Community Based Affordable Housing
Demonstration Project
647-657 Lawrence Avenue West at Allen Road
(Ward 8 - North York Spadina)
The Strategic Policies and Priorities Committee recommends the adoption of the
Recommendation of the Budget Committee embodied in the following communication
(May26,1999) from the City Clerk, subject to inserting the following new
Recommendation No. (2) in the joint report (May 4, 1999) from the Commissioner of
Community and Neighbourhood Services and the Commissioner of Corporate Services;
and renumbering the remaining Recommendations accordingly:
"(2)Council declare surplus the property known as number 647-657 Lawrence Avenue
West for the purposes of, and to the extent required by, the lease recommended herein,
and that the appropriate City Officials take all steps necessary to give effect to by-law
No. 551-1998;";
so that the Recommendations embodied in the aforementioned joint report now reads as
follows:
"It is recommended that:
(1)the business case from Out of the Cold and Congregation Darchei Noam for below
market rental housing be accepted as an Affordable Housing Demonstration Project;
(2)Council declare surplus the property known as number 647-657 Lawrence Avenue
West for the purposes of, and to the extent required by, the lease recommended herein,
and that the appropriate City Officials take all steps necessary to give effect to by-law
no. 551-1998;
(3)vacant lands at 647-657 Lawrence Avenue West previously withheld from sale be
leased to the not-for-profit corporation to be established jointly by Out of the Cold and
Congregation Darchei Noam for a term of 49 years at a rate of $2.00 per year, subject to
terms and conditions which are satisfactory to the Commissioner of Corporate Services
and the Commissioner of Community and Neighbourhood Services and in a form
acceptable to the City Solicitor;
(4)the continued provision of below-market rental units by the not-for-profit group be
secured through the review provisions in the land lease agreement with the City;
(5)subject to the final approval of the Commissioner of Community and
Neighbourhood Services, that the following funds be provided from the Capital
Revolving Fund for Affordable Housing:
(a)a capital grant of $10,000.00 per unit to a maximum of $240,000.00; and
(b)a no-interest, second mortgage of up to $600,000.00, for a maximum of 35years, to
be repaid to the Capital Revolving Fund from net cash flow;
(6)the final amount of the second mortgage from the Capital Revolving Fund for
Affordable Housing be adjusted by the Commissioner of Community and
Neighbourhood Services to reflect the budget reductions from the use of innovative
building technologies, budget refinements, or other cost-saving measures;
(7)in order to reduce the cost of private construction financing, City officials are
authorized to disburse the capital grant from the Capital Revolving Fund for Affordable
Housing to the not-for-profit corporation as soon as possible after the building permit is
issued;
(8)Council agree in principle that all planning, development and building permit fees
and charges for 647-657 Lawrence Avenue West, should be waived or forgiven and that:
(a)the Commissioner of Urban Planning and Development Services waive all
application fees or costs of giving notice under The Planning Act;
(b)the Commissioner of Economic Development, Culture and Tourism and the
Commissioner of Urban Planning and Development Services, in consultation with the
City Solicitor, report by September 1999, on the measures required to exempt this
development from building permit fees and the payment in lieu of parkland; and
(c)Toronto Hydro be requested to waive or forgo any required connection fee or
charge;
(9)the cost of the 22-metre centre median on Lawrence Avenue West required as a
condition of previous site plan approval be provided for in the 2000 Works and
Emergency Services capital budget. The current estimated construction cost is $8,000.00;
(10)the lease commencement date, the advancement of the capital grant and second
mortgage form the Capital Revolving Fund for Affordable Housing be conditional upon
the not-for-profit group obtaining a first mortgage commitment within six months of the
zoning by-law for the lands coming in to force."
(11)City officials be authorized to take such actions as are required to implement these
recommendations; and
(12)City Council request the Federal Government to rebate the GST for this
community based affordable housing project.
The Strategic Policies and Priorities Committee submits the following communication
(May26,1999) from the City Clerk:
Recommendations:
The Budget Committee on May 25, 1999, recommended to the Strategic Policies and
Priorities Committee, and Council, the adoption of the joint report (May 4, 1999) from the
Commissioner of Community and Neighbourhood Services and the Commissioner of
Corporate Services, as amended by the Corporate Services Committee, subject to adding the
following Recommendation:
"(11)that City Council request the Federal Government to rebate the GST for this
community based affordable housing project."
