Item - 2013.EX35.4

Tracking Status

  • City Council adopted this item on November 13, 2013 without amendments.
  • This item was considered by Executive Committee on October 30, 2013 and was adopted with amendments. It will be considered by City Council on November 13, 2013.

EX35.4 - A Ten-Year Capital Financing Plan for Toronto Community Housing

Decision Type:
ACTION
Status:
Adopted
Wards:
All

City Council Decision

City Council on November 13, 14, 15 and 18, 2013, adopted the following:

 

1.         City Council, in its capacity as Shareholder of Toronto Community Housing Corporation (TCH):

 

a.         approve the Toronto Community Housing Ten-Year Capital Financing Plan (2013-22) as outlined in Appendix A to the report (October 16, 2013) from the City Manager; and

 

i.          direct Toronto Community Housing to increase its annual allocation from its existing operating budget for capital backlog repairs to $50 million for 2013 and to adjust this amount by the annual Consumer Price Index (CPI) for each year thereafter subject to annual Council budget approval;

 

ii.         direct Toronto Community Housing to initiate negotiations with potential lenders for the refinancing of Toronto Community Housing mortgages maturing in 2014 and 2015, with the potential to leverage equity, withdrawals of $22 million and $36 million respectively, to address the capital repair backlog and seek approval from Council for any proposed mortgage refinancing terms negotiated;

 

iii.        direct Toronto Community Housing to increase its annual capital repair backlog expenditures from $50 million in 2013 to in excess of $300 million annually by 2018 subject to annual Council budget approval and receipt of necessary federal and provincial funding;

 

iv.         direct Toronto Community Housing to allocate any unspent annual capital repair funding into a State of Good Repair Reserve Fund which is restricted to fund future capital repair backlog expenditures; and

 

b.         direct Toronto Community Housing to report annually, through the Toronto Community Housing Annual Report to Council, with an updated Ten-Year Capital Financing Plan as of December 31st of the prior year that includes:

 

i.          total amount of capital backlog repair expenditures from the prior year;

 

ii.          outstanding capital repair needs carried forward from the prior year;

 

iii.         reductions to the capital repair backlog due to the sale of assets and/or revitalization;

 

iv.         balance of the capital repair backlog reserve fund;

 

v.         changes in estimates for current and future capital repair requirements; and

 

vi.         changes in estimates for current and future capital repair funding.

 

2.         City Council request the Province of Ontario and the Government of Canada to continue to fund the City Toronto for social housing at current levels and to provide additional funding in the amount of $864 million each, representing an equal one-third share of the $2.6 billion in new ten-year Toronto Community Housing capital requirements (2016 through 2022) as detailed in Appendix A to the report (October 16, 2013) from the City Manager.

 

3.         City Council authorize the City Manager to allocate $10 million in total, $5 million in each of 2013 and 2014, to Toronto Community Housing from the City of Toronto's Development Charge Reserve Fund for Subsidized Housing to replace equity that Toronto Community Housing has previously used in new construction that supported growth through an increase in affordable housing units and require Toronto Community Housing to direct funds received to address the capital repair backlog.

 

4.         City Council request the Deputy City Manager and Chief Financial Officer, in consultation with the General Manager, Shelter, Support and Housing Administration, and the Chief Executive Officer, Toronto Community Housing Corporation, to report to the Executive Committee on how insurance companies operate in terms of coverage of repair issues, including mould, in the view of reducing Capital repair backlog pressures.

