Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council/et au Conseil

10 June 2008/ le 10 juin 2008

Submitted by/Soumis par : Steve Kanellakos,
Deputy City Manager/Directeur municipal adjoint,

Community and Protective Services/Services communautaires et de protection

Contact Person/Personne ressource : Russell Mawby, Director/Directeur

Housing/Logement

(613) 580-2424 x 44162, russell.mawby@ottawa.ca

Kitchissippi (15)

Ref N°: ACS2008-CPS-HOU-0008

SUBJECT:	DEFERRAL OF DEVELOPMENT CHARGES FOR HABITAT FOR HUMANITY

OBJET :	REPORT des REDEVANCES d’aménagement pour habitat pour l’humanité

REPORT RECOMMENDATION

That the Corporate Services and Economic Development Committee recommend Council delegate authority to the Director of Housing to enter into a Municipal Housing Project Facilities Agreement with Habitat for Humanity to allow for and secure the deferral of development charges, in the amount totalling $11,218 associated with the construction of a 2-storey single-detached dwelling located at 386 Tillbury Avenue.

RECOMMANDATION DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Comité de donner pouvoir au Directeur du logement pour conclure avec Habitat pour l’humanité une entente sur les installations relatives à des projets municipaux de logement, dans le but de permettre et de garantir le report des redevances d’aménagement, d’un montant totalisant 11 218 $, relativement à la construction d’une maison unifamiliale de deux étages au 386, avenue Tillbury.

EXECUTIVE SUMMARY

Under the current Development Charge By-law (By-law 2004-298) the exemption for affordable housing extends only to units that are owned by non-profit or charitable housing organizations and not to units that are developed by a non-profit, such as Habitat for Humanity, and then sold to private individuals. The proposed alternative is to enter into a Municipal Housing Project Facilities Agreement to defer the payment of development charges for a minimum of 20 years or until such time as the benefited home is sold. The Housing Branch is recommending that the development charges for a Habitat for Humanity home proposed at 386 Tillbury Avenue be deferred and secured through a Municipal Housing Project Facilities Agreement. The Agreement secures the development charges as a third mortgage that will be paid in full in the event that the owner sells or transfers the property to another property owner, prior to the end of the 20 year period, unless Habitat for Humanity purchases the property back from the owner in accordance with its buy-back policy in which case the third mortgage will remain on title.

RESUMÉ

Conformémeut au Règlement municipal actuel sur les redevances d’aménagement (Règlement 2004-298), l’exemption pour les logements abordables se limite aux unités qui appartiennent à des organismes de bienfaisance ou sans but lucratif et n’inclut pas les unités qui sont construites par des organismes sans lut lucratif comme Habitat pour l’humanité, puis vendues à des particuliers. La solution de rechange proposée est de conclure une entente sur les installations relatives à des projets municipaux de logement afin de reporter le paiement des redevances d’aménagement pendant au moins 20 ans, ou jusqu’à ce que la maison bénéficiaire soit vendue. La Direction du logement recommande que les redevances d’aménagement pour le projet de maison Habitat pour l’humanité au 386, avenue Tillbury soient reportées et garanties par le biais d’une entente sur les installations relatives à des projets municipaux de logement. L’entente garantit les redevances d’aménagement comme troisième hypothèque qui sera remboursée en entier, dans l’éventualité où le propriétaire vendrait ou transférerait la propriété à un autre propriétaire, avant la fin de la période de 20 ans, à moins qu’Habitat pour l’humanité rachète la propriété du propriétaire, en vertu de sa politique de rachat, auquel cas la troisième hypothèque demeurerait en vigueur.

BACKGROUND

City Council on October 13, 2004, in considering Amendments to the City Council Approved Official Plan to modify policies related to affordable housing, provided direction to staff to implement various planning incentives and direct supports to promote and encourage the achievement of the Official Plan policies. Habitat for Humanity is a charitable organization that develops housing for families who are at or below the Low Income Cut-Off (LICO) as established by Statistics Canada.