The Budget Committee reports, for the information of Strategic Policies and Priorities
Committee and Council, having requested the Commissioner of Community and
Neighbourhood Services to ensure that in every instance where subsidized units are created by
the City, the residents of such units must be from the City's existing prioritized waiting list
and/or from shelter housing.
Background:
The Budget Committee had before it a communication (May 20, 1999) from the City Clerk
advising that the Corporate Services Committee on May 20, 1999, recommended to the
Budget Committee, and Council, the adoption of the joint report (May 4, 1999) from the
Commissioner of Community and Neighbourhood Services and the Commissioner of
Corporate Services, subject to:
(1)amending Recommendation No. (2) by deleting the words "on a long term basis at an
initial" and inserting in lieu thereof the words "for a term of 49 years at a", so that such
Recommendation now reads as follows:
"(2)vacant lands at 647-657 Lawrence Avenue West previously withheld from sale be leased
to the not-for-profit corporation to be established jointly by Out of the Cold and Congregation
Darchei Noam for a term of 49 years at a rate of $2.00 per year, subject to terms and
conditions which are satisfactory to the Commissioner of Corporate Services and the
Commissioner of Community and Neighbourhood Services and in a form acceptable to the
City Solicitor;" and
(2)amending Recommendation No. (9) by adding before the word "advancement" the words
"lease commencement date, the" so that such Recommendation now reads as follows:
"(9)the lease commencement date, the advancement of the capital grant and second
mortgage form the Capital Revolving Fund for Affordable Housing be conditional upon the
not-for-profit group obtaining a first mortgage commitment within six months of the zoning
by-law for the lands coming in to force."
Ms. Joanne Campbell, General Manager, Shelter Housing and Support Division, Community
and Neighbourhood Services, appeared before the Budget Committee in connection with the
foregoing matter.
--------
(Communication dated May 20, 1999, addressed to the
Budget Committee from the City Clerk)
Recommendations:
The Corporate Services Committee on May 20, 1999, recommended to the Budget
Committee, and Council, the adoption of the joint report (May 4, 1999) from the
Commissioner of Community and Neighbourhood Services and the Commissioner of
Corporate Services subject to:
(1)amending Recommendation No. (2) by deleting the words "on a long term basis at an
initial" and inserting in lieu thereof the words "for a term of 49 years at a", so that such
Recommendation now reads as follows:
"(2)vacant lands at 647-657 Lawrence Avenue West previously withheld from sale be leased
to the not-for-profit corporation to be established jointly by Out of the Cold and Congregation
Darchei Noam for a term of 49 years at a rate of $2.00 per year, subject to terms and
conditions which are satisfactory to the Commissioner of Corporate Services and
Commissioner of Community and Neighbourhood Services and in a form acceptable to the
City Solicitor;" and
(2)amending Recommendation No. (9) by adding before the word "advancement" the words
"lease commencement date, the" so that such Recommendation now reads as follows:
"(9) the lease commencement date, the advancement of the capital grant and second
mortgage from the Capital Revolving Fund for Affordable Housing be conditional upon the
not-for-profit group obtaining a first mortgage commitment within six months of the zoning
by-law for the lands coming in to force."
Background:
The Corporate Services Committee at its meeting on May20, 1999, had before it a joint report
(May4, 1999) from the Commissioner of Community and Neighbourhood Services and the
Commissioner of Corporate Services, recommending that as a result of a request for proposals
issued by the City of Toronto for City-owned land at 647-657 Lawrence Avenue West, and
with the advice of the Reference Group for the Capital Revolving Fund for Affordable
Housing:
(1)the business case from Out of the Cold and Congregation Darchei Noam for below
market rental housing be accepted as an Affordable Housing Demonstration Project.
