The $ 100,000 Wall – Huddle
Mark Leger is the editor of Huddle. The Saturday Huddle is a weekly column that features opinions, analysis and thoughts on Huddle stories, podcasts and business news in the area. It is first published as a newsletter on Saturday morning – sign up and also receive our free daily newsletter.
We have come to call it the â$ 100,000 wallâ.
In 2006, I was living in a three-unit apartment building in southern Saint John. Janet and I got married that summer and was planning to move into her house a few blocks away. My landlord offered us the opportunity to buy the building I lived in and we decided it was a good investment. We proceeded with the purchase even though we were aware of a mysterious bulging section of a brick wall on the side of the building.
It turned out to be serious water damage that could only be properly dealt with by knocking down most of the three-story wall and rebuilding it, brick by brick. We sold the building over a decade later and have failed to recoup the investment we made to ensure the structural integrity of this building. The rents were relatively low because the city had a high vacancy rate at the time, so we could barely cover operating costs, let alone pay off the debt to repair and rebuild the wall.
It was a first lesson for me, who had only been a tenant at the time, on the responsibilities and risks of property. We never got into the business of being a full-time landlord, although we still own another rental property in the city center. But I have developed an appreciation for property development and management as a business, and it informs how I view the rental landscape in the area as tenants face rising rents they say. not being able to afford.
That doesn’t mean that I don’t sympathize with the plight of tenants. Over the past year, Huddle has covered some of the absurd rent increases tenants are being asked to pay, starting with a story last October about Gracie Fogarty, a Halifax woman facing a monthly increase. of $ 650, almost doubling the rent she paid on time. Just last week, Huddle published the story of a Saint John woman facing a raise of $ 950.
A month after reporter Derek Montague spoke to Gracie, Nova Scotia announced a two percent cap on rent increases. But the new policy was temporary and only aimed at helping people get through the pandemic. It is set to expire in February 2022 and the new Tory government says it will not extend it or make it permanent, leading to protests like the one that happened in downtown Halifax this week.
New Brunswick even rejected temporary rent control measures. The government ordered a policy review earlier this year, but the next report recommended not to cap increases.
Earlier this year, I wrote a column in favor of rent control, comparing it to the importance of having regular and generous increases in the minimum wage. People deserve predictable and fair increases in their wages and rents. We need some form of rent control, or other public policy intervention, to deal with the outrageous increases some landlords are asking for, and the relatively strong overall increases we’ve seen in the region over the past decade. last year. Statistics Canada recently released data which showed a year-over-year rental price increase of 7.5% in Nova Scotia in August and 8.7% in New Brunswick.
However, solutions and compromises must take into account economic realities. Developers must meet the growing demand for housing in the region while making their investments profitable. The capital costs of new construction and the costs of renovation and routine maintenance of existing properties are significant, as we have seen firsthand. We can always find examples of outrageous and unfair increases, some of which have been documented by Huddle, but most of the increases are simply due to increased demand and the higher costs of doing business.
Ultimately, private sector promoters operate for-profit businesses. They take risks and incur huge costs in the hopes of creating equity capital and making profits that support current and growing businesses that employ people and provide tax revenue for government services. We cannot reasonably expect this class of entrepreneurs to intentionally keep rental prices artificially low.
I recently had a long conversation with former Radian6 CEO Marcel LeBrun, a social entrepreneur who announced plans to build 96 affordable âlittle housesâ in Fredericton. In addition to housing subsidized by the province’s rent supplement program, the development will include a social enterprise center that will include a cafe, retail store, offices and community spaces. Residents will have access to drug treatment programs, vocational and entrepreneurial training programs and psychological support services.
LeBrun says marginalized low-income people need âdignity, community and opportunityâ and that his small home community represents an opportunity to address all of these issues.
“He’s the most worthy model,” LeBrun told me. âI have my four walls, my own lock and key, my own lawn, my own private space, but I also have a community because I have all this green space shared with me and my neighbors. And then I have the opportunity, which is the center of social enterprise because I can learn skills, I can be in a patient working environment to achieve my goals.
LeBrun’s project focuses on the homeless and people in precarious situations. But our conversation, which you can listen to in the next episode of the Huddle “Home Office” podcast, touches on housing issues in general and the challenges people face with rising rents in the area.
He believes the best solutions will come from nonprofits, not the private sector.
âWe are discussing the purpose of the company. Is it to generate profit or to improve the state of the world? More and more companies are finding that they have a mandate that goes far beyond just making a profit. That said, in real estate, it seems like that’s what drives it, âsays LeBrun.
âBut there are models emerging that are trying to be a little more affordable by design. I really think special purpose nonprofits are really the way to solve the problem because you are going to get more than just a house.
For LeBrun, it’s also about building community, not just providing low-cost housing.
Earlier this week, new Huddle reporter Sam Macdonald reported on a 56-unit affordable housing project in Saint John that was approved by the city’s planning advisory committee. It will have a daycare on the ground floor and an outside play area. Like LeBrun’s mini-house project, the intention is to create a sense of community as well as an affordable place to live.
âWe’re not looking to make a lot of money – we’re here to provide much-needed housing for all walks of life,â says Kevin McDonald, Chairman of the Board of Steepleview Developments.
It all comes down to intention and we need more developers, both private and non-profit, focused on housing affordability.
Our motives were mixed when we bought our southern property 15 years ago. I had lived in all three units and had a strong emotional attachment to the building and the surrounding neighborhood. We also thought it would be a good investment, which it would have been without this wall.
Search for âHuddle Home Officeâ on a podcast platform like Apple and Spotify and listen to the episode starring Marcel LeBrun, which will be released next week. You can also follow the show there and listen to earlier episodes featuring Maritime business leaders like Bryana Ganong and Frank McKenna.
Banner image: Mark Leger / Huddle.