Item - 2018.EX36.15

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 Toronto Community Housing Corporation approve the term sheet substantially in the form attached as Attachment 2 to the report (July 3, 2018) from the Interim Chief Financial Officer between Toronto Community Housing Corporation as "Borrower" and Infrastructure Ontario as "Lender" for refinancing totalling $76.5 million in order to address the renewal of seven (7) Toronto Community Housing Corporation mortgages and the mortgaging of a further property ("Mortgaged Properties") totalling $19.3 million, as well as obtaining incremental financing of $57.2 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 well as capital repair and maintenance work in Toronto Community Housing Corporation's portfolio of residential properties as allocated by the Lender in Appendices 2 and 3 (the "Cap-Ex Reserve Funds") of the Term Sheet in Attachment 2 to the report (July 3, 2018) from the Interim Chief Financial Officer;

c.  authorize the Chief Financial Officer or delegate to execute on behalf of the shareholder an amendment to the agreement among the City, Toronto Community Housing Corporation and Infrastructure Ontario which will provide for an amended City guarantee for the repayment of all principal and interest payable by Toronto Community Housing Corporation to Infrastructure Ontario under the 2013, 2014, 2015, 2016, 2017, and 2018 financing agreements on conditions satisfactory to the Interim Chief Financial Officer and in a form approved by the City Solicitor; and

d.  approve the extension of Toronto Community Housing Corporation's mortgage subsidy for the seven refinanced properties, based on the current monthly mortgage payment, until the end of 2048.

2.  City Council approve the extension for one year of the City's guarantee for the repayment of principal and interest of the mortgages originally taken out in 2013 for two Toronto Community Housing Corporation properties at 931 Yonge Street and 679 Queen's Quay (to allow for the long-term refinancing of these two properties to be established).

3.  Subject to the satisfaction of the foregoing conditions, City Council authorize the Chief Financial Officer or delegate to execute on behalf of the shareholder:

a.  amendments to the agreements among the City, Toronto Community Housing Corporation and Infrastructure Ontario which will provide for:

1.  City consent to the amended terms and conditions of Term Loan No. 1 described in the financing agreement between Toronto Community Housing Corporation and Infrastructure Ontario dated October 18, 2013; and

2.  an amended City guarantee for the repayment of all principal and interest payable by Toronto Community Housing Corporation to Infrastructure Ontario under the amended terms and conditions of  Term Loan No. 1, described in the financing agreement between Toronto Community Housing Corporation and Infrastructure Ontario dated October 18, 2013; on terms and conditions satisfactory to the Chief Financial Officer or delegate and in a form approved by the City Solicitor; or

b.  a City guarantee for the repayment of all principal and interest payable by Toronto Community Housing Corporation to an alternative lender under the terms and conditions of a refinancing of Term Loan No. 1, described in the financing agreement between Toronto Community Housing Corporation and Infrastructure Ontario dated October 18, 2013, on terms and conditions satisfactory to the Chief Financial Officer or delegate and in a form approved by the City Solicitor.

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

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

a.  provide such Service Manager consents under the Housing Services Act, 2011 (the HSA) as are necessary to authorize the mortgage security to be provided to Infrastructure Ontario or other lender 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 2 to the report (July 3, 2018) from the Interim Chief Financial Officer; and

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

6.  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 to Infrastructure Ontario with respect to any of the properties described in Appendix 1 to Attachment 2 to the report (July 3, 2018) from the Interim 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.

7.  City Council authorize the City Manager or the Chief Financial Officer or delegate 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 mortgages on the properties described in Attachment 2 to the report (July 3, 2018) from the Interim Chief Financial Officer, including, without limitation, amendments to the Operating Agreement between the City and Toronto Community Housing Corporation.

This report recommends that Council:

1. Approve a proposal developed by Toronto Community Housing Corporation and Ontario Infrastructure and Lands Corporation ("IO") which would result in the refinancing of seven Toronto Community Housing Corporation properties and the mortgaging of an eighth property not currently mortgaged.

2. Approve the extension for one year of the City's guarantee for the repayment of principal and interest of the 5-year mortgages originally taken out in 2013 for two further Toronto Community Housing Corporation properties (to allow time for the long term refinancing of these two properties to be established in 2019).

Toronto Community Housing Corporation has used its line of credit to pay out the remaining $19.3 million balance on the original mortgages for the first group of properties upon their renewal dates in 2017. At that time there was an opportunity to take advantage of Canada Mortgage and Housing Corporation's prepayment program to extinguish two of the high-interest-rate mortgages without paying any penalties. Subsequently, mortgage-refinancing terms for these properties have been finalized with Infrastructure Ontario.

The proposed refinancing of the first group of properties will generate $76.5 million in financing, of which $19.3 million will be used to replenish Toronto Community Housing Corporation's line of credit. The balance of the financing will be used to fund urgent and high priority capital repair and maintenance at the eight properties ($9.3 million) and on the broader Toronto Community Housing Corporation portfolio of buildings ($47.9 million).

This refinancing proposal will have no immediate financial impact to the City. However, Toronto Community Housing Corporation has requested a City commitment to extend subsidy funding of mortgages at current levels for the 7 properties for a new 30-year mortgage term. The extended mortgage subsidy funding has a total nominal value of $76.2 million and a present value of $41.6 million.

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

City Council previously approved loan repayment guarantees for the second group of properties in 2013 (EX29.2). Toronto Community Housing Corporation took out 5-year loans, rather than long-term mortgages, when refinancing these properties in 2013 because of the expectation that these properties would be redeveloped or sold. These short-term loans will need to be renewed in November 2018.

It is anticipated that the permanent refinancing of these properties will be achieved in early 2019. Toronto Community Housing Corporation will seek temporary financing for the interim period. This report recommends that the City's current guarantee of the repayment of principal and interest for the loans on these two properties be extended for one year to facilitate this temporary financing.

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