10 HOUSING PROVIDER ASSET MANAGEMENT ACTIVITY

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1 Clause No. 10 in of was adopted, without amendment, by the Council of The Regional Municipality of York at its meeting held on October 17, HOUSING PROVIDER ASSET MANAGEMENT ACTIVITY recommends adoption of the following recommendation contained within the report dated September 19, 2013 from the Commissioner of Community and Health Services: 1. RECOMMENDATION It is recommended that this report be received for information. 2. PURPOSE This report provides an update on social housing providers building repairs and fulfils the annual reporting requirement established by Council on March 27, 2008 through the adoption of Clause No. 7 of Report No. 2 of the Community Services and Housing Committee. 3. BACKGROUND As York Region s social housing stock continues to age, having a proactive strategy to maintain the building stock is prudent and necessary. The social housing programs devolved to the Region did not have sufficient capital repair reserves, and as a result housing providers have begun to deplete their repair reserves. A large percentage of providers have insufficient reserve contributions to meet their needs, as even wellconstructed and maintained buildings will require substantial refurbishment after years. Building Condition Assessments (BCA s) completed in 2005 estimated that an additional $65 million would need to be invested between to maintain buildings in a state of good repair. In 2012, the Region entered into a licence agreement with the Housing Services Corporation to access Ameresco s capital asset management technology; Asset Planner. This technology s life cycle modeling will provide the Region with more interactive and current Building Condition Assessments. Regional staff have been

2 Clause No implementing Asset Planner and life cycle profiles of each asset are being finalized. The first phase of implementation will be finished in March 2014 when Ameresco concludes their annual management and reconciliation of all the new data imputed into the system. At this stage, the Region will be in a position to conduct further analysis that will inform a second stage report with policy options and recommendations. The Housing Division s Social Housing Asset Management Strategy includes multiple methodologies for managing capital repairs and building reserve funds York Region has been aware of the capital underfunding for some time, and as a result initiated the Non-Profit Housing capital repair reserve in In 2009, the first budgeted contribution in the amount of $1 million was made to this fund. Annual contributions to this reserve have increased each year, and as of December 31, 2012, the Non-Profit Housing Capital Repairs Reserve balance was $12.9 million. Annual Contributions made through the budgeting process as follows: $1.0M $3.7M $3.8 M $4.8M $5.8M In addition to the annual contributions made through the budgeting process, housing providers also make annual contributions to their individual capital reserves. As of June 2013 housing provider capital reserve deposits within program regulated investment accounts totalled just under $23 million. This pro-active approach to the management of housing providers reserves and capital repair replacement is part of the overall Social Housing Asset Management Strategy. Along with the increased contributions to the Non-Profit Building Repair Fund, other initiatives have been designed to address the gaps in funding. These initiatives include: Surplus Sharing Agreements Regional Capital Loan Programs (Additional Subsidy and Secured Loans) Social Innovation Funds Access to Technical Services expertise and staffing resources Implementation of Asset Planner Software

3 Clause No ANALYSIS AND OPTIONS Surplus Sharing Agreements help providers to build their reserves The Region continues to support housing provider efforts to build their reserves by allowing providers to retain the Region s share (50%) of any in-year surpluses by assigning any surpluses to capital repair funds Allowing providers to retain surpluses creates incentives for good business practices and builds reserve balances. Surplus retention is conditional upon submission of capital plans for Regional approval. Since 2006, 17 Surplus Share Agreements with various providers have been executed, allowing them to contribute an additional $2.5 million to their own reserves. $3 million has been advanced to housing providers through Regional Capital Loan Programs Unlike private sector organizations, housing providers cannot renegotiate or extend their mortgages to secure additional financing. In order to support access to Regional funds, Council approved a repayable Capital Loan Program with two funding streams: Additional Subsidy provides advances of up to $500,000 per housing provider. These advances are non-interest bearing and subject to availability of funds in the approved Regional budget. Secured Loans provides advances of more than $500,000 which are registered on title. The existing secured loan framework is currently being reviewed and simplified as more of the providers will be moving into the secured loan program in the near future. Each year as part of the budgeting and capital planning process, building staff identify where the highest priority repairs are, based on health and safety, aging systems, renewal of housing stock, and energy conservation. This process determines which housing providers require additional funds to complete necessary capital work. For the 2011 fiscal year, additional Subsidy Agreements with a total commitment of $725,000 were executed with four housing providers. For the 2012 fiscal year a total commitment of $499,999 was executed with one housing provider. A summary of the additional subsidy allocations is listed in Table 1.

4 Clause No Table Additional Subsidy Loans Year Housing Providers Total Funds Advanced 2011 Oakwil Non Profit Housing Corporation $175, Oakwil Non Profit Housing (amendment) $55, Pefferlaw and Lions Housing Corporation $245, Schomberg Lions Club Non Profit $250, Kinsmen Non Profit Housing $499,999 For the 2012 fiscal year, Secured Loan Agreements with a total commitment of $1.83 million was executed with three housing providers. A summary of the secured loan allocations is listed in Table 2. Table Secured Loans Summary Housing Provider Agreement Amount Bethany Co-operative Homes Inc. $600,000 John Fitzpatrick Steelworkers Co-operative $630,000 Prophetic Non Profit (Richmond Hill) Inc. $600,000 Total $1,830,000 The Social Housing Innovation Fund helps providers fund playground replacements/upgrades, accessibility upgrades and energy conservation initiatives The Region permanently established a Social Housing Innovation fund through the Multi-Year Plan 2011 to assist providers in addressing the need for playground replacements/upgrades, accessibility upgrades and green initiatives focusing on energy conservation. A summary of the projects funded since 2011 are listed in Table 3. Table 3 Social Housing Innovation Funds Summary Year Number of Housing Providers Total Funds Advanced $293, $474, (to date) 10 $250,000

