Meeting Documents Peel Housing Corporation PHC - 5 2017 · 2017. 10. 20. · 3.1. Minutes of the Board of Directors Meeting (PHC-3/2017) meeting held on May 11, 2017 4. APPROVAL OF

PEEL HOUSING CORPORATION

BOARD OF DIRECTORS AGENDA PHC - 4/2017 DATE: Thursday, June 1, 2017 TIME: 8:30 AM – 10:30 AM LOCATION: Regional Council Chamber, 5th Floor Regional Administrative Headquarters

10 Peel Centre Drive, Suite A Brampton, Ontario

MEMBERS: F. Dale G. Miles C. Fonseca E. Moore M. Mahoney B.Shaughnessy Chaired by Vice President G. Miles 1.

DECLARATIONS OF CONFLICTS OF INTEREST

2.

ADMINISTRATIVE MATTERS

3.

APPROVAL OF MINUTES

3.1. Minutes of the Board of Directors Meeting (PHC-3/2017) meeting held on May 11, 2017

4.

APPROVAL OF AGENDA

5.

DELEGATIONS

5.1. Mohamed Bhamani, Senior Manager, KPMG, LLP and Will Lipson, Partner, KPMG, LLP, Regarding the Twin Pines Project (See also Reports – Item 6.4)

6.

REPORTS

6.1. Service Delivery Model Review (For information)

PHC-4/2017 Board of Directors Agenda

-2- Thursday, June 1, 2017

6.2. Peel Living Procurement Audit (Oral)

Presentation by Dan Labrecque, General Manager, Peel Living, and Jennifer Weinman, Manager, Internal Audit

6.3. Update on the Peel Living Portfolio: Report on the State of the Infrastructure (Oral) Presentation by Dan Labrecque, General Manager, Peel Living, and Troy Mander, Manager, Corporate Asset Management

6.4

Twin Pines Redevelopment – Project Delivery Model (See also Delegations – Item 5.1)

7.

COMMUNICATIONS

8.

GENERAL MANAGER'S UPDATE

9.

IN CAMERA MATTERS

10.

OTHER BUSINESS

11.

NEXT MEETING Thursday, July 6, 2017, 8:30 a.m. – 9:30 a.m. Regional Council Chambers, 5th Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A Brampton, Ontario

12.

ADJOURNMENT

- 11 -

* See text for arrivals

See text for departures

PEEL HOUSING CORPORATION

BOARD OF DIRECTORS

MINUTES

PHC-3/2017 The Board of Directors of Peel Housing Corporation met on May 11, 2017 at 8:34 a.m., in the Council Chambers, Regional Administrative Headquarters, 5th Floor, 10 Peel Centre Drive, Suite A, Brampton. Directors Present: F. Dale; C. Fonseca; M. Mahoney; G. Miles; E. Moore Directors Absent: B. Shaughnessy, due to illness Also Present: D. Szwarc, Chief Administrative Officer, Region of Peel; J. Sheehy,

Commissioner of Human Servies, Region of Peel; J. Arcella, Deputy Treasurer; B. Colavecchia, Manager, Housing Operations and Tenancy Management; M. MacCrae, Manager, Housing Operations and Tenancy Management; P. O’Connor, Corporate Counsel; A. Macintyre, Corporate Secretary; C. Law, Deputy Corporate Secretary; R. Comacchio, Legislative Technical Coordinator.

Chaired by Vice-President Miles. 1.

DECLARATIONS OF CONFLICTS OF INTEREST – nil

2.

ADMINISTRATIVE MATTERS – nil

3.

APPROVAL OF MINUTES

3.1.

Minutes of the Board of Directors Meeting (PHC-2/2017) meeting held on April 6, 2017

Moved by: Director Fonseca, Seconded by: Director Dale; That the minutes of the April 6, 2017 Peel Housing Corporation (PHC-2/2017) Board of Directors meeting be approved.

Carried 2017-20

- 12 - PHC-3/2017

Thursday, May 11, 2017 4.

APPROVAL OF AGENDA

Moved by: Director Moore, Seconded by: Director Mahoney; That the agenda for the May 11, 2017 Peel Housing Corporation (PHC-3/2017) Board of Directors meeting, be approved.

Carried 2017-21

5. DELEGATIONS – nil 6.

REPORTS

6.1.

2016 Peel Housing Corporation Financial Statements (Unaudited)

Moved by: Director Mahoney, Seconded by: Director Moore; That the 2016 Peel Housing Corporation (operating as Peel Living) unaudited financial statements, be approved.

Carried 2017-22

6.2. Year End Financial Report – December 31, 2016

Moved by: Director Moore, Seconded by: Director Fonseca; That the Treasurer be authorized to transfer $3.53 million from capital reserves and $83,000 from working fund reserves, plus accrued interest to date, from all reserves associated with Regionally-owned buildings, to the Region of Peel’s capital and working fund reserves; And further, that the Treasurer be authorized to close reserves RPL200, RPL204, RPL208, RPL209, RPL210, RPL212, RPL254, RPL258, RPL259, RPL260, RPL262, RPL32, once all funds have been transferred to the Region of Peel.

Carried 2017-23

7.

COMMUNICATIONS – nil

8.

GENERAL MANAGER'S UPDATE – nil

- 13 - PHC-3/2017

Thursday, May 11, 2017 9. IN CAMERA MATTERS – nil 10.

OTHER BUSINESS – nil

11.

NEXT MEETING Thursday, June 1, 2017, 8:30 a.m. – 10:30 a.m. Regional Council Chambers, 5th Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A Brampton, Ontario

12.

ADJOURNMENT

The meeting adjourned at 8:36 a.m.

Vice-President Secretary

rr-RegionIr of Peelworking with you

Request for Delegation

FOR OFFICE USEONLY. __ _ _ _ _ ____._

MEETING DATEYYYY/MM/DD MEETING NAME2017/06/01 PHC

REQUESTDATEYYYY/MM/DD

2017/05/19

Attention: Regional ClerkRegional Municipality of Peel10 Peel Centre Drive, Suite A

Brampton, ON L6T 4B9Phone: 905-791-7800 ext. 4582 Fax: 905-791-1693

E-mail: [email protected]

NAME OF INDIVIDUAL(S)Mohamed Bhamani

POSITION/TITLESenior Manager

NAME OF ORGANIZATIONKPMG, LLP

E-MAIL TELEPHONENUMBER EXTENSION FAXNUMBER

NAME OF INDIVIDUAL(S)Will Lipson

POSITION/TITLEPartner

NAME OF ORGANIZATIONKPMG, LLP

E-MAIL TELEPHONENUMBER EXTENSION FAXNUMBER

REASON(S)FORDELEGATIONREQUEST(SUBJECTMAnER TO BEDISCUSSED)Regarding the Twin Pines Project

I AM SUBMITIING A FORMAL PRESENTATION TO ACCOMPANY MY DELEGATION ~ YES 0 NO

IF YES, PLEASE ADVISE OF THE FORMAT OF YOUR PRESENTATION (ie POWERPOINT) Powerpoint----~-------------------------Note:

Delegates are requested to provide an electronic copy of all background material/presentations to the Clerk's Division atleast seven (7) business days prior to the meeting date so that it can be included with the agenda package. In accordancewith Procedure By-law 100-2012,as amended, delegates appearing before Regional Councilor Committee are requestedto limit their remarks to 5 minutes and 10minutes respectively (approximately 5/10 slides).

Delegates should make every effort to ensure their presentation material is prepared in an accessible format.

Once the above information is received in the Clerk's Division, you will be contacted by Legislative Services staff to confirmyour placement on the appropriate agenda. Thank you.

Notice with Respect to the Collection of Personal Information(Municipal Freedom of Information and Protection of Privacy Act)

Personal information contained on this form is authorized under Section IV-4 of the Region of Peel Procedure By-law 100-2012 as amended, for the purpose ofcontacting individuals andlor organizations requesting an opportunity to appear as a delegation before Regional Councilor a Committee of Council. TheDelegation Request Form will be published in its entirety with the public agenda. The Procedure By-law is a requirement of Section 238(2) of the Municipal Act,2001, as amended. Please note that all meetings are open to the public except where permitted to be closed to the public under legislated authority. AllRegional Council meetings are audio broadcast via the internet and will be video broadcast on the local cable television network where video files will beposted and available for viewing subsequent to those meetings. Questions about collection may be directed to the Manager of Legislative Services, 10 PeelCentre Drive, Suite A, 5th floor, Brampton, ON L6T 4B9, (905) 791-7800 ext. 4462.

V-01-100 2017104

mailto:[email protected]

REPORT Meeting Date: 2017-06-01

Peel Housing Corporation

For Information

DATE: May 15, 2017

REPORT TITLE: SERVICE DELIVERY MODEL REVIEW

FROM: Dan Labrecque, General Manager, Peel Living

OBJECTIVE

To provide an overview of the key findings from the work conducted by SHS Consulting on the review of Peel Living’s service model. REPORT HIGHLIGHTS

Final report is in line with previous findings reported to the Board at its September 2016 meeting.

Findings and recommendations can be summarized in three areas of focus: Organizational Accountability, Business Practices, and Governance.

Consultants note that current service delivery model is complex and could benefit from enhanced Service Level Agreements between Peel Living and the various Regional service providers.

The use of metrics and key performance indicators would improve the transparency and accountability.

The ultimate form of Peel Living governance will continue to evolve.

Work plan priority on bringing back a revised Shareholder Direction for adoption. DISCUSSION 1. Background

As part of its broader vision to transform Peel Living, the Peel Living Board commissioned three consulting assignments to bring insight and recommendation to both the Board and its staff.

At its April 6, 2017 meeting, the Board reviewed findings on how it could improve its long-term financial viability. Today’s report reflects on findings from SHS Consulting’s review of the service model. A third report regarding a review of Peel Living’s Tenant and Community Value Design, which represents the last of the commissioned works, will follow. In its update to the Board on September 15, 2016, the consulting team identified five

attributes of an effective service delivery model:

Fosters organizational motivation

Has organizational capacity to achieve its goals

6.1-1

SERVICE DELIVERY MODEL REVIEW

- 2 -

Fosters long-term and sustainable financial viability

Supports a well performing organization Is well understood in terms of accountability

The consultant’s subsequent review and its findings and recommendations, as set out in the executive summary of its report (Appendix I – Executive Summary), was based on

enhancing Peel Living’s performance against their attributes.

2. Key Findings and Opportunities

While the report provides a fulsome review of the organization, its findings can be segmented into three areas of focus: Organizational Accountability, Business Practices and

Governance.

a) Organizational Accountability

One key theme that has been identified is the accountability framework that is used to

deliver service.

The Current Service Delivery Model, as presented in the following chart, is very complex.

While most of the core property management services are performed by staff reporting to the General Manager, many essential elements of the work stream is provided by various Regional business units such as:

Integrated Business Support division (Human Services Department) Business and Financial Planning division (Finance Department)

Purchasing division (Finance Department)

Corporate Finance division (Finance Department)

Real Property Asset Management division (Corporate Services Department)

6.1-2


- 3 -

Human Resources division (Corporate Services Department)

Legal Services and Regional Solicitor (Corporate Services Department) Service Innovation division (Service Innovation Information and Technology

Department)

Info Systems and Tech Services division (Service Innovation Information and Technology Department)

While the use of a shared services model can be very efficient and effective, it can lead to some fragmentation of accountability and responsibility. Within the draft Shareholder Direction, there was an attempt to improve the level of accountability through the use of Service Level Agreements (SLA). It is noted that while the current direction of the draft SLA is positive, there continues to be further opportunities to refine the agreement to enhance service accountability. b) Business Practices

The consultant’s jurisdictional review of other private and public service providers provided insight into a number of business practices that could be further integrated into Peel Living’s operational effectiveness and accountability framework. Many of these observations were in line with insights made by Ernst and Young (EY) in their review of the Corporation’s financial viability. One of the fundamental principals in enhancing both transparency and accountability is the use of objective evidence in the decision making process. As such, it was recommended the organization adopt performance metrics to help direct and manage resources in delivering service. It was also identified that utilizing technology as an enabler was a best practice that could be explored further. The recommendations are sound and fall into the context which both the Region and Peel Living have been working in relation to the Integrated Planning Framework. While more detailed Key Performance Indicators (KPI) will be developed, the General Manager reflected the adoption of a high level Balanced Score Card to the Board at its February Board meeting. Successful use of the Balanced Score Card will improve service outcomes as we focus on all four quadrants as illustrated below:

Our Client Our People

Our Infrastructure

Our Finances

6.1-3


- 4 -

Coincidentally, SHS Consulting identified the Net Operating Income (NOI) metric as a key financial indicator used by the industry. NOI is the strategic level indicator that we have adopted to reflect the financial quadrant of the Balanced Score Card. In terms of recognizing the value of technology as an enabler, staff are in full support of the consultant’s findings. In recent months, the Region’s technology team has been well engaged in rolling out various elements of its Housing Technology Initiative (HTI). The HTI’s first phases include an enhanced work order functionality as well as digital portals for both Peel Living tenants and vendors. At the time of preparation of this report, it was anticipated that the joint Peel Housing Corporation and Service Innovation Information and Technology Department team would bring a short demonstration to the Board of the HTI outcomes to either the July or September Board meeting. c) Governance

The consultant also undertook a jurisdictional review of governance models to support the evolving conversation between the Shareholder (Region) and the Board. In its report, it reflected its findings in three potential models: i.) Status Quo – with suggested improvements to the operations (refer to the Current

Service Delivery Model chart above).

ii.) Refined Service Delivery Model

This model was based on Peel Living assuming more of its accountabilities currently performed by Regional service providers, and simplifying the relationship between the Board and the General Manager.

6.1-4


- 5 -

iii.) Enterprise Service Model The Enterprise Service Model reflects a situation where all service accountabilities fall under the direct authority and direction of the General Manager and CEO. The model below reflects a stand-alone organizational structure.

All three of these options come with their own benefits and challenges. In practical terms, the form of the Peel Living organization and its governance will continue to evolve as it

better defines its function within the Social Housing service delivery program.

It is the General Manager’s goal to enhance the overall accountability framework with the Board as a priority. Working with the Shareholder and the Board to clarify what Peel Living’s mandate and accountabilities are will set a strong foundation for evolving the “how” Peel Living gets the job done efficiently and effectively. Through the use of metrics and keeping current with changes in environment, how we do the work can and will continuously evolve. Focusing on the outcomes that we want to achieve is of greater value than fixating on whether an activity should be insourced or outsourced. At present, Peel Living interacts daily with scores of internal and community partners to deliver good service to its clients. Our ultimate governance form and function should contribute to building stronger relationships with all our partners for better service outcomes.

6.1-5


- 6 -

NEXT STEPS

In the traditional governance design process, “form follows function”. To that end, it is very important to establish a firm position on what Peel Living’s mandate is and how it w ill be held

accountable to deliver on that mandate.

In order to support the board in closing the loop on the decision making around the governance

direction that it should take; staff has a number of workplan initiatives underway:

At its April meeting, the Board asked for a governance workshop to allow for some focused time to discuss clarify the Board’s direction on a revised Shareholder’s Direction agreement. Given competing timelines and the need to engage senior staff in a number of the Region’s support programs, it is likely that a workshop will not be held until early fall.

Reviewing all the existing proposed service agreements covering Regional support groups, with the objective of enhancing service outcome accountabilities.

Review of consulting work undertaken with respect to Tenant and Community Value

Collaboration with the Region of Peel Service Manager team to identify partnership opportunities that could be incorporated into the Shareholder Direction.

In support of the broader finding that the board and management should enhance its use of evidence based decision making in helping to improve Peel Living’s service efficiency and effectiveness, staff continue to develop good process metrics in support of the

Balanced Scorecard approach, which the board endorsed earlier this year.

