September 1, 1998

To:Community and Neighbourhood Services Committee

From:Commissioner of Community and Neighbourhood Services

Subject:Reform of Social Housing Programs - Response to Discussion Paper released by provincial Social Housing Committee

Purpose:

To propose a Council response to recommendations made by the province's Social Housing Committee about how social housing programs may be reformed.

Financial Implications:

No financial implications identified.

In 1998, it is estimated that the City will pay approximately $255 million (in 1998 budget) for its share of social housing programs. Estimates for future years are not yet available.

Recommendations:

It is recommended that Council:

1. Respond to province's Social Housing Committee request for feedback on its proposed reforms to social housing programs by:

(a)Endorsing the recommendations proposed in the Social Housing Committee discussion paper, as summarized in Appendix A of this report;

(b)Endorsing the recommendations proposed by housing staff of the Greater Toronto Area, as summarized in Appendix B of this report; and

(c)Endorsing the position taken by the Association of Municipalities of Ontario, as summarized in Appendix C of this report, with the exception of the request for periodic reviews of provider costs and financial adjustments.

2. Write to the Minister of Municipal Affairs and Housing about the following:

(a)to commend the Social Housing Committee and its Working Groups for the excellent and difficult work they have done to develop and propose reforms which are practical and which balance the divergent, and often competing, interests of social housing stakeholders;

(b)to express Council's continued interest in having municipalities, and the City of Toronto in particular, involved in further design and implementation of program reform, and in other matters related to social housing which directly impact on the City;

(c)to inform the Minister that the City will require establishment of capital reserve funding at an adequate level to meet the needs of public housing, and that this newly established reserve be funded by the province at no cost to the City;

(d)to clearly state Council's position that the decisions related to management, administration and ownership of public housing should occur at the municipal level, and that ownership should be transferred to the City at no cost;

(e)to advise the Minister that accountability for social housing must be through elected councils, and that Council does not support the establishment of third parties or special purpose bodies by the province to administer social housing;

(f)to encourage the Minister and the province, in response to concerns expressed to the Social Housing Committee and by Council about the shortage of affordable housing, to acknowledge that provision of social housing is a shared responsibility of all three levels of government; and

(g)to urge the province to work with the federal government and municipalities to improve the supply of affordable housing.

3.Write to the Federal Minister responsible for Canada Mortgage and Housing about the following:

(a)to advise the Minister of Council's support for program reform as proposed;

(b)to request that the federal government resume negotiations with the province to ensure that transferring administration of cost shared social housing programs to the municipal level can proceed;

(c)to encourage the Minister and the federal Government, in response to concerns expressed to the Social Housing Committee and by Council about the shortage of affordable housing, to acknowledge that provision of social housing is a shared responsibility of all three levels of government; and

(d)to urge the federal government to work with the province and municipalities to improve the supply of affordable housing.

4.Given the September 24, 1998 deadline for responding to the Social Housing Committee, authorize Community and Neighbourhood Services Committee to submit a response prior to Council approval, and subject to any recommendations Council may make at its meeting October 1 and 2, 1998.

5. Recognizing that GTA municipalities have shared issues around social housing, encourage and support GTA councils and staff in their continued efforts to work collaboratively on shared issues.

Council Reference/Background:

1.BACKGROUND

In 1997 the province announced it would download financial and administrative responsibility for social housing to the municipal level. Beginning January 1, 1998, responsibility for paying the provincial share of social housing costs was passed on to municipalities.

The next step in devolving social housing is to transfer program administration to municipalities. Since it has been long recognized that the amalgam of existing programs is administratively complex, the province committed to reforming the social housing system before transferring administration.

The reform process began last fall when the Minister of Municipal Affairs and Housing set up a Social Housing Advisory Council. The Advisory Council included municipal representatives as well as representatives of other stakeholder groups, and concluded that the current social housing system was complex, and that the relationship between funder and providers was unclear. Reforms were proposed which would make the system simpler, more accountable, and more cost-effective.

