1. Affordable Housing Program 2008

LE PROGRAMME DE LOGEMENT ABORDABLE 2008

COMMITTEE RECOMMENDATIONs as amended

That Council approve:

1. The allocation of up to $12.76 million in new Federal and Provincial funding under the Canada/Ontario Affordable Housing Program (AHP), specifically $7.0 million in “Wave 1” capital funding for up to 100 units and up to $5.76 million of reallocated Housing Allowances funding for up to 83 units of low-income rental housing.

2. That in light of the fact the AHP funding may not be sufficient to continue to support the development of new low-income affordable housing via the established request for proposals procurement process, that staff be directed to explore opportunities to acquire and rehabilitate existing low-cost residential properties, and to report back to Committee and Council if new procurement processes are required to enable this approach.

3. That a report be prepared for the Community and Protective Services Committee on the need for and procedure to annually fund a Housing Reserve Fund.

recommandations modifiées du comité

Que le Conseil approuve :

1. l’affectation de nouveaux fonds fédéraux et provinciaux, d’un montant de jusqu’à 12,76 millions de dollars, provenant du Programme Canada-Ontario de logement abordable (PLA), plus précisément 7,0 millions de dollars au financement d’immobilisation « de première vague » pour aménager jusqu’à 100 logements et jusqu’à 5,76 millions de dollars au financement réaffecté pour aménager jusqu’à 83 logements locatifs à loyer modéré;

2. l’instruction à donner au personnel – eu égard au fait que le financement du PLA pourrait n’être pas suffisant pour continuer de soutenir l’aménagement de nouveaux logements à loyer modéré au moyen du processus établi des demandes de propositions – d’examiner les possibilités d’acquérir et de rénover des propriétés résidentielles à bon marché existantes et, si de nouveaux processus d’achat s’avèrent nécessaires pour mettre en œuvre cette approche, d’en faire rapport au Comité et au Conseil.

3. la préparation d’un rapport au Comité des services communautaires et de protection sur la nécessité d’un Fonds de réserve pour le logement et les procédures nécessaires en vue de le financer annuellement.

DOCUMENTATION

1. Deputy City Manager, Community and Protective Services report dated 15 February 2008 (ACS2008-CPS-HOU-0001).

2. Extract of Draft Minutes, 6 March 2008.

Report to/Rapport au :

Community and Protective Services

Comité des services communautaires et de protection

and Council/et au Conseil

15 February 2008/ le 15 février 2008

Submitted by/Soumis par : Steve Kanellakos, Deputy City Manager/Directeur municipal adjoint,

Community and Protective Services/Services communautaires et de protection

Contact Person/Personne ressource : Russell Mawby, Director

Housing/Logement

(613) 580-2424 x 44162, russell.mawby@ottawa.ca

City Wide/à l'échelle de la Ville

Ref N°: ACS2008-CPS-HOU-0001

SUBJECT:	Affordable Housing Program 2008

OBJET :	LE PROGRAMME DE LOGEMENT ABORDABLE 2008

REPORT RECOMMENDATIONS

That the Community and Protective Services Committee recommend that Council approve:

RECOMMANDATIONS DU RAPPORT

Que le Comité des services communautaires et de protection recommande au Conseil d’approuver :

EXECUTIVE SUMMARY

On April 29, 2005, the Province of Ontario announced the introduction of the Affordable Housing Program (AHP) and allocated $30.16 million in funding to the City of Ottawa for a range of programs to invest in the development of new housing affordable to low- and moderate-income households. There were three program streams: Homeownership (232 units); Housing Allowances (400 units) and Rental and Supported Housing (315 units).

Staff proceeded to allocate the first wave of this funding, with 4 projects for 139 units approved in the fall of 2005. The Province requested that participating municipalities develop a Housing Delivery Plan, which was approved by Council on June 28^th, 2006 (ACS2006-CPS-HOU-0008). This plan directed staff to focus on delivering the Rental and Supported Housing stream. When current proposal calls are completed, the City will have funded a total of 410 units against an original allocation of 315 units. The “Beaver Barracks” project budgeted 100 units of AHP and City funding, but the successful proponent was able to fund 195 units of low-income housing because of access to other funding.

