HS -A I-( REPORT Meeting Date: October 27, 20% 1 Regional Council

Transcription

1 HS -A I-( REPORT Mting Dat: Octobr 27, 20% 1 Rgional Council DATE: Octobr 1 1,201 1 REPORT TITLE: FROM: Jant Mnard, Commissionr of Human Srvics Norma Trim, Chif Financial Officr and Commissionr of Corporat Srvics RECOMMENDATION That th proposd Accssing Capitalllnfrastructur Funding policy b approvd. pprovd a Social Housing Maintnanc Rsrvs Stratgy, which futur capital and maintnanc nds and outlind a framwork for distributing funds and srvics to mt this nd. A rcnt analysis of housing providrs' forcastd capitallmaintnanc funding rquirmnts dmonstratd that futur capital and maintnanc will still xcd thir funding capabilitis, dspit th influx of on-tim capital funding from snior lvls of DISCUSSION I. Background As th Srvic Systm Managr, th Rgion of Pl manags th partnrships with 46 housing providrs, which includs; 15 co-oprativ housing providrs and 32 non-profit housing providrs (including Pl Living which is th largst housing providr). Undr th Social Housing Rform Act, 2000 (SHRA), it is mandatory for th Rgion of Pl, as a Srvic Managr, to provid funding to housing providrs for capital and maintnanc funding shortfalls. Th Rgion of Pl is th only lvl of govrnmnt from whom Pl housing providrs can ask for additional funding. Unlik privat sctor organizations, housing providrs cannot rngotiat or xtnd thir mortgags as a mans to attain additional funding for ths shortfalls.

2 14s- AI -2- Octobr I, In 2003, th Rgion of Pl stablishd an intrnal Contingnt Liability Rsrv Fund to addrss any potntial capital or maintnanc funding rqusts from housing providrs. In 2006, Council approvd a Social Housing Capital Maintnanc Rsrvs Stratgy, which includd: An analysis that indicatd that most housing providrs in th Rgion of Pl will not hav nough funding to dal with futur capital and maintnanc nds. A rcommndation to crat two staff positions through a Tchnical Advisory Srvics Pilot projct as a ddicatd rsourc to assist housing providrs in an advisory capacity on maintnanc and capital issus. A framwork on how funding from th Rgion's Contingncy Liability Rsrv could b usd to assist housing providrs that nd financial hlp daling with capital and maintnanc issus. Sinc that rport, staff undrtook: An analysis confirming housing providrs' xpctd capital and maintnanc costs will continu to b highr than thir financial capacity to mt ths nds, dspit th influx of on-tim capital funding from snior lvls of govrnmnt. An valuation of th Tchnical Advisory Srvics Pilot projct which dmonstrats th srvic is a significant bnfit to both th Rgion of Pl and housing providrs. Th Pilot rsultd in dvloping Thr Yar Capital Plans for all housing providrs to hlp thm bttr manag thir assts, and to hlp th Rgion of Pl to bttr manag and mitigat its liabilitis associatd with th upkp of social housing stock in Pl. A procss to dvlop a rcommndd policy that fairly dals with rqusts that com in from housing providrs for assistanc for capital/maintnanc funding shortfalls. Th purpos of this rport is to provid Council with an updat on housing providrs' capital and maintnanc shortfalls and to rcommnd th stablishmnt of a policy that will hlp housing providrs accss funding to mt ths shortfalls. Most Housing Providrs will continu to hav CapitallMaintnanc Funding Shortfalls A rcnt analysis of housing providrs' xpctd capital and maintnanc funding nds ovr th nxt tn yars shows that by 2021, th aggrgat capitallmaintnanc funding shortfall for all housing providrs is xpctd to b $97 million. Tabl I: Expctd CapitallMaintnanc funding nds of all housing providrs I by program - including Pl Living) Program # Units Amount (millions) % of Total Nd SHRA 7,714 $75.3 Formr Fdral* 3,384 $17.2 Public Housing 1,008 $4.5 Total 12,106 $97 78% 18% 4% 100% *Th formr fdral portfolio is includd in this analysis as a rcnt lgal opinion providd to Rgional staff found that th Rgion of Pl, as a Srvic Managr, has an obligation to fund ths housing providrs to offst any unxpctd oprational nds (Pl Living has 22 buildings undr th formr fdral portfolio consisting of 2405 units.)

