Sale of Toronto Hydro Telecom to benefit Toronto public housing|
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Toronto Mayor David Miller today announced that he will seek to have the approximately
$75 million in City proceeds from the sale of Toronto Hydro Telecom invested in the much needed repair of Toronto’s public housing. In addition, Toronto Hydro Telecom will continue to provide the City with significant opportunities for improved public access to technology networks.
The sale of Toronto Hydro Telecom, a subsidiary of Toronto Hydro, was announced by Toronto Hydro earlier today.
The exact amount of the proceeds the City will receive as a result of the sale will be confirmed when the sale has been finalized and Toronto Hydro has completed its year-end. The City of Toronto is Toronto Hydro’s sole shareholder and Toronto Hydro pays dividends to the City each year. A portion of the proceeds from the sale of Toronto Hydro Telecom will be part of the City’s 2008 dividend - and will provide the funding for this new investment in public housing.
“This new investment is an important step to maintaining our City’s public housing in proper condition,” said the Mayor when announcing that he would seek Council approval for the funds to be used for public housing repairs. “The investment we are making today will provide the residents that live in our community housing the dignity they deserve, and allow us to repair and re-open units that were closed due to unsafe conditions. Making this investment now reduces costs in future by reducing our reliance on debt. Investing in our public housing makes Toronto a liveable city and gives those in need of support the opportunity for a full life.”
Using these funds to repair Toronto’s aging public housing stock will mean the City and its housing company, Toronto Community Housing, can complete long overdue work faster and rely less on debt financing to get the work done.
Toronto City Manager Shirley Hoy stated, “This is a unique opportunity for the City to leverage the sale of an asset to make long lasting improvements to the City’s public housing and improve accessibility to technology.”
Deputy City Manager and Chief Financial Officer Joe Pennachetti stated, “The use of the City’s portion of the proceeds from the sale in this manner makes good financial sense for the City - reducing the impact of future debt costs and addressing important infrastructure needs.”
Toronto Community Housing has an estimated repair backlog of $300 to $350 million. This backlog is growing rapidly with the lack of timely repairs and the aging housing stock. Toronto Community Housing invested more than $550 million in repairs between 2002 and 2007. This level of expenditure is the result of fixed-term programs and cannot be sustained beyond 2009. These programs used borrowed funds and exhausted Toronto Community Housing’s debt servicing capacity.
The new funds announced today will allow Toronto Community Housing to refurbish 5,000 more units of housing and retrofit 10 buildings with new energy efficient building systems.
“This investment represents a big step forward in our capital repair program and will allow Toronto Community Housing to make very significant progress in addressing outstanding repairs,” said Derek Ballantyne, CEO of Toronto Community Housing. “This is an investment that is very good news for our tenants, and the communities where they live.”
The sale of Toronto Hydro Telecom and the use of the City’s portion of the proceeds are consistent with the recommendations of the Mayor’s Fiscal Review Panel, which reported last February that a review of assets be undertaken to ensure the City explores all possible funding options.
Toronto Hydro Telecom owns and operates more than 450 kilometres of fibre optic network connecting more than 500 buildings throughout Toronto, and owns and operates the largest WiFi network in North America. The City of Toronto will continue to retain ownership rights and access to four strands of the fibre optic network. In addition, the access to critical fibre optic networks will be available to libraries, community organizations through City facilities; including services within priority neighbourhoods where public buildings could be connected to the City’s four strands of the fibre optic network. The fibre optic cable that will be made available to the City will carry data at an incredibly fast rate of one Gigabit per second - up to 10 times faster than the speed at which data is transferred through typical residential internet lines.
Toronto Hydro confirmed the sale of the Telecom subsidiary made financial sense for the company as the proceeds from the sale would increase its ability to invest in maintaining a strong, safe, reliable and sustainable electricity system. “This sale enhances our ability to invest in the renewal of our distribution system,” said David O’Brien, President and Chief Executive Officer of Toronto Hydro Corporation.
In addition to the dividend funds received from the sale, the City of Toronto will also receive $5 million from Toronto Hydro Telecom as part of the municipal access permit agreement. These funds will be directed to offset the cost of future initiatives aimed at improving telecommunications infrastructure and accessibility across the city.
Backgrounder: Toronto Community Housing repair program
Toronto Community Housing inherited a large capital repair backlog when it was created in 2002 following provincial downloading. A majority of Toronto Community Housing's units - 45,000 of 58,500, came from the provincial government or were funded by the Ontario Housing Corporation, and had no capital reserves for repairs. Ongoing deferral of major repairs due to a lack of funding has resulted in a $300-350 million repair backlog which continues to grow because of inflation and the fact that the repairs become more expensive the longer the work is deferred.
Since 2002, Toronto Community Housing, with the assistance of the City of Toronto has been able to invest $550 million to repair and replace outdated housing units and building systems. In addition, Toronto Community Housing with the support of the City is investing in the revitalization of Regent Park. These investments have not only improved the quality of housing for Toronto Community Housing's tenants, but have also contributed to a significant reduction in energy use. The savings from reduced utility costs have been used to finance borrowing for repairs. A Toronto Community Housing bond issue in 2007 also raised $250 million for the complete rebuilding of social housing in Regent Park and Don Mount Court.
The $300-350 million backlog represents work that Toronto Community Housing has not been able to undertake because of lack of funds. In addition to the new funds announced today, the Ontario government recently committed $36 million to the City of Toronto for repairs to social housing. Canada is the only major western nation without a real national affordable housing program. The City of Toronto, the Federation of Canadian Municipalities and the provincial and territorial governments are all encouraging the national government to invest in this essential part of our national social infrastructure.
Toronto Community Housing is Canada’s largest social housing provider and home to more than 164,000 tenants with low and moderate income - about six per cent of the City of Toronto’s population. These families, individuals, seniors, and people with special needs reside in 58,500 households in communities throughout Toronto.
Don Wanagas (firstname.lastname@example.org)
Director of Communications, Office of Mayor David Miller, 416-338-7134
Kevin Sack (email@example.com)
Director, Strategic Communications, City of Toronto, 416-397-5277
Kristin Jenkins (firstname.lastname@example.org)
Vice-President, Public Affairs, Toronto Community Housing, 416-981-4340
Blair Peberdy (email@example.com)
Vice-President of Communications and Public Affairs, Toronto Hydro Corporation, 416-542-2515