Proposed Redevelopment - North-East Quadrant,

North Regent Park, Don River Ward

The Community and Neighbourhood Services Committee recommends the adoption of the following report (May 25, 1998) from the Commissioner of Community and Neighbourhood Services:

Purpose:

To update Council on the progress of negotiations between the Province, the developer, and the City, and on the principal issues relating to the proposed redevelopment.

Funding Sources, Financial Implications and Impact Statement:

No direct costs to the City, related to the proposed redevelopment, have been identified to date.

Recommendations:

(1) That, subject to such amendments as may be approved by Council as redevelopment proposals are more fully developed, the appropriate City officials be authorized to execute an Agreement with the Ontario Housing Corporation (OHC), releasing the City's reversionary interest in the lands in North Regent Park bounded by Gerrard, River, Oak and Sumach Streets, subject to the following conditions being met:

(a) the developer obtaining approval, from all required regulatory agencies, of any Official Plan Amendment and/or rezoning that may be required, and the subdivision of the land to implement the intended redevelopment of the subject site, and entering into any development, collateral and/or other agreements that the City may require;

(b) the developer and the Ministry of Municipal Affairs and Housing (MMAH) entering into an agreement satisfactory in form and content to the City Solicitor and the Commissioner of Community and Neighbourhood Services, regarding the implementation of the proposed redevelopment;

(c) the intended owner entering into a Social Housing Agreement, or an equivalent, with the City regarding the 163 units which replace the existing assisted housing stock on the lands in question, which assures:

- their long term existence as assisted housing;

- adequate funding to ensure their maintenance in good physical condition;

- their operation on a long-term basis as rental housing for low-income households; and

- that the units will be owned and operated by a non-profit corporation both before and after the expiry of the existing Operating Agreement;

(d) CMHC restructuring its debenture interest in the subject lands, and providing such mortgage insurance as may be required, both on terms which permit implementation of the redevelopment proposal;

(e) the developer obtaining a commitment to finance the entire proposed redevelopment from an institutional or other lender acceptable to the City;

(f) agreements being in place between the developer, OHC, and MMAH which ensure the relocation of existing tenants from the redevelopment area, into equivalent units in the Metropolitan Toronto Housing Authority (MTHA) or OHC portfolios, to allow for site clearance and redevelopment, and which provide for the rehousing of the displaced tenants in the new units should they so desire, or their right to remain in their replacement units;

(g) municipal facilities to be conveyed to the City as part of the proposed redevelopment of the subject lands are designed to City standards, and to the satisfaction of the appropriate City officials;

(h) the Chief Building Official has issued a letter to the effect that building permits will be available for the 163 replacement units upon payment of the required fee;

(i) the developer guaranteeing that sufficient funds from the proceeds of sales be directed to pay down the mortgage on the 163 replacement units, or to the purchase of an annuity (the determination of the appropriate approach will require financial modeling of both) to ensure sufficient funds are available to cover their on-going operation based on the current level of subsidy;

(j) cost savings realized through negotiation with utilities or regulatory agencies be directed to the benefit of the redevelopment;

(k) Council declaring its reversionary interest surplus under Section 193 of the Municipal Act; and

(l) if the above conditions are satisfied, the City's release of its reversionary interest will be conditional upon commencement of construction of the 163 replacement units within six months of the date upon which they are satisfied.

(2) That staff be requested to report again, as necessary, on progress in meeting the above conditions; financial implications for the City, if any, as they are identified; and the extent to which the City's goals and objectives are being met.

(3) That the City request the Provincial and Federal Governments to address the problem of ensuring on-going funding for all the assisted housing developments for which the existing Federal/Provincial Operating Agreement expires in 2013.

Background/History:

By the adoption, as amended, of Clause No. 5 of Report No. 4 of the Community and Neighbourhood Services Committee at its May 13 and 14, 1998, meeting, Council authorized staff to continue meeting with the developer identified by the Province through its 1997 Proposal Call, with Ministry of Municipal Affairs and Housing staff, and with the North Regent Park Working Committee. That report set out the City's goals and objectives for the redevelopment:

- protection of affordable housing, and existing tenants;

- the creation of a livable community which complements the surrounding neighbourhoods;

- expenditure equality with the Province regarding public sector contributions to the redevelopment; and

- a full and open exchange of information between all parties.

Staff were also requested "to report again in two months on the progress of negotiations between the parties, and the extent to which the City's goals and objectives are being satisfied." This report is in response to that request.

Finally, staff were instructed, "to report back to Council when the redevelopment proposals are further advanced including all costs, revenues, and any contributions from the City, if required." Further reports will be provided on costs, if any, as they are identified.

Comments:

Although no formal planning approval application has yet been made, City staff have now attended several meetings of the Working Committee. In addition, staff has met on several occasions with the developer and Ministry staff in an effort to more fully understand the proposed redevelopment. Staff are constantly being provided with the most recent pro-formas for the proposed redevelopment, and have seen two site plan proposals.

The complexity of the undertaking, the number of issues to be considered and resolved, and the potential risk for all parties mean that much work remains to be done. Nevertheless, progress is being made. The recommendations in this report are, in part, a response to a request from the Working Committee that the City clearly set out the conditions it will expect to be met in order to relinquish its reversionary interest in the land. The Working Committee understands that the conditions may have to be modified as the redevelopment proposal itself evolves.

