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TCHC’s houses: Can TCHC have it all?

October 17, 2011

Toronto Community Housing has a problem: two in fact.

It has 700+ houses that it is simply not set up to manage. Some of these houses are deteriorating, under-used, and in some cases, uninhabitable without thousands of dollars in repairs.

And it has a stubborn capital repair shortfall that has doubled from $300 million to $650 million in the past three years, despite an unprecedented $239 million investment of federal, provincial and municipal funds. To turn things around, TCHC says it needs $100 million every year.

But does it follow that TCHC should sell its houses – the most spacious, most versatile and most integrated properties in its portfolio — to plug its capital shortfall?

I think it can do better than that. I believe that if it is ready to play the long game, TCHC can have it all. It can maintain mixed income neighbourhoods, benefit low-income families, off-load its expenses, free up rent subsidies and benefit from rising property values.

Two problems. Two solutions

Last summer I sketched an affordable home ownership alternative called Homesteading, where TCHC sells its property cheaply to high-skill but low-income families, and retrieves the value of the property when the house is sold. You can find all the details here. But let me just restate the benefits:

  • TCHC unloads all of its operating and capital costs on new owners, who take on all the work and expense of bringing these houses up to Code.
  • Low-income people can own their own homes with no new public subsidies, and get a modest return on their investment when they sell.
  • When they do sell, TCHC gets to retrieve its asset – everything it would have got if it had sold the property on the market now, plus a cut of the increased property value. (Unless you assume that the real estate market is at its all-time peak right now, TCHC might even gain more through a rising real estate market than it could from investing the money in safe, low-interest deposits.  But that’s one for the experts to judge.)
  • Toronto’s gentrified east end would continue to include people of all incomes – something that just won’t happen if the market is left to itself.

Don’t want to go the ownership route?

Set up an independent non-profit, with people who know how to manage these houses. I know it can be done.

In the summer I described a 5-bedroom house owned and managed by Innstead Co-op, one of several housing groups that specialize in scattered units. It was bought at the same time as many of TCHC’s scattered houses, in the same neighbourhood, under similar funding programs.

The house is in good condition inside and out. The break-even cost, covering property taxes, utilities, admin, maintenance and a monthly contribution to the now-substantial capital reserve, is $1306/month – less than the cost of an average two-bedroom in downtown Toronto. So when it houses a tenant who needs subsidy, it can stretch that subsidy further. When it houses a family who can pay market rent, it generates a surplus that helps subsidize other houses.

The house, like all Innstead houses, is never vacant. And when children grow up and the family no longer needs such a big house, they move on to make way for another family.

Is it too late for TCH’s houses? For some perhaps. But for those that are in good condition, this may be the route to follow.

Expanding the 88% solution

I’ve suggested two ways to address TCHC’s “stand-alone house problem.” But what about the thornier issue of its capital backlog?

I’m no expert, although others (like Stewart Pearson, whom I cited in an earlier entry) have given a lot of thought to these issues. But what strikes me is that, after all these houses are sold, TCH expects to gain only 12% of the money it needs to maintain its buildings.

My question to TCHC – the question I think needs to be answered before any units are sold — is, “How do you plan to find the other 88%? And can you stretch your 88% solution to a “100% solution” that is better than the prospect of selling off property?

When the issues are close to home

I live on Ashdale Avenue: home to three of the TCHC houses now recommended for sale. From the outside, they look like any other house on the street. The difference? They are the only affordable housing on this street.

When these houses were bought, this was a working class neighbourhood. You could buy a 3-bedroom house for under $40,000. Last month a two-bedroom semi on this street sold for a whopping $760,000.

What does this mean? It means that the people who work in our stores, banks, hotels, restaurants, and hospitals cannot move onto my street. Neither can new immigrants who are just settling in. And neither can the young people who grew up on this street. Instead, they commute up to 3 hours a day from the city’s fringes to their jobs.

Toronto Community Housing says it wants to sell “non-strategic” properties. I can hardly think of properties that aremore strategic than the 700+ it is thinking of selling.

Friends and colleagues:

I’ve done my best to find the right strategy — one that lets TCHC have it all. But I know there are smarter people than I am reading this blog. If you have a strategy that just might work, now’s the time to speak up!

7 Comments leave one →
  1. Christopher King permalink
    October 18, 2011 11:29 am

    As someone who lives in housing, I’m sorry but I have to agree with Council’s move to sell these buildings.
    Some of them, such as the mansions on Huron/Maddison, and that’s what they are, MANSIONS, are incredible cash cows. Iin this day and age, with a growing need for affordable housing, and a backlog of empty apartments in desperate need of repairs before they can be rented out, the needs of the many have to outweigh the needs of the one or few.

    • Bogo permalink
      November 13, 2011 5:57 pm

      I do not think you can understand that in order to fix these dilapidated buildings you need a lot of money, money which (tchc) had a few years back if you can remember, I think it was 1 billion or 2 billon dollars if I can recall. Where did it all go?

      Even if they manage to sell off all the homes, the money will simply disappear or be misused in some way. They should simply stop building new buildings and start repairing the old ones, like in regent park.

      But (TCHC) is a corporations, it is a running business then it should learn to do business, it can’t keep on making dumb choices that will eventually be left to the future government.

      They could have used some of these houses and rent them off to a business for office space or non-profits; and had the tenants pay market rent. So that they could be receiving study income long-term.

      They also could go into the business of motels, boardings houses and bed and breakfest homes; again these are small solutions but with long term goals.