Dan Labrecque, General Manager, Peel Living APPENDICES

1. Appendix I – Executive Summary For further information regarding this report, please contact Dan Labrecque, General Manager, Peel Housing Corporation at [email protected], or ext. 3549. Authored By: Dan Labrecque

6.1-6

Appendix I - Service Delivery Model Review6.1-7



1

Peel Living Procurement Audit

Dan Labrecque, General Manager, Peel Living Jennifer Weinman, Manager, Internal Audit

6.2-1

2

Background

• Peel Living is the largest landlord in the Region and the 3rd largest housing provider in Ontario.

• The portfolio includes 68 buildings consisting of high and low-rise apartments and townhouses.

• Peel Living is owned, managed and administered by the Region of Peel.

• The Region of Peel provides procurement services to Peel Living.

6.2-2

3

Audit Objective and Scope

• To assess the effectiveness of procurement practices and processes followed to acquire needed goods and services for Peel Living.

• The audit focused on: – governance of Peel Living procurement including

applicable policies, procedures, roles and responsibilities, and

– transactions under $25K that were made by Purchasing Card and Express Purchase Order.

6.2-3

4

Audit Observations There are opportunities to:

• better define and strengthen a procurement governance and accountability framework that incorporates Peel Living’s purchasing strategy and risk appetite.

• establish a procurement service level agreement that clearly defines roles, responsibilities, and procurement options as well as service delivery time frames.

6.2-4

5

Audit Observations There are opportunities to:

• increase education and awareness about property management procurement practices and processes for staff, and

• ensure that purchases are made in accordance with policies and procedures by documenting support for procurement decisions.

6.2-5

6

Management Response

Two focus points: • Review Board governance needs with respect to

procurement process accountability • Engaging with Purchasing division to clarify:

– Service Level Agreement – Use of relevant procurement processes by staff – Procedures for use of purchasing card and express

purchase order

6.2-6

7

Conclusion

• Internal Audit has reviewed the action plans developed by management and is satisfied the proposed actions address the risks observed

• Internal Audit will follow up with management to ensure action plans are implemented

6.2-7

8

Questions

6.2-8

Update on the Peel Living Portfolio

6.3-1

The Peel Living portfolio: ◦ 69 housing properties

◦ 3 group homes

◦ 2 shelters

◦ Estimated replacement value = $1.8 billion (excludes land)

Average age of the portfolio = 31 years

6.3-2

Province downloaded program without long term sustainable funding in place

Peel finance staff forecasted that additional funding would be needed as early as 2004

Council/Board have long advocated that housing be returned to the Province

Federal government now contemplating a national housing strategy, but unclear on funding commitment

6.3-3

Building condition assessments (BCAs) were completed in 2016: ◦ assessed the physical condition of each building (state

of good repair) ◦ Conditions are reinspected annually ◦ Future needs based on estimated life cycles ◦ Used as a high level forecast of asset management

needs for capital planning BCAs are just one factor identifying capital needs

◦ The condition of each building is rated using a facility condition index (FCI) FCI = capital needs ÷ facility replacement value

Aesthetics are not a factor

6.3-4

Rating Description

Good

• Clean & functional

• Occasional maintenance activities with possible minor component/equipment repairs

• Minor risk to services

Fair

• Buildings showing some wear

• Growing maintenance activities with possible moderate component/equipment repairs

• Moderate risk to services

Poor

• Buildings have a worn appearance with some signs of deterioration

• Frequent maintenance activities & sometimes extensive component/equipment repairs

• Significant risk to services

Critical

• Buildings have a very worn appearance & obvious deterioration

• Very frequent maintenance activities & often extensive component/equipment repairs

• Major risk to services with potential unit closures

6.3-5

Good (26%)

Fair (28%)

Poor (45%)

Critical (1%)

Portfolio FCI = Fair

6.3-6

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

10-Year (2017-2026) Projected Needs

Rec

om

men

ded

Act

ion

Co

sts

( $

in M

illio

ns)

6.3-7

Move the portfolio’s overall condition toward a target of ‘Good’ consistent with the targets set for Region-owned Housing ◦ Achieves an acceptable balance between capital

costs & minimizing risks to customer services

◦ Reduces reactive maintenance & operating costs

◦ Will require much higher annual capital investments

Approx. $320 M over first 10 years & 210 M in subsequent 10 years (current values)

6.3-8

Average financing requirements to meet SoGR should be between $25 - $30 million per year

The 2017 Capital Budget = $6.3 million

6.3-9

Achieving a ‘Good’ rating would allow for $90 million in residual capital work to be outstanding ◦ Not cost effective, sustainable or practical to achieve a

‘Very Good’ portfolio

The outstanding work can be cost effectively managed through proactive maintenance plans

Potential redevelopment opportunities would reduce the need to action BCA recommendations in whole or part

6.3-10

Staff are at the early stages of long-range planning The capital investment requirements have not been

finalized Need to first complete an asset management plan (1-2

years), including a companion financing strategy ◦ Develop an asset management policy ◦ Analyze BCA information & replacement costs ◦ Assess capital & operating costs for each building ◦ Determine viability of maintaining higher cost properties ◦ Prioritize the needs & risks in the portfolio ◦ Assess options:

Maintain/repair Redevelop Repurpose Divest

◦ Identify 10-year capital investments according to preferred options ◦ Develop phase-out plans for properties to be removed from the

portfolio

6.3-11

Housing infrastructure are Federal & Provincial funding priorities ◦ Provincial budget allocates total $640 M out to 2019 for

maintenance of affordable housing & shelters

The Province is developing regulations that require municipalities/agencies to develop: ◦ An asset management policy ◦ A (minimum) 10-year asset management plan

Mandatory prerequisites to apply for Federal/Provincial funding (e.g. Federal Gas Tax, Provincial budget allocations) o Already in use as a requirement for small municipal

programs

Regulation is due for January 2018

6.3-12

1. Work with the Service Manager to develop a 2018 10-year capital plan

2. Complete the asset management plan (1-2 years)

3. Determine financing needs and interim strategy

4. Position Peel Living for Federal funding opportunities

5. 2018 spending plan will continue to be constrained given time to mobilize all the underlying planning actions.

6.3-13

REPORT Meeting Date: 2017-06-01

Peel Housing Corporation

DATE: May 24, 2017

REPORT TITLE: TWIN PINES REDEVELOPMENT – PROJECT DELIVERY MODEL

FROM: Dan Labrecque, General Manager, Peel Living

RECOMMENDATION That the Twin Pines Redevelopment Project be delivered by way of a shared risk model as set out in Appendix I to the report of the General Manager titled “Twin Pines Redevelopment – Project Delivery Model”; And further, that the General Manager pursue a partnership agreement with the Region of Peel for use of the land for affordable housing purposes that supports the optimization of the Total Public Value Framework; And further, that a loan request in an amount not to exceed $4 million from the Region of Peel for the project costs, be approved; And further, that subject to loan approval, the General Manager be authorized to proceed with Phase 2 of the project including securing the necessary staffing, other resources and completing the negotiations of the next phase of the contract with KPMG in accordance with RFP #2016-226P, with total costs for this phase not to exceed $4 million; And further, that the Treasurer be authorized to execute the necessary loan documents with the Region of Peel for the total amount not to exceed $4 million repayable at the call of the Commissioner of Finance and Chief Financial Officer of the Region of Peel or upon the request of the Treasurer to make re-payment; And further, that the Treasurer be authorized to establish a capital budget in the amount of $4 million. REPORT HIGHLIGHTS • On June 2, 2016, the Peel Housing Corporation (PHC) Board selected KPMG to lead the

Twin Pines redevelopment process and phase 1 project financing was approved by Regional Council on September 22, 2016.

• The vision for the project - the Total Public Value (TPV) framework was endorsed by the PHC Board on February 16, 2017. The TPV was developed utilizing inputs from the previous Charrette (2012) and Housing Needs and Impact Assessment (2015), current research including sector case study analysis and comprehensive stakeholder engagement (2016).

• The TPV was fundamental in guiding the analysis of a variety of delivery models for the project to ensure the recommended approach and delivery model will result in the optimal

6.4-1

TWIN PINES REDEVELOPMENT PROJECT - PROJECT DELIVERY MODEL

- 2 -

balance of TPV elements and ultimate achievement of the TPV. • Analysis of the site and consideration of market conditions have determined that without

securing additional funding from the Region of Peel approximately one 120 unit building of purpose built rental stock can be built on the site, with the majority of the site being developed for private uses/purposes.

• In order to optimize the use of this valuable public land asset and increase the volume of purpose built rental units on the future site, partnership with the Region of Peel is required.

• The next phase of the project will focus on confirming an agreement with the Region of Peel, preparing and executing the necessary procurement processes to obtain a development partner and determining the resident options and associated transition timelines.

• Phase 2 of the project is anticipated to cost approximately $4 million and subject to approval timelines will be completed by the end of 2018 / early 2019.

• Phase 2 will include the development of the resident transition plan which is anticipated to be presented to the PHC Board late 2017.

DISCUSSION 1. Background Twin Pines In 1996, Peel Housing Corporation (PHC or Peel Living) purchased the 23 acre Twin Pines’ lands and entered into an agreement with the Cedar Grove Resident’s Community Corporation (CGRCC) providing a twenty-year security of tenure for the residents, with the intent to redevelop the lands following its’ expiration as of October 1, 2016. The area was increased to 25 acres in 2012 with the purchase of an adjacent commercial property.

Peel Living presently operates Twin Pines through month-to-month lot land leases with 213 mobile homes and commercial leases with two commercial tenants.

Operational challenges continue to grow as the site infrastructure struggles well beyond its useful life. Following the 2012 decision to pursue redevelopment at that time, operationally, the approach to maintaining the site has been one that minimizes the infrastructure investment while maintaining the site and obligations to existing tenants. Twin Pines has reached the point where the viability of continuing to operate in its current state is not sustainable, and does not make optimal use of this valuable land asset.

Minor operational changes were implemented in 2016 to support some of the ongoing financial constraints including the discontinuation to provide reduced rent for new tenants and the implementation of annual RTA increases for all; however, these actions do not alleviate the operational and financial issues. Project Approach On June 2, 2016, the PHC Board of Directors selected the Twin Pines’ project approach and authorized staff to finalize a contract with KPMG LLP. Following the completion of Phase 1 contract negotiations, financing was approved by Regional Council on September 22, 2016. The PHC Board of Directors selected a project approach which involves three phases as identified below:

6.4-2


- 3 -

• Phase 1 (October 2016 to June 2017) - Project Definition focuses on defining Total Public Value (TPV) with key stakeholders. Analysis of a variety of project delivery concepts and models along with the associated business case will support the PHC Board of Directors in determining the appropriate delivery option for the project to optimize the achievement of the TPV outcomes.

• Phase 2 (Fall 2017 to Late 2018/Early 2019) – Transaction Implementation will execute

the delivery option selected to be the most suitable and optimal for the achievement of the TPV at the conclusion of Phase 1.

• Phase 3 (2019 Onwards) - Project Delivery will execute the detailed plans and

associated redevelopment.

2. Phase 1 Project Definition

Total Public Value Framework

Commencing in October of 2016, the project team proceeded with the Phase 1 deliverables identified above, with a focus on engaging with a variety of key stakeholders to inform the definition of the Total Public Value Framework (or outcomes for the project). The TPV Framework was also informed by the previous work to date including the 2012 Charrette and 2015 Housing Needs and Impact Assessment as well as current research and case study analysis.

The TPV Framework was endorsed by the PHC Board on February 16, 2017. The TPV elements include the provision of a mix of housing options and support the sustainability of Peel Living’s affordable housing portfolio within a complete community that is age-friendly, connected and environmentally responsible. The TPV Framework guided the development of the business case including a preliminary development concept to utilize for financial analysis purposes and the recommended delivery model as identified within the KPMG Twin Pines Business Case Report (Appendix I). Shared Risk Project Delivery Model KPMG analyzed and assessed three different delivery models including maximized risk transfer, a shared risk and retained risk models. A qualitative assessment of the various delivery models resulted in the determination that the shared risk model maximizes Peel Living’s ability to achieve the outcomes for the site established through the shared vision (TPV Framework). See summary of the delivery model analysis below:

Delivery Model Benefits Challenges

Maximized Risk Transfer (land sale)

• Significant financial risk transfer to private sector

• Focus on operating existing portfolio, while increasing affordable stock

• Least amount of internal resources required

• Less control / oversight during and after development including resident transition

• Risk of a lower return • Reduction of

partnership opportunities to support public uses

6.4-3


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Delivery Model Benefits Challenges

*Shared Risk

(development partner(s))

• Optimal risk transfer • Greater control and oversight

during development including resident transition

• Ability to pursue additional partnership opportunities to maximize public uses & retain operational control of affordable housing

• Increased oversight required to manage performance

• More complex procurement process and deal structure

• Significant resources required to manage

Retained Risk

(Peel Living developer)

• Maximum control and oversight throughout development including resident transition

• Retained financial return

• Low risk transfer • Greatest level of internal

resources and expertise required – in an area in which the organization has limited experience

• Complex administration of multiple procurements

* recommended delivery model

The shared risk model allows Peel Living to focus its efforts on detailing the redevelopment requirements and engaging with the development community to propose innovative and creative options to meeting the requirements through a competitive process. Furthermore, the shared risk model allows Peel Living to have an optimal level of control and involvement within the redevelopment to ensure that partnership opportunities maximize the land for public uses and that the TPV outcomes are successfully achieved.

The shared risk model also acknowledges Peel Living’s core mandate as a social housing provider versus a master community developer. 3. Business Case

In order to complete the business case analysis, KPMG developed a preliminary site concept which included the required infrastructure, road networks, public space, connectivity and approximately 600 housing units on the site (a blend of social and market housing reflective of the TPV, anticipated planning permissions, market conditions and site constraints). However, confirmation of Peel Livings requirements related to affordable housing units and alternate house forms will need to be confirmed in consultation with internal partners prior to finalizing the scope of work for the subsequent competitive procurement process.

KPMG was tasked to analyze the site opportunities and constraints both qualitatively and quantitatively. The business case includes a number of planning and financial assumptions related to the redevelopment of Twin Pines with the preliminary goal of optimizing the value of the site to achieve the TPV, while determining what was possible with little to no additional funding investment from Peel Living.

The results of the analysis have shown that after existing debts and project costs are paid, a purpose built rental building including approximately 120 units and at-grade retail/commercial space can be achieved through the redevelopment without additional investment resulting in a positive net financial position of $23 million which represents the capitalized value of the

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building at the end of construction (analysis is exclusive of costs associated with the resident transition which will be identified in Phase 2 of the project). By comparison, an additional investment of approximately $26 million would provide for a 200 unit purpose built rental building (80 additional units) with at-grade/retail commercial space; however, in this case a positive net financial position of approximately $11 million would result. The results of the business case provide important evidence to assist the Board in directing the approach to the project moving forward. Recognizing the financial constraints of the site, it remains a valuable public asset that should be maximized for public uses prior to confirming how much of the site is available for market housing.

As such, an important next step for the project will be to pursue a partnership with the Region of Peel to confirm the volume of affordable units included within the redevelopment requirements. 4. Phase 1 Engagement & Involvement Plan

Throughout Phase 1 key stakeholders were engaged and provided input through the creation of the shared vision (TPV Framework). The TPV will continue to provide a primary mechanism by which stakeholders will guide the project direction. Project updates were provided to stakeholders through a variety of methods including open houses, resident meetings, the project web site and newsletter updates. Please refer to Appendix II for a detailed summary of the engagement activities for Phase 1. 5. Phase 1 Budget Summary

Phase 1 of the project was completed within budget. A detailed breakdown of the expenditures anticipated as of July 31, 2017 is included below:

Project Activity Budget Project Cost

(Inclusive of Non-Refundable HST)

Costs Incurred prior to Phase 1 $450,000 $424,138 Consultant – KPMG Phase 1 $534,000 $627,152 Site Testing $150,000 $116,699 Internal Charges $330,000 $199,328 Contingency $50,000 $5,407 Non-refundable Taxes $15,000 - Grand Total $1,529,000 $1,372,724

6. Twin Pines Redevelopment Project – Phase 2

The Transaction Implementation (Phase 2) is anticipated to be complete by the end of 2018/early 2019 and will focus on the following deliverables:

• Partnership agreement with the Region of Peel

• Development and approval of the Resident Transition Plan

• Confirmation of the technical and programming requirements

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• Development Partner(s) and plan selection

• Initiation of applicable planning approvals (to be confirmed via Dundas Connects) The preliminary budget for Phase 2 of the project is estimated as follows:

Project Activity Budget Consulting Services (KPMG, Technical, and Legal Advisors)

$1,900,000

OPA / Re-Zoning Application (Contingency for Planning Consultant & Additional Site Testing)

$300,000

Internal Charges (Procurement, Legal, Real Property Asset Management, Project Management, Community Engagement)

$1,300,000

Contingency $460,000

Non-refundable Taxes $40,000

Grand Total $4,000,000

Subject to the approval of the preliminary budget and loan, staff will proceed with the finalization of the resourcing requirements including Phase 2 of KPMG’s contract in accordance with RFP #2016-226P. Regular updates will continue to be provided to the Board throughout the next phase of work. FINANCIAL IMPLICATIONS To date Peel Housing Corporation has obtained approval from the Region of Peel to borrow up to $4.2 million plus accrued interest for the project (inclusive of the 2012 purchase of 1725-1731 Dundas Street) and received a grant in 2013 in the amount of $150,000.

