For decades it has been a way for thousands of Edmontonians to make ends meet, whether they're young families struggling to pay a mortgage, seniors faced with fixed incomes and rising taxes or landlords looking for more revenue.
Put up some drywall, install a bathroom, fridge, stove and cabinets in a basement, above a garage or even in a separate little building in your garden — and presto, you have a secondary suite.
Many secondary suites are located near post-secondary institutions, where housing demand far exceeds the supply. An estimated 10,000 suites in Edmonton contravene zoning bylaws, but the City has generally turned a blind eye to this largely underground movement. Although it has the power to shut them down, there are no fines on the books. Until recently, the secondary suite has been a source of ambivalence for the City.
A severe housing shortage that peaked in 2006 and 2007 transformed the blind eye into a helping hand. Edmonton's homeless count has been growing yearly, more than tripling since 1999 to more than 3,000, and the City has been under pressure to do something about the lack of affordable housing for the homeless and working poor. As a result, zoning bylaws have been loosened and homeowners can now get grants to build new suites or bring current suites up to snuff.
"I'm a strong believer that this is a very cost-effective, non-invasive way of creating new affordable housing," says City housing manager Terry Loat. "You're not about to get a big towering behemoth beside your own investment in a home."
As part of Cornerstones, a $148-million program implemented by the City of Edmonton in 2006 to create more than 2,500 units of affordable housing, the City committed $12.7 million for grants to encourage the development of new secondary suites or improve existing ones. Under the program, homeowners can receive up to $24,000 to renovate existing secondary suites, and up to $20,000 to build new suites in existing or new homes.
But the criteria is extensive and the rules have changed on several occasions since the program's inception. To be eligible for a grant, landlords must provide a separate entrance, a minimum floor area per person, cooking facilities and a bathroom, as well as conforming to Alberta Fire Code requirements, such as having an alarm system connected to the rest of the home and minimum window sizes. The existing units must be rented out to people whose earnings are less than the median income for the Edmonton area, which is pegged by Canada Mortgage and Housing at $27,000 for a single person and $49,000 for a couple, and the homeowner must put up at least 25 per cent of his or her own money toward the construction.
Thanks to this program, Derek Stephen, 31, and Lindsay Cragg, 27, both students in NAIT's ultrasound technology program, were able to find a bright, new 900-square-foot basement apartment for $1,100 per month, including all utilities except phone. For what they're getting, it's a great deal compared to other apartments they shopped around for online.
"This place jumped out at us," says Cragg. "It's just renovated and we're the first tenants." They especially like the modern kitchen cupboards with the lazy Susan utensil racks, and they appreciate the plentiful storage space. For people living largely on student loans, it's a good stepping-stone toward the time when they can afford to buy their own homes. And they both appreciate that they don't have to complicate their busy lives with paying utility bills, either.
Cragg and Stephen are the type of people the grant program aims to help. But so far it is undersubscribed. Loat expected about 525 applications for new and renovated suites over four years, but almost half-way into the program, 75 applications have been approved, two-thirds of which are for renovations.
This low uptake has surprised the planning department. Although the housing market has cooled and vacancy rates were higher than four per cent last fall, rents have not fallen and there is still a shortage of affordable housing.
Sean Verret, who is Cragg and Stephen's landlord, puts the blame solely on an initial rule approved by city council — with the urging of the Edmonton Federation of Community Leagues (EFCL) — that restricted the grants largely to people living in the home, ruling out many absentee landlords. "That basically shut down the program," Verret says. The rules were relaxed slightly a few months later, meaning that homeowners with existing suites don't have to abide by the owner-occupier rule anymore.
As a further encouragement, the City removed zoning restrictions that permitted secondary suites only on lots backing onto service roads or corner lots.
The EFCL wanted more restrictions, making secondary suites a discretionary use, which would have given neighbours a chance to take their concerns to the Subdivision and Development Appeal Board, rather than a permitted use, which only requires the approval of the City development officer, but the City didn't go for the proposed EFCL restriction.
"The EFCL encourages secondary suites to be developed, but what we don't want to happen is absentee landlords buying a bunch of properties, using subsidies to create more suites and then tearing them down when they get rundown," says Bev Zubot, community planning advisor for the federation. "We don't want to encourage land speculation, but to encourage affordable housing."
