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Ontario releases paper on the End of Mortgage issue

Published October 16, 2019

This article from 2019 contains outdated information, prior to provincial regulations introduced in 2022.

In September the Ministry of Municipal Affairs and Housing released a Technical Backgrounder on the End of Operating Agreements and Mortgages in Community Housing. The “backgrounder is intended to provide community housing providers and Service Managers with a better understanding of what happens at the end of a housing project’s operating agreement and/or mortgage.”

Often, people think of End of Mortgage (EOM) and End of Operating Agreement (EOA) as the same thing but the backgrounder outlines each one and clarifies some of the differences. The backgrounder is a good resource for Housing Services Act (HSA) co-ops that want to have a better understanding of how EOM is different than EOA is for federal program co-ops.

Key points on EOM and HSA co-ops

There is no end date. When a co-op’s mortgage ends, it still has an obligation to continue to provide RGI units and it still needs to follow the rules in the HSA. The Service Manager still has an obligation to pay subsidy and to enforce the rules in the HSA.

There will be no total negative subsidy. The backgrounder outlines that the operating subsidy will change when the mortgage cost is removed from the calculation. “When a mortgage payment becomes $0, the operating subsidy component can become a negative amount.” However, it also notes that if the total subsidy (operating plus property tax plus RGI) becomes negative the co-op does not have to pay the money to the Service Manager. In the case of a negative total subsidy the Service Manager is to set total subsidy to zero so the co-op doesn’t receive any money from the Service Manager, but also doesn’t pay the Service Manager any money.

Finally, the backgrounder notes that the funding rules in the HSA are the minimum a Service Manager must do and that “Service Managers have the discretion and flexibility to provide a subsidy over and above these minimum requirements to meet housing needs.”

Delisting The backgrounder notes that co-ops and non-profits can ask to be removed from the HSA ending all obligations under the HSA. This process is informally called delisting. However, the Ministry has put a three-year freeze on all delisting “during the transition to an improved legislative framework, announced as part of the Community Housing Renewal Strategy.”

What is important about the technical backgrounder?

Many co-ops will have heard about CHF Canada’s work on EOM, specifically the threat to long-term sustainability posed by negative operating subsidies (see our EOM Briefing Note). It is important to realize that the backgrounder does not look at the impacts of what happens because of the current rules in the HSA. In fact the introduction to the backgrounder states that “It is not intended to provide analysis on the impacts that the end of operating agreements and mortgages might have on housing providers or Service Managers. The Ministry of Municipal Affairs and Housing is working to better understand these impacts and put in place an improved framework for community housing as part of its Community Housing Renewal Strategy.”

“CHF Canada supports the Ministry’s work to understand the impacts of EOM,” says Harvey Cooper, Deputy Executive Director. “We look forward to working with the government to follow through on its commitment to put in place an improved framework for community housing.”

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