Toward a Municipal Strategy to Encourage
the Creation of Affordable Housing and
a Framework for Proposals to Develop
Affordable Housing Demonstration Projects
The Community and Neighbourhood Services Committee recommends the adoption of
the recommendations of the Council Strategy Committee for People Without Homes
embodied in the following communication (July 7, 1998) from the CityClerk:
The Council Strategy Committee for People Without Homes on July 6, 1998, had before it a
report dated June 29, 1998, from the Commissioner of Community and Neighbourhood
Services, headed "Toward a Municipal Strategy to Encourage the Creation of Affordable
Housing," and a further report dated June 29, 1998, from the Commissioner of Community
and Neighbourhood Services, headed "Framework for Proposals to Develop Affordable
Housing Demonstration Projects".
The Council Strategy Committee for People Without Homes recommended that:
(1)the following recommendations, as contained in the report dated June 29, 1998, headed
"Toward a Municipal Strategy to Encourage the Creation of Affordable Housing", be
adopted:
(i)Council agree in principle to play the role of facilitator and partner in the creation of
affordable housing and adopt the following goal to guide the Council Strategy Committee
for People Without Homes in its work over the coming months:
"The goal of the Affordable Housing Development Strategy is to create an environment in
which private sector and community partners will be able to develop affordable housing for
people with a range of housing needs that are not currently being met in the market;"
(ii)Council agree in principle that a capital revolving fund for affordable housing should be
established to provide financial support to projects that demonstrate the City's role in
facilitating the creation of affordable housing, and request the Chief Financial Officer, the
Commissioner of Corporate Services and the Commissioner of Community and
Neighbourhood Services to report back on options for establishing such a fund and potential
funding sources;
(iii)Council agree in principle to the provision of surplus City-owned land and buildings for
affordable housing development, as a first priority, and request the Commissioners of
Corporate Services, Urban Development Services, and Community and Neighbourhood
Services to report back jointly on options for a "housing first" policy; and
(iv)Council urge the Federal and Provincial Governments to make a commitment to an
affordable housing development strategy for the City of Toronto by making surplus
publicly-owned sites available for housing as a first priority and by helping affordable
housing projects to access capital financing and support service funding;
(2)the Council Strategy Committee for People Without Homes advises the Community and
Neighbourhood Services Committee that it adopted the report, headed "Framework for
Proposals to Develop Affordable Housing Demonstration Projects", and that staff are
proceeding with the actions outlined in the said report; and
(3)a communication be forwarded to The Urban Environment and Development Committee
requesting that the Council Strategy Committee for People Without Homes be allowed
direct input in the new Official Plan for The City of Toronto process.
(Report dated June 29, 1998, addressed to the Council Strategy Committee for People
Without Homes, from the Commissioner of Community and Neighbourhood Services,
headed "Toward a Municipal Strategy to Encouragethe Creation of Affordable Housing")
Purpose:
This report is intended to assist the Council Strategy Committee for People without Homes
in developing a City strategy to create an environment in which the private sector and the
community will be willing and able to develop affordable housing.
Financial Implications:
This report has no immediate financial implications. Staff are asked to report back on
elements of the strategy that have financial implications in 1998, including the provision of
City land or buildings to private and community partners to develop housing, and the
designation of a capital revolving fund to facilitate demonstration projects.
Recommendations:
It is recommended that:
(1)Council agree in principle to play the role of facilitator and partner in the creation of
affordable housing and adopt the following goal to guide the Council Strategy Committee
for People Without Homes in its work over the coming months:
"The goal of the Affordable Housing Development Strategy is to create an environment in
which private sector and community partners will be willing and able to develop affordable
housing for people with a range of housing needs that are not currently being met in the
market.";
(2)Council agree in principle that a capital revolving fund for affordable housing should be
established to provide financial support to projects that demonstrate the City's role in
facilitating the creation of affordable housing, and request the Chief Financial Officer, the
Commissioner of Corporate Services and the Commissioner of Community and
Neighbourhood Services to report back on options for establishing such a fund and potential
funding sources;
(3)Council agree in principle to the provision of surplus City-owned land and buildings for
affordable housing development, as a first priority, and request the Commissioners of
Corporate Services, Urban Planning and Development Services, and Community and
Neighbourhood Services to report back jointly on options for a "housing first" policy; and
(4)Council urge the Federal and Provincial Governments to make a commitment to an
affordable housing development strategy for the City of Toronto by making surplus
publicly-owned sites available for housing as a first priority and by helping affordable
housing projects to access capital financing and support service funding.
Background:
From the inception of the new City of Toronto, homelessness and affordable housing issues
have been of prime concern to the municipality. For example, the Mayor, in his inaugural
speech, stressed the need to address such concerns. With regard to affordable housing he
noted that "Together we must work to make sure this is a city in which people can afford to
live", and he spoke specifically of the need to get new affordable rental housing built in the
City.
At its meeting of May 11, 1998, staff made a presentation to your Committee on a new role
for the municipality in affordable housing development. The presentation reviewed the
extent of housing needs identified by the Patterns and Prospects report (1996) and the work
done by the Metro Housing Stakeholder Panel (1997) on tools that the municipality could
use in the absence of social housing housing supply programs. It was proposed that the
Committee take action at its next meeting to:
(a)adopt a framework for a municipal strategy on affordable housing development; and
(b)proceed to with affordable housing demonstration projects through a request for
proposals process.
Recently the City has received many creative suggestions for housing models that could
provide affordable housing and that would help to demonstrate the City's new role as
facilitator and partner. Some proposals to date include Bob Barnett's Shared Affordable
Accommodation model, MikeLabbe's "Options for Homes" model, and John van Nostrand's
"Grow-as-you-Go" model. There has also been initial discussion at the Ad Hoc Committee
on Shared Accommodation on how to apply a Single Room Occupancy (SRO) model to
Toronto. It is most encouraging that people and organizations are contributing their ideas,
time and resources in order to create affordable housing options in the City of Toronto.
Rather than consider each idea in isolation, we suggest the City move quickly to establish a
process to select demonstration projects that will help test the mechanisms in the overall
strategy. The City will need to decide where to allocate its limited resources (e.g., surplus
sites, financing support, concessions in the development approval process, etc.) based on fair
and objective criteria such as who is to be served by such housing and which mechanisms
are being tested. We are recommending a process for selecting demonstration projects in a
separate report to the Council Strategy Committee.
Comments:
Overview:
This report is the first part of the process towards making decisions about a municipal role
for affordable housing development. It provides background on the need for a municipal role
and outlines, at a high level, some options for a municipal role.
We see the City's new role in affordable housing development as being built upon the
notions of facilitation and partnership. This model recognizes that the City cannot readily
undertake much development on its own, and cannot take over the role that the Provincial
and Federal Governments previously played in the development of social housing. The City
can facilitate development by creating an policy environment where the private sector and
non-profit groups will be willing and able to build housing. As a partner with other
development stakeholders on specific sites, such as community agencies, the development
industry, financial institutions and senior levels of government, the City can influence, even
advance, the development of affordable housing.
We propose that, over the next several months, the Council Strategy Committee for People
Without Homes consider the role the City may have in supporting the development of
affordable housing. To facilitate that discussion, to outline options, and to make
recommendations, a series of topics will be brought forward to the Strategy Committee in
functional areas that are outlined in this report. The City can impact upon affordable housing
development in many different ways - e.g., providing land or buildings, working directly
with developers or indirectly through planning and regulatory policies - but decisions need
to be made about the best way to lever action in the community, using the specific
mechanisms and resources available to the City.