A capital project for Phase 1 was set up in the amount of $1.5 million (inclusive of previous project costs) and Phase 1 is anticipated to be completed within budget.

The Phase 2 budget for the project including all previous loans may be impacted by the scope of the partnership with the Region of Peel; however, in order for the project to proceed at this time the budget is estimated in the amount of $4 million inclusive of internal and external resourcing.

There is established value within the property and the TPV outcomes that can be achieved through the project that continues to make the investment in the redevelopment a low risk commitment for Peel Living.

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CONCLUSION

Continuing to operate Twin Pines in its existing capacity is not sustainable and does not allow Peel Living to optimize the use of this valuable land asset for affordable housing purposes. Twin Pines presents a unique opportunity for both Peel Living and the Region of Peel. Optimizing the use this valuable public asset is the ultimate goal of the Total Public Value Framework and recommended shared risk delivery model. In order to do so additional funding and partnership with the Region of Peel is required.

Subject to receipt of the required approvals to proceed to Phase 2, the project will continue to provide frequent updates to the Board.

Dan Labrecque, General Manager, Peel Living APPENDICES 1. Appendix I – KPMG Twin Pines Redevelopment Business Case Report 2. Appendix II – Phase 1 Engagement & Involvement Summary For further information regarding this report, please contact Denise Occhipinti at extension 7658 or [email protected] Reviewed in workflow by:

Legal Services

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mailto:[email protected]

Business Case

Twin Pines Redevelopment Project

May 23, 2017

kpmg.ca

Appendix I - Twin Pines Redevelopment – Project Delivery Model 6.4-8

Note to Reader This report has been prepared by KPMG for the use of its client, Peel Living. It is not intended to be used or relied upon by other (third) parties. The results of this report are intended to assist Peel Living in making decisions with respect to the Twin Pines redevelopment. Readers are cautioned that there is no assurance or warranty, expressed or implied, regarding the accuracy and reliability of any information contained within this report. The underlying assumptions and inputs may change subsequent to this report date and changes may have an impact on the results. Since these assumptions reflect anticipated future events, actual results may vary from the information presented and these variations may be material.

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Executive Summary

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Introduction In September 2016, KPMG was engaged by Peel Living to assist with the redevelopment of Twin Pines. Peel Living is interested in transforming the Twin Pines site into a community that better supports the objectives of Peel Living’s mandate, optimizes the asset, and provides an enhanced community for current and future residents.

KPMG’s scope of work is to support Peel Living in finding the optimal solution for the planning and implementation of the site’s redevelopment, which will be completed through three phases of work:

Total Public Value To facilitate the development of a vision for Twin Pines, KPMG developed the Total Public Value (“TPV”) Framework. This tool is designed to assist Peel Living and Twin Pines’ stakeholders to collectively define the desired future state/or vision of the site.

The objective of the TPV Framework is to create a shared vision among decision-makers and stakeholders. The vision is defined through a discrete set of principles and outcomes. Subsequent phases of the project will be assessed based on their ability to apply the principles and achieve the desired outcomes.

The TPV Framework is an approach to finding an optimal solution that looks beyond financial feasibility and expands the analysis to a broader set of objectives for the redevelopment. The process captured and leveraged previous work relating to the site, framed the discussion for stakeholder consultations, and is designed to ensure transparency throughout the redevelopment process.

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Business Case The TPV Framework is a key input into the Business Case, which is the final product of Phase 1 of the Twin Pines Redevelopment Project. The redevelopment of Twin Pines aims to create a mix of housing options that respond to community needs, and will result in a more socially and economically robust neighbourhood that is fully integrated into the City of Mississauga’s urban fabric, and considers the needs of all stakeholders.

The transitioning of residents on the site is not addressed in this document, although it will be addressed as part of a separate process in the subsequent phases of the project.

Preliminary Development Concept

In order to provide a basis for analyzing the financial impact of redeveloping the site, a preliminary development concept was developed for the Business Case. The development concept demonstrates the potential design parameters for the site, such as secondary streets and blocks, development characteristics, street and pedestrian connections, and open space.

The preliminary development concept was developed to meet the five TPV outcomes within the Framework. The preliminary development concept includes:

• A mix of units across built forms, including a mix of traditional townhouses, stacked townhouses, and a high-rise affordable rental building;

• An affordable rental building(s) which includes 200 rental units which are assumed to be used in part to address the Region’s housing waitlist, as well as retail on the ground floor that could be used for community purposes or public services; and

• A 1.3-acre park in the centre of the site.

The preliminary development concept allowed for development costs and revenues to be estimated in order to analyze the net financial impact to Peel Living of redeveloping the site, as well as to assist Peel Living in defining its requirements for the site and ultimately select the preferred delivery model. The preliminary development concept is expected to differ from the site plan that will be designed for the site, as further planning, site investigations, feasibility analysis and refinement of Peel Living’s requirements continue, and as a competitive procurement process is anticipated to allow the market to propose innovative solutions.

Delivery Models

A delivery model represents the means by which a project is delivered, including which parties are involved and what their roles and responsibilities are. In this Business Case, three potential delivery models have been considered for redeveloping the site; the three models were chosen to cover a range of alternative risk transfer strategies that could be used for the project. For each model, as the roles of the public and private sector change, so does the overall distribution of the risks associated with redeveloping the site.

The three delivery models considered are:

• Maximized risk transfer model;

• Shared risk model; and

• Retained risk model.

These delivery models were evaluated by considering the challenges and benefits of each to Peel Living. The identification of the Shared Risk Model as the preferred model is a key outcome of the Business Case analysis. This model was used as the basis of the financial analysis presented in the Business Case.

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Financial Analysis

A financial analysis was undertaken to guide policy decisions for the redevelopment of Twin Pines by estimating the net financial position to Peel Living, assuming the preliminary development concept is delivered under the shared risk model.

The methodology for the financial analysis involved comparing the residual land value that results from the sale of traditional and stacked townhouses to the cost of developing an affordable rental building(s). In order to redevelop the site based on the preliminary development concept, the amount of funding support required is approximately $26 million (in Net Present Value terms). The net financial position including the capitalized value of the affordable rental building at the time of construction completion was estimated, which results in a net financial position of approximately $11 million. As a result, Peel Living’s net financial position from the project is positive.

In addition, a sensitivity analysis was conducted in order to understand the potential range of results and the impact of certain policy decisions.

Implementation Plan

Based on the preliminary development concept and preferred delivery model, a high-level implementation plan identifying key considerations was developed for the redevelopment of Twin Pines. The implementation plan considers different elements of the project moving forward, such as the redevelopment approach, financing strategy, potential funding opportunities, procurement strategy, anticipated approvals process, and the preliminary project schedule. Currently, a phased approach is being contemplated, with the development of the affordable rental building being constructed during the first phase. The development partner will be responsible for developing a phasing strategy for the project that meets Peel Living’s requirements.

The preliminary procurement schedule described in this Business Case anticipates the release of a Request for Proposal (RFP) in early 2018 with commercial and financial close reached by early 2019. The successful proponent could potentially commence the first phase of construction in 2021 with construction completion achieved in 2023 or later, depending on the scope of the first construction phase and the phasing strategy developed by Peel Living’s development partner.

In order to support the planning and procurement process, procurement roles have been identified that can be filled with internal resources and external advisors. These roles include an executive sponsor, a project sponsor, a steering committee, a project manager, as well as roles in the following areas: operations, stakeholder engagement, transition support, financial and procurement support, planning, and design and technical support.

Several next steps are identified in the Business Case for Peel Living and/or the Region of Peel to consider during Phase 2 of the project in order to support the implementation of the project.

Looking Ahead The Business Case, which was driven by the TPV Framework, will support and guide the project moving forward. The Business Case will guide the project planning and procurement process, during Phase 2 of the redevelopment of Twin Pines. Under a Shared Risk Model, a competitive procurement process would be initiated to select a development partner to redevelop the site. Once the development partner is selected, Phase 3 will commence which will involve the implementation of the project.

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Table of contents

Executive Summary i

1.0 Background Information 1 1.1 History of Twin Pines and the Agreement 2 1.2 Strategic Alignment and Project Need 3 1.3 Twin Pines Redevelopment Project 7 1.4 Total Public Value Framework 8 1.5 KPMG’s Scope of Work 10 1.6 Business Case Development 10

2.0 Market Sounding Findings 11 2.1 Market Sounding Overview 12 2.2 Market Sounding Results and Key Findings 12

3.0 Preliminary Development Concept 16 3.1 Approach for Developing a Preliminary Development Concept 17 3.2 Preliminary Development Concept 21

4.0 Delivery Models 24 4.1 Overview of Delivery Models 25 4.2 Recommended Delivery Model 31

5.0 Financial Analysis 33 5.1 Methodology 34 5.2 Financial Assumptions 35 5.3 Cost and Revenue Estimates 35 5.4 Financial Analysis Results 38 5.5 Sensitivity Analysis 39

6.0 Implementation Plan Considerations 42 6.1 Redevelopment Approach 43 6.2 Financing Strategy 43 6.3 Potential Funding Opportunities 44 6.4 Procurement Strategy 45

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6.5 Preliminary Procurement Timeline 50 6.6 Potential Deal Structure Elements 50 6.7 Approvals 53 6.9 Stakeholder Engagement and Communications 56 6.10 Project Governance 58

7.0 Conclusion 61 7.1 Conclusion 62 7.2 Next Steps 62

Appendices 64 Appendix A Works Cited 65 Appendix B Region of Peel Strategic Plan 66 Appendix C TPV Framework 67 Appendix D Potential Funding Programs 70 Appendix E Approvals 72

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Figures

Figure 1: Annotated Map of Current Twin Pines Mobile Home Park 2 Figure 2: Peel Centralized Waitlist Data (as of July 2016) 6 Figure 3: Project Approach – Phases of Work 7 Figure 4: Twin Pines – Total Public Value Framework 9 Figure 5: Development Concept Guiding Principles 18 Figure 6: Preliminary Project Timeline 55 Figure 7: Governance Structure 58 Figure 8: Twin Pines – Site Zoning 73

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Tables

Table 1: Summary of Market Sounding Participants Interest in the Project 13 Table 2: Considerations of Market Sounding 14 Table 3: Number of Units in the Preliminary Development Concept 22 Table 4: Alignment of Preliminary Development Concept with TPV Framework 22 Table 5: Maximized Risk Transfer Model – Benefits and Challenges 27 Table 6: Shared Risk Model – Benefits and Challenges 29 Table 7: Retained Risk Model – Benefits and Challenges 31 Table 8: General Assumptions 35 Table 9: Hard Construction Cost Assumptions 36 Table 10: Development Charges 37 Table 11: Absorption Assumptions 38 Table 12: Cost of Affordable Rental Building and Residual Land Value from Developing Market Housing 38 Table 13: Net Position to Peel Living 39 Table 14: Change in Inflation Rates 40 Table 15: Preliminary Procurement Timeline 50 Table 16: Potential Key Project Roles and Responsibilities 59

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1.0 Background Information

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Twin Pines Mobile Home Park dates back to 1949, when the first mobile homes were placed on the Pallet family's apple orchard. This section outlines the history of the site, the agreement between Peel Living and Twin Pines residents, the vision and the project approach for the redevelopment of Twin Pines.

1.1 History of Twin Pines and the Agreement The History of Twin Pines

In the 1940s, Twin Pines was an apple orchard owned by the Pallet family. The family originally opened the site to mobile homes to shelter workers from the nearby Trans-Canada pipeline that needed affordable housing and expanded it further in the aftermath of Hurricane Hazel.

In the early 1990s, the Pallet family looked to sell the lands to a private developer. In 1996, Peel Living purchased the site from the Pallet family, becoming the landlord. The property was renamed Twin Pines Mobile Home Park and the residents became tenants of Peel Living. Twin Pines Mobile Home Park is shown in Figure 1.

Figure 1: Annotated Map of Current Twin Pines Mobile Home Park

Today, the Twin Pines site is approximately a 25-acre (11.2 hectares) site with 213 resident-occupied and 3 vacant mobile home units located at 1749 Dundas Street East in Mississauga, Ontario. Also located on the site is Summerville Pines, an eight-storey senior’s residence, and the Peel Family Shelter, an emergency family shelter owned by the Region of Peel. There are three commercial properties fronting Dundas Street East, two of which are owned by Peel Living. The Peel Living owned

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commercial properties are presently leased to businesses (a food retailer and a tree cutting business). There is an adjacent piece of land that houses a furniture store that is owned by a separate party.

There are residential communities made up of primarily detached and semi-detached homes to the north and west side of the site. There is presently only pedestrian access between the site and the neighbouring residential areas. Along the eastern border of the site there is an active hydro corridor owned by Hydro One. Adjacent to the hydro corridor are light industrial and employment lands. An informal road connects Twin Pines to the industrial park to its east. The primary access point to the site is from Dundas Street East.

The Agreement between Peel Living and Cedar Grove Residents Community Corporation

In 1996, Peel Living entered into an agreement with Cedar Grove Residents Community Corporation (“CGRCC”), which represented a majority of Twin Pines residents (the “Agreement”). The Agreement provided for a $1 million loan from CGRCC to Peel Living; it also provided that all residents who occupied their premises at Twin Pines when Peel Living became the owner in 1996 and who joined the CGRCC residents’ association (by paying a $5,000 loan to the CGRCC to be repaid by CGRCC upon the member moving out) were granted 20 years of security of tenure. As a result, Peel Living was prohibited from terminating the tenancy of any such resident for redevelopment purposes until October 1, 2016. Under the Agreement, Peel Living would charge rent to CGRCC members based upon a pass-through of all costs and expenses incurred by Peel Living to operate the property.

Peel Living fully repaid the loan on September 30, 2016, with interest. Tenancy agreements are maintained on a monthly basis and are subject to the Residential Tenancies Act.

1.2 Strategic Alignment and Project Need 1.2.1 Previous Work – What were the key findings? Planning for the future Twin Pines began in 1996, with the purchase of the site and Peel Living’s stated intent to redevelop the lands upon the expiry of the security of tenure. More detailed future-focused conversations and data gathering activities started in 2012. This foundational work informed key findings and design of the Business Case. Specifically, there are two previous reports and activities that informed the development of the TPV Framework and the Business Case – the 2012 CIVIS Charrette Report and the 2015 SvN Housing Needs and Financial Impact Assessment.

CIVIS Charrette Report – Prioritization of Interests

In 2012, a charrette process conducted by CIVIS (formerly known as IwB), created an opportunity for Twin Pines residents, the neighbouring community, and professionals to discuss concerns and interests for the future state of Twin Pines. Feedback received during the charrette process was summarized and interests were prioritized. Two key priorities shared by the residents, neighbouring community and professionals were (1) to maintain the unique character of Twin Pines, and (2) to support residents through the transition and redevelopment of the site.

