[homeles_ot-l] TCHC Privatization FW: Toronto Star Op-Ed

[Lynne Browne]

FYI, Nick requested that this be shared. He has an op-ed on the Toronto
Community Housing Corporation in today's Toronto Star. ("It's not
directly related to the Ottawa scene, but I suspect it might be of
interest to some of the people on the Alliance's e-mail list."):

Toronto Star
April 12, 2011
 
Ford's housing cure is ill-advised
Nick Falvo
 
In the aftermath of two damning reports by the City of Toronto's
auditor, the entire board of directors of the Toronto Community Housing
Corp. has been replaced and multiple staff have been let go. 

But privatizing Canada's largest provider of affordable housing would be
expensive for both taxpayers and renter households over the long term.

The auditor found that TCHC's policies on staff expenses and procurement
were often not followed. Inappropriate expenses totalling approximately
$200,000 a year were taking place, while annual savings of up to $10
million could be realized if TCHC improved the way it awards contracts.

Mayor Rob Ford responded to the controversy by suggesting TCHC be
privatized and that, rather than build social housing for low-income
persons, rent subsidies be offered so that poor households can live in
privately owned apartment buildings. But such an undertaking by city
council would amount to cutting off its nose to spite its face. There
are two reasons for this.

First, across North America, research supports the view that non-profit
housing is cheaper for both taxpayers and low-income tenants over the
long term.

In 2007, I undertook a cost comparison of various models of providing
affordable housing to very low-income persons living in Toronto. I
compared the costs of a non-profit entity (such as TCHC) providing
affordable housing with the costs of a private landlord doing so with
the help of government subsidies (generally referred to as rent
supplements).

The results of my analysis, which I presented at that year's annual
conference of the Canadian Economics Association, were consistent with
empirical research undertaken by others. I found support for the view
that it is considerably cheaper over the long term to have a non-profit
housing authority own and operate affordable housing than it is for the
private sector to do so.

The logic behind this is as follows: it is the incorporated purpose of a
non-profit housing authority to keep costs to tenants down over the long
term, and to make the housing units as affordable as possible. The
private sector, by contrast, has a clear interest in raising as much
money from tenants as possible.

In other words, non-profit housing authorities across Canada measure
success in large part by both how low they keep their rent, and by how
many low-income households - including social assistance recipients -
they are able to house. Private landlords, by contrast, do the opposite.

Second, higher rents in subsidized units also have repercussions for
rent levels in unsubsidized units. In 2002, results of a study by New
York University's Scott Susin were published in the Journal of Public
Economics. He assessed the impact of rent supplements provided to
private landlords in the United States' 90 largest metropolitan areas
over a 19-year period.

During that time, Susin found that while $5.8 billion (U.S.) in public
funds were provided for low-income tenants through rent supplements, the
inflationary impact of these rent supplements on unsubsidized housing
units amounted to $8.2 billion. In short, this approach was deemed to
have had a net negative financial impact on renter households.

Put differently, the existence of rent supplements on a large scale
sends a signal to private landlords that they can charge higher rents to
low-income households. In effect, it gives private landlords the green
light to gouge.

Toronto's largest landlord doesn't need to be privatized. It needs new
leadership, and our new city council is making sure that happens.

The day-to-day operations of Toronto's largest landlord have received
some much-needed scrutiny in recent months. This was long overdue. But
as he continues his quest to clean house at TCHC, Mayor Ford should be
prepared to quit while he's still ahead.

Nick Falvo is a PhD candidate at Carleton University's School of Public
Policy and Administration and teaches a course on affordable housing at
Carleton's School of Social Work.

**********************
Lynne Browne
Coordinator, Alliance to End Homelessness 
613-241-7913 ext. 205
lbrowne at ysb.on.ca
147 Besserer St., Ottawa, ON K1N 6A7
www.endhomelessnessottawa.ca
NOW ATEH is on FACEBOOK HERE &
on TWITTER HERE @endhomelessOTT

-----Original Message-----
From: Nicholas Falvo [mailto:nfalvo at connect.carleton.ca] 
Sent: April 13, 2011 8:28 AM
To: Lynne Browne
Subject: Toronto Star Op-Ed