| 135032 | REPORT | N | Y | MAIN | ACTION | AMENDED | — | N | — | Launching the Rental Housing Supply Program | — | 2024.PH13.8 | — | Y | Y | Y | Y | <p>The Executive Director, Housing Secretariat, recommends that: </p>
<p> </p>
<p><strong>New Rental Supply Housing Program</strong></p>
<p> </p>
<p>1. City Council approve the Rental Housing Supply Program, as outlined in this report, to assist the City in achieving its approved rent-controlled, affordable and rent-geared-to income rental housing targets.</p>
<p> </p>
<p>2. City Council authorize the Executive Director, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, to provide City financial incentives to eligible rental housing units under the Rental Housing Supply Program, up to the number of rental housing units approved annually through the Housing Secretariat Budget, including exemptions from development charges, parkland dedication fees, community benefits charges, if not exempted by provincial legislation, and waivers of planning application and building permit fees, to eligible housing developments.</p>
<p> </p>
<p>3. City Council direct Executive Director, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, to develop a review and evaluation process to assess the financial impact of Rental Housing Supply Program applications and recommend approval of financial incentives for Council approval.</p>
<p> </p>
<p>4. City Council authorize the Executive Director, Housing Secretariat, to launch a three-year Pilot Community Housing Pre-development Fund, to provide funding to Community Housing Providers for the purpose of undertaking pre-development activities in accordance with guidelines included in Attachment 3 to this report.</p>
<p> </p>
<p>5. City Council authorize the Executive Director, Housing Secretariat to approve projects eligible for the Pilot Community Housing Pre-development Fund, in accordance with guidelines included in Attachment 3 to this report, up to the number approved annually through the Housing Secretariat Budget.</p>
<p> </p>
<p>6. City Council request the Executive Director, Housing Secretariat, to report to City Council annually on the results of the Rental Housing Supply Program and Pilot Community Housing Pre-Development Fund from the prior year, including any recommended modifications to the programs.</p>
<p> </p>
<p>7. City Council adopt the updated Municipal Housing Facility By-law in Attachment 4 to the report from the Executive Director, Housing Secretariat and repeal Municipal Housing Facility By-law 183-2022.</p>
<p> </p>
<p>8. City Council authorize the City Solicitor make such stylistic and technical changes to the draft Municipal Housing Facility By-law as may be required.</p>
<p> </p>
<p><strong>Financial Support for Affordable Rental Housing Projects</strong></p>
<p> </p>
<p>9. City Council authorize the Executive Director, Housing Secretariat, to provide capital funding to the projects listed in Confidential Attachment 1, up to $260,000 per affordable rental unit, in a total amount not to exceed $351,515,142.</p>
<p> </p>
<p>10. City Council authorize the Executive Director, Housing Secretariat to negotiate and execute, on behalf of the City, the following:</p>
<p> </p>
<p style="padding-left: 30px;">a. a municipal housing facility agreement ("Contribution Agreement") with eligible proponents for funding and financial incentives, and to set out the terms of the development and operation of affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor;</p>
<p> </p>
<p style="padding-left: 30px;">b. a municipal housing facility agreement ("Contribution Agreement") or amendments to existing Contribution Agreements with the proponents listed in Confidential Attachment 1, or related entities, for funding and financial incentives and to set out the terms of the development and operation of affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor;</p>
<p> </p>
<p style="padding-left: 30px;">c. a pre-development funding agreement with eligible proponents approved under the Pilot Community Housing Pre-development Fund, including the projects outlined in Confidential Attachment 1, to secure the financial assistance and to set out the terms of the pre-development funding, on terms and conditions satisfactory to the Executive Director, Housing Secretariat and in a form satisfactory to the City Solicitor; and,</p>
<p> </p>
<p style="padding-left: 30px;">d. to enter into agreements or other suitable arrangements with City of Toronto agencies and/or corporations, the Government of Ontario and/or its agencies, community agencies, private entities and/or individuals, as appropriate, to deliver projects approved under the Rental Housing Supply Program.</p>
<p> </p>
<p>11. City Council direct the Chief Financial Officer and Treasurer, the Executive Director, Housing Secretariat, and the Executive Director, Financial Planning to develop an implementation plan to establish a revolving Affordable Housing Fund to be overseen and used by the Executive Director, Housing Secretariat in consultation with the Executive Director, Financial Planning to support future rent-geared-to-income and affordable rental housing projects.</p>
<p> </p>
<p><strong>Expediting Development Review and Legal Due-diligence</strong></p>
<p> </p>
<p>12. City Council request the Executive Director, Development Review Division, in consultation with the Executive Director, Housing Secretariat, Chief Executive Officer, CreateTO and Chief Planner and Executive Director, City Planning, to identify projects approved by the Rental Housing Supply Program that will be reviewed under the Priority Development Review Stream.</p>
<p> </p>
<p>13. City Council increase the 2024 Operating Budget for Legal Services Division by $0.166 million gross and $0 net, fully funded from the 2024-2033 Capital Budget and Plan for Housing Secretariat and increase the approved staff complement for Legal Services by two permanent positions to support a range of housing initiatives.</p>
<p><br /> <strong>Intergovernmental Considerations</strong></p>
<p> </p>