At the same time, it is proposed that the City undertake a number of affordable housing
demonstration projects, in order to show how the City can influence development using
some of these mechanisms. A separate report on Demonstration Projects will provide more
detail.
It is proposed that Council be asked to make a commitment in principle to this new role in
facilitating the creation of affordable housing, and to two key elements of a strategy. The
two key elements, that will be critical to the success of demonstration projects over the next
18 months, include a "housing first" policy for the disposal of surplus City-owned land and
buildings, and the establishment of a capital revolving fund to facilitate the financing of
demonstration projects.
Responding To Affordable Housing Needs:
The need for affordable housing is growing across all household types, and we expect that it
will become even more urgent over time. Appendix A provides a summary of recent data on
housing needs in the City of Toronto. Although all households with low incomes have
difficulty accessing affordable housing, the problem is worse for particular groups - notably
one-parent families, seniors and youth. More and more the City's demographic profile is
becoming hollowed out as families leave the City to find housing they can afford.
Migration data show that the City of Toronto tends to receive a disproportionate share of the
population with housing affordability problems, relative to the Greater Toronto Area (GTA)
and the rest of the country. This results from the high level of immigrants coming to the
GTA, combined with significant migration of home-buying families from the City to the
suburbs of the GTA. This means that the City has, and will continue to have, fewer families,
more renters, and more households with lower incomes. It also suggests that Toronto's
affordable housing issues need to be addressed from a GTA perspective and the senior levels
of government should play a role in local housing solutions.
Without a doubt, it is critical that the City play a strong role in preserving the existing
supply of affordable housing. The potential for loss of affordable units in the existing stock
is larger than the feasible scale of any new development. In addition, in terms of actual
numbers of units, it is usually more effective to preserve housing stock than it is to build
new units. But preservation alone is not enough. The current demand for affordable housing
units exceeds supply and pressure on the existing stock of affordable housing (in terms of
conversions, demolitions, and rent increases) will continue to erode supply. Unless a range
of affordable housing options are provided for these populations, the result will be a City
that is less diverse and less vibrant, socially and economically.
Although conventional economic theory is that demand will create supply, rising demand
has not fuelled a supply of affordable rental or ownership housing, primarily because the
cost of production consistently exceeds the rents/mortgages the market can support. For
example, based on pro formas of a typical new rental apartment project in Toronto, the
estimated gap between the economic rent required to make the project viable and the
achievable market rent is over $3,000.00 per unit annually. Without help, the private rental
market cannot build more apartment buildings, let alone supply units at affordable (or below
market) rent levels.
New supply is created through construction, conversion and intensification. The City can
support new supply through policies and actions aimed at reducing the cost of development
including providing access to land and financing, permitting conversion from non-residential
to residential uses and making other such regulatory changes which permit residential land
use, and by establishing policies which support different housing models including
accessory apartments and single room occupancy units.
Providing housing for groups with unmet needs, and for youth, women with children and
seniors, in particular, may also mean encouraging different forms of housing design, tenure
and different ways of occupying the unit so that low-income households, and households
with specific support needs, can obtain housing.
A recent report undertaken by the Canadian Housing and Renewal Association and the
Canada Mortgage and Housing Corporation (New Ways to Create Affordable Housing,
1998), outlined twelve different housing models which have either been created, or are in the
process of being created, without traditional non-profit supply programs. These range from
models focused on how the occupant pays for shelter (for example, life leases and
home-ownership), and how they occupy the unit (for example, co-housing). Zoning
presented a barrier to development in about 19 percent of the cases.
Toward A New Municipal Role:
Municipalities in Toronto have played an active role in facilitating and building new low
income housing. Both the former Metro and City of Toronto Official Plans set targets for
affordable housing development as a tool for ensuring a mixed community and a livable
city. Through their housing companies, former Metro and the City used Federal and
Provincial programs to construct over 28,000 social housing units. The other former
municipalities helped to facilitate social housing development through their planning
approval processes. As a result, from 1976 to 1995, about 2,100 new non-profit units were
built each year within the boundaries of the new City.
The municipal role has changed over time with shifting senior government policies and
community needs. In the early 1900s local government became involved due to concerns
over the effect of poor housing conditions on the health of residents. In the 1940s, the City
played a lead role in developing the first public housing project, assembling property for
Regent Park North. As Federal financing became available in the 1950s and 1960s,
newly-formed Metro formed its own housing company and supported the rapid growth of
the Metropolitan Toronto Housing Authority, covering 7.5 percent of the costs. In the 1970s,
the City of Toronto set up Cityhome and a land banking program to take advantage of
Federal non-profit funding. Local governments also advocated the growth of private
non-profits and co-ops, and were instrumental in the expansion of Provincial funding for
supportive housing.
With the cancellation of non-profit housing supply programs in 1995, senior government
funding is no longer available to support large-scale affordable housing development in
Toronto. However, waiting lists for social housing continue to grow, and data from the 1996
census show that the need for such housing has increased significantly. The municipality
must find new ways to respond to this need in light of its changing responsibilities and the
resources that are available.
Facilitation and Partnership:
In response to the needs identified in the Patterns and Prospects (1996), the Metro Housing
Stakeholder Panel (1997) proposed a strong role for the municipality in encouraging the
development of private rental and affordable housing for low income households. The
Stakeholder Panel suggested that, in the absence of traditional housing supply programs, the
City could influence supply using a variety of mechanisms, including reduced taxes for new
rental construction, provision of municipal land for housing, and assistance with financing
for housing projects.
While the City cannot easily create new affordable housing alone, it can create an
environment that encourages the production of housing, and can apply its own resources to
partnerships that will directly result in affordable housing being created. To be successful,
the City will need to influence the factors that affect the cost of production of housing.
There are a number of players who need to be involved to create affordable housing. Key
players include the municipality, senior levels of government, private developers/builders,
community-based agencies, and financial institutions. Each of the players has an important
role to play:
Senior levels of government - despite the recent devolution of housing responsibilities to
municipalities, the Federal and Provincial governments have the legislative power and
financial strength required to create affordable housing on a larger scale. The Federal
Government has expressed an interest in facilitating housing partnerships, and in making
mortgage insurance available to affordable housing projects.
Private developers/builders/managers - if it is economic to do so, the private sector will
build rental housing. The private sector has land and equity to bring to the creation of
housing, and could provide or facilitate the creation of affordable housing as part of larger
redevelopment schemes.
Community-based agencies - community agencies are the most familiar with needs of client
groups, and can make linkages to services and community/volunteer resources.
Financial institutions - there are a range of large and small sources of private capital
financing that could be engaged in the provision of affordable housing.
The Municipality - the City's role, as suggested by the Metro Stakeholder Panel, is to
encourage housing development by reducing barriers and helping to meet housing needs that
are not being met in the market, with appropriate allocation of municipal resources for that
purpose.
Developing a Strategy for the City of Toronto:
The municipality can play a role in influencing affordable housing creation both at a policy
level, and at a project specific (action) level through a variety of mechanisms. For example,
at a policy level, equalizing residential and multi-residential tax rates could impact on rents
for all forms of rental housing. At an action level, providing density incentives or land at a
preferred price to a particular developer, could impact on rent levels for a specific project.
