy reports, one on affordable housing in the NWT, and another on homelessness in Yellowknife.  Both reports can be accessed here.

Nick Falvo is a Ph.D. candidate at Carleton University.

Photo credit: “yellowknife at twilight” by Agent Magenta under a creative commons license.

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