peel housing corporation board of directors agenda …€¦ · 2015-06-04 · (hsc) as being too...

PEEL HOUSING CORPORATION

BOARD OF DIRECTORS AGENDA PHC-4/2015 DATE: June 4, 2015 TIME: 8:30 AM – 10:30 AM LOCATION: Conference Centre, 1st Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A

Brampton, Ontario MEMBERS:

D. Austin F. Dale S. Elias C. Fonseca V. Hall R. Mendis

G. Miles E. Moore P. Palleschi C. Parrish B. Shaughnessy

Chaired by President P. Palleschi or Vice-President G. Miles 1.

DECLARATIONS OF CONFLICTS OF INTEREST

2.

APPROVAL OF MINUTES

2.1.

Minutes of the Board of Directors Meeting (PHC-3/2015) meeting held on May 7, 2015

3.

APPROVAL OF AGENDA

4.

IN CAMERA MATTERS

4.1.

Update on Bargaining (Labour Relations or Employee Negotiations)(Oral)

5.

REPORTS

5.1.

Shareholder Directive (Oral)

Presentation by Patrick O’Connor, Corporate Counsel 5.2.

2014 Peel Housing Corporation Investment Report (For information)

PHC-4/2015 Board of Directors Agenda

-2- June 4, 2015

6.

DELEGATIONS

6.1.

Dee Karski, Project Manager, Peel Living, Providing an Update on Twin Pines

6.2.

Tim Welch, Tim Welch Consultants (TWC), Regarding an Overview of the TWC Report on Financial Viability

7.

GENERAL MANAGER'S UPDATE

8.

COMMUNICATIONS

9.

OTHER BUSINESS

10.

NOTICE OF ANNUAL GENERAL MEETING OF THE SHAREHOLDER

11.

NEXT MEETING To be determined

12.

ADJOURNMENT

* See text for arrivals

See text for departures

PEEL HOUSING CORPORATION

BOARD OF DIRECTORS M I N U T E S PHC-3/2015 The Peel Housing Corporation met on Thursday, May 7, 2015 at 8:35 a.m., in the Conference Centre, 1st Floor, Regional Administrative Headquarters, 10 Peel Centre Drive, Suite A, Brampton.

Directors Present: D. Austin; F. Dale; S. Elias; V. Hall; R. Mendis; C. Fonseca; P. Palleschi; B. Shaughnessy; E. Moore Directors Absent: G. Miles; C. Parrish

Also Present: D. Szwarc, Chief Administrative Officer, Region of Peel; M.

Mwarigha, General Manager; D. Bingham, Treasurer; J. Arcella, Deputy Treasurer, B. Colavecchia, Manager, Housing Operations and Tenancy Management; Mary Jo MacCrae, Manager, Housing Operations and Tenancy Management; P. O’Connor, Corporate Counsel; A. Macintyre, Corporate Secretary; C. Law, Deputy Corporate Secretary

Chaired by President P. Palleschi. 1. DECLARATIONS OF CONFLICTS OF INTEREST – Nil 2. APPROVAL OF MINUTES

Moved by Director Hall, Seconded by Director Shaughnessy; That the April 2, 2015 Peel Housing Corporation (PHC-2/2015) Meeting Minutes be approved.

Carried 2015-15

PHC-3/2015 Thursday, May 7, 2015

3. APPROVAL OF AGENDA

Moved by Director Elias, Seconded by Director Mendis; That the agenda for the May 7, 2015, Peel Housing Corporation Board of Directors meeting include a delegation from the General Manager regarding updates to ongoing staff work, to be dealt with under Delegations – Item 4.2; And further, that the agenda also include an oral update from Bruno Colavecchia, Manager, Housing Operations and Tenancy Management regarding several administrative matters, to be dealt with under Other Business – Item 7.1; And further, that the agenda for the May 7, 2015, Peel Housing Corporation Board of Directors meeting be approved, as amended.

Carried 2015-16 4. DELEGATIONS 4.1 Carolyn Kearns, Management Consultant, Regarding Excellence in Not for Profit

Governance

Received 2015-17

Carolyn Kearns, Management Consultant, provided the Board with information regarding effective not-for-profit board best practices, and performing the following essential roles for their organization: completing formal strategic planning exercises; monitoring executive performance; formulating policy and having clear decision making; providing strong financial oversight; ensuring effective communications; and coherently and firmly self-managing as a single body that achieves its goals and objectives. President Palleschi thanked Carolyn Kearns for her presentation, and informed staff that a future session on development and its related costs would be of great value to the Board. Director Fonseca stated that currently the Association of Municipalities of Ontario (AMO) have organized a housing working group of various stakeholders, and suggested that staff could look at inviting this group to speak to the Board on the topic of advocacy for increased housing funding to the higher levels of government. Additional Item - Item 4.2:

4.2 M.S. Mwarigha, General Manager, Peel Housing Corporation, Providing the Board with an Update on Ongoing Staff Work Related to Several Emerging Issues

Received 2015-18


M.S. Mwarigha, General Manager, Peel Housing Corporation (PHC), provided an update on the following: He stated that engagement with the Cedar Grove Board is going well, and the residents seem open to providing their input into the long-term redevelopment of the site. Further, he stated that discussions with the primary bank dealing with the residents has also occurred, and the bank is now well informed of the plans for the site. He informed the bank that PHC is aiming to keep willing residents as tenants once the site is redeveloped. He added that staff will provide an update on the progress as available. He informed the Board of an article recently written in Tough Times magazine criticizing Peel Housing Corporation’s parking fees at various sites. He stated that agencies that provide services do have special areas or allotted spots at various sites, and that fees are charged at various sites as part of Peel Living’s revenue recovering for various non-housing services. Lastly, he informed the Board of a recent media criticism by a Member of Provincial Parliament of Peel Housing Corporation’s insurance and energy provider Housing Services Corporation (HSC) as being too expensive in the services it provides. He provided details of HSC’s relationship to Peel Housing Corporation and the value it provides to Peel Housing Corporation in order to keep energy costs predictable for residents, and insurance costs comparatively low. 5. REPORTS 5.1 Business Transformation Project

Presentation by M.S. Mwarigha, General Manager, Peel Housing Corporation

Moved by Director Moore, Seconded by Director Shaughnessy;

That the Business Transformation Project, as a foundation to the Board’s role in the development of a new Strategic Plan for Peel Housing Corporation, be approved; And further, that the Board appoint Board Advisors for each of the following projects areas: Governance, and Tenant & Community Experience; And further, that Directors Palleschi, Austin, and Elias be appointed as Board Advisors for the project area of Governance; And further, that Directors Hall, and Austin be appointed as Board Advisors for the project area of Tenant & Community Experience.

Carried 2015-19 M.S Mwarigha, General Manager, Peel Housing Corporation, introduced the Business Transformation Project to the Board as the beginning stages of developing a new strategic planning process that will define Peel Living for the next 20-30 years. He stated that staff is


looking to engage with the Board in three major areas of interest: governance, financial and asset viability, and tenant and community experience. He suggested the Board appoint certain members to be advisors to staff on each of the three major areas. While volunteer Directors were chosen for the areas of governance, and tenant and community experience; it was agreed the entire Board of Directors would be engaged on the topic of financial and asset viability, given significant interest indicated by Directors. 5.2 Creditbend Terrace – Attic Mould Remediation

Moved by Director Austin, Seconded by Director Shaughnessy;

That the budget for a major capital project, with a maximum budget increase of up to $800,000 in order to accommodate necessary and unplanned capital work at Creditbend Terrace, be approved; And further, that the Treasurer be authorized to transfer up to $800,000 from Working Fund Reserves to cover costs in excess of $989,995 already allocated for roof replacement and necessary repairs at Creditbend Terrace; And further, that the contract for roof replacement and mould remediation at Creditbend Terrace be awarded to the successful vendor of the Tender process.

Carried 2015-20 President Palleschi indicated he has concerns with the amount of additional money being requested. Joseph Abraham, Construction Project Manager, stated that the $1 million was calculated given estimates from a consulting engineering firm. President Palleschi suggested the contingency amount of $200,000 could be removed. Dave Bingham, Treasurer, Peel Housing Corporation confirmed that $800,000 would be the revised amount. The Board recessed at 10:40 a.m. The Board resumed at 10:45 a.m.


5.3 Year End Financial Report – December 31, 2014

Moved by Director Fonseca, Seconded by Director Elias;

That the financial report for the twelve months ending on December 31, 2014 be received; And further, that Capital Project 14-0501 for 2014 Major Capital Work be increased by $770,000 for a total revised budget of $6,209,254; And further, that the increase be funded from the Working Fund Reserves.

Carried 2015-21 5.4 2014 Peel Housing Corporation Financial Statements (Unaudited)

Moved by Director Mendis, Seconded by Director Dale;

That the 2014 Peel Housing Corporation (operating as Peel Housing Corporation) unaudited financial statements, be approved.

Carried 2015-22 6. COMMUNICATIONS – Nil 7. OTHER BUSINESS

Additional Item - Item 7.1:

7.1 Upcoming Administrative Matters (Oral) Received 2015-23

Staff advised that planning for tours of the Twin Pines housing site is underway; Bruno Colavecchia, Manager, Housing Operations and Tenancy Management stated that sites for an off-site Board meeting to occur on July 2, 2015 where Board members would be transported to the site in the morning, are being evaluated with further information to be conveyed as it becomes available; and an invitation to all Board members to the Divisional Staff Day occurring on July 9, 2015 at 11:30 am at 10 Peel Centre Drive, Brampton.


8. NEXT MEETING

Thursday, June 4, 2015, 8:30 a.m. – 10:30 a.m. Conference Centre, 1st Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A Brampton, Ontario

9. ADJOURNMENT

The meeting adjourned at 10:57 a.m.

1 Legal Services

SHAREHOLDER DIRECTION

Presentation to Peel Housing

Corporation BoardJune 4, 2015

5.1-1

2 Legal Services

Presentation Summary

Nature

Purpose

Board’s Input

Process for Development

Timeframe

5.1-2

3 Legal Services

Nature

Legal instrument provided for in the Business

Corporations Act.

Under subsection 108(3) of the Business

Corporations Act a shareholder of a corporation

may issue an unanimous shareholders

agreement to direct the corporation’s board.

5.1-3

4 Legal Services

Nature

Many municipal sole shareholders of local housing

corporations like Peel Living have Shareholders

Directions. Examples:

Toronto

York

Ottawa

Hamilton

Windsor

5.1-4

5 Legal Services

Purpose

Articulates the relationship between The Region and Peel Living.

May be used to establish:

A high level framework for the conduct of business by setting the Shareholder’s objectives

for Peel Living.

Principles of operation.

An accountability framework.

A general articulation of the Region’s expectations for Peel Living.

Reflects the Region’s role as owner of the corporations entire shareholding

Connects tenants and all other Peel residents to the corporation and its

board through their elected representatives.

5.1-5

6 Legal Services

Board’s Input

Regional staff will recommend that Council

consult with Board.

The Board’s input will be a relevant consideration

for Regional Council.

The process is not in the nature of a “negotiation”

but is part of Regional Council’s decision making.

5.1-6

7 Legal Services

Process for Development

Regional staff will consult with other key

personnel to develop the draft Direction.

To be co-ordinated with complementary

amendments to the Board’s By-law No. 1.

Proposed Direction will be presented to Regional

Council for approval.

5.1-7

8 Legal Services

Timeframe

Board can anticipate an opportunity for

input this coming summer.

Finalization anticipated for early fall of

2015.

5.1-8

REPORT Meeting Date: 2015-06-04

Peel Housing Corporation

For Information

DATE: May 26, 2015

REPORT TITLE: 2014 PEEL HOUSING CORPORATION INVESTMENT REPORT

FROM: David Bingham, Treasurer, Peel Living

OBJECTIVE To provide the annual results of investment activity in accordance with the investment policy adopted by the Board in the report of the Treasurer, Peel Living, titled “Investment Policy” dated March 27, 2007.

REPORT HIGHLIGHTS At December 31, 2014, Peel Housing Corporation (PHC) had holdings totaling $19.2 million, of which $16.3 million was cash invested by the Region of Peel and the remaining $2.9 million invested in Social Housing Investment Funds (SHIF) pooled funds. The cash received the Region’s earnings rate which averaged 3.5 per cent in 2014. The SH – Canadian Equity Funds as at December 31, 2014 had an unrealized annual return of 15.8 per cent. The Investment Policy has provided sufficient flexibility to generate good overall returns during volatile economic periods and therefore does not require updating at this time.