Policy-based Mechanisms:
-intent is to create an environment that encourages affordable housing;
-implementation tends to be longer term (18 months or more); and
-primarily dependant upon regulatory tools such as Official Plans and Zoning By-laws.
Action-based Mechanisms (are both transitional and ongoing):
-tools currently available or that can be implemented within a short term (less than 18
months);
-work within the current regulatory environment;
-requires a greater level of direct input by municipality than policy-based mechanics; and
-can be tested through demonstration projects.
The role of the municipality can be defined by the mechanisms available to it, in terms of
both policy and action, within seven functional areas:
(1)Leadership, Organization, and Advocacy;
(2)Land and Buildings;
(3)Financing and Funding;
(4)Planning and Policy;
(5)Regulations - Standards and Approvals;
(6)Community Supports; and
(7)Taxation, Charges and Fees.
Potential mechanisms under each of these functional areas are set out in the table in
Appendix B. As noted previously, a separate report will describe the rationale for
demonstration projects designed to test the City's ability to encourage affordable housing
development through some of these mechanisms.
In order to allow time for the Committee to understand each mechanism, and to seek input
from internal and external stakeholders, we propose that the Committee consider these tools
over a series of future meetings. Prior to each meeting, staff will consult with the various
departments who have an interest and provide background material and options for
consideration by the Committee. Where appropriate, external stakeholders will be invited to
present their points of view to the Committee as well. We propose that the Committee
consider the following two categories of mechanisms at its next meeting: Land and
Buildings, Financing and Funding.
Commitment Of City Council:
We propose that Council commit in principle to a number of aspects of this strategy before
the Council Strategy Committee for People Without Homes proceeds to develop specific
proposals over the coming months.
Goal for Affordable Housing Development Strategy:
Reflective of an approach that would be based on facilitation and partnership, Council
should be asked to commit in principle to the following goal:
"The goal of the Affordable Housing Development Strategy is to create an environment in
which private sector and community partners will be willing and able to develop affordable
housing for people with a range of housing needs that are not currently being met in the
market."
A number of elements that may form part of this strategy will have financial implications for
the City, directly in the form of financial or funding support, or indirectly in terms of
foregone revenues (e.g.,from land sales at below market value, waiving of fees or deferral of
taxes). Some of the planning tools, such as density incentives (under Section 37 of the
Planning Act), have the potential to generate revenues for affordable housing based on the
development potential of land.
In the short term, two elements will be critical to the success of the strategy and to the
success of demonstration projects that the City might wish to pursue with private and
community partners. It is important that Council make a commitment in principle to these
elements, and that staff provide further information on the financial implications.
Housing First Policy for Surplus City Land and Buildings:
The contribution sought most often by community groups who have approached the City
with creative ideas is that of the provision of sites for development. Depending on the
housing model to be tested, and the ability of future residents to pay for accommodation,
City land could be provided at full market value at a discounted value, or at no cost. The
framework for demonstration projects, being proposed in a separate report, is intended to
provide a basis for deciding where City resources, including land or buildings, should be
made available in the short term.
The former City of Toronto, following the cancellation of provincial non-profit development
funding, sold a number of sites that have been planned as non-profit projects. However a
limited number of sites were also retained for future affordable housing development using a
partnership approach. In the Demonstration Projects report, we are recommending that some
of these sites be considered for affordable home-ownership development, and that an open
request for proposals be issued to seek private and community development partners. These
sites could be developed in similar fashion to the former City's Royce/Dupont equity project
for families, which was facilitated by Cityhome with a private partner.
It is important that a City strategy for creating affordable housing not be focused only on the
former City of Toronto, and that it address housing needs across all of the new City of
Toronto. For example, as noted in Appendix A, there are a very large number of families
waiting for social housing across the City of Toronto who have little hope of being served in
the near future. In order to identify sites that could be made available for demonstration
projects in all parts of the City, we propose that Council make a commitment in principle to
a "housing first" policy for surplus City land and buildings. Staff should report back on
options for such a policy, based on previous policies employed historically by the former
Metropolitan Toronto and the former City of Toronto, and currently being employed by
other municipalities such as Vancouver.
Capital Revolving Fund for Affordable Housing:
A second element that will be critical to the success of the strategy, and to demonstration
projects in particular, will be assistance with financing. In a recent survey of 186
organizations across Canada who are trying to develop affordable housing without
government housing supply programs, the key obstacle that was identified was difficulty in
obtaining financing (New Ways to Create Affordable Housing, 1998). Financing refers to
access to capital (for development and construction) at a reasonable cost as well as start-up
funding for projects.
We propose that Council take steps to increase access to financing for affordable housing, in
particular for demonstration projects that the City may wish to support. The objective would
be to improve the access of innovative projects to private financing (e.g., through second
mortgages or equity contributions) where there is an affordable housing component, and the
project cannot meet the approval criteria of private lenders. For community groups with
limited resources, the City could also provide seed money to test the feasibility of proposals
for demonstrations. It should be noted that the Canada Mortgage and Housing Corporation
also provides Proposal Development Funding for "non-assisted" housing on a
project-by-project basis of up to $75,000.00, and we have had preliminary discussions with
CMHC with regard to accessing this funding for demonstration projects.
As a first step, we recommend that Council agree in principle to the establishment of a
capital revolving fund for affordable housing. A number of precedents exist for such a fund
in the former City of Toronto, and in other municipalities across Canada. A "Capital
Leverage Fund" established by the former City is supporting the expansion of housing for
formerly homeless people, through a youth shelter/housing demonstration project at 11
Ordnance Street and a townhouse development for homeless men and women at 30 St.
Lawrence. Staff should be requested to report on potential sources of funding that would not
require new contributions from the City's operating budget.
Conclusions:
This report provides an overall framework for an affordable housing development strategy
for the City of Toronto. The goal of such a strategy would be to create an environment in the
City in which the private sector and community groups are willing and able to create
affordable housing. In the absence of traditional government housing supply programs, the
City's role must be that of facilitator and partner, making the most effective use of planning
and policy tools and other resources available to it.
Contact Name:
Joanne Campbell
Tel: 392-6135/Fax: 392-3037
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Appendix A
Need For Affordable Housing
In The City Of Toronto
The number of households in Toronto which are having problems affording shelter is
growing. The problem is even worse for families (especially women with children), youth
and seniors who, in addition to not being able to afford most shelter costs, cannot find
appropriate and supportive accommodation, are not effectively served by existing
emergency shelter options, and often face barriers in accessing units.
Although obtaining and maintaining affordable housing is difficult for just about every
individual with a low income, certain groups of individuals have more difficulties than
others. Housing Patterns and Prospects (1996) concluded that housing policy and policy
actions should target the specific groups whose housing demand is growing the most - (1)
non-family, (2) one-parent family household and lower-income, and (3) seniors. Non-family
household are mostly single-person households, but also include unrelated persons or
relatives sharing a home. In 1991, 35 percent of households in Metro were non-family
households. About three-quarters of non-family households were renters in 1991, and 90
percent lived in apartments. In the City, single parent households are primarily mother-led,
most are renters (63 percent in 1991) and there is an increasing tendency to rent houses
(single/semi/rows). For families where the parent was under 45 years of age, 80 percent
were renters; where the parent was 45 or older, 58 percent owned their home.