Verret received a $24,000 grant toward his $40,000 renovation of a formerly non-conforming basement suite in his Lendrum Place home. That included new electrical work, drywall, a smoke detector system, the new kitchen and even cutting into the foundation to increase the size of bedroom windows.
The owner-occupier rule doesn't affect him personally because he lives upstairs from the renters, but as the owner of a small real estate investment company, he says that the requirement discourages potential investors. Verret had started organizing a seminar on the secondary suites program for hundreds of people looking to invest in low-income housing, and he had to cancel it when the residency requirement was brought in for new suites. Verret hopes to organize another seminar, now that the rules have changed slightly.
Although he is fine with having renters living under him, Verret says that not all homeowners are comfortable with that responsibility, and the program should be open to investors as well. "I'm glad to have taken advantage of it, but lots of people don't want to be landlords. Why not give it to people who want that job?"
Hal Wright, general supervisor for the City's inspection services, who oversees the secondary suite grant program, agrees that the owner-occupier requirement has put a damper on the program. The planning department originally proposed that it be open to all absentee landlords, but city council voted for the restriction because of community concerns.
"Obviously, if you're in the business of developing buildings, you would like something with the best return and the most saleability," Wright says. "There would be a lot of developers who would appreciate this."
The good news, according to Wright, is that there has been a "spike" in the number of applications, especially since a requirement to limit the rent to 85 per cent of median market rent was removed.
Asked if the removal of the rental limit countered the program's original purpose of creating affordable housing, Wright says the restriction on rent didn't make sense. "We'll let the market take care of itself," he says, adding that secondary suites are often cheaper than apartments.
The program may also get another boost now that the word is getting out that the paperwork isn't that onerous. Although there is a requirement to get at least two quotes from contractors, as well as periodic inspections during the work and after it is completed, the paperwork isn't much more than with any construction, which requires building and development permits. Wright says that the average turnaround for approval has been five days.
The Greater Edmonton Alliance, which represents more than 40 church and social groups, labour groups and small business associations, supports encouraging secondary suites as a source of moderately priced housing. While the apartment vacancy rate has risen generally in Edmonton since 2007, Canada Mortgage and Housing reports show it is still tight at the lower end of the market. Rents have not gone down and are expected to rise because of higher costs for landlords.
Carolyn Nutter, who chairs the affordable housing team for the alliance, says there are likely many unsafe secondary suites, and the grant program can encourage homeowners to make them safe or to build new ones.
Many factors could be behind the limited response to the City's secondary suite grant program, Nutter says. Some homeowners might already be carrying a heavy debt load and might not be able or willing to borrow their share of the renovation cost, and some might be afraid that their proposed renovation might not be approved for a grant.
"Maybe it was unrealistic to expect that people would be willing to open themselves up to scrutiny," she says.
Even with several rule changes over several months aimed at pleasing various interests among homeowners and community alliances, there are still differing opinions among city councillors. Coun. Bryan Anderson supported more restrictions, at least making secondary suites a discretionary rather than a permitted use in established neighbourhoods, but his motion for more restrictions didn't pass.
There's nothing wrong with a young family renting out a basement suite to help them meet their mortgage payments, Anderson says, but neighbours have little recourse if there are problems and the owner is an absentee landlord.
"You could end up with one- or two-bedroom suite rented to four guys who work in Fort McMurray and they park their diesel half-tons and take the bus up to McMurray," explains Anderson. "Then when they come back and they're all tooling around in their diesel half-tons, the neighbours aren't going to be too happy. If the neighbours have complaints, the absentee landlord could be in Calgary."
On the other hand, Coun. Karen Leibovici says the requirements for grants may be too onerous. While the housing crunch isn't as severe as it was two years ago, the City should be doing all it can to prevent a recurrence when the economy picks up.
Leibovici wants to remove the owner-occupier requirement on new suites, which she views as difficult to enforce anyway. If a homeowner gets transferred to another city after receiving a grant, what happens then? she asks. They might have to rent the house out if they can't sell it, or a new owner might not necessarily choose to live there.
Leibovici also questions the assumption that owners are better neighbours than renters.
"On every level I disagree with the idea that if you're a renter, that equates with being a poorer community member. I think that was part of the thinking."
The rules may change again in a few months. Only $1.8 million, or 14 per cent, of the $12.7 million set aside for the program has been allocated to homeowners so far. The secondary suite grant program is scheduled to come back to city council for review in the spring for another tune-up. Or possibly a swift burial.
