Affordable Rental Housing Development Resource

Introduction:

Across Ontario, a common goal exists to increase the supply of affordable rental housing for improved housing options available to low and moderate-income households and specifically targeted households in need. This goal and many others in regard to affordable rental housing and ending homelessness are addressed by Service Managers (SM) and District Social Services Administration Boards (DSSABS) which are responsible for housing service system planning in their communities under the 10-year Housing and Homelessness Plans. Local strategies to create affordable rental housing may be implemented, and are often dependent on important federal and provincial investments to offset the economic realities to build more housing.

A combination of roles and partners are necessary to work together, ranging from the residents in need of improved access to affordable housing and Housing Providers to develop the housing, to all three levels of government including Service Managers and housing development experts in the private sector such as lenders, builders, and architects. The development of affordable rental housing requires navigation through various stages, in both the public and private sectors. This guide can assist with the understanding of common considerations in achieving a successful outcome.

References in this guide may refer to the local Service Manager administration and funding for affordable rental housing developments accessed through federal/provincial programs such as the Investment in Affordable Housing Initiative (IAH), as well as through municipal incentives and investments such as municipal housing reserves, Municipal Housing Project Facility Agreements and related By-laws. Housing Providers and others are encouraged to contact their local Service Manager for up-to-date information on available affordable housing development initiatives and funding opportunities.

The purpose of this guide is to provide a resource to individuals and groups wanting to develop, build and operate affordable rental housing. A growing body of research shows that access to good quality affordable housing can support not only low and moderate-income households, but also has positive community-wide benefits related to economic competitiveness, health, education and community well-being.

But what do we mean by “affordable rental housing”?

Affordable rental housing is an umbrella term that refers to a range of different housing types in the private market and non-profit sectors. How you define affordable housing will be different depending on your role as funder, policy maker, housing advocate, and/or tenant.

The Role of the Service Manager and Municipalities:

The Province of Ontario has set out various roles for Service Managers and municipalities for purposes of provision of affordable housing in terms of housing programs and services, as well as land use planning and services.

The Service Manager Role:

The Province has identified 47 Municipal Service Managers and District Social Services Administration Boards (the “Service Manager”) across Ontario. The Service Manager is responsible for the delivery of multiple social services and programs, including but not limited to social and affordable housing, and homelessness initiatives, within designated geographic areas. Under the Housing Services Act, 2011, the Ontario Housing Policy Statement, and Poverty Reduction Initiative and related initiatives, the Service Manager is responsible for:

 Housing and homelessness service system planning (i.e. 10-year Housing and Homelessness Plan targets and measures, and annual reports)

 Coordination of services under related initiatives and existing local or federal/provincial programs

 Building partnerships in the areas of housing and homelessness

 Administering programs and funding from any of federal/provincial/ municipal investment sources for affordable housing and homelessness programs.

The Municipal Role in Land Use Planning:

Municipalities, as set out in Ontario provincial planning policies and related legislation, must address the land use and planning development activities, including the provision of an appropriate range and mix of housing types required to meet the current and future needs of their residents. Municipal governments, including Regional governments, separated Cities, Counties and their local municipalities, have a responsibility to address the housing needs of their residents. To achieve its affordable housing targets (vary per local land use planning requirements), policies related to housing and affordable housing are included in municipal Official Plan’s, zoning by-laws, companion research, secondary plans and related land use planning documents.

Types of Housing Providers:

Municipal or Private Non-profit Housing Corporations:

These are non-profit housing corporations established by a municipality (Municipal Non-Profit Housing Corporation – MNP) or a community organization (Private Non-Profit Housing Corporation – PNP), such as a church, ethno-cultural group, service club, labor union or other community group. The relationship to the municipality or community organization varies widely, ranging from total independence with no municipal /organization appointees on the board of directors, to municipal councilors / community organization appointees being the only board members.

Non-Profit Housing Corporations with Charitable Status:

Non-profit Housing Corporations may have a charitable component. The Canada Revenue Agency has specific requirements regarding permissibility on whether a charity is carrying on a related business. A helpful resource called “End of Operating Agreements: Legal Issues, May 2, 2016” provides information on Registered Charity, and is available at www.hscorp.ca. A provincial government’s resource called “Non-Profit Incorporator’s Handbook” is available at www.attorneygeneral.jus.gov.on.ca. Also, check with your legal services for specific charitable requirements related to affordable housing and potential financial incentives.

Private Developers:

A private developer, or real estate developer, is an entrepreneur who purchases land for residential and/or commercial purposes, prepares it for development and manages the construction process with the intention of a financial gain. The Private Developer may own and manage the housing project, or may sell to another corporation or arrange private management services.

Co-operative Housing Providers Co-operative housing is a different form of social and affordable housing. It is not rental housing in the context of tenant-owner relations. The households who live in the project are all members of the cooperative corporation that owns the building. They elect from amongst themselves a board of directors who are responsible for overseeing the management of the building. They are subject to rules in the Co-operative Corporations Act.

Supportive Housing Providers:

Supportive Non-profit housing is available for people who need support to live independently, e.g. the frail elderly, people with serious mental illness, addictions or developmental disabilities. Administration and funding of social housing projects and shelters with 100% support services by some supportive housing providers were not transferred by the Province to the Municipal Service Managers in 2001; rather, the responsibilities were retained at the provincial level with authority changed to the provincial ministry that funds the support services, either the Ministry of Health/Long Term Care or the Ministry of Community and Social Services (MCSS).

What are the Housing Needs in Your Community?

Housing Need and Demand Study:

In helping to set goals for the housing you want to develop, it is important to analyze and document housing needs in your community. Understanding housing needs is a task to be completed early in the development process to show that the affordable development you are proposing to create will be fully occupied and generate the projected rental revenue. Funders and financial institutions will be evaluating the viability of your proposed development based on a business plan that includes capital and operating budgets. Your business plan will also include a section referred to as a Housing Need and Demand study and will document three things:

1. Current housing needs in your community (needs analysis)

2. Emerging and future needs (demand analysis)

3. The current supply of housing in your area.

Human Rights and Affordable Rental Housing:

Housing is a human right and more information about how these rights are protected under the Human Rights Code (the “Code”) can be located on the Ontario Human Rights Commission website. The Ontario Human Rights Code specifies that everyone has the right to equal treatment in housing that is free of harassment or discrimination. Housing providers need to be aware of their responsibility to ensure a housing environment free of discrimination. According to the Code, people cannot be refused an apartment, harassed or treated unfairly by their landlord or other tenants on any of the following grounds:

 Race, colour or ethnic background

 Religious beliefs or practices

 Ancestry, including individuals of Aboriginal descent

 Place of origin

 Citizenship, including refugee status

Conclusion:

Many of the social housing developments built around the 1980s are soon to have both their operating agreements as well as mortgages expire in the next few years. Many of the original operating agreements and mortgage financing terms were for 35 years, although some agreements lasted for 50 years. This is often referred to as a discussion about end of operating agreements (EOA – non-profits and coops with federal agreements), end of debentures (EOD – public housing stock) or end of mortgages (EOM – provincial reformed social housing).

While there will be housing providers who will face financial risks at the time of EOA, there will be other housing providers which will strive towards a more favorable financial situation with increased operating surpluses. The housing asset, however, will remain with the non-profit corporation and can’t be used for individual equity gain.

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