Shortly after the charrette’s conclusion, Peel Living determined that upon the conclusion of the security of tenure, it would move forward with the redevelopment of Twin Pines. The Peel Living Board of Directors adopted a series of commitments (commonly referred to as the 2012 Commitments) to guide the redevelopment, and highlighted that affordability would be maintained in any future Twin Pines. The six commitments are listed below:

1. Peel Living is committed to the Twin Pines neighbourhood, ensuring that it remains affordable and offers a mix of housing options, for current and future residents.

2. Peel Living will explore the creation of more housing and will examine the viability of ownership options in the future Twin Pines, as a reflection of the character of the community.

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3. Residents will be offered the option to remain in the future Twin Pines community. (Revised by the Peel Housing Corporation Board of Directors on December 1, 2016, Commitment #3 shall not apply to persons who become residents of the Twin Pines Community after January 6, 2018).

4. Peel Living is committed to undertaking a Housing Needs and Financial Impact Assessment for each resident to understand the personal financial issues of the residents and to take that into consideration when developing options in a future plan for Twin Pines.

5. In a master planning process for Twin Pines:

• The planning process will clearly outline when each stage will happen and what decisions will be made at each stage;

• A collaborative approach will be undertaken that is sensitive to resident concerns, including their housing needs and financial circumstances;

• A community involvement strategy will outline how local residents will have input at each stage of the process; and

• The process will also include a plan on how residents and neighbouring stakeholders will be communicated with going forward, so they can stay updated on the process and key developments.

6. Any other commitments with legal implications will be considered by the Peel Living Board of Directors and communicated.

SvN Housing Needs and Financial Impact Assessment – Profile of Residents

Through the 2012 Commitments Peel Living committed to conduct a Housing Needs and Financial Impact Assessment for the Twin Pines residents. In 2015, this commitment was fulfilled through the survey work completed by SvN Architects (formerly known as planningAlliance).

Sixty five percent of all Twin Pines households took part in the assessment that was focused on five key topics – aspirations, housing, community, affordability, and transitioning. (Note: Results from the assessment are indicative and not predictive. Results are a snapshot of the Twin Pines community as of July of 2015.)

The findings from the assessment informed the development of the TPV Framework by providing an understanding of the profile of Twin Pines residents and their reported needs.

1.2.2 What is motivating the change? There are numerous public policy documents, strategies and materials that assisted in informing the development of the Business Case. The various documents that were reviewed originated from all levels of government – federal, provincial, regional and local municipalities – as well as core Peel Living documents. The purpose of this review was to look critically across the many public policy documents and strategies to understand the key driving forces of change that are influencing the Twin Pines Redevelopment Project.

The following summarizes the results of this situational assessment and captures the key driving forces that should be considered when planning the redevelopment of Twin Pines:

PROFILE OF RESIDENTS

• Less than a quarter of surveyed residents have lived in Twin Pines since 1996.

• Two thirds of the surveyed residents are over the age of 60.

• The majority of surveyed residents live in one- or two-person households.

• Less than half of surveyed residents carry a loan or chattel mortgage on their mobile home with the majority indicating that their loan/mortgage would expire by 2018.

• Almost a majority of surveyed residents are retired, while less than a third work full time.

• Nearly all surveyed residents own at least one vehicle.

• Majority of surveyed residents identified health issues.

Source: 2015 Housing Needs and Financial Impact Analysis

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Peel Living Priority – Creating a Sustainable Housing Portfolio

The development of a strategic plan for Peel Living is currently underway. However, even without this guiding document, the transformation challenge signaled in the Annual Report is clear – “to evolve the organization into a sustainable housing and community assets holder” that contributes “value to the health and well-being of all people and communities in Peel”. Creating a sustainable housing portfolio is a priority for redeveloping Twin Pines.

Financial Realities – Long Term Viability Concerns

The transformation challenge for Peel Living is grounded in long term financial viability concerns. Based on the updated 2016 Building Conditions Assessments, the 10-year capital needs are estimated to be approximately $421 million. These financial challenges are further compounded when the age of the buildings is taken into consideration – the majority of Peel Living assets were built in 1995 or earlier and 10 buildings were built before 1976. As a result, capital replacement needs are outpacing Peel Living’s ability to fund the required repairs.

Twin Pines has reached the point where the viability of continuing to operate in its current state is not sustainable, as the frequency and severity of emergency capital repairs continues to increase. Throughout the term of 1996-2016, expenses on the site have exceeded revenues by around $2 million. There is a risk that the amount of this operating loss will continue to increase if the redevelopment does not proceed in the near future.

Affordable Housing Options – A Call to Action

The fundamental need to enhance affordable housing options is a common public policy issue. For the Region of Peel, it represents one of the goals of its 20-year Strategic Plan and is the key driver behind an important Term of Council priority outcome – to reduce the length of time on the centralized waitlist (CWL) before being housed. Supporting the achievement of this goal is Peel’s Housing and Homelessness Plan that recognizes the need for innovative and cost-effective solutions that aim to increase the supply of housing across the full housing continuum, which includes shelters, transitional housing, social and subsidized housing, rental housing and home ownership.

A Growing Challenge – The Affordability Gap

One of the most significant challenges nationally, provincially, and locally is the growing affordability gap. As the Government of Canada, through the Canadian Mortgage and Housing Corporation, consulted with Canadians to develop the National Housing Strategy, a re-occurring message was heard from nearly a majority of participants:

“…respond to increasing affordability challenges of low- and middle-income Canadians by ensuring an array of housing options in sufficient quantities and surfacing innovative financing models for affordable rental and homeownership that will serve Canadians’ varied housing needs.”

The recently updated Provincial Long-Term Affordable Housing Strategy also identified the erosion of affordability as a key barrier to be addressed due to increased housing and rental prices, lagging household incomes, and increased levels of household debt. Locally, the challenge of affordability is also identified in the Affordable Housing Program – Housing Gap Assessment and Municipal Best Practices report developed by the City of Mississauga. The report suggested that the gap should be considered from two perspectives – income and supply – and that the City ought to focus on influencing the supply gap. A focus was put on the protection and increasing the supply of rental housing and encouraging more affordable home ownership for larger households. The Peel CWL as of July 2016 has a total of 12,580 households. Key information about the Peel CWL is listed in Figure 2.

PEEL LIVING RESIDENT PROFILE

• Peel Living currently serves approximately 15,600 residents.

• 43% are children and families; and 22% are seniors.

Source: September 7, 2016, Region of Peel

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Figure 2: Peel Centralized Waitlist Data (as of July 2016)

Creating Healthy Communities – Complete Communities

The concept of a complete community is not new, but it is gaining renewed focus in planning and development policies. The goals of developing a complete community are captured in the Region of Peel’s Healthy Development Assessment (“HDA”) User Guide. The document defines healthy development as:

“The concept of healthy communities is intrinsically tied to the Provincial planning policy’s promotion of complete communities. Complete communities meet people’s needs for daily living by providing convenient access to an appropriate mix of jobs, local services, a full range of housing, opportunities for aging in place, and accessible community infrastructure including schools, recreation and open space for their residents. Convenient access to public transportation and options for safe, non-motorized travel is also a key part of complete communities.”

The HDA User Guide provides guidance that assesses communities based on the six core elements of built environment – development density, service proximity, land use mix, street connectivity, streetscape characteristics and efficient parking. The City of Mississauga has adapted the HDA and developed the

HEALTH AND SOCIOECONOMIC PROFILE OF TWIN PINES AND SURROUNDING AREA

• A higher portion of Twin Pines’ population is 65 years or older compared to Peel region, with 15.9% of people within the area around Twin Pines over 65.

• By 2041, the population over 65 is estimated to increase by 200% (i.e. 1 in 5 residents will be seniors).

• The prevalence of low income households in and around Twin Pines is 14.7%, slightly above the regional average of 12.6%.

• 42.4% of tenant households spend greater than 30% of their household income on shelter costs.

Source: Peel Data Centre and 2015 Housing Needs and Financial Impact Analysis

1.9

6.5 6.2

10.7

16.5

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0

5

10

15

20

Bachelor One Two Three Four Average

Year

s

Bedroom Type

Average Wait Times

27%

25%

48%

Household Composition

Seniors (singles andcouples)

Singles (not includingseniors

Families67%

30%

3%

Household Income

Under $20,000

$20,000 - $45,000

$45,000 - $60,000

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2

4

6

8

Seniors Singles Families Average

Year

s

Household Type

Average Wait Times

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Mississauga Healthy by Design tool, which incorporates these six core elements with existing City design standards for mixed use developments.

Transit on the Move – Dundas Connects

One of the strategic pillars of the City of Mississauga Strategic Plan, presented in Appendix B, is to ‘Move’ – a priority focused on “developing a transit oriented city”. More specifically, the City would like to create a community that “people can get around without an automobile, and where transit directly influences and shapes the form of the city”. In building a reliable and convenient system, the City committed to “make transit a faster and more affordable alternative to the automobile,” and committed to having a transit stop within walking distance of every home.

One of these transit plans is Dundas Connects, which is a project to create a master plan on how to best increase transportation capacity, connect the city, and intensify land use in appropriate areas along the Dundas Street corridor. The City is currently developing the evidence-based recommendations for higher-order transit and land use changes to support the intensification. The final master plan will be brought to City Council for approval in late 2017.

1.3 Twin Pines Redevelopment Project Peel Living is interested in transforming the site into a community that better supports the objectives of Peel Living’s mandate, optimizes the use of the site, and provides an enhanced community for current and future residents. The project aims to provide enhanced support to Peel residents that are in need of affordable housing, while recognizing the unique character of the community, in accordance with the TPV Framework. The study area also includes Summerville Pines and the Peel Family Shelter.

1.3.1 Redevelopment Approach and Objectives The project approach to the redevelopment of Twin Pines is divided into three distinct phases of work, as described in Figure 3.

Figure 3: Project Approach – Phases of Work

Phase 1: Vision for the Future

Phase 1 of the approach focuses on determining the future state of Twin Pines.

To facilitate the development of a vision for Twin Pines, KPMG developed the Total Public Value (TPV) Framework. This tool assisted Peel Living and Twin Pines’ stakeholders to collectively define the future state of the site. The TPV Framework has been used as input to this Business Case, which guided the development of a preliminary development concept and assessment of delivery models, ultimately identifying the preferred approach to deliver the project.

Phase 2: Partnerships and Planning

Phase 2 is anticipated to involve further planning and a procurement process to select a developer for the project.

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The alignment of proposals with the TPV Framework is anticipated to guide the evaluation process during the procurement process. At the end of this phase, Peel Living will oversee the approval of:

• An agreement with a developer;

• A design concept; and

• A development plan.

In order to support the successful delivery of this phase, Peel Living will need to retain resources, both internal and external to its organization, in order to fulfill key roles and responsibilities. During this phase, Peel Living will also need to identify key resources that will be involved in overseeing Phase 3 of the project.

Phase 3: Bringing the Vision into Reality

The third phase is the delivery of the project.

This phase will involve the selected developer designing a site plan, as well as obtaining required planning approvals and permits. Resident transition and construction will also occur during this phase of work supported by ongoing project management and joint oversight by Peel Living.

1.4 Total Public Value Framework To facilitate the development of a vision for Twin Pines, KPMG developed the TPV Framework. The TPV Framework is an approach to finding an optimal solution that looks beyond financial feasibility and expands the analysis to a broader set of objectives for the redevelopment to create a shared vision for the future state of the site. The vision is defined through a discrete set of principles and outcomes. Subsequent phases of the project will be assessed based on their ability to apply the principles and achieve the desired outcomes.

Throughout the fall of 2016, a comprehensive group of stakeholders impacted by the redevelopment of Twin Pines were engaged in the development of the TPV Framework. Feedback received from stakeholders directly informed the development of the TPV Framework.

The TPV Framework is shown in Figure 4. Additional details about the elements of the TPV Framework can be found in Appendix C. Details about the feedback can be found in the TPV Report in Section 2 and an overview of the complete stakeholder engagement process can be found in the TPV Report in Appendix D.

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Figure 4: Twin Pines – Total Public Value Framework

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1.5 KPMG’s Scope of Work In September 2016, KPMG was engaged by Peel Living to assist with the redevelopment of Twin Pines. KPMG’s scope of work for Phase 1 is to support Peel Living in developing a vision for the site’s redevelopment, together with a plan to achieve that vision. This report describes the work completed in the second part of phase one to develop a Business Case for the project.

The scope of the Business Case includes the following:

• Review of past work and strategic reports related to Twin Pines;

• A market sounding exercise;

• Development of a preliminary development concept for the site;

• An assessment to identify the preferred delivery model;

• Financial analysis to analyze the assumed preliminary development concept by estimating the net financial position to Peel Living; and

• Development of a high-level implementation plan.

The transition of residents is not addressed in this document, although it will be addressed as part of a separate process in the subsequent phases of the project.

1.6 Business Case Development The purpose of the Business Case is to develop a plan for delivering the project. This includes a preliminary development concept (which describes what could be developed in Twin Pines) and a preferred delivery model (which describes how the project is to be delivered) based on the strategic vision articulated in the TPV Framework.

To gain market insight on the Twin Pines project, a market sounding exercise was undertaken to solicit project-specific feedback relating to the market’s interest in redeveloping the site and to receive input on the potential scope and deal structure elements for the project to inform this Business Case. The market sounding was conducted with for-profit firms and non-profit organizations from the development community that have experience in affordable housing.

The preliminary development concept was developed for the Business Case to serve as a basis to analyze the financial impact of redeveloping the site. The development concept demonstrates the potential design parameters for the site, such as secondary streets and blocks, development characteristics, street and pedestrian connections, and open space. The preliminary development concept was developed through considering the five TPV outcomes and guiding principles within the Framework.

Three potential delivery models were considered for redeveloping the site; the three models were chosen to cover a range of alternative risk transfer strategies that could be used for the project. For each model, as the roles of the public and private sector change, so does the overall distribution of the risks associated with redeveloping the site. These delivery models were evaluated by considering the challenges and benefits of each to Peel Living.

The Business Case also summarizes key findings from the financial analysis and describe a high-level implementation plan, such as potential funding opportunities, approvals process, a procurement strategy, stakeholder engagement and communications, timelines and next steps. Ultimately, the Business Case identifies a preferred delivery model for the Twin Pines Redevelopment Project.

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2.0 Market Sounding Findings

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A market sounding exercise was undertaken to collect insights from the residential development community. This section summarizes key findings and feedback provided by the market sounding participants, and identifies considerations for the future planning and procurement stages of the project.

2.1 Market Sounding Overview 2.1.1 Market Sounding Objectives To obtain market insight on the Twin Pines Redevelopment Project, a market sounding exercise was undertaken to solicit project-specific feedback relating to the market’s interest in redeveloping the site and to receive input on the potential scope and deal structure elements to inform this Business Case.

The market sounding was conducted by KPMG and consisted of interviewing for-profit firms and non-profit organizations from the development community that have experience in affordable housing, in order to:

• Validate interest in the project among the development community;

• Assess general interest in the Twin Pines location and feedback on site features;

• Measure private sector capacity and interest to deliver affordable housing on the site;

• Discuss leading practices or lessons learned in relation to developing and/or operating affordable housing;

• Measure private sector capacity and interest in potentially supporting the transitioning of residents;

• Solicit opinions on potential deal structures and transaction approaches; and

• Understand risks that the private sector would expect Peel Living to share or retain.

The market sounding exercise was not part of any potential transaction process for this project and participation does not in any way affect a firm’s participation in any potential procurement process.

2.1.2 Market Sounding Process KPMG carried out the market sounding in February 2017 with representatives from for-profit firms and non-profit organizations active in the construction, development, and operation of residential developments in Canada, and specifically affordable housing. Target firms were identified with the intention that each participant would be well positioned to have deep insights on the key parameters of the site and future redevelopment, and that the overall market sounding responses would be sufficiently varied. A total of 14 interviews were conducted, consisting of ten for-profit organizations and four non-profit organizations, all of which had some experience with affordable housing.

