Report to/Rapport au:

Health, Recreation and Social Services Committee/

Comité de la santé, des loisirs et des services sociaux

and Council as Shareholder of the Ottawa Community Housing Corporation/

et au Conseil en tant qu’actionnaire de la Société de logement communautaire d’Ottawa

18 June 2002/le 18 juin 2002

Submitted by/Soumis par: Dick Stewart, General Manager/Directeur général

People Services/Services aux citoyens

Contact/Personne-ressource: Joyce Potter, Director of Housing/Directrice du Logement

580-2424, ext. 44162, joyce.potter@ottawa.ca

Ref N°: ACS2002-PEO-HOU-0004

SUBJECT: RECOMMENDED SHAREHOLDER DIRECTION FOR THE OTTAWA COMMUNITY HOUSING CORPORATION

OBJET: RECOMMANDATION À L’ACTIONNAIRE CONCERNANT LA SOCIÉTÉ DE LOGEMENT COMMUNAUTAIRE D’OTTAWA

REPORT RECOMMENDATION

That the Health, Recreation and Social Services Committee recommend that Council as the Shareholder of the Ottawa Community Housing Corporation:

1. Approve the Shareholder Direction, attached as an Appendix to this Report, to define the relationship between the Ottawa Community Housing Corporation and the City of Ottawa as its sole shareholder.

RECOMMANDATION DU RAPPORT

Que le Comité de la santé, des loisirs et des services sociaux recommande que le Conseil, en tant qu’actionnaire de la Société de logement communautaire d’Ottawa :

1. Approuve la directive de l’actionnaire annexée au présent rapport et visant à définir la nature des rapports entre la Société de logement communautaire d’Ottawa et la Ville d’Ottawa, son unique actionnaire.

BACKGROUND

On 26 June 2002, City Council as the sole shareholder of City Living (City of Ottawa Non-Profit Housing Corporation) and Ottawa Housing Corporation approved a number of recommendations related to the implementation of the asset transfer from City Living to Ottawa Housing Corporation. Ottawa Housing Corporation’s name was changed to the Ottawa Community Housing Corporation (OCHC) and the Directors of the Corporation’s new Board were appointed.

Much of the work to date on completing the transition to a single City-owned housing corporation has focused on developing good governance structures for the corporation. To that end, City Council approved OCHC’s articles of amendment and its governing by-laws relating to its conduct and business affairs.

This report seeks approval for a third key governing document, the Shareholder Direction. This document is designed to ensure that the relationship between OCHC and the City of Ottawa as its shareholder is clearly defined. Under subsection 108(3) of the Ontario Business Corporations Act, a shareholder of a corporation may issue a unanimous shareholder agreement to direct the corporation’s board in a manner which the shareholder sees fit.

DISCUSSION

The Shareholder Direction establishes a high level framework for the conduct of business by OCHC. It establishes the shareholder’s objectives for the Corporation, its principles of operation and an accountability framework. In developing the document, several key factors were considered:

- OCHC will operate at arm’s length from the shareholder.

- OCHC is unique within Ottawa’s social housing sector since it is the sole publicly-owned housing corporation.

- The City of Ottawa has two roles in relation to OCHC, one as shareholder and the other as Service Manager under the Social Housing Reform Act. The Shareholder Direction addresses the accountability of the Corporation to the City as its shareholder.

- Whereas an operating agreement between the Service Manager and OCHC will be developed to govern much of the Corporation’s housing stock, the Shareholder Direction will provide an overall framework of how OCHC is expected to operate all of its portfolio.

- The Shareholder Direction should be a document which is accessible to the public.

- The Shareholder Direction must not conflict with other documents which constrain and direct the conduct of business of the Corporation. Other constraints include statutory requirements, agreements with third parties such as funding agreements, the articles of incorporation and corporate by-laws.

Summary of the Shareholder Direction

The purpose of the Shareholder Direction is to give the Corporation’s Board of Directors instructions on governance, accountability and the City’s expectations for the Corporation in the form of stated objectives and principles to be followed in doing business. It also communicates these expectations to the tenants of OCHC and other residents of the City of Ottawa.