DISCUSSION 1. Background

At the April 19, 2007 Peel Housing Corporation Board meeting, the Board adopted the Investment Policy for Peel Living and authorized the Treasurer to utilize all pooled investment funds of Social Housing Services Corporation Financial Inc. (SHSCFI) in accordance with specified limitations “to supplement the investment activity performed on behalf of the Corporation by the Region of Peel”. The Housing Services Corporation (HSC) manages the pooled funds from replacement reserve balances of all eligible housing providers in Ontario. With the exception of Peel, Ottawa and Toronto, all prescribed housing providers were mandated to participate in this pooled investment program. Participation for the three exempt providers was optional. SHSCFI was incorporated in September 2002 to manage, on behalf of HSC, the pooling of capital reserve funds for prescribed providers as required under section 141(b) of the Social Housing Reform Act. This organization is registered with the Ontario Securities Commission and is subject to regulatory oversight in its role as an investment fund.

5.2-1

May 26, 2015 2014 PHC INVESTMENT REPORT

- 2 -

Effective November 2014, SHSCFI was reconstituted as Encasa Financial Inc. (Encasa) when its investment base was broadened through an expansion of its ownership when four key housing organizations (Housing Services Corporation, Co-operative Housing Federation of Canada, Co-operative Housing Federation of BC and BC Non-Profit Housing Association) came together. Encasa's daily investment activities are conducted by Phillips, Hagars and North (PH&N). Oversight of PH&N is conducted by Encasa's board of directors. At the end of 2014, PH&N was managing in excess of $476.1 million for Encasa in three separate product lines: SH - Canadian Short-Term Bond Fund (1 to 5 Year Horizon) SH - Canadian Bond Fund (5 to 7 Year Horizon) SH - Canadian Equity Fund (Beyond 7 Year Horizon)

In September 2007, Peel Housing Corporation (PHC) invested $2.5 million of the SH - Canadian Bond Fund and $2.5 million of the SH - Canadian Equity Fund. In October 2013, PHC liquidated their long term bond holdings and replenished cash balances held with the Region as cash in capital replacement reserves had been drawn down to finance state of good repair expenditures. Cash balances with the Region have been attributed the same earnings rate as has been earned by the broader Peel portfolio. The initial 2007 investment in the SH – Canadian Equity Fund was retained.

2. 2014 Overview of PHC Holdings

a) Transactions

In September of 2014, approximately $1.6 million or 50% of the SH – Canadian Equity Fund holdings were switched to the SH – Canadian Short Term Bond Fund. The funds were held in the SH – Canadian Short Term Bond Fund until December 11, 2014 at which time all funds were switched back into the SH – Canadian Equity Fund. During this time period the SH – Canadian Short Term Bond Fund units and unit price increased 638.41 and $0.0358 respectively resulting in a capital gain of $12,280.02 or a 3.2 per cent annualized return. The SH – Canadian Equity Fund experienced a decrease in its unit price (-$1.2560 or -6.3%) allowing for an additional 6,206.43 units to be obtained on the re-purchase.

b) Year End Holdings

Total Working Fund and Capital Reserves have increased to $9.8 million at the end of 2014 from $8.6 million (2013). Replacement reserves have increased to $2.5 million at the end of 2014 from $1.6 million at the end of 2013. The balance of Peel Living’s holdings consisted of working capital that had ranged from average monthly balances of approximately $9.3 million to $13.4 million throughout the year. As noted in the following table, of the total holdings of $19.2 million, $16.3 million was invested with the Region of Peel and the balance under the SHIF program with Encasa.

5.2-2


- 3 -

Dec. 31, 2014

Available Pooled Funds (Book Value)

SH - Canadian Short-Term Bond Fund $117 *

SH - Canadian Bond Fund $0

SH - Canadian Equity Fund $2,896,449

Total SHIF $2,896,566

Region of Peel $16,254,510

Total Funds $19,151,076

* December 19, 2014 Management Fee Rebate.

From the time of the original investment in the SHIF funds in 2007, the rates of return on the balances varied as noted in the graph below. Funds held with the SH – Canadian Bond Fund fluctuated between -1.1 per cent in 2013 and 8.5 per cent in 2009. The returns for the SH – Canadian Equity Fund experienced volatile fluctuations with the largest occurring during the 2008 economic downturn. The Region of Peel’s earnings rate provided a more consistent rate of return ranging from 3.3 per cent to 4.8 per cent with overall rates of return declining since 2007 due to lower interest rates.

-40%

-30%

-20%

-10%

0%

10%

20%

30%

2007 2008 2009 2010 2011 2012 2013 2014

Annual Rate of Return

SHIF - ST Canadian Bond Fund (2014) SHIF - Canadian Bond Fund

SHIF - Canadian Equity Fund Region of Peel - Earnings Rate

5.2-3


- 4 -

i) Funds held in SH – Canadian Equity Fund

The investment policy imposes a limit of the lessor of 10 per cent of the reported SH – Canadian Equity Fund balance and $5 million. At December 31, 2014, the SH – Canadian Equity Fund had a balance of $103.1 million (10 per cent equivalent to $10.3 million) while the PHC investment was a book value of $2.9 million, well within the limitation.

SH - Canadian Equity Fund Rate

Annual Rate of Return (2014) 15.8%

Annualized Rate of Return (2007 to 2014) 3.9%

ii) Funds held in SH – Short Term Canadian Bond Fund

In September 16, 2014, $1.6 million of the fund was purchased and then redeemed in December 11, 2014.

Purchased Sept. 2014

Redeemed Dec. 2014

Total Earnings

Annualized Rate

of Return

SH - ST Canadian Bond Fund $1,634,287 $1,646,567 $12,280 3.2%

iii) Funds held with the Region of Peel

The investment policy also states that a minimum of 25 per cent of total PHC funds must be maintained with the Region of Peel. In addition to the SHIF investments, PHC held $16.3 million with the Region. The Region’s earnings rate (monthly General Fund investment rate less administration fees) was applied to PHC’s average monthly bank balances (ranging from $16.6 million to $21.0 in 2014), and for the year averaged 3.5 per cent (slightly below the seven year average of 3.9%), which translates to interest earnings of $648 thousand. More information regarding the Region of Peel General Fund can be found in the report entitled “2014 Treasury Report” scheduled to be presented to Region of Peel Council on June 25, 2015.

Region of Peel General Fund earnings rate (on varying monthly balances)

Rate

Annual Rate of Return (2014) 3.5%

Annualized Rate of Return (2007 to 2014) 3.9%

5.2-4


- 5 -

CONCLUSION

PHC’s Investment Policy allows for an effective and efficient investment management operation that provides the flexibility to adjust investments to the Corporation’s changing fiscal condition while providing opportunities to supplement returns earned on behalf of the Corporation by the Region of Peel.

David Bingham, Treasurer, Peel Living For further information regarding this report, please contact David Bingham, Treasurer Peel Living, 4292, [email protected]. Authored By: Debbie Williams,Treasury

5.2-5

Material Related to Delegations – Item 6.2

EVOLVING INTO THE FUTURE:

A FINANCIAL VIABILITY REPORT FOR PEEL LIVING

August, 2014

6.2-1


Table of Contents

Executive Summary ........................................................................................................................... i

1. Introduction ................................................................................................................................. 1

1.1 Context and Purpose of this Study .................................................................................. 1

1.2 Background – Peel Living ................................................................................................. 1

1.3 Context – Legacy Housing Programs ............................................................................... 3

1.4 Work Plan ........................................................................................................................ 5

1.5 Highlights of Project Profiles ........................................................................................... 6

2. Financial Information & Operational Viability ............................................................................. 8

2.1 Purpose of This Section ................................................................................................... 8

2.2 Financial Projections Based on Current Operations ........................................................ 8

2.3 Cost-Control Opportunities ........................................................................................... 16

2.4 Conclusions – Operating Viability .................................................................................. 20

3 Capital Needs .............................................................................................................................. 22

3.1 Introduction ................................................................................................................... 22

3.2 Building Condition Assessment Data ............................................................................. 23

3.3 Facility Condition Index ................................................................................................. 25

3.4 Capital Repair Practices and Energy Conservation ........................................................ 29

3.4 Future Directions – Building Conditions and Capital ..................................................... 33

4. Social Return on Investment (SROI) .......................................................................................... 37

4.1 SROI – Introduction ....................................................................................................... 37

4.2 Social Outcomes of Housing: Main Dimensions ............................................................ 37

4.3 Pilot Measurements of SROI, and Next Steps ............................................................... 38

5. Analysis of Sites ......................................................................................................................... 41

5.1 Introduction and Evaluation Matrix .............................................................................. 41

5.2 Typology of Sites ............................................................................................................ 43

5.3 Redevelopment and Intensification of Existing Peel Living Sites .................................. 45

6. Strategic Directions and Recommendations ............................................................................. 48

6.2-2


A Financial Viability Report for Peel Living – TWC Inc. – July 2014 i

Executive Summary

Evolving into the Future:

A Financial Viability Report for Peel Living

Nature and Purpose of the Study

This study examines options for Peel Living to support the work of a Task Team established by

the Board of Directors, to address the long-term financial and social viability of Peel Living.

The context is a portfolio which faces new needs and opportunities, rising operational and

capital repair needs, aging buildings, lower mortgages, phase-out of federal subsidy, and

potential site redevelopment and intensification.

The study examines the operational financial viability, capital repair requirements, site needs

and opportunities, and social return on investment, on a site-by-site and portfolio-wide basis.

A typology of sites is developed, financial and other options are identified, and

recommendations are made to support the long-term financial sustainability of Peel Living.

Operational Viability

Peel Living data was used to create long-run financial scenarios, using varying assumptions.

As mortgages expire and legislated subsidy declines, rental income will cover a rising share of

costs (from 62 percent today to a high of 83 percent, falling back to 77 percent by 2040). Some

ongoing Regional subsidy will therefore be required for existing operations (before considering

the costs of capital repairs); but a year-to-year subsidy increase lower than projected inflation

or property tax increases would suffice to cover operating costs. Lower utility costs or

manageable costs, or increased market rents would reduce subsidy requirements.

Capital Repair Requirements

Data from 2009 Building Condition Assessments (BCA s updated by the 2009-2013

improvements are used to project capital repair requirements from 2014 to 2023. A Facility

Condition Index FCI is al ulated, easu i g the u e t ph si al state of Peel Li i g s housi g stock which overall is in the good to fair range. As buildings age and their various components

and systems reach the end of their lifespan, more capital repair and replacement will be

needed. For the next 10 years (2014-2023) the projected capital expenditures needed for the

portfolio are $20 million per year. This figure will need to be updated upon completion of the

new BCAs scheduled for later in 2014.

6.2-3


A Financial Viability Report for Peel Living – TWC Inc. – July 2014 ii

Other key capital issues include potential savings from energy retrofits, since 38 Peel Living

sites are heated with electric baseboard heating.

There are three main options for paying for capital repairs: pay-as-you-go, a reserve fund

strategy, or borrowing to do work in stages starting in the near future and repay over time.

The report presents an option whereby capital repairs funds are borrowed in rolling five-year

tranches, each repaid over the following 25 years. This would enable needed work to be

carried out in the short term as needed, while putting the largest financial impact after 2030

when operating subsidy requirements are at lower levels. It may offer a predictable,

manageable approach to the combined operating and capital requirements.

Social Return on Investment (SROI)

SROI can be a means to sustain public support for social housing and a basis for future social

finance. This report offers an initial foundation for SROI steps by Peel Living over a longer term.

SROI deals with quantitative measurement of outcomes, going beyond performance or output

measures. SROI is complex, and usually involves research partners.

Social finance in Canada is at an early stage of development. To pursue SROI for social finance,

Peel Living will need partnerships with other organizations. It is unlikely that social finance will

supplant established financing sources for regeneration, repair, or new supply; support services

and new initiatives are the best candidates for social finance.

The report identifies 18 main types of social outcomes of housing, based on prior research.

Two SROI indicators are measured on a pilot basis. The value of RGI in increased household

income and purchasing power is $36.5 million annually. Peel Living capital expenditure

generates 600 jobs (person-years) for 2009-13 actual; 810 jobs for 2014-18 requirements.

Site Needs and Opportunities

Information from site visits, Peel Living staff, and other sources was used to create site profiles

for each of the 66 sites that were included in this study. The site profiles summarize housing

stock, key financial and condition data, planning status and intensification potential, parking,

and nearby transit and services.

Most sites are in good condition and are functioning well in social terms. A significant number

are well located near transit and services. Market units are readily tenanted.

6.2-4


A Financial Viability Report for Peel Living – TWC Inc. – July 2014 iii

A matrix of the 66 sites was created, ranking the sites on a various criteria. This is the basis for

assigning each site in a typology of five categories (with further options within each). The

diagram shows the number of sites in each category.

