City Role in Delivering the Residential

Rehabilitation Assistance Program

The Community and Neighbourhood Services Committee recommends the adoption of the following report (May 5, 1999) from the Commissioner of Community and Neighbourhood Services:

Purpose:

This report recommends directions for the City role in delivering the Residential Rehabilitation Assistance Program (RRAP) based on a recent program review.

Funding Sources, Financial Implications and Impact Statement:

No variance from the approved 1999 budget will result from these recommendations.

Recommendations:

It is recommended that:

(1)Council approve a City role in delivery of the federal Residential Rehabilitation Assistance Program (RRAP) in all areas of the City, as part of a housing supply strategy within the mandate of the Shelter, Housing and Support Division;

(2)staff write to Canada Mortgage and Housing Corporation communicating this position;

(3)subject to acceptance by Canada Mortgage and Housing Corporation (CMHC) of such a City role, the City enter into a new agreement with CMHC in a form satisfactory to the City Solicitor, for delivery of RRAP across all former municipalities;

(4)CMHC be urged to commit to a clear multi-year RRAP funding level for the new City of Toronto with expanded and flexible timelines and deadlines for project commitment; and

(5)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

The Chief Administrative Officer this year approved the organization structure for the Shelter, Housing and Support Division. This includes staffing for the housing repair program function (also referred to as housing rehabilitation or improvement). The approval called for a review of delivery of these programs. A review was needed for several reasons: service harmonization, the context of an emerging City housing supply strategy, the new mandate of the Shelter Housing and Support Division, and the housing policy environment including recommendations of the Homelessness Action Task Force and the possibility of new federal initiatives. This report is based on that review.

The principal housing repair program is the Residential Rehabilitation Assistance Program (RRAP) funded by Canada Mortgage and Housing Corporation (CMHC) and in existence since the 1970's. RRAP originated as an alternative to large-scale "urban renewal", and as a strategy for affordable housing and ensuring the quality of low-income neighbourhoods. It provides forgivable loans for necessary repairs to housing, while maintaining affordability for low- and moderate-income homeowners and tenants. The role in RRAP delivery varies among the former municipalities.

RRAP funding covers essential repairs to main structural elements, roofs, walls, and windows, plumbing and wiring, and improvements to meet Ontario Building Code and Fire Code requirements, plus disability needs. Eligible RRAP costs are up to $18,000.00 per homeowner or self-contained rental unit, and up to $12,000.00 per rooming house unit. Recipients must be below certain income limits or, in the case of rental housing, must maintain it as a rental property with rents below median market levels in Toronto. Each loan is gradually "forgiven" over a period of years as long as the owner or tenants continue to meet these criteria.

RRAP funding levels across the City in recent years have been $0.5 to $1.0 million annually for homeowners and disabled in the new City, and a similar amount for rental and rooming houses. This year saw a special 1998/99 allocation of $6.5 million for rental and rooming house RRAP.

The Homelessness Task Force identified preserving existing housing as the biggest factor in overall supply of affordable housing. Maintaining existing housing is usually far cheaper than replacing it. Housing repair assistance can help maintain neighbourhood quality and supply of affordable housing.

Comments and/or Discussion and/or Justification:

Existing City Role in RRAP:

RRAP is delivered in different ways in different former municipalities, under delivery agreements with CMHC. RRAP is provided in several streams: low- and moderate-income homeowners, home modifications for disabled people, and repairs to rental housing and rooming houses.

"Delivering" RRAP involves receiving proposals and inquiries, determining eligibility and priority, reviewing applicants' financial situation vis-a-vis loan criteria, determining scope of work and costs for each property, reviewing contractors' quotations, recommending proposals to CMHC for approval, inspecting the work, authorizing advances of CMHC funds, and communicating with applicants as necessary. (Less than a full range of functions is provided in some cases.)

RRAP has generally been more needed in older neighbourhoods. Homeowner and disabled RRAP is directly delivered by the City in the former municipalities of Toronto, Scarborough, and York. In Scarborough and York, it is delivered by the Municipal Licensing and Standards Division staff (about two-three FTE combined). In North York, Etobicoke and East York, CMHC has contracted with a private delivery agent rather than with the municipality. In the former City of Toronto, the new Shelter, Housing and Support Division has responsibility for delivering the RRAP program. There are four FTE program officers and one FTE support staff, reporting to a manager to deliver RRAP together with termite control (see accompanying report) and other minor programs.