The shareholder’s objectives for the Corporation are outlined in section 4 of the document. These objectives give direction to the Corporation with respect to the sound management of its existing assets, the development of new housing and the requirement for financial responsibility and maintenance service standards. The Board of Directors will determine how these objectives are achieved within the limitations that are described elsewhere in the Shareholder Direction.

Section 5 establishes the principles under which OCHC must conduct its business. These principles reflect the role of the Corporation as a publicly-owned non-profit organization, its responsibilities to tenants and its responsibilities in meeting the social housing needs of this community.

Section 6 mirrors section 5(i) of the articles of incorporation that establishes restrictions to the business of the Corporation. As the Shareholder Direction is expected to be a more publicly accessible document than OCHC’s articles of incorporation, this section is provided for information.

Sections 7 and 8 outline the areas in which the Board is required to seek the approval of the Shareholder. These are in addition to areas requiring approval under relevant by-laws and statutes such as the Ontario Business Corporations Act.

Section 9 provides for a complete and thorough accountability framework for OCHC. Two key documents establish this framework, a Strategic Business Plan and an Annual Report. The first Strategic Business Plan must be submitted to the Shareholder by June 2003. At this time, the Shareholder will have an opportunity to provide comments on the Plan to the Board of Directors. OCHC will report annually in June on the implementation of the Strategic Business Plan, providing indicators of success in implementation and performance targets for the year in progress. Reporting on the Strategic Business Plan will coincide with OCHC’s Annual Report which will include the audited financial statements of the Corporation.

CONSULTATION

In developing the Shareholder Direction, the Housing Branch undertook to consult with key stakeholders, legal counsel and change management consultants. A Draft Shareholder Direction was developed as a consultation document and circulated to stakeholders at the end of March 2002. These groups included the Poverty Issues Advisory Committee, the Health and Social Services Advisory Committee, City Living, Ottawa Housing Corporation and the Ottawa Social Housing Network, a network of housing providers and tenant advocacy agencies in the City. A copy of the draft was also provided to the Centre for Equality Rights in Accommodation upon its request and to the Transition Steering Committee for information.

The Housing Branch met with stakeholders and invited written submissions. Over the month of April, staff attended a total of five meetings with stakeholders to present the Draft Shareholder Direction and receive verbal feedback. Three written submissions were also received. As a result of consultations, significant changes to the draft document were made.

The following is a list of several key issues which were identified during consultations and which are reflected in the final document.

- The arm’s length relationship between OCHC and the Shareholder should be respected.

- The Corporation should be accountable to the City of Ottawa.

- Tenants should participate in corporate decision-making.

- The City should not expect that OCHC will set the standard for other social housing providers in the City of Ottawa.

- Rent-geared-to-income/low income housing should be protected and promoted.

- The Shareholder Direction should only deal with matters concerning the Shareholder and not matters concerning the Service Manager.

- The Shareholder should promote the concept of permanent affordability with respect to OCHC’s housing stock.

- OCHC should take on an active housing development role.

- OCHC should be an active advocate in the social housing sector.

- OCHC should ensure that housing units are accessible.

- OCHC should implement best practices in relation to the environment.

- OCHC should be encouraged to partner with support service agencies to assist tenants who need these services.

The attached Shareholder Direction has addressed all of these concerns. It should be noted that, with respect to OCHC’s rent-geared-to-income units, an operating agreement between the Service Manager and OCHC will govern the level and operation of these units. The Corporation’s objectives as set out in the Shareholder Direction mandate OCHC to provide housing primarily for low and moderate income households. This encompasses both rent-geared-to-income housing and other forms of low and moderate income housing which may not be strictly geared to income.

In addition to the above, stakeholder groups made several recommendations which have not been incorporated into the Shareholder Direction:

- Descriptive terms such as ‘affordable’ and ‘accessible’ should be defined in the Shareholder Direction.

- OCHC should be directed to preserve or expand the current range of housing unit sizes within its portfolio.

- OCHC should integrate an eviction prevention plan into its Strategic Business Plan.

Eviction prevention strategies, the appropriate mix of housing unit sizes and definitions of terms qualifying ‘housing’ should be dealt with through the development of OCHC policies. These policies must be developed under the terms of the Shareholder Direction which require OCHC to respect City policies on affordable housing and to consult with tenants and other public stakeholders where appropriate.

- The Shareholder should approve the dissolution, sale or redevelopment of properties.

