May 3, 1999

To:Corporate Services Committee

From:Commissioner of Community & Neighbourhood Services

Commissioner of Corporate Services

Commissioner of Urban Planning & Development Services

Subject:Housing First Policy for Surplus City-Owned Property

Purpose:

To implement Recommendation No. 76 of the Mayor's Homelessness Action Task Force by proposing a policy to make suitable surplus City-owned property available for affordable housing purposes.

Financial Implications:

The approval of a Housing First policy will allocate sites for housing purposes and, as set out in the Financial Considerations section in this report, other City initiatives/objectives will be impacted as a result of land being directed on a priority basis to housing. The individual financial implications are to be determined on a site-by-site basis, supported by a business case for the proposed use.

Recommendations:

It is recommended that:

(1)a Housing First policy, as outlined in the Appendix 'A', be adopted;

(2)a target of levering the development of a minimum of 900 affordable housing units on City-owned sites within the next three years be adopted, and staff report back on a quarterly basis on the progress of the Housing First policy;

(3)the Commissioner of Community and Neighbourhood Services, in consultation with the Chief Administrative Officer and the Chief Financial Officer and Treasurer, develop a five year capital program for housing and report back on the financing of such a program including the use of the Capital Revolving Fund and the method of obtaining future contributions to this Fund; and

(4)the appropriate Civic Officials be authorized to take the steps necessary to give effect to these recommendations.

Background:

City Council, at its meeting of July 29, 30 and 31, 1998, approved with minor amendments a report (Corporate Services Committee Report No. 11, Clause 1) entitled "Acquisition and Disposal of Real Property" dealing with various real estate issues, including a process to declare properties surplus to the City's requirements (see flow chart attached as Appendix 'B'). The disposal process provides for Real Estate staff to consult with the City's agencies, boards, commissions and departments on whether a property is required for municipal purposes. The recently established Property Management Committee ('PMC') reviews all requests for the allocation of property and determines whether sites should be recommended for disposal.

At the same meeting, Council also adopted a strategy to encourage the creation of affordable housing and a framework for demonstration projects (Community and Neighbourhood Services Committee Report No. 7, Clause No. 7). Council agreed in principle to provide surplus City-owned land and buildings for community affordable housing projects, as a first priority. On February 2, 3 and 4, 1999, Council by adoption of Strategic Policies and Priorities Committee Report No. 2, Clause No. 13 established a Capital Revolving Fund for Affordable Housing and provided $10 million dollars largely from the Social Housing Reserve Fund.

Recommendation No. 76 of the Report of the Mayor's Homelessness Action Task Force (January, 1999) states: "The City should develop a "housing first" policy for municipal lands to make suitable sites available for affordable housing . . . "

Comments:

Rationale for Providing City Land for Housing Affordable Purposes

Financial pro-formas for new rental construction show that returns are potentially sufficient that such housing could now be built for high-end rent levels. In order to produce housing for low-income households, government incentives are needed to bring down the development costs of such housing. The Report of the Mayor's Homelessness Action Task Force suggests that all levels of government have a role to play in providing such incentives.

The Mayor's Task Force identifies the following four tasks for the municipality:

(1)initiating a framework for partnership between the three levels of government and the private and non-profit sector;

(2)making sites available for housing development;

(3)providing limited financial support through a capital fund; and

(4)reducing taxes and charges for affordable housing projects.

It is noted that the provision of land for affordable rental units (i.e. if leased to a community developer at a nominal fee) can reduce development costs by more than 15%. It is recommended by the Task Force that all levels of government make suitable government sites available for affordable housing.

There are precedents for the contribution of land for affordable housing purposes. Vancouver, in the early 1990's, provided land on a deferred-return basis for the development of 1,150 rental units. Today, some public-private partnerships, such as those assisted by Canada Mortgage and Housing Corporation's Partnerships Centre, are using land contributed by church groups or service clubs. Recently (March 23, 1999), the Provincial Government announced that it would be making available government-owned land for the development of a minimum of 500 units of affordable rental housing.

Proposed Housing First Policy

The Appendix provides a proposed Housing First policy for surplus City-owned real property. The intent of the policy is to provide direction for the current process of assessing potentially surplus sites and preparing them for disposition. A variety of possible forms of assistance to housing providers exist. One form would be making City-owned property available, possibly for nominal consideration. In doing so, attention will need to be exercised in order to maintain compliance with the bonusing prohibition in the Municipal Act.

To measure the effectiveness of this policy it is proposed that a target be set for the creation of affordable housing units as a direct result of these actions by the City. A target of 900 units to be approved by Council as a result of Requests for Proposal ('RFP') within the next three years is recommended.

Financial Considerations

The approval of a Housing First policy will allocate sites for housing purposes. Staff have previously been directed to maximize the revenue from the sale of surplus properties by disposing of those properties which were previously surplus to the City's requirements as well as those properties which were freed up as a result of amalgamation. It was the intention to utilize the revenue generated thereby to fund capital and operating budget shortfalls and utilize those funds for other initiatives. The Facilities and Real Estate staff have previously proposed that a certain portion of the funds generated be allocated to capital maintenance for the City's remaining property portfolio. As a result of the approval of the proposed Housing First policy, other City initiatives/objectives may be impacted due to land being directed on a priority basis to housing. Facilities and Real Estate staff will provide an estimate of market value when the Property Management Committee is considering requests in order that the Committee can make a fully informed decision. However, the level of financial return for a particular property can only be determined once the proposed housing type and tenure is decided and, accordingly, the individual financial implications can only be determined on a site-by-site basis.