Council also directed staff to continue to negotiate with the Province for changes to the AHP program streams and to retain any funding allocated to Ottawa. Specifically, there were concerns about the effectiveness of the Housing Allowances stream, and staff indicated that one option would be to request that the $6 million allocated to that stream be converted to provide an additional 80 units of low-income housing. Confirmation of the transfer of this funding was received on January 31, 2008, and this funding will be included in a future Request for Proposals.

In addition there are 100 units of new funding available under the AHP. In 2006 the Province created an additional 300 units of capital funding for the Province for projects on brownfields sites. The City applied for 100 of those units, and on July 31, 2007, this additional funding was approved. All 100 units of this new brownfields funding were applied to the Beaver Barracks site, which allowed the 100 units of regular AHP funding initially allocated to this project to be utilized for a future project.

Experience with the AHP suggests that unless a developer can bring additional financial resources to the table, this level of funding will not be sufficient to achieve the very low-cost rents that previous AHP projects in Ottawa have been able to achieve through new development. Therefore, although new development will be encouraged in any Requests for Proposal (RFP) for this funding, staff will also solicit and encourage the acquisition and rehabilitation of existing residential properties in order to make necessary capital investments in existing private rental housing stock while preserving or improving the affordability of that housing. A Municipal Housing Facilities Agreement and bylaw will secure any such investment, and projects will be selected following standard Action Ottawa criteria that seeks to maximize both the depth of low-income affordability and the duration of that affordability over the long term.

A target of 500 units of affordable housing per year over the next 10 years was identified in the 2004 Long Range Financial Plan, contingent on the funding participation of Federal and Provincial governments. These targets were established as a benchmark against which this financial support can be measured. It is clear that Ottawa is significantly behind on meeting these targets. The commitments from senior levels of government under the AHP have not met expectations, and do not enable the City to achieve these targets. However, staff believe that is it important to ensure the success of the AHP to support continued demands by Canadian municipalities for more and better funding to meet the continued need for low-income affordable housing.

RÉSUMÉ

Le 29 avril 2005, le gouvernement de l’Ontario a annoncé le lancement du Programme de logement abordable (PLA), en vertu duquel il a accordé à la Ville d’Ottawa un financement de 30,16 millions de dollars destiné à une gamme de programmes d’investissement dans l’aménagement de nouveaux logements abordables à l’intention des ménages à revenu faible ou modeste. Le PLA comportait trois volets : l’accès à la propriété (232 logements); les allocations de loyer (400 logements); les logements locatifs et en milieu de soutien (315 logements).

Le personnel a procédé à l’affectation de cette première vague de financement à quatre projets, approuvés à l’automne de 2005, comprenant 139 logements. Le 28 juin 2006, donnant suite à une demande de la Province aux municipalités participantes, le Conseil approuvait le Plan de création de logements (ACS2006-CPS-HOU-0008), qui prescrivait au personnel municipal de se concentrer sur le volet des logements locatifs et en milieu de soutien. Au terme des trois actuels appels de propositions, la Ville aura financé l’aménagement de 410 logements, plutôt que 315 comme il était prévu à l’origine. Le projet du « casernement Beaver » prévoyait le financement de 100 logements par le biais des budgets du PLA et de la Ville, mais le proposant retenu a pu fournir 195 logements à loyer modéré en raison de son accès à d’autres sources de financement.

Le Conseil a également demandé au personnel de poursuivre les négociations avec le gouvernement provincial pour apporter des changements aux volets du PLA et retenir le financement fourni à la Ville d’Ottawa. Des questions avaient été soulevées quant à l’efficacité du volet afin des allocations de loyer, et le personnel indiquait qu’une des options serait de demander que les fonds de 6 millions de dollars consacrés à ce volet soient convertis pour fournir 80 logements supplémentaires à loyer modéré. La confirmation de ce transfert de fonds a été reçue le 31 janvier 2008, et ces fonds seront utilisés pour une future demande de propositions.

En outre, le financement de 100 nouveaux logements est possible aux termes du PLA. En 2006, la Province a prévu un financement d’immobilisation pour 300 logements sur des friches industrielles. La Ville a demandé et a obtenu, le 31 juillet 2007, un financement pour 100 de ces logements. La totalité de ce nouveau financement est allée au projet du « casernement Beaver », ce qui fait que le financement ordinaire du PLA de 100 logements, destiné à l’origine au « casernement Beaver », peut désormais être consacré à un autre projet.

