Liberal government’s housing plan promises to expand GST exemption to new residence buildings

The federal Liberal government is proposing to extend the exemption on the five per cent GST for purpose-built rental housing to new residence buildings.

The Liberals announced the new policy proposal on April 12 in a series of pre-budget events leading to the unveiling of Budget 2024 on April 16.

Algonquin College is considering a new residence building for next year’s Master Campus Development Plan. The college is aware of the need for more student housing, but funding is an issue.

“The college doesn’t have the ability to go into deficit on this,” said Ryan Southwood, executive director of Facilities Management.

The college currently has $60 million in deferred maintenance backlog, and the projection for 2032 leaves the college liable for $300 million.

Southwood said the college is looking for partners to make providing additional housing opportunities for students feasible. A GST exemption may help convince potential partners to work with the college, according to Southwood.

The exemption applies to buildings that begin construction on or after Sept. 14, 2023, and before Dec. 31, 2030. Buildings must also finish construction before 2036.

A new residence building would have to break even and, ideally, make money like the current one, said Southwood.

Right now, R-building can house 1,050 students and it costs $4.57 million to run over the 2022-2023 school year. The building made $9.89 million in revenue and paid $1.29 million in interest on debt and $2.8 million in principal debt. That brings the college’s net profit to $1.22 million.

That sounds profitable, but according to Brent Brownlee, director of campus services, it’s not near the amount required to run the building in the big picture. Brownlee said the R-building is about to undergo an HVAC replacement that will cost the college $14 million over the next three years.

Brownlee said there may be a need for more student housing.

“We are seeing extremely high demand,” said Brownlee. “There’s a large number of students interested in moving into residence for the upcoming academic year.”

Students are already being referred to the wait list when they inquire about living on campus.

The college is considering multiple locations for a new residence, according to Ryan Southwood. He said the F-building is a primary redevelopment candidate for residential or mixed use purposes.

Southwood says before the college starts building, things need to be properly planned out. He said that’s why the college is putting so much time into the next phase of the MCDP; once it’s done, they can get to work.

“This is a critical piece to make sure we don’t have an impact on the future in a negative way,” said Southwood. “It’s a way of addressing this appropriately, making sure we’re making the right investments at the right time.”

Southwood pointed out that buildings are a 50-year asset, and when you start putting them in the wrong place, it may limit development. He said it makes sense to take time to plan something that takes a long time to come to fruition.

“Even if we decided today that we were going to build a residence, and it’s funded, and we’ve got the right space, it’s going to be 18 months for design, it’s going to be 18 months for construction,” said Southwood.

Southwood said the college is also looking for student housing opportunities off-campus. The college would need a partner, and the right space would have to become available, but Southwood said it would be a benefit to students.

“Not everybody wants to be in the residence,” said Southwood. “People want to live out in the community, or closer to work.”

Southwood said the college is in the midst of a housing study that is using methods such as student surveys, interviews, and focus groups to determine the exact needs of students.

“We’re looking at getting a report in June that will identify, as best we can right now, what we think the demand is. And what the gap is between what we can offer in residence and what Ottawa can offer in the local area,” said Southwood.

While housing will be a focal point of the MCDP, there are other campus needs it aims to address.

“We have a number of facilities on our campus that are reaching end of life,” said Southwood. “They’ll have to come down or need significant investment in them to maintain.”

One of these facilities is the north part of A-building, which Southwood said has aged past the point of economic viability.

Southwood says that the MCDP will also attempt to address the need for additional space in S-building, home to the transportation technology program. The current concept is to give that program extra space and free up other spaces around the college by moving in programs that may benefit from being in the same building.

Southwood said that all plans are currently just concepts, and nothing is set in stone. The MCDP is slated to go before the Board of Governors again in February 2025.