(2)vacant lands at 647-657 Lawrence Avenue West previously withheld from sale be leased
to the not-for-profit corporation to be established jointly by Out of the Cold and Congregation
Darchei Noam on a long-term basis at an initial rate of $2.00 per year, subject to terms and
conditions which are satisfactory to the Commissioner of Corporate Services and the
Commissioner of Community and Neighbourhood Services and in a form acceptable to the
City Solicitor;
(3)the continued provision of below-market rental units by the not-for-profit group be
secured through the review provisions in the land lease agreement with the City;
(4)subject to the final approval of the Commissioner of Community and Neighbourhood
Services, that the following funds be provided from the Capital Revolving Fund for
Affordable Housing:
(a)a capital grant of $10,000.00 per unit to a maximum of $240,000.00; and
(b)a no-interest, second mortgage of up to $600,000.00, for a maximum of 35years, to be
repaid to the Capital Revolving Fund from net cash flow;
(5)the final amount of the second mortgage from the Capital Revolving Fund for Affordable
Housing be adjusted by the Commissioner of Community and Neighbourhood Services to
reflect the budget reductions from the use of innovative building technologies, budget
refinements, or other cost-saving measures;
(6)in order to reduce the cost of private construction financing, City officials are authorized
to disburse the capital grant from the Capital Revolving Fund for Affordable Housing to the
not-for-profit corporation as soon as possible after the building permit is issued;
(7)Council agree in principle that all planning, development and building permit fees and
charges for 647-657 Lawrence Avenue West, should be waived or forgiven and that:
(a)the Commissioner of Urban Planning and Development Services waive all application
fees or costs of giving notice under The Planning Act;
(b)the Commissioner of Economic Development, Culture and Tourism and the
Commissioner of Urban Planning and Development Services, in consultation with the City
Solicitor, report by September 1999, on the measures required to exempt this development
from building permit fees and the payment in lieu of parkland; and
(c)Toronto Hydro be requested to waive or forgo any required connection fee or charge;
(8)the cost of the 22-metre centre median on Lawrence Avenue West required as a condition
of previous site plan approval be provided for in the 2000 Works and Emergency Services
capital budget. The current estimated construction cost is $8,000.00;
(9)the advancement of the capital grant and second mortgage from the Capital Revolving
Fund for Affordable Housing be conditional upon the not-for-profit group obtaining a first
mortgage commitment within six months of the zoning by-law for the lands coming in to
force; and
(10)City officials be authorized to take such actions as are required to implement these
recommendations.
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(Joint report dated May 4, 1999, addressed to the
Corporate Services Committee from the
Commissioner of Community and Neighbourhood Services
and the Commissioner of Corporate Services)
Purpose:
To request:
(i)approval for the lease of the City-owned land at Lawrence Avenue West and Allen Road
to a not-for-profit community group to allow the group to construct 24 units of affordable and
below-market rental housing;
(ii)approval of the business case for financial assistance, as recommended by the Advisory
Reference Group of the Capital Revolving Fund for Affordable Housing; and
(iii)approval to request the Province and Federal Government to contribute capital or
operating funds to the project or forgo development and tax revenue.
Funding Sources, Financial Implications and Impact Statement:
Capital Revolving Fund for Affordable Housing:
The Capital Revolving Fund is recommended as the primary source of City funds to facilitate
the Demonstration Project. A capital grant of $10,000.00 per unit and a no-interest second
mortgage from the Fund is proposed as it will enable the community group to secure private
mortgage funding for the majority of the cost.
Delayed and Foregone Revenue:
There is an impact on potential revenues as it is recommended that all planning, development
and building fees be waived. It is further recommended that the land be leased to the
not-for-profit community group at a nominal rate, thereby delaying the short-term
achievement of revenue from the sale of the land. The market value of the land was previously
estimated at $322,000.00 in late 1995. A current appraisal is being obtained.
Capital Budget:
There would be a very small increase of $8,000.00 in next year's Works and Emergency
Services capital budget for minor traffic management measures on Lawrence Avenue West.
Increase in City Revenues:
City revenues would increase in the first year of the development through the payment of
approximately $33,700.00 in annual reality taxes. Currently no tax revenue is generated as the
property is vacant and is not entered in the City's tax rolls. From the second year onwards, an
escalating repayment of the second mortgage would begin to the Capital Revolving Fund for
Affordable Housing.
Operating Grants:
No operating grants are to be provided by the City. Program support will be provided by
existing organizations from their established budgets. The not-for-profit community group is
providing a minimum of $360,000.00 towards the capital cost of construction and other
donations of goods and services are being sought.