The market sounding was designed to encourage detailed responses from participants on topics that were most relevant to them. KPMG and the participants explored deeper into areas of particular interest and concern to the individual participants. As the participants have different skills and interests, by design, not all questions were discussed with each participant.

2.2 Market Sounding Results and Key Findings This section summarizes the key findings of the market sounding.

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2.2.1 Interest and Key Findings Most participants indicated they would be “highly likely” to participate in a procurement process for the project, with the exception of one that indicated it would be “somewhat likely” to participate. A few firms noted that their involvement would depend on the proposed deal structure, procurement approach, and ability to find the right partners for their team. Table 1 below provides a summary of the anticipated likelihood of participation in the procurement process for this project.

Table 1: Summary of Market Sounding Participants Interest in the Project

Likelihood of Participation Number of Participating Organizations

Highly Likely 13

Somewhat Likely 1

Unlikely 0

Uncertain 0

The topics discussed during the market sounding interviews were:

• Twin Pines Site

• Existing Site Features

• Built Forms

• Affordable Housing

• Project Planning and Procurement

• Resident Commitments

• Municipal Approvals and Zoning

• Site Due Diligence

• Deal Structure

2.2.2 Market Sounding Considerations Participants in the market sounding identified a number of suggestions for Peel Living to consider during the planning, procurement and transition periods of the project. Key considerations identified during the market sounding, as well as how those suggestions will be addressed in this Business Case, are identified in Table 2 below.

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Table 2: Considerations of Market Sounding

Consideration 1: Include new affordable housing on the site

Participants were highly interested in incorporating affordable housing into the development. A number of participants indicated Peel Living should investigate allowing the affordable housing developed on the site to fulfill the required community benefits under Section 37 of the Planning Act, and identified property taxes, permit fees and development charges as levers that could be used to incentivize developers to develop affordable housing on the site. This Business Case assumes new affordable housing will be developed on the site.

Consideration 2: Further investigate the Region of Peel’s requirements and needs for relocating the Family Shelter

Participants identified different options for the Peel Family Shelter, including continuing to operate the current family shelter, or relocating the shelter on-site by potentially incorporating it into an affordable rental building, or relocating the shelter off site. While integrating a new family shelter in a new building may be an effective way to upgrade and possibly expand the shelter, the preliminary financial analysis conducted to date indicates that the value of the current shelter property is insufficient to offset the significant cost of developing a new facility, even if integrated into a new building. As a result, unless the Region of Peel decides to allocate funds to offset the costs of constructing a new facility, the development will be carried out on the basis of leaving the shelter in its current location. This view is in line with the preliminary development concept presented in Section 3.

Consideration 3: Site should remain primarily residential

Participants prefer that the site remain primarily residential, with a range of mid- to high-rise, mixed use buildings along the Dundas Street frontage, and low- to mid-rise buildings extending north on the remainder of the site (e.g., traditional and stacked townhouses). This view is in line with the preliminary development concept prepared for this Business Case.

Consideration 4: Do not require micro-houses on the site

Participants indicated that micro-houses would not result in optimal land use, due to the low density of units, challenges meeting building codes, and an immature market for micro-houses in Ontario, and as a result, Peel Living should not require developers to build micro-houses on the site. This view is in line with the preliminary development concept prepared for this Business Case presented in Section 3.

Consideration 5: Design a procurement process based on market precedents and leading practices

Participants indicated that the procurement process and project agreement should follow market precedents and leading practices of affordable housing developments. Views expressed also included ensuring the procurement process is open, fair and transparent, as well as collaborative in nature to ensure proponents propose solutions that meet Peel Living’s requirements and vision for the site.

The procurement strategy is described in Section 6 of this business case, and a detailed procurement process will be developed and implemented after endorsement of this Business Case by the PHC Board during Phase 2 of the project.

Consideration 6: Clearly define vision and objectives for the site prior to commencing procurement process

A common theme discussed during the market sounding is that Peel Living should clearly define its vision and objectives for the site prior to commencing the procurement process. Examples of requirements that should be clearly specified in the RFP document are: number of affordable units, the level of affordability, community space requirements and other desired outcomes for the site. Participants identified this information as necessary for ensuring an effective procurement. This feedback will be incorporated in the procurement documents developed during Phase 2 of the project.

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Consideration 7:Undertake further site investigation prior to commencement of the procurement process

Participants suggested Peel Living undertake the following prior to the commencement of a procurement process: geotechnical investigations, identifying site boundaries, heritage study and impact assessment, archeological assessment, ground condition assessments, easements, servicing capacity and required improvements, noise and vibration impact studies and title searches. This feedback received aligns with relevant site testing that has been undertaken to inform the Business Case and the subsequent procurement processes. Phase 2 may include additional testing.

Consideration 8: Developer partner to manage zoning and municipal approvals process

Participants indicated that a developer should be selected in advance of finalizing the development concept and seeking detailed planning approvals to implement a site development concept. However, Peel Living could advance higher order permissions by working closely with the City of Mississauga on the Dundas Connects project in advance of selecting a developer.

Consideration 9: Peel Living to remain primarily responsible for communicating with and supporting residents throughout the planning and transition stages, unless it partners with a non-profit developer

For-profit developers are interested in assuming an advisory role related to the resident commitments, however do not feel well positioned to take a lead in supporting this process and communicating directly with residents. Participants noted that residents may trust Peel Living more than a developer as a result of their existing relationship.

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3.0 Preliminary Development Concept

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This section outlines the work undertaken to develop a preliminary development concept for the redevelopment of the Twin Pines site. The concept will be used as the basis for analyzing the financial impact of redeveloping the site in Section 5 of this Business Case.

3.1 Approach for Developing a Preliminary Development Concept 3.1.1 Purpose of a Preliminary Development Concept In order to provide a basis for analyzing the financial impact of redeveloping the site, it is necessary to develop an assumed preliminary development concept for the site. A development concept illustrates a range of specific design parameters for the site, such as secondary streets and blocks, development characteristics (built form types, building height, unit counts, and gross floor areas), street and pedestrian connections, and open space (e.g., private outdoor amenity space and public park space). The preliminary development concept allowed for development costs and revenues to be estimated in order to analyze the net financial impact of redeveloping the site. (It also provides a basis to assist Peel Living in defining its requirements for the site.)

It is important to note that the preliminary development concept underlying this business case has been developed solely for those purposes. Whether carried out by Peel Living or a developer that is selected to redevelop the site, further site investigations and a feasibility analysis will be needed to proceed from a preliminary development concept to a detailed site plan. In addition, Peel Living’s objectives and requirements for the site will continue to be refined prior to or during the procurement process for the project. As such, the preliminary development concept that has been developed for this Business Case analysis is expected to differ from the final detailed site plan.

3.1.2 Methodology The preliminary development concept underlying the business case was developed by taking into consideration the TPV Framework described in Section 1.4, the current municipal and regional policy framework, the broader policy permissions and restrictions, financial/market considerations, and input from Peel Living.

This section describes the methodology by describing:

• a set of five principles used to develop the preliminary development concept;

• market demand for the site;

• the assumed constraints on the possible development concept for the site; and

• the preliminary development concept that was identified for more detailed analysis.

Section 3.2 details the preliminary development concept which underlies the Business Case.

3.1.3 Guiding Principles The preliminary development concept was developed with consideration of the five guiding principles outlined in Figure 5.

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Figure 5: Development Concept Guiding Principles

• Access to public transportation (5 minute walking radius)

• Active transportation opportunities (pedestrian and cycling network)

• Connect the site to the surrounding neighbourhood

• Improve access into and through the site

• Create rational development blocks

• Support a walkable street network

• Centralized shared outdoor space at the heart of the site

• Option to establish a frontage condition along the hydro corridor

• Provide private outdoor amenity space for mid-rise and high-rise developments

• Provide a range of housing types

• Explore potential for best practices in low-impact development and green infrastructure

Working closely with the Peel Living project team, objectives were defined for the site related to the extent of affordable housing, community space, density and built forms. It was assumed that specific land use planning permissions could be obtained to accommodate intensified development of the lands, although this will need to be further investigated during Phase 2 and Phase 3 of the project. In that context, the objectives include:

• A range of market and affordable housing;

• A range of built forms to achieve the TPV outcome of creating a mix of housing options that respond to community needs;

• A range of mid- to high-rise, mixed use building(s) along the Dundas Street East frontage animating the street and taking advantage of planned rapid transit improvements along the corridor;

• Mid-rise and medium density buildings extending north to align with a potential future extension of Nawbrook Road and to transition sensitively to the surrounding neighbourhoods by incorporating lower density forms of housing towards the northern and western portions of the site;

• Increased multi-modal east/west connectivity from the site to the surrounding lands;

• An age-friendly and complete community that offers a range of facilities, services and amenities to support the needs of residents; and

• Consideration of environmental sustainability principles.

Road + Block Network

01Public Realm Sustainability

+ Innovation

04Built Form

02 05Transit + Mobility

03 04

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3.1.4 Market Demand for the Land N. Barry Lyon Consultants (NBLC) undertook a review of the likely market demand for residential, employment, retail and other uses that might be attracted to the site. The methodology used to review the market demand for the site took into consideration the following:

• Planning instruments impacting the site, such as height and density limits, park land requirements, and development charges;

• Site development costs, such as municipal servicing, road construction, environmental considerations, and storm water management;

• Sales performance of medium and high density housing forms in competitive areas;

• Macroeconomic factors, such as supply and demand, interest rates, and government policy; and

• Site characteristics, such as surrounding land uses, topography, and the adjacent hydro corridor.

The findings of this review were used to support the development of the preliminary financial concept. Additionally, findings of the review were considered in the financial analysis presented in Section 5, including the projection of revenues and as well as the overall assessment of financial viability of redeveloping the site.

Implications for Twin Pines

Currently, height restrictions of four storeys apply to the south end of the site that fronts Dundas Street East, which the Mississauga Official Plan has identified as an “Intensification Corridor”. The Dundas Connects Master Plan is anticipated to include land use permission recommendations regarding heights, densities, and land use designations which may result in increased density along the Intensification Corridor. Despite the potential for higher density built forms on the site, market demand considerations indicate that there is currently limited demand for mid-rise or high-rise apartment buildings on the site. Factors that influence this are:

• Lack of “In-demand” Amenities: From a market demand perspective, individuals typically look for apartments in locations with strong amenities, such as walkable streets with mature retail strips, recreational facilities, and employment opportunities.

• Strong Competition: There is competition from established high-density communities nearby such as Port Credit, Cooksville and Mississauga City Centre. Further, there is a significant amount of new residential development planned for more marketable areas in the City of Mississauga. The marketability of these areas relative to the subject lands will be enhanced with the planned Hurontario light rail transit project and the GO Regional Express Rail improvements.

• Construction Costs and Project Viability: High-density built forms, such as apartment buildings, are costly to build because they are complex and time consuming projects involving concrete construction methods and underground parking. Given the market constraints of the Twin Pines site, it is unlikely that a market apartment building could achieve sale prices or rental rates high enough to offset these costs and provide a reasonable return to a developer.

In contrast, lower density built forms, such as traditional and stacked townhomes, are significantly less expensive to build; for example, they can be constructed more rapidly using wood-frame technology. These “grade related” housing projects are also much more limited in supply and in greater demand. In addition, individuals that are interested in this type of housing are generally more dependent on automobiles than individuals that typically prefer to reside in high-density built forms, and as a result, put less emphasis on the lower walkability score of the area. These factors help to offset any shortcomings in local site attributes and indicate that lower density built forms on the site are more favourable.

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A preliminary financial analysis was undertaken for the redevelopment of the site, which indicated that a mid- to high-rise market apartment development would not be feasible. The market conditions in the local area limits the revenue potential of the site, resulting in lower rental income than a developer would require to earn its desired return. Furthermore, rental rates in any affordable rental building(s) on the site are assumed to be average 80% of Canada Mortgage and Housing Corporation (CMHC) Average Market Rent (AMR), which further reduces revenue potential (and therefore increases the potential subsidy required).

The market will be determined as the redevelopment project continues, and as a result, the findings outlined in this business case are subject to change, and the changes may be material.

3.1.5 Constraints in Developing the Preliminary Development Concept Development constraints for the site were considered in developing the preliminary development concept. These constraints have been developed for the purposes of the Business Case analysis and are likely to evolve as the project proceeds.

Summerville Pines

The site includes Summerville Pines, an eight-storey senior’s residence that was constructed in 2005 and provides 136 units of affordable housing for seniors. It was constructed to address the region’s demand in affordable housing and also provided alternative housing option to Twin Pines mobile home residents.

This business case assumes that Summerville Pines will remain as is and this building will be incorporated into the design of the redeveloped site.

Peel Family Shelter

The site includes the Peel Family Shelter, an emergency family shelter owned by the Region of Peel. This building is a former motel that was purchased by the Region of Peel and renovated to provide emergency housing. The shelter is bordered by the mobile home park to the north, the hydro corridor to the east, main road access to the west and Dundas Street East to the south. Road access to the site is from Dundas Street East.

Three potential options for the Peel Family Shelter were discussed with Peel Living during the development of this Business Case:

1. Shelter continues to operate at its current location

2. Incorporate the shelter into a new multi-storey building on the site

3. Relocate the shelter to another site

As the Region of Peel has not identified an alternative location for the shelter at this time or identified funding to cover the costs of relocating the shelter, the preliminary development concept has assumed that the Peel Family Shelter remains on the site in its current location. The other two scenarios have been analyzed in Section 5.

Commercial Properties

There are three commercial properties fronting Dundas Street East (a food retailer, a tree cutting business, and a furniture store). Peel Living owns and leases the commercial properties to a food retailer and tree cutting business. There is an adjacent piece of land that houses a furniture store that is owned by a separate party. The preliminary development concept assumes that the Peel Living owned commercial properties will be redeveloped as part of the project.

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Neighbouring Properties and Access to the Site

The areas north and west of the site are primarily made up of detached and semi-detached homes. Along the eastern border of the site is a hydro corridor owned by Hydro One, which is approximately 36 metres in width and adjacent to light industrial and employment lands.

There is currently limited vehicular and pedestrian access to the site. An informal road connects Twin Pines to the industrial park to its east and there is pedestrian access connecting to the neighbouring residential area to the west of the site. The hydro corridor may impact potential road connections to the redeveloped site.

The Business Case assumes that multi-modal connectivity will be increased east and west of the site by formal road connections, along with formal roads continuing to connect the south of the site to Dundas Street East.

In alignment with the development concept guiding principles identified in Section 3.1.3, the preliminary development concept includes increased multi-modal connectivity from the site to the surrounding lands.

3.2 Preliminary Development Concept 3.2.1 Overview of Preliminary Development Concept The preliminary development concept was developed for the site by Urban Strategies Inc., a planning and urban design firm, by considering the TPV Framework, the development concept guiding principles, market demand and the development constraints described in the previous sections, as well as considering findings from the market sounding.

The redevelopment of Twin Pines aims to accommodate mixed-use and mixed-income housing options, and will result in a more socially and economically robust neighbourhood that is fully integrated into the City of Mississauga’s urban fabric, and also considers the needs of all stakeholders. In developing the preliminary development concept, a range of design parameters were considered:

• Type and variety of built forms, ranging from micro-homes, townhouses, stacked townhouses and mid-to high-rise buildings;

• Number of market rate versus affordable housing units; and

• Height and mix of uses (commercial, residential, or mixed) of a mid-to high-rise building along the Dundas Street East frontage.

The preliminary development concept provides a basis for analyzing the financial impact of redeveloping the site. As mentioned earlier, the preliminary development concept that has been developed for this Business Case analysis is expected to differ from the final site plan.

The concept includes connections from the site to both the industrial lands to its east and the existing community to the west by establishing formal road connections, in addition to formal road connections to the south of the site on Dundas Street East.

The preliminary development concept:

• Aims to maximize the number of grade-related townhouses on the site, while still incorporating over 200 units in a stacked townhouse format.