The Advisory Council report set out a direction rather than a detailed plan. Therefore, earlier this year, the Minister appointed the Social Housing Committee (SHC) and established three working groups (Roles and Responsibilities, Subsidy Model, Public Housing), made up of municipal, provincial and housing provider representatives, to develop more detailed plans.

The SHC was asked to consider recommendations made by the three working groups, and to develop a comprehensive report to the Minister. As part of that process, on August 24, 1998 SHC released a discussion paper outlining 48 recommendations. Municipalities have been invited to respond, in writing, by September 24, 1998, and may make deputations to SHC on September 28, 1998. A summary of the SHC recommendations is attached as appendix A, and the SHC Discussion Paper itself is attached appendix D.

This report outlines key reform proposals and a number of recommendations Council may wish to adopt as its written response to the SHC. The recommendations in this report are based on:

- prior positions Council has taken in response to devolution of social housing;

- recommendations and analysis prepared jointly by housing staff throughout the GTA municipalities (Appendix B summarizes those recommendations, and the detailed report is attached as Appendix E); and

- the position taken by the Association of Municipalities of Ontario (AMO) as set out in its August 26, 1998 communication to members (Appendix C summarizes those recommendations, and the complete communication is attached as Appendix F).

2.0SOCIAL HOUSING IN THE CITY OF TORONTO

In the City of Toronto, there are just over 95,000 units of social housing, representing about 70% of the total GTA social housing stock, and almost 30% of the total provincial stock. "Social Housing" refers to non-profit housing (co-operative housing, municipal non-profits and private non-profits) and public housing.

Non-profit housing is owned and managed by non-profit housing corporations, co-operative housing corporations and municipal non-profit corporations under operating agreements and cost-sharing arrangements with the province. The City of Toronto owns and manages 28,000 units through its two municipal non-profit housing corporations; Cityhome and Metro Toronto Housing Company Limited (MTHCL) (these companies will be merged Jan. 1, 1999). Another 37,000 units are owned and managed by community non-profit groups (23,000) and co-operative housing corporations (14,000).

Each non-profit housing portfolio has specific program requirements, which vary depending upon the housing program under which the units were built, and how the units are funded. The majority of housing projects were developed under cost-sharing arrangements between the provincial and federal governments (61%), however, there are projects which were funded unilaterally by the province (15%) and some older programs funded entirely by the federal government (24%). The SHC recommendations do not address those housing programs funded and administered entirely by the federal government.

Approximately 70 to 80% pay rents limited to 30% of their household incomes (RGI), and about 20 to 30% of the units are rented to tenants who do not receive rent subsidies (market tenants). The ratio of RGI units to market units is established in most cases by targeting plans" set out in the operating agreement between the province and the housing providers.

Public Housing projects are owned and administered by the Ontario Housing Corporation (OHC), and managed by local housing authorities (LHAs). In Toronto, the LHA is the Metro Toronto Housing Authority (MTHA) which has about 30,000 units. The federal government cost-shares with the municipality (about 50:50). Just about every public housing unit is provided to tenants at a rent geared to income (30%).

2.1Cost of Social Housing

Starting January 1, 1998, the City of Toronto became responsible for paying an equalized share of the total social housing cost of the Greater Toronto Area. The City's share of the total estimated 1998 cost for social housing in the GTA was budgeted at $266,278,406. This cost is net of federal funding provided through cost-sharing arrangements for specific social housing program types.

In June, the Province announced that it would no longer require municipalities to assume the costs for dedicated supportive housing. For Toronto, this meant that the previous cost estimate for social housing was reduced, retroactive to January 1, 1998, by $11,784,329.

3.0SUMMARY OF REFORM RECOMMENDATIONS

What follows is a summary of key reform issues, and comments on specific implications for the City.

3.1The Funding Model

Municipalities, housing providers, social housing residents and the province have all identified the need for a social housing program that is simpler to administer, more cost-effective, more business-like and more accountable. Under the current system, cost controls come more from provincial oversight (through annual budget reviews and approvals, and other interventions) and to some extent, this has permitted the province to exercise a substantial amount of control over provider operations. However, in addition to high administration costs, the downside of this type of intensive monitoring is that there is no incentive for housing providers to operate efficiently, and providers can turn to the province for additional funds when there are shortfalls. Providers have found it difficult to operate in an environment where funding levels are unpredictable.