The typology relates to the role of Peel Living in meeting future needs and opportunities. It

also relates to objectives of long-term financial viability. For example, increased revenue

through higher market rents will reduce long-term subsidy requirements, while improving the

condition of buildings may save other long-run costs and enhance revenues. Redevelopment

of sites, although entailing large capital costs, would lead to lower energy costs and capital

repairs in the newer buildings created, and has potential to enhance the social sustainability by

adjusting income mix on the site.

The report identifies various factors to consider when embarking on redevelopment or

intensification of sites.

Recommendations

1. Peel Living should pursue a strategy of raising market rents in advantageous site locations

in order to maximize market rent revenues.

2. Peel Living should attempt to set targets for increases to manageable costs that take into

account the three-year rolling average of the provincial rent guideline (and explore the

creation of operational benchmarks with similar large scale non-profit housing corporations

in Ontario as none are currently in existence), in order to reduce as much as possible the

need for municipal subsidy.

6.2-5


A Financial Viability Report for Peel Living – TWC Inc. – July 2014 iv

3. Peel Living should analyse the options, legal aspects, revenue implications and social

impacts of switching from the current RGI scale to a shallow flat- ate housi g allo a e subsidy for some share of its units, when operating agreements expire.

4. Peel Living should ensure that the Building Condition Audits planned for 2014 include more

intrusive testing; and that FCI ratings and capital budget planning for each site should be

updated upon the completion of these new BCAs.

5. Peel Living should undertake an energy and water audit in co-operation with the Region, to

identify upgrades providing the best payback and restraint of utility costs, and including

review of lessons from recent retrofit work by Peel Living or other providers.

6. Peel Living should systematically examine options, including longer term borrowing, to pay

for the additional $60 million in additional capital expenditures (over and above the

planned annual $14 million) required by 2024, on a portfolio-wide basis.

7. Peel Living should undertake future financial feasibility updates every five years, using data

from updated BCAs as these are carried out from time to time.

8. Peel Living should select two full redevelopment sites and one intensification site in late

2014 and proceed with a feasibility analysis and the creation of a business case in 2015.

9. Peel Living should take initial steps to establish capacity to measure social return, as set out

in this report.

10. Peel Living should review the implications of this report as they affect its overall financial

relationship to Peel Region; determine a preferred future relationship in collaboration with

the Region as service manager; and take related transition steps.

11. Peel Living should pursue different priorities for each site, along the lines of the typology

presented in this report

6.2-6


A Financial Viability Report for Peel Living – TWC Inc. – July 2014 1

1. Introduction

1.1 Context and Purpose of this Study

In April 2014, Peel Living (Peel Housing Corporation) retained Tim Welch Consulting Inc. to

develop a set of options for a financially sustainable model for future years. The new financial

model will allow Peel Living to redefine itself and successfully move forward over the next 25

years. The goal is to ensure that Peel Living continues to be a leader in providing quality

affordable and social housing in the Region of Peel.

This financial viability study is led by housing consulting firm Tim Welch Consulting Inc. (TWC)

and the consulting team includes Connelly Consulting Services, Greg Suttor Consulting and GSP

Group. The study examines options for Peel Living in terms of the operational, capital and

social/community needs of its portfolio and residents. This study also provides an initial

foundation for measuring social return on investment (SROI) in Peel Living, and develops a

typology of sites to inform strategic decision-making by Peel Living.

1.2 Background – Peel Living

Peel Housing Corporation is a non-profit housing corporation owned by the Region of Peel. Peel

Living owns and manages 68 residential properties with 7,100 residential units. It also manages

six Region-owned buildings, two transitional housing residences and three shelters. Peel Living

has o e ea s e pe ie e i the de elop e t a d ope atio of housi g that is affordable

for low- and moderate-income families, seniors and single people in the Region of Peel.

The portfolio includes over 1,000 units developed directly by the Ontario Housing Corporation

(OHC) between 1967 and 1978. Development of these units was funded through Ontario

Housing Corporation debentures, and annual operating subsidies were the shared

responsibility of the Federal and Provincial governments. Capital repairs were paid out of

annual operating budgets and there were no capital reserve funds or contributions.

On January 1, 2001, the Province of Ontario transferred the OHC units in the Region of Peel to

Peel Living as part of the devolution of social housing. The former OHC segment of the portfolio

(now referred to as Peel Region Housing Corporation – or PRHC – stock) includes townhouses,

and low-, mid- and high-rise apartment units. All of the former OHC housing was initially rented

to low-income families and seniors on a Rent-Geared-to-Income (RGI) basis. Since the transfer

in 2001, Peel Living has gradually introduced market rent units into the former Ontario Housing

Corporation portfolio; typically about 10% of the units in a building, or townhouse complex are

now rented at market rents.

6.2-7



At the time of devolution, the former provincial responsibility for providing operating subsidies

was assumed by the Region of Peel in its role as Service Manager, delivering housing programs

under the authority of the Social Housing Reform Act (subsequently replaced by the Housing

Services Act).

Peel Living developed most of its housing portfolio under various Federal and Provincial

housing programs in the 1980s and first half of the 1990s. The housing developed during this

time typically had 35-year operating agreements that required a minimum percentage of units

to be rented on an RGI basis to low- or moderate-income households. The operating

agreements for these developments require that a certain amount of rental revenue must be

put aside each year in a capital reserve fund to be used to pay for the capital repairs of a

building. This is because, unlike in the private sector, a government guarantee of the mortgage

allowed non-profit corporations developing housing during this time to borrow 100% of the

capital cost of the project. This, in turn, meant that governments did not wish to see the

projects encumbered by further borrowing for capital work (as in the private-sector) and so the

only way to amass capital was to create a reserve that required annual contributions from

operations.

Since 2003, Peel Living has developed and now owns/operates two housing developments

funded through capital grants under Federal and Provincial housing new-supply initiatives.

These developments also had significant one-time capital funding from the Region. The grants

were conditional, in part, on Peel Living setting the rents in these projects at affordable rates

(in one development 100% of average market rent, in the other 80% of average market rent)

for a period of 25 years. There are no ongoing operating funds provided.

While the Peel Living stock is in good condition overall, the portfolio will require continuous

repairs and significant capital improvements due to its age, as more than 80% of the stock is 18

years or older and over 1,000 units are 40 – 45 years old.

The viability of the existing portfolio is important for both current and future Peel Living

residents. In addition, there are opportunities for Peel Living to redevelop or expand its stock to

help meet the growing need for both low-income and market rental housing in the Region.

Peel Region has been growing at a quick pace in recent years, as illustrated by the population

figures below.

Table 1: Population of Peel Region: 2001-11

2001 2006 2011

988,948 1,159,455 1,296,814

“ource: Peel’s Housing and Homelessness Plan A Community Strategy 2014-2024

6.2-8



This trend of significant population growth is expected to continue. The Government of

O ta io s Amendment 2 (2013) To The Growth Plan For The Greater Golden Horseshoe provides

for an increase in the ‘egio of Peel s populatio al ost half a illio people to a total of

1,770,000 between 2011 and 2031.

The current need for affordable housing can be measured many ways. The Region s Housi g and Homelessness Plan notes that almost one third of households spend more than 30% of

their income on housing and so need affordable housing. The Regional waiting list for

subsidized housing in 2013 contained 13,600 households. The current need and the anticipated

population increase indicate that the requirement for affordable housing will almost certainly

continue to grow.

Peel Living, as part of its future direction, has a significant role to play in helping the Region of

Peel a hie e the stated goal of the ‘egio s Housi g a d Ho eless ess Pla : E e o e has a home and homelessness is eliminated.

1.3 Context – Legacy Housing Programs

As the public housing program stopped developing new units, federal and then the provincial

government initiated a number of non-profit housing programs. While these programs had a

number of variations in their design, they generally fall into three categories:

1. Federal housing programs: From 1981 to 1988, under Section 15.1 and then Section

56.1 (subsequently renamed as Sec. 95) of the National Housing Act, Peel Living created

2,315 units in 20 developments. Ultimately in Peel Living, 47 percent of combined 15.1

and 56.1 units are RGI, including 18 percent (of the total) funded through rent

supplement. The balance of the units had rent levels set at low end of market, rather

than average market rent. The operating agreements require regular payments into a

capital reserve fund to be used for repairs that were beyond the scope of annual

maintenance budgets. In the Sec. 95 program the federal government pays an ongoing

operating subsidy to help reduce the cost of the mortgage payment. (This subsidy is

scheduled to expire when the mortgage is paid off.) In addition, the province had the

option to provide additional rent supplement to a specific number of units to allow

tenants who could not afford low-end-of market rents to have affordable housing. The

annual Federal government subsidies will begin to expire as early as 2016 on two Peel

Living sites with the expiry of the mortgage. The operating agreement governing

management of these properties will also expire at that time, and all will expire by

2023. Since devolution, the former provincial operating subsidies for the additional rent

supplement units have been the responsibility of the Region.

6.2-9



2. Federal-Provincial Municipal programs: Between 1987 and 1994, Peel Living developed

1,662 units in 14 projects under these programs. Originally, these programs required a

high percentage of RGI tenants (up to 80%), with operating subsidies shared between

the federal and provincial governments according to how many of the RGI tenants were

i o e eed, that is ith e lo i o e a d e ui i g deep subsidy to be able to

afford their housing. In 2000, the federal government relinquished its role in these

programs to the Province, but made a commitment that it would continue to provide

block funding at 1996 levels for the Province to administer until the end of the

mortgages. Shortly afterward, with the passage of the Social Housing Reform Act

(SHRA), the Province terminated the operating agreements providers had signed under

these programs, but undertook to continue to pass through the federal subsidy as

required on an annual basis till the expiry of the project mortgage. The federal subsidy

will begin to decrease in 2022 with the end of the 35-year mortgage of the first project

funded under this program. The last mortgage originally funded under an F/P operating

agreement will expire 2029 and this will mark the end of the federal responsibility for

projects that were developed under these programs. Under the SHRA, as well as

terminating the operating agreements, the Province obliged the service managers,

including the Region of Peel, to pay the balance of the subsidy not provided by the

fede al go e e t that is dete i ed u de the A t s fu di g fo ula. The fu di g formula includes the requirement that housing providers set aside funds annually for

future capital repairs. The majority of tenants pay rent on an RGI basis.

3. Provincial Unilateral programs: Peel Living created 1,385 units in 14 developments

between 1991 and 1995 under these programs. Essentially, these programs attempted

to replicate the F/P programs as set out above, with the province assuming the entire

subsidy obligation, since the government of the day wanted a larger housing program

than the federal government was willing to cost-share. As with the F/P program,

projects funded under unilateral programs had a high percentage of RGI tenants – often

up to 80%. These operating agreements were also terminated by the SHRA and replaced

by a legislative framework and a funding formula that requires a certain amount be set

aside from annual operating budgets in a reserve for future capital work. With the

passage of the “H‘A, the ‘egio of Peel assu ed the p o i ial go e e t s su sid responsibility for projects funded under these programs.

Understanding the financial impact of the expiry of the existing operating agreements on Peel

Living, and on the Region of Peel in its role of Service Manager, is a key part of this study. The

need for funding an increased amount of capital repairs for the aging housing stock is also a key

reason in undertaking this study.

6.2-10



The expiry of the operating agreements make it more challenging to continue to provide

housing that is affordable to the lowest income households in the community. In general terms

the expiry of the operating agreements, after the end of the 35 year period, end both the

mortgage payments that Peel Living has had to make on the properties as well as the operating

subsidies received from the federal government. The Region of Peel has been paying the

portion of the subsidies that the Provincial government used to pay up until the downloading

of housing responsibilities in 2001.

As noted above typically the higher percentage there are of RGI units in a building (such as in

PRHC and Provincial unilateral programs) the greater the need for ongoing operating subsidies.

Municipal organizations and housing sector organizations have been advocating that the

federal government, upon the expiry of the operating agreements (and therefore the end of

the requirement for Federal government operating subsidies), should continue to invest the

same level in housing with a particular focus on ensuring there are funds for capital repairs and

ensuring that the number of RGI households do not decrease.

1.4 Work Plan

A work plan was drawn up by the TWC team in order to analyze the current and future

situation of Peel Living. This execution of the workplan has as its goal devising a financially

viable model for the future of Peel Living to deal with the growing capital repair needs, the

implications of the expiry of operating agreements, and the increasing need for new affordable

housing.

6.2-11



1. Visiting 66 Peel Living sites by the TWC team to view the buildings and discuss the

building issues with the property managers for the various sites.

