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TCHC: A Case for “Non-Profitization”

February 18, 2016

On January 16th, the Mayor’s Task Force recommended that Toronto Community Housing be transitioned to a new community-based non-profit housing corporation.

It’s a good idea, but it’s not a new one. In the UK, the US, and Australia, governments have recognized the community sector can do a better job of creating and managing housing than they can.

It’s the same conclusion reached over 40 years ago in Canada. In 1973, the Federal Government abandoned the old public housing model – where government built, owned and managed the housing — in favour of independent non-profit and co-op housing corporations.

Today, 240 non-profit and co-op housing organizations successfully operate over 33,000 Toronto homes. Their success was shared by two Toronto municipal non-profit corporations: Cityhome and the Metro Toronto Housing Company Ltd. (MTHCL). Like community-based non-profits, these corporations operated at arms-length from their funder and regulator – the Federal, and later Provincial, Governments.

That all changed in 2001. When the Ontario Government downloaded its housing responsibilities to the municipal level, the newly amalgamated City of Toronto became the funder, regulator and sole shareholder of all the housing developed by Cityhome, MTCHL and all of Toronto’s former public housing.

I think it’s time to invoke the “Spirit of 1973” to restore TCHC to its rightful role as an independent non-profit corporation accountable first to the tenants it serves. Here’s why.

Restored stability and accountability to tenants

When TCHC was founded in 2002 it was envisaged as an autonomous business corporation at arms-length from the City. It started out well. But over the years, TCHC became politicized in a way that was unimaginable under federal or provincial funding administration.

Think of the chaos created by political interventions over the past six years:

  • A complete rout of the Board of Directors — directors who serve at the pleasure of Council, whether that power is exercised or not
  • A 10% operating budget cut in 2011 to allow then-Mayor Ford make good on a promise to keep property taxes down
  • The threatened sale of over 900 scattered units – a tale in itself, begun by Mayor Ford and his appointed one-man Board, Case Ootes
  • Mandate creep as TCHC was called on to help solve homelessness, joblessness, youth disengagement and a dozen other city-wide problems – all with no extra funding
  • “Stop, drop and roll” management. TCHC receives 400 individual requests from City Councillors every month
  • And then there are the policy directives from Council. Take, for example, the Ombudsman’s 2013 Housing at Risk – an investigation that uncovered few solutions beyond those in TCHC’s own Mental Health Framework (2009), the LeSage Review (2010) and TCHC’s eviction prevention policies. According to a 2015 review, TCHC’s response required 2,500 hours of TCHC project manager time; 1,100 hours of meeting time; an 18-person task force, another 12-person task force, and 9 implementation sub-committees involving more than 60 front-line staff. Yet I’m not sure tenants are better off than they would have been if TCHC had simply implemented its own policies.

Can a municipally controlled and funded housing corporation work? Yes. There are examples across Ontario of City Councils that are their housing’s champions, not its critics. TCHC itself has benefitted from municipal generosity: $75 M from a Toronto Hydro sale, Section 37 awards, relief from property taxes and garbage levies.

But I believe that, on balance, the benefits have not compensated for the instability and loss of focus caused by TCHC’s “hyper-politicization.” Time for a fresh start.

A simple way to protect municipal interests

The City doesn’t need to get involved in day-to-day housing management to preserve public assets, ensure public funds are used properly, or protect tenants should things go sideways.

Some protections are already in place through legislation, regulation and Codes – everything from the Accessibility for Ontarians with Disabilities Act to Toronto’s Zoning By-law – that govern TCHC irrespective of its relationship with the City.

The City of Toronto also has powers set out in Ontario’s Housing Services Act – the same powers it uses to regulate all other municipally-funded social housing. If TCHC became an independent non-profit corporation, the City would retain the power to:

  • review annual reports (including audited financial statements), appoint a person to conduct an audit or investigation, or enter and inspect any property, to ensure TCHC was complying with the Act and regulations
  • intervene – not at whim, but when there are specific risks, such as the risk of mortgage default, a breach of the Act, an inability to fulfill obligations or pay debts, an excessive expenditure or deficit, building deterioration that affects health or safety, fraud, criminal activity or misuse of assets
  • exercise remedies to respond to any of these “triggering events,” including: requiring the board or staff to receive training; reducing, suspending or discontinuing subsidy payments, or using subsidy payments to pay down TCHC’s debts; appointing an operational advisor, an interim receiver or manager, or taking over TCHC’s duties; and removing some or all directors and appointing new directors.

With all these powers, it’s hard to imagine what the City gains by being TCHC’s shareholder. And of course, there is always the backstop of Ontario’s Minister of Municipal Affairs and Housing, who must consent to any transfer or sale of social housing assets – a protection against not only rogue housing providers but rogue municipalities.

A better workplace

In the 1980s and 1990s, British municipal unions fought the transfer of Council housing to independent housing associations, even as tenants voted to transfer their homes — over 1.3 Million of them — to independent non-profit housing associations.

But as it turned out, staff as well as tenants benefitted from the transfer. As the Mayor’s Task Force has recommended, unionized staff simply transferred to the new non-profit corporation. According to Hal Pawson et al’s 2009 study, Impacts of Housing Stock Transfers in Urban Britainthe transferred staff reported a less hierarchical, more inclusive “bottom-up culture,” with greater opportunities for creative thinking and decision-making for middle and junior managers.

Similarly, Taper et al’s Large Scale Voluntary Transfers: Staff impact and implications, found 87% staff satisfaction with hours, holiday and sick leave after the transfer, with 76% of staff reporting their pay and conditions were the same or better after the transfer and only 16% saying they were worse. Transferred staff also reported greater understanding of their employer’s objectives, fewer worries about the future, and improved or equal work content and training.

Many options to choose from

I believe that “non-profitization” is the path to a more stable, autonomous and responsive TCHC. But there are many forms that “non-profitization” might take.

The Mayor’s Task Force has started the conversation with two ideas. I think there are other options as well.  But that’s a conversation for future entries!

One Comment leave one →
  1. February 18, 2016 1:42 pm

    As a non-profit, who essentially will “own” the assets and control them? The buildings and land are potentially extremely valuable and should ultimately be under the control of government.

    I think of the Regent Park redevelopment (not that it was perfect)… TCHC has a lot of land that could be redeveloped at higher densities or otherwise used for the public benefit.

    I often wonder who really benefits in the long term from non-profit housing – when the mortgages are paid off, any equity or benefit from the lower cash flow requirements – will this mean that the few tenants will ALL get low rents rather than being able to use the potential profit generated to fund acquisition of additional buildings?

    If a non-profit is wound up, what happens? Who decides?

    Elsewhere in the city we see older apartment buildings being demolished and condos built – like around Fairview Mall, meaning the loss of cheap buildings… because of rent decontrol, ulitmately if the same number of rental units are replaced they are not the same but more upmarket.

    Personally I have wondered if the City should create a holding company to own the properties and then to do long term leases of the buildings and lands to non-profits, with ground rents being adjusted periodically. In this way the land remains public property and any positive cash flow/profits would be used to acquire additional rental stock and protect it where appropriate.

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