October 27, 1999

ADMINISTRATION COMMITTEERE: RESOLUTION OF THE BOARD OF DIRECTORS OF THE TORONTO HOUSING COMPANY INC. ITEM 4 - PROPERTY HOUSES TRANSFER

At its meeting of June 24, 1999 the Board of the Toronto Housing Company Inc., had before it a Board Report (June 21, 1999) Property Houses Transfer. The Board of Directors passed the following resolutions with respect to the attached report.ON MOTION MADE BY Councillor Michael Feldman, seconded by Catherine Bertucci-Menchetti, the Board of Directors adopted the report without amendment.

(1) That the Board of Directors forward this report to the Administration Committee and City Council with the recommendation that Council grant approval of the changes to the transaction outlined in this report, that Council declare all of the property houses surplus in accordance with such changes and that the appropriate city officials carry out whatever actions are necessary to give effect to Bylaw No. 551-1998;(2) that the Toronto Housing Company accept a conveyance of the Property Houses upon the terms set out in Clause 3 of the Corporate Services Committee Report No. 4 as amended, of the Property House portfolio, except for the 15 properties required to be sold as described in the said clause ("the Sale Properties"); (3) that, subject to City Council's concurrence, the Toronto Housing Company through the Chief Executive Officer, offer for sale and accept offers to purchase respecting the Sale Properties, on the City's behalf;(4) that the Toronto Housing Company accept from the City the proceeds from the sale of the Sale Properties;(5) that the Toronto Housing Company continue to manage the Sale Properties under the Property House Leases until each Sale Property is sold, respectively; and,(6) that the appropriate Toronto Housing Company Officials be authorized to take the necessary actions to give effect thereto.D.Ballantyne

Chief Executive Officer

Attach:Item (4-99053)

c S.Emerson

B.Dryden

THCres12

TORONTO HOUSING COMPANY INC Date: June 21, 1999

To: BOARD OF DIRECTORS

From: Chief Executive Officer Subject: PROPERTY HOUSES TRANSFER

(THC:99053:bd)

RECOMMENDATIONS:

(1) That the Board of Directors forward this report to the Administration Committee and City Council with the recommendation that Council grant approval of the changes to the transaction outlined in this report, that Council declare all of the property houses surplus in accordance with such changes and that the appropriate city officials carry out whatever actions are necessary to give effect to Bylaw No. 551-1998;(2) that the Toronto Housing Company accept a conveyance of the Property Houses upon the terms set out in Clause 3 of the Corporate Services Committee Report No. 4 as amended, of the Property House portfolio, except for the 15 properties required to be sold as described in the said clause ("the Sale Properties"); (3) that, subject to City Council's concurrence, the Toronto Housing Company through the Chief Executive Officer, offer for sale and accept offers to purchase respecting the Sale Properties, on the City's behalf;(4) that the Toronto Housing Company accept from the City the proceeds from the sale of the Sale Properties;(5) that the Toronto Housing Company continue to manage the Sale Properties under the Property House Leases until each Sale Property is sold, respectively; and,(6) that the appropriate Toronto Housing Company Officials be authorized to take the necessary actions to give effect thereto.

BACKGROUND:

The property houses portfolio consists of 60 properties owned by the City of Toronto which have been under lease to the Toronto Housing Company (THC) for the purpose of market rental accommodation on a cost-pass-through basis. The properties are predominantly houses and contain 105 residential units. The portfolio is managed without any capital or operating subsidies. Recently Toronto City Council approved Clause 3 of Corporate Services Committee (CSC) Report No. 4, as amended, declaring the City's Property Houses surplus and recommending conveyance of the portfolio to the Toronto Housing Company. Approval is based on the Company's proposal for the Property Houses (A Plan for the Property Houses - Maximizing Housing Opportunities for Low Income Tenants). The Toronto Housing Company's Report proposes a self-financing plan to continue managing the portfolio as affordable rental accommodation. The goal of the Property Houses Plan is to preserve and retain the most needed larger family units and create from sale revenues the resources for internal cross-subsidies for as many rent-geared-to income (RGI) units as possible. The proposed operating plan was based on the retention of 45 properties and the disposal of 15, utilizing sale proceeds to pay down debt, repairing some properties, funding capital reserves and creating RGI subsidies. The following are the properties that are to be sold, as per Corporate Services Committee Report No. 4, as amended and approved by City Council:

125 Roxborough St. Detached 2 Storey, 3 bdr. house

213 Crawford St. Semi-detached 2-storey, 4-bdr house

217 Crawford St. Detached 2 ½ storey, 4-bdr house

1 Hubbard Blvd. and,

3 Hubbard Blvd. Detached 2-storey fourplex house. Each semi detached duplex with 2-2 bdr units

5 Hubbard Blvd. and,

7 Hubbard Blvd. detached 2-storey fourplex house. Each semi detached duplex with 2-2 bdr units

9 Hubbard Blvd. and,

11 Hubbard Blvd. detached 2-storey fourplex house. Each semi detached duplex with 2-2 bdr units

13 Hubbard Blvd. Detached 2-storey, 4-bdr house

15 Hubbard Blvd. Detached 3-storey walkup apartment with 17 bachelor units

2 Wineva Ave. and,

4 Wineva Ave. Detached 2-storey fourplex house. Each semi detached duplex with 2-2 bdr units

6 Wineva Ave. and,

8 Wineva Ave. detached 2-storey fourplex house. Each semi detached duplex with 2-2 bdr units

The criteria for selection on the sale list included properties with the highest market value, small unit size and one investment rental property that is likely to remain as rental stock if sold. The 45 properties not sold will be retained for affordable housing purposes and managed on a self-financing basis. In accordance with the Toronto Housing Company's Report and CSC / Council direction the properties will be sold at market value and in accordance with the City's disposal policy. The Toronto Housing Company will offer these 15 properties for sale in accordance with Clause 3 of CSC No. 4, as amended, subject to the further amendments by this report.

REASONS FOR RECOMMENDATIONS:

Recommendation No.1

Changes to the transaction as originally approved by Council are proposed as outlined below in order to rationalize the portfolio of Property Houses and provide a process by which the Sale properties ca be disposed of.: (A) Properties on Disposal List (Sale properties) not to be transferred

The properties on each of Wineva and Hubbard respectively abut each other. Under the Planning Act, the Toronto Housing Company may not sell any of these individual properties without the consent of the Committee of Adjustment if it owns abutting land. On the other hand the City is exempt from these provisions of the Planning Act. Because the City has decided that these properties should be sold and because the Toronto Housing Company may not do so without the Committee of Adjustment's consent, we recommend to Council that the Wineva and Hubbard properties not be transferred to the Toronto Housing Company but be sold directly by the City. The same procedure should be followed with the properties at 213 and 217 Crawford Street. Although the Roxborough property is a single unit, it should be retained by the City for the purpose of sale in a manner consistent with the other properties. The Toronto Housing Company through its Chief Executive Officer will act as the City's agent in offering the properties for sale and negotiating and accepting offers. In keeping with the intent of the original Plan the City should not retain the net proceeds of Sale but should provide them to the Toronto Housing Company under its granting powers. The net proceeds of the sales are intended to be used to retire the mortgage debt, effect needed capital repairs and provide a fund for the provision of rent assistance to low income households.(B) First right to Offer to Purchase by Tenants

Clause 3 of CSC No. 4 recommended that consideration only be given to those Offers to Purchase from the tenants in duplex, triplex or fourplex buildings made collectively by all of the tenants living in each such building on the terms and conditions outlined in the report of the City Solicitor to CSC dated November 20, 1998. The Toronto Housing Company requests that Council give approval to the procedure that failing to receive a joint offer by all the tenants in a building, the Toronto Housing Company be allowed to receive an Offer to purchase the entire building by any tenant in such building. This modification will allow the possibility that some but not all tenants in a building are interested in a joint Offer to Purchase and that all interested tenants have the opportunity to purchase. All Offers to Purchase will still have to be made jointly by all interested tenants. This reflects the intention of the City's Solicitor's Report of November 20, 1999 to leave the organizational process to the tenants of each multiplex by offering to sell them their buildings collectively giving the residents full autonomy in an area which affects them vitally. Recommendation No. 2

As per the proposed changes to the transaction described above, the Toronto Housing Company will accept conveyance of 45 properties to be retained. The proposed sale list includes 15 properties as described above.Recommendation No. 3

The Toronto Housing Company will manage the disposition process as recommended by Council and CSC Report No. 4 as amended. However, this will be implemented by acting as the City's agent on all aspects of the sales (see recommendation 1 above).Recommendation No. 4

Closing of each sale transaction is between the City and the Purchaser and proceeds will be collected by the City. Therefore, the City under its granting powers will provide the proceeds of sale to the Toronto Housing Company.Recommendation No. 5

The existing lease arrangement for the Sale Properties will remain in place and the Toronto Housing Company will continue to manage and operate each Sale Property until sold.

UPDATE:

The Toronto Housing Company is in the process of implementing Council recommendations. The intention is to move very quickly with the sale of selected properties (as early as September 1999). This will permit the Toronto Housing Company to move towards operating the portfolio as envisioned in the Plan - eliminating mortgage debt, introducing some RGI assistance and adding new subsidized housing units to the assisted housing portfolio. The property Houses Business Plan recommended that tenants have the opportunity to purchase their buildings at market value. Recommendation No. 2 of Clause 3 of CSC Report No. 4, as amended, recommended that prior to tenants being offered any duplex, triplex or fourplex building (or any portion thereof) within the Property House portfolio, the Toronto Housing Company obtain confirmation from the Commissioner of Urban Planning and Development Services (UPDS) that the proposed use of the property as ownership housing does not contravene any current or contemplated City policy respecting the conversion of rental housing.Staff requested this confirmation. On June 1, 1999, the Commissioner of UPDS responded based on the interpretation of Council's newly adopted Official Plan policies, which limit, where appropriate the conversion and demolition of rental housing. The Commissioner concluded that in light of the content of the report adopted by Council and of the Toronto Housing Company's articles of incorporation, the proposed transaction is not inconsistent with the object of, and should, therefore, not be restricted by policy 135.1 of the Official Plan⁽¹⁾/. Based on our proposed implementation beginning September 1999 of the Property Houses Business Plan the Commissioner does not anticipate the emergence of any new policies that would conflict with our Business Plan and the related property transaction by year's end.Consultants have been retained to conduct building condition inspections on all properties and real estate appraisals on those to be sold. Staff is also obtaining advice from experienced local Real Estate brokers with respect to pricing and marketing. This will occur during June and July. Staff is consulting with the City's Real Estate Services in respect to the City's Disposal Policy and their experience in the disposition of the Spadina and Scarborough properties. Subsequently we will prepare a disposal strategy to ensure the Company's interests are protected. The information produced by the inspections, appraisals and real estate opinions will assist us in determining a fair market value for each property to be sold and in developing a multiyear capital works plan for those properties to be retained The Toronto Housing Company recognizes that the sale of these properties will be disruptive to tenants. For those not interested or in a position to purchase, the Toronto Housing Company will offer alternative market rental housing or assisted housing as required in the Company's portfolio. All tenants will receive a communication informing them of the transfer of ownership of the 45 properties from the City to the Toronto Housing Company. Tenants of buildings on the sale list will receive further information regarding the sale process and providing more details as soon as a definite schedule is determined.

NEXT STEPS:

Completing the real estate transaction and the disposal process require several steps by the Toronto Housing Company and the City. A general schedule is proposed below.

Property Houses Transfer and disposal of Sale Properties	Task Start or Completion
Toronto Housing Company
Board pass a motion accepting conveyance of the portfolio and approve Report to be forwarded to the Administration Committee and City Council with the recommendation that Council grant approval of the changes to the transaction as outlined in this Report	June 21, 1999
Complete Building Condition Inspection of all properties	July 2, 1999
Complete Real Estate Appraisals and Real Estate Brokers advice	July 9, 1999
Update Councilors: details Sale Process and Schedule	July 14, 1999
Start notices: Tenants Letter of Interest to Purchase or Waiver to Purchase (30 days)	July 19, 1999
Start tenants offer of alternative rental housing (90 days); start relocation of interested tenants to alternative rental housing in the THC portfolio (120 days)	Aug 31, 1999
Start to solicit joint Offers to Purchase from in-situ tenants, negotiate, receive joint Offers (30 days)	Aug 30, 1999
List any properties with no Offer to Purchase by tenants	Sept 1, 1999
Start marketing, receiving Offers from the public ( 90 days)	October, 1999
Complete revision of Property Houses Business Plan for the ongoing management of the retained houses and obtain Board approval	Dec 20, 1999
Complete Sale of all Properties: maximum closings (120 days)	March, 2000
City of Toronto
Administration Committee recommends approval of THC's Report - June 21, 1999	July 13, 1999
Council approves THC's Report - June 21, 1999	July 27, 1999
Advertisement by Facilities and Real Estate Services of the City surplus land declaration respecting the entire Property Houses Portfolio (1 week)	July, 1999
Start Conveyance of title to the Toronto Housing Company in the following stages. (1) The City will convey to the Company the properties released from the leases and to be retained by THC (in appropriate steps as determined by the City Solicitor). (2) The Company will offer the 15 properties for sale on the City's behalf and will continue to operate each of under the leasehold arrangements pending the sale and conveyance of the 15. (completion time determined by sales)	Aug, 1999
Receive transfer of net sale proceeds from City (based on estimated closings)	March 2000

CONCLUSION:

Meeting the need for affordable housing without senior government financial assistance is a significant challenge for the Toronto Housing Company. The Company took the initiative to justify a financially viable option to retain City-owned assets that are much needed for affordable housing. It proposed a plan to more effectively use the Property House portfolio while maximizing the housing available to low income families. The principles include a self-financing approach to the capital and operating expenses, which is contingent upon the sale proceeds from the sale of some of the properties. We expect some adjustments may be required as the next steps develop and will continue to update you on a regular basis.

Derek Ballantyne

Chief Executive Officer Staff Contact: Bob Dryden

Portfolio Management Tel: 392-3723.

1/ Conversion and Demolition of Rental Housing. It is the policy of Council: 135.1 to preserve, maintain and replenish the supply of residential buildings, and particularly rental buildings, across the City of Toronto by restricting the demolition of residential property and the conversion of rental units to condominium, by discouraging the conversion of rental units to equity co-operative, and by encouraging new rental housing production.