Item - 2012.EX16.3

The Executive Committee deferred consideration of the item until a special meeting of the Committee at a future date to be determined.

Over the past several years, Council has been made aware of the significant and growing repair needs in the City's social housing portfolio and, in particular, the backlog of needed repairs in the Toronto Community Housing (TCH) stock of social housing.  In response, Council has requested on numerous occasions that the provincial government upload the full costs of social housing and that the federal and provincial governments provide ongoing, sustainable funding for social housing repairs.  The costs of social housing have not been uploaded and at the present time, there is no ongoing, sustainable program for repairs.  As a result, the funding challenge in Toronto’s social housing continues to deepen. This report, therefore, recommends the sale of stand-alone dwellings to generate revenue to help fund repairs of the multi-unit buildings in TCH's portfolio.

TCH's proposal to sell stand-alone properties is part of its strategy to address state of good repair needs in its entire portfolio. The TCH Board has resolved that, as a condition of approval of sale, proceeds from the sales will be dedicated to a "State of Good Repair" fund for capital repairs to TCH's multi-residential stock.

In reviewing TCH's proposal and the impact on tenants, communities and TCH's financial situation, consideration has been given to the City's roles and responsibilities as sole shareholder of TCH and consolidated service manager under the Housing Services Act, 2011 (HSA), as well as Council positions on affordable housing including the Housing Opportunities Toronto ten year plan, Official Plan housing policy and rental housing protection and heritage preservation requirements.

To date Council has approved TCH's requests for consent to the sale of 47 stand alone properties – 20 at below market value to another social housing provider and 27 on the open market. TCH is now seeking approval to sell another 872 stand-alone properties. These properties contain 1,534 housing units.

Included in the 872 stand-alone properties TCH is requesting approval to sell are 168 properties that have yet to be approved by the TCH Board.  Staff are recommending that Council not consider their sale and refer consideration of the possible sale of these properties back to TCH for further analysis.

The 704 properties approved for sale by TCH's Board of Directors include 11 properties which have previously been approved for sale by both TCH and Council. These properties do not need to be considered by Council again.

Also included in the 704 properties approved for sale by TCH's Board of Directors are 18 supportive housing properties.  Through referral and head lease agreement with TCH, supportive housing agencies are able to provide special needs clients support and affordable housing in a communal setting.  Staff recommend that these properties (with 81 units in total) not be approved for sale at this time and that TCH proceed with further analysis and consultation with these supportive housing agencies and their clients.

Therefore, this report recommends that Council approve the sale of 675 TCH houses containing 740 units, as listed in Appendix A, subject to a set of conditions aimed at supporting tenants and satisfying statutory and regulatory requirements.  The following chart summarizes the disposition of the properties: 

Based on TCH estimates, these 675 properties have a combined market value of at least $222 million that can be put towards the approximately $650 million needed for capital repairs. It is understood that TCH intends to take a phased approach over a number of years to the sale of these 675 properties and develop a business case for the sale of each property.  TCH will not evict tenants or withdraw rent-geared-to-income (RGI) subsidy to qualified residents as a result of Council's approval of the sales and will make reasonable efforts to relocate households to suitable alternative accommodation.

Should Council approve the sale of the 675 TCH properties, 644 of them will still need the consent of the Minister of Municipal Affairs and Housing and/or Canada Mortgage and Housing Corporation (CMHC).

Consideration by Council of the sale of any other TCH stand-alone properties may be given at a later date after TCH has concluded its analysis of the feasibility and benefits of such sales.

Letter (December 5, 2011) from the Interim Chief Executive Officer, Toronto Community Housing Corporation, forwarding the decision of the Board of Directors for the sale of Toronto Community Housing's stand-alone units which was approved at the Board meeting on October 21, 2011.

At its meeting of January 24, 2012, Executive Committee deferred report EX15.1 from the City Manager and the General Manager, Shelter, Support and Housing Administration entitled Securing Funding to Repair Toronto Community Housing's Multi-Residential Portfolio: Sale of Toronto Community Housing Stand-Alone Units to the February 13^th meeting.  In response to questions raised by Councillors on the proposed sale of its stand-alone properties, the Chief Executive Officer of Toronto Community Housing (TCH) has prepared the attached report.

The report describes the background to TCH's state of good repair funding shortfall, how TCH manages capital repairs and how the proposed sale of stand-alone units would assist TCH. The report further explains how TCH will support affected tenants, maintain the same level of rent geared to income units and how the sale of units will be phased in order to best accommodate tenants.

Capital Repair Deficit $1.7 billion by 2020

Over the next several years, $45 million annually has been allocated by TCH for capital repairs. The property tax exemption will save an additional $9 million per year leaving an unfunded gap of just over $90 million per year. Without the additional investment the capital deficit of $751 million in 2012 will grow to approximately $1.7 billion by 2020 and the average state of repair for these buildings will move to "Poor" in 2015 and "Critical" by 2018.

With the investment of $222 million over five years from the sale of the stand-alone units, the primary focus would be repairs to the building envelope, the building structure and the main services in the building such as electrical, mechanical, elevators and life safety systems. Under the plan approximately 86% of TCH's portfolio would have some work done assisting approximately 55,246 or 94% of the households in Toronto Community Housing.  The relocation of 2,200 tenants will repair buildings that house over 55,000 tenant households. This key investment of $222 million will maintain the condition in a "Fair" state of repair to 2015 rather than the projected "Poor" condition.

In order to bring the TCH portfolio to a "Good" state of repair by 2017 and to maintain the "Good" state of repair beyond that, additional annual funding from the federal and provincial governments of $150 million from 2013 to 2017 and $90 million a year from 2018 thereafter is required. This, combined with the investment by TCH, will reduce the annual capital deficit to $362 million by 2017.

I am forwarding the report from the Chief Executive Officer of TCH to the Executive Committee for consideration with the City staff report deferred from January 24, 2012.