Cost Reduction:
By diverting people from the hostel system, emergency shelter costs to the City could be
reduced by up to $261,000.00 annually.
Recommendations:
As a result of a request for proposals issued by the City of Toronto for City-owned land at
647-657Lawrence Avenue West, and with the advice of the Reference Group for the Capital
Revolving Fund for Affordable Housing, it is recommended that:
(1)the business case from Out of the Cold and Congregation Darchei Noam for below
market rental housing be accepted as an Affordable Housing Demonstration Project;
(2)vacant lands at 647-657 Lawrence Avenue West previously withheld from sale be leased
to the not-for-profit corporation to be established jointly by Out of the Cold and Congregation
Darchei Noam on a long-term basis at an initial rate of $2.00 per year, subject to terms and
conditions which are satisfactory to the Commissioner of Corporate Services and Community
and Neighbourhood Services and in a form acceptable to the City Solicitor;
(3)the continued provision of below-market rental units by the not-for-profit group be
secured through the review provisions in the land lease agreement with the City;
(4) subject to the final approval of the Commissioner of Community and Neighbourhood
Services, that the following funds be provided from the Capital Revolving Fund for
Affordable Housing:
(a)a capital grant of $10,000.00 per unit to a maximum of $240,000.00; and
(b)a no-interest, second mortgage of up to $600,000.00, for a maximum of 35 years, to be
repaid to the Capital Revolving Fund from net cash flow;
(5)the final amount of the second mortgage from the Capital Revolving Fund for Affordable
Housing be adjusted by the Commissioner of Community and Neighbourhood Services to
reflect the budget reductions from the use of innovative building technologies, budget
refinements, or other cost-saving measures;
(6)in order to reduce the cost of private construction financing, City officials are authorized
to disburse the capital grant from the Capital Revolving Fund for Affordable Housing to the
not-for-profit corporation as soon as possible after the building permit is issued;
(7)Council agree in principle that all planning, development and building permit fees and
charges for 647-657 Lawrence Avenue West, should be waived or forgiven and that:
(a)the Commissioner of Urban Planning and Development Services waive all application
fees or costs of giving notice under The Planning Act;
(b)the Commissioner of Economic Development, Culture and Tourism and the
Commissioner of Urban Planning and Development Services, in consultation with the City
Solicitor, report by September 1999, on the measures required to exempt this development
from building permit fees and the payment in lieu of parkland; and
(c)Toronto Hydro be requested to waive or forgo any required connection fee or charge;
(8)the cost of the 22-metre centre median on Lawrence Avenue West required as a condition
of previous site plan approval be provided for in the 2000 Works and Emergency Services
capital budget; the current estimated construction cost is $8,000.00;
(9)the advancement of the capital grant and second mortgage from the Capital Revolving
Fund for Affordable Housing be conditional upon the not-for-profit group obtaining a first
mortgage commitment within six months of the zoning by-law for the lands coming in to
force; and
(10)City officials be authorized to take such actions as are required to implement these
recommendations.
Background:
Selection Process:
In July of 1998 Council considered a report from the Commissioner of Community and
Neighbourhood Services to the Council Strategy Committee for People Without Homes. On
the basis of the report, Council directed staff to proceed with affordable housing projects that
would demonstrate new models of housing and respond to the needs of a range of target
groups in Toronto. The adopted strategy was for the City to facilitate the delivery of the
targeted housing by community sponsors and the private sector. The City of Toronto would
"seed" the projects through the use of City-owned sites, waiving of development fees and
limited capital contributions from reserve funds for housing. Actual development and
long-term operation would be by the community sponsor or the private sector.
A small City-owned site was identified. It had been approved in principle for 24 apartment
units under the Provincially-sponsored social housing program. Just before the building permit
was to be issued, the Province terminated the housing program and the development was
abandoned.
After consultation with the local councillors a two-stage Request for Proposals was issued to
community groups. The Request for Proposals asked that the majority of units be targeted to
single parents with children who may be living in emergency or hostel accommodation.