<p>14. City Council request the Government of Ontario to support the implementation of the Rental Housing Supply Program, which is also necessary to support delivery of the <a href="\\VS-130-AHO\AHODATA\AHO\AHO\POLICY & PARTNERSHIPS\Open Door\2024 Program Redesign\Staff Report\Ontario’s plan to get more homes built">Ontario's more Homes for Everyone</a> plan targets, by:</p>
<p> </p>
<p style="padding-left: 30px;">a. urgently allocating land to develop new purpose-built affordable, rent-controlled and rent-geared-to-income homes and require that as part of any future Provincial land offerings, at least 30% of the gross floor area be allocated for affordable housing for 99 years;</p>
<p> </p>
<p style="padding-left: 30px;">b. partnering with the Federal Government on their Canada Builds program and the City of Toronto to launch an Ontario Builds housing program and:</p>
<p style="padding-left: 30px;"> </p>
<p style="padding-left: 60px;">1. allocate between $500 million and $800 million per year in grant funding to Toronto over the next seven years;</p>
<p> </p>
<p style="padding-left: 60px;">2. allocate between $6.5 billion and $8 billion in low-cost financing/re-payable loans to Toronto over the next seven years;</p>
<p> </p>
<p style="padding-left: 60px;">3. provide loan guarantees for non-profit, co-op and public led purpose-built affordable and market rental projects, as well as for affordable homeownership projects;</p>
<p> </p>
<p style="padding-left: 30px;">c. allowing zoning with conditions to enable the City of Toronto to secure purpose-built rental housing as part of individual site-specific zoning by-laws;</p>
<p> </p>
<p style="padding-left: 30px;">d. allowing for Inclusionary Zoning to be applied across the city and approve the City’s Protected Major Transit Station Areas delineations, and require the homes to meet the City’s income-based definition of affordable housing and ensure that affordability is secured for 99 years; and,</p>
<p> </p>
<p style="padding-left: 30px;">e. adopting the City of Toronto’s income-based definition of “affordable housing” and harmonizing all provincial housing programs to create certainty and predictability.</p>
<p> </p>
<p>15. City Council request the Government of Canada to support the implementation of the Rental Housing Supply Program, in alignment with Canada’s Housing Plan, and the subsequent 2024 Federal Budget, by:</p>
<p> </p>
<p style="padding-left: 30px;">a. urgently allocating land to develop new purpose-built affordable, rent-controlled and rent-geared-to-income homes and require that as part of any future federal land offerings, at least 30% of the gross floor area be allocated for affordable housing for 99 years;</p>
<p> </p>
<p style="padding-left: 30px;">b. launch the Canada Builds program in partnership with the Province of Ontario and the City of Toronto to:</p>
<p style="padding-left: 30px;"> </p>
<p style="padding-left: 60px;">1. allocate between $500 million and $800 million per year in grant funding to Toronto over the next seven years;</p>
<p> </p>
<p style="padding-left: 60px;">2. allocate between $6.5 billion and $8 billion in low-cost financing/re-payable loans to Toronto over the next seven years; and,</p>
<p> </p>
<p style="padding-left: 60px;">3. provide loan guarantees for City-supported non-profit and public led purpose-built affordable and market rental projects.</p>
<p> </p>
<p>16. City Council direct that Confidential Attachment 1 to the report (May 30, 2024) from the Executive Director, Housing Secretariat remain confidential in its entirety as they: outline a position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City; and contain financial information, supplied in confidence to the City of Toronto and CreateTO, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.</p> | <p>The proposed new Rental Housing Supply Program, transformed from the Open Door program, will significantly increase the supports available to partners interested in delivering Rent-Geared-to-Income, affordable rental and rent-controlled homes. The anticipated financial impacts associated with the Rental Housing Supply Program are provided below.</p>
<p> </p>
<p><strong>1. Allocating Capital Funding to Affordable Housing Projects Stuck in the Pipeline</strong></p>
<p> </p>
<p>This report proposes allocating approximately $351 million to the affordable rental housing projects outlined in Confidential Attachment 1 to this report, to unlock and expedite construction starts for approximately 2,606 Rent-Geared-to-Income and affordable rental homes. These homes are anticipated to reach construction start in 2024 and 2025, which will support meeting the City’s commitments under the Federal Housing Accelerator Fund and the Provincial Building Faster Fund programs. These investments will enable 18 affordable rental housing developments to reach construction start in 2024 and 2025, adding to the 47 projects already funded and under or nearing construction start, listed in Attachment 2.</p>
<p> </p>
<p>These projects have previously been approved by City Council for funding or financial incentives under affordable housing programs (including Open Door or Housing Now programs) and require further funding recommended through this report to achieve construction start. The City has undertaken a financial and construction readiness review of all projects, with support from an independent third-party consultant, and in consultation with CreateTO and Toronto Community Housing Corporation. Projects have been prioritized for funding based on readiness to achieve construction start, and scored consistently using a number of criteria that align with the City’s HousingTO Plan objectives, including type of proponent, length and depth of affordability, funding request, and access to other government funding sources.</p>
<p> </p>
<p>The Housing Secretariat's 2024-2033 Capital Budget and Plan provides a total funding of approximately $351 million to be re-allocated to the Rent-Geared-to-Income and affordable rental project outlined Confidential Attachment 1, which are scheduled to begin in 2024.</p>
<p> </p>
