Construction should begin by October on the first 400 housing units three of Montreal’s largest real estate developers have committed to help build in a bid to provide housing for 2,500 homeless people in the city.

The developers – Groupe Mach, Devimco and Cogir – say a site in Montreal has been selected for the development. The City of Montreal will provide the land free of charge.

It will be the first of several housing projects aimed at reducing homelessness in the city by about half.

“We have a social duty to solve the problem” of homelessness, said Mach president Vincent Chiara, speaking at the Quebec Apartment Investment Conference Feb. 4 at Montreal’s convention centre.

Chiara said it’s long been believed the majority of homeless people have drug or mental health problems. “But there’s a new generation of homelessness – people without the means to pay the rent,” who now represent about 40 per cent of the Montreal area’s homeless population, which is estimated at 6,000 people. 

Personal connection leads to action

Chiara related that he met a family living in a tent in a homeless encampment on Notre Dame St. in which there was a full-time breadwinner. The family still could not afford to pay for housing.

He made that visit after meeting board members of the Old Brewery Mission, which works with people experiencing homelessness. The mission was seeking donations to build a homeless shelter. 

The Mach leader was surprised to see the organization quote the “astronomical cost” of $950 per square foot to build housing for the homeless, compared to the $400 per square foot that developers traditionally pay to build private apartments. Chiara then teamed up with the two other developers to find a solution. 

He said the rate of homelessness in Montreal has climbed beyond traditional levels. 

“We’ve never seen it before, and it can affect social peace. When people are hungry and can’t house their children, they’re prepared to do anything. We’re seeing crime rates rising and it will turn Montreal into something we’ve never seen.” 

Target group for housing project

The goal with this housing project is to target homeless people with financial problems, but who do not have mental health or consumption issues.

“What government is incapable of executing, we can execute," he said. "We’ve created a team that can do what government is incapable of doing,” which includes building at or below the cost the private sector typically sees.

Projects like this can free up other resources to then help people with more complex needs.

Mathieu Duguay, CEO of Cogir, said the developers are fast-tracking the initiative and working to ensure it doesn’t become mired in the processes that typically slow down development, such as calls for offers, negotiations and advisory bodies.

Since decisions are coming quickly from governments, lenders and community groups, “we’re going to be able to do the groundbreaking in record time,” Duguay said.

Industry unites to help build affordable housing

The stars are aligned like never before with the federal, provincial and municipal governments, Duguay added. He noted that last fall’s municipal election in Montreal, which saw the Projet Montréal party lose power, has changed the picture and opened new doors at city hall for developers.

Devimco president Serge Goulet said it is impressive to see how many professionals have come forward to offer their services for the project – including architects, engineers, lawyers, urbanists and insurance companies.

The general contractor and major lender should be named in the next 30 days and there should be shovels in the ground before a new construction code comes into effect in October, he said.

Duguay said general contractors have agreed to work for cost and provide materials at cost. The developers will not actively be involved in the construction or management of the properties.

Development to cost under $400 per sq. ft.

Quebec’s government-run housing agency, the Société d’habitation du Québec, or an organization named by the agency will own the housing developments. Given that the land will be provided for free and without taxes, it should be possible to build the housing for less than $400 per square foot, Chiara said.

However, based on a $400 per square foot calculation, it will cost about $400 million to build 1,250 two-bedroom apartments with an average net size of 700 square feet to house 2,500 people. The cost per unit would be $320,000 and the cost per occupant approximately $160,000.

If the government obtains financing at three per cent interest, the debt service charge will be $15.4 million per year with a 50-year amortization. Monthly operating costs to house each person are estimated at $517 per month.

“We have probably the most serious social problem in the last 50 years and we’ll need $15 million a year to solve the problem,” Chiara said, noting the scope of the issue, “and we’re doing nothing. It’s fixable.”

Duguay, who took pains to note the developers are not making a cent on the project, noted lots of similar developments will be able to proceed if it can be shown this project works.

“We won’t solve the problem with a magic wand,” he said, “but we can help homeless people who can quickly be rehabilitated into society.”