REPORT TO HOSPITALS AND HOUSING COMMITTEE - Future Housing Partnerships
CRD staff report detailing the proposed $85 million borrowing and the focus areas for future affordable housing.
REPORT TO HOSPITALS AND HOUSING COMMITTEE MEETING OF WEDNESDAY, MAY 03, 2023
SUBJECT
Future Housing Partnerships Alternative Approval Process and Bylaw Amendments
ISSUE SUMMARY
To permit the borrowing of up to $85 million (M) through the Land Assembly, Housing and Land Banking service in support of partnership opportunities related to increasing the supply of affordable, inclusive, and adequate housing in the region.
BACKGROUND
In September 2019, the Capital Regional District (CRD) Board authorized staff to amend Bylaw No. 3712, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010” (Appendix A – showing track changes from proposed Bylaw No. 4551 amendment) to remove a borrowing maximum of $25M under the service as well as remove a 25-year limit on the length of time a housing agreement could be entered into. At the same meeting, the CRD Board also authorized staff to proceed with obtaining elector assent for Loan Authorization Bylaw No. 4327 to permit the borrowing of $10M in support of the Regional Housing First Program (RHFP). The amendment bylaw and the loan authorization bylaw were adopted in March 2020.
As the RHFP was moving toward full program build out, staff advanced a white paper, Future Housing Priorities and Partnerships (FHPP), in July 2022. The white paper identified three areas of focus including:
- Acquisition fund to increase and preserve the supply of affordable rental and create future redevelopment opportunities, purchase of shovel-ready developments or acquire land for development of affordable housing;
- Rural Housing Strategy to increase, preserve and broaden the supply of affordable housing in small and rural communities, recognizing the need to approach housing solutions in rural communities with different assumptions than those used for conventional housing interventions in growing urban regions; and,
- Increase the supply of housing with supports for people with complex needs currently not adequately supported by the traditional model as a compliment to new provincial Complex Care Housing initiative.
The Board endorsed the FHPP and directed staff to develop a program framework and identification of funding partnership contributions to address unmet housing needs in the capital region based on the priorities identified in the white paper. The Board included a fourth area of focus which is to ensure the rapid and ongoing expansion of newly built publicly owned affordable housing in the CRD. Staff will report out on the program framework in Q4 2023.
On September 21, 2022, as part of provisional budget review, the Board directed staff to report back on options for increasing funding for land acquisition for housing. This report was received at the Hospitals and Housing Committee (HHC) as an information report on March 1, 2023 (Appendix B). The HHC passed a referral motion directing staff to report back on the implications of amending Bylaw No. 3712, which was received by the Board on April 12, 2023, where the Board then passed the following motions:
- That staff be directed to bring forward a report with an amendment to Bylaw No. 3712, "Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010" to increase the allowable annual maximum requisition by $5 million to $10 million; and,
- Create a loan authorization bylaw to enable the financing of up to $85 million from the increase of the allowable annual maximum requisition of $5 million.
Due to recent changes in interest rates as well as assessed property values, the estimated annual requisition to support $85 million in borrowing now stands at $5.3M. As a result, the proposed amendment of $0.062 per $1,000 of assessed value equates approximately to a new maximum requisition of $11.5M instead of the $10.0M referenced in the Board motion.
Bylaw No. 4551, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010, Amendment Bylaw No. 2, 2023” is attached as Appendix C and the Bylaw No. 4552, “Land Assembly, Housing and Land Banking Loan Authorization Bylaw No. 3, 2023” is attached as Appendix D to this staff report.
ALTERNATIVES
Alternative 1 The Hospitals and Housing Committee recommends to the Capital Regional District Board:
- That Bylaw No. 4551, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010, Amendment Bylaw No. 2, 2023”, be introduced, read a first, second, and third time;
- That Bylaw No. 4552, “Land Assembly, Housing and Land Banking Loan Authorization Bylaw No. 3, 2023”, be introduced, read a first, second, and third time; and,
- That participating area approval for Bylaws No. 4551 and No. 4552 in the municipalities be obtained via council consent on behalf of electors, and by alternative approval process in the electoral areas, and if successful, that staff provide the bylaws to the Inspector of Municipalities for approval.
Alternative 2 That the Future Housing Partnerships Alternative Approval Process and Bylaw Amendments report be referred to staff for additional information based on Hospitals and Housing Committee direction.
IMPLICATIONS
Intergovernmental Implications
On January 12, 2023, the Province announced the creation of a $500M fund administered by a newly created Rental Protection Fund Society (RPFS) to enable non-profits to purchase buildings and protect affordability for current and future tenants. Though there remain key details that have yet to be announced, staff have engaged BC Non-Profit Housing Association (BCNPHA), who is actively working with other stakeholders to develop the RPFS.