<p>Subject to the adoption of the Rental Housing Supply Program, the City will continue to support Rent-Geared-to-Income and affordable rental homes through the allocation of up to $260,000 per eligible affordable rental and Rent-Geared-to-Income home. This is the maximum allowable funding allocation under the Rental Housing Supply Program. Actual funding per project will be determined based on the evaluation of applications on a site-by-site basis, in consultation with the Chief Financial Officer & Treasurer, and based on project parameters and additional sources of funding that can be leveraged to support the project’s financial viability. These funds will be provided as interest free forgivable loans to eligible and approved projects and will be tied to milestones and requirements in agreements with housing providers.</p>
<p> </p>
<p><strong>2. Pilot Community Housing Pre-development Fund</strong></p>
<p> </p>
<p>As part of <a href="https://secure.toronto.ca/council/agenda-item.do?item=2023.MM13.27">adopting MM13.27 - Federal Housing Accelerator Fund, Council requested staff to consider the creation</a> of a municipal Indigenous, non-profit and co-operative housing pre-development fund, to supplement existing CMHC funding programs, and provide support to qualified housing organizations working to assist the City, to deliver net new RGI, affordable and rent-controlled homes, and report on the potential sources of funding and the mechanism to deliver the pre-development funds.</p>
<p> </p>
<p>This report recognizes the need for additional support for Community Housing Providers to increase the supply of Rent-Geared-to-Income, affordable and rent-controlled homes. The three-year pilot program will commence in 2024 and conclude in 2026. An annual allocation of approximately $10 million will be available, with adjustments made as necessary during the City's annual budget process based on ongoing evaluations of need and take-up. Through the Pilot Community Housing Pre-Development Fund, projects will be eligible to receive a maximum of $50,000 per Rent-Geared-to-Income and affordable rental home in the form of interest free loans due on first construction financing draw.</p>
<p> </p>
<p>Projects in receipt of the City’s Pilot Community Housing Pre-development Fund will be required to apply for Seed Funding available from Canada Mortgage and Housing Corporation which provides financial support (up to $350,000 in interest-free loans and a maximum of $150,000 of forgivable contributions) for individuals or organizations involved in the initial phases of creating an affordable housing project to assist with early development expenses.</p>
<p> </p>
<p>The Pilot Community Housing Pre-development Fund will be a revolving fund where funds will be re-paid at the first construction loan draw and re-invested back into the pre-development fund and/or in future Community Housing projects in Toronto. Eligible costs and additional details are included in Attachment 3.</p>
<p> </p>
<p>The City, in collaboration with Toronto Alliance to End Homelessness and Co-operative Housing Federation of Toronto, is reviewing non-profit and co-op sites with re-development potential (intensification and infill) that could benefit from the Pilot Community Housing Pre-development Fund over the next three years to increase the community housing stock.</p>
<p> </p>
<p>This report proposes to allocate approximately $16 million in pre-development funding to affordable housing projects this year, as outlined Confidential Attachment 1, to support their due-diligence activities with the aim of expediting construction start timelines. The Housing Secretariat's 2024-2033 Capital Budget provides initial funding of approximately $16 million to be re-distributed to these Rent-Geared-To-Income and affordable rental homes in 2024. Any necessary modifications and required funding requests to year 2025 will be completed through the 2025 Budget process.</p>
<p> </p>
<p><strong>3. Proposed Incentives for Rent-controlled Homes Delivered by Community Housing Providers</strong></p>
<p> </p>
<p>The Open Door Program has historically supported new affordable rental housing projects through relief from building permit fees, planning application fees and parkland dedication fees as well as an exemption from development charges and property taxes for a stipulated affordability period (typically 40-99 years).</p>
<p> </p>
<p>The Province's adoption of the More Homes Built Faster Act, 2022 (Bill 23) and the Affordable Homes and Good Jobs Act, 2023 (Bill 134) has substantially altered the landscape of financial incentives available for the City to provide affordable rental housing developments, by introducing provincial exemptions of development charges (DCs), community benefit charges (CBCs), and parkland dedication fees for developments providing 25 years affordability, at the levels set out by the Provincial government in the Affordable Residential Units Bulletin, and subject to an agreement. The Province recently announced these exemptions, for both affordable rental and ownership units, will come into effect on June 1, 2024.</p>
<p> </p>
<p>Bill 23 also created different sets of exemptions for private sector and non-profit housing developments which came into effect in November 2022, including through development charge, community benefit charge and parkland exemptions for non-profit rental and ownership housing, in addition to development charge discounts for purpose-built market rental housing. The non-profit exemption applies to all residential units, whether affordable, market, ownership or rental. There is no requirement for a minimum time frame for the building to be non-profit, or authority to enter into agreement or require the repayment of financial incentives should the property be sold in the future to a for-profit entity.</p>
<p> </p>
