Peel Housing Programs & Initiatives
Social Housing Asset Management
As part of each housing provider’s annual budget, there is a mandated allocation for capital reserve funding. This amount of money must be directed to their capital reserve fund for future capital replacement needs. The amount allocated each year is increased based on the rate of inflation.
An analysis based on capital reserve forecasts, reserve contributions and balances indicates that the reserves will not be sufficient to fund future capital repairs and replacements. It has been estimated that some housing provider’s capital maintenance requirements will exceed their reserve balance by the end of 2007, although the timing for individual providers varies. To be clear, the timeframe is based upon action on all items identified in condition assessments, which are inherently high level in nature; more careful prioritization will delay this date. Experience suggests the date is being further postponed by inaction on items that should proceed, which in itself is a concern.
Since the devolution of social housing responsibilities from the province to the municipalities in 2001, the Region of Peel, designated as a Social Housing Service Manager, is ultimately responsible for the funding and administration of social housing in Peel governed under the Social Housing Reform Act (SHRA). The downloading of social housing responsibilities to municipalities has added to an increasingly burdened property tax load. While the responsibility of social housing should be shared across all government levels, it is currently up to the Region of Peel to ensure its social housing stock does not deteriorate at the expense of the residents. This obligation may place the Region of Peel at some financial risk if the social housing providers cannot meet their capital replacement needs with their existing reserve funds.
Peel's Strategy to Mitigate Financial Risk
Region of Peel Council and staff have been aware of this situation for some time. As a result, to ensure that this responsibility is met, the Region of Peel has contributed annually to a Contingency Liability Reserve since 2003. However, reserve levels and contributions are not adequate to sustain the existing social housing stock. Without a long-term strategy to manage capital repairs and replacements, it is forecasted that by 2012 this reserve will also be depleted if contributions are not increased from the current levels.
Asset Management Strategy
The Region of Peel is taking a pro-active role in the management of the housing providers’ reserves and capital repair and replacement planning as a part of an overall corporate Asset Management Strategy. The department began developing the strategy in summer 2006. By providing direct financial and management support, the Region of Peel will mitigate financial risks resulting from its obligations as Service Manager mandated through the SHRA.
Peel’s Asset Management Strategy includes three key platforms for managing capital repairs and replacements:
- Contingency Liability Reserve
- Financial Risk Mitigation Strategy:
- Capital Maintenance Reserve Service Strategy Business Plan (SSBP) created to improve housing provider capacity by identifying issues related to capital reserve management and establishing strategic directions, objectives and actions for establishing standard business practices, procedures and processes, and training and education in capital planning tools, energy programs and management support.
- Advocating as a unified voice with social housing service managers for more senior government long-term commitment. This includes referring the matter through the Provincial / Municipal Fiscal Review.
The Capital Maintenance Reserve SSPB can be found in section 11 of this binder. As the Capital Maintenance Reserve Strategy and related actions are implemented with additional support given to housing providers, it is hoped that the timing of reserves going into deficits can be delayed with a full round of Building Condition Assessments planned for 2007, after which a clearer picture should emerge.
Social Housing’s Future Rests with Senior Government Support
A combination of direct financial support, dedicated staffing resources, and continued lobbying of senior levels of government to contribute their fair share toward social housing as a whole will help to alleviate some of the pressures on social housing providers to maintain their housing stock and thereby sustain Peel’s precious affordable housing supply. A long-term solution will only be achieved once the provincial and federal governments come to the table and contribute equally to social housing in Ontario.