Financing social housing expenditures Derek Ballantyne

Toronto Community Housing 60,000 units of housing Average unit age 39 years High need for re-capitalization (avg. FCI 23%) Long waiting list for access $600 M operating turn over Debt 21% of revenues Utilities (gas. electricity. water) 18% revenues $650M capital investment 2002-08 $900 M investment requirement 2009-19 High levels of GHG production Target to reduce 40% from 2002 levels by 2020

60,000 units of housing

Average unit age 39 years

High need for re-capitalization (avg. FCI 23%)

Long waiting list for access

$600 M operating turn over

Debt 21% of revenues

Utilities (gas. electricity. water) 18% revenues

$650M capital investment 2002-08

$900 M investment requirement 2009-19

High levels of GHG production

Target to reduce 40% from 2002 levels by 2020

Growing capital investment need The estimate of the total shortfall for the sector is $1,2 billion by 2012 (0.676 x 233,974 x $7,684). Per unit deficits are $7,684 and % of population in deficit by 2012 is estimated at 67.6%

The estimate of the total shortfall for the sector is $1,2 billion by 2012 (0.676 x 233,974 x $7,684).

Per unit deficits are $7,684 and % of population in deficit by 2012 is estimated at 67.6%

Financial outcomes Access to low cost capital Reinvestment New / replacement housing Stabilize investment capacity at 2% asset replacement value Internal ROR (ex basic building components) BCI + 3%

Access to low cost capital

Reinvestment

New / replacement housing

Stabilize investment capacity at 2% asset replacement value

Internal ROR (ex basic building components) BCI + 3%

Toronto Community Housing Three part strategy Invest to reduce operating costs Leverage asset base / cash flows Use corporate debt instruments 2004 – 2008 investment $ 65 M energy efficiency (savings leverage) $ 150M redevelopment financing (50% increased operating cash flow, 50% revenue driven) $100 M repairs and re-capitalization

Three part strategy

Invest to reduce operating costs

Leverage asset base / cash flows

Use corporate debt instruments

2004 – 2008 investment

$ 65 M energy efficiency (savings leverage)

$ 150M redevelopment financing (50% increased operating cash flow, 50% revenue driven)

$100 M repairs and re-capitalization

Financing approach Move from real-estate backed financing Variable risk over time Constrained obligations Placement of corporate debt Bond placement for $250 M Based on overall financial performance Management discipline Encourages enterprise behaviours Enterprise scale limits accessibility

Move from real-estate backed financing

Variable risk over time

Constrained obligations

Placement of corporate debt

Bond placement for $250 M

Based on overall financial performance

Management discipline

Encourages enterprise behaviours

Enterprise scale limits accessibility

Creating a sector (social) solution Key issues How to access asset base of housing organizations How to attract low-cost financing How to manage risk (lenders and borrowers) How to reduce cost of administration

Key issues

How to access asset base of housing organizations

How to attract low-cost financing

How to manage risk (lenders and borrowers)

How to reduce cost of administration

Housing provider A: Cash flow / need access to capital B: No cash flow / Capital investment can yield positive return (e.g. energy) C: No cash flow / No positive return on investment Capital / debt Funders

Proposed Ontario financial facility

torontohousing.ca