      • Christopher King permalink
        November 13, 2011 8:56 pm

        $1-2 billion dollars were just lying around. When was this? Wasn’t when former CEO Derek Ballantyne was running things. TCHC actually took out a loan at one point to get some cash to catch up on immediate, critical repairs.
        Can you be more specific about this alleged money?
        As far as I can recall, based on my experiences with TCHC and from people who have lived in my building for decades, the shortfall began with the Federal Government passing the buck of running social housing, and will only be resolved when they pick up the slack once again, and with every other level of government below it chipping in.

  2. Jamie permalink
    October 19, 2011 10:31 am

    TCHC has really dropped the ball. They spend too much on admin and expensive contracts while neglecting the properties. Much of the ‘disrepair’ of properties is a result of allowing small things and basic neglect cause larger and more expensive problems. They are losing money on the houses because they are not an efficient organization. For the same reason, they are also overstating the cost of needed repairs.
    They have made a decision, by default, to let these properties erode, so that now they can’t be blamed for selling off what should be considered valuable assets.

    I appreciate the creativity of your proposal.

    • Christopher King permalink
      November 13, 2011 9:01 pm

      I totally agree with you on the amount of money TCHC is wasting on administration and acting like a social agency.
      They need to move the responsibility of community safety back onto the police, health issues on to public health, and social issues with social services, and just maintain the buildings portfolio.
      I see nothing wrong with having a TPS satellite station installed in each of the highrises, as well as a permanent public health officer and social worker. This would allow each agency to work better together with one another on issues specific to each building, and in turn speed up response time

  3. ideas matter permalink
    November 13, 2011 5:41 pm

    Jamie I think you are right. I worked for (TCHC). They would often pay me late and I would notice ridiculous expenses being made to feed curtain members, like pizza lunches and catered foods.

    I actually grew up in one of these homes some odd years back. I’ve also worked for (TCHC) in the past and have worked at City Hall as well, I’ve been following this story because my parents still live in (TCHC) and have decided to move because of the new decisions being made by the board.

    As a business man myself I understand the growing issues that (TCHC) faces, they simply can’t meet the demand. And the cost of maintenance is growing every day, but I also believe that selling off these homes is just a quick fix, it is not a real solution and it will not generate enough income to help fix some of the dilapidated buildings.

    The Canadian government should come up with solutions to best help address the growing demand for low income housing and set it in motion then in stone. Partnerships with (tchc) clients, housing connections; where they can purchase their units. homes etc. Possibly have partnerships with habitat for humanity or programs for social inclusion for Immigrants so that newly found immigrants have more of a chance to to be financially independent.

    As for my parents. My parents worked hard all their lives, they had difficutlty fitting in as most immigrants do. My dad would often hold down two jobs just to pay the bills. Their rent was geared to income and would often go up and down like the stock market and if given the opportunity I am sure they would be able to pay off a mortgage.

    Infact a lot of tchc clients mostly consist of skill work traders, I am surprised Rob Ford hasn’t made the connection or taken advantage of the opportunity laid before him.

    I think Rob Ford needs to get real, kicking out families but at the same time there is this misconception that if you live in government housing you do not work, that is not the case for everyone, you are allowed to work but then your rent goes up based on your income. It also depends on how many people are living in each house hold, if you have more people living in each house hold you pay more.

  4. Kevin permalink
    January 23, 2012 1:13 am

    Hmm, I would argue that the purpose of ‘affordable’ or ‘public’ housing is to bridge the gap between ownership/rental prices and moderate incomes where the two are not meeting. The question then, what is the current problem, such that a significant percentage of society either lives in or sits on a waiting list for such housing? Surely, the issue after a certain point is not one of individual circumstance, but rather, a societal problem of either unreasonably low incomes; or unreasonably high housing costs?

    That being the case (if you accept my initial supposition) which is is it? And what is the reasonable solution? (I would suggest its a bit of both)

    I would argue, at this point, that a larger volume of TCHC housing is not the answer. Particularly since most who live in TCHC housing would not recommend it as a choice, and notwithstanding that dubious lack-of-endorsement, it is quite expensive to provide.

    Instead I would target the price-of-housing; and income level issues.

    Let’s start with income, there are 2 basic problems for low-income earners. One is lack-of-work, the other is low-paying work.

    Fixing the former, if the economy is otherwise healthy is no mean trick; but let’s assume, that in otherwise good economic times, most people are employable….

    So the income question can be answered, I would argue, by increasing the minimum wage. Australia, not exactly a socialist bastion……has a minimum wage of just over $14.00 per hour Canadian. Assuming full-time employment, and 40 paid hours, that amounts to an extra $7,500 per year, before taxes, or extra $625 per month before taxes. (versus the current Ontario Minimum wage)

    I strongly suspect that such a boost would provide most low-income (working) people sufficient money to afford their own accommodation in the private sector.


    Then let’s reflect on the cost of housing.

    Whether ownership or rental, we (as a society) impose on developers some extraordinary costs that most society’s do not.

    Take a good look at a typical new condo in Toronto and the costs tacked on….

    I don’t just mean development charges.

    Park land requirements, recreation space, parking, etc etc.

    Imagine if we said, there are enough parks, and if not, gov’t will fund them out of taxes; why must every new building have a ‘party room’ and a ‘gym’? Surely we can do w/o these.

    And we can allow people who don’t have cars not to subsidize those that do. Let developers provide for what parking the market demands (and will pay for); nothing more.

    By doing so, we could lower entry-level ownership costs by at least 10’s of thousands, and it follows logically there would similar downward movement in rents.

    Equally, property taxes on renters are more than double those on single-family homes.

    Were this revised, rents might drop by $100.00 per month or more.


    If we dropped average rents by $150.00 per month.

    And raised most low-income households up by $500.00 per month or more (through higher minimum. wages……

    Could we not resolve this problem with out a lot of government expenditure, administration or bureaucracy?

    Just curious.

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