Municipal Services Corporation for Affordable Housing

Project Overview

The City of Peterborough is proposing to incorporate a Municipal Services Corporation (MSC) for Affordable Housing, and we want to hear from you. Please provide your comments below. Comments will be reviewed and summarized as part of a report to City Council.

Legislation Governing Incorporation of MSCs

The MSC would be incorporated pursuant to the Municipal Act, 2001, s. 203 (https://www.ontario.ca/laws/statute/01m25#BK221) and in accordance with Ontario Regulation 599/06 (https://www.ontario.ca/laws/regulation/060599).

Why create a MSC?

The MSC would allow the City to be able to retain control over the planning, priorities, and activities of the MSC by virtue of being its sole shareholder.

Background

The 10-year Housing and Homelessness Plan, approved by Council in 2019, established ambitious targets for housing development for the City of Peterborough, as Service Manager for the City and County. To meet all housing needs to 2029, the report states that 580 new rent-geared-to-income supportive housing units are needed, and a further 2,680 below-market rental housing units to meet the needs of individuals and families with low incomes.

In 2017, Peterborough Housing Corporation (PHC) finalized a draft Capital Financing and Community Revitalization Plan that, if fully completed, would add more than 600 units to their portfolio. This would be a substantial contribution to the City’s housing targets. It would also provide much-needed regeneration for buildings in PHC’s portfolio that are nearing the end of their useful life. To undertake this project represents a $468,000,000 total cost and $327,000,000 in anticipated debt to be financed. The plan is that most or all affordable units would move from PHC’s portfolio into the MSC, with all social housing remaining with PHC.

Impact on tenants

The transfer of properties to the MSC should result in no loss of or reduction in service to tenants as it would be expected that PHC would continue offering their tenant services to these properties that would be owned by the new MSC but continue to be operated by PHC. In addition, the overall plans to redevelopment PHC properties to meet the goals of the 10 Year Housing and Homelessness Plan for additional units would be done in a coordinated and staged manner to ensure no reduction in unit availability for existing tenants.

Affordable Housing Development and Municipal Debt

Since 2003, PHC has developed 287 affordable housing units in the City and County of Peterborough. These projects also have associated debt that forms a significant portion of PHC’s debt impact on the City of Peterborough.

The reason for this is that PHC’s financial statements are consolidated with the City’s financial statements; any debt taken on by PHC is a draw against the City’s non-tax supported debt capacity. This consolidation of debt is a limiting factor for future affordable housing development under PHC. The debt capacity issue is a significant barrier to moving forward with PHC’s Capital Financing and Community Revitalization Plan.

As mentioned above, the MSC would allow the City to be able to retain control over the planning, priorities, and activities of the MSC by virtue of being its sole shareholder. As well, a MSC that operates as a Government Business Enterprise (GBE) would alleviate debt capacity issues for the City, which would enable new approaches to developing rental housing. Any debt incurred by the MSC functioning as a GBE would not be considered as part of the City’s debt capacity limitations. The transfer of these properties to the MSC would alleviate the impacts of these projects on the City’s debt capacity while providing the clear opportunity to meet the goals of PHCs redevelopment plans. A total of $43.2 million in debt issued or approved to be issued associated with PHC’s affordable housing projects would be removed from the City’s consolidated debt leaving only $2.4 million in City debt associated with Peterborough Housing Corporation (PHC). It would also allow the new MSC to use various borrowing models, partnerships with the private sector, and to leverage these properties to be able to redevelop and add units. A plan would need to be established with PHC to not only transfer the affordable projects to the new MSC’s ownership but also transfer key properties to be redeveloped over time. Shared service arrangements with PHC would provide the potential to reduce administrative costs associated with the MSC as well.