Cela signifie que le personnel dispose actuellement d’un engagement allant jusqu’à 12,76 millions de dollars en fonds fédéraux et provinciaux nouveaux ou redirigés, qui permettront de financer jusqu’à 180 logements à loyer modéré, à raison d’un coût unitaire de 70 000 $, auquel s’ajoutent les coûts de programme. Toutefois, à cause de ses contraintes budgétaires actuelles, la Ville ne pourra fournir de fonds supplémentaires en immobilisations.

L’expérience tirée de la mise en œuvre des projets du PLA semble indiquer que, sauf si un promoteur peut faire appel à d’autres ressources financières, le niveau de financement en question ne permettra pas de répéter l’offre en loyers très modérés faite par le passé à Ottawa dans les nouveaux aménagements. Par conséquent, même si les nouveaux aménagements seront encouragés dans toute demande de propositions bénéficiant de ce financement, le personnel verra également à solliciter et à promouvoir l’acquisition ou la rénovation de propriétés résidentielles existantes, dans l’optique d’apporter les investissements en immobilisation nécessaires au parc de logements locatifs privés actuels tout en cherchant à maintenir ou à accroître l’abordabilité de ces logements. Un accord et des règlements sur les immobilisations domiciliaires municipales permettront d’obtenir un tel investissement, après quoi les projets seront choisis en fonction des critères normatifs du programme Action Ottawa; il s’agira de maximiser et de pérenniser l’abordabilité des logements à loyer modéré.

Le Plan financier à long terme de 2004 fixe comme cible l’aménagement de 500 logements abordables par année au cours des 10 prochaines années, sous réserve d’une participation financière des gouvernements fédéral et provincial. Cette cible a été établie comme point de référence pour mesurer ce soutien financier. Il est clair qu’Ottawa accuse un retard considérable dans l’atteinte de cette cible. Les engagements des ordres supérieurs de gouvernement dans le cadre du PLA n’ont ni répondu aux attentes, ni permis à la Ville d’atteindre la cible en question. Cela dit, le personnel municipal estime qu’il est important, pour assurer le succès du PLA, d’appuyer les demandes continues des municipalités canadiennes en vue d’une bonification et d’une amélioration du financement leur permettant de répondre aux besoins permanents de logements abordables à loyer modéré.

BACKGROUND

On April 29, 2005, the Province of Ontario announced the introduction of the Affordable Housing Program (AHP), in which the Province agreed to match $301 million in Federal funding, and also to develop programs for municipalities to build or otherwise provide housing affordable to lower-income households.

Table 1: Status of project funding from AHP Wave I

Project	Report	# Units	Status
Gloucester Non-Profit	ACS2005-CPS-HOU-0009	139	Under construction or completed
McLean Cooperative Homes
Multi-faith Housing Initiative
Quex Property Corp
Beaver Barracks	ACS2007-CPS-HOU-0010	195	Under development
Orleans Town Centre	ACS2006-PGM-ECO-0017	41	Final proposal pending
Tompkins Avenue	ACS2006-CPS-HOU- (Land)	16	RFP January 2008
Supportive Housing	TBD	19	RFP Spring 2008
Totals		410

Prior to the AHP, the City funded 304 units of low-income affordable housing directly and with other funding programs. In 2004, a target of 500 units of affordable housing per year over the next 10 years was identified in the 2004 Long Range Financial Plan, contingent on the funding participation of Federal and Provincial governments. These targets have been established as a benchmark against which this financial support can be measured.

Table 2: Affordable Housing Program Units Funded vs. City Target

Year	Target	Funded	Gap
2005	500	139	(361)
2006	500	0	(500)
2007	500	271*	(229)
Total AHP	1,500	410	(1,090)
Percentage		27%

* expected

It is clear from Table 2 that Ottawa is significantly behind on meeting these targets. The commitments from senior levels of government under the AHP have not met expectations, and do not enable the City to achieve these targets. However, staff believe that is it important to ensure the success of the AHP to support continued demands by Canadian municipalities for more and better funding to meet the continued need for low-income affordable housing. However, the AHP signals the return of the Provincial government to new housing development after over 10 years of absence, and the lessons learned in delivering the AHP should support both more appropriate funding and better policies to address housing needs.