Preliminary discussions have identified a viable path toward a possible partnership between the CRD and the RPFS to acquire and protect existing Naturally Occurring Affordable Housing (NOAH) within the capital region. However, as the RPFS is a newly formed society, more extensive discussions are on hold until it has a Chief Executive Officer (CEO) in place, which is expected by the midway point of 2023 and the CRD has a demonstrated capacity to consider investment into a potential partnership.
Focusing more broadly on general land acquisition and potential partnerships, the province recently released its 2023 provincial budget, which included the following:
- $394M over three years in new capital funds to acquire lands for future affordable and market housing development along main transit corridors. Full details on how these funds are to be deployed and the constraints/targets informing this investment have yet to be released. Forthcoming information will inform ongoing work related to FHPP.
- $4.2 billion (B) over three years with $2.2B in operating and $2B in capital funding to support Building BC programs. It is important to note that this $4.2B includes the previously mentioned $394M to support land acquisition along transit corridors as well as a range of other investments. Budget 2023 identifies $260M as new capital investment over three years to support Building BC and BC Housing programs, such as the Community Housing Fund (CHF).
- $169M over three-years in capital funding to help create additional complex-care beds to support individuals with complex mental-health and substance-use challenges and whose needs are not being met through the current intervention landscape. Budget 2023 also includes $97M in operating funding to provide clients of this intervention with health-focused supports and services.
Building on the funding commitments made through Budget 2023, the province released Homes for People: An action plan to meet the challenges of today and deliver more homes for people, faster. A summary overview of the four pillars of the action plan, action items and potential connections to current or future CRD initiatives is attached as Appendix E.
On April 12, 2023, the province and the Metro Vancouver Regional District (MVRD) announced a Memorandum of Understanding (MOU) that will help to advance 2,000 units of rental housing over 10-years under the new Homes for People program. Phase 1 of this partnership includes an investment of $158M over three-years from the provincial government and is expected to support 660 new units at five sites identified by MVRD. Foundational to this partnership is a commitment from MVRD of land and cash equity totaling $217M over 10-years.
Though still in the early stages, staff are actively engaging a range of key stakeholders to explore partnership opportunities in the following areas:
- Protect and preserve NOAH in partnership with the RPFS;
- Acquire lands for future affordable housing development along transit corridors;
- Working through the Capital Region Housing Corporation (CRHC), apply for any funding programs as available to advance the acquisition of lands and/or fund the capital costs associated with developing new affordable rental units;
- Develop scoping and feasibility for a Rural Housing Program, including advancing partnerships with other agencies and pursuing funding opportunities;
- Working in partnership with the Capital Regional Hospital District (CRHD), collaborate with Island Health (IH) and the Ministry of Mental Health and Addictions to explore partnerships related to complex-care housing; and,
- Look to the model of MVRD to consider a longer-term MOU that could leverage CRD investment, if available.
Service Delivery Implications
As the current capacity under Bylaw No. 3712 is fully committed to already approved initiatives, consideration of any additional projects will require new resourcing. The recent announcements from the provincial government provide several areas of opportunity that staff are actively exploring. Should the CRD create the capacity to invest into potential partnerships, it will demonstrate an enhanced commitment to addressing key regional challenges and will also provide staff with the ability to signal to prospective partners the opportunity to leverage and layer funds to achieve a greater impact than would otherwise be possible.
It is also important to note that any efforts to advance work related to FHPP involved two related, but distinct steps. The first is to create the capacity, which involves an amendment to Bylaw No. 3712 and a new loan authorization bylaw. The second step will be to authorize debt on a project-by-project basis or as a part of the annual financial plan approval process.
Alignment with Board & Corporate Priorities
On April 12, 2023 the CRD Board approved the 2023-2026 Corporate Plan. The following initiatives under the Housing Priority are directly related to advancing the recommendations contained within this staff report:
5a-1 Increase supply of affordable, inclusive and adequate housing across the region; 5a-2 Pursue funding opportunities and matching funds to deliver more housing; 5b-1 Support continued investment into existing housing stock to preserve and enhance the quality of the buildings and units; and, 5b-2 Protect existing market rental housing to preserve affordability.
Financial Implications
To access additional funds under this service, the amendment to Bylaw No. 3712 along with the new loan authorization bylaw require approval and adoption.
Upon adoption of both bylaws and before any funds can be expended, the financial plan will need to be updated to include revenue, expenses and borrowings. In addition, before any funds can be borrowed against the loan authorization, the board will be asked to approve a Security Issuing Bylaw.
Bylaw No. 3712 currently has a maximum requisition limit (based on property assessment values) and an existing loan authorization bylaw. The borrowing limit currently authorized is $35M and is entirely committed in support of approved RHFP projects, after which the bylaws will no longer be active.