2. Analyzing the financial and operational data provided by Peel Living staff, including the

long-term projections of operating costs and capital needs (giving consideration to the

implications of the expiry of mortgages and the end of mandated government operating

subsidies). The data analysis also included examining, in a preliminary fashion, some of

the Social Return on Investment (SROI) that occurs through the operations of Peel Living

communities.

3. Combining the information from site visits and from the SROI analysis with the

operational and capital-needs data to create an evaluation matrix which rates the

potential for redevelopment and intensification of the sites.

4. Using this evaluation matrix, creating typologies to classify the 66 Peel Living sites.

5. Through the classification of sites and through the aggregate analysis of the data, a

number of recommendations are provided that set out financial viability options for

Peel Living.

1.5 Highlights of Project Profiles

For each of the 66 sites, a four-page summary has been created (see Appendix D) that

highlights ea h de elop e t s ke i fo atio , including;

Description of the housing stock.

Municipal zoning rules and whether the current building underutilizes the zoning.

Proximity to transit, retail, schools and other services.

Parking utilization.

Current and projected financial operations.

Building condition information.

Recommendations for future directions.

The following is a summary of observations made from the site visits or from discussions with

Peel Living property managers:

6.2-12



A significant portion of the sites are located in good central locations close to transit

(higher order transit in some cases), retail, grocery stores and community, recreational,

education and social services which are attractive to both market and RGI tenants. In

most buildings renting up units is not difficult.

The majority of the sites benefit from having a variety of social and community services

provided in the common meeting rooms on the sites. Services ranging from seniors

hair services and foot examinations to literacy programs for all ages to life-skills in food

preparation help build a sense of community in the buildings and provide a larger social

return on investment (explored in a later section of the report).

The refurbishment of lobbies and stairwells in a number of buildings in recent years has

given a sense of pride to both residents (further helping marketability) and staff of Peel

Living. There are, however, a few buildings with well worn hallways and lobby areas

which give a sense of the building not being looked after.

In a number of the townhouses, the high utility costs for market-rent tenants can trigger

financial strain, which can either lead to rent arrears or quicker turnover of units.

Just over half of the sites have electric baseboard heating, typically a cause of higher

utility costs than other heating systems, although arguably simpler to operate and

maintain.

There are a significant number of parking garages that are underused (in part due to

some tenants not owning cars and in other situations tenants illegally parking in visitor

spots).

While many of the family Peel Living sites work well socially with a high level (80 – 90%)

of RGI households, some Peel Living property managers stated that some family sites

could benefit from a greater mix of market rental units.

There are some sites that underutilize the land and are possible candidates for either

complete redevelopment or intensification through adding to the existing building or

adding a new building on to the site.

6.2-13



2. Financial Information & Operational Viability

2.1 Purpose of This Section

The purpose of this section is to examine the financial information regarding current revenue

and expenses to project the future operational viability of the individual projects and the

portfolio as a whole. The projection uses the assumptions set out below (as provided by Peel

Living/Region of Peel), applies them to the current budget of each property then aggregates

the projections first by program then for the portfolio as a whole.

Examining the operational viability is a useful first step since Peel Living needs to be confident

about what will be required to ensure it can meet its day-to-day obligations. Only then will it be

able to turn to addressing how to fund the capital work that will be required over the next 25

years.

2.2 Financial Projections Based on Current Operations

The base case for future budget years uses the following assumptions:

Projected annual cost increases are:

o Manageable costs: 3%

o Minor capital costs: 2%

o Taxes: from 2.4% to 3.2% annually between now and 2040 (note: tax-increase

projections provided by Peel staff).

o Mandated contributions to reserves: 2%.

o Water & Sewage: 6.0% annually till 2025, then by 2% annually.

o Hydro and gas:

2015 2016 2017 Subsequent years

Hydro 7.1% 0.7% 3.2% 2%

Gas 3.4% 6.6% 6.2% 3%

The assumptions about annual increases to revenue are:

o Market Rent: 1.8%.

o RGI rent: 1.25%.

The assumptions about subsidy are:

o Federal subsidy fixed till expiry of mortgage, then eliminated

o Municipal subsidy generally fixed at current level till expiry of mortgage, except:

Subsidy to PRHC properties balances operating deficit

6.2-14



Subsidy in projects not included in PRHC, 15.1, 56.1 or F/P Municipal

depends on individual arrangements. The aggregate average annual

increase for those projects is 0.8%.

Using the above assumptions, the following chart shows per-program and portfolio projections

till 2040:

The Sec. 56.11 program properties will generally show a substantial operating surplus

each year, especially once the mortgages are paid off, despite the loss of subsidy.

The PRHC properties will require municipal subsidy to break even. It is almost certain

these properties will experience losses every year because the low incomes of the

residents mean rents will be low and cannot equal total operating costs, thus the need

for ongoing subsidy. (In order to help minimize the losses, Peel Living should look at

working with other larger non-profit housing providers to establish operating cost

benchmarks so that Peel Living would be able to examine its operational expenses on a

comparative basis). This is the current financial model for the PRHC program, except

that federal funds contribute to the subsidy while there is debt attached to these

properties. Ongoing attention to managing operating costs, including through

benchmark comparisons with former public housing stock in other Ontario

municipalities, will help promote optimal efficiency and mitigate the need for subsidies

increases, but in its very design, this portion of the portfolio is non-market, so operating

subsidies will be required as long as a large majority of the residents is made up of

households ho a t affo d e ts that e ual ope ati g osts. The 15.1 segment of the portfolio (only one project) is projected to start with a slight

surplus but then begin to show small annual losses as the annual cost increases outpace

the increases in rents.

The FP/Municipal program properties are anticipated to show annual operating deficits

because the base projection is that federal subsidy will not increase beyond current

levels and because expenses are projected to rise faster than rents (as per the base

case). A significant portion of the tenants in the F/P Municipal program properties

receive social assistance as their source of income. Social assistance rates have only

been increasing at 1% annually over the past number of years, less than increases in

building operating costs. Operating subsidies will fluctuate over time because of

changes to taxes, utilities and operating costs but the overall trend is downwards

because the mortgages will be retired on a predictable schedule based on their 35-year

amortization period. However, even as mortgage costs drop, the fact that the majority

of tenants are in low-income households means that this section of the portfolio will

show an operating loss. This is because experience shows that incomes of RGI

1 For consistency with the naming practices of Peel Living, this section of the portfolio is called 56.1 program. In

fact, the program design and subsidy rules of these units are now governed by Sec. 95 of the National Housing Act.

6.2-15



households do not rise as fast as operating costs. However, the charts do not show an

RGI subsidy being applied to the FP/Municipal program to help it break even. Instead,

the deficit is shown as part of the total potential cost exposure the Region faces

regarding the entire portfolio.2

The other projects (i.e. those not funded through any of the above programs) are

projected to show a small aggregate deficit.

The Service Manager has made loans to a number of 56.1 and FF/Municipal program

projects. The repayment of each loan on a 15-year timeframe after the retirement of

the mortgage of the respective projects is included in the base-case projection.

Chart 1: Projected Net Surplus (Deficit) by Program

2 This approach is being used because there is no general consensus across the sector, or definitive legal

opinion, about whether or not service managers are obliged to continue to provide ongoing operating

subsidy after the mortgages are paid off. If there were general agreement that this obligation is indeed

ongoing, then the projected deficit shown for the FP/Municipal program would be substantially reduced

and the municipal subsidy obligation shown in Chart 2 would be correspondingly increased.

6.2-16



Chart 1A: Projected Net Surplus (Deficit) by Program – No Capital Reserve Contributions

Chart 1 assumes no additional municipal subsidy beyond the amounts set out in the

assumptions. The anticipated portfolio result is net annual surpluses till approximately 2027,

followed by annual deficits. Chart 1A is similar except it assumes the elimination of the current

program requirement for contribution to capital reserves, instead leaving capital funding to be

dealt with outside of operating funding.

The chart below shows municipal subsidy that would be expended in the above scenario. Note

the wide variation in the subsidy mandated per program.

6.2-17



Chart 2: Municipal Subsidy Obligation by Program, 2014 to 2040

The major contributor to the fall-off in the mandated municipal subsidy shown in Chart 2 is the

retirement of mortgages in the former FP/Municipal program developments between 2020 and

2030. After that, the majority of the subsidy required on an ongoing basis is in the PRHC

portfolio (and relatively small amount in the non-program properties), because inflation-

adjusted rental revenue is not expected to track inflation-adjusted expenses. (The assumed

general interest rate is 2% annually while, as noted above, the projected annual increase in

market rents is 1.8% and 1.25% in RGI rents.) See chart 3.

(Note: the financial projections for this study are for the period ending in 2040. However, since

the general characteristics of the PRHC portion of the portfolio are expected to remain as they

were, then the general trend of subsidy requirement in those units will probably continue after

2040.)

6.2-18



Chart 3: Inflation-Adjusted Monthly Net Rental Revenue per Unit

Chart 4: Inflation-Adjusted Monthly Expenses Per Unit, by Program

Note that once the mortgages are paid off in the 56.1 Program and then the FP/Municipal

Program, it appears that the per-unit costs will be generally quite close to each other, with the

15.1 project the lowest and the FP/Municipal projects the highest on average. However, all

programs are anticipated to have cost increases that are higher than the general inflation rate

6.2-19



of 2% (the lines rise over time), but anticipated rents will not track inflation and so will fall

elati el fu the ehi d the osts o e ti e. The p oje ts i the othe atego a e e luded from the above two charts because many of them have beds, not units, so direct comparisons

are not possible.)

Sensitivity Analysis

Here are the results of a sensitivity analysis, starting with the base case above, using the

following variations:

1. Manageable cost increases are 2% per annum instead of 3%. All other assumptions are

as in the base case.

2. Market-rent increases are 90% of base-case manageable cost increases (i.e. 90% x 3% =

2.7% per annum instead of 1.8%). All other assumptions are as in the base case.

3. Hydro and Gas costs are 100 basis points above the base case. All other assumptions are

as in the base case.

4. The final sensitivity analysis changes two variables at once. Hydro and gas costs are 100

basis points above base case, and market rents increase by 2.7% per annum instead of

1.8% as in the base case.

6.2-20



Chart 5: Sensitivity Analysis vs. Base Case; No Subsidy Beyond Legislative Requirement

Notes:

The base case starts to go into negative territory around the year 2027. Having higher-

than-projected costs for hydro and gas would accelerate that process.

Controlling manageable-cost increases to 2% rather than 3% per annum delays the

point of crossing to negative till around 2037, and the subsequent losses are relatively

small.

A major determining factor seems to be the ability to charge market rents that track

cost inflation. If market-rent increases could be 90% of cost increases, then the portfolio

would run a surplus every year.

Even with higher-than-anticipated utility costs, the ability to have market rents track

cost inflation would allow the portfolio to stay in the black for most of the period under

discussion.

The above scenarios assume municipal subsidy is limited to the currently mandated obligations.

However, in three of the five scenarios, additional subsidy would be required to allow the

6.2-21



portfolio to break even on an operating basis. In the base case, this additional subsidy would be

required beginning in 2027, as shown in the following chart.

Chart 6: Base-Case Subsidy Obligation Compared to Additional Subsidy Required for Break-even

Note that the above calculation of additional subsidy would only apply to the base case. If the

operating results varied from the prediction of the base case (e.g. costs and revenues vary

according to the other scenarios presented above), then the subsidy requirement would vary

accordingly.

2.3 Cost-Control Opportunities

A major variable in determining operating results in the coming years will be cost control. The

following chart compares per-unit manageable costs, minor capital expense and utility costs for

the three major program groups in the portfolio. These are: PRHC (1,011 units), 56.1 Program

(2,315 units) and the FP/Municipal Program (3,105 units).

6.2-22



Chart 7: Annual Per-Unit Costs, Selected Programs

Although manageable costs are similar in all three program groups, it is interesting to note that

the oldest program has the lowest per-unit manageable costs and the newest one the highest.

Also, note that utility costs are higher in the newest program group. Although one might

perhaps expect the newer units to have better insulation, it is also true that many FP/Municipal

projects have electric heat because the provincial government of the day tended to approve

capital cost budgets that only allowed for baseboard heating rather than the more expensive

boilers. It has been claimed that baseboard heaters allow for lower maintenance costs than

other heating systems, but Peel still has higher manageable costs in the FP/Municipal portion

of its portfolio.

Based on the above charts, it appears that improving energy efficiency to reduce the rate of

cost increase would be the most effective approach to improving operational effectiveness. It

would be worthwhile for Peel Living to conduct a cost-benefit analysis of capital investment in

improving the energy efficiency of the portfolio, combined with a renewed program of tenant

education about the importance of conservation.