One of the best sources to capture demand for subsidized housing in the City is the central
registry in Housing Connections. Recent figures (March 98) show 42,624 households on the
waiting list and the type of unit requested. Generally, the population served by units with
two or more bedrooms is families; and close to 60 percent of the households on the waiting
list (24,501) requested these units; at the same time, the turn-over rate (excluding internal
transfers) in 1997 for units with two or more bedrooms was just 8 percent.
More recently, and given the waiting list statistics, not surprisingly, there have been a
growing number of reports that the number of women with children living without shelter
has increased substantially. For example, draft information provided to the Homelessness
Task Force in June 1998 found that about 19 percent of hostel users annually are children
(5,300 of 25,000) . In addition, this review of data provided by the Hostel Services Divisions
found that the fastest growing populations using hostels are persons under 18 and families
with children, and that there has been a dramatic drop in the ability of hostel users to find
subsidized accommodation.
Demand for low-income housing has a long history of outstripping supply in Toronto, even
during the years when social housing projects, funded by the Provincial and Federal
governments, were being constructed. During the 1980s, a remarkable 1,500 to 2,500 units
of social housing were constructed each year. Yet even at that high level of production,
social housing units only absorbed about half the added low-income demand.
Very little affordable rental construction has occurred in the City since the Federal and
Provincial governments terminated social housing programs. As a result of continued and
rising demand, there is significant pressure on the existing housing stock to meet increasing
needs for affordable housing: Indeed, conversions and basement apartments, both legal and
illegal, have now become the leading sources of supply.
Despite strong economic growth in Toronto, the housing situation during the early to
mid-1990s for households with low-income is worsening. Recent data from the 1996 Census
data shows that 44percent of renters in Toronto spent 30 percent or more of their household
income on shelter, compared to 35 percent in 1991. Certain types of households were more
likely to spend 30 percent or more of their income on housing; in particular people who
lived alone, family households consisting of couples with children, and lone-parent family
households.
At the same time, that supply has tapered off, existing rental housing stock is threatened by
conversions, demolitions, deterioration and rising rents. With a vacancy rate of .8 percent,
and CMHC forecasting a drop to .7 percent this fall, ongoing rent increases can be expected,
while low-end incomes continue to decline. Recent CMHC 1996 census data reported that
the average tenant income in Toronto declined by 23 percent between 1991 and 1996, one
reason why the number of households paying more than 30 percent of their annual income
on rent has increased by 32 percent during that same period.
If past trends are taken as an indication of the future, affordability problems are going to get
even worse. There has been steady growth of rental demand, mainly in Toronto, as a result
of growth in the GTA (Housing Patterns and Prospects, 1996). About 50,000 to 60,000
people (15,000 to 18,000 households based on 1986-91 ratios) moved into the City each
year between 1989 and 1993. Of these, 80 percent are tenants with an average household
income about 50 percent to 70 percent below the overall average rate for the City.
Meanwhile, about 75,000 to 85,000 people (25,000 to 30,000 households) per year move out
of the City into the "905" suburbs. These households primarily have middle to upper
incomes, and 80 percent become homeowners at their destination.
The GTA attracts some 80-100,000 immigrants annually (40 percent of national
immigration). In the period 1986-91, 70 percent of immigrants to the GTA settled in former
Metro. New immigrants tend to be younger than the rest of the population, and those coming
to the City are more likely to be renters. The City receives almost half of migrants coming
from other Canadian cities or regions to the GTA. However, those coming to the City of
Toronto tend to be young, non-family renters. The combined effects of immigration and
suburban migration are therefore: fewer families, more renting, and more with lower
incomes in the City of Toronto.
Summary:
In summary, there is a continuing net shift to lower-income tenant households, which is also
reinforced by the patterns of other migration streams and the result is growing income
polarization. Demographic polarization is also occurring as the number of seniors, singles
and youth increase in terms of sheer numbers, and as a result of the net loss of families to
the GTA.
The demand for rental housing will continue to grow, and supply will continue to remain
low. Deregulation of rents alone will not generate more rental housing construction, since
there is a continuing economic viability gap between what it costs to construct and operate
rental housing units (economic rent), and what tenants can afford to pay in rents. Without
new rental construction, added demand will be met by the creation of basement apartments
and overcrowding existing units.
In addition to not having enough rental housing units, many tenants have incomes which are
too low to afford prevailing rents. The quality of life for many residents is dependent on
preserving and expanding the supply of decent low-rent housing. Neighbourhood decline,
overcrowding, and increased use of hostels are some of the potential consequences of
inaction in this area.
(Report dated June 29, 1998, addressed to theCouncil Strategy Committee for People
Without Homes,from the Commissioner of Community and Neighbourhood Services,headed
"Framework for Proposals to DevelopAffordable Housing Demonstration Projects")
Purpose:
To proceed with housing projects that demonstrate new models of housing and respond to
the needs of a range of target groups in Toronto, in partnership with community sponsors
and the private sector. To test mechanisms that are described in a separate report to the
Committee on creating an affordable housing development strategy for the City.
Financial Implications:
The demonstration projects have the following financial requirements:
The funding needs of the Youth Street Survivors Housing Support Project were addressed in
a separate report considered by the Community and Neighbourhood Services Committee on
June 18, 1998. They include a $500,000.00 commitment from the City's Capital Leverage
Fund to cover capital costs, and $50,000.00 from the Homeless Initiatives Fund for
development and implementation.
For the Transitional Housing, Affordable Rental, and Affordable Ownership Projects, the
City may be requested to make suitable site(s) available at market value or a discounted
value. The cost, and any additional financial assistance, will need to be determined on the
basis of the proposal calls outlined in this report.
Recommendations:
It is recommended that:
(1)staff proceed with a two phase process to expand on the ideas received to date for
Transitional Housing Demonstration Projects, as follows:
(a)a first phase, or "Concept Proposal Call", to generate as many preliminary project
proposals as possible from the community and identify housing models, target populations,
potential sites, costs and resources required from the City; and
(b)a second, "Proposal Development", phase which would request a number of groups to
prepare full proposals in sufficient detail (including a detailed financial plan and
architectural concept drawings) to allow the City to decide where its limited resources would
be most effectively applied, and to lay the ground-work for a longer term analysis of the
project, if developed, to determine which mechanisms employed by the City had the greatest
impact on affordability;
(2)staff proceed with a request for proposals process to select partner(s) to work with the
City on Affordable Rental Demonstration Projects, in order to demonstrate what resources
and assistance are needed from the city to provide new rental housing to households whose
needs are not currently being met in the market;
(3)staff proceed with a request for proposals process to select partner(s) to work with the
City on Affordable Ownership Demonstration Projects, in order to demonstrate how home
ownership opportunities can be provided to households whose needs are not currently being
met in the market;
(4)staff, in consultation with the local Councillors, identify City-owned sites that would be
suitable for these demonstration projects, to be included in the proposal call process;
(5)the Commissioner of Community and Neighbourhood Services work with the Chair of
the Council Strategy Committee for People Without Homes and the Mayor to establish a
reference group to help select Demonstration Projects, including representatives of the
private development community, the financial sector, support service providers, the
non-profit sector, Canada Mortgage and Housing Corporation, the Province of Ontario and
City Councillor(s);
(6)staff report back to the Council Strategy Committee for People Without Homes on the
progress of the Demonstration Projects on a regular basis; and
(7)the appropriate City officials be authorized and directed to take the necessary actions to
implement these recommendations.