<p>To further address the shortage of purpose-built rental housing supply and support the City’s housing target of 17,500 rent-controlled homes, this report proposes supporting Community Housing Providers, as well as Toronto Community Housing Corporation and Toronto Seniors Housing Corporation to build rent-controlled homes with rent levels between income-based affordable rents (the lower of Official Plan and the Development Charges Act definitions) and up to 150% of the average market rent, by unit type, as reported annually by Canada Mortgage and Housing Corporation, when first rented to a new tenant, and provided that rent increases are limited to the provincial rent increase guideline under the Residential Tenancies Act, 2006 plus 2%, but not greater than the consumer price index. This new rental threshold aligns with the Official Plan definition of mid-range moderate rents. Rent-controlled homes will need to be maintained for a minimum of 40 years, and projects will need to include at least 30% of gross floor area (GFA) affordable housing.</p>
<p> </p>
<p>To support creation of these rent-controlled homes by the Community Housing Providers, this report proposes the following financial incentives to be provided by the City (applicable to the rent-controlled portion of developments):</p>
<p> </p>
<p>Waivers of building permit and planning application fees; and,<br />Property tax exemptions for the duration of rent-control, subject to City Council approval.<br />These incentives are supplementary to development charge, community benefit charge, and parkland dedication fee exemptions available to non-profit housing developments that meet provincial requirements, and other growth funding tool discounts and exemptions provided to these developments.</p>
<p> </p>
<p>It should be noted that there is a gap in the provincial definition of a non-profit housing developer for the purpose of determining eligibility for provincial exemptions under Bill 23. The specific definition provided in Bill 23 requires that affordable housing be the primary object of the non-profit corporation. This may not capture the mandate of some multi-service non-profit corporations operating in Toronto whose object includes affordable housing, but whose articles of incorporation do not describe this as the organization’s primary object. In these cases, Housing Secretariat, in consultation with the Chief Financial Officer and Treasurer, will assess applications and review their eligibility for City incentives, including evaluating costs and benefits, to exempt development charge, community benefit charge, and parkland dedication fees on a case-by-case basis.</p>
<p> </p>
<p>Table 1 – Proposed Financial Incentives for 1,000 Rent-controlled Homes1 delivered by Non-profit, Co-op, Indigenous Housing Providers, Toronto Community Housing Corporation and Toronto Seniors Housing Corporation.</p>
<table style="width: 100.0%; border-collapse: collapse; border: none;" width="100%">
<tbody>
<tr style="break-inside: avoid; height: 24px;">
<td style="width: 33.12%; border: 1pt solid black; padding: 5.75pt; height: 24px;" width="33%"> </td>
<td style="width: 29%; border-top: 1pt solid black; border-right: 1pt solid black; border-bottom: 1pt solid black; border-image: initial; border-left: none; padding: 5.75pt; height: 24px;" width="29%">
<p><strong><span style="color: windowtext;">Estimated Value of City Incentives </span></strong></p>
</td>
<td style="width: 37.9%; border-top: 1pt solid black; border-right: 1pt solid black; border-bottom: 1pt solid black; border-image: initial; border-left: none; padding: 5.75pt; height: 24px;" width="37%">
<p><strong><span style="color: windowtext;">Estimated Impact of Provincial Incentives </span></strong></p>
</td>
</tr>
<tr style="break-inside: avoid; height: 24px;">
<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24px;" width="33%">
<p><strong><span style="color: windowtext;">Development Charges</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="29%">
<p>Subject to Provincial Exemption<span style="color: windowtext;">2</span></p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="37%">
<p>$78 million<span style="color: windowtext;">3</span></p>
</td>
</tr>
<tr style="break-inside: avoid; height: 24px;">
<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24px;" width="33%">
<p><strong><span style="color: windowtext;">Parkland Dedication</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="29%">
<p>Subject to Provincial Exemption<span style="color: windowtext;">2</span></p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="37%">
<p>$15 million</p>
</td>
</tr>
<tr style="break-inside: avoid; height: 24px;">
<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24px;" width="33%">
<p><strong><span style="color: windowtext;">Community Benefits Charges</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="29%">
<p>Subject to Provincial Exemption<span style="color: windowtext;">2</span></p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="37%">
<p>$6 million</p>
</td>
</tr>
<tr style="break-inside: avoid; height: 18px;">
<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 18px;" width="33%">
<p><strong><span style="color: windowtext;">Planning Application Fees</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 18px;" width="29%">
<p>$0.8 million</p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 18px;" width="37%">
<p>n/a</p>
</td>
</tr>
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<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24px;" width="33%">
<p><strong><span style="color: windowtext;">Building Permit Fees </span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="29%">
<p>$1 million</p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="37%">
<p>n/a</p>
</td>
</tr>
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<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24px;" width="33%">
<p><strong><span style="color: windowtext;">Estimated Net Present Value of Property Taxes (40 years assumption)</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="29%">
<p>$32 million</p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24px;" width="37%">
<p>n/a</p>
</td>
</tr>
<tr style="break-inside: avoid; height: 24.6626px;">
<td style="width: 33.12%; border-right: 1pt solid black; border-bottom: 1pt solid black; border-left: 1pt solid black; border-image: initial; border-top: none; padding: 5.75pt; height: 24.6626px;" width="33%">
<p><strong><span style="color: windowtext;">Total value of Incentives</span></strong></p>
</td>
<td style="width: 29%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24.6626px;" width="29%">
