Item - 2025.PH18.6

The Executive Director, Housing Secretariat, the Executive Director, Corporate Real Estate Management, and the Chief Procurement Officer recommend that:  

Applications for Affordable and Supportive Housing Funds

1. City Council authorize the Executive Director, Housing Secretariat, to submit applications and enter into agreement(s) and/or amendments with the Canada Mortgage and Housing Corporation (CMHC), the Government of Canada or any other government entity necessary (the “Canada Mortgage and Housing Corporation Agreement”), for the receipt and expenditure of funding under the Affordable Housing Fund (AHF) – Rapid Housing Sub-stream, on such terms and conditions as are satisfactory to the Executive Director, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, and the Executive Director, Corporate Real Estate Management, and in a form approved by the City Solicitor.

2. City Council approve the receipt of any program funds under the Affordable Housing Fund – Rapid Housing Sub-stream, in accordance with the terms and conditions of the Canada Mortgage and Housing Corporation Agreement and any other related agreements, directives or program guidelines.

3. City Council authorize the Executive Director, Housing Secretariat to endorse or provide letters of support for applications by Indigenous and non-profit housing providers to the Affordable Housing Fund – Rapid Housing Sub-stream.

4. City Council request the Executive Director, Housing Secretariat, in consultation with the Executive Director, Corporate Real Estate Management and the Executive Director, Development Review, to inform local Councillors of plans to purchase or develop properties using the Affordable Housing Fund – Rapid Housing Sub-stream funding in advance of any address being publicly announced and to work with local Councillors on communication and community engagement.

5. City Council authorize the Executive Director, Housing Secretariat, and Executive Director, Corporate Real Estate Management, to work with the University Health Network (UHN) to submit application(s) to the Affordable Housing Fund – Rapid Housing Sub-stream to request funding for additional site(s) to be developed under the Social Medicine Initiative, including to enter into any agreements; memoranda of understanding or letters of intent with University Health Network or any related entity in relation to those projects as may be required for the application process.

6. City Council authorize the Executive Director, Housing Secretariat, and/or Executive Director, Corporate Real Estate Management, to work with Canada Lands Company Limited (CLC) and its affiliates to submit application(s) to the Affordable Housing Fund – Rapid Housing Sub-stream to request funding for project(s) to be developed on lands in Toronto, including to enter into any agreements, memoranda of understanding, or letters of intent with Canada Lands Company Limited or its affiliates in relation to those projects as may be required for the application process.

Delivery of New Supportive and Affordable Rental Housing

7. City Council request the Executive Director, Development Review, Chief Planner and Executive Director, City Planning, and Chief Building Official and Executive Director, Toronto Building, prioritize and expedite the review of planning and/or building permit applications for sites submitted under the Affordable Housing Fund – Rapid Housing Sub-stream.

8. City Council authorize the Executive Director, Housing Secretariat to issue Requests for Proposals and to select non-profit and Indigenous housing operators, to lease and operate the affordable and supportive housing projects that may be approved under the Affordable Housing Fund – Rapid Housing Sub-stream.

9. City Council direct the Executive Director, Housing Secretariat, to prioritize the selection of Black-led housing provider(s) through the process in Part 8 above in support of the City’s commitment to Confront Anti-Black Racism, the Toronto Housing Charter, and to access Affordable Housing Fund Rapid Housing Sub-Stream funding prioritized for Black-led organizations.

10. City Council authorize the Executive Director, Housing Secretariat to negotiate and execute on behalf of the City, municipal housing project facility agreements for up to 99 years with the non-profit and Indigenous housing operators selected through the competitive process referred to in Part 8 above, or any related corporation(s), to secure the financial assistance being provided and to set out the terms of the operation of the new affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form approved by the City Solicitor.