3 HS- A I -3- Octobr I, SOCIAL HOUSING CAPITAL WlAlNTEMANCE STRATEGY UPDATE a) How th Rgion of Pl has Hlpd Housing Providrs to Dat Each yar through th budgt procss, Council approvs an allocation to an intrnal Contingnt Liability Rsrv Fund, for th purpos of hlping housing providrs dal with capital or maintnanc funding shortfalls. In 2006, Rgional staff stimatd that th Contingnt Liability Rsrv Fund would b dpltd by 201 3; howvr, disbursmnts from th Contingnt Liability Rsrv Fund hav not bn as high as xpctd du to th following: * Th 2006 stimat of Contingnt Liability Rsrv Fund disbursmnts wr basd on th bst availabl information about th futur capital and maintnanc funding nds of housing providrs at th tim. Sinc thn Rgional staff hav updatd this stimat using mor currnt data from housing providrs' Building Condition Assssmnts compltd aftr th 2006 rport. Thr was no stablishd policy concrning th rlas of ths funds to housing providrs. * Two capital funding programs from snior lvls of govrnmnt providd on-tim influxs of capital funding for housing providrs: o In 2008, th provincial govrnmnt providd th Rgion of Pl with $5.5.million1 which was distributd to thr housing providrs; and o In 2009, th fdral and provincial govrnmnts rlasd th Social Housing Rnovation and Rtrofit (SHRRP) program, which providd $35,189,385 to housing providrs in th Rgion of Pl. A complt updat on th distribution and us of ths funds is providd in th Council Rport titld "Social Housing Capital Rpair Initiativ: Social Housing Rnovation and Rtrofit Program and Rnwabl Enrgy Initiativ - Updat", datd Sptmbr 21, Through th Tchnical Advisory Srvics Pilot Projct, housing providrs rcivd nhancd assistanc in th aras of capital planning and building maintnanc, which has hlpd thm bttr plan for rgular maintnanc and capital rpairs. A rcnt valuation of this srvic found th following: o Housing providrs notd high satisfaction with th nhancd srvics rcivd through th Pilot projct. o By working with Pl Living staff to rviw and prioritiz th capital plans for 72 buildings, th Tchnical Advisory Srvics tam hlpd Pl Living to rduc its forcastd capital budgt for 2011 from $1 9 million to $1 1 million. o Th Tchnical Advisory Srvics Tam workd proactivly with non-pl Living housing providrs to hlp thm plan for larg-scal rpairs. Ths rviws allowd housing providrs to mak bttr informd dcisions about how to procd and rsultd in a ovrall savings $623,100 in capital and maintnanc rpairs. o Th Rgion's ability to provid tchnical advic and assistanc to housing providrs has bn solidifid through this Pilot. By hlping housing providrs bttr manag thir assts, th Rgion is also nsuring that its own liability rgarding th maintnanc and upkp of th social housing stock in Pl is bttr managd.

