REVOLVING HOUSING LOAN FUND

Fonds de crédit renouvelable pour le logement

Acs2007-ccs-cps-0018 CITY WIDE / À L'ÉCHELLE DE LA VILLE

Councillor Holmes provided a brief overview of the item, the details of which are reflected in her report. She referred to the letter from the Ottawa Community Housing (OCH) dated 20 June 2007, in which they express the difficulties of such a fund because it is problematic to provide loans rather than a grant. They were concerned that a refundable loan (which is what staff recommend this be) would be an encumbrance on the mortgage. In addition, there is a lot of paperwork involved in the administration of these funds and she believed it only serves to hinder the process. Further, OCH has 80% of the social housing in this city and yet there are no commitments from the City to fund them using this loan fund. She also recognized that some housing providers are going bankrupt because the City has not funded them in any sustainable way and Council has to live up to this funding responsibility. It was for these reasons that she believed half the funds should go to OCH and the rest to the other housing providers.

Mr. Kanellakos clarified that the department is not asking for mortgages from any of the providers. These are forgivable loans that will not be required to be paid back as long as they continue to provide the basis service. In addition, OCH would receive the money in the form of grants because the City owns them and they are non profit and the City would not be asking them to go through any kind of mortgage or signing a loan agreement. He explained that while OCH is eligible for this money, staff prefer to see all the applications and allocate based on most urgent need. He recognized that Council is aware of the situation of the lifecycle maintenance capital budget program, which has been reduced to 40% of required repairs on an annual basis, adding that budget directions over the past number of years have decreased the Department’s ability to maintain any assets, including affordable, social and public housing.

Councillor Cullen asked why this policy discussion did not take place when this program was being put together earlier this year, Mr. Kanellakos advised that the revolving loan fund was an item in the 2007 budget and was brought to the CSEDC in May 2007 at which time there was discussion about moving it into a reserve fund, pending Council’s long range financial planning priorities. He explained that the Department was able to release that portion of the money to make it available and there was discussion at Committee about the revolving loan fund, but not the details of the policy, although staff did advise at the CSEDC meeting in May, that they would be bringing back a program details and requirements of policy to Committee. Councillor Holmes’ report pre-empted the staff report, and as such, a summary of their report is incorporated as staff’s comment in the Councillor’s report.

Councillor Cullen noted the staff recommendation contained in Councillor Holmes’ refers to allocating based on a need that is not yet known, whereas the councillor is recommending a 50/50 split between OCH and the remaining housing providers. Mr. Kanellakos confirmed that not all applications for the funding have been received, but staff would know within the next week what those requests are. He added that the intent of the revolving loan fund was that it would be applicable to all housing providers, not just to OCH. The councillor indicated that the City has complete discretion with these funds and therefore believed some policy guidance would be in order. He noted there is a specific sector that is without reserves or support and the intimation from the staff comments is that OCH has other resources it can access that other housing providers do not.

In response, Mr. Kanellakos explained that the point of that comment in the report was to point out that approximately $8.1M is transferred each year to OCH and there are leveraging options which would be under the authority of that Board. Further, staff’s comments in the report on this was simply to say there are very limited dollars for a huge problem and they should be allocated based on most urgent need - not for scheduled maintenance items, but for the most urgent such as roofs and elevators. And, once staff see the list of requests from all providers, they will make a determination and they believe OCH should receive the portion of money they deserve based on their identification of the most urgent need.

When asked if the Committee should defer this pending receipt of all applications, the Deputy City Manager advised that based on the submissions received, OCH has submitted a number higher than their half, but noted that all the other providers have submitted in the range of that half so staff will have to carry out an assessment of these needs and make their determination accordingly for the distribution of the limited funds. He recommended, therefore, that the Committee make the allocations that meet the most urgent needs without pre-determining an exact split.

If nothing is done today and staff do their allocation, Councillor Cullen inquired how that information will be transmitted to the Committee and Council and to the public. The Deputy City Manager explained that a report would be brought back in November advising of the allocations.

The Committee received the following public delegations:

Debbie Barton, Ottawa Social Housing Network explained that they represent the majority of social housing providers in the Ottawa area and while the funding is appreciated, it is a small amount compared to the need. They were pleased the Housing branch consulted with this sector to discuss the allocation of this money and they support much of what is in the councillor’s report. She indicated that although everyone recognizes that OCH is by far the largest social housing landlord in Ottawa, they asked that the allocation be fair and based on a real assessment of need over the whole sector. She reiterated staff comment about the OCH being able to leverage additional funds with the millions they receive each year in capital funding – a financial option that is not available to other housing providers. It is for this reason they could not support the Councillor’s recommendation to allocate a specific amount of money to one housing provider. They believe a more fair and equitable process is one which is based on a more comprehensive needs assessment and priorization, adding that many providers could benefit significantly by a small infusion of funds to address their capital needs.

