HeadStart on a Home Program (HeadStart) is a major economic program announced to increase the availability of entry-level housing across the province of Saskatchewan. The objective of the program is to increase the available supply of entry-level homes by a minimum of 1,000 new homes in five years. This will encourage renters to buy, and free up rental housing stock as well.
Due to the prosperity and growth of the province, growing population, and increased immigration to Saskatchewan, many companies and Municipalities have expressed a need for more entry-level housing to help accommodate this growth and attract workers.
On March 28, 2011, the Honourable June Draude, Minister of Social Services, announced the Saskatchewan Advantage Housing Plan, a suite of programs to increase the availability of affordable housing in the province. HeadStart on a Home was one of these programs. The design of the program has been completed through public consultation with stakeholders across the province.
Through the Saskatchewan Immigrant Investor Fund Inc. (SIIF), the Government of Saskatchewan is flowing the federal funding of over $200 million for this program. SIIF is a subsidiary of Crown Investments Corporation. The government will not administer the Program or pick which Municipalities or projects the funds will be allocated to.
All Municipalities in the province are eligible to apply in support of construction financing loans to proven Builders and Developers.
The funding comes from the Federal Government’s Federal Immigrant Investment Program and must be repaid to the Federal Government five years after it is received. The Provincial Government has established the Saskatchewan Immigrant Investor Fund Inc. (SIIF) to receive and administer the federal funding which will be received over the next five years. The funds will be returned to fund (and repaid to the Federal program) through the sale of the new homes.
Westcap Mgt. Ltd. is one of Saskatchewan‘s oldest investment fund managers that specializes in the development, launch, and fund management of niche funds that address capital funding gaps in Saskatchewan. Westcap’s history and experience in delivering new funds and programs such as Golden Opportunities Fund Inc. throughout Saskatchewan, working with immigrant investment funds, and specialized investment acumen is important to the success of the program.
The Government of Saskatchewan held a request for proposal to manage SIIF and deliver the HeadStart on a Home Program, providing the loans to Developers and Builders. Westcap was awarded the agreement to manage all the business affairs of the Fund and Program with its strategic partners, the participating Credit Unions.
Westcap submitted its RFP to the Government of Saskatchewan in strategic partnership with participating Credit Unions including Affinity, Conexus, Innovation, Cornerstone, Synergy, and Spectra. The Credit Unions acting in cooperation with Westcap, the fund manager, will reach all communities in Saskatchewan an important component of the HeadStart on a Home Program.
Westcap and participating Credit Unions have formed a strategic partnership to deliver this major economic program throughout all of Saskatchewan engaging Municipalities, and Builders and Developers. Collectively working together these two Saskatchewan financial institutions will ensure the success of the Program and impact thousands of new home owners.
Participating Credit Unions are the “Community Champions” of the HeadStart on a Home Program and will ensure awareness of the Program reaches every corner of the province. In the months ahead, a complimentary program will be announced by the Credit Unions to assist new home buyers in purchasing a new home constructed by the HeadStart on a Home Program. Credit Unions consider community investment a social responsibility and see working with all levels of government as contributing to stronger and healthier communities.
Municipalities must apply to the Program in support/cooperation with the potential Builder and Developer seeking financing for a new development that will expand the entry level housing units in the community or Municipality. They can contact Westcap, the fund manager, directly or contact the local participating Credit Union who will discuss the project and eligibility before referring the project to Westcap.
The initial application for the project must be submitted by the Municipality, the primary beneficiary of increased entry‐level housing, but the construction loan will be with the Builder and Developer. One of the proposed assessment criteria will be the level of support, involvement or incentive provided by the Municipality to make the project a success. Developers/Builders and Municipalities are encouraged to work together to develop creative and flexible plans that involve municipal support, and adaptive financial arrangements.
The basic assessment criteria that each project will be evaluated on:
- Capacity of Developer/Builder – previous projects completed, financial condition of the developer, etc.
- Overall feasibility of the project – site plan, project description, overview cost of development, proposed sales pricing, sales strategy, etc.
- Municipality engagement – the support, involvement and incentive provided by the local Municipality
- Sales strategy – Developers/Builders must provide the sales plan inclusive of the strategy or incentives to assist the new home buyer in meeting the required deposit to obtain mortgage financing
- Needs analysis – applicants will provide a needs analysis of the project to ensure it is meeting a gap in the entry-level housing market
- The Program will provide secured loans to finance the construction cost of entry‐level housing units for sale in communities across Saskatchewan
- No upfront pre‐sale of housing units will be required from Developers/Builders
- Loans to Developers/Builders will be subject to an annual 4% fixed rate of interest
- There will be a 10% minimum equity requirement
- New entry-level housing units will have a target sale price at or below the MLS average sale price for that municipality in which the construction project is located, currently expected to be in the range of $180,000 ‐ $300,000
Westcap, in partnership with participating Credit Unions, has been awarded the management services agreement and the Program details and roll out of the program will happen formally in the weeks ahead. Interested Municipalities, and Builders and Developers can immediately begin to make contact with Westcap on their interest in the Program to discuss projects that may qualify.
The terms that the Program will provide construction financing are less onerous than typical traditional lenders in order to encourage Developers/Builders to allocate increased resources and capital to the entry-level home market. Traditional lenders would not typically fund under these terms.
By increasing the capital available to build entry-level homes and providing an attractive loan program to Developers/Builders. The 10% equity requirement will allow Developers/Builders to leverage their available equity capital to build more units then what they would be able to if the builder was subject to the traditional equity requirement. The reduction in pre‐sales will reduce upfront costs, keeping the new homes more affordable and also kick start the construction time of new developments.
Over the past number of years the Government of Saskatchewan has conducted independent reports on the housing supply, and separate stakeholder meetings that confirm the need for the Program. Generally, across the board, Municipalities are viewing housing as a priority and an urgent need. The issue of housing is confirmed by the remarks and actions coming out of the SUMA conference in February 2011. The increase in the province’s population has made the availability of entry-level homes a priority to help those looking to exit the rental market and purchase a home.
No, this is a made-in-Saskatchewan solution to increase the availability of entry-level housing and there is no other Program similar to this in Canada.
CIC has experience and is in the best position to manage the flow of funds between the Federal Immigrant Investor Program and the Saskatchewan Immigrant Investor Fund (SIIF).
Are there specific requirements for who will be eligible to buy these, e.g. income level restrictions?
No, the objective of the program is owner-occupied home purchasers.