I. Introduction

Having adequate, affordable and secure housing is fundamental to the well being of individuals, families and community. The availability of housing affects the success of business and is a key factor in determining demands on social and health services in our City. The need for affordable housing is, therefore, one of the key issues facing the City of Ottawa.

A. Affordable Housing Strategy

As part of municipal efforts to meet housing needs in our city, Ottawa City Council approved an Affordable Housing Strategy in February 2002. The Strategy covered a wide array of initiatives including:

· Reducing tax and regulatory barriers including effectively reducing the higher property tax rate for new multi-residential developments.

· Reducing the costs of development through initiatives such as providing land and grants, and reducing fees and charges.

· Requesting the Province to increase the duration and number of Rent Supplement units available.

· Establishing a Housing First policy for surplus City lands and leasing lands for affordable housing projects.

· Establishing a municipal by-law designating housing as a municipal capital facility; and

· Establishing a capital development program.

Thus far, implementation of the Affordable Housing Strategy has resulted in the creation of the following tools for affordable housing development:

1. As-of-Right Incentives

Some affordable housing incentives are available to developers “as-of-right”. These are incentives that were created through By-laws of Council.

· Reduced property taxes: the New Multi-Residential Tax Class is for all new residential developments of multiple form with seven units or more and provides a tax rate comparable to the residential class rate for a period of 35 years.

· Relief from development charges and building permit fees is available for all residential development in the downtown core area of the City.

Non-profit or Charitable Developers have additional as-of-right incentives which provide relief from development charges, planning application fees, building permit fees and parkland levies for the development of affordable housing. Verification of non-profit or charitable status must be presented to the City in order to receive relief.

2. Discretionary Incentives

The City’s Municipal Housing Facilities By-law is a tool that gives Council the ability to grant specific development charge relief and other incentives to developers in exchange for affordable rental housing.

Specific returns are expected:

· housing must be guaranteed to be affordable for a minimum of 20 years

· rents can be no higher than the CMHC Average Market Rent and a minimum of 60% of the units must be at rents affordable to lower income families

· units for lower income households must be rented to tenants drawn from the Social Housing Registry waiting list

Developers may seek discretionary incentives at any time. Proposals are assessed on merit, achievement of City objectives, and in consideration of available resources. Council must approve proposals of this kind.

3. Program Application and Approval

i) The Rent Supplement Program provides eligible landlords with a subsidy to offset rents for lower income tenants registered on the waiting list. Rent Supplements cover the difference between rents households can pay and market rents. They are delivered through agreements with landlords, which have initial terms that can be renewed for up to 20 years. Private and non-profit housing providers may apply for Rent Supplements at any time.

ii) ActionOttawa is the housing initiative launched by the City of Ottawa to help private and not-for-profit developers build new affordable rental housing for moderate and low-income households.

Action Ottawa bundles as-of-right and discretionary incentives together with additional resources of capital grants and, in some cases, City-owned land. These incentives are offered to developers through a competitive bid process.

In addition to the as-of-right and discretionary incentives, the Action Ottawa package includes:

· Capital Grants of up to $25,000 per unit (Federal and/or Municipal)

· Long-term lease opportunities on City-owned land at nominal rates

· Rent Supplements (subsidy to reduce rents for lower income households)

In exchange for incentives, the City requires successful applicants to provide affordable rental units for a minimum of 20 years. As well, the rents can be no higher than the CMHC Average Market Rent, 60% of the units must be at rents affordable to lower income families, and units must be rented to tenants drawn from the Social Housing Registry waiting list.

Action Ottawa applications are accepted on a proposal call basis only.

How These Incentives Fit Together to Make Rents Affordable:

The City of Ottawa’s Housing Branch serves as a facilitator for affordable housing development.

As illustrated above, the combination of capital funding, tax relief and relief from municipal fees should enable proponents to reach Average Market Rent levels.

Additional assistance from the City such as land and/or Rent Supplements should allow proponents to offer below market rents or Rent Geared to Income housing.