CMHC retains the final decision on allocation of funds. Loan funds flow directly from CMHC to property owners, not through the City budget. The City receives an administrative fee (see below).

The rental and rooming house portion of RRAP has generally been delivered directly by CMHC through proposal calls; although once selected, the projects were administered by the City or other delivery agents. A significant departure from this was the 1998/99 special allocation, which was delivered City-wide by the Shelter, Housing and Support Division (report to the Community and Neighbourhood Services Committee, March 1999).

RRAP is virtually the only housing program (apart from housing on reserves) to which new federal funds are now being committed. RRAP is popular across the country, and the Federal Government has committed to funding RRAP through fiscal 2002/03. The future of rental and rooming house RRAP has been uncertain at several point in the 1990's, but the government has now used it as the way to respond quickly to concerns about homelessness, through the 1998/99 special allocation.

The City has experience in delivering other rental repair programs over the years, notably the former provincial Low Rise Rehabilitation Program, the special rooming house funding made available under that Program in 1991-93, and Contract After Care (CAP) loans for upgrading of boarding homes funded through Habitat Services to house psychiatrically disabled residents.

Potential Future Need for Repair Assistance:

While most landlords and homeowners maintain their properties well, exceptions occur. Some older homeowners and others have fixed incomes and cannot afford major repairs required on their homes; some develop mobility problems that require adaptations to their home to permit them to stay there. Some older apartment buildings (see accompanying report on high-rise condition survey) present a choice between ongoing deterioration that will in due course reach unacceptable levels, and repairs that will lead to rent increases making the housing unaffordable to low-income tenants.

RRAP is one tool in preserving neighbourhood quality and also housing affordability. Large-scale disrepair can spill over to affect neighbourhood quality, values of nearby property, and ultimately the tax base. Toronto in the 1990s has far more low-income tenants than at any time in its history, and one of the market responses likely to be seen, over time and in certain neighbourhoods, is landlords supplying - and tenants renting - lower-quality housing as a way of achieving lower rents. Such neighbourhoods are under pressures they did not experience in the 1970s and 1980s, and repair assistance is likely to be a valuable tool.

If the City moves toward recognizing second suites (such as basement apartments) as a necessary part of an affordable housing strategy, there will be issues of standards and upgrading. While most middle-income homeowners with second suites can upgrade their own homes, lower-income owners cannot always afford that. The City received numerous proposals for creating or upgrading basement apartments in response to the special 1998/99 RRAP proposal call. Repair assistance is a potential tool in ensuring standards in such housing.

The steady aging of the overall profile of Toronto homeowners is likely to mean rising need for adaptations such as ramps and door widenings to permit people with disabilities and limited income to stay in their homes.

The 1998/99 special rental and rooming house allocation demonstrated the potential demand, and the ability to target RRAP to housing for people who are homeless and at risk. Proposals totalling $30 million were received in a very short application period for $6.5 million of funds available. The funding is supporting the rehabilitation of 629 rooms in rooming and boarding houses, City-funded long-term shelters and transitional housing, and rehabilitation of 273 self-contained apartment units including an abandoned apartment property.

Directions for Municipal Delivery of RRAP:

The following principles are suggested to apply to the future of the City role in RRAP delivery:

(1)harmonization City-wide, with one delivery approach and equitable access;

(2)cost-recovery of delivery costs to the extent possible;

(3)a scale of activity suited to the scale of needs; and

(4)integration with related City activities.

Housing repair assistance should be seen as a useful part of the housing supply strategy, initiated by the City in response to the growing shortage of low-cost housing and to the report of the Homelessness Action Task Force. The strategy emphasizes concrete City involvement on a manageable scale, with the aim of levering contributions from other governments and the private and community-based sectors. RRAP is the one program area (apart from occasional research) where the City currently has an ongoing relation with CMHC.

