STAFF REPORT
December 13, 1999
To: Community and Neighbourhood Services Committee
From: Commissioner of Community and Neighbourhood Services
Subject: Sale of 341 Shuter Street to Trefann Homes Corporation
Ward 25, Don River
Purpose:
To obtain authority for the sale of one owned unit in the Trefann Court redevelopment, by its owner, to Trefann Homes
Corporation (Trefann), at a price above that stipulated in the schedules to the December 1st, 1975 Ground Lease between
the City and Trefann Homes Corporation.
Financial Implications and Impact Statement:
None to the City.
Recommendations:
It is recommended that:
(1) consent be granted, subject to the concurrence of CMHC and the Province of Ontario, to the sale of 341 Shuter Street
by its owner to Trefann Homes Corporation at a price of $75,000 (or such other price as may be acceptable to the Vendor,
CMHC, and Trefann Homes Corporation), subject to Trefann Homes Corporation obtaining mortgage financing;
(2) subject to receipt of concurrence from CMHC and the Province, the proceeds of sale be retained by the Vendor;
(3) authority to consent to future sales proposed at a price exceeding the formula set out in the 1975 Ground Lease between
the City of Toronto and Trefann Homes Corporation be delegated to the General Manager, Shelter Housing and Support,
on the terms and conditions outlined in the body of this report; and
(4) the appropriate City officials be authorized and directed to take all steps necessary to give effect to the foregoing.
Background:
Trefann Court is one of the first social/affordable housing developments in Canada, occurring before the Federal or
Provincial programs were put in place which encouraged the creation of affordable housing for so many years. The
development is located in the downtown area, east of Sumach Street, between Shuter and Queen. In 1971 the City formally
agreed to abandon plans to expropriate all the land in the area, and instead to pursue an improvement program worked out
in conjunction with residents.
The land was acquired through the joint efforts of the City, Metro, the Province and CMHC, in the ratio of 12.5%, 12.5%,
25% and 50% respectively, and was subject to a Redevelopment Plan under the Planning Act. The City, as landlord, leased
the land to Trefann Homes Corporation, a non-profit corporation, and it, in turn, assigned/sold its interest in 9 houses to
various individuals while retaining 8 houses for rental. The owners acquired their units at modest cost as ownership of the
land was not part of their purchase. The various Agreements among the federal, provincial and municipal governments
implementing the development prohibited rental of the owned units, and restricted the amount of their resale price to
maintain affordability. The resale price was to be based on the purchaser's equity escalating at the CPI rate, to which would
be added the difference between that equity and the original purchase price. It was anticipated that purchasers would
acquire a $20,000 unit with a $1000 down payment and a mortgage for the balance.
(The particulars are set out in the Redevelopment Plan and a Ground Lease dated December 1, 1975, between The (then)
Corporation of the City of Toronto and Trefann Homes Corporation, and in various Council authorities: Cl 29 ECR 31,
adopted June 25, 26 and 27, 1975; Cl 25, ECR 34, adopted August 6, 7, and 8, 1975; and Cl 33, ECR 51, December 10,
1975.)
The City Solicitor has been consulted and concurs with this report.
Comments:
The model that was devised aimed to retain ongoing affordability for the units, and to prevent speculation. On the basis of
the assumed down payment (minimum 5%), increased by the change in the Consumer Price Index, the formula yields a
price today for a unit of less than $25,000. The concept therefore failed to anticipate the tremendous escalation that would
occur in the price of Toronto real estate in the years that followed development and occupancy of the units, and of the need
for unit owners to establish a nest egg to support their old age.
In 1992 an owner who had paid cash for a unit was granted permission by all three levels of government to sell the unit and
assign his portion of the underlying leased land to Cityhome (now the Toronto Housing Company) for a price of $85,850.
(Cl 14, Neighbourhoods Committee Report 18, adopted as amended by Council September 21, 1987.) This was deemed to
represent a fair price in relation to the level of the real estate market at that time, his initial 100% equity position, and
offered a means of keeping the unit affordable and in the non-profit sector. As a result of this sale in 1992 there are now 8
owned units and 9 rented ones, 8 of which are owned by Trefann Homes Corporation and the ninth by the Toronto Housing
Company.
The owner of 341 Shuter Street has been anxious to sell his unit for some time, but at a price that will provide some funds
to support his later years. He was asking $100,000 based on an assessed value of $129,000. Twenty-five years ago he sold
a house in the community to move into the new development. Had he remained in his original residence, he would have
been able to sell for full market value today, and without requiring the consent of three levels of government to the
transaction. He is aware of the previous sale, and the fact that an exception was made to the original pricing formula. He
has not lived in his unit for some time. As he is prevented from renting it, the on-going costs of mortgage and maintenance
are steadily depleting his limited resources. The Toronto Housing Company has declined to buy his unit, not wishing to
expand its portfolio in this area.
Staff met with CMHC to consider an approach that would be acceptable to all parties in this and future cases. CMHC
appraised the unit and agreed to support a sales price of $75,000 to Trefann Homes Corporation, subject to Trefann
obtaining mortgage financing. CMHC also agreed to consider an application for mortgage insurance to assist Trefann in
obtaining the required financing. Units coming up for sale in the future could also be bought by Trefann at the then
appraised value from CMHC. The Toronto Housing Company would be encouraged to sell the unit it previously purchased
to Trefann so that the entire development would ultimately come into one ownership. As Federal responsibilities for
housing are about to be downloaded to the Province, CMHC has agreed to seek the Province's consent to the transfer of
this additional unit and to the possible transfer of additional units in the future.
While the most recent City Council authority unearthed on this project (Cl 14, NHC 18, adopted as amended on September
21, 1987) indicates City Council's position that, upon resale, the unit vendors should retain the entirety of the proceeds,
CMHC's then position was only to compromise to the extent of allowing the unit vendors to retain 50% of the appreciation
to the time of resale, with the federal/provincial/municipal partners sharing in the other 50% (according to their relative
interests). The current recollection of CMHC staff is that, indeed, by the time the one "exception" case was concluded in
1992, all parties had agreed that the unit vendor be allowed to retain the full proceeds. While it would be too cumbersome
at this point to amend all the original funding and recapture agreements, it is recommended that, subject to receipt of
concurrence from CMHC and the Province, the vendor at 341 Shuter Street (and other owners who may wish to sell in the
future) be entitled to receive the full proceeds of those resales (subject to the owners paying their own legal and other
expenses necessary to implement the transactions).
Conclusion:
I am advised by the prospective Vendor that the other owners object to the selling price as being too low, and are urging
Trefann Homes Corporation not to buy at the stated price. Consequently, my Recommendation No. (1) is worded to permit
some flexibility should negotiations lead to a different mutually acceptable value.
A concept that requires the consent of three levels of government to the sale of a single unit must be considered unwieldy,
at the least. I am, therefore, recommending that authority be granted to the General Manager, Shelter Housing and Support,
to consent to the future sale of units under the Trefann Ground Lease Agreement in those circumstances where the
purchaser is either a person/persons or family(ies) of low income, or a non-profit housing corporation, and subject to the
consent of Trefann Homes Corporation, CMHC, and the Province of Ontario.
Contact Name:
Derek Ballantyne
(Acting) General Manager, Shelter Housing and Support
Telephone: (416) 392-7885
Fax: (416) 392-0548
Email: dballant@toronto.ca
Shirley Hoy
Commissioner, Community and Neighbourhood Services