Financial incentives can also work in “mixed” or “blended” housing projects which can contain both full market housing (which benefits from lowered property tax rates for new multi-residential construction) average market rent units and rental housing affordable to lower-income households.

4. Housing Facilitation

The City of Ottawa’s Housing Branch serves as a facilitator for affordable housing development. We provide information and advice to private and non-profit housing developers, other City departments and the community at large.

B. Action Ottawa: Affordable Housing Initiative

In 2002, the City of Ottawa initiated Action Ottawa with the goal of supporting the creation of 1,000 units of rental housing over four years. The key objective is to target limited municipal resources to the most pressing housing related problem – the need for a new supply of permanent, affordable housing for the lowest income people in our City, including those experiencing homelessness.

The initial phase of Action Ottawa was a pilot program with a Request for Proposals (RFP) for new affordable housing. There was an encouraging response from both the not-for-profit sector as well as the private sector. Under the pilot RFP, two projects are moving ahead with occupancy expected by 2004.

City of Ottawa staff have subsequently met with stakeholders in order to evaluate the pilot RFP process and have incorporated suggestions into these guidelines for future proposal calls.

C. Coordination with Community Rental Housing Program (CRHP)

On December 6, 2002, the Federal and Provincial Governments announced the Community Rental Housing Program (CRHP), which is intended to support the creation of affordable rental housing in Ontario. Under this program, the federal government provides capital funding on average of $25,000 per new rental unit created. In addition, the Government of Ontario provides a grant of $2,000 per new rental unit created.

The City of Ottawa has received an initial allocation of $7.5 million in federal funds, which could help support the creation of 300 units or more, subject to resolution of conflict between provincial requirements and the City’s Action Ottawa process. It is the intention of the City of Ottawa to effectively use these funds and incorporate them into Action Ottawa through future proposal calls.

II. Housing Program Guidelines for Action Ottawa

A. Program Objectives

The overall objective of Action Ottawa is to support the creation of needed affordable housing by making available significant municipal resources and facilitating access to new assistance provided by other levels of government. It is hoped that as many as 250 affordable rental units per year in Ottawa can be created under the umbrella of Action Ottawa over the next four years.

The program objectives can be categorized as follows:

Increasing the supply of new affordable rental housing including meeting the housing affordability goals.

Housing residents from the social housing registry waiting list including meeting the various types of housing needs.

Contributing to the building of healthy communities.

1. Increasing the Supply of New Affordable Housing

The key goal is to create new housing which is affordable to moderate and low-income households.

a) Maximum Affordable Rent - under Action Ottawa, the Canada Mortgage and Housing Corporation (CMHC) Average Market Rent for Ottawa is the maximum affordable rent for housing funded through this program. But average market rent only reaches a portion of the households in Ottawa experiencing a crisis in housing. To reach the needs of lower-income households, rent levels need to be considerably lower.

The following chart sets out the average rent levels for some of the units to be created under Action Ottawa, as well as rent levels which are only 70% of CMHC average rents and therefore affordable to lower-income households.

CMHC Average Market Rents: 70% of CMHC Average Market Rents:

a)	Average Market Rent (Oct. 2002) (maximum for moderate income tenants)	b)	Below Market Rent (Oct. 2002) (maximum for lower income tenants)
Bachelor Apts.	$624	Bachelor Apts.	$437
One Bedroom	$767	One Bedroom	$537
Two Bedroom	$930	Two Bedroom	$651
Three Bedroom	$1,129	Three Bedroom	$790

Please note that these rent levels change annually in the fall with the publication of the CMHC rental market survey. Also note that these are average rents for apartments only. Rental row houses and townhouses are not included in these figures.

b) Lower Income Rents - in order to produce rents suitable to lower-income households, proponents are expected to use rent supplements and/or to use financial resources that produce rents that do not exceed 70% of average market rent. At least 60% of the units supported by Action Ottawa incentives must have rents suitable to lower-income households.

The following example shows how a new building with 40 one-bedroom apartments can meet these goals.

