Item - 2020.EX16.12

The Executive Committee recommends that:

1. City Council consent to the amendment of the terms and conditions to the nine Financing Agreements substantially in the manner described in Attachment 1 to the report (September 9, 2020)  from the Chief Financial Officer and Treasurer together with such changes thereto or other terms and conditions that are satisfactory to the Chief Financial Officer and Treasurer.

2. City Council direct that funding released from the Secured Properties Capex and the 4 percent Capex Reserve be used to satisfy Toronto Community Housing Corporation's capital repair co-investment obligations under its National Housing Co-investment Program Credit Agreement with Canada Mortgage and Housing and to achieve the goals of its Ten Year (2019 – 2028) Capital Financing Plan as it may be amended from time to time.  

3. City Council authorize the Chief Financial Officer and Treasurer or designate to execute on behalf of the City as shareholder and guarantor:

a. City consent to the amended terms and conditions of the Financing Agreements (Amending Agreements) described in Attachment 1 to the report (September 9, 2020) from the Chief Financial Officer and Treasurer; and

b. confirmation that the City acknowledges, ratifies, confirms and agrees that the Guarantees continue in full force and effect and that the City continues to be bound by all of the provisions of the Guarantees notwithstanding the amending terms and conditions on terms and conditions satisfactory to the Chief Financial Officer and Treasurer or delegate and in a form approved by the City Solicitor.

4. City Council deem the guarantees to be in the interests of the City.

5. City Council authorize the Chief Financial Officer and Treasurer or designate to execute and deliver such other notices, consents, authorizations, approvals and agreements or amendments to existing agreements on behalf of the City as service manager, shareholder or guarantor in order to facilitate City Council's decision.

6 .City Council authorize the General Manager, Shelter, Support and Housing Administration to:

a. provide such Service Manager consents under the Housing Services Act, 2011, as are necessary to authorize any required amendments to the mortgage security provided to Infrastructure Ontario to secure all of the foregoing loans;

b. request all necessary third party waivers, consents or other authorizations which the Service Manager is required to seek in connection with the transactions as described in Attachment 1 to the report (September 9, 2020) from the Chief Financial Officer and Treasurer; and

c. provide the necessary notice to the Minister of Municipal Affairs and Housing pursuant to Section 163 of the Housing Services Act, 2011.

This report recommends that City Council provide its consent to amend existing financing agreements (FA) between Ontario Infrastructure and Lands Corporation (IO) and Toronto Community Housing Corporation (TCHC), for which the City is guarantor.  The amendments will provide that the capital expenditure (Capex) reserve funds applicable to the specific properties secured under the FAs can be utilized on TCHC’s general portfolio to satisfy TCHC's capital repair co-investment obligations under its National Housing Co-investment (NHCI) Program Credit Agreement with Canada Mortgage and Housing (CMHC) and achieve the goals of its Ten Year (2019 – 2028) Capital Financing Plan.

Between 2013 and 2019 TCHC and IO entered into 9 separate FA's providing over $1.1 billion in loans in total to TCHC for the purposes of general debt refinancing and for capital repairs for over 100 of its properties.  The City as the sole shareholder of TCHC guarantees the repayment of all of these loans. 

Pursuant to the FAs, a portion of the advance was required to be deposited in a separate fund administered by IO for capital repairs to the properties mortgaged under each specific FA (the "Secured Properties Capex"). In addition, TCHC was required to provide 4% of the gross income from the mortgaged properties into another reserve held by IO for the purpose of funding capital repairs on those properties (the 4% Capex Reserve, together with the Secured Properties Capex, the Capex Amounts).

Accordingly, there are limitations on TCHC's ability to access Capex Amounts as they cannot be used for capital repairs on TCHC's general portfolio.  Existing IO FA’s need to be amended to release the funds for capital work on the overall TCHC portfolio instead of only the IO mortgaged properties.

The FAs also included an equity withdrawal component which could be used for capital repairs on all of its buildings. TCHC has expended all of such equity withdrawal amounts.  However, there still remains needed capital work to be completed for 2020 and beyond and a funding source is needed to satisfy the TCHC contributions under the NHCI Credit Agreement with CMHC.

IO has agreed to release the Capex Amounts and to permit TCHC to apply such funds to its general portfolio state of good repair fund. The amount of the Capex Accounts held by IO in favour of TCHC currently exceeds $137 million.

Once the Capex Amounts are released by IO, these funds will be placed in a TCHC segregated account for Capex expenditures on the general portfolio. The released funds will supplement the City’s 10 year funding and be utilized for capital expenditures on the general portfolio.

The City and TCHC intend to use these released funds for repairs consistent with the co-investment under the CMHC National Housing Co-investment credit agreement recently executed at the end of 2019.

This report has been prepared in consultation with staff from the Shelter, Support and Housing Administration and TCHC.