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TCHC: Some ideas just won’t work

October 15, 2015

I’m not the only amateur pundit concocting “big and bold” ideas for TCHC’s future. As I scan the comments sections of the Toronto media, or simply talk to friends, I hear all sorts of ideas for reforming TCHC.

However, some of these ideas remind me of an old cartoon. The consultant is standing beside a graph chart in a corporate boardroom saying, “When I say reform, I don’t necessarily mean better.” Here are four widely circulating reform ideas that I think would do more harm than good.

1. Sell TCHC’s buildings and use the money to subsidize tenants’ rents in private sector buildings

Housing allowances have many benefits. They enable tenants to live where they want, are relatively easy to administer, and promote mixed-income buildings and neighbourhoods. But they don’t work unless there is somewhere to move to.

According to CMHC’s Fall 2014 Rental Market Report, the most recent detailed report available, Toronto had a 1.6% vacancy rate, or 4,109 vacant units. Where would the other 54,000 households now living in TCHC go?

In the long term, one could argue that injecting subsidies into the private sector would stimulate new supply. But it will need a lot of stimulating to create affordable housing. Private developers are now eligible for $150,000 per unit plus additional incentives to create new housing at 80% of market rents. That’s $857 per month for a one bedroom apartment, $1,011 for a two-bedroom, and $1,187 for a three-bedroom.

By way of comparison, the daunting $2.6Billion required to fix up TCHC’s buildings works out to $44,400/unit. The average rents in these units, according to TCHC’s 2014 financial statements, is $415 per month topped up with an average subsidy of $326.

In other words, Toronto can’t afford to replace this valuable stock, and many tenants can’t afford private market rents — even if they could take their subsidies with them. Fixing up the housing the City owns is a much better deal for taxpayers and for tenants.

2. Turn TCHC into a City Division

I’m a great fan of public services, but even a casual look at the City’s record on street repairs suggests tenants will not see their taps fixed faster or more cheaply under City management. If anything, TCHC would become less responsive to tenants, more expensive and more politicized under City control.

However, there are some TCHC functions that might be usefully transferred to a City division. It made sense to make Housing Connection a City function because it serves all City-subsidized housing providers – not just TCHC. I can imagine TCHC’s Commissioner of Housing Equity offering her services to other housing providers struggling to keep vulnerable tenants housed. As for TCHC’s Audit function? Policy and research? A function-by-function review would determine where there is actual duplication and who might do the job best.

3. Make the seniors’ portfolio a City Division

I understand the nostalgic appeal of this option. Many seniors fondly remember their tenancies with the pre-amalgamation Metro Toronto Housing Corporation, and the City could look forward to taking on TCHC’s easiest-to-manage buildings filled with the undisputedly “deserving poor.”

Proponents of this option argue that City management would promote co-ordination with the City’s Long-Term Care Division. But surely access to the City’s home care and seniors’ services shouldn’t depend on the City managing the housing, any more than I need the City to manage my house to access my local library.

In any case, it is the provincially-funded Local Health Integration Networks (LHINs), not the City, that are vigorously expanding home care, mental health and other services for seniors. They are the ones with the most to gain by keeping seniors successfully housed, and the ones with the most resources to do something about it.

This option also begs the question, “What about everyone else?” Over 40% of TCHC’s seniors do not live in seniors’-only buildings – a percentage that will only grow as people age. How will they be served? And how will this transfer address the complaints of TCHC seniors today – who have to trundle downtown to get services everyone else gets in their neighbourhood?

4. Contract housing management to the private sector

If the first three options are “bold but not better,” this option is not bold enough.

Private management companies already manage 12,500 TCHC units. Their management costs are lower. But according to the TCHC’s 2015 Tenant Survey, [http://www.torontohousing.ca/webfm_send/11749/1?#] tenant satisfaction is higher in buildings managed directly by TCHC staff. And private management has not been able to solve serious community or building problems, as most vividly demonstrated by the 200 Wellesley fire.

Further contract management – to private companies or to non-profit housing providers – may be worth exploring, but we cannot count on it to address TCHC’s most serious problems.

Am I wrong?

In short order I have dismissed four reform options. Have I been too quick to toss out a good idea? Or if you agree these ideas won’t work, what do you think would?

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5 Comments leave one →
  1. October 15, 2015 11:14 am

    What about bringing in the non-profit sector? Do long-term leases of buildings.

    The issue here about selling the buildings is that the land is worth a lot of money and many buildings from the 1950s and 1960s are ripe for redevelopment, like Regent Park was. Maybe the city should keep the land and do ground leases.

    But isn’t the real issue here one of poverty and that “affordable housing” is expensive to build and subsidise and does little to move people out of poverty… and there is no way we can build units for the 90,000 families on the waiting list.