<p>$33.8 million</p>
</td>
<td style="width: 37.9%; border-top: none; border-left: none; border-bottom: 1pt solid black; border-right: 1pt solid black; padding: 5.75pt; height: 24.6626px;" width="37%">
<p>$99 million<span style="color: windowtext;">4</span></p>
</td>
</tr>
</tbody>
</table>
<p>Assumptions for estimating the value of incentives:</p>
<p style="padding-left: 30px;">1) Calculations based on unit mix of 10% studio, 45% 1-bed, 35% 2-bed, 10% 3-bed units. Calculated using 2024 rates.</p>
<p style="padding-left: 30px;">2) Subject to meeting provincial definition of non-profit housing development.</p>
<p style="padding-left: 30px;">3) The estimated value is before any previously Council approved rental discounts provided by the City (estimated at $25 million), which would be repayable to the City should the units no longer be rental.</p>
<p style="padding-left: 30px;">4) This reflects the total financial impact to the City arising from all exemptions available to non-profit housing developments mandated by the Province, and not the Rental Housing Supply Program.</p>
<p> </p>
<p><strong>4. Supporting the Implementation of the Rental Housing Supply Program</strong></p>
<p> </p>
<p>To support the successful roll-out of the Rental Housing Supply Program, and a range of housing initiatives aimed at expedited delivery of housing projects, additional legal staffing support is required.</p>
<p> </p>
<p>This report proposes an increase in the 2024 Operating Budget for the Legal Services Division by $165,558 gross and $0 net, to add two permanent positions to the Housing Secretariat’s legal staffing complement, fully funded from the Housing Secretariat's 2024-2033 Capital Budget and Plan, with annualized and future year financial impact to be considered as part of the annual budget process.</p>
<p> </p>
<p>These two positions, being added to Legal Services Division, will be dedicated to the Housing Secretariat and as needed, to support delivery of a range of housing initiatives. These positions will start September 1, 2024. The Executive Director, Housing Secretariat, and the City Solicitor will meet annually to evaluate the City Legal resources needed to meet the service level expectations and requirements of the Housing Secretariat.</p>
<p> </p>
<p><strong>5. Establishing a Sustainable Affordable Housing Fund</strong></p>
<p> </p>
<p>Building Rent-Geared-to-Income, affordable and rent-controlled homes in the current challenging market conditions requires a combination of land, low-cost financing, significant grant funding, and financial incentives as well as a willingness to accept a lower rate of return or achieving rental stabilization over a longer period. Existing funding and financing programs are not currently working in a coordinated manner causing situations where land is ready to be developed but funding and financing are not readily available or the timelines to secure funding and financing will result in a project becoming financially unviable. In other instances, the bar to secure low-cost financing is too high to the point that many community housing organizations are not able to secure financing without loan guarantees that tie up significant assets to advance a new housing development.</p>
<p> </p>
<p>The City, through this report, is proposing an expanded suite of funding and incentives to support housing developments, recognizing that even with these new investments, there are housing projects that would remain unfunded and that significant federal and provincial funding is required.</p>
<p> </p>
<p>As part of <a href="https://secure.toronto.ca/council/agenda-item.do?item=2023.EX9.3">2023.EX9.3 – Generational Transformation of Toronto’s Housing System to Urgently Build More Affordable Homes</a>, City Council directed staff to explore the establishment of a sustainable Toronto Housing Affordability Fund and report back in 2024 with recommendations to advance this initiative. The Fund is intended to provide an opportunity for the City to work with the federal and provincial governments, financiers, academic institutions, philanthropic organizations, and private sector organizations (including large employers) and explore ways to facilitate access to various low-cost financing, grant funding and loan guarantees solutions for public, not-for-profit, co-operative, and Indigenous-led organizations to improve financial viability of affordable rental housing projects.</p>
<p> </p>
<p>Through the recommendations in this report, Housing Secretariat and other relevant divisional staff will work to implement and establish a sustainable Affordable Housing Fund. The implementation plans and any required resources will be reported out through the 2025 budget process or future staff reports.</p>
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<p>The Affordable Housing Fund could act as a vehicle for philanthropic organizations to flow their affordable housing funds to the City to be allocated as patient capital and/or pre-development funds to City-supported or City-led affordable housing projects. Access to patient capital particularly for affordable and rental housing projects is critical as the rental revenues for these projects are limited, further limiting their ability to secure construction financing.</p>
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<p>Additionally, the Affordable Housing Fund could enable the City to leverage partnerships with the financial sector and banks to secure low-cost financing solutions for City-supported and City-led projects where land and funding is already secured. This will be a critical step in advancing public-builder sites where the City is responsible for direct delivery of the projects.</p>
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<p>The City will also continue leveraging its Social Debenture Program (Social Bond) that was first launched in 2020 to fund capital projects that meet the City’s social objectives, including affordable housing development and/or capital repairs. A total of $450 million in social bonds have been raised to date and have been issued for 10-20 year periods. Raising new funding and financing solutions through these alternative approaches will relieve the pressure from the City’s tax base and will bring additional resources to support the City’s ambitious housing objectives.</p>