Number of Units	Affordable Market Rents Per Month	Lower Income Rents Per Month
16 (40%)	$767	-
24 (60%)	-	$537 or Rent Supplement
Total 40 (100%)

Please note that the monthly rental revenues produced by rent supplement units can be as high as the average market rents.

c) Rent Supplements Available - in order to meet the Action Ottawa goals on the affordability of housing, proponents can access Rent Supplement subsidies through the City of Ottawa. Rent Supplement subsidies, which pay the difference between average market rents and approximately 30% of a low-income household’s income, can therefore help place a number of low- income households from the Social Housing Registry waiting list. The City will give preference to proposals, which offer a higher percentage of below market rent/units.

d) Utilities Optional - Action Ottawa will accept proposals for affordable housing in which utilities are in addition to the prescribed rent levels but a preference will be given for projects in which the combined rent and utility charges are either at or below the average market rent/low income rent levels.

e) Rent Increases According to Guideline - once rents are established, they may be increased by no more than the annual rent guideline under the Tenant Protection Act. Consideration will be given to increases above the rent guideline after 10 years of occupancy, in order to assist in the costs of major capital expenditures.

f) Housing Residents from the Social Housing Registry

Under Action Ottawa, all of the units created must first be offered to households from the Social Housing Registry. If those households are unable to afford the average market rents then these units may be rented to members of the public looking for rental housing. As a minimum, residents must be paying no less than 20% of their income on rent.

These income limits only apply when a household first moves into the rental unit. Rent Supplement households are required to annually verify their income.

g) Contributing to the Building of Healthy Communities

While there are a number of technical requirements new affordable housing must meet, it is also important to recognize the role of the housing in building healthy communities.

New affordable housing is needed to create an ongoing asset in the community which can help bring stability and support to struggling households. Well-planned affordable housing should also be integrated into the community and meet the needs of the community from both a design and social perspective.

h) The minimum sizes for units created under this program are those set out in the Ontario Building Code.

i) Affordable housing developed under Action Ottawa is required to have at least 5% of the units accessible for individuals with special mobility needs.

B. Assistance from the City of Ottawa

Action Ottawa offers a variety of substantial incentives for proponents of affordable rental housing:

1. Financial:

a) Capital grants of up to $25,000 per unit.

b) Lowered property taxes for new multi-residential housing, which will effectively pay the residential rate for a 35-year period. (Savings of approximately $10,000 per unit in the first 10 years).

c) Development Charges Exemptions – worth approximately $6,100 - $9,500 per unit.

d) Building permit exemptions – worth up to $1,000 per unit.

e) Park Levy Exemptions – worth approximately $1,000 per unit.

f) Planning fee exemptions – worth approximately $200 per unit.

g) Land Lease – if successful in accessing a long-term lease of select City of Ottawa land sites for use for affordable housing – approximately $15,000 - $20,000 per unit, with the value to vary depending on the site.

h) Rent Supplements – provided through the City of Ottawa, Rent Supplement subsidies pay the monthly difference between the average market rent and approximately 30% of a low-income household’s income.

2. Land:

a) Action Ottawa will make available suitable parcels of surplus municipal land for affordable housing purposes. The provision of municipal land will be provided as an additional incentive through open Request for Proposals processes. It should be noted that use of City land is not considered to be an equity contribution from a proponent when evaluating submissions under an RFP.

b) Land owned by the proponent can be considered an equity contribution when put forward for development under Action Ottawa, and will be considered in the evaluation and selection of proposals. The proponent must provide either proof of ownership of land or long-term lease OR an option to either purchase land or acquire the use of land through a long-term lease.

c) The municipal preference for projects which can be completed in a relatively short period of time will take into consideration whether land is already owned by the proponent or whether the proponent has an option to purchase or lease a specific parcel of land.

C. Eligibility for Action Ottawa Program

a) Both private sector and not-for-profit organizations are eligible to apply for Action Ottawa financial incentives.

b) In order to be eligible for financial assistance, a housing proposal must:

· Contain at least 7 units or more.

· Be a newly constructed complex or convert non-rental buildings to rental or substantially rehabilitate rental buildings that are vacant and uninhabitable.