The new funding model proposes trade-offs for both the providers and municipalities. Providers would gain more autonomy, funding predictability, and streamlined accountability. In return, they would be required to repay to the municipality some of the debt which they did not have to repay under the old program, and to operate within established cost and revenue benchmarks. Municipal administration costs will be reduced through harmonized programs and more targeted and streamlined methods of administration and overview.

Funding levels for each provider would be initially established based on cost and revenue benchmarks, and these benchmarks would be reviewed after three years to determine whether or not adjustments to the mandated operating loan repayments are needed. Housing providers which cannot operate their business within those benchmarks would be subject to a greater degree of municipal oversight.

AMO's position (see appendices C and F) is that it would prefer a much higher degree of municipal involvement and control than what is proposed (for example, periodic budget setting and review). City staff are of the opinion that the model as proposed is practical and balanced. Subject to detailed program design, there appear to be sufficient checks and balances recommended throughout the life of provider agreements to manage the funding relationship. GTA housing staff support this position (with the exception of Hilton region which recommends reviews and financial adjustment every three years).

Periodic or even annual budget adjustments will not result in material savings for the municipality. Only about 20% of provider costs are manageable (i.e. that they can influence the cost level in any way), and the rest are fixed. Reviews and adjustments may actually increase social housing costs by contributing to higher municipal administrative costs, opening the door to requests for additional funding by the providers, and undermining provisions geared towards having the provider operate in an efficient and business-like manner (like early loan repayment incentives and best practice reviews) Social housing is not like other municipal services, which are required to justify funding every year. Social housing differs because its costs can be secured against an asset, will be partially repaid, and the service level and costs can be established (and are predictable) over a very long term. There is little doubt, especially in Toronto, that the needed for social housing will continue for a very long time.

Instead of a high degree of monitoring for all providers, emphasis should be placed on developing systems and protocols to identify providers which may have difficulties, and to take action to help those providers resolve difficulties and stabilize.

Municipalities should also focus on the larger social housing cost items: mortgage/debenture financing and utilities. SHC recommends consolidated management of mortgages (to attain below-market financing rates, and lock in rates over entire amortization period to achieve certainty). It also recommends energy audits of projects to determine if money can be saved through system conversions (with the province paying for the audits). By providing incentives for efficient operations, providers may be able to repay City subsidies sooner. Finally, there may be cost savings if the City combines social housing intake functions with similar functions for other social programs it delivers. City efforts would be better spent maximizing savings in these areas.

Details about the methodology and the process for implementing the benchmarks have not yet been established. Protocols around early detection of potential problems, municipal responses and default management also need to be developed. SHC recommends that municipalities be included in the design and implementation work, and work directly with housing providers to review data and calculations.

For more detailed information about the funding model proposed, see Appendix E, section 3.1.

3.2The Relationship between the Municipality and the Housing Provider

The relationship between the municipality and housing providers would be established by two agreements. One agreement would address the operating loan the provider must pay back to the municipality; the other would address funding for rent-geared-to-income units. Both agreements would have standard clauses about reporting requirements, breaches and remedies, and set out requirements established by the province (provincial standards).

In general, the housing provider will confirm it is operating within the requirements of the agreement through reports to the municipality (depending upon the subject, reports are quarterly, annual, and periodic). If the provider is not in compliance, the municipality can intervene; the degree of intervention is directly proportional to the seriousness of the breach. In worst case situations, the province would also be involved because it continues to retain contingent liability for the mortgages/debentures. Details about how projects in difficulty will be managed need to be determined.

Annual reports would include filing audited financial statements, annual information returns (status measured against non-financial measures) and management representation reports (items not normally address in an audit report). This reporting does not limit the ability of the municipal auditor from exercising their authority -- providers may be reviewed by the municipal auditor as part of their duties to audit municipal expenditures, which include social housing programs. In addition, in certain breach situations the municipality can conduct an audit of the provider's operations.