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<p><strong>6. Enhanced Support Required from the Federal and Provincial Governments</strong></p>
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<p>The federal government, through Budget 2024, has announced new funding to boost home construction, including:</p>
<ul>
<li>A $15 billion top-up to the Apartment Construction Loan Program for a total of $55 billion to build 131,000 new rental apartments;</li>
<li>Launching Canada Builds which leverages the Apartment Construction Loan Program by making it available to support partnerships with provinces that launch housing plans;</li>
<li>Launching a new $6 billion Canada Housing Infrastructure Fund for water and wastewater infrastructure;</li>
<li>$1.3 billion for Reaching Home: Canada’s Homeless Strategy, and,</li>
<li>$1.5 billion for the Canada Rental Protection Fund, to help non-profits acquire rental housing to maintain existing housing stock for those on low and fixed incomes.</li>
</ul>
<p>The City is in a unique position to work with the federal government and invest these new funds through existing programs such as the proposed Rental Housing Supply and the Multi-Unit Residential Acquisition Program.</p>
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<p>Recent federal and provincial measures introduced to support purpose-built rental construction, such as providing a 100% rebate on GST and HST on new purpose-built rental housing is an example of government policies aligning to advance collective housing objectives. As an example for a two-bedroom rental home valued at $500,000, the enhanced Ontario HST New Residential Rental Property Rebate would <a href="https://news.ontario.ca/en/release/1003722/ontario-helping-to-build-more-rental-housing">deliver</a> $40,000 in provincial tax relief. When combined with the enhanced federal GST New Residential Rental Property Rebate, this would amount to $65,000 in tax relief.</p>
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<p>Approximately $500-$800 million in funding and $900 million-$1 billion in low-cost financing is required from each of the federal and provincial governments respectively per year over the next seven years to support advancing the City’s 65,000 rent-controlled homes approvals. Additional funding is needed from the Province of Ontario to continue providing operating subsidies and support services to advance the City’s supportive housing targets. This includes funding for rent supplements needed to help deepen affordability for low- and moderate-income households, as well as funding to deliver a range of wraparound social and health supports onsite, which are necessary to help vulnerable and marginalized residents successfully exit (or prevent their entry into) homelessness.</p>
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<p><strong>Financial Impacts of Provincial Policies and Legislation</strong></p>
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<p>The City's ability to continue to deliver its housing programs and the community infrastructure required to support new housing, is currently at high risk due to the significant financial impacts arising from the provincial changes to the Development Charges Act and Planning Act impacting municipal growth funding tools. Specifically, the province has removed the City's ability to collect anticipated and budgeted development charges for housing services, resulting in an approximate $1.2 billion in lost revenues for Affordable Housing services over 10 years.</p>
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<p>Additionally, the Government of Ontario has introduced a number of changes to policies and legislation impacting municipal growth funding tools and other legislation over the past few years through the Ontario Housing Supply Action Plan- Bill 108, More Homes, More Choice Act; Bill 138, Plan to Build Ontario Together Act, 2019 ; Bill 109, More Homes for Everyone Act; Bill 134, Affordable Homes and Good Jobs Act, 2023; Bill 23 More Homes Built Faster Act, 2022 and the recent Bill 185, Cutting Red Tape to Build More Homes Act, 2024 which is currently at second reading at the time of writing of this report.</p>
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<p>These changes have limited the impact of the City's key tools and programs for creating new affordable rental housing, including the Open Door program, Section 37 density bonusing, and Inclusionary Zoning. Provincial exemptions to growth funding tools are provided with a shorter term of affordability and in some cases without authority to require agreements with housing providers, or a requirement for the repayment of incentives should there be a change in use or tenure.</p>
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<p>In the absence of the City being fully reimbursed by the province for the lost revenues as a result of changes to the Development Charges Act and Planning Act, and without new financial and policy tools, the City will not be able to provide the services essential to support growth, deliver existing housing programs necessary to scale up supply and respond to the needs of residents, thereby impacting the financial sustainability of growth to the City and the City's ability to plan for complete communities. The City continues to request the Province of Ontario make the City whole for the significant financial impact arising from adoption of this legislation.</p>
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<p><strong>Newly Proposed Optional Multi-Residential Property Subclass</strong></p>