4 Hs- A t -4- Octobr 11, SOCIAL HOUSING CAPITAL MAlNTENANCE STRATEGY UPDATE 3. Rcommndd Policy for Distributing Ndd Funds to Housing Providrs Rgional staff dvlopd a proposd policy (Appndix I) to addrss rqusts from housing providrs for financial assistanc for capital and maintnanc issus. Dvlopmnt of this policy was basd on stakholdr fdback; lssons larnd through th administration of SHRRP; and bst practics found in similar policis usd by othr Srvic Managrs. Positiv fdback was rcivd about th dirction of th policy at a rcnt mting of xtrnal housing providrs and sctor organizations. Undr th proposd policy: o Funds ar providd to housing providrs through an advanc of additional subsidy for rpairs undr $500,000 and through a scurd loan for rpairs ovr $500,000 (including aggrgat amounts); Housing providrs must mt crtain conditions; and Mchanisms ar in plac to facilitat rpaymnt of funds to th Rgion of Pl. Maintaining th viability of th working fund through rpaymnt mchanisms will allow for th continud availability of funds to housing providrs in nd. Dpnding on th financial circumstancs of th housing providr, th Rgion may, at its discrtion, provid th funding through a forgivabl loan. In cass whr funding is providd to Pl Living, th rquirmnt to scur a loan on titl is not ncssary as it is a rgionally ownd asst. Th Rgion of Pl, as Srvic Managr, invsts millions of dollars annually in th social housing portfolio through mandatd subsidy paymnts. In ordr to prsrv ths assts, it is important that housing providrs b abl to accss additional funding whn ndd. Th Rgion's intrst is protctd undr this policy by nsuring housing providrs continu to participat in th social housing program aftr thir oprating agrmnts xpir and by invoking conditions whrby if th housing providr dos not pay back th dbt, th Rgion can act on its scurity on th mortgag and ithr dlivr th units dirctly or rdvlop th sit. A visual of th rlationships btwn th Rgion of Pl, as th Srvic Systm Managr, and its rgional and community basd stakholdrs within th housing continuum is prsntd in Appndix 11. This chart illustrats what stakholdrs will b affctd by this policy. FINANCIAL IMPLICATIONS Whil it is mandatory that th Rgion of Pl provid funding to housing providrs for thir capital and maintnanc funding shortfalls, th Rgion also nds to us its discrtion to carry out th procss in an fficint and ffctiv mannr. Each yar, as a part of th budgt procss, staff will idntify housing providrs likly to rquir additional subsidy to complt ncssary capital work in th upcoming yar for inclusion in th budgtary procss. Each yar, staff will also rport to Council on th loan/subsidy advanc activity as part of an annual rport on th Rol of th Srvic Systm Managr in th Rgion of Pl. Th Tchnical Advisory Srvics Pilot Projct was stablishd to assist housing providrs to dal with capital and maintnanc issus, and consistd of two ddicatd staff paid for by th intrst gaind on th Rgion's Contingnt Liability Rsrv Fund. In 2011, this srvic was valuatd and it was found that that housing providrs and th Rgion of Pl hav bnfitd gratly from this spcializd assistanc. Th pilot has bn of grat valu in supporting th Rgion's ability and obligation to hlp housing providrs sustain thir assts.

5 HS-fl -5- Octobr 1 1, Basd on this valuation, staff proposd to formaliz th tchnical advisory srvic and associatd staffing and will bring this forward as a nw initiativ during th 2012 budgt procss. Social housing buildings ar a valuabl infrastructur and community asst. Community-basd housing providrs ar an important partnr in th dlivry of housing programs across th Rgion of Pl. Hlping housing providrs to appropriatly maintain thir assts nsurs that communitis in Pl Rgion rmain viabl. Dspit on-tim capital invstmnts from th provincial and fdral govrnmnts, it is still xpctd that housing providrs' capital rsrvs will not b sufficint to mt xpctd capital nds going forward. Providing ncssary funding through th attachd rcommndd policy and by offring prmannt tchnical advisory srvics to hlp housing providrs bttr manag thir assts ar important factors to prsrv th housing stock for currnt and futur rsidnts. All Srvic Managrs, including th Rgion of Pl, hav rgularly communicatd th nd for adquat capital funding to snior lvls of govrnmnt with som succss. Th assistanc providd through on-tim capital funding programs fundd by th provincial and fdral govrnmnts was a wlcomd and wll ndd invstmnt in social housing. It is hopd that this is a signal of an ongoing rol for th othr lvls of govrnmnt in mting th undrfundd capital nds of th dvolvd housing stock. Thr is still an ongoing nd for th Rgion of Pl, through th Intrgovrnmntal Rlations Advisory Committ, to advocat to snior lvls of govrnmnt to assist municipalitis in maintaining th downloadd social housing stock. ~anunard Commissionr of Human Srvics Norma Trim Chif Financial Officr and Commissionr of Corporat Srvics Approvd for Submission: D. Szwarc, Chif Administrativ Officr For furthr information rgarding this rport, plas contact Joan Kaczmarski] at xtnsion 7242 or via mail at joan. kaczmarski@plrgion. ca Authord By: Michll Way, Managr - Housing Programs c. Lgislativ Srvics Managr, Financial Support Unit