The following delegations provided specific examples of the challenges they face:

Selene Cummerford, Gloucester Non-profit Housing Corporation

· when they started replacing siding on two of their buildings, they found significant dry-rot, mold and water penetration; because of the extensive and unexpected damage, they must now complete the work on all the buildings in the property

· this initial expenditure of $36,000/building has escalated to over $200,000 per building

· the forecast for depletion of their reserve funds is 2014, but the funds is not expected to that long; when it does deplete, they can only hope there are funds available and an appropriate process to access them

· of big concern to them is the ability of smaller groups to prepare and supervise such large maintenance items.

Janis Lacroix, Barrhaven Non-profit Housing Corporation

· the units they manage require a great deal of maintenance and the benchmarks for those costs were set and started to climb, leaving quite a gap between the money available and the work needing to be done

· their capital reserve fund is presently $357,000 to which they contribute $25,000 per year

· over the past few years it has become necessary to replace carpets, appliances, bathroom walls and counter tops, leaving a net increase in the reserve funds of approximately $5000 rather than the $25,000

· this year, they are having to look at replacing two major items – roofs and windows at a combined estimated cost of $300,000

· because they are a small non profit, they do not have the time nor the expertise to assess the condition, create the required scopes of work, assess the bids and supervise the actual work; as a result, they have had to hire consultants to do that at an additional cost of $5000 per item; their reserves are now left with less than $60,000 and there are further expenses to be incurred for replacing entrance doors, regrading walkways, et cetera

· all providers should have an equal opportunity to access the available funds on a needs-priority basis.

Lynn Carson, Nepean Housing

· they currently have reserve funds and will not be applying for funding under the Revolving Fund at this time; however, they are not going to be able to continue to maintain at the standard for much longer without more money or innovative ideas

· they too were pleased that staff consulted with the housing network on the Revolving Loan Fund and supported the staff recommendation in the report

· she recognized that the matter of urgent repairs and the capital reserve shortfalls is a huge concern to both Council and social housing providers and they want to work with the City on solutions.

Ron Larkin, Chief Executive Officer, Ottawa Community Housing focused on the urgency of their situation and expressed concern about the suggestion that there are other solutions available to OCH. He reminded Committee members that the total funding from the senior levels of government ($12M) is nowhere near the total required to address the issue of capital repairs for housing providers ($600M). He indicated that when the revolving loan fund was first suggested, OCH took issue with it, but to be mindful of the other applications being put forward, they decided to limit their request for funds to three applications for a total request of $9M. He explained that the urgency of obtaining monies to deal with that is very critical. He impressed upon the Committee the urgency of making a decision and getting money into their hands so they can deal with these pressing capital problems, adding the OCH would settle for a lesser amount now, if it meant getting a decision to move forward.

Catherine Gardner encouraged the Committee to focus their priorities for funding of capital improvements on items such as elevators, which, when out of service for any period of time, trap those in wheelchairs in their homes, preventing them from getting out to get food or other items, or prevent them from getting to their homes at all. They may even be denied access to their employment or medical care as a result of not being able to get out of their building or the fact that some medical people will not travel up the stairs. She suggested that people who rely on elevators to get to and from their apartments should be treated as displaced tenants and treated accordingly when they are unable to get to and from their homes.

Councillor Feltmate noted that one of the criticisms of the program has been that it is a lengthy and bureaucratic process and she wondered why immediate repairs to address issues of mold or a broken elevator, for example, are not simply dealt with instead of having housing providers requesting $1500 in accessible funds to begin the process. Mr. Mawby explained that the necessary level of detail required by staff goes well beyond that and referred to the technical expertise required to get that level of information. He did not believe it was too bureaucratic and suggested that what staff is trying to do is get the best intelligence it can on the real estate of the housing stock in the community so they can make more informed long-term decisions, rather than constantly reacting when a crisis occurs. He went on to state that the conversations staff have had with the Social Housing Network also point to the need to build that capacity in the housing system and if the City wants those smaller providers to continue to provide housing, they also have to build the capacity to manage their stock.

In response to additional questions posed by the councillor, the Director advised that the Building Condition Assessment Program used consultants/experts in the field to provide the information to providers; in the case of a repair to an elevator for example, the information has to come from an elevator company who can provide guidance on the best course of action. He went on to state that the $1500 will allow the housing providers to get the professional expertise and when all that information is received by staff as part of the application, they will assess it and will use in-house expertise to help understand where the priorities are and think about some options.