In initial response to the Task Force Report's Recommendation No. 77, Council established a Capital Revolving Fund of $10.9 million dollars. Council has not yet dealt with its long-term approach to capital funding of housing. To this end, it is recommended that the Commissioner of Community and Neighbourhood Services, in consultation with the Chief Administrative Officer and the Chief Financial Officer and Treasurer, develop a five year capital program for housing and report back on the financing of such a program including the use of the Capital Revolving Fund and the method of obtaining future contributions to this Fund.

The CAO and the Chief Financial Officer and Treasurer were consulted in the preparation of this report and are in agreement with its content and recommendations.

Conclusions:

The Mayor's Homelessness Action Task Force stated that all levels of government, the private sector, and the community-based sector should be combined in a City-led housing partnership. One of the four specific roles identified for the City was to make municipal land available by adopting a "housing first" policy for surplus and potentially surplus sites.

Allocating City-owned land resources to community groups and the private sector for housing will directly produce new units of affordable housing while strongly demonstrating the City's commitment to other levels of government. The Housing First policy attached to this report will focus on providing a new land base for the production of affordable housing while protecting the City's operational requirements for land.

Contact Name:

Joanne CampbellDoug StewartBarbara Leonhardt

Phone: 392-7885Phone: 392-7202Phone: 392-8148

Fax: 392-0548Fax: 392-1880Fax: 392-3821

Shirley HoyMargaret RodriguesVirginia West

Commissioner of CommunityCommissioner ofCommissioner of Urban

and Neighbourhood Services Corporate Services Planning & Development

Services

Appendix 'A'

Proposed Housing First Policy for City-owned Property

The goal of the City's affordable housing strategy (Community and Neighbourhood Services Committee Report No. 7, Clause No. 7 adopted July 29, 30, 31, 1998) is: to create an environment in which the 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. The Housing First policy supports this strategy by using suitable City-owned property to lever the creation of affordable housing by the private sector and community non-profit groups.

Principle of "Housing First"

The first priority in the decision making process respecting surplus or potentially surplus City-owned real property should be affordable housing development. For the purposes of this policy the definition of affordable housing shall be as determined from time to time by the Council of the new City of Toronto.

Objectives for a Housing First Policy

The objectives of the proposed Housing First policy are as follows:

(1)to identify and make suitable City-owned sites (land and/or buildings) available to community groups for the provision of long term affordable housing;

(2)to forgo or defer revenues from such sites, where it can be demonstrated that long term affordable housing will be created as a result;

(3)to require the inclusion of affordable housing in the development of City sites that have the potential for multiple land uses;

(4)to facilitate the distribution of affordable housing development across all areas of the City, based on community needs and appropriate community consultation;

(5)to lever participation of senior levels of government, the private sector and non-profit community groups in the provision of affordable housing, for example, where funds from the sale of sites are committed under prior agreement to the Province, the City could request the Province to make those funds available for housing;

Elements of a Housing First Policy

The following policy will apply to all property owned by the City, including that under the operational jurisdiction of its' agencies, boards and commissions.

Sites for Affordable Housing

1. Review of Potentially Surplus Property for Affordable Housing Potential

As properties are identified as being no longer required for their current use, the City's Real Estate staff undertake a circulation to the City's agencies, boards, commissions and departments ('ABCDs') and local Councillors to determine if there is any other municipal interest in retaining the property for alternative uses or if the property should be declared surplus to the City's requirements. A determination should also be made as to whether there are any statutory, title, by-law, contractual or other legal provisions constraining the use or disposition of that property. If interest is expressed in retaining the property, the ABCD is requested to complete a business case submission providing preliminary details on the proposed use of the property for consideration and decision by the Property Management Committee ('PMC'). If there are competing interests, affordable housing shall have first priority, unless in the opinion of the PMC, there is an overriding City interest.

Under the disposal process, the General Manager, Shelter Housing and Support, is notified of potentially surplus properties for her determination of the site's suitability for affordable housing initiatives. Housing staff will coordinate their interest with the Ward Councillors prior to submitting their preliminary business case. The PMC, in considering the General Manager's preliminary business case submission could temporarily withhold the site from disposal. Temporarily withholding a site from sale allows the General Manager time for detailed consultations with City planning staff, other relevant service areas, local Councillors and to issue a Request for Proposals to identify developer interest. As a result of the foregoing process a final report will be submitted to the PMC and after PMC consideration of same a report will be submitted for consideration by Corporate Services Committee and Council on the proposed use and appropriate means of achieving the City's housing objectives. If the housing business case is not satisfactory to the PMC, then consideration will be given to other expressed interests. If no other interest has been expressed, consideration will be given to disposal on the open market.

Sites with affordable housing potential would fall into two categories: those of modest size with potential for the development of a single-purpose affordable housing development; and larger sites with the potential for multiple use development with an affordable housing component.

2. Process for Single-Purpose Affordable Housing Sites

Where the General Manager has determined that a site has potential for development of a single-purpose affordable housing project, the report to the PMC will include a business plan to support the use of the site for this purpose. The report will also recommend a process for leasing the site to a community group or sale to a private developer through an open proposal call process.

The target of the policy would be to identify and allocate a minimum of ten (10) single-purpose sites for affordable housing development by the end of 1999. The PMC should have responsibility for ensuring that this target is met.

3.Process for Multi-Use Affordable Housing Sites

In the case of larger sites that have potential for mixed use development with an affordable housing component, the General Manager's report to the PMC will describe the potential and recommend a strategy for securing affordable housing benefits through sale of the site. This may include dividing the site into smaller parcels or including specific requirements for affordable housing targets in the sales agreement for the site.

The objective of the policy would be to secure twenty-five percent (25%) of the residential development potential of the site as affordable housing. The PMC should have responsibility for ensuring that this objective is met.