DISCUSSION

The average development cost for the 410 new units built in Ottawa under the AHP has been about $144,000 per unit. The average public investment has been about $90,000 per unit, from all three levels of government. The funding breakdown has been approximately $60,000 per unit average from the federal and provincial governments and $30,000 per unit average from the City.

Municipalities intending to participate in the Affordable Housing Program (AHP) were required to develop a Housing Delivery Plan. Council approved a Plan on June 28, 2006 [ACS2006-CPS-HOU-0008]. Staff identified significant concerns with the AHP, particularly with the proposed Housing Allowances portion of the program. With Council’s direction, staff successfully negotiated with the Province to convert the $6.08 million in Federal funding for the Housing Allowances to capital. This will enable the development of up to 80 units of low-income affordable housing in 2008.

On June 29^th, 2006, Council directed staff to focus on delivering the Rental and Supported Housing stream. Staff have undertaken three proposal calls and funded 391 units of low-income housing to date, with a further 19 units still to be allocated, for a total of 410 units against an original allocation of 315. The Beaver Barracks project, approved on July 11, 2007, budgeted 100 units of AHP and City funding, but the successful proponent was able to fund 195 units of low-income housing because of access to other funding.

The first wave of the AHP funding included up to $70,000 of AHP funding plus up to $40,000 of City funding per unit. City funding includes a capital grant of up to $30,000 per unit, and additional funding or incentives to offset the development costs, including the value of any City owned land being provided, plus grants for the costs of building permit fees (estimated at $1,500 per unit), school board fees ($994 per unit) and to support the development of housing accessible to people with physical disabilities ($10,000 per unit for up to 10% of the units in a project). Incentives include waiver of development charges and levies (approximately $6,800 per unit) and pre-development studies and approvals where City owned land is being provided.

In addition there are 100 units of new funding available under the AHP. In 2006 the Province created an additional 300 units of capital funding for the Province for projects on brownfields sites. The City applied for 100 of those units, and confirmation of this additional funding was received on July 31, 2007. All 100 units of this new brownfields funding were applied to the Beaver Barracks site, which allowed the 100 units of regular AHP funding initially allocated to this project to be utilized in a future call for proposals.

This means that staff currently have a commitment of up to $12.76 million in new and redirected Federal and Provincial funding for up to 180 units of low-income housing, an average of $70,000 per unit plus program costs. The City will be required to contribute up to $750,000 in funding to offset the costs of building permit fee grants; school board fee grants; housing accessibility grants; professional services to support implementation and administration of the AHP, and a 1% contingency to deal with unforeseen costs to the program. This funding is available in the Affordable Housing Capital Building Fund from projects that did not proceed under earlier funding programs.

In previous waves of the AHP, the City has provided an additional $30,000 per unit on average to AHP projects over and above the development costs outlined above. This has enabled all of the AHP projects in Ottawa to exceed the AHP target rents. The AHP program requires that average rents in funded projects be no more than 80% of Average Market Rent by unit size. In Ottawa, we require that at least 60% of the rents be at 70% of Average Market, and in most cases projects have significantly exceeded that target, including some projects that have been able to achieve rents as low as 50% of Average Market.

Staff continue to identify the need for this additional per unit funding to fully support Council’s objectives for the AHP. In 2007, staff included a request for up to $8.2 million for 2008 in the Long Range Financial Plan Strategic Initiatives to support the delivery of up to 250 units, which was based on optimistic expectations of funding that might be available from the Federal or Provincial governments. Due to budget directions, the request was identified as “not recommended”. $5.4 million would be required to continue to fully support the 180 units of Federal and Provincial funding that is now available.

The impact of not having this additional funding will be that proponents will need to provide either additional equity or secure additional mortgage financing to support project development. Additional financing means additional operating costs, thus reduced affordability to lower-income households. Each $30,000 of mortgage financing costs about $150 per month, meaning that a unit that could be rented for $650 would have to rent for $800.