11. City Council authorize the Executive Director, Housing Secretariat to negotiate and enter into any agreements with the non-profit and Indigenous housing providers selected for any operating funding that may be available, including but not limited to rent supplement or grant funding agreements, on terms and conditions agreed to by the Executive Director, Housing Secretariat and in a form approved by the City Solicitor.

12. City Council authorize the Executive Director, Housing Secretariat to execute, on behalf of the City, any security or financing documents required by the non-profit and Indigenous housing operators, including any postponement, confirmation of status, discharge or consent documents where and when required during the term of the municipal housing project facility agreement, as required by normal business practices, and provided that such documents do not give rise to financial obligations on the part of the City that have not been previously approved by City Council.

13. City Council authorize the Executive Director, Corporate Real Estate Management, or designate in consultation with the Executive Director, Housing Secretariat, to negotiate, approve and execute, on behalf of the City, long-term leases (or sublease as applicable ) and related agreements with the non-profit housing operators selected through requests for proposals for 175 Cummer Avenue, 35 Bellevue Avenue, and 11 Brock Avenue, or any related corporation(s) substantially on the major terms and conditions set out in Attachment 1 to the report (Jan 9, 2025) from the Executive Director, Housing Secretariat and Executive Director, Corporate Real Estate Management, and such other terms as deemed appropriate by the Executive Director, Corporate Real Estate Management, in consultation with Executive Director, Housing Secretariat, and in a form satisfactory to the City Solicitor.

14. Subject to City Council approval of a zoning by-law for the development, City Council authorize the Executive Director, Corporate Real Estate Management, in consultation with the Executive Director, Housing Secretariat, to negotiate, approve and execute, on behalf of the City, a long-term nominal rent lease with Youth Without Shelter or a related entity at 7-9 Wardlaw Crescent substantially on the major terms and conditions set out in Attachment 1 to the report (Jan 9, 2025) from the Executive Director, Housing Secretariat and the Executive Director, Corporate Real Estate Management, and such other terms as deemed appropriate by the Executive Director, Corporate Real Estate Management, in consultation with the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor.

15. Subject to City Council approval of a zoning by-law for the development, City Council authorize the Executive Director, Housing Secretariat to negotiate and execute on behalf of the City, a municipal housing project facility agreement with Youth Without Shelter or a related entity, for 7-9 Wardlaw Crescent, to set out the terms of the operation of the new affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form approved by the City Solicitor.

16. City Council consider the leases referenced in Part 13 and 14 above to be in the interests of the City.

17. City Council authorize the Executive Director, Corporate Real Estate Management, or designate, in consultation with the Executive Director, Housing Secretariat, to administer and manage the leases including the provision of any amendments, consents, approvals, waivers, notices, and notices of termination, provided that the Executive Director, Corporate Real Estate Management may, at any time, refer consideration of such matters, including their content, to City Council for its determination and direction.

18. City Council, in accordance with Section 71-11.1C of the City of Toronto Municipal Code Chapter 71 (Financial Control), authorize the amendment of Purchase Order 6054523 issued to Govan Brown Associates Limited for Construction Management Services for the affordable rental housing building located at 65 Dundas Street East, in the amount of $10,562,651 net of all taxes ($10,748,554 net of Harmonized Sales Tax recoveries), fully funded within the Council approved 2024 Housing Secretariat Budget, revising the current purchase order value from $51,857,637 net of all taxes ($52,770,331 net of Harmonized Sales Tax recoveries) to $62,420,288 net of all taxes ($63,518,885 net of Harmonized Sales Tax recoveries).