Council Reference/Background:
At its meeting of May 11, 1998, staff made a presentation to your Committee on a new role
for the municipality in affordable housing development. The presentation reviewed the
extent of housing needs identified by the Patterns and Prospects report (1996) and the work
done by the Metro Housing Stakeholder Panel (1997) on tools that the municipality could
use in the absence of social housing supply programs. It was proposed that the Committee
take action at its next meeting to:
(a)adopt a framework for a municipal strategy on affordable housing development; and
proceed with affordable housing demonstration projects through a request for proposals
process.
This Demonstration Projects report has been prepared to respond to the request that we
proceed with affordable housing demonstration projects through a request for proposals
process. The municipal strategy framework is the subject of a separate report to your
Committee. At the same time, homelessness issues are being examined by the City (Task
Force on Homelessness) and work is underway to harmonize planning standards (including
work to develop an official plan for new City). It is proposed that these demonstration
projects also be used to test certain mechanisms the City may use to influence affordable
housing development.
City has been Receiving Proposals for Affordable Housing Developments:
Over the past several months the City has received a number of creative suggestions for
housing models that have the potential to provide affordable housing for low income
households. Some of the concepts to date include Bob Barnett's "Shared Affordable
Accommodation" model, MikeLabbé's "Options for Homes" model, and John van
Nostrand's "Grow-as-you-Go" model. There has also been initial discussion at the Ad Hoc
Committee on Shared Accommodation on how to apply a Single Room Occupancy (SRO)
model to Toronto. Clearly there are people and organizations willing to contribute their
ideas, time and resources in order to create affordable housing options in the City of
Toronto. Such contributions should be encouraged.
However, all of these concepts will require Council to make decisions with regard to the use
of City resources to achieve the creation of new affordable housing. For example:
(a)Shared Affordable Accommodation Proposal (report to Community and Neighbourhood
Services Committee, March 27, 1998) proposes to create three pilot projects totalling 300
beds in 50 suites and requests the City to provide a loan guarantee for part of the capital cost
(maximum $2.5 million). In addition, the City may consider providing a site (ideally with an
appropriate building) so that construction costs may be further reduced; tax units at the
residential rate rather than the multi-residential rate; possibly fund some first year costs and
longer term support service costs and, provide an operating subsidy if shelter allowances
drop (below $325.00 per month), operating costs increase faster than half of the increase in
the shelter allowance, or interest rates increase after the initial term of the mortgage.
(b)Options for Homes (from May 11, 1998 presentation to the Council Strategy Committee
for People Without Homes) proposes to create affordable ownership units by use of an
innovative financing technique. The City is asked to give access to surplus land at appraised
values. In addition, the City may consider providing deferral of building permits fee,
reduced parking by-law requirements, deferral of Arts contribution, Park levy, Sewer Impost
levy and other levies until prepayment of the first resale, guarantee for interim financing,
City loan to Home-Ownership Alternative equity fund, and deferral of land value until first
resale to help reach deep core income groups..
(c)Grow-as-you-Go: The concept would require the City to permit significant zoning
variances (Grow-as-you-Go: From Homelessness to Housing, May 1998). In addition, the
City may consider providing land at a reduced price or deferring payment.
While there is urgency to take action on these ideas, it must be recognized that we do not yet
have a clear picture about what exact resources the City may want to provide (including the
cost of those resources), and we do not yet have a process for receiving proposals which is
as open and fair as possible and ensures that we make efficient use of City assets.
In order to make the best use of community interest, to generate a full range of ideas, and to
illustrate and test some of the ways in which the City leverage resources and can influence
affordable housing development, we are proposing that the City proceed with a process to
accept proposals and select projects which demonstrate a range of housing models, meet a
range of housing needs, and which make effective and efficient use of any resources the City
may choose to provide. These projects would be launched in the short term.
While the City would have an initial role in facilitating the projects, they would be
developed by non-profit and private partners in the community. It is not intended that the
City provide ongoing operating subsidies to such developments.
Comments and/or Discussion and/or Justification:
Overview:
This report proposes a framework for demonstration projects to test new affordable housing
models, and address a range of housing needs (such as household types, income ranges,
tenure types, housing forms, need for community supports). The framework includes the
following key areas:
(a)housing that provides a transition from living in emergency shelter to stable, longer term
housing, and which includes appropriate community supports (Transitional Housing
Demonstration Projects);
(b)affordable rental housing for target groups which do not require community supports
(Affordable Rental Demonstration Projects); and
(c)ownership housing that is sufficiently low-cost that it can be purchased by households (in
particular, families) with moderate to low incomes (Affordable Ownership Demonstration
Projects).
The report proposes a proposal call process for expanding on the ideas received to date for
innovative projects, and to provide a basis for effective, efficient and equitable decisions on
the provision of City land, buildings and other resources for affordable housing development
projects.
Goals For Demonstration Projects:
Three overall goals for the demonstration framework are proposed:
(1)Select proposals and develop projects which provide affordable housing, demonstrate a
range of housing models, meet the needs of a variety of groups who are currently
under-served, and make efficient and effective use of any resources the City may provide.
(2)Use the demonstration projects to examine how the City can best influence affordable
housing development. This includes providing City resources, but also includes other types
of support the City may provide. Projects selected must be feasible, and results measurable
(e.g., pricing and rents) and replicable.
(3)Establish an open, competitive and transparent process for accepting and evaluating
proposals from the private and non-profit sectors for developing affordable housing that
require the use of City resources.
A number of guidelines are suggested for how these goals may be achieved. There are
guidelines about, the types of projects (goal 1), the resources the City may provide (goal 2),
and the process (goal 3). A complete listing of these guidelines is provided in Appendix A.
Demonstration Models:
We propose three demonstration concepts based primarily on examining a range of tenure
types, affordability benchmarks and housing needs (including supports) for a range of
individuals and households who are currently under-served by existing housing options.
Transitional Models:
The term "transitional" is used to describe a temporary stage between hostel type
accommodation and more stable, longer-term housing; however, this housing may also be
permanent housing for some people. Generally the occupants of this housing will require
some degree of support from community agencies to live independently. A number of
project ideas recently received by the City might fall into this category, and there are many
other possible models which can be applied.
The City is currently providing support for two such projects that should be monitored by
the Committee as examples of Transitional Housing Demonstration Projects. One is being
developed on the City-owned site at 30 St. Lawrence Street. This project, sponsored by
Dixon Community Homes, will provide shared accommodation for 40 formerly homeless
men and women in a townhouse development.
A second transitional project is a street youth demonstration project for which, at the request
of the Budget Committee, a specific proposal was made in a report to the Community and
Neighbourhood Services Committee on June 18, 1998. The proposal is to create
housing/shelter for 50 street-youth in a City owned warehouse at 11 Ordnance Street.
This project will test how a partnership model between the City and community agencies
can contribute to affordable housing development. We also want to learn more about how
support programming can be used to facilitate developing the skills needed to access
housing, and move along the continuum from emergency accommodation to stable,
permanent accommodation. Street Youth, in particular, need to develop these skills because
they do not have a history of stable housing, cannot provide references, nor have they had
the opportunity to develop the skills necessary to fulfil their obligations under a landlord and
tenant relationship.
