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Who will pay for a transformed TCHC?

February 10, 2016

“It’s all about the money.”

That was the phrase on just about every Councillor’s lips during the Executive Committee’s January 28th discussion about the Mayor’s Task Force on Toronto Community Housing.

I agree. Whether TCHC, NewHome or a group of smaller non-profit or co-op corporations assumes responsibility for the 58,500 homes now owned by TCHC, the numbers have to add up.

At the moment, they don’t. When TCHC was formed in 2002, it negotiated a funding agreement with the City of Toronto that was different from any other in Ontario, with subsidy increases tied to the Consumer Price Index.

The agreement gave TCHC strong incentives to reduce costs and generate new revenues – and for the first few years, that’s what TCHC did. Between 2002 and 2004 it slashed 70 management positions, developed an aggressive Revenue Plan and dramatically cut utility bills through a comprehensive green strategy.

These one-time re-sets gave TCHC a good start. But over the last decade, tenant incomes from social assistance rates, low-end wages and pensions have lagged behind inflation, while housing costs — and particularly double-digit utility increases –have soared.

The result is TCHC now loses money for every unit – and there are 52,600 of them! – where tenants pay rent geared to their income. In 2016, TCHC projects an operating deficit of $60 Million. Without action, it expects the deficit to grow to $200 Million per year by 2026.

Can anything be done? The Task Force points the way with a series of strategies to increase TCHC’s self-sufficiency and promote the well-being of tenants. Here is my interpretation.

Promoting mixed-income communities

Many Torontonians see mixed-income communities as a social good — a way to address the dangers of concentrated poverty. For TCHC, mixed incomes are also the path to financial sustainability. According to the chart on page 42 of the Task Force report, a mix of 30% market tenants and 70% geared-to-income tenants would yield roughly $125M in year 10. That’s enough to cover more than half TCHC’s projected deficit.

How to get there? The City of Toronto needs to lift TCHC’s Rent-Geared-to-Income target so that it can reallocate some of TCHC’s 52,600 subsidies to other non-profit, co-op, or privately-owned buildings. The Province must change the rules that require Local Housing Corporations to devote 100% of their units to people who pay rent-geared-to-income and permit RGI subsidies to be converted to portable housing benefits.

And then the gradual, voluntary movement of tenants. I understand an average of 5% of TCHC units turn over each year now. That transition might be accelerated with portable housing allowances (so dissatisfied tenants can take their business elsewhere) and new construction (so tenants have more places to move to). Either way, it’s a long-term strategy.

But it’s also a sustainable strategy. TCHC needs core revenues that don’t depend on the mood of the government at the time, or on one-time solutions like the scattered unit sales. Rents are core revenues, and they entrench TCHC’s accountability to tenants – where it belongs.

A fair deal for social assistance recipients

If you are a single person on Ontario Works and live in a privately owned building, you are eligible to receive a shelter allowance of up to $376 per month. If you are a single parent with two kids on Ontario Disability Support Program, you get up to $816/month. That money goes to your landlord who, if it’s a good landlord, invests it in your building.

The same single person living in TCHC gets only $115 per month; the same parent gets $236. The rest of that shelter allowance disappears into provincial coffers, leaving the City and TCHC to pick up the $60 Million per year and growing difference.

Why are we standing for this? Give social housing tenants their full shelter allowance to be invested in their own homes.

Stop using rents to pay for City services

Tenants’ rents should be going to fix their buildings, not to pay for services other citizens receive as of right.

If TCHC tenants are not served well by the police, it should not be up to TCHC to maintain its own quasi-police force – a $17.5 M per year expense paid for through tenants’ rents – to fill the gap. The Toronto Police Service has a $1.1B annual budget to serve and protect everyone in Toronto, including those who live in TCHC. Time for the police to do the work themselves or pay TCHC to do it.

That’s also true of TCHC’s community and recreation programs. Does TCHC need staff to promote tenant engagement, support partnerships with local agencies and help connect tenants to services? Yes. Should tenants’ rents pay for activities that most citizens enjoy through City-funded recreation or community programs? No. Potential savings? It depends on which portion of TCHC’s $11.8M community and recreation budget overlaps with City services, but my guess is anywhere from $5M per year and up.

The solution not in the report . . .

The Task Force report offers these solutions and others to bridge the gap created by TCHC’s broken funding formula. But there is one very simple reform that it omits: just fix the funding formula.

What would it mean? Under a renegotiated agreement, the City would bridge the gap between revenues from rents and the costs of operating TCHC, costing the City an extra $65 M in 2016, growing to a projected $200 Million in 2026.

I’m assuming the Task Force considered that idea a non-starter, but it’s worth considering. If I’m reading the City’s 2015 budget correctly, $65 M would be 0.56% of the City’s $11.5B “tax and rate supported operating budget.” Based on my own property tax bill, I would be paying an extra $28/year.

Do I think the Task Force judged the public mood correctly? I do. Does TCHC have problems that money alone can’t fix? Yes. But if TCHC’s problems are not only a financial problem, they are also a financial problem, and just paying more taxes would make a huge difference.

. . . and the REAL solution that seems beyond us all

TCHC can’t raise rents because its tenants are poor and are getting poorer. The median income for TCHC tenants is $15,225. For Toronto, it’s $58,381. Fix income inequality, re-connect an unhinged real estate and rental market to incomes, and you fix not only TCHC. You fix everything.

 

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3 Comments leave one →
  1. February 11, 2016 12:29 am

    if the non profits get tchc they will just sell them off for condos

  2. February 11, 2016 9:18 am

    Why do you think that, Connie? I do know of non-profits that have sold buildings (often houses or their offices) but replaced them with many more new units. I don’t know of any non-profits that have sold property and then just given the money to charity (as they would legally be required to do). Do you?

  3. February 11, 2016 6:38 pm

    Thank you for explaining the TCHC/Newhome as a group of non-profit or co-op corporations
    for 58,500 existing TCHC units. I have lived in Cityhome and TCHC since 1982. Incomes have not increased and social services still does not cover rents like they should. What I am afraid of is that many will not be able to afford rents like $ 430.00 rather than $130.00 when Ontario Works only pays minimum when incomes are below $15,000. a year and ODSP is harder to get now and never enough either and Seniors are starving… Employment insurance is a joke and does not cover the cost of anything. I really don’t know what the solution is but to keep the rents low and make sure the tenants are not lying about their incomes.

    The process of subsidy calculations should be made easier and maybe the non-profit and co-op is not a bad idea. Co-op’s have members who are in charge and non-profits have directors. Customer service is essential to tenants who need subsidy.

    Market rents are rising every day and should be regulated.

    Subsidies should be calculated according to income and rents should be regulated ubntil incomes increase or decrease even at market rent.

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