6 -I- HS- &I-1, Octobr 1 1, APPENDIX I HIP Housing In Pl Subjct: Accssing Capitalllnfrastructur Subsidy Purpos: F Rgion d Pd Workinq for 90% Th purpos of this documnt is to provid housing providrs in th Rgion of Pl with th policy for rqusting capital/infrastructur subsidy from th Srvic Managr if th providr rquirs assistanc with xpnditurs for thir housing projct(s). Ovrviw Housing providrs ar xpctd to manag thir oprations and financs rsponsibly (fiscally and socially), which includs sking out opportunitis to maximiz rvnus and minimiz costs. Housing providrs rciv funding from th Srvic Managr and funding lvls providd ar xpctd to b adquat for providrs to maintain thir assts, but th Srvic Managr rcognizs: o o unxpctd xpnss and circumstancs can occur which can caus dficits; housing projcts' annual rsrv contribution rats (includd in ovrall funding lvls) and currnt rsrv balancs ar insufficint to mt long-trm capital rquirmnts; capital grants providd through th Social Housing Rnovation and Rtrofit Program (SHRRP) and th provincial Social Housing Capital Initiativ hlpd rduc dficits and th rat of rsrv dpltion but wr not sufficint to liminat long trm financial shortfalls; and whn ths financial shortfalls ar xprincd housing providrs will turn to th Srvic Managr for support. To rspond to th anticipatd nd by housing providrs for financial support, th Srvic Managr may provid funding to assist housing providrs that rqust additional funding for a spcific capital us and will b issud on a cas by cas basis according to critria st out in th policy blow. Policy: Rqusts for Additional Funding: Housing providrs in th Rgion of Pl can rqust additional funding for capital xpnditurs if th rqust can b rankd on th Capital Priority Scal (attachd to policy). Businss Cas Rqusts for additional funding must b submittd to th Srvic Managr as a businss cas. Businss cass must includ dtails on th xpctd capital xpnditurs, rational for why additional funding is rquird and why th sought work is th most ffctiv solution to addrss th capital nd. Funding Capital Expnditurs from xisting rsrvs and surpluss: Housing providrs may rqust additional funding for capital xpnditurs bfor thir rsrv fund has bn compltly dpltd if th providr has a long trm plan that dmonstrats an xpctd rsrv fund dpltion. This information will b confirmd in your Thr-Yar capital plan prpard by th Rgion of Pl in or Housing providrs that mak a rqust for additional funding for capital xpnditurs may b xpctd to us som of thir rmaining rsrvs toward th rquird work.

7 -2- HS-AI-7 Octobr I, Housing providrs may b xpctd to us funds from thir accumulatd surplus amounts. Th Rgion of Pl rcognizs th importanc of having a halthy accumulatd surplus to offst unxpctd oprating costs and may rquir that a providr rtain a minimum of $300 pr unit in its accumulatd surplus prior to any transfr from this fund to offst capital xpnditurs. If using rsrvs and/or accumulatd surplus amounts ar dtrmind to b ncssary, conditions will b includd in th Additional Subsidy Agrmnt or Loan Agrmnt. Important! A dpltd rsrv fund dos not guarant that additional subsidy will b grantd. Th Srvic Managr will considr th housing providr's spnding habits and pattrns ovr th past fw yars to nsur thr was ffort to rmain a fiscally rsponsibl housing providr. If past spnding is dtrmind to hav bn frivolous th Srvic Managr can dny th rqust. Additional Subsidy Agrmnt or Loan Agrmnt If th Srvic Managr approvs a housing providr's rqust th approval is subjct to conditions st out in an Additional Subsidy Agrmnt or Loan Agrmnt btwn th housing providr and th Srvic Managr. Final approval on bhalf of th Srvic Managr will b grantd by th Dirctor of Srvic Systm Managmnt basd on an valuation of th businss cas. Funds will b providd to a housing providr as a rpayabl additional subsidy up to an aggrgat amount of $500,000. At th sol discrtion of th Srvic Managr and dtrmind on a cas by cas basis, any aggrgat amounts ovr $500,000 may b rgistrd on titl as a scurd loan, which will b rpayabl. 1, Additional Subsidv Advancs: Th Srvic Managr can provid additional subsidy advancs to housing providrs undr sction 107 of th Municipal Act, Th Additional Subsidy dos not bar intrst and rpaymnt is guarantd through th natur of th funds as a subsidy paymnt whrby th Srvic Managr controls th providrs' subsidy paymnts. Typically, th Srvic Managr would rquir a portion of th housing providr's annual surplus b dirctd to pay back th subsidy. Th additional subsidy rpaymnt plan will b ngotiatd and confirmd in th Additional Subsidy Agrmnt. 2. Loans scurd bv collatral mortqaqs Funds that xcd an aggrgat of $500,000 may b scurd on titl, as dtrmind by th Srvic Managr on a cas by cas basis according to critria st out in this policy. All loans will b rpayabl at th nd of th housing providr's oprating agrmnt and will b paid back ovr a 15 yar priod. During this tim, th housing providr will hav to rmain in th Rgion's housing program. Th following conditions will b applid for providing capital funding in xcss of $500,000: 0 Rgistration on titl of an assignmnt of rnts and collatral mortgag ranking bhind th primary lndr's first mortgag, subjct to Ministrial Consnt. Rpaymnt bginning whn th Srvic Managr dtrmins th housing providr has th financial capacity to pay or at th latst upon rtirmnt of th first mortgag. 0 Intrst rats on th amount of funds will b dtrmind in consultation with th Rgion of Pl's Corporat Financ Dpartmnt. 0 Rquirmnt for th housing providr to comply with housing program obligations until th loan and all accrud intrst is paid in full with a prohibition against third party rfinancing or sal without th Rgion's prior writtn consnt.