· Be a purpose-built rental project (projects intended to be registered condominiums will not be eligible for Action Ottawa funding).

c) All proponents are encouraged to leverage other resources through equity and/or mortgage or alternative benevolent financing. Equity contributions will be considered in the evaluation and selection of proposals. Proponent- owned land will count as equity.

d) Existing social housing providers must either have permission of the Ministry of Municipal Affairs and Housing (MMAH) and the Service Manager, or be willing to seek approval if their new proposal includes using either land or equity from an existing social housing project.

e) Affordable rental housing that is part of a complex which includes other uses (e.g. commercial space on the ground floor, or full market housing) is eligible for Action Ottawa funding however, the funding can only be used for the portion of the complex containing the affordable rental housing.

f) Housing which is not eligible includes nursing and retirement homes, student residences, shelters, crisis care facilities and registered condominiums.

D. Municipal Priorities

In addition to mandatory requirements, the City has identified preferred program priorities.

a) Preference will be given by Action Ottawa to proposals that:

· Exceed the affordability requirements either in number of units or duration of affordability.

· Deliver on the priority areas of housing need by household type as set out in each specific RFP.

· Can be completed within an accelerated time frame as set out in each RFP.

· Are accessible to public transit.

· Sensitively integrate into the community (e.g. through quality design, good land use planning and appropriate response to community context).

· Incorporate universal design standards for accessibility so that the building is “barrier free” for visitors.

· Include a property management plan which recognizes that resident involvement is a positive property management tool.

b) In addition, where proposals are deemed to be equal following assessment of all of the above criteria, preference will be given to proposals that incorporate energy efficiency measures.

E. Zoning

Using land, which already permits multi-residential housing, is also important in moving an affordable housing proposal forward.

The municipal preference for projects which can be completed in a relatively short period of time will consider whether land is appropriately zoned or whether the proponent will undertake a rezoning in order to have a site properly zoned and ensure a building permit can be issued in a timely fashion as set out in each RFP.

F. Resident Involvement and Project Management

A successful affordable housing community is one in which the residents of that community are actively involved. This can also include involvement in the development of the proposal. Action Ottawa encourages all affordable housing proponents to involve potential residents in the planning and development of the project. Proponents should also consider how they might involve residents in the management of the affordable residential community once it becomes occupied. Experience in managing existing community based affordable housing will be helpful in planning the resident involvement component of managing new affordable housing.

A further important part of developing new affordable housing is ensuring integration with the surrounding community. Proposals submitted under RFPs should outline how the new housing proposal will work well with the existing community.

G. Procedure for Allocating Funding

Funding for new affordable housing will be determined under Action Ottawa Requests for Proposals (RFPs). After an RFP deadline for submission passes, the proposals submitted will be referred to a project selection team for review.

The project selection team will consist of representatives of the City of Ottawa, industry experts and community housing representatives who will evaluate all of the proposals which meet minimum submission requirements. Part of this review process may involve an interview with short-listed proponents to seek clarification and additional information related to their proposals.

Recommendations for funding are to be brought forward from the project selection team by the City’s Housing Branch to Ottawa City Council for approval.

H. Agreement Required

Long-term agreements are required in order to access Action Ottawa financial incentives. The housing proponent must offer at least 20 years of affordable rental housing. A further five years of “phasing out” affordability requirements for sitting tenants will also be required.

Capital funding from Action Ottawa is provided in the form of a forgivable loan secured on title. If there is a significant default, the loan will have to be repaid to the City of Ottawa.

There is also a separate lease agreement needed where a proponent is to lease City-owned land.

Separate agreements are required to be signed with the City of Ottawa and with the Province of Ontario (if accessing financial support under the CRHP). Both of these agreements have minimum insurance requirements, as well as other administrative conditions, which must be agreed to in order to access funds.

I. Flowing of Funds

Capital funds from the City of Ottawa will be flowed in stages with an initial payment at the time of signing an agreement with the City. Subsequently some funds will be flowed during the period of construction while a portion of funds will be held back in accordance with the construction lien period as set out in provincial law. Capital funds under the CRHP will flow in a similar manner. Further details of the flowing of funds will be set out in each RFP.