As a result, there may be a reduction in the number of project proposals received. Experience with the AHP suggests that unless a developer can bring additional financial resources to the table, AHP funding alone will not be sufficient to achieve the very low-cost rents that previous AHP projects in Ottawa have been able to achieve through new development.

However, as discussed below, staff are developing mechanisms to use this AHP funding to acquire existing properties, with the expectation that the per-unit funding required would be lower than for new construction, subject to building condition and renovation needs. Therefore, and notwithstanding the benefits of providing additional capital funding, staff are recommending proceeding with an RFP process without the additional City funding, including direction from Council to pursue acquisition and rehabilitation projects. All projects recommended for funding will be brought to Council for approval, at which time the status of the AHP, and the need for additional tools or funding can be discussed.

Acquisition and Rehabilitation of Existing Housing

As reported in the “Housing Needs in Ottawa” report in June, 2007 (ACS2007-CPS-HOU-0009), and in the subsequent City Housing Strategy, staff are recommending that strategies for the acquisition and rehabilitation of existing low-cost housing be pursued to help secure and ensure the continued availability of housing affordable to low-income households in Ottawa.

Since the Canada/Ontario Affordable Housing Program began in 2004, the focus has been on developing new affordable housing. It has been pointed out that acquiring existing private sector housing and converting it to permanent affordable housing may be a more cost-effective way of meeting low-income housing needs in Ottawa. Acquisition and rehabilitation is not necessarily less expensive than building new, depending on the state and location of a given property. A related point is that the purpose of this kind of approach is not necessarily to salvage buildings in need of significant repair, but to help preserve the existence of good quality low-cost housing.

Ottawa has seen a significant net loss of purpose-built rental housing. In 2006, there were 68,178 rental housing units in Ottawa, down from 70,251 in 1995, representing a loss of 2,073 units. These units were lost to the market for a number of reasons, including demolition and conversion to condominium. It is important to note that existing rental housing may also become less affordable because when owners invest in the necessary capital repairs and upgrades, they may have to raise rents in order to pay for those investments, which may make the housing unaffordable to low-income households. These investments are important to maintain the viability of the existing housing stock, but the loss of affordability is significant.

New purpose-built development will remain important and necessary, but increased effort to acquire and reposition existing housing to ensure permanent affordability is a tool that requires more attention, and perhaps deliberate funding.

Pursuing this strategy likely requires new tools and processes as compared to investing in new development. Development generally occurs on vacant land. Generally, this means that more time is available between initial interest in developing a site and funding approval and subsequent construction. Opportunities to acquire existing buildings may require more expedient action, which in some cases may mean that the ultimate owner and housing provider may not be immediately identified or available. Also, existing buildings come with existing tenants, which imposes other restrictions, especially with regard to managing renovations and placement of new tenants.

Staff have been exploring best practices elsewhere, and looking at currently available properties to get a sense of the logistics in pursing this course of action. One option might be for the City to acquire properties via the recently developed Development Corporation mechanism put in place for the development of City owned lands in Barrhaven and Nepean. The intent would be to immediately proceed with disposal via competitive process to a housing provider willing and able to operate the building as low-income affordable housing, using AHP funding to reimburse the City for any costs incurred in facilitating the transfer of ownership. The City already owns some residential properties acquired in the course of other City business, such as potential road widenings.

It is therefore recommended that, as part of this wave of the AHP, staff be directed to pursue acquisition opportunities, and once identified, bring a report to Council with recommended actions, including identifying financial risks associated with this approach.

Operating Funding

No additional operating funding is required to participate in the Affordable Housing Program.

Based on an estimate of 6 new development projects under this Wave of the AHP, it is estimated that approximately 400 to 600 hours of Legal Services support will be required to support the delivery of AHP, including developing contribution agreements, municipal housing facility agreements, executing the City’s position in mortgage financing documentation, and overseeing legal requirements for payments of capital payments during development.

Capital Funding

In order to support the delivery of the AHP, staff estimate that up to $750,000 in City funding will be required, as follows:

- $420,000 (estimated) for grants in lieu of Building Permit Fees and School Board fees

- $180,000 for capital grants to provide accessibility for physically disabled tenants, based on $10,000 per unit for 18 units

- $150,000 contingency based on 1% of total capital cost to develop 180 units of housing.