The redevelopment proposal will replace the 163 existing RGI units with an equal number of new units, having the same distribution of unit sizes and types (townhouse and apartment) as are currently on the site. In addition to replacing the existing stock with new units, 81 ownership townhouses, 77 market condominium apartments, and 150 seniors' units will be added to the subject site. To facilitate management and maintenance, the developer is proposing that all units, whether ownership or rental, be part of a condominium corporation.

The seniors' building would be sold to an owner/operator in advance of construction. The ownership family units would have to be pre-sold, at prices representing the low-end of market for affordable ownership units, to assure the income needed to finance the replacement RGI units. The replacement units would be owned by a non-profit corporation. Woodgreen Community Centre, a non-profit organization, is a member of the development team, and is a possible owner of the 163 replacement rental units. They are working with existing tenants to develop a set of acceptable management practices for the new units.

The terms of a proposed tenant relocation agreement have been considered by the Working Committee and appear to be nearing resolution. The Province, through the Metropolitan Toronto Housing Authority will be responsible for tenant relocation costs, including moving and service/utility hook-ups. The estimated cost is in excess of $200,000.00.

In estimating capital costs of the redevelopment, some items add a significant financial burden - the realty tax charged to the replacement RGI units, the cost of underground electrical service as currently required by Hydro, and the assumed cost of paying-off the share of the existing CMHC debenture attributable to the subject site.

Regarding realty taxes, existing non-profit rental housing owned and operated by Woodgreen is tax exempt. The developer is working with the Provincial Assessor in an effort to achieve similar status for the 163 replacement units in the redevelopment. CMHC has been requested to release its debenture interest in the subject lands at no cost as the proposed redevelopment could result in a more-than-equivalent increase in the value of the remaining lands covered by the debenture. Finally, the developer will have to negotiate with Hydro to realize the $700,000.00 saving that would flow from providing overhead electrical service. Any savings realized through these or other means should be used to benefit the redevelopment, rather than going to the developer's advantage.

The existing Federal/Provincial Operating Agreement, under which both levels of government share equally the subsidy required to operate the existing units, expires in 2013. The Province has downloaded its financial responsibility to the City. Federal funding will end with the expiry of the Agreement. There is a 1969 agreement in place in which the Province agrees to continue operating these units, at its own expense, as RGI housing until 2024, when the site is scheduled to revert to the City.

The existing Operating Agreement covers many more units than those in the redevelopment area. It includes, for example, all of North Regent Park, Moss Park, etc. The resolution of the problem created by this massive withdrawal of funding by the Federal Government cannot be addressed solely by the proposed redevelopment under consideration here. Were the City to take the position that this issue must be resolved before redevelopment proceeds, the proposal would certainly die. A requirement that the 163 replacement units be owned by a non-profit corporation will at least ensure their continuing operation on that basis, on terms similar to those that may be negotiated in the future for the entire portfolio for which funding lapses. The City should be requesting the Federal and Provincial governments to start addressing this looming problem now.

The Ministry has agreed with the developer to cover front-end costs, up to a ceiling of $246,000.00 for the design work required to prepare plans to a level of detail sufficient to make the necessary applications for City approval, in the event that the redevelopment does not proceed due to OHCs inability to reach agreement with the City of Toronto to provide for the relinquishment of the City's reversionary interest.

The developer and the Ministry are working with CMHC to restructure its debenture interest in the redevelopment area in order to permit the proposal to proceed, and to obtain mortgage insurance which a private lender will require to finance the proposed redevelopment.

A key outstanding matter related to encumbrances on the land is the City's reversionary interest. As noted in our previous report, MMAH has requested that the City release its reversionary interest. Under existing Agreements, the ownership of the land comprising the whole of North Regent Park reverts to the City in 2024. This matter is one that residents are most anxious to see addressed. Without the City's agreement to release or restructure its reversionary interest, redevelopment cannot proceed.

Recommendation No. (1) sets out conditions which the City should expect to be fulfilled prior to releasing its reversionary interest in the subject lands. These have been reviewed with the developer, MMAH staff, and the North Regent Park Working Committee. Council's endorsement of these conditions will indicate its willingness to encourage the proposed redevelopment through establishing clear and specific conditions.

Conclusions:

The proposed redevelopment is a significant initiative, with potential benefits in the immediate community, its surroundings, the City as a whole, and more broadly where similar public housing developments are deteriorating. The efforts underway to demonstrate a mechanism which renews the housing stock, allows existing subsidized tenants to remain in place, and integrates assisted and market housing through private/public endeavour should be strongly supported.

Contact Name:

Joanne Campbell

Tel: 392-6135/Fax: 392-3037

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The Community and Neighbourhood Services Committee reports, for the information of Council, also having had before it during consideration of the foregoing matter a communication (June 11, 1998) from Mr. John Sewell, Chair, North Regent Park Working Committee, advising that the Working Committee generally endorsed the report at its meeting on June 9, 1998.

Councillor Pam McConnell, Don River, appeared before the Community and Neighbourhood Services Committee in support of the foregoing report.