For the City, the agreements will ensure that the accountability relationship is clear. Details about the contents of reporting documents, reporting methods, and adequacy of information, still need to be addressed in more detail. In particular, it is imperative that tools and information streams are developed which would permit the City to respond quickly if a provider has financial or other problems. Since the key relationship is between the provider and the City, the City should also have final say about how groups experiencing difficulties will be managed and when mortgage default will be declared.

For more information about operating agreements and reporting requirements, see appendix E, section 3.1.

3.3The Relationship between the Municipality and the Province

The model proposed that the province will continue to have an ongoing role in setting and monitoring standards in key areas, transferring the federal share of funding to the municipality, reporting to the federal government as required, and participating in centralized management of mortgage renewals and default management.

Provincial standards are recommended in nine key areas, generally related to access to rent-geared-to-income units (see Appendix D, section III). Standards include setting a minimum number of RGI units within each CMSM (roughly equivalent to the current number of units) and having provincial consistency around issues such as eligibility, benefit level, RGI calculations and minimum rent.

The mandatory provincial standards are a base. The municipality, generally in consultation with housing providers, can choose to have additional requirements for all housing providers in its area, and/or set requirements which are specific to one or more providers.

The City should support the recommendations made around provincial standards, and flexibility for municipalities to establish their own additional standards in response to local conditions. Few provincial standards are proposed, and the idea of maintaining some areas of province-wide consistency (particularly around access to RGI units) has merit. Many of the standards link to federal requirements, to ensure the continued flow of federal funding. The provincial standards proposed are generally the same as current standards (at least initially). In addition, there is flexibility for the municipality to change some aspects of provincial standards to suit local requirements. What is not yet clear is how much reporting the municipality will be required to conduct to satisfy provincial requirements, and how flexible those requirements will be. Further detail about how future changes to province-wide standards (if required) would be made.

For some time, the province has been discussing various transitional plans for administrative transfer, although no specific reports have been released or action taken. Provincial staff have indicated that they are working on a transitional plans ("Plan B" and "Regional Executive Committees") in the event that an agreement with the federal government is not possible or would not occur for some time. These ideas involved using existing LHAs or MMAH regional offices, as the bodies which would take over administration of all social housing for a transitional period. Municipal representatives would sit on the boards of these special purpose bodies to provide municipal input. This would be the means by which "say for pay" would be achieved.

The use of special purpose bodies in this manner has not been acceptable to most municipalities. Council has also adopted the position, which is restated in the recommendations to this report, that the establishment of a provincially controlled special purpose body to administer social housing programs is not acceptable to the City.

Further information about province wide standards are provided in appendix E, section 3.2.

3.4Public Housing

SHC recommends harmonization of public housing with other social housing programs, and that municipalities have the option of managing or even owning public housing projects in their area.

Public housing and non-profit housing currently have very different financial and operating environments. SHC recommends that both types of housing operate under similar program rules, and that municipalities be responsible for administering public housing, as they would with other social housing programs (i.e. through operating agreements with the housing provider). For example, currently for capital expenditures, non-profits maintain annually funded capital reserves whereas public housing capital work is funded through annual operating budgets. Under reform, both programs would have capital reserves established.

SHC recommends that municipalities have the option of owning all public housing in their area. Initially, OHC would retain ownership. During this time, the municipality would undertake an analysis of alternatives done jointly with the province, and would enter into negotiations to work out the details of the transfer. The Discussion Paper does not provide details about what this negotiation would entail, how long it might take, and whether or not there would be a cost to the municipality.

If the municipality decides not to own the public housing, it may still alter the LHA management structure. The municipality would be required to develop a business case and enter into discussions with the province.

Public housing management, administration and ownership have been a growing area of concern for the City. Tenants and tenant organizations have been making deputations and expressing their concerns about operational decisions made by the MTHA Board. The frustration is that while the City of Toronto pays for MTHA's housing, it has no direct means of influencing operating decisions or integrating activities with other social housing in the City.