8 Octobr 1 1, Conditions applicabl for both Additional Subsidy Agrmnts and Loan Agrmnts ar: 0 All housing providrs ar rquird to submit annual capital plans for th Srvic Managr's approval and may only spnd thir capital rsrv funds on approvd projcts until such tim as th funds and any applicabl intrst ar rpaid in full. Rgional tchnical advisory staff will closly monitor all aspcts of capital work undrtakn undr this program. Th Srvic Managr can tak appropriat stps if th housing providr is at risk of insolvncy or othrwis unabl to nsur work is compltd. Th Srvic Managr will only mak paymnts to housing providrs as rquird to pay projct rlatd invoics as th work is compltd. Th paymnt procss usd to distribut th Social Housing Rnovation and Rtrofit Program (SHRRP) paymnts will b usd for this program. Additional conditions may b applid that ar spcific to ach rqust and dtrmind by th Srvic Managr basd on th circumstancs idntifid in th housing providr's rqust. Som of th Srvic Managr's primary concrns (for which conditions will likly b basd upon) ar highlightd blow: a That th mandat to provid saf, affordabl, wll-maintaind housing to rsidnts in Pl is bing mt; a That th waiting list is accssd whn thr ar rnt-gard-to-incom vacancis; 0 Accountability for spnding habits; a Managmnt and ovrsight of th building is uphld; and Participation in th provision of affordabl housing continus onc oprating agrmnt xpirs. Lgislation Social Housing Rform Act, 2000 S.O. 2000, Chap 27, sction 11 1 (th "SHRA) Municipal Act, 2001, S.O. 2001, c.25, sction 107. Attachmnt Capital Priority Scal Th capital work rquird will b assssd against th following priority ranking scal (scal is from highst to lowst): Priority Ranking 1. Halth and Safty 2. Building Dficincy Mitigation 3. Lgislativ Rquirmnt 4. Building Functionality 5. Cost- Effctiv Initiativs a a Dfinition Conditions that ar hazardous 0 may lad to loss of lif or critical injury, or 0 thratn halth or wll bing of individuals using th building (g. rsidnts; staff) 0 must b corrctd or rmovd as a first priority. Currnt and ongoing conditions or dficincis that lad to th dtrioration of a building's structural lmnts must b invstigatd and corrctd if ncssary. Building dficincis and structural intgrity must b maintaind at all tims. Failur to mitigat dficincis will lad to unsaf (and potntially lif thratning) conditions which may vntually rndr a building: o structurally unsound o physically obsolscnt, and o incapabl of prforming th task it was dsignd to do. All buildings must b maintaind or upgradd so that thy comply with all applicabl lgislativ rquirmnts. Building lmnts that hav rachd th nd of thir usful lif must b rplacd or upgradd in ordr to maintain th tnants' quality of lif and to prvnt th building from bcoming physically or functionally obsolscnt. Upgrads with cost-ffctiv initiativs which improv th oprational fficincy of a building and hav a rasonabl payback.

9 -4- HS- A\-9 Octobr 11, APPENDIX II Rgion of Pl Stakholdrs Affctd by Proposd Policy (Circld) Rgion of Pl Srvic Systm Managmnt Rsponsibilitis non-profiffcooprativs & privat partnrs.16,827 bdlunitslhoms (11,873 with subsidis) I: I I Th Rnt Supplmnt Program supports all thr programs with 3,532 RGI and Housing Allowancs Srvic Systm Managr Rol: - mandat spans full rang of continuum from homlssnss prvntion to housing programs and homownrship; - administr and fund provincial (Social Housing Rform AcffHousing Srvics Act) and local programs (.g Hom in Pl); managmnt of Cntralizd Waitlist; - srvic systm planning, rsarch and policy analysis and stratgy implmntation.