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Getting the best from TCHC’s houses

May 30, 2011

The debate that has swirled around Toronto Community Housing’s sale of 22 houses has proved one thing: scattered units really are a valuable commodity.

Thanks to the foresight of governments in the 1960s and 70s, who snapped up these houses for an average $39,000 apiece, we have the luxury of choices. We can continue to provide affordable downtown homes for large families. We can leverage new investment. Or we can sell the properties — now or in the future — to raise cash for capital repairs in other buildings.

The only debate is, “how can we get the best value from each property?”

Selling good homes to pay for bad

I confess I’m wary of the “sell ‘em now” option. It’s not because I think TCHC should never sell property. Like any private owner, TCHC must manage its portfolio for the greatest good. Sometimes that means tenants must move, just as they did for the revitalization of Regent Park – and just as previous owners did when the City expropriated some of the homes TCHC tenants live in now.

My chief concern is that we’ll be selling good homes to pay for bad.

TCHC says it needs to sell houses to reduce its $650 million capital backlog. That backlog doubled in the past three years, despite an unprecedented $118 million in federal-provincial stimulus funding, $11 million in renewable energy initiatives, $75 million from the City of Toronto and $34.7 million from the Ontario Government.

If $238.7 million can’t dent the backlog, it makes me wonder whether one-time cash is the right solution. Until we know, I’d hate to see TCHC’s best located, most spacious and most versatile properties sacrificed to what might be a bottomless pit.

Better value from the scattered unit treasure-box

In the meantime, there’s lots we can do to get better value from the scattered unit treasure-box.

As anyone who lives in or near a TCHC house knows, their record has been very mixed. Some houses are doing well, providing good homes and appreciating in value. No need to mess with success.

Others are neglected and in poor repair, with a considerable capital backlog of their own.  TCHC saw these houses were getting short-shrift in neighbourhood-based administrative units, and brought them together into a single division.  It was a good first step. But I think TCHC needs to go further.

They need a new approach to maintenance. TCHC’s standard procurement and management systems don’t work for houses, where every house is different, and no staff are on site to watch for problems.

An alternative? Give the maintenance budget to the tenants who are on site, and let them manage their own repairs. Tenants could hire HSI (TCHC’s property management company), hire private contractors, or stretch their budget by doing the work themselves. The choice is theirs – as long as their house passes TCHC’s annual unit inspection.

They’re talking about this idea in the UK. It wouldn’t work for most TCHC buildings, but might just work in the scattereds.

They need new strategies for filling vacancies to ensure tenants in scattered units are able and willing to maintain their house. In the past, TCHC’s hands have been tied by a restrictive Social Housing Reform Act. The repeal of that Act opens up new possibilities. Time to use them.

They need new flexibility. TCHC guarantees all tenants will receive the same service under the same policies. If that ethos prevents TCHC from making these houses work, it may need to spin off management to one or more non-profit corporations.

A “rip off” or privatization at its best?

The sale of 20 houses to Wigwamen was one such spin-off. Oddly, many commentators mis-construed this strategy as “a rip-off sale.” In fact, it was a stock transfer – the privatization strategy that has successfully transferred two million UK Council homes to private non-profit ownership.

Like Wigwamen, these non-profit corporations serve the same low-income households as municipalities, but bring resources, flexibility and efficiencies that municipalities lack.

Along with Wigwamen, there are a handful of non-profit and co-op corporations that might provide good, low-cost management of TCHC houses. But just like TCHC, they would need rent supplements to keep the houses affordable, and capital to bring the houses up to standard. It’s an idea worth exploring, but not a panacea.

And how about a completely different strategy – one that allows TCHC to benefit low-income people, off-load its expenses, free up rent subsidies and benefit from rising property values?

Consider Homesteading

Homesteading is part of Canada’s heritage. We settled an inhospitable west by selling land for a song, on the condition that the new owners occupied the land and worked it. For skill-rich but cash-poor immigrants, homesteading offered a home, work, and the chance to build equity. For Canada, it enriched an asset – in this case unoccupied land – for no cash outlay by the public.

I think the time is ripe for a TCHC homesteading movement. Toronto is rich in people – immigrants and Canadian-born alike – who have low incomes but high energy and skills. And TCHC is saddled with unoccupied houses it cannot afford to make habitable.

How would it work? By harnessing the power of second mortgages – an approach that has enabled over 2,000 Toronto residents, some with incomes as low as $40,000 per year, to buy a home.

Next week’s blog: Could Homesteading solve TCHC’s scattered unit problem?

4 Comments leave one →
  1. Mary Craddock-Keating permalink
    May 31, 2011 10:14 am

    Very interesting and thought provoking! Thanks for sharing your thoughts on this topic.

  2. May 31, 2011 11:08 am

    Our work at Home Ownership Alternatives ( ties in nicely with your Homesteader concept, although as you mention, you need a motivated family willing to make the commitment to home finance/management. I look forward to the next blog.

  3. May 31, 2011 4:17 pm

    It was a pleasure to read your last two blogs. I look forward to your next installment. I like “Homesteading” as a banner for the salvaging the TCHC’s scattered houses. I assume you would turn the non-profit units into something like a housing co-op. As my own housing co-op shows, scattered, mixed-income housing is easier, if not cheaper, than the “focused” kind.

  4. Bill Justice permalink
    June 3, 2011 9:20 pm

    Their asset has to be thought about as an asset. How would you best use this asset and invest it. If it could be “monetized” to use current language how would that work? Could it be turned into a fund that would provide ongoing investment into the rest of the portfolio of buildings. Is that a reasonable approach? And if not why not? How about some dialogue on this issue.

    If this was your asset and you did not have the capital to maintain the asset as appears to be the case for Toronto Community Housing what would you do? Sell it for one time gain; invest the revenue and use the interest; move to rent supplements; or ….?

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