To establish the capacity to borrow up to an additional $85M, the maximum requisition will need to increase to accommodate the estimated cost of the annual debt repayment. Given recent shifts in interest rates and assessed property values, the estimated annual requisition to support $85 million in borrowing is $5.3M. Based on this estimate and for certainty, the amended maximum acquisition proposed is $11.5M or $0.062/$1,000 of assessed value. The estimated debt servicing costs will be based on the specific future projects and related borrowings, as approved within future Financial Plan Bylaws. For example, if the full $85M were borrowed at the MFA’s current indicative interest rate of 4.4% (as of April 24, 2023), the estimated annual debt servicing cost would be approximately $5.3M, with an amortization term of 30 years. Debt servicing costs are funded by requisition, and actual borrowings in each of the next five years will depend on that year's cash flow requirements.
Legislative Implications
To borrow funds long-term (i.e., beyond five years), the approval of a loan authorization bylaw and subsequently, and separately, a security issuing bylaw are required under the Local Government Act. As part of the loan authorization bylaw approval process, the bylaw requires elector approval. Elector approval can be obtained through consent on behalf of municipal participants and electoral participating areas (by sub-regional AAP), a referendum, or by a regional alternative approval process (AAP) for the entire service area. Consent on behalf of municipal participants, and by alternative approval process in the electoral areas, is initiated when the loan authorization bylaw has received third reading by the Board and approval by the Inspector of Municipalities and are the preferred methods administratively in this instance. These processes will be undertaken concurrently, and are expected to take six months, including the eight weeks of waiting on provincial approval of the assent method and the approval of the service amendment and loan authorization bylaws.
To ensure optimization of interest and timing of long-term debt, issuance of a temporary borrowing will be proposed if Ministerial approval is obtained, and the elector approval process proves successful. The timing of the debt issuance will be based on the timing of expenditures and will be dependent on prevailing interest rates at the time. Before long-term debt issuance can be exercised, a security issuing bylaw will be brought forward for approval. The term of debt issuance under the loan authorization will be 30 years.
CONCLUSION
The current requisition capacity of Bylaw No. 3712 is fully committed to approved initiatives. New initiatives and resourcing will require an establishing bylaw amendment and a new loan authorization bylaw. Both bylaws require Inspector of Municipalities approval and elector assent. If the recommendations within this staff report are approved, staff will seek consent on behalf of electors in the municipalities and will undertake an AAP for the electoral areas.
As part of continuing to advance efforts related to the FHPP, staff have been actively exploring a range of partnerships related to acquiring and preserving NOAH, acquiring lands on or near transit corridors, working through the CRHC to acquire and/or advance affordable housing projects, scoping a rural housing program, working in partnership with the CRHD on complex-care housing, and looking to longer-term partnership opportunities with senior levels of government.
The ability of the CRD to demonstrate a willingness to invest into prospective partnerships will significantly advance these exploratory discussions. Debt will not be incurred, nor requisition increased, until approved on a specific project or through the annual service planning and financial planning processes.
RECOMMENDATION
The Hospitals and Housing Committee recommends to the Capital Regional District Board:
- That Bylaw No. 4551, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010, Amendment Bylaw No. 2, 2023”, be introduced, read a first, second, and third time;
- That Bylaw No. 4552, “Land Assembly, Housing and Land Banking Loan Authorization Bylaw No. 3, 2023”, be introduced, read a first, second, and third time; and,
- That participating area approval for Bylaws No. 4551 and No. 4552 in the municipalities be obtained via council consent on behalf of electors, and by alternative approval process in the electoral areas, and if successful, that staff provide the bylaws to the Inspector of Municipalities for approval.
Submitted by: Don Elliott, MUP, BA, Senior Manager, Regional Housing Concurrence: Kevin Lorette, P. Eng., MBA, General Manager, Planning & Protective Services Concurrence: Kristen Morley, J.D., General Manager, Corporate Services & Corporate Officer Concurrence: Nelson Chan, MBA, FCPA, FCMA, Chief Financial Officer Concurrence: Ted Robbins, B. Sc., C. Tech., Chief Administrative Officer
ATTACHMENTS:
Appendix A: Bylaw No. 3712, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010” Appendix B: Staff Report: Capital Regional District Land Banking and Housing Land Acquisition Financing, March 1, 2023 Appendix C: Bylaw No. 4551, “Land Assembly, Housing and Land Banking Service Establishment Bylaw No. 1, 2010, Amendment Bylaw No. 2, 2023” Appendix D: Bylaw No. 4552, “ Land Assembly, Housing and Land Banking Loan Authorization Bylaw No. 3, 2023” Appendix E: Summary: Homes for People: An action plan to meet the challenges of today and deliver more homes for people, faster
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