Affordable Rental:
As detailed in research done for the Housing Stakeholder Panel (1997), the cost of
producing rental housing accommodation (economic rent) outstrips by a significant margin
the rent which the market is willing to bare for those units. The impact is that there has been
very little new rental construction in the City, with the exception of social housing programs
(the social housing program ended in 1995). Therefore, this demonstration project will
examine ways in which economic rent can be reduced.
This project is targeted at the housing needs of individuals and families who simply require
housing at prices below market.
Affordable Ownership Models:
The Housing Stakeholder Panel recommended that new "affordable home ownership"
production be a municipal housing priority, given the great number of low and
middle-income families leaving the City in search of affordable and suitable housing. The
advantage of ownership over rental, for households which can live independently, is that
there is no ongoing commitment required by the City or other agency in terms of
administration and operating funding.
The intent of the affordable housing demonstration project is that it would show how units
can be built which are affordable to low-income households, and can be self-supporting on
just those low incomes. The full cost of developing the project would be recovered from the
purchasers over time. To ensure that any benefits given by the City do not translate into
capital windfalls for the household on sale, measures would need to be taken to ensure that
sale profits (perhaps in excess of a certain amount) would be reused for providing affordable
housing.
Households targeted do not need support from the community to live independently. Their
issue, quite simply, is that there is little or no low cost housing available in the City which
suits their needs. Two potential target markets are first-time buyers and seniors with
moderate-to-low incomes, who have limited options in the private market in the City of
Toronto.
There is some experience with this type of model. Cityhome, for example, has developed the
Royce-Dupont project that made it possible for households with incomes as low as
$30,000.00 to buy a townhouse-style home.
Guidelines For Proposal Call Process:
It is proposed that the City select lead partners for each demonstration project (proponent
that develops the housing) through an open proposal call process. Detailed evaluation
guidelines will be prepared based on the goals and guidelines outlined in this report, and
with the assistance of a Reference Group. The Reference Group would also provide
assistance with evaluating proposals, and some ongoing support and advice during the
development and evaluation stages of each successful project. Members would include
representatives of the private development community, the financial sector, support service
providers, the non-profit sector, Canada Mortgage and Housing Corporation (CMHC), the
Province of Ontario, the Chair of the Council Strategy Committee for People Without
Homes and other interested City Councillors. CMHC has advised that a representative of
their Centre for Public-Private Partnerships in Housing would be willing to participate.
Before specific proposals for development are brought forward for consideration by Council,
the Councillors of the Ward where the projects would be built will be consulted.
Two Stage Process for Transitional Housing:
It is proposed that a two-stage process be used to garner proposals for the Transitional
Housing project; (1) a Concept Proposal Call, and (2) a Proposal Development process.
The purpose of the Concept Proposal Call is to generate as many ideas from potential
partners, and combinations of partners as possible, without requiring them from the onset to
incur all the costs usually associated with preparing a detailed Proposal (such as preparing
financial models and architect concept drawings). Approximately three concept proposals
would be selected to proceed to a full Proposal Development phase.
For all demonstration projects, there would need to be a formal partnership agreement,
prepared by the City Solicitor, outlining specifically the resources and assistance that the
City will provide, in return for specific undertakings such as ensuring the housing will be
affordable.
It is intended that the Council Strategy Committee for People Without Homes will receive
regular progress reports throughout this process.
Appendix A describes the guidelines that we would employ in this process under the
following headings:
-Goal 1: Types of Projects
Definition of Affordable Housing
Targeting Populations not served by Market
-Goal 2: Resources the City may Provide
Reducing Development and Construction Costs
Making Units Affordable
-Goal 3: The Proposal Process
Selection Process
Reference Group
Partnership Agreement
Conclusion:
The City has received a number of proposals about affordable housing development using
City resources. This report suggests a framework for obtaining proposals, and outlines
guidelines which may be applied in evaluating proposals, to ensure a wide range of options
can be considered (from transitional housing with community supports, to affordable rental
housing without supports, to home ownership) for a variety of target groups (families,
seniors, youth, etc.) and to ensure that City resources are provided efficiently, effectively,
and through an open and competitive process. The demonstration projects would also test a
variety of mechanisms available to the City in order to determine which are most effective in
levering development of affordable housing using a partnership model.
Contact Name:
Joanne Campbell
Tel: 392-6135/Fax: 392-3037
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Appendix A: Proposed Guidelines for Demonstration Projects
1.0Types Of Projects:
Goal 1: Select proposals and develop projects which provide affordable housing,
demonstrate a range of housing models, meet the needs of a variety of groups who are
currently under-served, and make efficient and effective use of any resources the City may
provide.
Three types of demonstration models will be considered under the Housing Demonstrations
Project: Transitional Model, Affordable Rental, and Affordable Ownership.
Definition of Affordable Housing:
Affordable housing, for the purpose of the demonstration projects, needs to be defined so
that proposals can be assessed in terms of the range of price points offered. The definition
should address the initial price/rent, how long the price/rent remains in effect, and the
minimum number of units within the complex which will be "affordable".
Affordability of a housing unit is usually measured in terms of the share of household
income needed to pay for shelter and utilities. As a general rule of thumb, when shelter costs
exceed 25 percent or 30 percent of a household's income, that household is said to be having
affordability problems. At a household income of $20,000.00, a rent of $500.00 per month
including utilities, would be considered affordable. At $41,000, an affordable rent is
$1,025.00 per month. In 1997, average rents in the City ranged from $680 per month for a
one bedroom unit to $1,000.00 per month for a three bedroom unit1 . (1CMHC Rent Survey
Report, June 1998)
The City will be establishing a definition of affordable housing and/or affordability
benchmarks as part of the Official Plan process. In the meantime, for each of the
demonstration projects, affordability benchmarks will be established based on income and
household types, and depending upon the project selected and degree of City resources
required. For example, a benchmark rent for the transitional housing project may be equal to
the shelter component of general welfare benefits for the household the unit is intended for,
i.e., $325.00 per month for singles; for the affordable rental project, the benchmark may be a
rent less than prevailing averages; and for the ownership housing at a price which can be
purchased by households with incomes at or below $30,000.00 per year with a
down-payment on the mortgage of 5 percent.
It is further suggested that the rent levels be maintained at the "affordable" level for a
minimum period of time (for example, 10 years) and that for the ownership project, some
mechanism to ensure that capital returns which may result from a future sale are reused for
providing affordable housing.
Finally, the number of units in the project which are "affordable" will depend upon the type
of project. It may be necessary to offer some units in the residential complex at market rates
to permit cross-subsidization of the "affordable" units, or to permit projects which include
non-residential uses for the purpose of cross-subsidization of the "affordable units".
Details about the exact rent/purchase price benchmark, minimum length of time which the
affordable rent must remain in effect, how return on investment for the affordable ownership
project would be reused for affordable housing development, and the minimum number of
affordable units which must be provided for each project will be detailed and communicated
through the proposal call process. These should be assessed relative to the amount of
resources which would be required from the City to support the project (i.e., the more
resources provided by the City, the more affordable the units should be in terms of price,
timing and share of project).
