Commissioner's Office
Community &
Neighbourhood
Services
55 John St., Stn. 1111
Toronto, ON M5V 3C6
Tel. (416) 392-8302
Fax (416) 392-8492
September 25, 1998
To:Corporate Services Committee
From:Commissioner of Community and Neighbourhood Services
Subject:Disposition of City-Owned Property Houses
Purpose:
To comment on the issue of the future disposition of the City-owned property houses.
Funding Source, Financial Implications and Impact Statement:
The implications of options for disposition of the Property Houses are addressed in separate
reports from the City's Housing Company and the Commissioner of Corporate Services.
Recommendations:
It is recommended that:
The Corporate Services Committee give serious consideration to the proposal of the Housing
Company Board that would transfer ownership of the Property Houses to the Company for
affordable housing purposes, prior to considering other options that would result in their sale
to the tenants or others at market value.
Background:
At its meeting of June 22, 1998, the Corporate Services Committee deferred a report from the
Commissioner of Corporate Services with regard to the sale of the City-owned Property
Houses and asked staff to explore, in consultation with local Councillors, a mutually
beneficial arrangement for all of the properties. Corporate Services staff have been leading
this process and will be reporting on a proposed arrangement for the Property Houses.
At its May 25th meeting, the Board of Directors of the City's Housing Company (joint Board
of Cityhome and the Metro Toronto Housing Company) asked its own staff to look at
alternative methods to retain the Property Houses for social housing purposes. This report was
adopted by the Board on September 14, and the resolutions of the Board have been forwarded
to the Committee for consideration on October 9th.
This report provides comments from the perspective of Community and Neighbourhood
Services on the proposals being put forward by the Housing Company and the Corporate
Services Staff.
On June 22nd, Corporate Services Committee also asked staff to "identify clear guidelines as
to what the City's specific criteria are for subsidized housing". This report also responds to
that request.
Comments:
At this time, there is significant pressure on the City to respond to affordable housing needs in
creative ways. The interim report of the Mayor's Task Force on Homelessness indicates that
more than 80,000 people in Toronto are currently at risk of becoming homeless because they
pay more than 50% of their income on rent. The report also points out that the cost of
providing permanent housing ($22-30 per day for a rental apartment) is much cheaper than
short term emergency housing (e.g. $30-43 per day for a hostel; or $101 per day for a
contracted motel room with meal allowance). At its July meeting, Council adopted in
principle an affordable housing development strategy to be pursued in the coming months.
This strategy involves using City-owned property and policy tools in partnership with private
and community groups, to develop affordable housing demonstration projects. With this in
mind, it is important to consider whether the property houses are an asset that could support
this strategy.
As they are currently managed, the rents for most of these houses are set at or just below
private market levels. At this time, ten households are paying below market rents (i.e. geared
to income), with the costs being covered by rent revenues from the other houses. Under the
business plan for these houses, with market rents increasing over time (and overall rent
revenues became greater) it was intended that Cityhome provide more RGI assistance within
the portfolio (up to 50% of the 105 units). From an affordable housing perspective, the
question at this point is whether to proceed with this plan or to consider other ways to use this
asset. There are a number of options that are discussed below.
In May, the Board of Directors of the Housing Company (i.e. the joint Board of Cityhome and
the Metro Toronto Housing Company) asked its staff to look at alternative methods to retain
the houses for social housing purposes. On September 14, Housing Company staff reported
back to the Board on options to increase the affordable housing impact of this asset. The
Board has decided to recommend to the Corporate Services Committee that ownership of the
houses be transferred to the City's Housing Company. In light of the long waiting list for
affordable family housing, the Board is arguing that it is in the best position to utilize the
asset. As discussed below, this could include enhancing the existing business plan to help
more low income families or selling properties in order to build new affordable housing on
existing Housing Company property.
Staff of the Shelter Housing and Support Division of Community and Neighbourhood
Services have also been considering other uses of the houses that could serve the community
need for affordable housing. In August, staff canvassed a number of community agencies that
have experience in providing affordable housing and sought their ideas for alternatives to
open sale of the houses on the market. A number of ideas have been received and are
discussed below.
