In their latest article, Nemoy Lewis, Dimitri Panou, and Richard Maaranen explore the impact of Canada’s Limited Dividend (LD) program. Concentrated in racialized inner-city suburbs, especially Black renter-majority neighbourhoods, they find that the LD program provides a blueprint for the financialization of housing—protect investor returns at the cost of building neglect, rent hikes and weakened tenant security.
Read the ArticleThe 1970’s are often referred to as a golden age for affordable housing development in Canada; by the end of 1977 over 450,000 units had been delivered through Canadian funding programs, including 103,900 low- and moderate-income rental units through the Limited Dividends program. But what was the LD program, and what is its legacy? These questions are explored by Dr. Nemoy Lewis, Dimitri Panou, and Richard Maaranen in their latest article Organized Abandonment and Financialized Extraction: Racial Capitalism and the Political Afterlives of limited Dividend Housing in Toronto where they document how the state helped create the conditions for the financialization of rental housing long before the term was widely used.
Central to this analysis is Canada’s legacy of colonialism. As a white-settler state founded on the dispossession of Indigenous Peoples and extraction of natural resources, these power dynamics continue to play a central role in Canadian housing policy. This history is also closely linked to policies that disproportionately impact Black and racialized communities. Limited protections from rent increases paired with underinvestment in building maintenance and repairs allows for investor profits at the cost of the health, safety, and security for tenants.
Canada’s Limited Dividend Program
The goal of the LD program was to stimulate the construction of private rental housing for low- and moderate-income households. It did this through the provision of 95% federal loans at preferential interest rates over 50 years provided to developers that agreed to receiving limited profits (i.e., dividends). There were also protections of low rents with requirements that all rent increases be approved by CMHC. As interest rates increased through the 1970’s, it was difficult for the federal government to provide preferential interest rates, and the program was phased out by 1976, replaced by the Assisted Private Rental program where there were no caps on rents.
While the 1990’s are often pointed to as a period of time where federal divestment contributed to the conditions for financialization, a different narrative emerges when the LD program is explored in more depth. Analysis of the LD program show that over time changes were made to protect investor returns while allowing affordability requirements, maintenance obligations, and tenant protections to weaken. In the 1960’s housing developed through the LD program declined significantly, following a reduced allocation after fund misuse by some builds, as well as unprofitability. In a twist that would foreshadow things to come, the government removed the cap on dividends in 1968 and allowed LD companies to pay off their mortgage after 15 years, removing obligations to affordability. This pattern provides a blueprint for the financialization of housing in action today.
The Chalkfarm Towers Example
The Chalkfarm Towers in the Downsview area of Toronto provide an example of LD investment followed by organized abandonment. With 1,214 units, the Chalkfarm towers have the highest concentration of units created by the LD program and exemplify the scale of construction made possible by the program as well as the gaps in accountability. Weakened affordability and maintenance protections make LD buildings prime investments for financialized landlords. Dr. Lewis and his colleagues found that across the city 65% of LD properties are owned by financialized landlords. In Black renter-majority areas this number jumps up to 100%.
Ownership records paired with public records demonstrate a pattern of maximizing profits at the expense of building maintenance. In 2002, the Chalkfarm properties were purchased by the Oaks GP Limited, which had connections to the Lehman Brothers. The authors found that in 2005, three years before Lehman Brothers filed for bankruptcy, the Oaks GP Limited sold the towers to the Fishman Group for $77 million. By this point the towers had fallen into disrepair, with the City of Toronto identifying it as one of the area’s most dilapidated buildings. Licensing and Inspection data also show that the numbered corporation representing the Fishman Group was among the most frequently cited for property violations across the city. Problems continued after the building was bought by a subsidiary (Greenboard Holdings Ltd.) of the long-term property manager Greenwin Inc.
Black, Low-Income Households Disproportionately Impacted
Data on rents provide further evidence of the wealth extraction that characterizes the financialization of housing. A map of LD buildings shows that many are located in areas with a concentration of Black households. Furthermore, in areas with an LD building and a majority of Black, low-income households (>50%), the average annual rent increase was +8.9%, much higher than the 4.7% increase that tenants experienced in areas with an LD building that had a White, low-income majority.
Health harms were also widely documented in tenant interviews. Many tenants described poor ventilation and issues with moisture and mold that they attributed to respiratory conditions, especially amoung young children. Medical care was also often sought following pest infestations and bedbug bites. When housing conditions are poor, research has consistently found that poor health outcomes follow, especially for Black households. However, the researchers also documented tenants caring for one another and organizing collectively to address injustices. Tenants helped one another manage rent pressures, and connected each other to food programs and community supports in a unified effort to refuse the precarity that resulted from profit extraction.
Lessons from the LD Program
There are a number of important lessons that can be taken from the LD program. First off, it is important to acknowledge that the program was able to deliver a significant number of units at low- and moderate- rents. Furthermore, subsequent programs that tried to stimulate rental production by removing caps on profits were not able to deliver low- and moderate-income units. Dr. Lewis and his colleagues clearly show how the conditions that have led to poorly maintained buildings with crumbling entryways and rampant pest issues are manufactured by policies that allowed for financialization and the maximization of profit extraction at the expense of tenant health and safety.
Operating agreements are also an important consideration especially when paired with non-profit ownership. Funds for operation conditioned on the delivery of affordable housing were embedded into the original CMHC Operating Agreements for LD properties, however, owners were given the right to prepay their CMHC-insured mortgages which allowed landlords to terminate these conditions early. While landlords benefited from increased profits, tenants faced rent increases paired with deteriorating conditions. Steps should be taken to close these types of loopholes as the government looks to invest in affordable housing with programs like Build Canada Homes.
The Future of Black-led Housing in Canada
Black Canadian’s are also taking their housing futures into their own hands, developing programs that address historical wrongs and embed community into the development process. On the west coast, Hogan’s Alley Society formed the Hogan’s Alley Community Land Trust and has an MOU that sets out the terms for a long-term lease of a historically Black neighbourhood in Vancouver that was displaced by the Georgia Street viaduct. On the east coast, Upper Hammonds Plains Community Land Trust is building 162 new co-operative homes that will be the largest Black-led co-operative housing project in Canada. These projects centre relationships of collective obligation, permanence and repair, disrupting practices of extraction that have shaped Canada’s LD housing. With the National Housing Strategy 2.0 on the horizon, we have a choice in what future we choose to invest in.
The Balanced Supply of Housing (BSH) is a SSHRC-CMHC funded partnership grant led by Dr. Alexandra Flynn at UBC’s Peter A. Allard School of Law, focused on land use, housing financialization, and sustainable housing futures across Vancouver, Toronto, and Montreal.