CMHC officials, in the City's housing repair program review, stated a general preference for a municipal role in RRAP delivery. The reasons were that in policy terms, municipalities tend to share CMHC's broad program goals, and can bring to bear knowledge of the issues and housing situation; administratively, municipalities have pertinent property information, and can respond readily to funding changes. From the City point of view, it will be important to co-ordinate RRAP priority-setting with other policy on neighbourhoods and affordable housing.

To withdraw from program delivery might be seen as an odd signal to the Federal Government at a time when the City is seeking an enhanced housing partnership. RRAP, as noted here, has shown itself useful as a partial response to housing for homeless people and those at risk.

The preferred direction is consolidation of RRAP delivery activity in the Shelter, Housing and Support Division. This is where the majority of RRAP activity in the new City now resides, and RRAP is more a matter of incentives and support than of enforcement. Revamping of the Termite Control Program as recommended in the accompanying report will enable the current staff complement in the division to carry the delivery function across all areas of the City.

The Municipal Licensing and Standards Division is in agreement with the transfer out of the RRAP delivery function in Scarborough and York. The Director of Municipal Standards participated in the review of housing improvement programs leading to this recommendation. The accompanying report on Termite Programs suggests a countervailing transfer into the Municipal Licensing and Standards Division of those elements of the termite inspection function retained by the City.

In North York, Etobicoke and East York, harmonization within the Shelter, Housing and Support Division will mean assuming the function now carried out by CMHC's private agent.

Under the delivery agreement, CMHC pays the City an administrative fee for each project ($833.00 for a homeowner loan, varying for rental). Total fees across the new City have varied each year, with a projected annual average of approximately $125,000.00 over fiscal 1997/98 through 1999/2000. Assuming City-wide municipal delivery, such fees will cover approximately two FTE program officers, or most of the City's direct program delivery costs for RRAP (this excludes FTE costs of other housing improvement programs, mainly Termite Control). Costs of management and support staff will remain a municipal cost, reflecting the City's interest in RRAP as part of a supply strategy.

Implementation and Transition Issues:

CMHC's multi-year agreements with the City for program delivery now require renewal. Assumption of RRAP delivery by the City in all former municipalities will involve negotiating a newagreement with CMHC which would replace CMHC's various agreements with former municipalities and the private agent. Transitional implementation issues can be worked out among the two City departments, CMHC, and the private contractor.

It will be important to have some measure of certainty about the scale and timing of CMHC funding. While the Federal Government has committed to $50 million nation-wide annually through 2002/03, the Toronto allocation is typically announced after the start of each federal fiscal year yet must be committed by the fall. This tight time frame has made it difficult to do the more complex projects. It is to be hoped that the flexibility demonstrated by CMHC in its special 1998/99 rental and rooming house allocation will set a pattern for the future. A multi-year commitment would enable the City to plan its staffing and to fund more complex projects that require more lead time.

Conclusion:

A review of the City role in the Residential Rehabilitation Assistance Program (RRAP) has been undertaken for reasons of service harmonization, and in the context of an emerging City housing supply strategy, new divisional mandate, and changing housing policy environment. RRAP is delivered differently in different areas, with City delivery in the former cities of Toronto, Scarborough and York, and direct delivery by a private agent on behalf of CMHC in the other areas.

Housing repair assistance can help maintain the quality of neighbourhoods and the supply of affordable housing. Preserving existing housing is usually far cheaper than replacing it, and was identified by the Homelessness Task Force as the biggest factor in overall affordable housing supply.

Housing repair assistance is a useful part of a City housing supply strategy. City involvement in RRAP is supported by CMHC officials, and would send the right signal at a time the City is seeking an enhanced housing partnership with senior governments. The special 1998/99 RRAP allocation has shown the program's value as a partial response to housing for homeless people and those at risk.

The preferred direction is consolidation of RRAP delivery activity in the Shelter, Housing and Support Division, with an agreed minor transfer of functions from the Municipal Licensing and Standards Division. CMHC fees will cover most of the City's direct costs for RRAP delivery. A new City-wide agreement with CMHC will be required. An effective City strategy will also benefit from more certainty about the scale and timing of annual CMHC funding.

Contact Name:

Joanne Campbell

Tel: 392-7885/Fax: 392-0548

E-mail: jcampbell@toronto.ca