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<p>On March 26th, 2024, the Province's Finance Minister presented Ontario’s 2024 Spring Budget. In an effort to promote the development of purpose-built rental housing in Ontario, <a href="https://www.ontario.ca/laws/regulation/r24140">Ontario Regulation 140/24</a> was filed to create an optional new Multi-Residential Property Tax Subclass. Under the new regulation, municipalities have the option to apply a municipal tax rate reduction of up to 35% of the new multi-residential tax rate for eligible properties by passing a bylaw. Staff are currently reviewing the provincial regulation and will be reporting back to Executive Committee with additional information in 2024. Any tax policy implications will be considered as part of the 2025 budget process. The potential impacts on the Rental Housing Supply Program will be reviewed as a new tax policy may further support the construction of affordable purpose-built rental housing, addressing critical housing needs and fostering inclusive community growth.</p>
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<p>The Chief Financial Officer and Treasurer has reviewed this report and agrees with the financial implications.</p> | <p>Toronto is facing two housing crises – one where there is a lack of deeply affordable and supportive housing for low-income marginalized and vulnerable residents; and a more recent one in which rising rents have made it increasingly unaffordable for middle income earners, key workers and professionals to live in the city. This was noted by the <a href="https://www.toronto.ca/legdocs/mmis/2023/ph/bgrd/backgroundfile-235840.pdf">City’s Perspective on the Rental Housing Roundtable report</a> in 2023. Urgent action across the entire housing continuum is required to prevent more residents, specifically renters, from experiencing housing instability and potentially homelessness; to avoid Toronto’s social service sector facing a deepening key worker staffing crisis; and to allow Toronto’s businesses to attract the workforce and labour supply they need to grow.</p>
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<p>City Council has recognized the need to expand the City's <a href="https://www.toronto.ca/community-people/community-partners/housing-partners/housingto-2020-2030-action-plan/">HousingTO 2020-2030 Action Plan</a> (HousingTO Plan) targets beyond affordable rental homes, to include rent-geared-to-income (RGI) and rent-controlled homes, thereby advancing a generational transformation of Toronto’s housing system by 2030. In support of the delivery of a full range of homes, City Council has further directed staff to recommend revisions to the Open Door Affordable Rental Housing program (Open Door program). This report responds to City Council’s request to review the Open Door program in light of the revised HousingTO Plan targets that include rent-geared-to-income, affordable rental, and rent-controlled homes (<a href="https://secure.toronto.ca/council/agenda-item.do?item=2023.EX9.3">2023,EX9.3</a>).</p>
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<p>The Open Door program has been the City’s signature affordable rental housing initiative since <a href="https://secure.toronto.ca/council/agenda-item.do?item=2016.EX16.26">its launch in 2016</a>, and has provided City funding and incentives (including waivers of fees and charges, and property tax exemptions) to support the development of over 21,000 affordable rental homes on public, non-profit, co-op and private land.</p>
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<p>The Open Door program has been able to support a healthy <a href="https://www.toronto.ca/city-government/data-research-maps/toronto-housing-data-hub/housing-data/">pipeline</a> of affordable rental homes across Toronto, with 1,911 of these homes constructed and an additional 3,011 currently under construction. There are an additional 16,530 homes that are currently stuck in pre-development phases due to requiring additional support, including funding and financing, and acceleration of approvals, to move them into construction. </p>
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<p>This report provides recommendations to transform the Open Door program into the Rental Housing Supply Program in light of the updated HousingTO Plan targets, recent legislative changes to the <em>Development Charges Act (DCA)</em> through the <em>More Homes Built Faster Act, 2022</em> (Bill 23); the <em>More Homes, More Choice Act, 2019 (Bill 108), and the Affordable Homes and Good Jobs Act, 2023 </em>(Bill 134); federal and provincial housing policy and funding changes; and the current macroeconomic context which is making it increasingly difficult to adequately scale-up the purpose-built rental housing supply in Toronto.</p>
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<p>To respond to the housing and homelessness crises and support City Council’s new target for 65,000 rent-controlled homes, this report proposes:</p>
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<p>1) Allocating <strong>capital funding to 18 affordable rental and rent-geared-to-income housing projects,</strong> outlined in Confidential Attachment 1, aimed at accelerating delivery of over 2,600 new affordable rental homes. Through this funding, non-viable projects will be able to move to construction start and secure financing. Staff estimate that in addition to unlocking over 2,600 affordable rental homes, a further 3,380 market and rent-controlled rental homes will enter construction for a total of almost 6,000 new rental homes.</p>
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<p>2) Launching the new <strong>Rental Housing Supply Program</strong> which:</p>
<ul>
<li>Aligns the program definition of affordable rental housing with the <a href="https://www.toronto.ca/city-government/planning-development/planning-studies-initiatives/definitions-of-affordable-housing/">City’s Official Plan income-based affordable housing definition</a> and the provincial <a href="https://www.ontario.ca/page/municipal-development-and-community-benefits-charges-and-parklands#section-4">Affordable Residential Units Bulletin</a> definition.</li>
<li>Establishes a framework for prioritizing and recommending capital funding for affordable and rent-geared-to-income rental homes, up to a maximum of $260,000 per unit.</li>