19. City Council authorize the Executive Director, Corporate Real Estate Management, in consultation with the Chief Procurement Officer and Executive Director, Housing Secretariat, to execute any necessary Purchase Order Amendments, with a value exceeding $500,000 or more than 10 per cent of the original commitment, for which Committee or City Council approval would normally be required under City of Toronto Municipal Code Chapter 71, (Financial Control By-law) and City of Toronto Municipal Code Chapter 195 (Procurement) for the provision of construction and professional services needed and to carry out any necessary pre-development, pre-construction, construction, renovation or conversion of properties for the development of affordable housing under the Phases 1, 2 and 3 of the Rapid Housing Initiative, provided that:

a. the purchase order amendment is necessary to meet the timelines of the Rapid Housing Initiative;

b. the funds are available for, and funded through the Council approved Housing Secretariat Budget;

c. the terms and conditions of any amending agreements are acceptable to the Executive Director, Corporate Real Estate Management, and the Executive Director, Housing Secretariat in a form satisfactory to the City Solicitor; and

d. a report summarizing any amendments made under this authority is submitted to the appropriate Committee and/or City Council for information on an annual basis.

20. City Council authorize an exemption from taxation for municipal and school purposes for the affordable rental homes developed in the projects listed in and for the periods of time described in Table 2 below in the Financial Impact section of this report.

21.City Council authorize the Controller to cancel or refund any taxes paid after the effective date of the exemption from taxation for municipal and school purposes as set out in the applicable municipal housing facility agreement.

Intergovernmental Action to Build More Supportive Homes

22. City Council request the Government of Canada and Canada Mortgage and Housing Corporation significantly increase the funding available under the new Affordable Housing Fund – Rapid Housing Sub-stream to at minimum $1.5 billion each year from 2025 to 2029, and make enhancements to the program based on successful elements of the former Rapid Housing Initiative, including:

a. Providing guaranteed Cities Stream allocations to large municipalities, including Toronto, reflective of levels of need and demonstrated demand from prior rounds of the program and as part of the City’s request for a Canada-Ontario-Toronto Builds portfolio of funding and financing;

b.    Streamline and simplify application requirements for large municipalities recognizing their experience and track record of delivering affordable homes under prior rounds of Rapid Housing Initiative; and

c.     Allowing municipalities to submit applications on behalf of non-profit housing organizations in their jurisdiction to enhance their chances of success under the program.

23. City Council request the Province of Ontario to expand on its commitment to partner with the City of Toronto on supportive housing by providing a three-year allocation of $60 million in operating funding for support services beginning in 2025, to ensure residents of over 2,000 supportive homes have access to health and social supports and enable approximately 400 new supportive homes currently under construction to open in 2025 and 2026.

The City of Toronto has taken an increased role in the creation of new supportive and rent-geared-to-income (RGI) homes for people experiencing or at risk of homelessness, particularly since the adoption of the HousingTO 2020-2030 Action Plan (HousingTO Plan) and as a response to the COVID-19 pandemic. Despite increased action and investments, Toronto’s housing and homelessness crises have worsened. Deeply affordable rental housing is at risk of being lost, and difficult and volatile economic conditions have made the construction of new housing, particularly RGI, supportive, affordable rental homes, more challenging. The shortage of supportive homes, inadequacy of social assistance rates, and need for greater mental health and social supports is illustrated most starkly by the rising number of encampments in Toronto.

Concerted action and investment from all orders of government and the private, health, and social services sectors is needed to respond to these crises. Despite this growing need, federal and provincial investment in measures proven to be most effective – new supportive housing, mental health and social supports, and higher social assistance rates that match the cost of living – have not kept pace.

This report provides a summary of the City’s progress in creating new supportive homes, and requests authorities needed to complete existing in-flight developments creating more than 700 RGI and supportive homes and to advance new projects through an application for funding under a revised federal program to build more RGI and supportive homes.