• Contains a mixed-use building with 200 purpose-built rental units at the southwest corner of the site, which is assumed to be used in part to address the Region’s housing waitlist. It is assumed for the purposes of the Business Case that the average rental rates of units in the affordable rental building are set at 80% of CMHC AMR. The building also includes commercial/retail at grade that could be used for community purposes or public services.

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• Provides a 1.3-acre park in the centre of the site, which supports an age-friendly and connected community, which are both TPV outcomes.

The number of units associated with each built form is presented in Table 3 below.

Table 3: Number of Units in the Preliminary Development Concept

Built form Number of Units

Traditional Townhouses 233 units

Stacked Townhouses 206 units

Affordable Rental Building 200 units

3.2.2 Alignment of Preliminary Development Concept with the TPV Framework As described previously, a TPV Framework was developed to assist Peel Living and Twin Pines’ stakeholders to collectively define the future state of the site. It aims to find an optimal solution that looks beyond financial feasibility and expands the analysis to a broader set of objectives for the redevelopment. In that context, the framework was used as input to develop the preliminary development concept.

The preliminary development concept has been assessed to identify how well it addresses the TPV outcomes. As described in Section 1.4, the TPV outcomes are categorized into two groups. The first group of outcomes are the key drivers for redevelopment: “Housing Options” and “Affordable Housing Sustainability”. To find the optimal solution for the redevelopment, a balance must be struck between these two outcomes. The second group of outcomes are key priorities that will create a complete community. Successfully developing an “Age Friendly Community”, a “Connected Community”, and fulfilling the “Environmental Responsibility” will support the diverse needs of the community.

Table 4 demonstrates how the preliminary development concept achieves the key outcomes of the TPV Framework identified in Section 1, Figure 4.

Table 4: Alignment of Preliminary Development Concept with TPV Framework

TPV Outcome Considerations Elements that Align with the TPV Framework

Housing Options Creating a mix of housing options that respond to community needs

• Is there a mix of housing options that meet the diverse needs of current and future residents?

• Is there a mix of housing options that are responsive to the affordability requirements for current and future residents?

• Does it generate new affordable units?

• 233 units of traditional townhouses

• 206 units in stacked townhouses for current residents and other individuals seeking housing of this type in Mississauga at market prices

• 200 units in affordable high-rise buildings to address the Region’s housing centralized waitlist

Affordable Housing Sustainability Ensuring Peel Living’s affordable housing portfolio can be sustained and improved now and in the future

• Is the development financially sustainable over the long-term?

• Does the concept provide funding for the development of new affordable housing elsewhere and/or address the state of good repair needs?

• While the preliminary development concept may require a capital subsidy to be paid to the developer for the development of 200 units in an affordable rental building, Peel Living’s net financial position is positive if the value of the building is considered

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Age-Friendly Community Developing a community where residents can live active and healthy lives

• Does the concept contain a mix of services to support daily living, foster civic engagement, and support social inclusion?

• Does the concept provide outdoor space(s)?

• Is there a range of density on the site?

• Does the concept foster a healthy and complete community?

• Provides a 1.3-acre park in the centre of Twin Pines to enable physical activity and active lifestyles, as well as to support a pedestrian friendly environment

• A range of density on the site to accommodate single adults, seniors and families with children, considering the accessibility of all residents

• Space within the affordable rental building can potentially be used for community space or public services to support daily living, foster civic engagement and support social inclusion

Connected Community Fostering a connected and inclusive community

• Does the concept provide access to modes of transportation and active living?

• Does the concept provide outdoor space(s)?

• Does the concept incorporate defined space for health, social, community and/or recreational services?

• Does the concept integrate affordable and market housing?

• Does the concept support the physical and emotional well-being of its residents?

• Provides a 1.3-acre park in the centre of Twin Pines to support active living, to create a sense of community and to strengthen resident’s ability to live full, active and healthy lives

• Space within the site can potentially be used to incorporate defined space for health, social, community and/or recreational services

• Incorporates both affordable and market housing to create a sense of security and to build a sense of community

Environmental Responsibility Protecting and enhancing the environment for generations to come

• Is there opportunity to develop the site by minimizing environmental impact?

• Is there opportunity to construct green infrastructure and use other technologies for lower-emission or resource reuse?

• Considerable potential for the site to be redeveloped in an environmentally responsible manner and for the facilities to promote sound environmental practices and environmentally sustainable design, such as technologies for lower-emission, protecting the existing tree canopy, and maintaining and creating new green space

Further details on approvals are outlined in Section 6.7, however it is important to note that an Official Plan Amendment and Zoning By-law Amendment is anticipated to be required for the majority of the site to accommodate redevelopment. The current land use planning permissions are restrictive to substantially the same form of development presently in place. Although there is some flexibility to accommodate additional forms of commercial development and changes in use along the frontage lands along Dundas Street East without amending the current zoning, proceeding without amendment would likely suboptimize the value of the land.

The Dundas Connects master planning process presently underway by the City of Mississauga has indicated that amendments to the Official Plan and Zoning By-law will be undertaken as part of the approvals process for affected lands along the corridor. Based on information made public to date, the Twin Pines lands could have appropriate permissions in place to accommodate the assumed preliminary development concept with the exception of the portion of the site at the southwest corner, where amendments to the Official Plan and Zoning By-law would likely be required to accommodate heights in excess of 12 storeys.

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4.0 Delivery Models

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This section describes potential delivery models for the project. An assessment of the delivery models is presented that supports the selection of the shared risk model as the preferred model for delivery of the project. This delivery model serves as the basis of the financial analysis presented in Section 5 and the high-level implementation plan presented in Section 6 of this Business Case.

4.1 Overview of Delivery Models A delivery model represents the means by which a project is delivered, including which parties are involved and what their roles and responsibilities are. In this Business Case, three potential delivery models have been considered for redeveloping the site; the three models cover a range of alternative risk transfer strategies that could be used for the project. For each model, as the roles of the public and private sector change, so does the overall distribution of the risks associated with redeveloping the site.

To ensure that the three models are compared on an “apples to apples” basis, it is assumed that the project would meet the TPV outcomes and Peel Living’s commitments under each of the three models.

The three delivery models are the:

• Maximized risk transfer model

• Shared risk model

• Retained risk model

These delivery models, as they would be applied to the project, are described in the following sub-sections, and are evaluated by considering the challenges and benefits of each to Peel Living. As previously mentioned, the description and assessment of each model is provided on the basis of the entire site. Hybrids of these models could be applied to the project by dividing the site into separate components, although this is outside of the scope of this Business Case.

4.1.1 Maximized Risk Transfer Model

Overview of Model

This delivery model involves Peel Living selling the entire site in an open and fair bid process to a developer under an Agreement of Purchase and Sale for redevelopment. The private developer would create a site plan and would bring its own resources to plan, market, develop and finance the project. Under this model, all development risks are transferred to the private sector, including risks related to financial, marketing, approvals, design, and construction elements of both market and affordable housing.

The private sector would also be responsible for operating and maintaining any new affordable units on the site. The developer that enters into the Agreement of Purchase and Sale may either operate the affordable units itself, contract a non-profit operator to perform the work, or sell/lease the building to another entity who would assume overall operational responsibilities.

Legal agreements can set out the stipulated price of the project lands, and requirements of the buyer to satisfy terms and conditions established. For instance, in order to more effectively identify and enforce Peel Living’s requirements as they relate to the initial and ongoing operations of the affordable units, it could utilize an agreement which would govern the occupancy of these units. Examples of terms and conditions that Peel Living could include in legal agreement(s) are:

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• Providing existing residents (those that have purchased a mobile unit on or before January 6, 20181) first right of refusal to market housing on the redeveloped site;

• A commitment to provide community space;

• A commitment to provide affordable housing, including social housing for the Region of Peel’s centralized waitlist, which could also include:

- Occupancy restrictions to ensure individuals on the Region of Peel’s CWL that qualify for affordable housing are provided an opportunity to rent a unit;

- The tenure of the occupants of the units – for instance, a requirement that housing units be available for rental and occupied by tenants, rather than owners;

- Rent controls (which could be more restrictive than provided for currently under Ontario law);

- Requirements to ensure the long-term quality of the units– for instance, a requirement that a portion of rent is set aside in a reserve for maintenance and repair purposes; and

- Administration and management of the units.

The creation of new housing stock is costly, as a result of high land costs, lengthy developmental approval processes and increasing capital and operating expenses. If a developer is required to develop and own/operate new affordable rental housing on the site, some level of government financial support would be needed in order to allow a developer to receive an adequate rate of return (to fill the gap between required market rent and affordable rent to encourage private investment).

Under this model, it is assumed that the developer could be compensated for the delivery of building affordable units through the provision of land at below-market prices or free. If the value of providing the land in such a fashion is not sufficient to cover the cost of development and subsidized rents, an additional form of government subsidy would be required.

An example of a land sale that required affordable housing units to be constructed on the site is presented to the right.2,3,4

1 The Peel Living Board of Directors adopted a series of commitments (commonly referred to as the 2012 Commitments) to guide the redevelopment, and highlighted that affordability would be maintained in any future Twin Pines. These commitments are outlined in Section 1. 2 Director of Community Planning, North York District, City of Toronto; “30 Tippett Road – Zoning By-law Amendment Application”, dated November 4, 2015; available at - http://www.toronto.ca/legdocs/mmis/2015/ny/bgrd/backgroundfile-85530.pdf 3 Director, Affordable Housing Office, City of Toronto; “A Program for 100 New Affordable Rental and Ownership Homes at 36 Tippett Road”, dated March 2, 2016; available at - http://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-90861.pdf 4 Build Toronto; “30 Tippett Road”; accessed on May 2017; available at - http://buildtoronto.ca/project/30-tippett-road-3/

PRACTICAL EXAMPLE

– The City of Toronto sold a 5.6 acre property at 30 Tippett Road in north Toronto to a partnership formed by Metropia and Shiplake Properties, where a condition of the sale is the inclusion of 100 affordable rental and 100 affordable ownership homes.

– The property was identified as surplus by the City and transferred to Build Toronto in 2009. Build Toronto worked with the City to complete an Official Plan Amendment for the lands, with permission for residential and mixed use.

– The two properties will contain 900 units, including 100 affordable rental and 100 affordable ownership homes, a 5,000 sq. ft. daycare, 0.4 acres of parkland, and connections to the Wilson subway station through new walkways.

– Construction on the first building is expected to be completed in 2018.

• Financial Details:

1. The sale price of the land was not disclosed.

2. The City of Toronto and Build Toronto provided $4 million to deliver affordable rental homes. The City provided $3.5 million in incentives through waived development charges and property tax relief. Down-payment assistance for affordable ownership homes included $3.3 million in federal/provincial funding and $2.5 million in City funding.

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Benefits and Challenges

Table 5 identifies the key benefits and challenges of the maximized risk transfer model to Peel Living.

Table 5: Maximized Risk Transfer Model – Benefits and Challenges

Benefits Challenges

• Significant financial risk transfer to private sector, creating greater cost and budget certainty to Peel Living during the development and operational periods.

• Allows Peel Living to focus on operating its existing housing stock and fulfilling its other mandates, while still increasing the number of affordable housing units that can serve to reduce the Region of Peel’s CWL.

• Considerable flexibility and control provided to the private sector, potentially making the project more attractive to the marketplace.

• Greater consideration of long-term quality and lifecycle costs of the new affordable housing, as the developer will be responsible for ongoing operating and maintenance costs (and is thus motivated to make optimal tradeoffs between initial capital costs and ongoing operating and maintenance costs), which supports the potential of the developer to bring innovative ideas and solutions (which is a guiding principle of the TPV Framework).

• Less control and oversight during development of the site, including resident transition, creating challenges of ensuring Peel Living’s objectives and requirements are met, and less flexibility to address changing requirements (which is a guiding principle of the TPV Framework).

• Model is not designed to optimally allocate risks between the public and private sectors.

• Significant risk transfer may result in a higher risk premium that reduces the potential price a developer is willing to pay for land.

• Risk that a private developer will not be able to fulfill its affordable housing obligations, thereby delaying the provision of new affordable units.

• Low operational control of the affordable housing.

• Less control and oversight by Peel Living (such as minimizing disruption to impacted stakeholders which is a guiding principle of the TPV Framework).

• Peel Living is required to monitor on an ongoing basis the developer’s performance to ensure ongoing contractual obligations are being adhered to during operations of affordable housing.

• Reduces land and partnership opportunities for Peel Living and other government agencies to build public assets on the site.

• Opportunity for federal and provincial funding may be limited.

4.1.2 Shared Risk Model This delivery model involves Peel Living conducting a procurement process to select a development partner to redevelop the site. The procurement documents will identify Peel Living’s requirements and objectives for the project that a developer would be required to meet through its proposed development plan. Through a partnership agreement, Peel Living shares development risks (and potentially financial upside from the sale of market housing) with its development partner. The aim of this model is to implement an optimal risk-sharing regime between Peel Living and its development partner, while also benefiting from private sector expertise and innovation to achieve public objectives.

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Under this model, a development partner would be responsible for designing and constructing any required affordable housing on the site, and subsequently transferring the units “turnkey” at the end of construction to help the Region of Peel increase its affordable housing stock. After transfer, Peel Living would assume responsibility for operating and maintaining the units. A developer could be compensated for constructing affordable units through the provision of land at below-market prices or free. If the value of providing the land in such a fashion is not sufficient to cover the development costs of designing and constructing affordable housing, an additional form of government subsidy would be required.

This model could involve the creation of a special purpose vehicle (SPV) to deliver the project on behalf of Peel Living and the development partner. The role of the SPV would depend on the nature of the related legal and financial agreements, however, in general it allows Peel Living and the development partner to limit their exposure to liabilities and risks related to the project. The SPV also creates a governance structure that can facilitate Peel Living’s oversight role during the development.

If Peel Living decides to share the risks and rewards associated with redeveloping the site, it may enter into a partnership agreement. This agreement would set out the legal obligations of both Peel Living and its development partner. It would identify the development partner’s legal obligations to meet Peel Living’s requirements for the site, such as creating a mix of housing options, delivering affordable units, and providing community space. The agreement would also identify the allocation of risks, as well as clearly define any financial upside that Peel Living may be able to share in (such as sharing a portion of revenue from the sale of market housing on the site). Peel Living’s contractual responsibilities would also be covered in the agreement, such as its role to oversee and monitor the development partner in fulfilling its contractual obligations.

An example of a partnership model that involved a development partner delivering affordable housing on behalf of a public agency, which resulted in a mixed-income and multi-use community is described below5.

5 Spearn, Greg, President and Chief Executive Officer, Toronto Community Housing; “Rationale for Regent Park Funding Request to City Council”, dated February 9, 2017; available at - http://www.toronto.ca/legdocs/mmis/2017/cc/bgrd/backgroundfile-101361.pdf

PRACTICAL EXAMPLE

– The Regent Park Revitalization Plan began in 2005 by the City of Toronto in conjunction with development, government and community partners, with the goal of rebuilding the neighbourhood. The plan involved turning what was once solely a social housing development into a self-sufficient mixed-income and multi-use community. To achieve its goal, Toronto Community Housing Corporation (TCHC) partnered with Daniels Corporation, a private developer, to revitalize the 69 acre community over 15 to 20 years (in 5 phases) with a mix of subsidized / affordable housing, as well as condominium apartments.

– To fund the redevelopment, TCHC and the private developer sold market price condo units, which financed the costs of building the new social housing units. In Phase 1, TCHC assumed financial risk and financed the development, which was viewed at the time as necessary to attract a private sector partner due to the low land value. TCHC received minimal land value from its development partner but received most of the condo project’s return from profit. TCH also assumed all of the costs of the new municipal infrastructure.

– By 2010, TCHC began Phase 2, which involved assuming less risk, as the market projects were mostly able to be financed by traditional lenders and the majority of the condos had been pre-sold prior to construction start. TCHC realized its returns for the land from the market development once the projects were complete, allowing it to generate greater returns but putting reliance on the continuing strong performance of the market. The City of Toronto will fund 60% of the cost of municipal infrastructure.

