‘Workforce housing’ and the affordable housing crisis

Last month, Fredericton City Council announced new by-laws permitting “workforce housing” development in commercial corridors along Prospect Street and around Two Nations Crossing.

The announcement highlighted the ability of “workforce housing” to meet objectives related to climate change and delivery of affordable housing for workers who worked along these commercial corridors—often in minimum wage jobs.

But does it really?

The answer would depend on what “workforce housing” is, and how it might fit in to a rapidly changing urban landscape in New Brunswick, one where multi-family residential developments (apartments) are now the main form of new housing construction, reversing decades of dominance of single-family home construction.

The new focus on density has brought new possibilities for infill development, as well as new controversies about the desirability and appropriateness of multi-story apartments.

Redeveloping underused commercial spaces—especially parking lot land—is highly desirable for many reasons. Not only would the development of mixed-use, “complete communities” achieve objectives of creating more walkable neighbourhoods closer to daily amenities, it would densify the city and increase tax revenues without necessarily requiring substantial new outlays in the form of expensive infrastructure, typical in outlying, sprawl development. It is also unlikely to generate opposition from existing residents.

For the city, redeveloping these spaces makes financial and political sense.

It also makes sense for commercial real estate firms like Crombie REIT (the owner of Uptown Centre on Prospect St.) and CBRE Group (Coldwell Banker Richard Ellis, one of the world’s largest commercial real estate investment firms, and owner of the future 575 Two-Nations Crossing commercial complex).

These firms are facing headwinds from their commercial portfolios, and the new zoning allowances would allow them to diversity their income and increase the value of their properties.

Crombie REIT, in particular, has been trying to gain market share in multi-family residential developments around key commercial properties elsewhere in Canada.

So, what is “workforce housing” and how does it fit into the national housing scene?

Rotational workers in New Brunswick may recognize the term from their time in remote camps out West or in the North. Canada’s real estate sector already specializes in workforce housing, and it looks like temporary buildings, stacked one on top of another.

The by-law amendment defines workforce housing as “mixed-use and residential infill development within a commercial and/or industrial setting.”

In the US, the term is used to refer to a new market segment that emerged against the backdrop of a growing affordability crisis in the 1990s and 2000s. Many working professionals—nurses, police officers, teachers, etc.—could no longer afford to buy housing in cities near to where they worked as a result of the pre-2008 housing boom.

The private sector, with help from cities that wanted to attract these workers, sought to meet growing demand for rental apartments from this demographic of medium income earners—workers earning around 60 per cent to 120 per cent of the median household income (which currently in New Brunswick would be about $70,000 per year before taxes).

“Workforce housing,” therefore, is not affordable housing for a significant number of New Brunswickers—including tenant households, whose average income is below $45,000 per year. It is market housing, which in the last couple of years has become increasingly unaffordable, even for middle-income earners.

Rent in “workforce housing” will reflect the costs of development. Any gains tenants may see in terms of more affordable rents will come either from smaller unit sizes, or from lower building costs per square foot.

But as it is, the maximum size provisions outlined in Fredericton’s new by-law are largely the same as those currently being developed. The 915 square feet (85 square metre) maximum for a two-bedroom unit, for instance, is larger than some newly built two-bedroom units that Killam REIT, New Brunswick’s largest landlord, currently offers in its portfolio. And they are not affordable for people earning below the median income.

Only 20 per cent of new developments must be 1-bedroom or bachelor apartments, not a significant imposition on current commercial plans.

Requirements for indoor common spaces (1600 square feet for larger apartments) are already sold by corporate landlords in Fredericton as “amenities” which help justify higher rents.

These new developments will provide desirable housing options, but not for most workers, including those in the service industries, whose labour power Crombie REIT and others is offering here as an “amenity.”

If anything, the development proposes a new category that sounds progressive and inclusive, but in reality will cater mostly to those willing to pay for what ultimately could be very desirable locations.

So not a bad idea by any means, but not a solution to the affordable housing crisis. So why treat the by-law amendment as a solution to a problem it is not going to solve?

The units that will be built in these spaces are still going to cost far more to build than many of the existing affordable market units that we are losing to investors because our province lacks rent control—a point on which City Council’s silence is more than deafening.

How then, should we think about this proposal for “workforce” housing? It appears very much as though the term “workforce” is doing a lot of work here, and we should ask ourselves, what work is it doing? And for whom?

By any other name, “workforce housing” is just market housing. Units are not going to be affordable for most workers, students, retirees, new Canadians, temporary foreign workers, and folks on fixed incomes.

Council has a lot more to do if it wants to prevent further housing insecurity in Fredericton. “Workforce housing” is not an adequate response to the crisis.

Matthew Hayes is a spokesperson for the New Brunswick Coalition for Tenants Rights and a Canada Research Chair in Global and International Studies in the Department of Sociology at St. Thomas University.