Background Information (Committee)

(October 16, 2013) Report with Appendix A, from the City Manager on A Ten-Year Capital Financing Plan for Toronto Community Housing
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-62782.pdf
(October 30, 2013) Presentation by the City Manager on Toronto Community Housing
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-63114.pdf
(October 16, 2013) Report from the City Manager on A Ten-Year Capital Financing Plan for Toronto Community Housing - Notice of Pending Report
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-62871.pdf

Background Information (City Council)

(November 12, 2013) Supplementary report from the City Manager on Toronto Community Housing Social Housing Mortgages (EX35.4a)
https://www.toronto.ca/legdocs/mmis/2013/cc/bgrd/backgroundfile-63707.pdf

Motions (City Council)

Motion to Adopt Item (Carried)

Vote (Adopt Item) Nov-13-2013 10:25 AM

Result: Carried Majority Required - EX35.4 - Adopt the item
Total members that voted Yes: 43 Members that voted Yes are Paul Ainslie, Ana Bail„o, Michelle Berardinetti, Shelley Carroll, Raymond Cho, Josh Colle, Gary Crawford, Vincent Crisanti, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, Sarah Doucette, John Filion, Paula Fletcher, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Norman Kelly, Mike Layton, Chin Lee, Peter Leon, Giorgio Mammoliti, Josh Matlow, Pam McConnell, Mary-Margaret McMahon, Joe Mihevc, Peter Milczyn, Denzil Minnan-Wong, Ron Moeser, Frances Nunziata (Chair), Cesar Palacio, John Parker, James Pasternak, Gord Perks, Anthony Perruzza, Jaye Robinson, David Shiner, Karen Stintz, Michael Thompson, Adam Vaughan, Kristyn Wong-Tam
Total members that voted No: 0 Members that voted No are
Total members that were Absent: 2 Members that were absent are Maria Augimeri, Gloria Lindsay Luby

EX35.4 - A Ten-Year Capital Financing Plan for Toronto Community Housing

Decision Type:
ACTION
Status:
Amended
Wards:
All

Committee Recommendations

The Executive Committee recommends that:

 

1.         City Council, in its capacity as Shareholder of Toronto Community Housing Corporation (TCH):

 

a.         approve the Toronto Community Housing Ten-Year Capital Financing Plan (2013-22) as outlined in Appendix A to the report (October 16, 2013) from the City Manager; and

 

i.          direct Toronto Community Housing to increase its annual allocation from its existing operating budget for capital backlog repairs to $50 million for 2013 and to adjust this amount by the annual Consumer Price Index (CPI) for each year thereafter subject to annual Council budget approval;

 

ii.         direct Toronto Community Housing to initiate negotiations with potential lenders for the refinancing of Toronto Community Housing mortgages maturing in 2014 and 2015, with the potential to leverage equity, withdrawals of $22 million and $36 million respectively, to address the capital repair backlog and seek approval from Council for any proposed mortgage refinancing terms negotiated;

 

iii.        direct Toronto Community Housing to increase its annual capital repair backlog expenditures from $50 million in 2013 to in excess of $300 million annually by 2018 subject to annual Council budget approval and receipt of necessary federal and provincial funding;

 

iv.        direct Toronto Community Housing to allocate any unspent annual capital repair funding into a State of Good Repair Reserve Fund which is restricted to fund future capital repair backlog expenditures;

 

b.         direct Toronto Community Housing to report annually, through the Toronto Community Housing Annual Report to Council, with an updated Ten-Year Capital Financing Plan as of December 31st of the prior year that includes:

 

i.          total amount of capital backlog repair expenditures from the prior year;

 

ii.         outstanding capital repair needs carried forward from the prior year;

 

iii.        reductions to the capital repair backlog due to the sale of assets and/or revitalization;

 

iv.        balance of the capital repair backlog reserve fund;

 

v.         changes in estimates for current and future capital repair requirements;

 

vi.        changes in estimates for current and future capital repair funding.

 

2.         City Council request the Province of Ontario and the Government of Canada to continue to fund the City Toronto for social housing at current levels and to provide additional funding in the amount of $864 million each, representing an equal one-third share of the $2.6 billion in new ten-year Toronto Community Housing capital requirements (2016 through 2022) as detailed in Appendix A to the report (October 16, 2013) from the City Manager.