5 Clause No York Region s Technical Services staff provide valuable technical expertise at no cost to housing provider to manage capital projects and ensure value for money The Housing Division s Technical Services team offers strategic advice and support to housing providers to assist them in making informed decisions around their capital and operational needs. Their expertise encourages providers to review capital plans, conduct energy assessments, participate in bulk tendering initiatives and provides current information on program incentives and rebates. These initiatives provide opportunities to work more productively with housing providers who are able to save money that can be put towards other social housing renovations and upgrades that benefit tenants. Equally important, but more difficult to measure, is the trickle-down effects that the positive education of these programs have on tenants and improved community building. BC Housing has documented how the progressive decline in a building s state of repair negatively impacts tenants and staff. Dealing with frequent emergency repairs limits the amount of time staff can spend on regularly scheduled maintenance tasks resulting in dissatisfied tenants. Significant success has been achieved with our bulk tendering and energy rebates programs. A recent example of a co-operative tender package involved service contracts for 43 elevators. A small group of housing providers, Housing York Inc. and two Regional long-term care facilities participated in the bulk tender. Their combined efforts resulted in the following savings: Provider A contract costs decreased from $762/month to $296/month Provider B contract costs decreased from $1,191/month to $444/month Provider C contract costs decreased from $696/month to $296/month Asset Planner Software was implemented in 2012 to create a better understanding of current and future capital asset needs Since the Fall of 2012, Regional staff have been working to implement Asset Planner program. The implementation process started by inputting basic real estate information such as: land area, building area, year of construction etc. From this basic information the software technology developed life cycle models of the Region s housing portfolio which included all building components. This initial model was then validated by the Region s technical staff through visual/on-site inspections, inventory of all the major building elements, review of last replacement year and review of various other data sources. Any noted inaccuracies of the models were then adjusted in Asset Planner. The outcome of this work is a fully developed life cycle profile for each asset which will be continually be updated through frequent review cycles.

6 Clause No Asset Planner will provide the Region with a an ongoing dynamic system for managing capital data, not the least of which will track the housing stock s Facility Condition Index, Unfunded Liability and Deferred Maintenance. This data will provide the Region with information to make decisions on short, medium and longer-term costs for social housing assets, including redevelopment costs. Currently Asset Planner is being used by Toronto Community Housing, Canada s largest social housing provider as well as BC Housing. A number of Service Managers are also using the system including Ottawa and Kingston. Additionally, the system extends into the US social housing market and corporate sector. As additional users come on board and the data is further developed, it will assist in continued advocacy with senior levels of government. Although current data is preliminary, it takes us closer to ensuring an alignment between asset management needs and financial planning and positions us to respond to new demands, employ newer technologies, and adapt to changes in the marketplace. The ongoing data collection and subsequent analysis may also act as a springboard for municipalities to engage in joint advocacy on the capital needs issue. Ultimately the opportunity for a cross sector advocacy/networking table could be anchored in the issues and trends highlighted by the Asset Planner system. Link to key Council-approved plans Developing a comprehensive Social Housing Asset Management strategy aligns with our Regional Official Plan, Corporate Strategic Plan, the department s Multi-Year Plan. This strategy embodies the Region s overall principles of sustainability and growth management. Our Social Housing Asset Management strategy also supports the advancement of key priority areas such as continuing to deliver and sustain critical infrastructure, effectively managing municipal resources and managing the Region s finances prudently. 5. FINANCIAL IMPLICATIONS The social housing portfolio in York Region has a replacement value of approximately $1.3 billion. Timely building repairs avoid the compounding costs of deferred maintenance and ensure that appropriate property standards are maintained. The total Regional investments to assist providers in addressing their capital needs and building their capital reserve funds over that last four years are summarized in Table 5.

7 Clause No Table 5 Social Housing Regional Investments Year Number of Housing Providers Total Funds Committed $757, $757, $1,437, $3,056,971 Total Investments $6,009,009 The Regional investments shown in Table 5 include Capital Loan Advances and Social Housing Innovation Funding. In addition to these Regional investments, the following contributions have also been made into the Regional portfolio since 2009: Housing providers have contributed a total of $2,588,895 to their capital reserves based on their existing surplus share agreements As of December 2012, the Service Manager has fully maximized the Provincial 2008 one-time Building Repair funding of $2.6 million As of December 2011, a total of $15.6 million allocated to housing providers through the Social Housing Repair and Retrofit Fund (SHHRP) The continuation of Regional investments, reserve contributions and external funding will bring us closer to the annual contribution of $10.6 million as recommended by the preliminary Asset Planner analysis. 6. LOCAL MUNICIPAL IMPACT Social Housing buildings are located in every municipality in the Region. The portfolio is home to approximately 6,500 households, many of whom are low income residents. The Region s proactive building repair funding strategies and technical supports are giving housing providers improved access to the tools and funding they need to maintain their buildings in a state of good repair and to provide quality housing to their residents.

8 Clause No CONCLUSION The Regional Municipality of York recognizes the importance of maintaining our valuable social housing stock, and will continue to be pro-active in ongoing capital repair planning and mitigation of financial risks as part of the overall asset management strategy. Further reports will be forthcoming as additional analysis and strategic policy work is completed to warrant the development of an overall Long Range Asset Strategy for the housing portfolio. For more information on this report, please contact Sylvia Patterson, General Manager, Housing and Long-Term Care at Ext The Senior Management Group has reviewed this report.