The following chart ranks the projects according to total utility cost. A focus on reducing the

energy consumption of the highest-cost quartile of projects may yield worthwhile results.

6.2-23



Chart 8: Utility Cost per Unit (2014), by Project.

(The project marked in red and all the ones to the left constitute the most expensive quartile.)

Chart 9: Manageable Cost per Unit (2014), By Project.

6.2-24



Manageable costs are always an area where housing providers are seeking improvement. Of

the 17 projects that constitute the highest-cost-per-unit quartile, 10 are in the FP/Municipal

Program, four are 56.1 projects, two are PRHC and one is not funded through a program. It may

be useful to investigate why this pattern appears. It could be nothing more than the original

base budgets of FP/Municipal projects were set higher than in other programs, so cost inflation

has kept them higher on average. However, if there were another factor that could be

identified and addressed, then this would have a positive effect on the bottom line.

Another consideration would be to find ways to keep increases in manageable costs below 3%

annually. Consistently increasing manageable costs significantly above inflation3 will put

pressure on the finances of the corporation, while controlling these increases to below 3% will

reduce the need for additional municipal subsidy. As a long-term target, annual increases of 3%

may be somewhat conservative. On the one hand, Peel Living has budgeted for above-inflation

annual increases to staff salaries (3.0%) and benefits (4.0%). Furthermore, an aggressive

preventive maintenance program may also lead to higher cost increases in the short term. On

the othe ha d, Peel Li i g s a agea le osts pe u it a tuall d opped . % et ee 2011 and 2013 and the budgeted increase from 2013 to 2014 was only 2.3%, so keeping cost

increases below the long-term target has been achievable recently. (By way of comparison, the

cost factors for 2012 to 2014 set by the Ministry of Municipal Affairs and Housing averaged an

annual increase of 2.51%.)

The final key component of the annual budget to consider is market rents. If Peel Living can

raise market rents by the maximum permitted under the Ontario Rent Regulation Guidelines

and also be aggressive in setting market rents on turnover (to the extent permitted under

program guidelines while these are in force and then as much as the market will permit), this

additional income will go straight to the bottom line.

None of these projections assume a change in the current portfolio RGI/market mix. Since one

of the goals of social housing is to provide good-quality housing at an affordable price for low-

income households, it would appear to be good news that Peel Living will not have to reduce

the RGI percentage in its portfolio to stay viable assuming the Region is willing to continue to

provide a subsidy to bridge the gap between what low-income tenants can afford and the

market rent.

The projections also do not take into account the possible costs and revenues associated with

demolition, intensification, sale or repurposing of any sites. These projections are solely

focused on operational viability of the current portfolio.

3 The actuarial assumptions listed in the o po atio s o solidated fi a ial state e ts i lude . % pe ea as

the future inflation rate.

6.2-25



2.4 Conclusions – Operating Viability

FINDINGS:

1. The base-case operating projection from 2015 to 2040 shows relatively small annual

surpluses in the short term, rising to a high of $5.8 million in 2020 before falling into a

negative amount in 2027.

2. The operating projection varies dramatically from program to program. This is primarily

a function of the mandated targeting plan of the programs. The PRHC program shows

no operating deficit because the required subsidy is included as a source of revenue.

The FP/Municipal program shows large deficits because there is no built-in subsidy.

(Both of these programs have a high percentage of RGI tenants.) The 56.1 program runs

a surplus because it has a higher proportion of market rent tenants (i.e. rents are much

higher than RGI and also rising more quickly over time).

3. This projection indicates that an ongoing subsidy from the Region will be required for

Peel Living to break even. However, the rate of increase in subsidy between 2015 and

2018 will be substantially less than the projected rate of municipal tax increase. Subsidy

would then decline in 2019-2030, beginning to rise again around 2031. Adjusted for

inflation, the annual subsidy required for a break-even budget, excluding capital repair

expenditures, is projected to be at all times less than the 2014 subsidy.

Chart 10: Annual Subsidy Required for Break-even Budget as Percentage of 2014 Subsidy (Constant $)

6.2-26



4. As mortgages expire and legislatively mandated subsidy ends, rental income will cover

an increasing percentage of total costs, rising from the current level of approximately

62% to a high of 83% after 16 years and then falling back to around 77% by 2040. (The

decline towards the end of the period is directly a result of the assumption that

projected revenues will rise more slowly than projected costs).

5. Controlling increases in manageable costs, vacancies, and utilities will have a significant

positive effect on the bottom line. Reductions in these cost increases would reduce the

need for municipal subsidy.

IMPLICATION FOR ADDRESSING FUTURE CAPITAL NEEDS

The projections shown above are for annual operations only. They do not include the provision

of funding for capital work. Since the projections show the Peel Living portfolio as a whole will

need some level of subsidy to break even on an operating basis, Peel Living therefore cannot

fund its future capital needs without additional assistance. (The amount of assistance will be

somewhat dependent on how closely the operating results match any of the cases in the

sensitivity analysis.) This is as expected in an organization whose role is to provide rents well

below market levels.

Nevertheless, Peel Li i g s o e all fi a ial situatio appea s to gi e g ou ds fo opti is that it can manage its future capital requirements in a way that can be affordable for the Region.

The surpluses identified in the first few years of the projection provide an opportunity to fund

some capital requirements directly from operating revenues, or to borrow funds to do the work

immediately and then begin repayments from the operating surpluses. Since the subsidy

requirement is projected to decline in real terms over the following years, it will be possible for

the Region to assist Peel Living in meeting future capital needs without a significant real-dollar

increase in the total municipal subsidy contribution.

This issue will be subject to a more in-depth examination in the next section of the report.

6.2-27



3 Capital Needs

3.1 Introduction

Peel Li i g s po tfolio, uilt f o to 8 with an average age of approximately 29 years,

consists of approximately 7,100 units in high- and low-rise apartments, townhouses and

stacked townhouses.

The most recent building condition assessments (BCAs) commissioned by Peel Living have

identified issues regarding the state of individual buildings as well as potential capital shortfalls

across the entire portfolio.

Note: A Building Condition Assessment is an inspection and assessment of the physical facilities

of the buildings. Typically a BCA will include:

Inspection of building envelope, interior finishes, electrical/mechanical systems and

accessible structural components

Assessment of fire/life safety and exterior site features (i.e., walkways, roadways,

parking, landscaping, etc.)

Written and photographic documentation of each component together with observed

deficiencies

Review of general documentation on repair/maintenance history of the elements, if

available.

Cursory review of drawings and/or previous reports pertaining to the building, if

available

Interviews and discussions with on-site staff regarding repairs/maintenance conducted

on the building

Compilation of findings in a written report including observed deficiencies, together

with a list of recommendations for repair/replacement with associated estimated costs.

BCA s ha e li itatio s i that t pi all the involve visual inspections and that the accuracy of

the projections about the lifespan of building components can vary from industry standards

depending on the quality of the original construction. The older a BCA is, the less reliable the

projections typically are.

The project team has sought to understand the physical state of the Peel Living buildings and

complexes by

Analyzing the BCA data and providing detail as to the costs of improvements done over

the years 2009-2013;

6.2-28



Analyzing Facility Condition Index (FCI) summary data to indicate the condition across

the portfolio as well as for each site/building as data allows. (The concept of FCI is

examined later in this section);

Determining capital repair shortfalls and requirements for upcoming years.

Note: I p o e e ts efers, in this section, to repairs, replacements, modernization and

upgrades which are not part of routine operating costs, processes or budgets.

3.2 Building Condition Assessment Data

BACKGROUND

In 2009, Peel Living hired Nadine International, a consulting engineering firm to conduct a

complete assessment of the condition of its portfolio. Nadi e s BCA provided Peel Living with a

visual evaluation of its entire housing portfolio by building. Peel Living is due to update its BCA

data in the fall of 2014 and is currently validating the 2009 BCA through Asset Planner

software, which also allows for FCI (Facility Condition index) analysis across the portfolio.

While the recently updated FCI figures need to be further refined in the near future to include

the results of the forthcoming 2014 Building Condition Audit, the portfolio appears in good

condition over all.

BCA DATA ISSUES

The BCAs have not been fully updated since 2009 and therefore are somewhat dated as

the physical state of the buildings has changed over the past five years – some building

components have deteriorated more quickly than expected in the 2009 projections

while other building components have lasted longer than projected. In addition, over

the past five years some unplanned or reactive capital repairs have been undertaken

and other scheduled capital improvements based on the BCAs have had to be

postponed.

BCA data in 2009 was collected by observation only. The new 2014 BCA studies will be

more intrusive in their investigations by physically examining some of the mechanical,

ele t i al a d othe uildi g o po e ts ehi d the d all. The 2014 BCA should

also consider the interior visual appearance of the rental units and the exterior

appearance of the buildings/townhouses as it is important for Peel Living to be able

easu e the u appeal of the buildings.

For costs that were applied to multiple sites (i.e. multi-site contracts), Peel Living

assisted by breaking out a site-specific cost attribution. For the most part, there are no

building-by-building cost breakouts of improvements already carried out on sites with

more than one building – for instance, a site with both an apartment building and

6.2-29



townhouses – which creates some uncertainties in the data used.

BCA NEEDS SHORTFALL – Looking Back

The BCA figures highlight the continuous need to renew capital assets. There has been

significant shortfall of funding compared with BCA-identified needs over the last four years.

From 2010-2013 those needs averaged over $19 million per year while spending on

improvements averaged approximately $10 million per year – a total shortfall of almost $40M

million across the portfolio.

Chart 11

RECENT IMPROVEMENTS 2009-2013

The project team analyzed spending on improvements across the portfolio from 2009 to 2013.

Approximately $50M was spent on improvements in this period. Chart 12, below, breaks down

this sum by the percentage allocated to each type of improvement over the last five years.

Over 25 percent of all improvements are for the exterior building envelope (more if

windows are included).

Paving and parking including underground parking also accounts for almost 30 percent

6.2-30



of improvement spending within the period. (This reflects life cycle needs at the current

age of the portfolio and may not be typical in future.)

Chart 12

3.3 Facility Condition Index

BACKGROUND – FCI

The Facility Condition Index (FCI) is an accepted industry standard used to measure the

condition of properties in a portfolio. This index is the value of the outstanding work required

(deferred costs) divided by the current replacement value of the building expressed as a

pe e tage. Fo e a ple, if a uildi g s epla e e t alue as $ illio , a d the alue of the outstanding work on the building was $500,000, the FCI would be 5.0. The generally

a epted a ge of FCIs fo esta lishi g a uildi g s o ditio e p essed is shown below. The

lower the value of the FCI, the better condition a building is in.

6.2-31



Benchmarks are:

0-5% asset is in good condition

5-10% asset is in fair condition

10-30% asset is in poor condition

30% + critical condition

Overall, as FCI increases, assets will experience:

1. increased risk of component failure

2. increased facility maintenance and operating costs

3. greater negative impacts to residents and staff

As well as measuring the condition of a single building, group of buildings, or allowing for

comparisons with a total portfolio or between different portfolios, the FCI can act as a rule of

thumb for the annual reinvestment rate (funding percentage) that is needed to stop the

deferred maintenance backlog from growing.

The FCI can be used to describe the absolute and relative condition of each building, and the

spending required to complete all needed repairs and improvements (eliminate deferred

maintenance). The FCI is a s apshot of the uildi g s o ditio o , a d indicates which

buildings have the greatest need for repairs and maintenance relative to their value.

PORTFOLIO FCI AVERAGE

The FCI for the Peel Living portfolio on average is just over six per cent. This indicates that the

portfolio as a whole is good to fair condition, with some remedial work required. The portfolio

has been underfunded over the period of the analysis from 2010 to 2013. The average BCA

costs estimated as necessary for this period were approx. $19M/year. On the other hand,

improvements actually made over this same period were approximately $10M/year.

The 2009 BCA data is thought to be out of date, as noted above. More recent data on

improvements has been entered into Asset Planner so the updated FCIs take into account work

done between 2009 and December 2013. Furthermore, the visual method of inspections used

in 2009 did not allow for a sufficiently thorough investigation, thus making the projections less

reliable than desired. The 2014 BCA is expected to be more intrusive and therefore provide

both updated but also more detailed information.

The six-per-cent average FCI figure across the portfolio may be a little higher than is the case as

the 2009 BCA has recently been revalidated. Improvements have been incorporated and

deferred BCA items are being re-examined. FCI estimates are expected to be moderately lower

6.2-32



as a result of this process. The new BCA to be tendered in the fall will more adequately verify

the state of the portfolio and building conditions.