Provisions already exist in the Social Housing Reform Act, for the Corporation to seek Ministerial and Service Manager approval for the dissolution, sale or redevelopment of properties which fall under the provisions of the Act.

- A preamble should be included in the Shareholder Direction stating that housing is a basic need and a human rights obligation under international law.

It was determined that this statement is not appropriate for the Shareholder Direction since it goes beyond the scope of the relationship between the Shareholder and the Corporation.

- The same preamble should incorporate a statement to the effect that social housing is a public service that should be publicly administered and publicly delivered.

It was determined that this would also unnecessarily restrict the Board’s ability to make decisions regarding effective service delivery.

- OCHC’s mandate should include representing its tenants.

In certain situations, it would be inappropriate for OCHC to attempt to represent its tenants. Instead, the Shareholder Direction in addition to OCHC’s by-laws provides for tenants to represent their own interests to the Corporation through elected representation on the Board of Directors. The Shareholder Direction also calls for tenant participation in decision-making through consultations and committee structures.

FINANCIAL IMPLICATIONS

Approval of this report has no effect on the budget approved by the City Council for this project.

ATTACHMENTS

Appendix A: Shareholder Direction – City of Ottawa to Ottawa Community Housing Corporation

DISPOSITION

The Mayor of the City of Ottawa will sign two copies of the Shareholder Direction and provide one copy to OCHC’s Board of Directors. The Shareholder Direction will subsequently be posted on OCHC’s website.

Appendix A

Shareholder Direction

City of Ottawa

To

Ottawa Community Housing Corporation

1. Introduction

The City of Ottawa is the sole shareholder of the Ottawa Community Housing Corporation. This Shareholder Direction:

(a) constitutes a declaration by the City pursuant to subsection 108(3) of the Ontario Business Corporations Act to set out in part the powers of the Board to manage and supervise the business and affairs of the Corporation; and

(b) establishes principles of governance for the Corporation and a direction to the Board so that it is guided by high level principles in developing policies and in its operations.

2. Purpose of the Shareholder Direction

The purposes of the Shareholder Direction to the Corporation are as follows:

(a) to recognize the Board’s authority to develop policies and business strategies for the Corporation in accordance with this Shareholder Direction;

(b) to provide the Board with the Shareholder’s principles and objectives regarding the Corporation;

(c) to inform tenants of the Corporation and other residents of the City of Ottawa of the Shareholder’s principles and objectives regarding the Corporation; and

(d) to set out the accountability of the Corporation to the Shareholder in addition to the requirements as set out in the Ontario Business Corporations Act and other relevant statutes and by-laws.

3. Shareholder Objectives

The Shareholder’s objectives for the Corporation are as follows. The Corporation will:

(a) utilize its assets for the purpose of providing quality, affordable, accessible, secure and appropriate housing primarily for households of low and modest income;

(b) maintain its physical assets in good repair and maintain the usefulness of its assets over the long term;

(c) act to mitigate financial and legal risks to the City as Shareholder while service standards and levels are maintained or enhanced; and

(d) develop housing to meet the mandate of the Corporation through its existing resources and other sources of funding.

4. Principles of Operation

The Corporation will operate at arm’s length from the Shareholder and respect the following principles. The Corporation will:

(a) adopt and maintain best practices in its conduct including such matters as employment policy, the environment, purchasing, health and safety and maintaining the capacity to provide services to tenants in both English and French;

(b) participate in the coordinated access system with respect to its rent-geared-to-income units;

(c) ensure that the tenants of the Corporation have the opportunity to participate in decisions through elected representation on the Board and through participatory processes such as consultations and committee structures where the Board seeks input from tenants;

(d) communicate and consult with members of the public where appropriate;

(e) support and promote efforts aimed at providing the Corporation’s tenants with healthy, safe and sustainable communities;

(f) work with other community agencies where appropriate and where such arrangements promote the Corporation’s objectives, principles or mandate;

(g) sustain and actively support the diversity of its communities through the development and implementation of appropriate policies and plans;

(h) promote the development of housing, respecting the principle of income diversity within communities;

(i) respect City policies on homelessness and affordable housing as approved by Council from time to time to the extent that these policies are consistent with the Corporation’s Articles of Incorporation or mandate; and

(j) be an active participant and advocate in the social housing sector while respecting the autonomy of other social housing providers.