- Use of the Houses/Proceeds by the City's Housing Company
The City's Housing Company (i.e. Cityhome) currently manages the houses under two leases
(25 years for some houses, 49 years for others) from the City of Toronto, based on a business
plan adopted by the former City Council in 1992. As there are no non-profit program
subsidies available, the business plan requires that all operating costs be covered by rent
revenues on the 105 units. Since the properties are mortgage-free (except for a $2.5M
renovation loan), it is possible to provide below-market rents to a number of households in
need. These households pay a rent-geared-to-income (RGI) similar to households living in
non-profit housing.
The Housing Company's report identifies ways to enhance the management of the houses to
assist a greater number of households. These options include making better use of rent
revenues so that more RGI subsidies could be provided to needy households. This is based on
waiting list information showing that 22,955 families are waiting for RGI housing in Toronto,
but only 154 subsidized units are becoming available each year through turnover.
Other options include selling some or all of the houses and using the proceeds to develop new
housing, potentially on existing Housing Company sites. The analysis shows that, on land
owned by the Housing Company, the proceeds from the sale of the houses (assumed to be
approx. $11M) could be used to leverage the construction of 216 low end of market units or
up to 78 subsidized units in a walk-up building. On October 9th, the Board will be advising the
Committee of its strong support for allowing the Housing Company the opportunity to further
explore the options for this housing stock with a view to maximizing the potential for social
housing purposes.
2.Uses of the Property Houses by Existing Community Agencies
The Shelter, Housing and Support Division has received a number of ideas from community
agencies for other uses of the houses that would meet affordable housing needs:
Conversion to Non-Profit or Co-operative Ownership
The Co-operative Housing Federation of Toronto (CHFT) has been working with a group of
property house tenants to develop a proposal that they plan to present to the Corporate
Services Committee. CHFT supports the sale of individual houses to existing tenants, where
they can afford to buy them. However, they propose that, where tenants do not wish to buy,
the houses be sold to a non-profit housing organization committed to providing ongoing rental
housing. They specifically suggest that houses be sold to existing scattered unit co-operatives,
or local non-profits, based on the tenants' preference. Should existing co-operatives not be
interested, CHFT proposes to work with the tenants to form a new co-operative.
At the time of writing, CHFT was in the process of contacting tenants in all of the property
house units to determine the extent of the interest in this proposal. We would expect that, by
the time of the Corporate Services Committee meeting that they would have some indication
of the level of interest in this proposal. Should the City pursue this approach, staff would work
with CHFT to seek written confirmation of the preference of the individual tenants involved,
before proceeding.
CHFT indicate that they cannot finalize the financing plan for purchase by cooperatives
without knowing the sale price of the properties, or at least the appraised value. They propose
that coops obtain 75% of the purchase value through conventional financing (bank or credit
union) and suggest a number of alternatives for the remaining 25%. The alternatives for
second mortgage financing include the Risk Underwriting Fund of the Co-operative Housing
Federation of Canada, or depending on the retained earnings or equity of existing
cooperatives. Should the rent revenues be insufficient to cover the costs, they suggest the City
consider retaining the land and sell only the houses themselves to the co-ops, sell at a reduced
value, or take back a second mortgage at a below-market interest rate. All of these options
would reduce the immediate proceeds from sale of the individual houses involved. It should
ne noted that the proposal as it stands does not attempt to increase the affordability of the
houses, and additional funding may be required in order to rent the units at below market
levels. Further analysis must be done to test the feasibility of the proposal.
Two cooperatives that have been working with the tenants on this proposal include Dufferin
Grove Housing Co-op which owns properties (62 units) on Dovercourt Road, Melbourne
Avenue and Sorauren Avenue, and Wood Tree Co-op which owns 47 single family homes in
the Dufferin Davenport area.
We believe this proposal merits further analysis, should Council decide to reject the
recommendations of the Housing Company Board. For those houses where tenants are
interested in becoming co-op members, Housing staff would be prepared to work with CHFT
and local co-ops to develop the proposal further and to help arrange financing of the purchases
by co-ops.
Lease of Larger Houses to Community Agencies to Expand Existing Programs
A number of community agencies are interested in obtaining individual property houses in
order to expand the housing options for their clients and expand their existing programs.
Generally, these are well-established groups with significant experience managing housing,
and they are interested in leasing houses rather than buying them. For example, Yonge Street
Mission already operates two houses under the City's Single Housing Opportunity Program,
in partnership with Cityhome. As noted in our May report to the Committee, there are five
houses currently leased to community groups.
