Item - 2016.EX17.13

The Executive Committee recommends that:

1.  Subject to all necessary approvals of the board of Toronto Community Housing Corporation having been obtained, 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 substantially in the form attached as Attachment 1 (the Term Sheet) to the report (September 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer between TCHC as "Borrower" and Ontario Infrastructure and Lands Corporation ("IO") as "Lender" for refinancing totalling $62.1 million in order to address the renewal of 10 TCHC mortgages ("Mortgaged Properties") totalling $23.0 million, as well as obtaining incremental financing of $39.1 million (less transaction costs and legal fees);

b.  authorize the net amount of incremental financing be held in trust by the Lender invested for the Borrower within a separate account (the "Capital Expenditure Investment Account") for release to pay costs of major repairs and maintenance on the Mortgaged Properties as allocated by the Lender in Appendices 2 and 3 (the "Cap-Ex Reserve Funds") of the Term Sheet in Attachment 1 to the report (September 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer; 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, 2015 and 2016 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 interest 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 of the Term Sheet in Attachment 1 to the report (September 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer, that require Service Manager consent to secure the obligations of TCHC to 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, 2014 and 2015 mortgage financing transactions by including the 2016 mortgaged properties described in the Term Sheet in Attachment 1 to the report (September 14, 2016) from the Deputy City Manager, Cluster A 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 14, 2016) from the Deputy City Manager, Cluster A 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 HSA.

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 14, 2016) from the Deputy City Manager, Cluster A 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 the Term Sheet in Attachment 1 to the report (September 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer, including, without limitation, amendments to the Operating Agreement between the City and TCHC.

The Executive Committee:

1. Requested the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer to report directly to Council with respect to the decisions made by the Board of Directors of Toronto Community Housing Corporation (TCHC) with respect to the refinancing.

There are currently a number of long-term Canada Mortgage and Housing Corporation ("CMHC") mortgages on Toronto Community Housing Corporation ("TCHC") properties that were established in periods when mortgage interest rates were considerably higher than they are today. Until now, TCHC has not been able to refinance these mortgages without incurring substantial prepayment penalties.

However, in mid-July 2016, CMHC established the eligibility guidelines for a new program that will allow certain housing providers to pay out their long-term CMHC mortgages without penalty.  TCHC and Shelter, Support and Housing Administration staff were recently informed that ten of the CMHC mortgages on TCHC properties, with an outstanding principal amount of $23.0 million, have been approved for prepayment without penalty.

TCHC has negotiated refinancing terms with Ontario Infrastructure and Lands Corporation ("IO") that will result in a new 30-year term for these mortgages at the much lower interest rates that prevail today. By extending the repayment term, TCHC will be able to raise the $23.0 million required to repay the existing CMHC mortgages as well as a further $39.1 million in funding that will be used for capital maintenance work on the ten refinanced properties.

These ten properties do not currently receive mortgage subsidies from the City and TCHC is not requesting that mortgage subsidies be provided as part of the refinancing. However, IO has required that the City provide a guarantee for repayment of all principal and interest payable by TCHC to IO under the proposed refinancing agreement.

Approval by the board of directors of TCHC of this refinancing has not yet been obtained. It is anticipated that the board will have considered this matter prior Council meeting on October 5th, 2016.