From the City's perspective, the proposed recommendations are all quite positive. Council has previously adopted the position that the province should transfer ownership of the Metro Toronto Housing Authority stock to the City. It should be noted that this could not legally occur without federal agreement. This report recommends further that transferring ownership of public housing stock should be done at no cost to the City.

Further information about public housing recommendations are provided in appendix E, section 3.2.

3.5Summary

The proposed reforms are based on input from all stakeholders -- including municipalities -- and given the complexity of the issues, and competing interests, there is a remarkable level of consensus and balance evident in all 48 recommendations. The recommendations, if approved by the Minister, will establish the foundation for a social housing system which allows sound, long-term financial planning and predictable subsidies. Social housing providers would have sufficient ongoing funding to manage their projects in a business-like way and to serve residents effectively, and the City will have means by which to insure taxpayer dollars are being spent wisely and standards are being maintained. The needs of tenant/members have also been considered, and where standards may change, transitional provisions are recommended.

The model would allow the City to establish its own standards, processes and expectations for the provision of social housing.

The City can choose to negotiate with the Province to have public housing ownership transferred to the City.

These proposals, even if approved by the Minister, are simply a framework. Much more work around the details of the program design and implementation is needed. This report recommends that the continued significant municipal representation be maintained throughout the design and implementation process.

4.0Related Issues:

4.1Supply of Affordable Housing

Recently there has been a lot of discussion at Committees and Council around the need for affordable housing in the City of Toronto; in particular, the need for all level of governments to work together in order to improve the supply of affordable housing (for examples, see "Toward a Municipal Strategy to Encourage Affordable Housing", July 1998 and "Interim Report of the Mayor's Homelessness Action Task Force", July 1998).

Although not within their mandate, SHC commented that the lack of affordable, adequate housing supply was a major concern for current social housing residents during consultation sessions. The discussion paper notes that adequate, affordable housing is of benefit to municipalities in realizing healthy communities and is in the best interest of all levels of government.

It is recommended that Council ask both the federal and provincial governments to acknowledge that supply of social housing is the responsibility of all three levels of government, and urge both the Ministry of Municipal Affairs and Housing and CMHC to take action.

4.2No federal agreement

About three-quarters of provincially-administered social housing in Ontario is cost-shared with the federal government. The province needs the federal government's approval to change the programs, and to transfer administrative responsibility to municipalities. Although the federal government has signed agreements with six other provinces / territories for the transfer of its administrative responsibilities, they are not currently engaged in negotiations with the Province of Ontario.

Initially the City had asked the federal Government not to change its agreements with the province, with a view to preventing the province from downloading its costs on municipalities. In view of the fact that social housing costs have now been downloaded, the current position of the City is that the federal and provincial governments should work together to transfer social housing administration to municipalities as soon as possible.

In April, the Federal Minister responsible for CMHC, the Honourable Alfonso Gagliano, wrote to the Association of Municipalities of Ontario to indicate that he is awaiting the report of the Social Housing Committee on program reform before resuming negotiations with the Province on devolution. Presumably, if the reforms are supported by the municipalities and the non-profit sector, and acceptable to the federal government, the federal government would help to implement the reforms and would proceed with devolution negotiations with the Province. For this reason, it is recommended that Council inform the Federal Minister of its support for the reforms as proposed, and encourage the provincial and federal governments to resume negotiations.

With respect to social housing units unilaterally funded and administered by CMHC, Council has taken the position that it has no interest in administering unilateral federal non-profit and co-operative units (April 1998).

4.3Toward a GTA Position

The Ministry proposes to transfer administration to 47 "Consolidated Municipal Service Managers (CMSMs), which are municipal bodies responsible for administration of social housing and other municipally delivered social services (such as Ontario Works and Child Care). One overall advantage of the CMSM approach is to permit integrated intake and program delivery functions. A CMSM may be made up of one single upper tier municipality which is responsible for its own costs, or it may be made up of several municipal entities, all sharing costs.

