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TCHC’s $1.34 Billion: Is it the real deal?

May 14, 2019

Last month, Prime Minister Justin Trudeau announced a $1.34 Billion investment to address Toronto Community Housing’s repair backlog.

It was the biggest one-time federal housing announcement in Canadian history. It was everything that TCHC had asked for, and the culmination of advocacy efforts that began in 2005 with the tenant-led Save our Structures campaign.

And yet the response from housing advocates has been strangely muted.

 Why aren’t we dancing in the streets?

I think advocates have good reason to be wary of big announcements. Earlier this month we saw the buoyant headlines in the Ontario Government’s Housing Supply Action Plan. But the headline “More choice for renters” turns out to simply re-confirm the removal of rent controls on new buildings. The promise to “help build housing, including affordable housing, near transit” is a plan to limitthe powers of municipalities to introduce Inclusionary Zoning wherever they see fit.

Is the TCHC announcement more smoke and mirrors? To find out, I asked staff at TCHC and Canada Mortgage and Housing Corporation (CMHC) the same questions that I had been hearing. They aren’t the official spokespersons for their organizations, so no names here. But they are all people I knew would offer the straight goods.

What’s the deal?

CMHC has committed to delivering $1.34 Billion to TCHC over nine years for renovations under the National Housing Co-Investment Fund. Sixty per cent of the funds ($810 million) will be in the form of loans, and 40 per cent ($530 Million) will be grants, with a 50/50 split in the first three years providing an extra $45 Million in grants.  The monies will flow in tranches: $116 Million in 2019, $126 Million in 2020, $178 Million in 2021, and $153 Million each year from 2022 through 2027.

In return, TCHC has committed to meeting CMHC’s targets for accessibility and energy efficiency. The Co-Investment Fund requires TCHC to ensure 20 per cent of its units meet CMHC’s accessibility standards — that’s 11,600+ units! — and to reduce energy use and greenhouse gas emissions across its portfolio by 25 per cent.

Could this money disappear after the election?

The National Housing Strategy could be scuttled by a new government, which would be bad news for future applicants to the Co-Investment Fund.

But it is unlikely that any government will cancel contracts that are already in place. Remember: TCHC’s agreement is not with the Federal Government. It is with CMHC, a Crown Corporation that is legally bound to honour its contracts.

We saw that commitment in action in 1993, when the Federal Government stopped funding new co-op and non-profit housing. Federal funding for new housing ended, but existing operating agreements were still in force and subsidies continued. In the same way, when the Ford Government cancelled the Social Housing Apartment Retrofit Program shortly after taking office, TCHC kept the $133 Million already committed through the program.

Will TCHC be able to repay the loans?

I wondered about this one myself. According to media coverage, TCHC planned to repay the loan through energy savings and refinancing its properties. But TCHC has been doing both since the mid-2000s. I wondered how much potential was left for savings.

But I also know, as does everyone who has applied to the Co-Investment Fund, that CMHC is positively tenacious when it comes to proving long-term viability. TCHC simply would not have gotten the money if it couldn’t prove it could repay their loans. That proof entailed extensive financial projections, a system for tracking energy savings, and demonstrated room under its debt ceiling to borrow.

Did TCHC get any special advantages?

TCHC had to meet the same criteria as any other applicant. As one TCHC staffer said, “It was no cakewalk.” It meant hundreds of staff hours pulling together detailed project lists, projections and calculations, all tailored to meet CMHC’s format.

My own observation is that TCHC did have a special advantage, but it wasn’t an unfair one. It was scale. With 58,500 units, TCHC can afford high-calibre specialists in asset management, energy management, accounting and IT on its staff to prepare its proposal to CMHC. Most non-profit and co-op providers are lucky if they have their own full-time manager and a part-time bookkeeper.

TCHC’s scale also enhanced its ability to meet CMHC’s energy and accessibility requirements. Notably, TCHC’s original proposal to CMHC for three buildings failed. It needed a portfolio-wide approach to make it work.

Will there be money left for other non-profits and co-ops?

TCHC represents roughly 25% of Canada’s community housing units, and with this commitment, will receive roughly 25% of funds in CMHC’s Housing Repair and Renewal stream. That leaves $4.38 Billion for other non-profit and co-op organizations. In my opinion, the obstacle for the rest of the community housing sector will not be a lack of money in the fund. The challenge will be meeting the program’s requirements. A topic for another blog, perhaps.

Is this just good money after bad?

Let’s just say it. TCHC’s reputation leaves both tenants and advocates skeptical that TCHC can manage a billion dollar renovation job.

I defer to tenants when it comes to evaluating TCHC’s maintenance success, but I do have two things to say about this initiative. First, let’s not be over-awed by big numbers. A $1.34 Billion fund works out to $22,906 per unit. TCHC has been managing projects of this size for years. In fact, it was their track record for completing large projects that helped them secure these funds.

Second, I also wonder whether TCHC suffers unfairly from “fishbowl” syndrome. We see its problems magnified, while the short-comings of private sector rentals stay hidden. How often do we read about the many private-sector tenants who have resigned themselves to doing their own unit repairs, or of the private sector projects that are over budget or months over schedule? Do private sector owners hold themselves to procurement rules comparable to those public institutions such as TCHC set for themselves?  And when I think of any private-sector apartments that rent for $840/month — the amount TCHC expects in combined rents and subsidies in 2019 — I haven’t seen anything better than what TCHC offers, and a lot that is worse.

Beyond “water drops in the desert”

TCHC has spent the last decade relying, as one TCHC staff member called it, “water drops in the desert” — enough money for survival, but not enough to bloom.

TCHC is still reliant on one-off funds — and even this $1.34 Billion is still a one-off — to repair and maintain its buildings, and will be until City Council fulfills its promise to bring in a proper funding formula this year.

But this ten-year breakthrough is a giant umbrella leap towards a sustainable future. I’ve got my dancing shoes on!

 

 

One Comment leave one →
  1. Kathleen Ross permalink
    May 16, 2019 10:37 pm

    Dancing shoes? Are you aware that TCHC has sold its single family homes to a not for profit? I’m concerned about the tenants in these homes.

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