Target Population:
A significant portion of the families in the hostel system are mother-led with one or more
children, generally less than 16 years of age. They would likely have been in the shelter and
hostel system for a significant period of time, or in danger of ending up in the system because
of domestic abuse or economic set backs. Many have cycled through various temporary
housing situations, creating a variety of problems, particularly for children, due to the
instability of constant relocation. Others may be sharing with friends or relatives in an
overcrowded or unsuitable situation. Many are on long social housing waiting lists.
Housing Model:
The needs of these families are largely related to economic conditions and the inability to find
suitable housing. They require stability, and in the case of abused women, security. These
families need housing which will allow them to work on other issues in their lives and
eventually have the option of moving to more independent housing.
While certainly not "hard-to-house", this group nonetheless requires voluntary access to
support services, which may be provided on site, and would contribute to the transition to
fully independent living.
An appropriate transitional housing model would provide housing suitable for women with
children, and offer flexibility or variety in order to serve a range of family sizes and living
styles. Units may be entirely self-contained, with common areas, or include shared
components such as kitchens, living, recreation or employment space. Operationally, the
long-term operating cost of the project must be self-sufficient based on the incomes of the
target group, which is usually the shelter component of social assistance benefits.
Support services might include employment counselling and referral, childcare, settlement and
literacy or language services, health, nutrition and home management and parenting skills.
Some require access to educational facilities. For children, specialized services might include
personal counselling and school liaison to deal with issues surrounding instability in their
lives, and recreation or socialization opportunities.
Supply of Affordable Rental Housing:
The Mayor's Task Force on Homelessness documented a need for 2,000 new low rent units
annually just to keep pace with the new demand. These units are required only to prevent
low-income housing needs from worsening. Even with historically high level of production, it
would not even address the needs of existing tenants, 23percent of which have an affordability
problem caused be declining incomes coupled with increasing rents and low vacancy rates.
Further the Task Force analyzed the costs for developing new rental housing. The economic
monthly rent required to allow the private sector to produce new units is in the range of
$1,300.00 to 1,400.00 while the market rents were in the range of $835.00 to $947.00.
Consultants to the development industry expect a few hundred new private high-rent units to
be started in the next year or two, mostly in downtown or subway locations. This will add to
the high-end rental units produced each year in the form of condominium apartments that are
rented out. While this adds to the overall supply and reduces the pressure on the vacancy
levels, the trickle-down effects for lower income tenants will be modest and long-term.
The inescapeable conclusion is that basic development economics prevent the private sector
from meeting low-income housing needs.
The significant challenge for the not-for-profit group is to build new housing that can be
afforded by the target group i.e., the shelter component of welfare which is currently $554.00
per month for a family of three. This is about 40percent of the rent level required for the
private sector to deliver the same units.
Comments:
At its meeting of April 26, 1999, the Corporate Services Committee received an information
report on the results of a request for proposals under the Affordable Housing Demonstration
Projects framework adopted by Council in July 1998. This report detailed the two-stage
request for proposals selection process that resulted in the preliminary acceptance of the Out
of the Cold/Darchei Noam proposal as the working model for the refinement of the financial
plan.
Business Case:
Staff and the Reference Group have now reviewed the business case and detailed financial
program. At its meeting of May 4, 1999, the Reference Group received a presentation from
members of the proposed Board of Directors of the new not-for-profit corporation now being
formed specifically for this development. Members of the new Board are drawn from the Out
of the Cold and Congregation Darchei Noam.
The Board submitted to the Reference Group a profile of the members of the Board of
Directors and the organizational structure adopted for the development phase. (Appendix
"B").
A financial presentation was made by the Board. The Board detailed a capital budget -
development pro forma - (Appendix "C") and an operating budget with a 10-year financial
projection (Appendix"D"). Finally the operational housing model was presented and discussed
(outline in Appendix "E") and features of the site plan were outlined (Appendix "F").
Staff and the Reference Group have reviewed the capital and operating budgets. The costs and
expenses are reflective of a modest unit proposal and well within industry standards. In
addition they are within the range of the costs of development detailed in the background
studies for The Mayor's Task Force.
The not-for-profit group is providing 17 of the 24 units at a rent that is only 40percent of the
rent normally required to support this construction. As a result this new below-market rental
housing clearly would not happen without government support.