  2. mrwensleydale permalink
    October 15, 2015 11:23 am

    This idea isn’t a TCHC reform, but it might help.

    Get the people on the Landlord and Tenant Board to stop holding up evictions because they see TCHC (and other social housing) as housing of last resort. Not only does the current practice hurt TCHC’s finances, it also penalizes the other tenants, making buildings less desirable places to live. I don’t know if a direction from the Government would help or if an actual amendment to the regulations or the Act is required. But I think it’s something TCHC and the City should push for.

  3. John Cowan permalink
    October 15, 2015 4:12 pm

    I think you are too quick to dispel the Sell option. The big picture is the City should not be in the landlord business – it has shown its ineptitude. It should not do what the private sector can. Instead the City should focus on supporting disadvantaged folk.

    No strategy is going to build apartments over night for the 90,000 on thw waiting list. But putting the right signals into the construction and rental marketplaces could make it happen over a 15 year phase-in period. Meanwhile enabling subsidized people to find living near their work would be a great social enhancement. The approach to building owners might be carrot & stick style, needing some intestinal fortitude from our City Council who first need to realize that they should focus on helping people, not competing with the private sector. (Gosh I sound like a large private sector landlord – but I am not even a small one.)

    Carrot – reduced taxes for 10(?) years for buildings that agree to preserve 20% of their space for persons nominated by the City, paying market rents. (City absorbs the tax subsidy and pays the subsidies to market rent depending upon client needs.)
    Stick – a requirement that 10(?) years from now any building larger than 20 units must make 20% of their space for persons nominated by the City paying market rents (no tax reduction). Buyers of TCHC buildings would be required to relocate the subsidized City’s clients to the clients’ liking before closing any any purchase transaction if they want to evict for renovations. Such sales would obviously be phased over say 15 years, not one large sale. Developers of new rental buildings, now, would be required to meet this requirement right from the development application stage but would be given a City grant of maybe $20,000(?) for each new unit built (a discount on the City’s cost to renovate TCHC buildings, or something a bit less than the City gets from sales of TCHC properties). This development incentive would not be permanent, but remain while funds lasted or could be found from levels of government willing to sponsor housing development.

    I think some such Sell strategy should be thought through more fully, considering the power of government(s) to set the rules of the marketplace, and the positive signals builders could get from incentives.

    • October 15, 2015 4:56 pm

      Nice to hear from you John. You won’t catch me arguing against the private sector’s involvement in creating and maintaining affordable housing! I’m a big fan of MPP Peter Milczyn’s proposed Inclusionary Zoning legislation that would indeed require all new developments with more than 20 units to set aside a percentage as affordable — not market — housing. I see housing allowances as an effective way to make quick inroads on the social housing waiting list. I also support our current demolition and conversion controls that already require developers to replace at their own expense any rental housing they demolish or convert.

      But I can’t see replacing 58,500 units AND housing the 70,000+ households on the social housing waiting list — even over a 15 year period. And why pay developers to create market rent units? They’re already doing it — no public incentives required. The problem is that the gap between the market rent ($1500 and often MUCH higher for new units) and what TCHC tenants can afford (around $400 per month) is many times the average $326 subsidy that TCHC tenants receive now. Either the public pays $1000+/month rent subsidies in perpetuity, or the relocated tenants will be much worse off than they are now.

      John, if you can see a way to replace TCHC’s existing stock with new $400/month rental units, at a one-time public cost of $44,000 + a monthly $326/unit subsidy — you’ll win the prize! Can it be done?

  4. John Cowan permalink
    October 20, 2015 3:55 pm

    I don’t know the math of the situation, but have a few observations:
    – we only need to create the housing that will house the waiting list folk (70,000?), not those currently housed in TCHC buildings. Entities buying TCHC buildings would be required to adequately house the existing tenants, at market rates with City subsidy.
    – the actual number of added subsidized units units will depend on how many still need it when they can get housing near work and may therefore be better able to raise their income.
    – the rental housing shortage is real through government policies that have discouraged owners to build. Rent control has been the primary devil in this, and reflects politician desire to look after those who are currently renting, not all who wish to rent. There must be a better way. I am not going to try to delve into that, but it must be done.
    – whether to subsidize new construction or not, I don’t know. The keys ares to motivate existing buildings to move to a % of City subsidized tenants (not specific units), and to motivate new construction. If the City does not put money on the table it will have more to invest in a fund to support subsidies.
    – if subsidy costs grow, so be it. At least then taxpayers (in high cost cities like Toronto) would know the real costs without trying to pretend they can properly manage buildings. It would help bring into focus the need for something like guaranteed minimum incomes and employment practices legislation that would motivate less use of part time labour, TFWs etc.

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