Proposed Guideline for Definition of Affordability:
1.1Proposals will be assessed in terms of the number of affordable housing units to be
provided. Affordability will be considered in terms of the rent level and length of time it
stays in effect, sale price, and the relative mix of affordable and market units. The degree of
resources the City may offer will be considered relative to the number of affordable units
proposed for the project.
Targeting Populations not served by Market:
Although obtaining and maintaining affordable housing is difficult for just about every
household which has a low income, certain groups have more difficulties than others.
Housing Patterns and Prospects (1996)2, (2 Housing Patterns and Prospects in Metro,
Metropolitan Toronto Planning Department, June 1996) a detailed report on the state of
housing in Metropolitan Toronto, and the final report of the Housing Stakeholder Panel
(1997), concluded that housing policy and policy actions should target the specific groups
whose housing demand is growing the most. These groups include non-family households
(singles), one-parent family households, and seniors. There is also a growing trend whereby
moderate income families with children, whether single parent or two parent, are leaving the
City to get affordable housing in the "905 belt", resulting in a City which is more and more
populated by low-income families, youth and seniors.
The need for affordable housing, however, should not only be described by the household
types experiencing the most difficulty. Depending upon the characteristics of the household,
community supports may be needed.
Proposed Guidelines for Targeting:
1.2Proposals will be assessed in terms of the degree to which the project proposed can meet
the needs of the community it intends to serve, what those needs are and volume of need,
and how they have been determined.
1.3Where the community to be served requires support to live independently, proposals will
be assessed in terms of how those supports will be accessed, funded and provided.
2.0Guidelines - Potential City Resources:
Goal 2: Use the demonstration projects to examine how the City can best influence
affordable housing development. This includes providing City resources, but also includes
other types of support the City may provide. Projects selected must be feasible, and results
measurable and replicable.
Each of the proposals to date for affordable housing projects has asked that the City provide
resources, and we can expect that any future proposals will make similar requests.
Therefore, it is necessary to outline what resources the City may be willing to provide, and
under what terms.
In general, it is proposed that the City contribute resources and support to selected proposals
under terms of a partnership agreement. The exact mix of resources and support which may
be provided for each demonstration project may vary, but will be assessed in terms of costs
(to the City and as savings to the proponent, and how much of the savings will be directly
transferred to the occupants) as part of the proposal call process, and finalized as part of
negotiating the partnership agreement. It is expected that the size of the City's contribution
will be relative to the degree of affordable housing to be provided.
The full list of mechanisms (resources and supports) which the City may use will be
examined as part of the strategy to develop a municipal role in creating affordable housing.
For the purposes of the demonstration projects, we are suggesting only some of the possible
mechanisms be used - notably those which we may be able to use in the short-term, which
have a good chance at being implemented, and which can have the largest impact on
reducing development costs. Key resources which may be provided include land, capital
grants and, possibly, assistance obtaining financing.
Reducing Development and Construction Costs:
Why does it cost so much to create housing? As set out in research undertaken for the
Housing Stakeholder Panel3 (3Greg Lampert with Steve Pomeroy, and Heiyar and
Associates, Prospects for Rental Housing Production in Metro, 1997), a primary cost driver
is the price of land. The City can directly reduce the cost of housing by making land
available for affordable housing development.
The City has a number of surplus sites (some with buildings which may be converted to
residential use). Land can be provided by a long term land-lease, at or below-market, as has
been done for a number of non-profit housing programs. Alternately, the land could be sold
at market value, but at preferred terms (including delayed closing so the land cost does not
need to be carried during the development period). Land may also be sold for less than
market value.4 (4For example, Montreal has a policy where surplus land used for affordable
housing may be provided at 25 percent less than the market rate on a site specific basis.
Innovative Rooming Houses, 1995, Foyer des Cent Abris Non-Profit Organization,
Montreal, Quebec.)
The length of time it takes to develop a property and the associated fees and charges, also
contribute to capital costs. The time it takes to develop is costly because the developer is
incurring costs (servicing, architect fees, construction costs) during a period of time when
there is no revenue. Interim financing is often required to pay these costs, and the interest
charges on interim financing, if available, tend to be high. Interim financing costs are
eventually passed into operating costs when the interim financing is converted into a longer
term mortgage.
The City can assist in reducing the time it takes to negotiate development approvals by
implementing some type of "fast-track" process. This may include a method for obtaining
shorter turn-around times from the various departments involved in approving
developments.
Sometimes it is difficult to get interim financing for affordable housing projects, and this
may be particularly true for rental projects. The City may want to provide assistance targeted
to providing Affordable Rental - Transitional Housing to access interim financing, if
required, at market rates. This would not be provided until construction starts and would be
paid off when construction is complete.
Access to longer term capital financing can also be problematic, particularly by non-profit
groups, because the method typically used by banks to determine the mortgage level
permitted is too stringent for affordable housing projects. CMHC does provide mortgage
insurance for high-risk mortgages, and the City's most effective role may be to help the
developer access long term financing by providing a guarantee.
The City can reduce capital costs by direct grants, or by paying for certain soft costs. Paying
some capital costs can make sense for projects where housing is provided at less cost than
accommodating someone in an emergency shelter. For example, the project at 30 St.
Lawrence will receive about $400,000.00 in funding. The Housing/Shelter Pilot Project for
Street Youth will receive $500,000.00 from the Capital Leverage Fund.
Some level of capital grants will be needed to make the Transitional Housing demonstration
projects viable. The City may want to provide capital grants in addition to land, fee rebates
and paying carrying costs, where the project is targeted at moving people out of the hostel
system and, eventually, into more stable housing5. (5It is generally accepted that once a
person has passed the crisis stage, the cost of keeping someone in emergency hostel
accommodation becomes more expensive than non-emergency shelter. The reason for this is
that the hostel provides a number of support services (such as meals and housekeeping)
which the household could provide on their own if they were in "regular" housing, i.e., had
access to a kitchen.) The exact value of potential savings is not well understood, and is the
subject of a research report currently underway by the City's Homelessness Task Force.)
Based on costing pro formas, grants in the range of $15,000.00 to $20,000.00 per unit
should be sufficient; additional costs would need to be contributed by other partners. A
portion of the grant may be conditional upon funding raised by the other partners (from
non-government sources). For example, after an initial contribution of $15,000.00, the City
may provide $1.00 of grant funding for every $5.00 raised by the lead partner (developer),
up to an additional $5,000.00.
Proposed Guidelines about Resources to Reduce Development Costs:
2.1Proposals will be assessed in terms of the anticipated cost per unit for the intended
occupant (i.e., ensuring that savings are transferred to end user), and the amount of City
resources which would be required to attain that cost level. The demonstration projects will
be considered successful if they can show how affordable housing can be developed with
few City resources (i.e., the relationship between affordability and utilization of City
resources).
2.2Proposals will be assessed in terms of whether or not they could be replicated by others
wanting to provide affordable housing in the future, either on their own or in partnership
with the City.