 

3.         City Council authorize the City Manager to allocate $10 million in total, $5 million in each of 2013 and 2014, to Toronto Community Housing from the City of Toronto's Development Charge Reserve Fund for Subsidized Housing to replace equity that Toronto Community Housing has previously used in new construction that supported growth through an increase in affordable housing units and require Toronto Community Housing to direct funds received to address the capital repair backlog.

 

4.         City Council request the Deputy City Manager and Chief Financial Officer, in consultation with the General Manager, Shelter, Support and Housing Administration, and the Chief Executive Officer, Toronto Community Housing Corporation, to report to the Executive Committee on how insurance companies operate in terms of coverage of repair issues, including mould, in the view of reducing Capital repair backlog pressures.

Decision Advice and Other Information

The Executive Committee requested the City Manager, in consultation with the Toronto Community Housing Corporation (TCHC), to provide a report directly to the November 13 and 14, 2013 meeting of City Council with a list of current TCHC mortgages, their terms, interest rates and annual cost to TCHC and the City.

 

 

The City Manager made a presentation to the Executive Committee on the Toronto Community Housing Reports:

 

-           EX35.3 - Putting People First – Moving Forward

-           EX35.4 - A Ten-Year Capital Financing Plan for Toronto Community Housing

-           EX35.5 - Amended and Restated Shareholder Direction to Toronto Community Housing Corporation

Origin

(October 16, 2013) Report from the City Manager

Summary

At its meeting in October 2012, City Council approved Putting People First – Transforming Toronto Community Housing, the report of the Special Housing Working Group, chaired by Councillor Ana Bailão, which made a number of recommendations to address the significant capital repair backlog and set a new course for Toronto Community Housing (TCH).  This report responds to the request for the development of a capital financing plan. A companion report Putting People First: Moving Forward responds to a number of other recommendations arising from the Special Working Group's report.

 

Toronto Community Housing December 31, 2012 Capital Backlog - $862 million

 

The Putting People First report identified that the Toronto Community Housing capital repair backlog needed to be addressed and as a result the City and Toronto Community Housing have secured new sources of financing.  Funding is being generated from approved mortgage refinancing in 2013 and through the ongoing sale of Toronto Community Housing properties as approved by Council.  At the same time, the Special Housing Working Group recognized that the capital repair backlog was going to grow significantly over time unless further funding measures were identified.

 

Based on a recent building condition study commissioned by Toronto Community Housing on their social housing portfolio, the consulting group Ameresco has estimated the current TCH capital backlog to be $862 million.  For an aging housing stock with an asset replacement value of some $9 billion this is considered on average a fair and acceptable Facility Condition Index (FCI) – ratio of backlog to asset value.

 

The average age of the 58,500 units within the TCH portfolio is over 40 years.  With an asset value of $9 billion, maintaining and modernizing TCH's housing stock is a significant challenge. 

 

Toronto Community Housing 2013-22 Capital Requirements - $2.6 Billion

 

Given the age of the portfolio and years of deferred capital repairs, Toronto Community Housing is facing a projected $2.6 billion "spike" in capital requirements from 2013 to 2022.  The need for solutions to address the upcoming ten-year capital repair needs is now urgent as the forecasted growth in capital repairs will threaten the ratio of capital backlog to asset value. 

 

Historically, Toronto Community Housing has operated year to year with capital repair funding from its annual operating budget and has not undertaken a longer term capital and financing plan to solve this significant issue.  Over the past year, City and Toronto Community Housing staff have worked collaboratively to develop a long-term plan that sets out the financial resources Toronto Community Housing will require to properly maintain its housing stock in an acceptable state of repair. 

 

The Toronto Community Housing Ten-Year Capital Financing Plan, detailed in Appendix A, is designed to finance the 2013-22 capital requirements and create greater certainty for the Board to govern and maintain housing in a safe and good state of repair and provide security to the people who call these buildings home.

 

Federal, Provincial and Toronto Partnership Funding

 

The Ten-Year Capital Financing Plan is built upon the principle of a federal, provincial and Toronto partnership, where each order of government will contribute one-third or $864 million each of the funding required by TCH over the next ten years to address the $2.6 billion in new capital repairs.

