Community bonds offer solution to pre-development financing

Indwell is a charity organization based in Hamilton, Ontario that develops and operates supportive, affordable housing for vulnerable populations. Indwell’s communities support over 1,000 tenants across Southern and Southwestern Ontario.

Indwell has adopted a community investment approach to finance pre-construction costs. Through the Hope & Homes Hamilton Community Bond, Indwell has reached their target to raise $5 million to develop new affordable housing projects in Hamilton.

Project scope and expected outcomes

Indwell has received CMHC funding and loans for its affordable housing projects and innovation initiatives, delivering sustainable, accessible and affordable housing for the communities it serves.

The purpose of the community bond is to secure pre-construction financing and to get projects shovel-ready to attract long-term financing from various government entities such as CMHC.

Community investment

A community bond is offered only by charities and non-profits. All types of investors can benefit from accessible pricing to put their money towards the community and earn a financial return.

Short-term financial solution

The community bond is not part of the long-term project financing. It is structured as a revolving loan fund. As projects become shovel-ready and attract long-term financing, community bond funds are redeployed on the next pre-development project.

Investment options

Indwell offers five community bond series with minimum investment ranging from $1,000 to $50,000, with 3 or 5-year terms and annual interest rates ranging from 3.5% to 5%. Investors can choose the investment option that is best suited to their portfolios, including holding the community bond in Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA).

Cost-savings to enable affordable housing development

Compared to traditional financing options, the community bond offers competitive interest rates and lower costs for the housing developer. This enables Indwell to invest more in supportive, affordable housing and bring more projects to life.

New projects funded through the community bond

Indwell is looking to develop four new affordable housing projects in Hamilton through the Hope & Homes Community Bond.

• Acorn Flats: 23 residential units designed for families, including 7 accessible units and commercial space, mainly targeting families on the Access to Housing List in Hamilton.
• Stonehouse Apartments: 50 residential units consisting of 1-bedroom and studio apartments, including 9 accessible units, targeting people on the Access to Housing List in Hamilton.
• Ottawa Street Apartments, Phase II: 32 residential units, including 6 accessible units, mainly targeting Indigenous tenants and those on the Access to Housing and priority lists in Hamilton.
• Century Manor: 41 one-bedroom units including accessible units, mainly targeting people needing discharge from psychiatric hospital in Hamilton, as well as those on the Access to Housing and priority lists in Hamilton.

Challenges and risk mitigation

Developing supportive, affordable housing projects is a significant task that involves risks associated with reliance on funding programs and rising development and construction costs and timelines. Indwell mitigates risks by:

• working with all levels of government, donors and community investors
• carrying out feasibility studies and effective cost estimates, including a 10-15% contingency budget on all costs
• choosing experienced contractors and builders with a proven track record of completing similar projects on time and within budget, with sound project management and quality control measures in place