CONSULTATION

There was no consultation in the development of this report. The principles of the Action Ottawa program were redefined in 2006 and the proposed approach is consistent with those changes and Council’s previous direction.

FINANCIAL IMPLICATIONS

Capital spending authority to support Wave II of the AHP, in the amount of $750,000, as described above, is available in the Affordable Housing Capital Building Fund project (901001).

CITY STRATEGIC DIRECTIONS

This report supports the following City Strategic Priorities:

City Strategic Direction – Priority E. Sustainable Healthy and Active City – Objective 6: In cooperation with federal and provincial partners, end homelessness in Ottawa in 10 years.

City Strategic Direction – Priority E. Sustainable Healthy and Active City – Objective 12: Continue work to achieve the annual development of 500 housing units affordable to people earning low income. The objective is to close the gap in the affordable and appropriate housing supply.

DISPOSITION

Housing Branch will advise the Province of Council approval for accessing the additional Affordable Housing Program funding.

The City Manager or designate on behalf of the City will enter into a Contribution Agreement for the Affordable Housing Program.

Housing Branch will develop and administer Requests for Proposals for the rental stream of the AHP according to established practices under Action Ottawa.

Housing Branch will develop approaches for the acquisition and rehabilitation of existing residential properties and report to Council with recommendations on proceeding with this approach.

Affordable Housing Program 2008

LE PROGRAMME DE LOGEMENT ABORDABLE 2008

ACS2008-CPS-HOU-0001 CITY WIDE / À L'ÉCHELLE DE LA VILLE

John Dickie, Chair, Eastern Ontario Landlords Organization provided a written submission addressing the following specific issues:

Ottawa did not take up the “housing allowance”/rental assistance stream offered by the province under the last Affordable Housing Program (AHP)

People would have received about $250 a month in assistant but some felt this was not a deep enough subsidy. He recently learned from staff that inquiries were being made to find out what can be learned from that program and he wondered if there had been any response from the province. He believed the City policy should focus on housing allowances for the following reasons:

· they allow tenants to choose where they live

· they can provide immediate assistance to those in need

· they achieve income mixing without the cost of subsidizing middle-income tenants

· there are a number of organizations and municipalities that support housing allowances, including the Federation of Canadian Municipalities (FC), the Centre for Equality Rights and Accommodation, et cetera.

The value the City receives from subsidizing new rental construction

The report presents the cost per unit built (410 units at $90,000 each); however, the built units are not limited to low income tenants. There is a desire for income mixing so what does it actually cost per unit that the low-income tenant moves into. Based on the fact that 60% of the rents be at 70% of the Average Market, the total cost is more like $150,000 a unit and it is tax dollars that are going towards these capital subsidies.

His submission sets out the comparison with average market rent to determine what rent reduction is achieved, but the average market rent is probably not what the people (who need the assistance) are paying. If average market rent is $886/month (for example), the average previous rent that tenants paid might be $797/month. Using the latter figure, what the tenant actually saves in rent between where they were renting before and when they move into the new social housing unit, works out to $265/month. That is a total saving to tenants of $782,000 which is only 2% of the public cost of the program. Therefore, the cost of new construction is astronomical.

The value the City would receive from buying existing rental buildings for non-profit providers to operate

The cost to do this is also astronomical because the report suggests a cost of $70,000 per unit total, so it’s more than that per subsidized unit (over $100,000/unit to buy existing units). Evidence shows that over the past two to four decades, non-profit corporations and governments spend more than private developers to buy land, build buildings, operate buildings and put in upgrades.

A copy of his submission is held on file.

Councillor Holmes asked how much money the City put into capital for affordable housing this year and was advised by Russell Mawby, Director of Housing that Council did not include any dollars to add to the provincial/federal program. In 2005, Council provided about $7.3M to continue to see the build-out of the first wave of the affordable housing program. This money was generated on mortgage savings in social housing. He added that any operating surplus at the end of the year goes into the Social Housing Reserve and the City has been using that reserve to provide City capital funding for new development. He confirmed that Ottawa does not have an annual program of putting a specific amount into affordable housing. When asked if the department asked for capital funding in 2008 for the program, he explained that it was a strategic initiative ($5.8M) in the Long Range Financial Plan (LRFP), but very little if any of the strategic initiatives went forward.