When asked how the City is responding to building the capacity within the smaller providers to allow them to have the expertise so the City does not have to be constantly making these priorities as monies become available, Mr. Mawby confirmed that staff have had discussions about this with the Social Housing Network and indicated that the co-op housing association (CHASEO) has been grappling with this question as well and is trying to build that capacity with their providers and there is a need to work with them. Staff recognize there are things they can do in terms of training work shops to help providers know what is necessary. Councillor Feltmate did not think this was the answer; she believed that what was needed was people with particular technical expertise that can be available to the networks to tap into. One of the things that should be coming out of this, she suggested, is some kind of report back as to how the City is going to build that kind of capacity. Mr. Mawby indicated that could be a direction to staff to examine that.

Councillor Bédard asked when the City will know it will start distributing money to the urgent needs staff will be identifying. Mr. Mawby explained they have received applications from 23 housing providers totalling over $15M and many of those applications have sufficient information they can start flowing the funds within the next couple of weeks because there are those in a real crisis situation and staff are very aware of the depth of some of those needs. He confirmed that money would be flowing before the end of the month, with the fund exhausted by the end of November. If all the funds are going to be dispersed by then, the Councillor asked why the report is before the Committee. Mr. Mawby explained that the challenge is deciding which providers get what since the total requested is more than the total monies available. Prioritization will be based on some of the issues raised today, and the financial capacity of providers to deal with those needs with their current reserves. Some of the providers are bankrupt in terms of their capital capacity so they will get priority.

In light of this timeline and when pressed by the councillor with respect to the relevance of this report, the Deputy City Manager advised that the only issue is the predetermination of the allocation of the money. He reiterated the fact that staff consulted with the housing providers and followed best practices in terms of talking to the Social Housing Network and bringing back the details. He explained that there has to be some assessment of each application to determine which one needs what more. The only decision before committee therefore, is whether or not it supports preallocating the money.

Councillor Holmes asked what constraints Council has put on the budget for housing. Mr. Kanellakos indicated that there is a submission from OCH for $2M for their base budget; there is capital program requirements that are urgent and the budget directions they have now and based on the three tax scenarios and based on his assessment of what he will be submitting, will not address any of those. He would be putting forward suggestions to reduce those funding sources in an effort to make his funding envelope and that will be given to Council for budget consideration. He mentioned that the 3.4% tax increase scenario will put the Department in the position where it’s capital funding envelope will not be enhanced and will in fact will have to be diminshed, i.e., what capital projects can be afforded and which ones have to come off because they put pressure on the operating budget.

Councillor Holmes referred to a briefing note on the Social Housing Urgent Repairs Loan Fund dated 17 September in which it states that: “a loan fund agreement will be registered on title to ensure that the investment is used to maintain the availability of social housing over the long term.” However, she noted that staff recently said they were not going to register them on title and they will not be liens. Mr. Kanellakos advised that the official staff position is contained in the comments section of the report.

Councillor Bédard proposed that the staff recommendation on page 37 of the agenda be approved and that the funds be allocated by the end of November 2007. He explained that given the timelines involved for the actual dispursement of the monies, he felt the process has been started and is nearing completion and the Committee should proceed accordingly.

Moved by D. Holmes

That the information report on the allocation of the forgivable loan fund be on the agenda of the Community and Protective Services Committee on 15 November.

CARRIED

Chair Deans suggested the Committee accept this substitute recommendation to that which is in the agenda, because the end result will probably see a 50/50 split of the limited funds between OCH and the other housing providers. She believed it was important that funds should be allocated based on greatest need. In addition, she was concerned about the perception of making a recommendation in favour of the OCH when four members of this Committee also sit on the OCH Board. She believed that taking the staff approach and ensuring that money gets rolled out to all of the housing providers based on the greatest need, is the best approach and one the Committee should support.

Councillor Cullen did not support the Bédard Motion, stating that the City has an obligation to ensure there are sufficient resources going in to meet it’s own obligations because the City’s OCH is held to a higher standard. While he recognized the needs of other housing providers, he recognized the City has to deal with this difficult situation particularly with the public housing stock which gets extra attention paid to it because it is owned by the City.

Moved by G. Bédard

That staff recommendations on page 37 of the agenda be approved and that the funds be allocated by the end of November 2007.

LOST

YEAS (4): M. Bellemare, G. Bédard, S. Qadri, D. Deans

NAYS (5) : A. Cullen, R. Chiarelli, D. Holmes, P. Feltmate, C. Leadman

Moved by D. Holmes

That the Community and Protective Services Committee recommend to Council:

1. That $4.9 million proposed revolving loan fund in the 2007 budget become a granting fund to be used by housing groups other than Ottawa Community Housing and,

2. That the $7.1 million new federal funds also be a granting fund and be divided to allocate $6 million for Ottawa Community Housing and $1.1 million for other housing groups.

CARRIED

YEAS (5) : A. Cullen, R. Chiarelli, D. Holmes, P. Feltmate, C. Leadman

NAYS (4): M. Bellemare, G. Bédard, S. Qadri, D. Deans