– In 2013, the TCH Board provided direction to limit market risk exposure for the Phase 3 lands. As a result, TCHC negotiated a market land sale to the developer partner and had no participation in condo sales or market risk. The land value is set up front and does not vary regardless of market performance which provides greater revenue certainty but limits TCHC’s upside potential.

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There are several factors that contribute to the success of a partnership model, including trust and commitment by the partners, and clearly defined contracts that specify the roles and responsibilities of each party, and what the consequences are of not meeting a requirement. Ultimately, successful models of private participation require a sense of shared interests among public and private organizations, and receptiveness to new ideas and partnership opportunities.


Table 6 identifies the key benefits and challenges of the shared risk model to Peel Living.

Table 6: Shared Risk Model – Benefits and Challenges

Benefits Challenges

• Facilitates optimal risk allocation (shared financial risks

and potential to share returns), which can reduce the

developer’s risk allowance to maximize the value a

developer is willing to pay for land.

• Significant financial risk transfer to private sector,

creating greater cost and budget certainty to Peel

Living during the development period.

• Greater control and oversight during development of

the site, including resident transition, to ensure Peel

Living’s objectives and requirements are met (such as

minimizing disruption to impacted stakeholders which

is a guiding principle of the TPV Framework).

• Peel Living retains operational control of the affordable

housing.

• Procurement process would require for the entire site

to be considered during the planning and design

stages, supporting a development partner to create an

integrated and efficient site plan.

• Supports Peel Living and its partner’s ability to further

explore other opportunities for developing additional

public assets on the site through the procurement

process, which supports the potential of the developer

to bring innovative ideas and solutions (which is a

guiding principle of the TPV Framework).

• Peel Living is required to monitor the development

partner during the construction phase to ensure

output specifications are met.

• Significant upfront planning is required.

• More complex procurement process and legal

agreements.

• More complex deal structure, requiring Peel Living to

retain a certain level of competency throughout the

term of the agreement.

4.1.3 Retained Risk Model Under this model, Peel Living would retain responsibility for developing the entire site. Peel Living would bring its own resources to plan, market, develop and finance the project, and would be responsible for procuring contractors to deliver the work, as required. Under this model, almost all of the development risks are retained by Peel Living, including risks related to financial, marketing, approvals, design, and construction elements of both market and affordable housing. Similar to the

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shared risk model, after the affordable housing is designed and constructed, Peel Living would retain responsibility for operating and maintaining the affordable units to address the Region of Peel’s CWL.

In contrast to the previous two delivery models described, this model does not involve Peel Living selling any portion of the site. As a result, Peel Living would not receive any up front value for the land, rather would only realize proceeds from the sale of market units. This allows Peel Living to potentially generate greater returns compared to the other delivery models but also requires it to secure all funding and financing required to redevelop the site. This model also significantly increases Peel Living’s exposure to financial risks as there is greater reliance on the performance of the local housing market.

Under this model, in recognition that Peel Living does not routinely develop projects of the magnitude and complexity of the Twin Pines redevelopment and therefore lacks the experience and in-house resources required, it could use a contracting strategy in which it delegates the day-to-day management and administration of design and construction contracts to a Construction Management (CM) contractor. While the CM contractor would carry out project management responsibilities on Peel Living’s behalf, overall accountability for project outcomes is retained by Peel Living.

The CM contractor generally manages the design team, procures the construction contractor(s) and manages the project delivery on behalf of Peel Living. As the owner’s agent, the CM contractor is authorized to enter into legal relationships with third parties on Peel Living’s behalf.

A CM contractor can share some of the project delivery risk with the owner, although generally at a much more reduced level than the previous two models. However, the CM contractor is not financially-motivated to deliver exceptional performance and value, and therefore it can be difficult to motivate a CM contractor to provide more than a minimally-acceptable performance. While common in certain sectors, the use of a CM contractor is rare in real estate development projects.

Regardless of whether a CM contractor is used or not, Peel Living may wish to establish a wholly-owned subsidiary to Peel Living to constrain any project risks and liabilities within the project structure. The subsidiary would be responsible for overseeing all aspects of development, from the planning, approvals, design, financing, marketing and development of the site, through to engagement of the local and wider community. This is a common approach in real estate development projects; an example of a real estate development project that has used this approach is presented to the right6 7.

Regardless of the exact approach adopted, in order for this model to succeed, Peel Living would be required to assign/retain staff with expertise in developing residential properties.

6 Hobsonville Land Company; “Sustainable Development Framework for Hobsonville Point”, dated June 2015; available at - http://hobsonvillepoint.co.nz/assets/Uploads/Sustainable-Development-Framework-version-3.0.pdf 7 Hobsonville Land Company; “Buckley Hobsonville CDP”, dated August 3, 2009; available at - http://hobsonvillepoint.co.nz/downloads/Hobsonville-Point-Buckley-CDP.pdf

PRACTICAL EXAMPLE

• Hobsonville Point, located on 167 hectares of land, was home to the New Zealand Defence Force for 75 years. After the relocation of Air Force activities on the site, there was an opportunity to redevelop it in order to address growth in the area and to create additional housing stock.

• Housing New Zealand Corporation established Hobsonville Land Company (HLC) in 2005, as a Crown Entity and a wholly-owned subsidiary, specifically to deliver the project. It did so in part to limit its exposure to liabilities and risks related to developing the site.

• Since 2006 HLC has been overseeing the development of Hobsonville Point, which will create a mix of social housing, affordable homes aimed at first home buyers (defined as 75 per cent of the Auckland median house price) and market housing. It is estimated that 3,000 homes will ultimately be built.

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Table 7 identifies the key benefits and challenges of the retained risk model to Peel Living.

Table 7: Retained Risk Model – Benefits and Challenges

Benefits Challenges

• Greater control and oversight during development of the site, including resident transition, ensuring Peel Living’s objectives and requirements are met (such as minimizing disruption to impacted stakeholders which is a guiding principle of the TPV Framework).

• Increased development and operational control of the affordable housing.

• Retained financial return in market housing.

• If a CM contractor is retained, it can assist in understanding the complexities in construction and schedule development, encouraging a more efficient construction period and timely completion.

• If a CM contractor is retained, it ensures design is reviewed from a constructability perspective to reduce the number of design changes.

• Creates flexibility to address changing requirements (which is a guiding principle of the TPV Framework).

• Low risk transfer to private sector, including financial risks.

• Longer planning and development periods.

• Greater internal resources and expertise required, as Peel Living does not have experience acting directly as a developer.

• Administration of multiple procurements and oversight of multiple contractors, increases complexity of redeveloping the site.

• CM contractor is not financially-motivated to ensure construction quality (if retained) or to bring innovative ideas and solutions (which is a guiding principle of the TPV Framework).

• If a CM contractor is retained, Peel Living’s control is reduced during the construction phase as the CM contractor has signing authority.

• There are costs associated with compensating the CM contractor which would be material for the size of this project.

4.2 Recommended Delivery Model In order to identify a delivery model that will be assumed for the project, a qualitative assessment was conducted of the delivery models described in Section 4.1. This section identifies the preferred delivery model that will be assumed in the remainder of this Business Case, specifically Section 5 (Financial Analysis) and Section 6 (Implementation Plan Considerations). On the basis of the assessment, the shared risk model is recommended for the project.

While the success of a shared risk model requires more time and resources upfront to carefully design the procurement process and to oversee the performance of a development partner, it supports Peel Living to achieve its TPV objectives and requirements for the site. Specifically, this model:

• Facilitates optimal risk allocation, which can reduce the developer’s risk allowance and reduce project costs, both of which will serve to maximize the value a developer is willing to pay for land;

• Facilitates Peel Living’s control and oversight during development of the site to ensure Peel Living’s objectives and requirements are met;

• Provides considerable flexibility to Peel Living to adjust to changing circumstances and requirements over time (e.g., if more funding is available to explore developing additional public assets on the site);

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• Provides Peel Living with the control necessary to ensure high quality for affordable housing on the site at completion and during operations; and

• Avoids the need for acquiring considerable new internal resources and expertise.

In summary, when considering the benefits and challenges of all three delivery models, the Shared Risk Model has been identified as the optimal model to fulfill the TPV Framework. The Shared Risk Model will be used as the basis of the financial analysis presented in Section 5 and the high-level implementation plan presented in Section 6 of this Business Case.

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5.0 Financial Analysis

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This section outlines the financial analysis of the preliminary development concept by estimating the financial impact to Peel Living, assuming the project is delivered under the shared risk model. Policy changes and other sensitivities that could impact the financial results are also presented in this section.

5.1 Methodology A financial analysis was undertaken to analyze the preliminary development concept described in Section 3 by estimating the net financial position to Peel Living, assuming the project is delivered under the shared risk model that is described in Section 4. The findings presented in this analysis are intended to guide policy decisions and Peel Living’s redevelopment approach for the site.

The key metrics in the financial analysis presented in this Business Case is Peel Living’s cash position at the end of development and its net financial position after considering the value of the affordable rental building. Peel Living’s net financial position is projected by first estimating proceeds from the sale of the land assumed to be sold to a development partner, the cost of constructing the affordable rental building, and the value of that building. The specific methodology followed was:

1. Revenues (revenue from the sale of market housing and rental revenues for the affordable units), development costs, and required return for the development partner were estimated for the project.

2. A residual land value model was developed to analyze the feasibility of developing market rate traditional and stacked townhouses on the site. The residual land value was calculated by deducting the development costs and profit from the estimated revenue from the sale of the market rate townhouses and stacked townhouses8 (as estimated in Step 1).

3. Next, the residual land value that results from the sale of market rate traditional and stacked townhouses was compared to the cost of developing the affordable rental building (assumed to be constructed on the southwest portion of the site and transferred to Peel Living to operate) with the difference representing Peel Living’s cash position after development.

4. The capitalized value of the affordable rental building’s cash flow at the time of construction completion was estimated. This value was added to Peel Living’s cash position after development (calculated in Step 3), to estimate its overall net financial position from redeveloping the site.

5. Sensitivity analyses were conducted to estimate the financial impacts of certain policy decisions and changes in economic factors.

The various financial results presented in this section of the Business Case are in net present (NPV) 9 dollars, unless otherwise noted, to bring all costs and revenues to a comparable point in time (January 1, 2017).

5.1.1 Residual Land Value Model As mentioned previously, a residual land value model was developed to analyze the feasibility of developing market rate traditional and stacked townhouses on the site. The residual land value is calculated by deducting the development costs

8 The residual land value was calculated for the portion of the site that is assumed to be developed with market traditional and stacked townhouses, based on the preliminary development concept. The preliminary development concept includes market townhouses on most blocks. 9 Discount rate of 3.7% used based on the Region of Peel’s 2017 Budget Assumptions and Projection Rates.

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(hard construction costs and soft costs) from the estimated sale proceeds for both the market rate townhouses and stacked townhouses. The estimated sale proceeds are estimated based on market parameters.

If the residual land value is positive, then assuming all assumptions hold true over the development period, the development of market and/or stacked townhouses would be feasible. In other words, the development partner would pay the amounts projected for the development and other project costs and earn a reasonable return from the sale of traditional and stacked townhouses.

5.1.2 Valuation of Affordable Rental Building The value of the affordable rental building was estimated, using a capitalization of net income approach, as part of this analysis. This is the estimated value if the building is sold to a single buyer after a full year of operations. This value was included in the analysis, since it is an asset that Peel Living is assumed to own; for instance, Peel Living could sell the building to an investor after it is constructed.

5.2 Financial Assumptions There are a whole range of assumptions that were used for the financial analysis. The sources of these assumptions were KPMG, NBLC, Peel Living, the Region of Peel, Altus Group, and the City of Mississauga. General financial assumptions are summarized in this section of the Business Case. While KPMG reviewed this information, we have not audited or otherwise independently verified these assumptions.

5.2.1 General Assumptions Table 8 presents the general assumptions that have been used for the financial analysis.

Table 8: General Assumptions

Assumption Rate Source

Inflation Rate - Development costs, Operating costs, Rental rates 1.9% Region of Peel 2017 Budget Assumptions and

Projection Rates

Inflation Rate - Price of Market Units 3.0% NBLC

Discount Rate 3.7% Region of Peel 2017 Budget Assumptions and Projection Rates

The project is assumed to be delivered under a phased construction approach, where the affordable rental building is delivered during the first phase. In the affordable rental building, the residential space is assumed to be 188,877 ft2 and the at-grade retail/commercial space is assumed to be 17,847 ft2, based on the preliminary development concept. While the timing for each phase has been assumed for the financial analysis, the development partner selected to deliver the project will be responsible for developing a construction plan and schedule. The project timelines are subject to the timing of obtaining any required planning approvals and permits prior the start of construction. As a result of these factors, it is anticipated that the actual timing of the project will vary from these assumptions.

5.3 Cost and Revenue Estimates The key categories of assumptions that are used to develop the cost and revenue estimates are presented in this section. The cost and revenue estimates do not include any allowance for risk

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5.3.1 Hard Construction Costs Hard construction costs were estimated for the townhouses, stacked townhouses, and the affordable rental building on the site (based on the preliminary development concept). Table 9 summarizes key assumptions that are used to estimate the hard construction costs.

Table 9: Hard Construction Cost Assumptions

Cost Category Market Townhouses Market Stacked Townhouses

Affordable Rental Building

Above Grade Construction Cost (per sq. ft.) $130 $150 $225

Below Grade Construction Cost (per sq. ft.) - $90 $90

Demolition & Site Prep (per sq. ft.) $7 $7 $7

Servicing Connection Cost $500 $500 $500

Landscaping (lump allowance) $100,000 $50,000 $100,000

Contingency (% of total costs) 5.0% 5.0% 5.0%

Source: N. Barry Lyon Consultants Limited, Altus Group Cost Guide 2017

In addition to the above assumptions, the cost estimates included in the financial analysis include the cost of constructing resident parking, visitor parking, and retail parking.

5.3.2 Soft Construction Costs In addition to hard construction costs, soft construction costs were estimated for developing the traditional townhouses, stacked townhouses, and affordable rental building on the site (based on the preliminary development concept). Below are categories of soft costs that are included in the cost estimates:

• Development Fees (Permit Fees and Planning Application Fees)

• Third Party Fees (Legal, Consultants, Project Management, and Construction Management)

• Tax (Property Tax, Land Transfer Tax, HST Fee, HST Rebate)

• General Overhead Expenses

• Insurance Costs

• Marketing Costs, including Sales Commission Fee

• After Sales Service Cost

• TARION Enrolment Fee

• Financing Charges

5.3.3 Development Charges Development charges were included in the cost estimates for the new residential units (the affordable rental building, traditional townhouses and stacked townhouses) and for at-grade retail/commercial space in the affordable rental building. The “Education and Transit” category includes development charges for GO Transit, Peel District School Board, and Dufferin-Peel Catholic School Board. “Other Residential” development charges are applied to development cost estimates for traditional townhouses, whereas “Apartment” development charges are applied to stacked townhouses and the affordable rental building.

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The development charges per unit are presented in Table 10.

Table 10: Development Charges10

Region of Peel City of Mississauga Education & Transit

Residential Development Charges (per unit)

Other Residential $41,283 $27,768 $5,080

Apartments $30,842 $18,490 $4,933

Non-Residential Development Charges (per m2 GFA)

Non-Industrial (per m2 GFA) $206.88 $101.88 $10.87

Peel Living should review whether the Region of Peel’s development charges could be waived through coordination with the Region of Peel.

It is anticipated that Peel Living may be eligible for a development charge credit estimated to be around $14 to $15 million.

5.3.4 Other Costs Below is a list of additional costs that were included in the financial analysis. These are costs that Peel Living is anticipated to incur in order to deliver Phase 2 of the project as well as to repay any debt that has already been incurred related to the project.

• Reserve to Fund Operating Loss: Throughout the term of 1996-2016, expenses on the site have exceeded revenues by around $2 million. There is a risk that the amount of this operating loss will continue to increase if the redevelopment does not proceed in the near future. These costs will need to be repaid through the project.