Financial Support:
The items of financial support are as recommended in The Mayor's Task Force. Further the
level of assistance from the City proposed for 647-657 Lawrence West is in line with the
financial models detailed in The Mayor's Task Force. The following items are listed in the
proposed capital budget enclosed with this report:
(i)a long-term land lease at an initial nominal rate of $2.00 per year;
(ii)a capital grant of $10,000.00 per unit to total $240,000.00;
(iii)a second mortgage of up to $25,000.00 per unit to a maximum of $600,000.00; and
(iv)waiving or foregoing of planning, development and building fee revenues.
Initial proposals for the new Development Charges By-law contain a proposal to exempt
affordable rental housing from the charge. Waiving or forgoing other fees and charges requires
the authorization of Council.
Wise Use of City Resources:
There is a basic choice for the City to make: either provide grants and loans up front from the
existing Capital Revolving Fund to generate new affordable rental units or pay annually from
on-going budget allocations to provide emergency shelter accommodation. The proposed
development at 647-657 Lawrence could house up to 55 people at below-market rents. If this
same number of people were to be housed in the emergency shelter system, the yearly costs
would be $875,000.00. Under the existing capped cost-sharing formula, $261,000.00 of the
savings would accrue to the City of Toronto and $615,000.00 to the Province.
Savings, Taxes and Revenues to Others:
The facilitation of this development by the City of Toronto will generate the following savings
or direct revenues for other levels of government and the private sector:
(i)$615,000.00 annual savings to the Province for hostel costs (discussed above);
(ii)$16,673.00 in P.S.T. to the Province (announced rebate of $48,000.00 already
discounted);
(iii)$63,218.00 in G.S.T. to the Federal government;
(iv)$3,600.00 in underwriting fees to Canada Mortgage and Housing Corporation;
(v)up to $75,602.00 in mortgage insurance premiums to CMHC;
(vi)$28,357.00 in interest for private construction financing; and
(vii)$105,262.00 annually in virtually risk free mortgage payments to the private sector.
On this basis, the Federal government could be requested to contribute an amount equal to the
G.S.T. while CMHC could be asked to waive its fee and to provide direct mortgage financing,
as was the norm for over 30 years after World War II.
The above proposals in regards to the G.S.T and direct mortgage lending would implement
Recommendations Nos. (81) and (83) of The Mayor's Task Force on Homelessness.
Conclusion:
The proposal outlined in this report is a prototype of what can be done with the resources
provided to the Capital Revolving Fund for Affordable Housing. Approval of the business
case and financial plan by the City of Toronto will result in the production of new affordable
rental housing. It is also cost-effective because the development will provide long-term
savings to the City's operating budget by reducing the cost of providing emergency shelter
accommodation.
Significant funds and volunteer time are being provided by the community. Further, while
ongoing affordability is secured through the terms of the land lease, there are no annual City
grants.
Contact Name:
Joanne Campbell, Phone: 392-7885, Fax: 392-0548
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Appendix "A"
Expected Planning, Development and Building Fees
647-657 Lawrence Avenue West
Based Upon a 24 unit Apartment Building
with a Mix of one, two and three Bedrooms
Official Plan Amendment Applicationpaid by previous applicant
Zoning Amendment Applicationpaid by previous applicant
Site Plan Applicationpaid by previous applicant
Cost of giving notice of passing of zoning by-law$200.00 estimated
Amend/extend existing Site Plan Approval$540.00
Building Permit - $12.00 per square metre$31,346.00 estimated
payment in lieu of parkland - 5 percent of land value$16,100.00 to $20,000.00
Development Charges - North York by-law$34,824.00
Sewer and Water - North York by-law$16,488.00
Hydro Connection - $84.00 per unit$2,016.00
Or as amended from time to time by the City of Toronto
The proposed New Development Charges By-law would replace the current former City of
North York Development Charges and Sewer and Water Charge listed above with a charge of
$67,688.00.
(A copy of Appendices B, C, D and E referred to in the foregoing report was forwarded to all
Members of Council with the May 20, 1999, agenda of the Corporate Services Committee and
the June 1, 1999, agenda of the Strategic Policies and Priorities Committee and a copy thereof
is also on file in the office of the City Clerk.)
