financing social housing expenditures
DESCRIPTION
Speaker: Derek Ballantyne, Toronto Community HousingTRANSCRIPT
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
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Net Annual Housing Expenditures (after removing integovernment transfers)
Federal (gross) * Derived Prov/Terr Local Net after FPT transfers)
Growing capital investment need
Program Deficit per unit % with deficits Total deficit
Other $9,504 46,170 52.5% 24,241 $230,383,858
Provincial Reform $8,718 88,632 61.6% 54,636 $476,344,476Public Housing $5,912 99,172 79.9% 79,267 $468,621,186All $7,684 233,974 67.6% 158,145 $1,215,161,766
Units in Population
Number with deficits
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%
Impact of Capital Investment on Deferred Capital2006 Deferred Capital (Opening) = $300 million
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Total Need After Investment Total Capital Investment
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%
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
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
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
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