Report
to/Rapport au:
Community
and Protective Services Committee
Comité des services communautaires
et de protection
and Council / et au Conseil
26 June 2009 / le 26 juin 2009
Submitted
by/Soumis par:
Steve
Kanellakos, Deputy City Manager/Directeur municipal adjoint,
City
Operations/Opérations municipales
Contact Person/Personne ressource : Stephen
Arbuckle, Acting Manager of Housing,Community and Social Services
Department/Gest.Logement, Services sociaux et communautaires
(613) 580-2424 x44117, Stephen.Arbuckle@ottawa.ca
SUBJECT:
|
ACTION OTTAWA 2009 - BLUE
HERON COOPERATIVE REIMBURSMENT OF SCHOOL BOARD CHARGES |
|
|
|
OBJET :
|
ACTION
OTTAWA 2009 - REMBOURSEMENT des redevances scolaires versées par la
COOPÉRATIVE BLUE HERON |
That Community and Protective Services Committee recommend that Council, in accordance with the provisions of the Action Ottawa program, approve a one time grant in the amount of $82,502 from the Affordable Housing Capital Building Fund to Blue Heron Cooperative at 750 March Road.
Que le Comité des services communautaires et de
protection recommande au Conseil d’approuver, conformément aux dispositions du
programme Action Ottawa, une subvention unique de 82 502 $ tirée du
fonds de construction de logements abordables à la coopérative Blue Heron,
située au 750, chemin March.
In
March 2003, the City of Ottawa with the support of the Federal and Provincial
Governments initiated the building of new affordable rental housing under the
early Pilot Project Component of the Canada Ontario Affordable Housing Program.
Blue Heron Cooperative, completed in September 2006 and located in Kanata on
750 March Road, was one of the developments funded under this early initiative
as well as Ottawa’s first non-profit affordable housing cooperative in 10
years.
During
this phase of Action Ottawa and the Canada – Ontario Affordable Housing “Pilot”
Program (AHP), the Blue Heron Proposal received a total combined capital grant
of $3,991,000, deferral of development charges, and exemptions of building
permit and planning fees. The cooperative was built on land that is currently
leased from the St. John’s Church Parish of March Anglican Diocese of Ottawa.
The Blue Heron Cooperative consists of a 58-unit apartment building containing one and two bedroom units and 25 town homes comprised of three and four bedroom units, with 83-units in total. The operating revenues are fixed to rent schedules in the Provincial Contribution Agreement and Municipal Facilities Agreements so that households pay housing rents that are either rent geared to income, 70 per cent of the average market rent as defined by Canada Mortgage Housing Corporation (CMHC), and/or no greater than the average market rent as defined by CMHC.
The design of Blue Heron Co-op was intended to set new standards for sustainable building in affordable housing by incorporating energy and water-saving features. The Cooperative’s vision and support for innovation in energy efficiency helped land its architect the local Homebuilders Association’s very first award for Sustainable Housing. The Cooperative had incorporated sustainable building features, such as computerized heating and cooling systems, high quality windows, a well-designed energy conserving envelope, and low-wattage light fixtures in common spaces. Shared laundry facilities use low water consumption washers and natural gas dryers as well as all toilets in the units are low volume flush. The buildings were designed to consume 32 per cent less energy than mandated by the National Energy Code to help reduce overall operating costs in the future.
As Blue Heron was a pilot project the overall funding from the AHP Strong Start Pilot Program was much less than subsequent AHP Wave 1 projects. Blue Heron received approximately $45,000 in AHP funding per unit while projects constructed under the following AHP Wave 1 funding received on average $90,000 to $100,000 per unit. City land was also made available for $1 to later projects, such as for McLean Cooperative; further reducing costs in the later AHP projects. Projects developed under the AHP Wave 1 funding program also received deferrals of municipal fees including school board fees, again which Blue Heron did not. Being a pilot project, the cooperative was designed with minimal funding and as such had structural problems in the financial design in both the capital and operating budgets.
The following chart compares the AHP Quick Start/Strong Start pilot project Blue Heron with a similar project constructed with Wave 1 AHP funding:
|
Grant / Incentive |
Blue Heron Co-operative |
McLean Co-operative |
|
Number of dwelling units |
83 |
63 |
|
Capital Grant (Federal/Provincial
/City) |
$3,991,000
|
$5,700,000 |
|
Capital Grant
per unit |
$45,352 / unit |
$90,476 / unit |
|
Land Costs |
Land is
Leased - Annual rent
$53,784 |
Land provided
by Federal Government: $811, 000 contribution |
Recent audited financial statements provided to the City under the terms of the Municipal and Provincial contribution agreements indicate that the Cooperative has not been able to meet the requirements of the operating agreement, specifically with respect to maintaining capital reserves. One of the main reasons cited for this operational shortfall is the revenue model on which the cooperative is based on, which essentially requires average market rent units to subsidize a required number of below market units. In addition, the Cooperative has been faced with higher than budgeted capital and operating costs.
Since occupancy in 2006,
Blue Heron has been facing a number of problems that have been affecting the
cooperative’s cash flow and long-term viability. Now in their third year of operation, the Cooperative is in need of
financial assistance and is not eligible for recently announced funds dedicated
to repairs for Social Housing. The key issues facing the cooperative include
cash flow problems due to a reduction of town house units to meet site plan and
flood plain requirements. Unbudgeted
repairs to the HVAC have proved to be very costly. As such, Blue Heron
has incurred an additional $12,000 in repairs and maintenance costs since
September 2007. Such repairs were not anticipated, as the units were less than
3 years old. The green building design
did not realize the 32% energy efficiency as originally proposed and this has
further affected any energy savings the cooperative was expecting to realize
resulting in higher energy and utility costs.
As stated earlier, this problem has been and is being addressed in recently funded Action Ottawa Affordable Housing developments. The primary factor in the case of Blue Heron Cooperative having financial difficulty is because the original capital contribution toward the project was almost half the capital contribution now provided under the Canada-Ontario Affordable Housing Program. The table above compares the capital contribution provided to both Blue Heron Cooperative and McLean Co-operative. In addition to McLean Cooperative receiving twice the capital contribution, land was also provided for 1$ whereas Blue Heron Co-operative is required to lease land from St. John’s Anglican Church at an annual rent of $53,784, to be increased at the rate of inflation, for a 40 year term.
Staff are working closely with the cooperative to resolve many of the issues identified above and to improve operational and administrative management to ensure long term financial sustainability. Staff are therefore requesting that Council provide an additional grant equal to school board fees previously paid, in the amount of $82,502, to help offset their operating shortfall. Blue Heron is also still waiting for a GST rebate of up to $105,198 pending Canada Revenue Agency review and approval.
This report was not subject to consultation
There are no legal/risk management impediments to implementing the recommendation in this report.
Capital spending authority to support the one-time grant of $82,502 identified in the recommendation is currently available from the Affordable Housing Capital Building Fund project.
N/A
Housing Branch will notify Blue Heron Cooperative of Council’s decision.
Housing Branch and and Legal Counsel in the Deputy City Solicitor Branch of the City Clerk and Solicitor Department will draft and attend to execution of an amendment to the Municipal Housing Facilities Agreement dated November 16, 2004