<li>Introduces a proposed program definition of rent-controlled homes where rent levels are higher than income-based affordable rents and at or below 150% of the average City of Toronto rent, by unit type, as reported annually by Canada Mortgage and Housing Corporation. This new program definition is consistent with the Official Plan definition of mid-range moderate rents and will include limiting rent increases to the provincial rent increase guideline under the <em>Residential Tenancies Act</em>, 2006 plus 2%.</li>
<li>Provides proposed incentives to not-for-profit corporations, non-profit housing co-operatives (co-ops), Indigenous housing providers, (collectively referred to as “Community Housing Providers” throughout this report), as well as the Toronto Community Housing Corporation (TCHC) and the Toronto Seniors Housing Corporation (TSHC) to support the development of new rent-controlled homes.</li>
</ul>
<p>3) Launching a <strong>Pilot Community Housing Pre-development Fund</strong> to support the intensification and re-development of Community Housing sites.</p>
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<p>4) Working towards launching a sustainable and <strong>revolving Affordable Housing Fund</strong> to attract funding from government and non-government sources including financial institutions, philanthropic organizations, and private sector organizations (including large employers) to support a range of City-supported and City-led affordable rental housing projects.</p>
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<p>These measures also complement the “Community Housing Modernization and Growth Strategy” (the Community Housing Strategy) report that is also to be considered by the Planning and Housing Committee at the same meeting on June 13, 2024. The Community Housing Strategy includes concrete measures to support long-term sustainability and affordability of the city's existing community housing stock over the next decade as they navigate expiry of mortgages, ending of land leases with the City, and escalating maintenance costs. The Community Housing Strategy also proposes a number of policy and planning measures aimed at increasing the community housing stock including enhancements to the Multi-Unit Residential Acquisition Program (MURA) to enable Community Housing Providers to better compete in the city’s speculative market and to acquire properties that can be operated as affordable rental housing in perpetuity.</p>
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<p>The proposed new Rental Housing Supply Program aims to support a shift in Toronto's housing market, where purpose-built rentals are the most common form of rental housing but have contributed the least amount of new supply over the past 10 years. During this time, most new rental supply has derived from condominiums, which according to the <a href="https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/rental-market-reports-major-centres">Canada Mortgage and Housing Corporation Rental Market Report</a> are generally more expensive and do not offer the same level of security of tenure for tenants. The proposed new Rental Housing Supply Program also aims to support a generational transformation of Toronto’s housing system to shift Toronto’s housing system and increase the supply of non-market, community housing.</p>
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<p>Despite an increase in purpose-built rental housing starts in 2023, the rental housing supply is not forecast to keep up with demand. Canada Mortgage and Housing Corporation (CMHC) anticipates a decline in housing starts that will persist through 2024 and 2025, reflecting the lagged effect of higher interest rates, labour shortages, and supply chain issues. Toronto is continuing to face high rental demand driven by strong population growth and an increasing number of renter households squeezed out of homeownership market. The rental market in Toronto is expected to remain tight without significant action by all orders of government to facilitate the development of purpose-built rental housing. This proposal responds to stakeholder feedback in the City’s <a href="https://www.toronto.ca/legdocs/mmis/2023/ph/bgrd/backgroundfile-235840.pdf">Perspective on the Rental Housing Roundtable report</a>, which recommended that the City study additional means of incentivizing purpose-built rental housing supply beyond what is already available in the Open Door program, and recognize the vital role of the non-profit sector in providing affordable housing.</p>
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<p>While the City is committed to taking every possible action within its jurisdictional and financial capacity to tackle the housing crisis, strengthened partnerships with the federal and provincial governments are needed to complement Toronto’s efforts. Recent federal and provincial measures introduced to support purpose-built rental construction, such as providing a 100% rebate on the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on new purpose-built rental housing is an example of government policies aligning to advance collective housing objectives.</p>
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<p>However, new and enhanced policy, program and financial tools are urgently needed to meet Toronto, Ontario and Canada’s respective housing supply targets. This includes a new fiscal deal to support the structural changes that will put Toronto on a path to long-term financial sustainability, as well as a commitment from the federal and provincial governments to invest in the HousingTO Plan.</p> | 13 | 8 | CMMTTEE | PH | All | N | … | Report | ACTION | Amended | Main | — | — | Committee | … | … | … | … | … | … | … | … | … | … | … | Decision information not found | false | Amended | — | … | … | … | … | — | 1719374400000 | NEGOT | A position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City. Attachment 1 contains financial information, supplied in confidence to the City of Toronto and CreateTO, which, if disclosed, could reasonably be expected to significantly prejudice the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization. | Measures to be applied to negotiations by or on behalf of the municipality or local board |