 

The federal and provincial governments created the legacy of social housing and it is their duty and social responsibility to renew their partnership.  At a time when more support is required, social housing funding from the other the orders of government is being withdrawn through the cancellation of the provincial Toronto Pooling Compensation grant and the on-going withdrawal of federal funding for social housing.  Yet, given the diversity and depth of their revenue sources, the federal and provincial governments are much better positioned to fund social housing than the City of Toronto.

 

The Financing Plan provides that the City and Toronto Community Housing will commit to its $864 million share of funding over the next ten years.  Cognizant of current federal and provincial deficit pressures, the Plan defers the matching one-third federal and provincial contributions to 2016 to 2022.  Through intergovernmental advocacy, the City and Toronto Community Housing will continue to work with local, provincial and national housing partners to secure commitments from the federal and provincial governments.  Without on-going commitments from all orders of government, the Toronto Community Housing capital backlog is expected to grow with the portfolio reaching a critical state of repair (i.e. FCI > 30%) by 2020.

 

Future Toronto Community Housing Sustainability

 

The adoption of the Ten-Year Capital Financing Plan is intended to provide Toronto Community Housing with a greater level of funding certainty to address the ten-year "spike" in capital repair requirements.  After ten years, from 2023 onward, the Financing Plan assumes TCH will be able to address its capital needs from City and Toronto Community Housing funding sources.

 

This report recommends that Toronto Community Housing report annually on the status of the capital backlog, the results from prior year expenditures and updates related to estimates for capital need and funding requirements.  The Financing Plan will create sustainability and will ensure accountability through annual reporting to Council while providing opportunities for necessary adjustments and reporting on the outcomes of intergovernmental efforts. 

 

Overall the Toronto Community Housing Ten-Year Capital Financing Plan demonstrates to the federal and provincial government and other partners that the City is being both aggressive and proactive in maintaining its social housing assets but that the $2.6 billion in capital needs required over the next ten years cannot solely be financed on the City's property tax base.

Background Information

(October 16, 2013) Report with Appendix A, from the City Manager on A Ten-Year Capital Financing Plan for Toronto Community Housing
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-62782.pdf
(October 30, 2013) Presentation by the City Manager on Toronto Community Housing
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-63114.pdf
(October 16, 2013) Report from the City Manager on A Ten-Year Capital Financing Plan for Toronto Community Housing - Notice of Pending Report
https://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-62871.pdf

Motions

1 - Motion to Amend Item (Additional) moved by Councillor Giorgio Mammoliti (Carried)

That:

 

1.         City Council request the Deputy City Manager and Chief Financial Officer, in consultation with the General Manager, Shelter, Support and Housing Administration, and the Chief Executive Officer, Toronto Community Housing Corporation, to report to the Executive Committee on how insurance companies operate in terms of coverage of repair issues, including mould, in the view of reducing Capital repair backlog pressures.


2 - Motion to Amend Item (Additional) moved by Councillor David Shiner (Carried)

Request the City Manager, in consultation with Toronto Community Housing Corporation (TCHC), to provide a report directly to the November 13 and 14, 2013 meeting of City Council with a list of current TCHC mortgages, their terms, interest rates and annual cost to TCHC and the City.


3 - Motion to Adopt Item as Amended moved by Councillor Norman Kelly (Carried)

Vote (Adopt Item as Amended) Oct-30-2013

Result: Carried Majority Required - Adopt as amended - Motion 1
Total members that voted Yes: 11 Members that voted Yes are Gary Crawford, Vincent Crisanti, Rob Ford (Chair), Norman Kelly, Peter Leon, Giorgio Mammoliti, Peter Milczyn, Cesar Palacio, Anthony Perruzza, David Shiner, Michael Thompson
Total members that voted No: 0 Members that voted No are
Total members that were Absent: 2 Members that were absent are Frank Di Giorgio, Denzil Minnan-Wong
Source: Toronto City Clerk at www.toronto.ca/council