On November 14, 2024, Canada Mortgage and Housing Corporation (CMHC) announced changes to the Affordable Housing Fund (AHF), including the creation of a new permanent Rapid Housing Sub-stream. CMHC also announced that $963 million was being made available over five years (2025-2029) across Canada under this new program. The program replaces the former Rapid Housing Initiative (RHI), which was delivered through three phases between 2020 and 2022, for a total of $4 billion over three years nationally. The RHI supported the creation of rent-geared-to-income and supportive homes for people experiencing or at risk of homelessness, by providing capital grant funding to eligible projects covering up to 100 percent of capital costs. The City of Toronto and its Indigenous and non-profit housing partners received $610.8 million in capital funding under the RHI, supporting the creation of more than 1,500 new homes. These investments have enabled the City to expand its supply of newly built supportive housing and exceed targets under the first 24-Month Housing and Homelessness Response Plan, launched in 2020 as a response to the COVID-19 pandemic. Since 2020, 3,880 supportive housing opportunities have been secured, including 1,763 net new supportive homes, for people experiencing or at risk of homelessness.

This report outlines key program changes and requests authority from City Council for staff to make applications and enter into agreements with CMHC under the new program. Despite new limitations and reduced funding available under this program, it is recommended the City continue to invest in due diligence activities to bring projects forward to be considered by CMHC. This report also recommends City Council request the federal government:

• make significantly greater funding available under this new program,
• make changes to program design based on the elements of the RHI that were most effective in creating new supportive homes for people experiencing homelessness, and
• provide Toronto with a portfolio of funding and financing under a Canada-Ontario-Toronto Builds model.

Through this report, staff are also requesting Council approvals required complete in-flight projects creating more than 700 RGI and supportive homes, including authority for Purchase Order Amendments, authority to enter into operating and lease agreements with non-profit housing providers, and property tax exemptions.

City Council took significant action in 2024 to expand its housing programs to support the creation of a range of new rental homes, including the launch of a new Community Housing Pre-development Fund to support community housing providers with early due diligence, and approval of a new Rental Housing Supply Program offering funding and incentives to a range of rental homes. The City acting alone cannot address the housing and homelessness crises, particularly for the more than 12,000 Toronto residents currently experiencing homelessness. A whole-of-government and whole-of-community response is needed to effectively respond. This must include new and enhanced policy, program, and funding tools at the federal and provincial levels that are effectively designed and adequately scaled to meet the depth of need, and investment in upstream interventions such as social assistance programs and access to mental health and social services, to prevent more households from falling into poverty, housing precarity, and homelessness.

The Rapid Housing Initiative (RHI) had been a successful federal program for building new rent-geared-to-income and supportive homes for people experiencing or at risk of homelessness in Toronto. The City and its partners have received $610.8 million in grant funding through the program, to build over 1,500 new affordable homes. Supportive housing offers a more cost-effective response to homelessness than emergency shelter and reduces downstream public expenses in the health and justice systems.

New Affordable Housing Fund (AHF) – Rapid Housing Sub-Stream Application

Unlike the former RHI, the new AHF Rapid Housing Sub-stream does not provide Toronto with a guaranteed allocation of capital funding to build a minimum number of new rent-geared-to-income and supportive homes. To receive any funding under this new program, the City must submit a complete application and compete with other jurisdictions and housing providers across the country through a first-come first-served application process. CMHC has also significantly reduced funding available under this program. Whereas RHI provided $1 billion in 2020, and $1.5 billion in each of 2021 and 2022, the new Rapid housing Sub-stream provides $963 million over five years from 2025-2029.

To successfully compete under the new Rapid Housing Sub-stream, the City must immediately advance projects through pre-development due diligence including completing site and servicing diligence, environmental assessments, design development, preliminary costing, and planning approvals. The Housing Secretariat has sufficient funding available within its approved 10-Year Capital Budget to allocate up to $850,000 to undertake this due diligence for potential development sites with no net new budget impact. For projects approved by CMHC, the City will recover funds expended on these activities.

In addition to the AHF Rapid Housing Sub-stream, the projects may be eligible for City incentives under the Rental Housing Supply Program, including exemptions from fees and charges and property tax exemptions.