2.3The City may consider providing resources to support the demonstration projects, and the
resources provided will vary by project and by project type:
(a)specific surplus sites could be identified - either by City staff or by organizations
responding to a request for proposals - and then made available to the successful proponent
for affordable housing development demonstration projects at market value and at preferred
terms;
(b)development fees and charges which are normally required by the City could be waived,
reduced or deferred;
(c)implementing a "fast-track" process for obtaining development approvals;
(d)after construction begins on the Transitional Housing demonstration, providing interim
financing, which would be paid back at project completion, if the group developing the
project requires this assistance;
(e)assisting the developer of the Transitional Housing demonstration, if required, in
obtaining CMHC capital funding by providing a guarantee; and
(f)providing capital grants for the Transitional Housing demonstration to reduce
development costs (soft costs and construction costs) which will, in turn, reduce the cost per
unit. It is suggested that the grants be provided to projects which target people currently
living in hostels. If provided, grants would be given to the proponent developing the
demonstration project under terms set out in an agreement. It is suggested that those terms
include a base grant of $15,000.00 per unit, and up to an additional $5,000.00 per unit tied to
the level of funds raised from non-government sources (matching funds).
2.4For the Affordable Ownership demonstration, a portion of profit made from sale by the
original purchaser must be reinvested in affordable housing production (for example, by use
of a second mortgage registered on title which would become payable, with some interest,
on sale and under certain conditions). Proposals will be assessed in terms of how that
mechanism will be implemented.
It is not the intention to use the demonstration projects as a replacement for traditional
supply programs which have been, and should be, provided by the Provincial and Federal
levels of government. Typical supply programs in the past have included provision of
operating subsidies to non-profit groups to pay the difference between the rent and the actual
cost of housing. It is not being proposed here that the City provide housing operating
subsidies for these demonstration projects.
Proposed Guideline about Operating Subsidies:
2.5The City will not provide housing operating subsidies for these demonstration projects.
Proponents may make allowances for cross-subsidizing units by, for example, providing
some units at market rents/prices where those market units have not received any City
funded capital grant.
3.0Guidelines - Process For Selection:
Goal 3: Establish an open, competitive and transparent process for accepting and evaluating
proposals from the private and non-profit sectors for developing affordable housing that
require the use of City resources.
We propose to proceed with a proposal call process to demonstrate the partnership role that
the City can play in influencing affordable housing development in these three
demonstration areas. The process proposed is that the City determine what resources it is
willing to contribute, and then offers these resources through a competitive process to
organizations who want to develop affordable housing. The City's role in the partnership
would be to contribute resources and support, and later, to undertake a monitoring and
reporting role. The role of the lead partner would be to undertake all development activities.
Other partners may be involved to provide, for example, access to community supports and
funding.
Potential partners include community support agencies, other levels of government, the
development sector (private sector), philanthropic organizations and the target households
themselves. Each demonstration project is based on a different blend of partners, depending
primarily upon the nature of the target groups to be housed.
Proposal Call Process:
It is proposed that the City will select a lead partner (proponent that develops the housing)
through a competitive request for proposals process (RFP). Detailed evaluation guidelines
will be prepared with the assistance of a Reference Group (see below) and based on the
goals and guidelines outlined in this report. As the reference group will also have a role in
evaluating proposals and determining successful proposals, members of the group will not
be permitted to submit a proposal.
We propose that the Concept Proposal Call, Proposal Development Process (see below) and
the Requests for Proposals be prepared with the assistance of a Reference Group. This group
would also provide assistance with evaluating proposals, and some ongoing support and
advice during the development and evaluation stages of each successful project. Members
would include representatives of the private development community, the financial sector,
support service providers, the non-profit sector, Canada Mortgage and Housing Corporation
(CMHC), the Province of Ontario, and the Chair of the Council Strategy Committee for
People Without Homes. CMHC has advised that a representative of their Centre for
Public-Private partnerships in Housing would be willing to participate.
Before the successful proposals are brought forward for final approval by Council, the
Councillors of the ward where the projects would be built will be consulted.
Two Stage Process for Transitional Housing:
We anticipate that projects proposed for the Transitional Housing demonstration will need a
greater level of assistance and resources from the City and, therefore, would be required to
meet a more stringent affordability standard. In addition, the field is fairly wide-open for the
types of proposals we may receive, and the organizations which may submit proposals (for
example, development firms and non-profit organizations may want to participate jointly, or
on their own). It is proposed that a two-stage process be used to garner proposals for these
projects; (1) a Concept Proposal Call for proposals based on concept plans, and (2) a
Proposal Development process requesting detailed responses, which may include a detailed
financial assessment.
The purpose of the Concept Proposal Call is to generate as many ideas from potential
partners, and combinations of partners as possible, without requiring them from the onset to
incur all the costs usually associated with preparing a detailed Proposal (such as preparing
financial models and architect concept drawings).
The proposals received from the Concept Proposal Call will be evaluated in terms of
innovation, feasibility, partnership arrangements, target group to be served, level of City
resources which may be required, overall likelihood of success, general financial outline,
and other such measures.
Approximately three proposals will be selected during the Concept Proposal Call process to
proceed to a Proposal Development process. At this point, some financial assistance could
be provided to successful proponents to cover the out-of-pocket costs that are usually
incurred when developing a detailed proposal. This would ensure the City has the detail it
needs to make an informed decision, and lays the groundwork for a thorough analysis of any
project which is ultimately developed. A potential funding source is CMHC Proposal
Development Fund. CMHC is planning to issue a request for proposals, and the successful
proponent(s) may receive a $75,000.00 forgivable loan. Therefore, we are proposing to
include requirements in the demonstration project RFPs which would mirror those of the
CMHC RFP, so that proponents may be eligible for the pre-development funding.
Partnership Agreement:
For all demonstration projects, there would need to be a formal partnership agreement,
prepared by the City Solicitor, outlining specifically the resources and assistance that the
City will provide, in return for specific undertakings such as ensuring the housing will be
affordable.
It is intended that the Council Strategy Committee for People Without Homes will receive
regular progress reports throughout this process.
Proposed Guidelines for the Proposal Selection Process:
3.1Proposals for each demonstration project are to be generated through an open and
competitive process:
(a)persons and organizations who have recently submitted proposals to the City for
affordable housing demonstration projects, will be asked to provide any additional
information which may be required for evaluation;
(b)the Transitional Housing demonstration project will have a two stage process. Proposals
selected at stage one (Concept Proposals) will be asked to prepare a more detailed proposal
at stage two (RFP);
(c)each proposal call will provide detailed information about what resources the City is
willing to provide to the successful proponent;
(d)each proposal call will have detailed criteria for evaluation for each project based on the
goals outlined in this report; and
(e)each proposal call will include requirements from the CMHC RFP for proposal
development funding so that proponents can also apply for that funding.
Proposal for a Reference Group:
3.2A Reference Group be established to guide the demonstration projects including
representatives of the private development community, the financial sector, support service
providers, the non-profit sector, Canada Mortgage and Housing Corporation, the Province of
Ontario, the Chair of the Council Strategy Committee for People Without Homes and other
interested Councillors.
3.3The selection process and documentation will be developed by staff of Community and
Neighbourhood Services, with guidance from the Reference Group.
Proposal for the Partnership Agreement:
3.4Staff of Community and Neighbourhood Services, with guidance from the Reference
Group, and after consultation with the Councillors of the ward where the development
would occur, will select the successful lead partners and undertake the negotiation process.
The final decision about which proposals will go forward, and what terms and conditions the
City will agree to, will be made by Council.
(A copy of the Apendix B: Summary Description of all Demonstrations Proposed, referred
to in the foregoing report, was forwarded to all Members of Council with the agenda of the
Community Services and Housing Committee for its meeting on July 16, 1998, and a copy
thereof is on file in the office of the City Clerk.)