In the GTA, there would be five CMSMs; the City and the four 905 regions. The GTA is the only place in Ontario where costs are shared between CMSMs. The result is that budget decisions made in one part of the GTA will impact on the other parts. While the CMSM model may make sense for the City in terms of service management, it is not clear what impact sharing costs across the five GTA CMSMs may have, if any, on administration or GTA-wide participation in decision-making. In addition, administrative decisions made in one part of the GTA may have spin-off effects in other parts.

Recognizing the need for the five CMSMs to work together, and perhaps the need to ensure that issues specific to the GTA receive the attention they merit at the provincial level, housing staff from all GTA municipalities worked together to analyze the SHC Discussion Paper and to outline recommendations for the GTA as a whole. The attached report and summary (appendices B and E) set out 18 staff supported recommendations. The overall message is that the GTA supports the reforms as proposed, and subject to continued municipal involvement in detailed design work and implementation.

For the most part, the proposed GTA position and the proposed City of Toronto position, are in line with AMO's position (appendices C and F). There is, however, one important difference -- AMO would prefer that the financial accountability model be revised to give municipalities the authority to periodically review provider costs with the potential of making financial adjustments as required; City staff and GTA staff support the model as proposed (with the exception of Halton region, which is proposing reviews every 3 years).

As outlined in section 3.1 of this report, the financial accountability model would operate based on a system of benchmarks. However, the strength of the reform model proposed is that all 48 recommendations balance and support each other. Although the municipality would not be able (in most cases) to adjust the operating loan without the consent of the provider, there are a number of other checks and balances it may use, which appear to be more efficient and effective than periodic or three year adjustments, such as:

- CMSM can use "best practice" reviews every 3 years to assist groups in lowering costs (thereby being able to repay operating loan faster);

- operating loan repayment can be adjusted if there are material changes to property taxes;

- CMSM can request assurances that non-rental revenues are being maximized;

- CMSM can institute early loan repayment incentives;

- if the operating loan is paid off, future surpluses must be used for social housing;

- if the provider wants additional funding, the CMSM may make the additional funding conditional upon increased oversight (e.g. annual financial reviews);

- energy audits (paid for by province) may identify other cost savings;

- for groups which cannot repay the operating loan, in certain circumstances, would be subject to a greater degree of oversight; and

- municipalities can intervene if a provider is in breach of the agreement.

The proposed model is the result of significant input by, and trade-offs between municipal, provincial and provider representatives. Changing the degree of municipal oversight will alter the balance established within the model and, in all likelihood, would make it unworkable, more expensive, and possibly undermine the support it has received so far.

We anticipate that other parts of the province may support AMO's position of wanting more municipal oversight. As discussed earlier, it is the opinion of GTA staff that a greater degree of oversight would not create any material advantage for municipalities, and would likely jeopardize the entire reform model as proposed. This report, therefore, recommends that the City endorse a GTA position, as outlined by recommendations proposed by GTA staff in their report. These 18 recommendations are consistent with the recommendations suggested in this City report.

Next Steps:

The deadlines established by SHC to respond to their discussion paper are very short. Council does not meet until after the submission and deputation deadlines (Sept.24 for written responses and Sept.28 for deputations). Therefore, it is recommended that Community and Neighbourhood Services Committee respond to SHC, subject to Council recommendations from their meeting October 1 and 2, 1998. In addition, it is recommended that the City make a deputation to SHC based on whatever position is endorsed by Community and Neighbourhood Services at its meeting September 10, 1998.

SHC proposes that municipalities have an ongoing role in program design and implementation. This City report supports that proposal, and recommends that Council express its appreciation for the level of municipal representation which has occurred to date, and advise the Minister, Municipal Affairs and Housing, of Council's continued interest in having municipal representation.

Recognizing that social housing reform is a shared issue for all GTA municipalities, and that the GTA differs from other parts of the province in certain respects (i.e. costs are shared across CMSMs, housing needs, the current supply of social housing, the practical experience with program delivery, and the political and staff capacity to take on devolved responsibilities), it is important that the GTA work together on shared issues, such as social housing reform. This report recommends that Council endorse the staff analysis and recommendations developed by GTA staff (see appendix A), and encourage continued collaborative efforts.