Within the Peel Living portfolio, there is a wide range of ratings. The 2014 FCIs across the

buildings in the portfolio are presented in Chart 13, below. The buildings have been grouped by

condition to illustrate overall portfolio condition. Of particular concern are the 12 buildings that

have high FCI s ed , which indicate they are in relatively poor condition. Of the other

buildings, 21 are in fair condition and 32 are in good condition.

The BCA/FCI analysis generally lines up with the information provided by property managers

and the visual impression from the site visits.

6.2-33



Chart 13

6.2-34



FCI ANALYSIS

As noted above, the average FCI across the buildings in the Peel Living portfolio is

approximately six per cent. The overall asset condition for the portfolio is good to fair. This

is partially a reflection of the age of the buildings. Buildings on average are almost 30 years of

age, and 29 buildings are more than 30 years old. The FCI also factors the type and size of the

building in the index.

The relatively good news is that there are no buildings in the critical category (over 30% FCI),

i.e. buildings that require constant emergency work and major system replacement. Twelve

buildings (17% of the Peel Living portfolio) currently fall into the poor condition category.

Buildings in this condition are beginning to show signs of wear. There are increased facility

maintenance and operating costs as well as increased risk of major system component failure

such as building envelope, heating and plumbing, boilers, windows, elevators, balconies, roof

replacements etc.

As a result of deferred capital spending there may be more occurrences of system and

component failures resulting in more reactive and emergency approaches. Staff time may be

diverted from regularly scheduled maintenance and there will be greater issues with residents

as a result of repair issues.

The esults he e suggest that hile the FCI s of olde sto k sho elati el ell, the also a a greater projected cost burden as assemblies, systems and finishes face expiration of their

anticipated life cycles. It is less a question of whether these assets will require capital

expenditures than how much and when.

FCI ASSUMPTIONS

Some of the needs are based on replacement of the same/similar technology

No allowance for future technology and advancement or altered work practice

FCI may be skewed because underground parking costs are associated with one building

and not factored between buildings.

Needs generated by the Asset Planner software are based on lifecycle and do not

always reflect the actual operation i.e. the asset software (via the BCA) might suggest an

interior repair in 2016, with the repair costs a percentage of the replacement value of

that component; in reality Peel Living performs some of this interior work at turnover.

3.4 Capital Repair Practices and Energy Conservation

ENERGY CONSERVATION

On a case-by-case basis, Peel Living has been replacing older building components with the

6.2-35



most efficient technology available. While there is presently no formal overarching Peel Living

energy conservation program in place, Region of Peel Energy Management has worked with

Peel Living to set energy-efficiency standards to ensure up-to-date technology. The present age

and condition of the Peel Living housing stock presents an opportunity to replace old and

inefficient equipment with more efficient equipment. Peel living staff continues to look to

high-efficiency equipment for space heating and hot water heating on a portfolio-wide basis as

a best practice.

The Canada-Ontario Affordable Housing Renewable Energy Initiative (REI) (2009) provided

funding for Peel Living to install solar technology in five projects. Hillside, Ridgewood and

Wedgewood are now using solar power to heat their domestic water. Savings in energy

consumption are being monitored. Derrybrae and Erindale have photovoltaic systems that are

intended to feed electricity into the grid but are not yet operational.

Peel Living has 38 electric-baseboard-heated buildings/sites. (A list of sites with electric

baseboard heating is set out in Appendix B.) The higher cost to heat these buildings, resulting

from the higher cost of electricity as a source of energy for heating, presents both a challenge

and an opportunity for Peel Living to reduce future energy costs. Currently, staff from Region of

Peel Corporate Energy are preparing an investigation of the available options, that is, weighing

the merits of installing more efficient electric heating machinery as opposed to changing the

entire heating system.

It would beneficial to have Peel Living conduct a full energy audit of its buildings. Following this

there should be a cost/benefit analysis of the alternative energy retrofits/replacements

possible across the portfolio and within individual buildings.

CAPITAL AND MAINTENANCE SPENDING PRACTICES

As noted earlier, there are challenges in working with a five-year-old BCA. Staff also indicate

there were issues with the 2009 BCA projections. Staff felt that the 2009 BCA, based on visual

inspections, did not reflect the true reality in some of the buildings. As a result some capital

needs were not articulated by the 2009 BCA. In fact staff indicated that more intensive work to

determine the efficacy of foundations and structural integrity would need to be part of the RFP

requirements for the new BCA work.

Staff also have come to believe that the lifecycle projections are too short and in fact systems

are lasting longer than projected. Staff indicate that the most critical needs across the portfolio

are now being prioritized and investigation processes have been improved – more intrusive

testing and processes will be put into the requirements for the new BCA RFP before it is issued.

Efforts have been made more recently to fund critical needs as opposed to giving all buildings a

component piece of funding annually. Procurement for work across the portfolio has also

become more cost-effective as multiple site tenders are issued for items such as windows and

6.2-36



furnaces.

Capital and maintenance oversight are becoming more integrated within Peel Living. Unit

turnovers for instance and the costs associated with this work are being validated with the

2009 BCA so as to make the next BCA a more accurate reflection of projected capital costs. In

other words the new BCAs will not reflect current work being done at turnover and as a result,

BCA, maintenance and operations costing will be more precise.

A continued shortfall of capital funding for scheduled replacement of assets would pose

challenges across the portfolio, including:

deferral of replacements may eventually result in more emergency failures and

unscheduled outages;

emergency/unforeseen critical repairs are more expensive than pre-planned and

scheduled work, due to after hours work and limitations in obtaining competitive bids

during emergency work – opportunities to enhance methods for innovation/code

improvement may also be lost;

opportunities for economies of scale through more preventative approaches may also

bypassed.

BCA NEEDS AND PER-UNIT COST

As an additional metric, the consulting team determined a per-unit cost of future capital repairs

for each site/building as BCA data was available. As noted earlier, the reliability of the

projected BCA data is an issue until an update of these figures is calculated once the BCAs are

updated in the fall of 2014. From 2010-2023 there are two buildings that have expected per

unit capital costs over $56,000. Appendix A lists the buildings with the highest capital

expenditures needed through to 2023. On average unit BCA costs across the portfolio in the

period were approximately $2,300 per unit/year.

6.2-37



Chart 14

(The X axis lists the various projects, not identified here by name.)

6.2-38



3.4 Future Directions – Building Conditions and Capital

BUILDING CONDITION SHORTFALL – Future Needs

1. According to the 2009 BCA there are significant capital renewal requirements for the

next ten years (2014-2023) as Chart 14 on the previous page indicates. When comparing

2009 projected BCA costs to the Capital Plan by building for the next 10 years there is a

projected capital shortfall (over and above the planned expenditures of $14 million

annually) of over $60M for the portfolio as a whole. These figures will need to be

updated upon the completion of the 2014 BCA in order to fine tune the amounts of

capital needs expenditures.

2. Based on a revised FCI index with revised and validated 2014 BCA data approximately

$20 million annually would be required to maintain the portfolio in good condition at an

FCI of 5%. These annual amounts include the funds required to eliminate the current

deferred unmet BCA needs from 2009 to 2013.

In sum, the recent FCI analysis concludes that Peel Living must spend $20 million annually

($2,800/per unit) from 2015 through the foreseeable future.

FINANCIAL OPTIONS FOR CAPITAL REPAIRS/CAPITAL EXPENDITURES

There are significant financial challenges with the funding of needed capital repairs. Assuming

Peel Living has a goal of eliminating the back log and keeping up to date on addressing capital

needs – there are three major options to consider for paying for such work:

A. Continue with the current practice of making annual contributions to and withdrawals

from an annual reserve.

B. Pay-as-you-go on an annual basis (this is the approach Peel Living has been moving

towards).

C. Borrow against the portfolio asset and cash flow (with the backing of the Region) to

carry out the work and then pay off the debt as part of a long-term asset-management

strategy.

Since current reserves are practically exhausted (or will be shortly), option A is essentially

impractical. The size of the contributions and withdrawals would match, rendering the concept

of a reserve redundant, and making this option look essentially the same as Option B.

Option B is also problematic. Current contributions to capital reserves are approximately $5

million annually. Applying this to the required $20 million identified above as the 2015

requirement would leave a shortfall of approximately $15 million. This shortfall could not be

addressed without a significant contribution of funds from the Region. In fact, the implication of

the annual capital needs figure is that an immediate and permanent increase of between $15

6.2-39



million and $20 million in Regional subsidy over current annual projections would be required.

The impracticality of Options A and B thus require a focused investigation of Option C,

borrowing for current needs with repayment coming from future cash flow. Here is one

approach, presented for discussion purposes.

Let us assu e the fu ds a e o o ed i t a hes e ual to fi e ea s o th of apital eeds, minus the amounts that had already been planned to be contributed to capital. Thus, over the

next 25 years, the borrowing would be:

Table 2: 25-Year Borrowing Plan (Example for

Discussion)

Tranche Year Amount

1 2015 $75,000,000

2 2020 $84,000,000

3 2025 $93,000,000

4 2030 $97,000,000

5 2035 $97,000,000

Total $446,000,000

For each tranche, repayment amounts are calculated based on the following assumptions:

It will not be possible to spend all of the tranche in the first year, so assume the actual

borrowing and spending takes place over the first three years of the five years. Thus, funds

would be advanced on an interest-only basis till the entire tranche had been used up. At that

point, P&I payments would begin.

The current Infrastructure Ontario rate for lending to municipalities is 3.66% on a 25-year

amortized loan. Assuming a slightly more conservative rate of 3.75% both for the interest-only

time and the amortization period, the cashflow for the first tranche would be:

Table 3: Cash-flow for First Tranche of Capital Borrowing

Year 2015 2016 2017 2018 2019

Funds Advanced ($25.0 m.) ($25.0 m.) ($25.0 m.)

Interest-Only

Payment

$0.3 m $1.2 m $2.2 m.

P&I Payment 0 0 0 $4.66 m $4.66 m

Total Payments $0.3 m $1.2 m $2.2 m. $4.66 m. $4.66 m

The payments of $4.66 million would continue for the following 23 years.

The process would be repeated every five years, with the principal amount for each tranche

being as shown in Table 2. Of course, the remaining P&I payments from previous tranches

would still have to be made till each one was retired, so the overall payment flow would be as

follows:

6.2-40



Chart 15: 25-Year Cost of Capital Borrowing Projection

Although this approach involves spending more money in absolute terms than the pay-as-you-

go approach, its advantage is that it creates room for a more affordable cash flow without

delaying the work.

The payment stream is extended beyond the actual period the funds are expended, but since

payments start to drop after 25 years, there is financial room at that point to finance very long-

run capital repairs that cannot be estimated at this time.

It should be noted that as current interest rates are at historic lows, the projections are based

on Region of Peel assumptions of rising interest rates beginning in 2020. Due to the difficult

nature of long-range forecasts, interest rates were assumed to be 5.85% for every tranche from

2020 onwards.

6.2-41



Chart 16: Projected Annual and Average Payments for Capital Needs Borrowing vs. Pay-as-You-Go

Note that the figures and projections rely on the following assumptions:

No change to the current stream of contributions to capital reserve

The capital rese e is esse tiall e hausted at this poi t, a d so a t e elied upo fo significant funds for capital repairs in future. Thus, any remaining funds in the reserve

can be used for emergencies and for minor capital.

Peel Living decides it wants to eliminate the shortfall in capital work within the next five

years.

Peel Living also commits to achieving an FCI rating of 5.0% or better and is not satisfied

with some lower standard, such as the current 6.0%.

Although Peel Living has not done any capital projections beyond 2040, it should be

assumed that there will be additional capital spending required on an ongoing basis. At

that point, Peel Living would again have the option of reverting to a pay-as-you-go

model or else taking on additional borrowing. In the latter case, it is to be expected that

new debt service for additional tranches will still be manageable since the payments on

the earlier tranches will be coming to an end.

In the scenario shown in chart 15 and in the red line in chart 16, the largest financial impact of

capital repairs occurs after about 2030. This achieves a deferral of those impacts until the point

in time where subsidy requirements to achieve operating viability fall to about 30 to 50 percent

of current levels (see section 2). At the same time it enables a higher level of capital repair

spending in the near term to carry out required work.

This approach appears to be a preferred option for ensuring good repair of the portfolio and

also a manageable financial impact. It should be explored in more detail once information from

6.2-42



the 2014 BCAs is analysed.

4. Social Return on Investment (SROI)

4.1 SROI – Introduction

Social return on investment refers to the social, health, quality-of-life and related benefits of

program activities, and to measuring these in specific, detailed, financial terms.

Measuring social return on investment is seen as having potential to help sustain public support

for social housing by demonstrating the alue of Peel Li i g s ole a d se i es. It is also seen

as a basis for future social finance and impact investing (see explanation below) in Peel Living.