Purchase Order Amendments at 65 Dundas Street East

The City purchased the former shelter hotel at 65 Dundas St. E. in 2022 with RHI funds to create 280 new permanent affordable rental homes, including homes with supports, in the Downtown East. Renovations on Phase 1 of the project were completed in summer 2024 and Phase 2 is ongoing. To fund the ongoing work, this report recommends an Amendment of Purchase Order 6054523, issued to Govan Brown Associates Limited in the amount of $10,562,651 net of all taxes ($10,748,554 net of Harmonized Sales Tax recoveries). This amendment will increase the contract value from $51,857,637 net of all taxes ($52,770,331 net of Harmonized Sales Tax recoveries) to $62,420,288 net of all taxes ($63,518,885 net of Harmonized Sales Tax recoveries). Funding for 2025 is included in Housing Secretariat’s 2025-2034 Capital Plan. Additional details are described in Table 1.

This amendment is being requested due to a contractual obligation of the standard Construction Management contract (construction agreement template CCDC5B) frequently used in the construction sector. The amendment at this juncture in the project is a standard component of finalizing the contract terms to exercise the Guaranteed Maximum Price (GMP) option or to convert the remainder of the executable work to a Stipulated Sum contract. The need for the amendment was anticipated from the outset of the project, as it is a part of the normal course of the Construction Management method of project delivery. Funding to facilitate this amendment was anticipated and allocated in the Housing Secretariat’s approved Capital Plan. The additional cost represents current market rates as part of the open-book pricing requirements of the contract.

Table 1: Purchase Order Amendment for 65 Dundas Street East

Property Tax Exemptions for Previously Approved Affordable and Supportive Housing Projects

This report requests City Council approval of property tax exemptions for affordable rental homes in previously approved housing projects that are in development and expected to reach completion in 2025 and 2026. The table below summarizes the estimated net present value of these property tax exemptions at $6.804 Million. This amount is not a direct payment but rather forgone revenues that the City waives to support the ongoing affordability of these new homes.

Table 2: Property Tax Exemptions for previously approved affordable housing projects

*Calculated using 2024 property tax rates. Property tax rates and fees are subject to change when City Council determines the 2025 tax rate supported budget in February 2025.

Intergovernmental Partnerships to Build Supportive Housing and Relieve Pressure on the City’s Shelter System

Housing is the solution to homelessness, and thousands of new rent-geared-to-income and supportive homes are urgently needed to relieve pressure on the City’s shelter system, and support residents living outside to move inside. The City has taken advantage of the available opportunities provided by the federal and provincial governments to create supportive housing opportunities for individuals exiting shelters. Since 2020, 3,880 supportive housing opportunities have been secured, including 1,763 net new supportive homes. However, the City does not have the financial capacity to respond to this crisis alone and requires capital funding from the federal and provincial governments, and ongoing operating funding for housing benefits and support services from the province, to achieve City Council’s target of approving 18,000 supportive homes by 2030.

This report and its recommendations request the federal government reintroduce key elements of the Rapid Housing Initiative that provided guaranteed allocations of capital grant funding to municipalities, including Toronto, enabling the City to move ahead with supportive housing developments with certainty and speed. Whereas the Rapid Housing Initiative made $4 billion available in the three-year period from 2020-2022, the new Rapid Housing Sub-stream only offers $963 million over the next five years. This reduction in investment comes at a time when the homelessness and housing crisis persists, and Housing First delivered through supportive housing is recognized as the best solution to chronic homelessness and encampments.

In 2023, the province announced a three-year commitment of $48 million to the City for supportive housing through the Homelessness Prevention Program (HPP). This contribution continues to provide wrap-around support services to residents of over 2,000 supportive homes completed since 2020. This report requests the Province renew this commitment and add an additional $12 million in operating funding under the HPP for a total $60 million commitment for three years beginning in 2025. These funds are required to provide ongoing supports in completed projects and enable supportive housing developments under construction to open with the wrap-around supports needed to support residents exiting homelessness to achieve housing stability and improve their well-being.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the financial impact information.