Attachments:Summaries

Appendix A:Summary of SHC Recommendations

Appendix B:Summary of GTA Staff Recommendations

Appendix C:Summary of AMO Position

Reports

Appendix D:Discussion Paper on Social Housing Reform, August 24, 1998

Appendix E:GTA Staff Analysis and Recommendations of SHC Discussion Paper, August 31, 1998

Appendix F:AMO Member Communication Alert, August 26, 1998

Contact Name:

Joanne Campbell

Phone: 392-6135

Fax: 392-3037

Joanne Campbell

General Manager, Shelter, Housing & Support

Shirley Hoy

Commissioner of Community & Neighbourhood Services

Appendix A: Summary of Recommendations proposed by Social Housing Committee

(complete discussion paper is provided as appendix D).

Appendix B: Summary of GTA Staff Recommendations

(complete GTA Staff report is provided as appendix E)

Staff of GTA municipalities recommend that GTA Councils endorse recommendations as outlined by the August 24, 1998 Social Housing Committee Discussion Paper on Social Housing Reform. In particular, GTA staff support the following recommendations:

1. Creation of separate rent supplement and operating loan agreements (#19-21);

2.Initial cost setting exercise to be revisited after three years, to allow time to assess accuracy and impacts of original exercise and to determine more detailed and comprehensive benchmarks (#12);

3.No further regular review of costs to occur beyond initial third year review, except for groups in breach of agreements or which had already been determined as unable to meet the normal loan repayment obligations (#12, 13, 18, 24);

4.Market rent component of the operating loan calculation to be set at true market rent for the type and location of housing being offered, allowing for phasing of any large increases, and requiring third party assistance if no agreement between municipality and provider is reached quickly (#10);

5. The same market rent is to be set for all market and rent geared-to-income residents in a project (subject to legitimate difference in unit types) so long as a rent supplement agreement is in place, even if the operating loan has been fully repaid (#15);

6.Information is to be available to municipalities from providers which will provide ongoing assurance that public funds are being used for intended purposes and allow CMSMs to detect problems and potential breeches of agreements at an early stage (#22, 23, 24, 25);

7.Target plans for individual providers may be changed by mutual consent between the provider and municipality (#27);

8.Municipalities may revise the "Modified Chronological System" for applications, following consultations with providers, subject to certain a minimum standards:

(a)All federal money received by a municipality must be spent to house applications at/below federal "Housing Income Limits".

(b)Applicants must be given priority for access based only on their inability to afford suitable and adequate housing and how long they have been on a waiting list.

(c)At least 35% of units must be occupied by "high need" clients (those for whom market rents are greater than or equal to 50 per cent of household income) (#31).

9.Municipalities to be able to determine intake function for units rented at a level geared to household income (RGI), including waiting list management, with the flexibility to delegate to providers or others, subject to compensation or other recognition of additional costs which arise from any imposed changes (#35, 6);

10.Municipalities to be responsible for income verification, with flexibility to delegate all or part of this function to providers or others, subject to compensation or other recognition of additional costs which arise from any imposed changes (#36, 6);

11.Municipalities to be able to adopt standard treatment of income and assets across social assistance, child care and social housing (#38);

12.Municipalities to be responsible for administering public housing programs (#39);

13.Municipalities to be able to decide on management models for public housing (#39);

14.Municipalities to have option of assuming ownership of public housing, and although transfer of ownership would only occur after negotiations with the province, the initial position of municipalities is that such a transfer should occur at nominal cost to the municipalities (#39);

15.Mortgage renewals to be administered centrally by a group with majority municipal representation, with a mandate to move as expeditiously as possible to stabilizing borrowing costs for the remaining life of mortgages (#46); and

16.Rules for investing capital reserves to be flexible enough to allow for pooling of investments (#47).

In addition, GTA staff recommend the following:

17.That the Province to cover shortfalls in existing replacement reserves, up to the amount set by a reasonable, and mutually acceptable engineering model, net of any previous expenditures from reserve accounts determined to be inappropriate;

18.Details about the protocol for default management between the municipality, provider and province need to be worked out, however, municipalities should have the final say in declaration of default;

19.Municipalities should be permitted to direct providers to use pooled capital reserve funds or other professionally assisted investments when returns the provider is earning on their capital reserve fund are below the earnings of the pooled fund, or deemed sub-par as measured against some other, appropriate, measure.