J. Reporting Requirements

In order to ensure housing affordability goals are met, all projects supported through Action Ottawa will be required to fill out an annual declaration of affordable rents and provide an annual audited statement for the project to the City of Ottawa. The certification of the annual rents will be done in accordance with the agreement signed between the City of Ottawa and the proponent.

III. Proposal Calls

The City of Ottawa looks forward to partnering with private and non-profit housing developers through the Action Ottawa: Affordable Housing Initiative. The City will periodically release RFPs over the next few years in order to continue to support the creation new affordable housing.

RFPs are normally advertised by the City, with proponents given a set period of time to respond in writing. Proposals submitted are then reviewed and assessed against program criteria, with successful proposals forwarded to Council for approval.

The City will continue to work with affordable housing partners through implementing other aspects of the City’s Affordable Housing Strategy. We also need to continue to work together to advocate for increased support from other levels of government, which will create, much needed affordable housing.

For further information on Action Ottawa contact Donna Mayer, City of Ottawa Housing Developer in the Housing Branch at (613) 580-2424, ext. 43083 or visit the website at www.ottawa.ca.

Appendix A

Complementary Initiatives to Assist in the Creation of Affordable Housing

In addition to Action Ottawa there are other initiatives which can assist in the creation of affordable housing.

Seed Funding

Canada Mortgage and Housing Corporation (CMHC) recently announced a financial assistance program for affordable housing proponents in the early stages of developing a housing project proposal. Up to $20,000 in seed funding per proposal is available with up to half of that in the form of a grant to develop a business plan or an analysis of the need and demand for the proposed housing project.

The remainder of the funds (up to $10,000) may be available in the form of a repayable interest free loan. This funding can be used for preliminary design work on a housing project.

Project Development Funding (PDF)

PDF is provided by CMHC and it assists with up-front expenses incurred during the process of developing an affordable housing project proposal. Funding of up to $100,000 per proposal is available in the form of a repayable interest free loan. PDF loans will be repayable if a project succeeds, although a portion of the loan may be forgiven.

CMHC Mortgage Insurance

CMHC mortgage insurance is available for affordable rental housing projects. While there are insurance premiums associated with CMHC insurance, the benefits of lower rates can often offset the cost of the insurance premiums.

Residential Rehabilitation Assistance Program (RRAP) –

RRAP funds are available through CMHC and can provide financial assistances of up to $18,000 per unit to:

- convert non-residential space to rental housing;

- upgrade existing self-contained rental housing to basic standards; and

- upgrade existing rooming house units to basic standards.

For more information on the various CMHC forms of assistance, please visit CMHC’s website at www.cmhc-schl.gc.ca.

Community Rental Housing Program

The Federal and Provincial governments have entered into a partnership to create the Affordable Housing Program. A component of this program is the Community Rental Housing Program (CRHP), which is intended to provide capital assistance for affordable housing development.

The City is attempting to access these funds via the Action Ottawa process. If approval to access Federal and Provincial is forthcoming, proponents will apply via Action Ottawa.

Assistance from CRHP

Assistance through CRHP can provide the following help to proponents of affordable rental housing:

a) The Federal Government could provide capital funding of up to $25,000 per unit.

b) The Province of Ontario could provide capital funding of $2,000 per unit.

Requirements

In addition to requirements stipulated in Action Ottawa, the following are requirements for CRHP funding:

a) There are maximum sizes for rental units receiving capital funds. They are as follows:

Unit Size	Apartment		Townhouse/Rowhouse
	Sq. Metres	Sq. Feet	Sq. Metres	Sq. Feet
Bachelor	41.8	450	N/A	n/a
One Bedroom	60.4	650	65.0	700
Two Bedroom	79.0	850	83.6	900
Three Bedroom	92.9	1000	102.2	1100
Four Bedroom	111.5	1200	120.8	1300

b) If the proponent is bringing forward their own land, they must provide proof that the land is or will be appropriately zoned for the purpose intended.

c) If a private sector proposal, bring at least 10% equity to the project, although only 4% equity is required if partnering with a non-profit organization through a memorandum of understanding.