This summary is intended as a preliminary foundation for SROI in Peel Living – pointing to initial

steps down a path that will take many months and years to develop comprehensively.

This SROI section summarizes the following matters, following this introduction. Fuller

information on SROI is in Appendix C.

Identifying the main social outcomes of housing – an essential foundation for SROI

Measuring SROI i Peel Li i g o t o pilot i di ato s Next steps on SROI in Peel Living

With social housing no longer funded as part of a federal-provincial social safety net, and

instead supported at the municipal level, it is important to demonstrate the local social benefits

of social housing and the fiscal benefits in terms of savings on other costs. SROI is expected to

support Peel Living s dual mandate in quality housing and opportunities for success for tenants.

Peel Li i g s i te est i “‘OI efle ts rising interest at Peel in measuring outcomes: for example,

Human Services systematically measured social return on its homelessness programs, and Peel

Living has measured the value of new affordable housing (see references in Appendix A).

4.2 Social Outcomes of Housing: Main Dimensions

Research literature points to several main categories of outcomes of housing, at three scales.

This su a is ased o the o sulta t s fa ilia it ith the esea h lite atu e o health, social and economic outcomes of housing – sometimes called non-shelter outcomes. (The

scope of work did not include a detailed literature review.) Appendix C provides a brief

elaboration of each of the following, as well as references to some main research sources.

6.2-43



Table 5: Main Dimensions of Social Outcomes of Housing

A. Individual and family outcomes

1) Physical health

2) Mental health and general well-being

3) Employment and income

4) Educational outcomes

5) Material well-being

6) Outcomes for vulnerable social groups

7) Outcomes for children and youth

C. Broader societal and economic outcomes

13) Economic multipliers

14) Program costs, cost avoidance, and

other fiscal impacts

15) Energy and the natural environment

16) Income inequality and related inequities

17) Conditions and opportunities for

disadvantaged social groups

18) Urban form and structure

B. Neighbourhood & local community outcomes

8) Community connectedness, social capital

9) Social integration/mix in neighbourhoods

10) Safety and security

11) Neighbourhood characteristics

12) Local services

4.3 Pilot Measurements of SROI, and Next Steps

The following summarizes the estimated social return at a portfolio- ide le el o t o pilot SROI indicators. Appendix C provides these at a site-specific level.

Table 6: Total Value of SROI

Outcome Measure Estimated Value in Peel Living

Value of RGI i.e. increased household

disposable income and therefore

purchasing power in the local community $36.5 million (2013-2014 annual)

Multiplier effects of Peel Living capital

repair expenditure.

Job generation: 600 person-years (actual capital 2009-2013); 810 person-years (capital requirements 2014-18)

NEXT STEPS ON S.R.O.I. FOR PEEL LIVING

The consultants reviewed the various categories of social outcomes, and specific variables, with

feedback from Peel Living staff. They were assessed in terms of (a) how measurable the

variable or type of outcome is, and (b) the most feasible measurement approach in Peel Living.

6.2-44



The types of outcomes variables were grouped into the following categories in terms of next

steps on measurement. This is an initial sorting and is expected to require further refinement.

Table 7: Next Steps on SROI

Peel Living pursue as

a priority for

measurement on a

pilot basis

Residential stability (avoiding eviction / involuntary moves)

Value of RGI as household disposable income & local purchasing power

Outcomes for vulnerable groups, e.g. homeless and/or frail elderly

Economic multiplier of capital repair expenditure

Peel Living take steps

to make fuller use of

operational /

administrative data

Income trajectory of individual tenant households

Rent arrears

Employment status

Housing quality (need for major repair)

Car ownership

Peel Living consider

an expanded tenant

survey to obtain data

Enrolment in adult education and computer ownership at home

Sense of community connection

“o ial suppo ts a d eigh ou i g

Explore

measurement in

collaboration with

other Peel

departments and

services, and/or with

other funders of

community services

Effects of social housing on overall segregation by income

Effects of social housing on overall segregation by ethnoracial group

Overall mix of housing tenure and price

Incidence of violent crime and of property crime

Gang activity or drug-related violence

Immigrant settlement services, child care, and Youth programs/recreation

Delivery of targeted social programs to disadvantaged populations

Homelessness prevention programs and Emergency shelter programs

Social assistance costs

Assessment base and property tax revenue

Effect on overall access to better schools, for disadvantaged families

Effect on overall incidence of high shelter/income ratios, etc.

Pursue research

partnerships (usually

applies to more

complex health and

social outcomes)

Hospital costs

Seniors support services, long term care costs, and assisted living costs

Residential energy consumption per household or per person

Energy use embodied in construction and repair materials

Hydrocarbon consumption and greenhouse gas emissions

The following next steps are suggested as ways for Peel Living to make itself best prepared for

fuller measurement and use of social impact measurement and social return.

a) Internal Process

Establish a working group (about 6 to 12 staff with research and operational knowledge)

from Peel Living and relevant Peel departments, to carry SROI forward.

Establish an executive liaison group to provide strategic decisions and resource support.

Communicate to tenants about the processes, at suitable points as SROI moves forward.

6.2-45



b) Clarifying Goals

Critically review the initial analysis undertaken in this report, and revise and refine the

suggested directions as appropriate.

Determine the priority SROI areas for purposes of sustaining public and political support.

Move toward clarifying the aspects of SROI that may be most relevant to potential

impact investing, bearing in mind that specific measures for that purposes will need to

be developed in partnership with potential lenders or intermediaries.

Ascertain the evolving goals of key potential research partners (e.g. Public Health, some

academics, LHINs) and clarify what potential common interests and priorities may exist.

c) Data and Indicators

Confirm what administrative/operational data is most relevant to the SROI priorities of

Peel Living and is also feasible to record, track and extract for SROI purposes.

Establish IT and operational procedures to support SROI use of admin/operational data.

Consider in more detail the costs and benefits of undertaking a tenant survey, possibly

in partnership, that may help track key social outcomes data on a longitudinal basis.

Explore potential to use support agency data to measure outcomes for vulnerable

tenants. (Some agencies may already compile data for their own service management

for reporting to the LHIN, which could also help measuring social impacts of housing).

6.2-46



d) Process and Partners

Participate in provincial processes regarding social housing tenant surveys, with special

emphasis on suitable control groups such as low-income tenants in market rental.

Investigate the possibility of research partnerships with bodies that are well-equipped to

undertake research on health and social outcomes and may be interested in partnership

arrangements with Peel Living. In particular, these may be:

o Peel Human Services

o Peel Planning Department

o Public Health

o Local Health Integration Networks

o Academic

researchers

Make contact with the MaRS Centre for Impact Investing to explore common interests,

potential resources, and frameworks of analysis, and to link to up-to-date information.

5. Analysis of Sites

5.1 Introduction and Evaluation Matrix From the direct observations made of the sites, from the analysis of the planning rules, the

existence of a variety of services, and from analyzing operating costs and capital needs, a matrix of

all 66 sites was created ranking the sites on a number of criteria using scores. The matrix is listed in

Appendix A.

While the rankings assigned are kept simple, they provide a helpful tool to consider the properties

individually in giving direction to Peel Living in how to approach each site in future years.

For example, if the evaluation matrix shows that a site:

is significantly below the density permitted by municipal planning rules.

has a poo FCI ati g, a d/o sig ifi a t apital epai osts to e u dertaken in the next

five years.

has higher-than-average operating costs.

is walking distance to higher-order transit.

then it is likely that this site is a prime candidate for redevelopment.

Or,

If the evaluation matrix shows that a site:

is at its maximum density according to municipal planning rules and the surrounding

neighbourhood has similar or lower density than the Peel Living site;

6.2-47



has lower-than-average operating costs;

is easy to rent up and is close to many services and higher-order transit;

then it is likely that the site has the potential to increase the market rents to help with the overall

revenue stream of Peel Living.

The matrix scoring does not line up perfectly as a predictor of actions for sites to be redevelop. For

example there are some sites which have relatively low capital expenditures planned in the next

five years (a low score for redevelopment potential) and would need Official Plan amendments

(also a low score in redevelopment potential) but have underutilized land and are located on major

transit corridors.

While not all of the Peel Living sites can be so neatly defined (a number of sites could fit in more

than one of the five classifications), the study has created typologies to guide Peel Living with an

assessment of the predominant types of sites and to help provide direction for future actions that

ill p o ide opti al st ategies a d help e su e Peel Li i g s lo g te fi a ial ia ilit .

6.2-48



5.2 Typology of Sites

Our study has suggested a Typology with five classifications for Peel Living sites based on key

variables, such as:

under-utilization of the land;

ease of renting and proximity to key amenities such as transit, employment and

retail/services, and therefore the ability to potentially raise market rents;

need for repairs;

energy efficiency; and

need to improve social mix.

The five classifications are:

1. Full site redevelopment. Variations within this could include:

• Peel Living redevelops and operates the whole site;

• Peel Living sells a portion of the site to a private developer and redevelops part of

site itself; and

• Peel Li i g sells all of site, uses e e ue to epla e lost u its at a othe Peel Li i g site.

2. Intensify or add housing to existing site while preserving all or most of existing buildings.

Variations within this include:

Peel Living adds to existing building/complex and operates entire development; and

Peel Living sells/long term leases a portion of land to private or other developer.

3. Increase operating revenue through increased market rents in good locations.

4. Upgrade physical state of building and/or possible energy upgrades.

5. Change market/RGI mix when it is seen to help with social issues

CLASSIFICATIONS OF 66 SITES IN 5 TYPOLOGIES

The following charts show the breakdown of Peel living sites by typology classifications then the

number of units per classification:

6.2-49



Chart 17

Chart 18

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Chart A.1 in Appendix A has a full list of what sites fall into which primary category, noting that

some of the sites will have primary classifications but could also have a secondary focus (for

example building could have a primary focus on undertaking capital repairs but should also

adjust the RGI/market mix).

The typology classifications link into a number of key objectives in the long-term financial

viability.

The 20 sites with a focus on increased revenue through higher market rents will help

moderately improve the rate of increasing market rent from the base assumption of 1.8%.

The 29 buildings with a focus on the physical state of the buildings will see some improvements

in some buildings at good lo atio s, hi h ould the o e the i to a lassifi atio of increasing rental revenue. A significant number of these 29 sites would have a major focus on

capital work related to potential energy upgrades, reflecting the significant number of sites

with electric baseboard heating.

The five sites to be fully redeveloped should see a significant reduction in energy consumption

costs (four of the five sites have electric baseboard heating) helping with the long-term financial

viability of Peel Living. In newly redeveloped sites there would be many energy efficient options

for Peel Living to consider including higher levels of insulation, use of solar energy to heat hot

water or generate electricity, or geothermal heating.

The five sites to be redeveloped also bring potential to have a moderate decrease in planned

capital expenditures as these five sites have planned capital expenditures of $2.43 million in the

next 1- 5 years and a further $2.97 million in the subsequent 5- 10 years. If redevelopment

goes ahead, most of these expenditures will not be required, therefore lessening the required

capital expenditures.

5.3 Redevelopment and Intensification of Existing Peel Living

Sites

As set out in the above typologies, there are five of Peel Living sites recommended for

redevelopment as well as six recommended for intensification. Both redevelopment and

intensification of sites can be a lengthy process often lasting five years in some cases.

While the process of redevelopment can be long and detailed, there can be a significant

number of positives to redevelopment:

Replacing older stock in need of significant capital repairs with new energy efficient

housing

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Replacing walk-up units with new accessible housing

The potential to increase the number of affordable units in a community

The potential to mix more market housing with social /affordable housing on some Peel

Living sites

The potential to support more efficient use of existing municipal infrastructure through

more intensive use of sites

There are some very significant challenges as well in moving ahead with redevelopment:

The municipal planning approvals process (most sites looking to redevelop would

require at least a rezoning and in some cases an Official Plan Amendment) typically

involves 1 -2 years even if there is strong municipal planning staff support for the

proposed redevelopment/intensification.

Ministerial Consent from the Ontario Ministry of Municipal Affairs and Housing, with

support from the Region of Peel as Service Manager for any demolition of exiting units is

required. A full business case, highlighting a tenant relocation plan, would be required.

Only Region of Peel consent is required if there is an addition/intensification which does

not demolish any units.

