Item - 2015.EX8.4

The Executive Committee recommends that:

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

a.  pursuant to Section 7.4.1(a) of the City's Amended and Restated Shareholder Direction to TCHC approve the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer (the Term Sheet), between TCHC and Ontario Infrastructure and Lands Corporation (IO) for refinancing totalling $232 million in order to address the renewal of 12 TCHC mortgages totalling $32 million, as well as obtaining incremental financing of $200 million (less transaction costs and legal fees);

b.  approve the extension of TCHC's mortgage subsidy for 12 identified properties, based on the current monthly mortgage payment, until the end of 2045, both on condition that:

i.  the net amount of incremental financing be deposited to a new special reserve other than the State of Good Repair Fund dedicated to the repair or replacement of building components with a useful life of at least 30 years; and

ii.  TCHC report annually, through TCHC's Annual Report to Council, on the status and use of funding deposited to such special reserve; and

c.  authorize the Deputy City Manager and Chief Financial Officer or his delegate to execute on behalf of the shareholder an amendment to the agreement among the City, TCHC and IO which will provide for an amended City guarantee for the repayment of all principal and interest payable by TCHC to IO under the 2013, 2014 and 2015 financing agreements on conditions satisfactory to the Deputy City Manager and Chief Financial Officer or his delegate and in a form approved by the City Solicitor.

2.  City Council deem the foregoing guarantee to be in the interests of the City.

3.  City Council, in its capacity as Service Manager under the Housing Services Act, 2011 (the HSA):

a.  grant Service Manager consent to Toronto Community Housing Corporation (TCHC) pursuant to section 162(2) of the HSA to mortgage those properties described in Appendix 1 to the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer, that require Service Manager consent to secure the obligations of TCHC to Ontario Infrastructure and Lands Corporation (IO) described in the Term Sheet;

b.  authorize the Deputy City Manager and Chief Financial Officer or his delegate to execute on behalf of the City as Service Manager an amendment to the agreement among the City, TCHC and IO which will provide for an amended City consent to the lender security over City subsidies payable with respect to the properties mortgaged in favour of IO under the 2013 and 2014 mortgage financing transactions by including the 2015 mortgaged properties described in Appendix 1 to the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer, on terms and conditions satisfactory to the Deputy City Manager and Chief Financial Officer or such delegate and in a form approved by the City Solicitor; and

c.  authorize the General Manager, Shelter, Support and Housing Administration to:

i.  request all necessary third party waivers, consents or other authorizations which the Service Manager is required to seek in connection with the transactions contemplated by the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer; and

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

4.  City Council consent pursuant to subsection 453.1(6) of the City of Toronto Act, 2006 to any mortgage or charge given by Toronto Community Housing Corporation (TCHC) to Ontario Infrastructure and Lands Corporation (IO) with respect to any of the properties described in Appendix 1 to the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer, and that where required, the City Clerk provide a certificate, in registerable form, pursuant to subsection 453.1(9) of the City of Toronto Act, 2006.

5.  City Council authorize the City Manager or the Deputy City Manager and Chief Financial Officer to execute and deliver such other notices, consents, authorizations, approvals and agreements on behalf of the City as shareholder or Service Manager in order to facilitate the refinancing of the Toronto Community Housing Corporation (TCHC) mortgages on the properties described in Appendix 1 to the Term Sheet in Attachment 1 to the report (September 4, 2015) from the City Manager and the Deputy City Manager and Chief Financial Officer, including, without limitation, amendments to the Operating Agreement between the City and TCHC.

In November, 2013, City Council approved the Toronto Community Housing Corporation's ("TCHC") Ten-Year Capital Financing Plan. As part of that approval, Council directed that TCHC initiate negotiations with potential lenders for the refinancing of TCHC mortgages being renewed in 2014 and 2015.

Pending confirmation of matching contributions from the federal and provincial governments, there is a need for additional funding to sustain the momentum of TCHC's capital repair program.  Consistent with the interim report recommendation from the Mayor's Task Force on TCHC, City staff are recommending that the refinancing of TCHC mortgages be maximized in 2015.  This will result in an increase in capital repair funding from $29 million, as proposed in the Ten-Year Capital Financing Plan, to $200 million.  The additional $171 million raised through refinancing will replace the $128 million ($64 million each) of Federal and Provincial funding originally anticipated in 2016 as part of the 10-Year Plan so that TCHC can still carry out their planned 2016 capital expenditures.

This report seeks approval from Council for a proposal developed by TCHC and Ontario Infrastructure and Lands Corporation ("IO") which would result in the refinancing of 12 TCHC properties with mortgages scheduled for renewal in 2015. Upon approval by Council, TCHC will proceed to finalize the transaction to receive mortgage refinancing totalling $232 million. Of this total, $32 million will be used to pay out the existing social housing mortgages coming to end of term this year. The balance of $200 million represents incremental financing of which $26.3 million will be restricted for investment in future capital repairs within the pool of 12 refinanced properties and, $173.7 million which will be invested to address capital needs throughout the entire TCHC social housing portfolio.

The refinancing proposal will have no immediate financial impact to the City. However, TCHC has requested a City commitment to extend subsidy funding of mortgages at current levels for the 12 properties for a new 30-year mortgage term.  The extended mortgage subsidy funding has a total nominal value of $177.2 million and a present value of $100.4 million.

In addition, the proposed terms require that the City provide an explicit guarantee to IO for repayment of the mortgages within this proposal.