Appendix C:Summary of AMO Position on social housing reform proposal

(complete text is provided as Appendix F)

This summary is based on "Member Communication Alert", August 26, 1998, prepared by the Association of Municipalities of Ontario. Where the position taken by AMO appears to differ from what is recommended by SHC, italics are used; however, recommendations in the SHC paper and the AMO communication are at a high level and, therefore, it is not always possible to determine which recommendations the AMO communication is responding to, and whether or not there is agreement. It is often a matter of interpretation. For exact wording of the AMO communication, see appendix F.

1.The Funding Model

Municipalities must have authority to periodically review provider costs and make financial adjustments, if required. SHC recommends establishing the operating loan initially, and then reviewing the operating loan after three years to determine whether or not the mandated repayments on the operating loan need to be adjusted.

AMO proposes the use of efficiency targets as part of benchmarking to ensure best value for municipal funding. It is not clear whether this comment indicates support for the SHC recommendation about "best practice" reviews to help providers keep costs low, or is intended to refer to a change in the way that benchmarks would be managed.

AMO supports having providers repay the operating loan.

AMO recommends an adequacy study be conducted to determine the appropriate level of capital reserves, and that the province "top-up" reserves if needed (SHC is silent).

2.The Relationship between the Municipality and the Housing Provider

AMO supports recommendations made about the municipal-provider relationship such as municipalities being responsible for administration and providers for operations, within framework of operating agreements. AMO also supports recommendation that municipality to have authority over income testing.

AMO cautions that using a province-wide "cookie-cutter" approach to administration (i.e. service contracting and reporting requirements) as it would not recognize local requirements, and would stifle oppourtunities to improve efficiencies. (This caution should be taken into account during detailed program design.)

3.The Relationship between the Municipality and the Province

AMO suggests limiting the provincial role in determining service levels (province wide standards) to and initial transfer period, and to some high level program standards. Municipalities should be permitted to establish standards at levels responsive to local needs thereafter (SHC builds in municipal flexibility around some provincial standards, and recommends that municipalities have flexibility to establish CMSM specific standards).

AMO suggests the municipality have final say in decisions around debt forgiveness for providers. (SHC is silent where forgiveness is needed due to default, but does recommend municipal control over other areas where debt forgiveness may be appropriate - such as early loan repayment incentives.

With respect to mortgages, the province retains contingent liability. AMO suggests the province should not pass on principle and interest costs to the municipality when a defaulted project is sold for less than outstanding value of mortgage (City of Toronto staff are not aware of any project that ever did end up in a default sale; the usual practice of the province has been to amalgamate/transfer the project to another housing provider).

AMO suggest that the provincial role should be limited to setting broad standards, guaranteeing mortgages and flowing federal funding. In addition to these functions, SHC recommends a provincial role in centralized default management and mortgage financing, with details about provincial participation to be determined.

4.Public Housing

AMO suggests that OHC and LHAs be wound down, municipalities determine the service delivery mechanism, and that municipalities should have option to own public housing. SHC recommendations around public housing appear to support all of AMO's suggestions.

5.AMO position on matters not covered by SHC mandate

AMO states a number of positions about matters not directly related to program reform and, therefore, outside of the SHC mandate. In general, the issues relate to implementation of reform, and administrative transfer of social housing:

-province should transfer service management responsibility as soon as possible;

-accountability for social housing through elected councils, not third parties or special purpose bodies;

-social housing should be transferred in a good state of repair;

-the state of repair for each project should be assessed prior to transfer, and this information provided to municipalities. Failing that, the province should guarantee that capital costs will not exceed the amount accounted for in the Who Does What transfers and fund any costs above that amount; and

-the province has indicated that cost-savings in all areas of municipal funding and management responsibility will be necessary in order to achieve revenue neutrality in transfer of responsibilities to municipal governments; social housing is no exception