The capital funding required to replace units or add additional Peel Living units is

significant, likely close to $200,000 per unit. It is assumed that Peel Living would not be

reducing its total number of housing units in a redevelopment plan (even if the

replacement units are built at a different location). While there can be some significant

revenue generated from the sales of land from its sites (estimates range from $15-

$20,000 per unit for multi-residential land sales but could be in the $20- $25,000 per

unit range for sites close to higher-order transit nodes) it should be assumed that unless

there is a conscious decision to reduce the number of Peel Living units, that there will

not be any net revenue to Peel Living from the sale of land to potential private-sector

developers because that revenue would need to be reallocated to the cost of

replacement units. There have been recent examples where Toronto Community

Housing (TCH) has tried to maximize revenue by, in addition to payment for land,

negotiating with the developer a percentage of the sales price of new condominiums

when they are being proposed as part of the redevelopment. This is an approach Peel

Living could explore to help it maximize the revenue from redevelopment but it would

not be as financially significant as the revenue to be derived from land sales.

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While land sales revenue and municipal assistance through offsetting grants for development

charges and fees can be an important help to new affordable housing development, it is likely

that any significant replacement of units would require capital assistance through Federal and

Provincial government housing funds. There have been Federal and Provincial government

announcements of a five-year extension of the Canada-Ontario Investment in Affordable

Housing Program in both the Federal and Provincial budgets of 2014, although it will likely be

late summer or early fall before full program details, including the amount of funding allocated

specifically for the Region of Peel, are made known.

In the recent Toronto Community Housing redevelopment at Regent Park, for example, Federal-

Provincial investment in Affordable Housing program funds were required in order to make the

replacement of the existing TCH units financially viable.

Studies looking at older social housing stock in other municipalities (Waterloo Region, Kawartha

Lakes and Niagara Region), indicate that unless units are sold for market value (i.e. converting

to ownership housing), rather than being demolished, there will need to be significant

additional capital funding from sources such as Federal-Provincial housing programs or other

outside sources of significant capital funding in order to create new affordable housing which

can replace the existing social housing. In general, the sale of Peel Living sites with a significant

number of units (over 40) will not produce enough revenue from land sales to offset the costs

of replacing those units.

Significant issues in redevelopment related to working with existing Peel Living residents as well

as partnering with the private sector are explored further in Appendix B.

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6. Strategic Directions and Recommendations

Strategic Choices and Opportunities for Peel Living

Looking into the next decade and beyond, Peel Living faces significant financial opportunities,

some challenges, and major strategic choices as a result.

The opportunities are created by two factors. First are real estate opportunities, as Peel Region

continues to grow and becomes more diverse, dense, and strategically located in the Greater

Toronto housing market. Second is the flexibility arising from expiry of project agreements for

the 21 sites (containing about one third of Peel Living units) funded under the 1979-1985 Sec.

95 federal housing program.

The main challenge is aging buildings. For most Peel Living properties, this creates a need for

ongoing capital repair expenditure to keep them in good condition. A second challenge is that

– like all social housing in Canada – Peel Region as service manager and Peel Living will

experience a sharp decline in annual federal subsidies over the next decade, tapering to zero by

20 years from now. This leaves Peel Region with sole responsibility for providing capital and

operating subsidies after that point. This will reinforce the need for Peel Living to reduce the

‘egio s su sid u de o t olli g ost i eases a d a i izi g i o e while continuing

to provide good service to its residents.

Other large housing providers in Ontario are dealing with similar issues of capital repairs and

have taken new approaches. Ottawa Community Housing, for example, has a larger portion of

older public housing stock than Peel Living and has focussed on borrowing on a portfolio wide

basis as a means of financing some of its capital repair backlog. Toronto Community Housing

has also taken an approach of borrowing on a portfolio wide basis in order to support part of its

redevelopment work (which eliminates capital repair backlogs in the units being redeveloped)

as well as borrowing to undertake some capital repairs.

The financial projections indicate clearly that there will be an ongoing need for operating

subsidy to allow Peel Living to remain financially viable. This operating subsidy is projected to

rise at less than the anticipated rate of inflation, meaning the cost in constant dollars to the

Region is expected to decline (as shown on Chart 10). However, significant additional subsidies

will be needed to pay for required capital repairs.

As discussed in Part 3, two of the options that might normally be open to social housing

providers and their funders will not be viable in Peel in future: covering all required work on a

pay-as-you-go basis; and reserve fund contributions and withdrawals. The most viable scenario

6.2-54



appears to be financing (borrowing) for capital needs. This most low-cost approach to

borrowing by Peel Living will involve the backing of the Region. Borrowing will spread out the

cost of the capital work to an extent that it could be more affordable to both Peel Living and

the Region to carry out the work in a timely fashion while ensuring the financial burden is

manageable.

Chart 19: Effect of Capital Needs on Subsidy Requirements

The solid blue area at the base of Chart 19 shows the mandated subsidy as discussed in Section

2, with the added red area being the subsidy that would allow the portfolio to break even in

operations, using the base-case assumptions. The top shaded area shows the effect of

increasing the 2105 anticipated municipal subsidy by 2% annually (i.e. the anticipated long-term

inflation rate). The purple line shows the impact of the pay-as-you-go approach to capital

spending if the entire capital need identified in Section 3 were to be allocated. The green line

shows the effect of borrowing for capital needs as opposed to pay as you go. In summary, there

would be immediate fiscal pressure if the pay-as-you-go approach were adopted, while the

more serious impact of capital spending would be delayed through the borrowing approach.

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The latter would give enough time for operating efficiencies, decisions around sale or

redevelopment of sites or even future grants by senior governments (if any) to take effect and

improve the bottom line.

In broad terms, the borrowing scenario achieves a long-term financial impact that is much

better aligned with gradual annual increments in subsidy. The pay-as-you-go scenario creates

very large financial impacts over the next decade (approximately 2015-2025) before mortgage

debt service and associated operating subsidy requirements have fallen to lower levels.

Note once again that Chart 19 uses data from the base case. If manageable costs were to be

controlled at levels below the base case of 3% annual inflation, or if market rental income were

to rise at a faster rate than the projected 1.8% annually, then the fiscal pressure on the region

would be correspondingly less. Chart 20 shows the potential effect of two other scenarios apart

from the base case, either increasing rents to track cost increases more closely or reducing the

annual increase in manageable costs.

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Chart 20: Effect of Operating Scenarios on Total Subsidy Requirement

Apart from the impact of annual operating results on the overall subsidy requirement, there are

alternative scenarios of the capital picture that would affect subsidy. Examples are:

Peel Living determines that an FCI of 5% is an unreasonably aggressive target and that

6% (or some other target) would still yield good-quality housing,

The revised BCAs, scheduled for late 2014, show the condition of buildings is better than

expected,

Senior government(s) introduce programs to provide funding for capital retrofit and/or

energy-efficiency programs, thus reducing pressure on capital funds.

The capital and operating spending projections used in the base case are quite conservative

(though not necessarily unreasonable in the current age when costs generally are rising at

6.2-57



faster rates than incomes and rents), so future performance that exceeds the assumptions

would have the direct effect of reducing the demand for Regional subsidy.

Another key direction for Peel Living is looking at redevelopment and regeneration involving a

number of its existing sites. Development opportunities exist on various Peel Living sites. These

have arisen as buildable densities change over time as due to changes in real estate market,

planning norms, the introduction of rapid transit, and as buildings age and project funding/legal

agreements expire. And on a few sites there are obsolescent buildings, such as older walk-up

apartments. Several sites are good candidates for overall redevelopment, which could be

carried out in various ways by Peel Living or in partnership with private-sector developers. This

could result in an increased number of affordable rental units; new lower-maintenance, energy-

efficient buildings; more mix of income and tenure; or financial proceeds from sale or lease of

parts of sites which can enhance the overall redevelopment or operational goals of Peel Living.

(Also, if it were decided to demolish some buildings, Peel Living could decide to cancel any

capital work already planned for them.) Finally, some sites are good candidates for intensifying

the use while retaining all or most of the existing buildings.

All this points to the strategic importance of the relation between Peel Region and its arms-

length agency, Peel Living. Decisions may be needed on whether RGI subsidy should continue

to be funded in the existing three forms. To manage the financial pressures of the next 5 to 10

years will require a financial strategy between the Region and Peel Living. Options for funding

or financing capital repairs may involve the Region either as funder or as the key to getting

favourable interest rates from Infrastructure Ontario or private lenders. Progress on measuring

Social Return on Investment (SROI) will depend on research partnerships, including the Regional

Human Services, Public Health, and Planning Departments. Redevelopment may generate sale

or lease revenues but will not easily pay for itself: it is likely to require Regional funding, or

Regional allocation of federal-provincial program funds, or a Regional role in facilitating private

financing.

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Recommendations

Operations

1. Peel Living should pursue a strategy of raising market rents in advantageous site locations,

in order to maximize market rent revenues.

Various Peel Living sites are well located: close to good transit and highways, with shopping,

schools, employment and other services nearby. Market rent units are readily rented out.

As operating agreements expire, a ket e t u its a e set at Peel Li i g s dis etio . (Sitting tenants are covered by the Residential Tenancies Act limits.)

In support of this strategy, Peel Living should undertake a market study of rent levels in key

neighbourhoods where opportunities to increase rents may exist.

2. Peel Living should attempt to set targets for increases to manageable costs that take into

account the three-year rolling average of the provincial rent guideline (and explore the

creation of operational benchmarks with similar large scale non-profit housing corporations

in Ontario), in order to reduce as much as possible the need for municipal subsidy.

3. Peel Living should analyse the options, legal aspects, revenue implications and social

impacts of switching from the current RGI scale to a shallow flat-rate housing allowance subsidy for some share of its units, when operating agreements expire.

This option has the potential to provide assistance to needy households in ways that

improve the revenue situation of Peel Living. Analysis would be required, and this option

would also involve related decisions by Peel Region as service manager.

Capital

4. Peel Living should ensure that the Building Condition Audits planned for 2014 include more

intrusive testing of its buildings; and that FCI ratings and capital budget planning for each

site should be updated upon the completion of these new BCAs.

5. Peel Living should undertake an energy and water audit in co-operation with the Region, to

identify upgrades providing the best payback and restraint of utility costs, and including

review of lessons from recent retrofit work by Peel Living or other providers.

6. Peel Living should systematically examine options, including longer term borrowing, to pay

for the additional $60 million in additional capital expenditures (over and above the

planned annual $14 million) required by 2024, on a portfolio-wide basis.

6.2-59



Multi-year funding for capital work should be on a portfolio-wide basis, not a project-

specific basis. Options may include: use of reserve funds; financing (borrowing) for capital

work with the loans repaid from operating surpluses; more capital work from current

operating revenue; Regional capital funding; or other options. Enhanced capital work is

required in the near term (2014-2018) and will exceed the projected operating surpluses

until the longer term when more mortgages are paid off. Hybrids of these options may be

suitable. The $60 million is an approximate estimate, pending completion of the 2014 BCAs.

7. Peel Living should undertake future financial feasibility updates every five years, using data

from updated BCAs as these are carried out from time to time.

Redevelopment and Intensification of Sites

8. Peel Living should select two full redevelopment sites and one intensification site in late

2014 and proceed with a feasibility analysis and the creation of a business case in 2015.

The feasibility analysis and business case will identify specific costed development options.

The approach to working with existing tenants is integral in this work. It is also likely to

require discussions with the Region of Peel regarding funding from the federal-provincial

Investment in Affordable Housing (IAH) program or regional resources. In support of this

activity, Peel Living should apply for CMHC seed funding and subsequently CMHC Project

Development Funding (PDF) to help offset the costs of this predevelopment work.

Social Return on Investment

9. Peel Living should take initial steps to establish capacity to measure social return, as set out

in this report.

Measuring social return requires research capacity and research partners. The suggested

steps include establishing a working group and executive liaison group; reviewing the initial

analysis undertaken in this report and refining the directions; confirming the suggested

priority areas for SROI measurement; making better use of operational data for SROI and

considering an enhanced tenant survey; and investigating potential research partnerships.

Financial Relation of Peel Living to Peel Region

10. Peel Living should review the implications of this report as they affect its overall financial

relationship to Peel Region; determine a preferred future relationship in collaboration with

the Region as service manager; and take related transition steps.

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Key elements of the financial relationship include or potentially include: the decline over

the next few years in existing funding under the Housing Services Act; ongoing Regional

funding for the PRHC portion of the portfolio; and overall commitment to a 2 percent

annual increase in Regional funding; a Regional role in funding or financing of capital

repairs; a Regional role in funding regeneration or infill development; any adjustments to

RGI or rent supplement funding; and other matters.

Implementation of Report

11. Peel Living should pursue different priorities for each site, along the lines of the typology presented in

this report

Based on the analysis in this report, the typology identifies potential actions and needs in the

categories redevelopment, infill, raising market rent revenues, adjusting RGI/market mix, and

upgrading the physical state of buildings. This provides an integrated set of strategic priorities

reflecting the issues and potential on each site.

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