The housing proposed at 386 Tillbury Avenue will meet the Official Plan definition of "affordable" in that the household will not pay more than 30% of income on the mortgage payment, and the household income will be at or below the 40^th income percentile. Attached in Document 1, are the most recently published LICO's from 2006, and in Document 2, the Housing Continuum by Household Income Percentiles for 2007. Habitat holds a first and second mortgage on the home and arranges an affordable payment schedule with the buyer to ensure that the mortgage payment is no more than 30% of household income. The organization also retains the right of first refusal, if the home is sold before the mortgages are paid off. If the purchaser sells or defaults on the Property within twenty years of the date of the transfer of the Property they will be required to repay all or some of the second mortgage plus applicable taxes, to Habitat for Humanity. The obligation to repay the amount is secured by a second mortgage on the Property. After your twelfth year of occupation of the Property, the principal amount of the second mortgage will be reduced on an annual basis of 12.25% of the original principal amount and if the property is occupied as a principal residence for twenty years the principal amount of the second mortgage will be deemed to have been paid in full.

Under the current Development Charge By-law (By-law 2004-298) as adopted by Council on July 14, 2004, the exemption for affordable housing extends only to units that are owned by non-profit or charitable housing organizations. It does not extend to units that are developed by a non-profit organization and subsequently sold to private individuals, because they would no longer meet the required criteria.

Since the option to exempt DC’s is not currently available, the proposed alternative is to enter into a Municipal Housing Project Facilities Agreement to defer the payment of development charges for a minimum time period of 20 years or until such time as the benefited home is sold. If the home is sold before the 20-year period and not kept affordable as defined in the Official Plan, the value of the deferred development charges would be repaid by the vendor to the City as part of the sales process. This requires that Habitat enter into a Municipal Capital Facilities Agreement with the City for the benefited unit, and that the value of the deferred fees plus interest would be secured as a third mortgage in favour of the City. Staff propose that the interest rate for the deferred fees be the rate at the date of the purchase for the dwelling unit. This is similar to the agreement reached for a previous Habitat developments at 859-861 Pinecrest and 855-857 Pinecrest (ACS2006-CPS-HOU-0005), approved April 12, 2006 (By-law 2006-295) and 11-13 White Cedar Street (ACS2008-CPS-HOU-0003) and approved by Council on February 13, 2008.

The term of the Municipal Housing Project Facilities Agreement is 20 years and the amount of the first, second and third mortgages will be as follows:

386 Tillbury Avenue

1st mortgage: 80% of the appraised value of the property plus net GST, plus the cost of a washer and dryer.

2nd mortgage: 20% of the appraised value less the amount of the City’s 3^rd mortgage (i.e., less $11,218 in development charges)

3rd mortgage (held by the City): $11,218

The third mortgage will be paid in full in the event that the owner sells or transfers the property to another property owner, prior to the end of the 20 year period, unless Habitat for Humanity purchases the property back from the owner in accordance with its buy-back policy in which case the third mortgage will remain on title.

CONSULTATION

The report has been circulated to Planning, Transit and the Environment, Legal Services Branch and Financial Services Branch. No public consultation has been conducted with respect to this request for assistance. The request and recommended response is consistent with current program practice.

FINANCIAL IMPLICATIONS

This agreement defers development charges in the amount of $11,218 and ultimately forgives the development charges unless the property(s) is sold to another property owner other than Habitat for Humanity prior to the 20-year expiry of the agreement.

SUPPORTING DOCUMENTATION

Document 1: Low Income Cut-Offs 2006

Document 2: Housing Continuum and Household Income Percentiles 2007

DISPOSITION

A project specific Municipal Housing Project Facilities By-law will be brought forward to Council.

Upon approval by Council, the Housing Branch will execute a Municipal Capital Facilities Agreement with Habitat for Humanity as per the terms identified in this report.

DOCUMENT 1

Low Income Cut-Offs (before tax) 2006

Size of Family Unit	Community of 500,000 or more.
1 person	$21,202
2 person	$26,396
3 person	$32,450
4 person	$39,399
5 person	$44,686
6 person	$50,397
7 or more persons	$56,110

Source : Statistics Canada, . Released May 10, 2007

The Low Income Cut-Off is inflated annually by the Consumer Price Index, which is the same inflationary measure used for the 40^th income percentile. The Low Income Cut-Offs for 2007 are not yet available.

Report to/Rapport au :

DEFERRAL OF DEVELOPMENT CHARGES FOR HABITAT FOR HUMANITY

RESUMÉ

386 Tillbury Avenue