When asked whether staff would be supporting a 2008 request for capital money for affordable housing, Steve Kanellakos, Deputy City Manager, explained that the LRFP determines what the capital envelope would be and therefore, any change would be an adjustment within a document that Council has already approved. He confirmed that while such a request could be made, as of this point, there is no funding source.

Councillor Holmes maintained that Council would have to address this problem because the City is not dealing with the waiting list for affordable housing quickly enough.

Responding to questions posed by Councillor Holmes with respect to buying buildings vs. building new, Mr. Mawby explained that the AHP is a federal/provincial program and was intended to produce new units from new development. The 2006 Housing Delivery Plan planned to explore other options because the City is probably losing more low cost housing in the market than it is able to replace through these small programs. Given the limited amount of capital available under this program, staff want to look at opportunities where they exist to acquire existing apartment buildings, put in the necessary renovations to maintain them and convert them to non-profit housing in order to address the growing waiting list.

Mr. Mawby further stated that staff are currently looking at a couple of properties that would be suitable for adding to the supportive housing stock (housing for single people requiring ongoing supports due to mental health or addictions) and as much as the City needs new construction, it also needs to be looking at those opportunities when they arise. This has been identified as a recommendation in the report because it changes the City’s procurement process and may, for example, require that the City take on the role of acquiring buildings and owning and operating them for a short period of time with the intent of transferring ownership to a community-based housing provider. When properties are available to buy, the purchaser must act quickly, but with the limited funding programs available, it takes time to assemble the necessary funding, and the opportunity passes. Having the ability for the City to act would secure good properties and buy the time needed to assemble the operating and capital funding. There is some risk to this approach, and staff would like the opportunity to look at some specific examples and bring some case studies back to the Committee for consideration.

Councillor Leadman asked for a staff comment on the statement made by the delegation that staff would be investigating the housing allowance options. Mr. Mawby explained that Council agreed not to participate in that program because it was unwieldy, unworkable and incredibly expensive to administer. He added that staff’s biggest concern at the time was that it forced people to move from existing housing into a vacant market unit in order to access the allowance and this imposes a significant moving and cost burden on those households. Staff would like to document the evidence they have received from the City of Toronto to help the province understand that if they plan to continue, there are considerations that need to be taken into account.

Given the comment made by the delegation that a number of organizations and agencies advocate for housing allowances, Councillor Leadman wondered why staff would not support it. Mr. Mawby clarified that the Housing Allowance program the City was converting the funding from was dysfunctional, and the Province agreed to allow the conversion and has since developed its own, somewhat improved allowances program. He further explained that the City has advocated (as has the FCM), that one of the tools that is needed to deal with housing needs is short-term housing allowances to help people stay in their apartment, rather than going on a long-term waiting list for social housing.

There is widespread agreement that a functioning housing system would include housing allowances, but the City as well as FCM do not advocate that it be the only tool. They are also supporting social housing and the development of new affordable housing.

The councillor asked if staff were looking at developing another program where there can be a housing allowance that will allow people to stay in their units. Mr. Mawby confirmed that a new provincial program, ROOF (Rental Opportunity for Ontario Families), offers low-income tenants $100 a month to help pay their rent. There is very tight criteria in terms of eligibility and the program will last four years. In addition, the province is embarking on a very comprehensive process (starting hopefully in June), engaging with stakeholders to develop a provincial strategy to deal with housing and all indications are that a housing allowance will be part of that conversation, although not the exclusive focus.

Councillor Cullen referred to the comments made by the Deputy City Manager with regards to the LRFP and asked when the next opportunity would be to advise that Plan to ensure Council deals with this pressing social issue. Mr. Kanellakos indicated that would occur at the end of the term of Council, but suggested there were always opportunities for Council to do what it wishes in terms of adding the funding. The councillor believed that what was required was to set aside monies so that when these occasions come from the senior governments, the City will be able to act on them in a timely fashion. The Deputy City Manager confirmed that in order to do that, the Committee would have to give direction to have such a strategy put in place.