The following agencies have expressed interest in leasing houses, at a market rent level (or a
negotiated rent based on what their clients can afford). These are preliminary expressions of
interest from agencies, and based only on a cursory review of the properties by their staff. In
addition staff are aware of several other community agencies that are interested in obtaining
City-owned property for housing purposes, through purchase or lease. For example,
Homeplace Non-Profit Homes has requested that City-owned vacant residential properties be
donated to the group for affordable housing; and they have specifically identified certain
houses in the Spadina corridor for this program.
Yonge Street Mission - interested in houses in the Cabbagetown or Riverdale areas to serve
street youth who are participating in YSM's employment/education programs and able to
maintain stable housing
Toronto Association for Community Living - interested in leasing larger houses for
developmentally handicapped who are currently living in unstable housing in the community
(e.g. poor quality rooming houses)
Dixon Hall - seeking houses to integrate into a program for formerly homeless/shelter users
Anglican Houses/Habitat Services - interested in large houses close to the existing John
Gibson House program at 227A Crawford Street, to integrate into their existing programs
serving individuals with mental health problems.
Christian Resource Centre - looking for larger houses to accommodate single adults,
comprising a mix of hard to house, economically disadvantaged and those more financially
independent, as a joint venture with churches and private sector.
As there are no houses that are vacant and suitable for use by agencies, it is not possible to
consider leasing houses to these groups at this time. However, we suggest that in those cases
where the existing tenants and/or co-ops are unwilling or unable to buy houses, Housing staff
be given the opportunity to examine the suitability of the house for community agency use
(based on size and the proximity to existing agency programs) and to consult with the
agencies that have expressed an interest to determine their interest in purchasing the houses
before they are offered on the open market. Alternatively, should Council accede to the
Housing Company's request to transfer ownership, the Housing Company could be requested
to accommodate these agencies if possible, as it develops options for the houses.
3. Co-Ownership or Conversion to Condominium
It should be noted that one of the tenants in the fourplex units on Hubbard (1,3,5,7,13) and
Wineva (2,4,6,8) has expressed an interest in creating a co-ownership or condominium
arrangement for those units. Since the units have common furnaces, this may be worth
exploring, provided that there is an interest among the other tenants. A number of issues need
to be explored however. In the case of condominium conversion, the legal expenses may be
significant and need to be identified. There are also issues related to the City's condominium
conversion policies that need to be explored. In terms of co-ownership, it may be difficult to
obtain private financing. We would suggest that the interest of the other tenants in this option
be determined, and if they are willing, the tenants be requested to make a proposal
demonstrating the feasibility of this approach.
GUIDELINES FOR SUBSIDIZED HOUSING
Staff were also asked to "identify clear guidelines as to what the City's specific criteria are for
subsidized housing". As noted above, the property houses do not operate under any social
housing programs, nor do they receive any subsidies from such programs. Under the business
plan adopted by the former City Council, the Housing Company (Cityhome) operates the
houses on a breakeven basis, and provides the equivalent of subsidized rents to a number of
low income households (currently 10 households). In effect, the Housing Company lowers the
rents on these 10 units to a level that the tenants can afford (i.e. 30% of household income),
and covers the loss from the rent revenue of the other properties.
The business plan itself provides the guidelines for the provision of these rent "subsidies";
these are equivalent to the criteria for Rent-Geared-to-Income (RGI) subsidies in the
non-profit program and other buildings operated by Cityhome or the Metro Toronto Housing
Company. Rent levels are set according to the provincial RGI scale, and (with the exception
of low income households who were already living in the houses when the business plan was
put in place) any new low income households must be selected from the waiting list for social
housing. In other words, the criteria for the "subsidized" housing units in this portfolio are
equivalent to those of the non-profit housing program in general.
Conclusion:
In light of the pressures on the City to respond to affordable housing needs, the proposal from
the City's Housing Company deserves serious consideration. We recommend that the
Corporate Services Committee decide to recommend or reject this proposal in its entirety
before considering other proposals to sell the houses at market value.
Contact Names:
Rob Cressman
Phone: 392-0601
Fax: 392-0548
Email: rcressma@city.toronto.on.ca
Joanne Campbell
General Manager
Shelter, Housing and Support
Division
Shirley Hoy
Commissioner of Community &
Neighbourhood Services
