When I purchased a unit, I knew that Options' mission was to make home ownership affordable for people with modest incomes. Initially, I didn't know that some purchasers received additional help on top of the second mortgage, but finding that out didn't bother me. This isn't new; the same has been done for Options' previous projects, and the condos it has developed -- in the Distillery District, by Lawrence West Station, etc. -- have appreciated in value, improved their neighbourhoods, and bear no resemblance whatsoever to public housing slums. In fact, because 95% of the units in Options' buildings are owner-occupied, I would expect them to be better maintained than conventionally developed condos with a high ratio of investors. Also, I've heard that the Village by High Park has attracted more higher income purchasers than previous projects.
If you can afford to 'buy' a 2-bedroom condo and you are on welfare or waiting to get into city housing you are not a purchaser - someone else is purchasing on your behalf. (Even if when you die your kids will get less of the sale price)
Like rh-7 said, purchasers getting additional help still need a minimum income to qualify. I wouldn't assume that low income purchasers will normally hold onto their unit until they die, still dirt poor; owning their home allows them to build wealth, and, like anyone else, they may have reason to sell within several years or so (at which point, the loans are repaid with interest, funding future projects).
Some public housing advocates dislike Options' model because they don't see ownership as a viable alternative to subsidized rentals. As with any other condo, the price of a unit in an Options' building will reflect the market value when it is re-sold (when there's no "Alternatives Mortgage"), so it ceases to be as affordable. That's a problem for people who want each unit to remain affordable indefinitely. Instead, Options uses the proceeds from previous projects to build new affordable units.
Out of curiosity, are you planning on taking the second mortgage? I intend to pay mine off at closing; I don't need the extra down payment, and I don't want the added complexity, nor the restriction of my mortgage options.