Vancouver, B.C. – The BC Construction Association (BCCA) is launching a new tool to help skilled employees live in the communities where they work.
The non-profit is launching a mortgage investment corporation (MIC) that will help secure mortgages for skilled tradespeople, medical care providers, educators, and emergency responders, while at the same time provide the growing impact investment market with a tax-free vehicle that supports housing affordability.
The association stated that the MIC is in response to in-demand workers being unable to afford a home in the communities they serve. This means long commutes, unreliable rentals or moving to other parts of the country. According to the BCCA, this hurts employers’ supply of skilled labour, disrupts families and deprives communities of vital services.
Lisa Stevens, BCCA’s chief strategy officer, and Peter Elkins, co-founder of Capital Investment Network, had previously looked to a MIC as a possible solution for the southern Gulf Islands, whose communities have trouble finding service providers who can afford to live there. When Stevens joined the association, she saw the same need, but on a much larger scale.
Stevens and Elkins began exploring MICs to help tradespeople buy homes in B.C. Unlike banks and credit unions, MICs are not subject to the federal mortgage stress tests which has pushed home ownership out of reach for many.
Additionally, shares in MICs are eligible for government deferred and tax-sheltered savings plans such as RRSPs, RESPs, RRIFs, TFSAs and RDSPs. While MICs typically generate revenue by attracting higher-risk customers willing to purchase higher-rate mortgages, this MIC sought to be an impact-investment that would thrive by offering tradespeople and other essential workers the competitive-rate mortgages they couldn’t get elsewhere.
“Our goal is to create a social impact investment vehicle that offers value for investors while also helping tradespeople and other professionals to establish roots in B.C. communities,” said Stevens. “Guiding our approach is the belief that these highly skilled and hard-working earners should be able to afford housing, and organizations that employ and represent them are willing to invest in a financial vehicle that helps them succeed.”
BCCA enlisted the help of University of Victoria’s Gustavson School of Business. The school created a capstone project for its MBA program to help flesh out the idea.
Over the course of five months, faculty professors and 23 students devoted thousands of hours to conducting a gap analysis, financial research and surveys with MICs, potential investors, HNWIs, financial advisors, Foundations, tradespeople and constructions companies. That work became the foundation of the business case for the Impact MIC, Canada’s first impact-investment mortgage fund.
Elkins stated that he expects competitive shareholder dividends, along with the Impact MIC’s tax-deferred/sheltered benefits and the important community benefit, will attract $500 million in capital over the next 10 years from the growing number of banks, pension funds, wealth managers, family offices, contractors, developers and individual investors for whom impact investing is a growing priority.
“The BCCA Board has approved funding to move the Impact MIC forward,” said Chris Atchison, BCCA president. “We’re proud to pioneer an affordable housing solution with the potential to improve the quality of life for thousands of skilled tradespeople and other essential workers across the province, benefitting every B.C. community.”
Elkins called the Impact MIC a business solution with potential application to other industry sectors. “We look forward to exploring partnership with organizations that support highly-skilled essential workers, and to connecting with individuals and organizations interested in a competitive and tax-free or deferred return with the potential to create significant positive social impacts,” he said.
Elkins encouraged potential partners and investors to contact him at 778-966-1250 or peter@gmail.com. Interested parties can also visit www.bccassn.com/resources/mortgage-investment-corp
BCCA is planning to make mortgages from the Impact MIC available in April 2020.
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