25 September 2023
Silvera has traditionally been known as a provider of housing for low-income seniors. While that is at the core of Silvera’s organizational mandate, Silvera also has a history of delivering market-based housing with the objective of generating revenues to support and sustain its core organizational mandate. As the programs of its government partner have evolved, Silvera has grown the number of competitively priced market suites to ensure the sustainability of its affordable housing portfolio.
This “mixed-market” strategy allows revenues generated from market suites to support investment into increasing the volume of affordable housing and reduce Silvera’s reliance on government funding over time.
“Mixed-market housing is not a new direction for the organization,” says Carrie Larose, the senior manager responsible for Silvera’s mixed-market portfolio. “In addition to our communities that offer affordable below-market rents and rents indexed to a resident’s income, some of the suites in our housing portfolio are rented out at competitive market rates. Our goal is to grow all of these options to continue to meet the needs of low to modest income seniors and sustain the organization financially over the long-term.”
The need for financial sustainability
The mixed-market housing strategy enhances Silvera’s sustainability and allows the organization to grow its affordable housing options in an environment where accessing public funding sources can be a challenge. Government housing strategies at all levels are encouraging mixed-market housing.
Higher revenues generated from market suites create several financial benefits that provide sustainability and growth for Silvera, including:
- Cash flow sufficient to support debt financing on buildings, resulting in a reduction of government grant funding required to support the creation of new affordable units. This allows the limited government resources that are available for creating affordable housing units to be leveraged and optimized to create more affordable units then would otherwise be created.
- Cash flow to support a portion of Silvera’s administrative costs and building maintenance expenses, resulting in a more financially sustainable organization that is less reliant on limited and unpredictable public resources and that can improve long-term asset planning and management decisions.
- Opportunities to develop partnerships with like-minded private sector organizations that can unlock other sources of capital and share appropriate risks, through the optimal deployment of public funds and private resources and expertise. Structured correctly, with the right type of public investment, more affordable housing can be built at a better value and social return to taxpayers.
Carrie says the mixed-market strategy has played an important role for Silvera in the past and that growing this strategy in alignment with government and community priorities opens the door for continued innovative and locally driven projects at higher value for the broader community.
“The money we’re generating from our market-rate units allows us to build and maintain more income-indexed and below or near market affordable housing,” she says. “It makes financial sense and helps us build more affordable housing units for those individuals in our community that need them.”
Adjusting course to satisfy market needs
As Silvera grows its competitive market suites, the financial and market risks increase, requiring different types of strategic and operational decision-making.
The organization must be nimble to adjust to market trends and manage capital investments without the safety net of the government purse. Often the strategic and operational decisions with respect to this portfolio are driven by the need to effectively manage the inherent financial risk and to maximize financial performance of this portfolio of suites.
While Silvera may operate these units similar to those within the private sector in terms of revenue and profit optimization, we remain a non-profit organization with a mandate to deliver and support affordable housing for seniors. As a result, positive cash flow or retained earnings from these units is not distributed to shareholders. Instead, it is reinvested to support the growth and sustainability of our affordable housing mandate.
Maximizing the financial performance of these units enhances Silvera’s ability to deliver more affordable housing in collaboration with government funders and partners.
Continuing important partnerships with government
Carrie says the mixed-market strategy does not let the government off the hook for its role in delivering affordable housing.
“We continue to ask the government for money to maintain our buildings and build new units. They are critical partners; however, we cannot exclusively rely on funding decisions that are out of our hands,” says Carrie.
“Governments have encouraged us to get creative and the past has shown us at Silvera that having a portion of our housing portfolio dedicated to competitive market units allows us to bring in the revenue necessary to support housing options for low-income seniors.”
A true mix of affordable and market housing at Silvera
The high demand for rental housing means our mixed-market strategy can work. “Naturally, there are many people looking for government supported affordable housing. However, there also people who are able and willing to pay market rates, and our competitive market units have proven to be attractive to these individuals,” Carrie says.
Silvera’s Westview Town Suites was Silvera’s original foray into a mixed-market strategy and has offered competitive market supportive living suites for over two decades. This community does not offer any government supported affordable suites. Market rents currently start at $2,900 per month, including three chef-inspired meals daily, housekeeping weekly and Life, Learning and Leisure programs.
Many of Silvera’s other newer communities have also begun offering market-priced suites.
Westview Residence West is an independent living building containing 83 suites, with 58 apartments at market prices and 25 at affordable below-market rates.
Similarly, our Willow Park on the Bow Residence is an independent living apartment that offers 75 competitively priced market suites with an additional 75 being offered at below-market rates.
“Silvera remains focused on providing government supported affordable housing that is indexed to income or offered below or at near-market prices to the people who need it,” Carrie says. “By offering a variety of types of rents, we can truly offer something for every budget while sustaining and growing our core mandate to support those who need it most.”