Councillor Chiarelli recognized that the subsidy system can work fine if there is a significant vacancy rate and inquired what evidence there was as to whether or not that type of system would stimulate the construction of new units. Mr. Mawby advised that both the United Kingdom and the United States have used voucher systems almost exclusively and in both cases have realized that they need to address the supply side of the problem as well as the demand side. He added that both are moving towards making investments to acquire, maintain and preserve the permanent affordable housing stock, as well as providing vouchers that give people some choice in the market. The problem with allowances is that in the long run, they are a very expensive way of housing people because they have to respond to market demands. The benefit of having a purpose-built stock of affordable housing (including acquiring buildings and making them non-profit), is to stabilize the housing stock in the community. Allowances deal with the individual aspects of housing but social housing programs and development programs deal with the community aspects of housing and both are necessary.

The councillor referred to a situation in Bells Corners where a mobile home park with almost 600 residents may be sold in the future and if that occurs, there will be a sudden influx of people in need of housing. He wondered what the City could do to have a better ability to react to these types of situations. Mr. Mawby understood that the City Solicitor is developing a document regarding the City’s legal ability to act after a private sector deal has gone forward. He indicated that municipalities can and have stepped in when the public interest warrants it. The councillor did not believe the City was in a position to react at this point to such an influx because Council has not created any kind of policy context that allows a reaction one way or the other. Mr. Mawby advised that in this particular situation, the service agencies are already working with those residents to help them understand what their options are.

The councillor suggested that if there were a framework that recognized the cost that this is going to place on the City, it would be in a position to enter into discussions with the new purchaser. Mr. Mawby again deferred to the Solicitor’s report in terms of what the City’s legal responsibilities and abilities are in this regard. He agreed to take the councillor’s comment as a suggestion that staff document and provide to him what the cost to the system may be in dealing with this kind of process.

Regarding the procurement process referenced in Recommendation 2, Councillor Bédard asked whether staff propose to establish guidelines in order to determine what kind of properties would be sought. Mr. Mawby confirmed this, stating that what is also required are resources and the ability to identify what mechanisms staff should be given in order to enter into these kinds of deals. The councillor was concerned that the administrative policy is not available at this time because he feared the City would end up buying housing that is in poor condition. Mr. Mawby indicated that the report explains it is not the City’s job to salvage distressed properties, but to acquire those that can provide good quality low-cost housing and make it permanently affordable by transferring it to the non-profit sector. He stated that their track record in the new development process is building very good quality housing that has low operating cost, very high energy sustainability, good neighbourhood development characteristics and good integration into neighbourhoods. He noted the councillor’s comments however, and indicated they would be reflected when staff report back with some ideas of what properties are available and why the case to buy them is strong.

With respect to the conversion of condominiums and the City’s policy that stipulates that when the vacancy rate reaches a certain point, it does not permit conversions, Councillor Bédard made note of the fact there are certain areas that have an over-supply of subsidized housing and rental accommodations and he asked whether staff would be looking in other areas where there is a need to increase the mix of ownership vs. renters. Mr. Mawby confirmed that staff intend to bring back for the Committee’s consideration and direction (June) a report which would give a sense of what properties are out there and what the business case would be, et cetera. The councillor explained that what he wanted to see was how the administrative policy is going to work in order to purchase these properties, and for example presumes that staff will not be brining back every property for Councils approval, but would be working within a policy. Mr. Mawby agreed.

Councillor Holmes brought forward a Motion directing staff to report back on the need for and procedure to annually fund a housing reserve fund. Mr. Kanellakos recollected that staff produced a report in 2007 that demonstrated what the requirements would be to meet the targets and suggested that could be recirculated. In addition to that, the councillor asked that staff indicate what Council would have to change in the LRFP to get an annually-funded housing reserve fund, as is done for roads, water and sewer. She believed such a fund was necessary to be permanently there for whatever that year’s need is because without the money being readily available, the City cannot possibly respond to any of these matters that come up.

Chair Deans suggested that as part of the report to be brought back, staff could discuss what triggers the City can use to actually put money into that reserve account, i.e., a percentage of the sale of surplus properties from the City, a portion of development charge revenue, et cetera.

Moved by D. Holmes

That a report be prepared for the Community and Protective Services Committee on the need for and procedure to annually fund a Housing Reserve Fund.

CARRIED

That the Community and Protective Services Committee recommend that Council approve:

CARRIED, as amended