5. Business of the Corporation[1]

In support of the objectives and principles outlined above, the business of the Corporation shall be restricted primarily to:

(a) the provision, operation and maintenance of housing accommodation, primarily for households of low or modest income, that may include any public space, recreational facilities, commercial space or buildings appropriate thereto;

(b) the administration of programs providing rent-geared-to-income assistance to households of low to moderate income;

(c) the provision of accommodation for persons having special needs;

(d) any matter with respect to which the Corporation and the Minister, the Service Manager or any other person may enter into an agreement under the Act;

(e) any other matter that is prescribed by the Act; and

(f) any business or activity ancillary to any of (a) through (e) above.

6. Matters Requiring Shareholder Approval[2]

The Corporation must seek the Shareholder’s approval for the following:

(a) the creation of subsidiary companies;

(b) any agreement made under section 7 of this Direction between the Corporation and a subsidiary company;

(c) expenditures which would result in an overall budgetary deficit where such expenditures are within the control of the Corporation;

(d) any amendment to the Corporation’s operating by-law(s) regarding the conduct, business and affairs of the Corporation; and

(e) the issuance, disposition, encumbrance or transfer of any shares of the Corporation.

7. Creation of Subsidiary Companies

If the Shareholder approves the creation of a subsidiary company under 6.(a), the Corporation will require that the subsidiary company enter into an agreement with the Corporation to address the provisions in this Shareholder Direction.

8. Accountability

8.1 Strategic Business Plan

The Board will approve and submit to the Shareholder a Strategic Business Plan which encompasses a period of three to five years. The first Plan will be submitted in June 2003. The Plan will include the following information:

(a) key issues facing the Corporation; and

(b) key strategies and major initiatives to be implemented by the Corporation.

The Shareholder may provide comments to the Board on the document and such comments will be addressed in the implementation of the Strategic Business Plan.

8.2 Reporting on the Strategic Business Plan

The Corporation will report annually on the implementation of the Strategic Business Plan within six months after the Corporation’s year-end. The Corporation will provide:

(a) information on the implementation of the Strategic Business Plan;

(b) indicators of success in implementing the Strategic Business Plan; and

(c) performance targets in relation to the Strategic Business Plan for the year in progress.

8.3 Annual Report

Within six months after the Corporation’s year-end, the Corporation will prepare an Annual Report and submit this report to the Shareholder with the audited financial statements of the Corporation. The annual report on the Strategic Business Plan (8.2) may be included with this report.

8.4 Procedure for Non-Compliance

If the Corporation fails to comply with this Shareholder Direction, the Shareholder may issue written notice of the problem to the Board.

The notice shall:

(a) specify the particulars of the problem;

(b) require that the Corporation respond to the Shareholder with the course of action that the Corporation intends to take to remedy the problem; and

(c) specify the period within which the Corporation must remedy the problem.

The action set out in this section shall not limit any other remedy available to the Shareholder.

9. Amendments

This Direction may be amended solely at the discretion of the Shareholder. The Shareholder will consult with the Board prior to making any such amendments.

Dated at Ottawa on the ________ day of ____________________, 2002.

City of Ottawa

_______________________________

Per:

Definition of Terms Used in the Shareholder Direction

“Act” means the Social Housing Reform Act, S.O. 2000, c.27, as amended or replaced from time to time, and its regulations;

“Board” means the Board of Directors for the Ottawa Community Housing Corporation;

“City” means the City of Ottawa;

“coordinated access system” means the common waiting list system established by the City of Ottawa under the provisions of the Act;

“Corporation” means the Ottawa Community Housing Corporation;

“Council” means the Council of the City of Ottawa;

“Minister” means the Minister of Municipal Affairs and Housing, or such other member of the Executive Council as may be assigned the administration of the Act under the Executive Council Act;

“rent-geared-to-income” has the same meaning as that found in the Act;

“Service Manager” refers to the City of Ottawa and has the same meaning as that found in the Act;

“Shareholder” means the City of Ottawa as represented by Ottawa City Council.

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[1] This section is identical to section 5.(i) of the Articles of Incorporation.

[2] These matters are in addition to the requirements as set out in the Ontario Business Corporations Act and other relevant statutes and by-laws.