• Region of Peel Loan 2013 Land Acquisition: This is a Regional loan for the purchase of land adjacent to Twin Pines, with an interest rate of 3.2%. The land was purchased in 2013 in the amount of $2,456,224, and the current outstanding loan amount (including accumulated interest) is $2,684,763.

• Region of Peel Loan for Project Costs: This is a loan from the Region of Peel to cover costs incurred for Phase 1 of the project, as well as borrowing for Phase 2 of the project. As of May 2017, the outstanding loan balance is equal to approximately $1.5 million, and is accumulating interest at an annual rate of 2.9%.

• Cost of Administering Project: This includes costs related to retaining resources to oversee and administer Phase 2 of the project.

• Construction Cost of Public Park, Roads and Servicing: Includes the cost of constructing the park, roads and servicing (e.g., stormwater management).

5.3.5 Revenue Estimates Revenues were projected for the sale of market townhouses and stacked townhouses based on the estimated sale value of market units and the rate at which the units are sold (absorption assumptions). Table 11 summarizes assumptions related to the assumed absorption rates and price increases for both townhouses and stacked townhouses.

10 City of Mississauga Planning and Building Department; “Development Charges”, Accessed on May 2017 (Rates are valid for building permits issued by July 31, 2017); available at - http://www7.mississauga.ca/documents/pb/main/2017/dcfeb2017.pdf.

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Table 11: Absorption Assumptions

Absorption and Market Price Assumptions Market Townhouses Market Stacked Townhouses

% Sold During Pre-Construction (Pre-sales) 70% 70%

% Sold During Construction 20% 20%

% Sold at Completion 10% 10%

Initial Deposit (% of end price per unit) 10% 10%

Final Deposit (% of end price per unit) 10% 10%

Revenue Inflator (market sales) 3% 3%

Price Increase at Start of Construction 2% 2%

Price Increase at Construction Completion 3% 3%

5.4 Financial Analysis Results This section presents the results of the financial analysis conducted, based on the information provided above. As discussed in Section 5.1, the methodology for the financial analysis involved comparing the residual land value that results from the sale of market traditional and stacked townhouses to the cost of developing 200 units in an affordable rental building (assumed to be transferred to Peel Living to own and operate).

Table 12 presents the estimated development cost of constructing 200 units in an affordable rental building that includes at-grade retail/commercial space. The table also presents the estimated residual land value from developing traditional townhouses and stacked townhouses on the site.

Table 12: Cost of Affordable Rental Building and Residual Land Value from Developing Market Housing

Nominal, 000’s Affordable Rental

Building (Nominal)

Stacked Townhouses

(Nominal)

Traditional Townhouses

(Nominal)

Total Stacked and Traditional

Townhouses (Nominal)

Sales of market units [A] N/A $106,411 $169,326 $275,737

Annual Rent (average monthly rent of $982) $2,772 N/A N/A N/A

Annual Operating Expense $1,045 N/A N/A N/A

Annual Net Cash Flow $1,727 N/A N/A N/A

Capitalized Value of High-Rise Building (rental and retail/commercial space) [B]

$45,504 N/A N/A N/A

Hard Construction Costs ($52,807) ($49,401) ($72,515) ($121,916)

Soft Costs ($21,523) ($31,698) ($32,916) ($64,614)

Total Development Costs [C] ($74,330) ($81,099) ($105,431) ($186,530) -

Development Profit [D] N/A ($13,880) ($22,086) ($35,369)

Residual Land Value Generated by Market Housing [A+B-C-D] N/A $11,433 $41,809 $53,241

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As presented in Table 13 below, the residual land value from the market housing is not sufficient to cover the development costs of constructing 200 units in an affordable rental building that includes at-grade retail/commercial space and “other costs” described in Section 5.3.4 (i.e., there is a negative cash position). The net financial position of Peel Living, considering the value of the affordable rental building after a full year of operations is positive at approximately $11 million.

Table 13: Net Position to Peel Living

000’s NPV Nominal

Residual Land Value Generated by Market Housing (refer to Table 12) $44,928 $53,241

:

Cost of Affordable Rental Apartment Building ($66,358) ($74,330)

Value of Development Charge Credit $13,681 $14,703

Other Costs:

Reserve to Fund Operating Loss ($1,888) ($2,181)

Region of Peel Loan 2013 Land Acquisition ($2,820) ($3,143)

Region of Peel Loan for Project Costs to Date ($1,527) ($1,701)

Cost of Administering Project ($3,608) ($3,740)

Cost of Public Park, Roads & Servicing ($8,343) ($9,297)

Total Other Costs ($18,186) ($20,062)

Cash Position ($25,936) ($26,448)

Value of Affordable Rental Building to Peel Living $36,652 $45,504

Net Financial Position $10,716 $19,057

5.5 Sensitivity Analysis 5.5.1 Sensitivities based on a Change in Market Factors Projecting development costs and revenues can be difficult as a result of the changing economic environment. For instance, the cost of development typically increases over time due to inflation, and in addition demand can also drive up revenues especially as parks and other new public infrastructure is constructed. In order to better understand the variability of the financial analysis, a sensitivity analysis was conducted. The results of the financial analysis is summarized in the following tables.

Change in Inflation Rates

Table 14 summarizes the results of the financial analysis if inflation rates increase or decrease by 1%. The base case of the financial analysis assumed that the inflation rate is 1.9% for costs and rental revenues and 3% for the sale of market units.

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Table 14: Change in Inflation Rates

000’s NPV Nominal NPV Nominal NPV Nominal

Base +1% -1% Residual Land Value Generated by Market Housing $44,928 $53,241 $47,258 $56,025 $42,633 $50,499

Cost of Affordable Rental Apartment Building ($66,358) ($74,330) ($67,992) ($76,184) ($64,760) ($72,517)

Value of Development Charge Credit $13,681 $14,703 $13,883 $14,920 $13,480 $14,488

Other Costs ($18,186) ($20,062) ($18,458) ($20,367) ($17,920) ($19,762)

Cash Position ($25,936) ($26,448) ($25,308) ($25,606) ($26,567) ($27,292) Value of Affordable Rental Building to Peel* $36,652 $45,504 $38,537 $47,845 $34,846 $43,263

Net Financial Position $10,716 $19,057 $13,229 $22,240 $8,279 $15,971

Wood-Frame Construction for Affordable Units

The preliminary development concept assumes that an affordable rental building will be built on the southwest section of the site, and will include 200 units and at-grade retail/commercial space. Alternatively, more than one building could be constructed on the site for affordable rental housing, such as wood-frame apartments and stacked townhomes. For instance, at six-storeys, wood-frame apartments could be used for affordable housing. According to the Altus 2017 Cost Guide, wood-frame above ground construction is approximately $145-$185 per square foot, which could reduce above-ground construction costs significantly. However, this would consequently reduce the amount of land available for market housing.

5.5.2 Sensitivities based on Policy and Strategic Decisions

Change in Number of Affordable Housing Units

As discussed in Section 5.1, the methodology for the financial analysis involved comparing the residual land value that results from the sale of market rate traditional and stacked townhouses to the cost of developing an affordable rental building. Based on the results identified in Section 5.4, the residual land value from the market housing is not sufficient to cover the costs of developing 200 affordable units in an affordable rental building that includes at-grade retail/commercial space and other project costs, although the net financial position is positive.

The number of affordable units may change depending on the value a development partner can bring to the redevelopment, and/or the role of Peel Living’s funding partners (e.g., the Region of Peel in its capacity as the Housing Service System Manager may wish to partner with Peel Living to develop additional affordable housing on the site). Despite this, a sensitivity analysis was conducted that indicates the number of units that can be delivered assuming developed in a reinforced concrete building is around 120 in order for a Peel Living to break-even (or eliminate its cash shortfall).

While the size of units in the affordable rental building have not been determined at this time, the analysis assumes that there are 35% 1-bedroom units, 50% 2-bedroom units, and 15% 3-bedroom units. The size of these units is based on the Region of Peel’s Affordable Housing Design Guidelines and Standards for Apartment Buildings, which results in an average unit size of 803 square feet per unit (assuming an 85% efficiency factor to convert gross floor area to net saleable area).

The total nominal development costs of the residential space in the affordable rental building is $69,131 million (which assumes a total gross floor area of 17,547 m2 or net saleable area of 14,915 m2 for 200 units), the estimated nominal construction costs for the affordable rental units is approximately $280,000 for a 1-bedroom unit (60.4m2), $366,000 for a 2-bedroom unit (79m2), and $431,000 for a 3-bedroom unit (92.9m2). The average nominal cost per unit in the affordable rental building is $359,000.

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Reduction in Land for Market Housing

To the extent that the Region of Peel is available as a funding partner for the project, it may decide to deliver more affordable units on the site. While the site can accommodate more affordable units, this would result in a reduction of market units and/or other amenities. An appropriate financial analysis of such a strategy requires refinement of the development concept and various other inputs that have gone into the financial model. Given that there are pending decisions associated with the extent that the Region of Peel will be involved and will require more affordable units, this more detailed analysis has not been conducted.

Relocate Peel Family Shelter Off-Site

As mentioned in Section 3.1.5, the preliminary development concept assumes that the Peel Family Shelter will remain on the site in its current location throughout the redevelopment. Despite this, the potential procurement process represents an opportunity for developers to identify a solution that incorporates the shelter in an effective way to upgrade and possibly expand the shelter. The preliminary financial analysis indicates that the value of the site of the current shelter is insufficient to offset the significant cost of a new facility even if integrated into a new building.

The size of the Peel Family Shelter site is approximately 1.5 acres. If the shelter is relocated off-site, there would be additional land available for market housing (depending on the detailed site design). Based on the preliminary development concept assumed in this Business Case, as an example, relocating the Peel Family Shelter could result in approximately 21 units of additional traditional townhouses or 57 units of additional stacked townhouses (or a mixture of both types of townhouses). The following is the additional residual land value that has been estimated for both scenarios:

• $3.3 million (NPV) if 21 units of additional traditional townhouses is assumed to be built on the site ($4.1 million, nominal)

• $2.9 million (NPV) if 57 units of additional stacked townhouses is assumed to be built on the site ($3.6 million, nominal)

As a result, unless the Region of Peel decides to allocate funds to offsetting the costs of constructing a new facility, the planned development will be based on leaving the shelter in its current location.

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6.0 Implementation Plan Considerations

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This section outlines implementation plan considerations for redeveloping the Twin Pines site based on the preferred delivery model. Key areas of the implementation plan are covered including: redevelopment approach, financing strategy, potential funding opportunities, procurement strategy considerations, approvals approach, stakeholder engagement and project governance.

6.1 Redevelopment Approach 6.1.1 Scope of Development Partner’s Role Redeveloping the site under a Shared Risk Model will involve a competitive procurement process to select a development partner to redevelop the Twin Pines site. Through the same procurement process, market blocks would be sold directly to the development partner.

The development partner will be responsible for coordinating the development of the project, bringing its own resources to plan, develop and finance the redevelopment. In general, the role of the development partner is anticipated to include:

• Securing all necessary approvals to proceed with the development;

• Creating a detailed site design;

• Coordinating the design and construction of the affordable rental building(s);

• Developing a construction plan, including a phasing strategy for the entire site (described further in Section 6.1.2); and

• Designing and building of all aspects of the redevelopment, including infrastructure, affordable rental building(s), and market units, as well as any public facilities (e.g., parks).

6.1.2 Proposed Construction Phasing for the Redevelopment Due to the unique characteristics of the project, it is expected that construction on the site will be a complex process. The development partner will be responsible for developing an appropriate phasing strategy, which allows for construction of the market units and affordable rental building(s) to proceed at an appropriate pace while still meeting Peel Living’s requirements for the project.

A phased construction approach is currently contemplated for the redevelopment of the site, with the affordable rental building being delivered during the first phase. Apart from potentially specifying requirements for the required substantial completion date of the high-rise affordable rental building, it is not anticipated at this time that Peel Living will have requirements for a specific sequence for phasing the relocation, demolition and construction on the site. However, it is anticipated that Peel Living will require the development of the affordable rental building during the first phase of the project in order to support the Region’s strategic priorities to increase stock and reduce the current centralized waitlist for affordable units.

6.2 Financing Strategy As discussed, the redevelopment of Twin Pines is anticipated to include a mix of affordable and market housing. This provides opportunity for revenue received by Peel Living from the sale of land to cover the costs of designing and constructing any affordable housing on the site. However, the preliminary financial results presented in Section 5.4 indicate that the residual land value (related to the projected net revenue of market housing) is the residual land value from the market housing is not

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sufficient to cover the costs of developing 200 affordable units in an affordable rental building that includes at-grade retail/commercial space and other project costs (although the net financial position is positive). As a result, Peel Living will need to consider a range of funding strategies for the project which includes the timing of proceeds from the land sale from the development partner, the use of federal/provincial/regional funding, borrowing from the Region of Peel, and/or use capital reserves to fund a certain amount of the development costs.

The financial analysis presented in Section 5 is based on the assumption that the development partner would pay for the land in installments. Instead of Peel Living receiving its land proceeds in installments, it could require the developer to make an upfront payment during the first phase of construction. This would reduce the amount of funding Peel Living would need to provide to its development partner for the affordable housing unit; however it would constrain a developer’s cash flows and potentially reduce the amount that a developer is willing to pay for the land as a result of this additional risk transfer.

Any required funding for developing the affordable rental building is assumed to be paid to the development partner during the construction period as a fixed capital subsidy. The current base financial analysis assumed that Peel Living would pay a substantial completion payment at the end of construction for the affordable rental building, and the development partner would be required to finance the construction costs. Alternatively, Peel Living could make milestone payments during the construction period to the development partner based on the value of work completed. With this alternative arrangement, the development partner would not have to arrange significant amounts of private financing. Providing a substantial completion payment at the end of construction provides incentive to the development partner to complete construction on-time and on-budget (as well as reducing Peel Living’s commitment to provide regular payment), although it would incur higher financing costs, which Peel Living would ultimately have to bear.

Depending on the timing of land proceeds and the payment mechanism, Peel Living may be required to secure bridge financing or a loan from the Region of Peel to finance its construction payments to the development partner. Once land proceeds are received, these would be used to extinguish all or some of the outstanding debt related to Peel Living’s payments to its development partner.

Performance security could be required from the development partner, such as payment and performance bonding and construction warranties - this is particularly important in the case of a substantial completion payment. In addition, Peel Living may require its development partner to provide security related to its commitment of purchasing land at a future date. For instance, a letter of credit could be secured, where the size of the letter of credit could be based on a percentage of the negotiated land sale price that a developer has agreed to pay at a later date.

It is important to note that the financial analysis currently assumes a preliminary development concept that could potentially be improved by the development partner. As further explained in Section 6.4, the procurement process should be designed to encourage innovation and creativity in order to meet Peel Living’s stated goals and objectives.

6.3 Potential Funding Opportunities The housing system in Peel is supported by funding contributions from the senior levels of governments and other system partners through innovative partnerships. It is suggested that Peel Living work with senior levels of government and other partners to investigate potential funding opportunities to support the delivery of additional affordable units created at 80% of CMHC AMR on the site. Appendix D provides further details on potential funding programs that could be leveraged for the development of Twin Pines. Potential funding sources are detailed below.

6.3.1 Federal, Provincial and Regional Funding There may be funding opportunities that Peel Living can leverage from its system partners to develop affordable housing on the site. In order to secure funding, the project will be required to demonstrate it is operationally viable under the proposed financing strategy while minimizing requirements for additional Regional operating subsidies, other than those required under

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Federal/Provincial funding guidelines (e.g., equalization of the multi-residential property tax rate). In addition, provincial funding requires that housing will remain affordable for 20 years and overall affordability of the new building on the site at 80% of CMHC AMR. As a result, the financial analysis presented in Section 5 has taken into consideration the federal and provincial governments’ eligibility criteria for funding affordable housing developments, setting average rent assumed in the building at 80% of CMHC AMR.

Funding under the Investment in Affordable Housing Extension (IAH) and the 2016 Social Infrastructure Fund (SIF) comes with annual timelines set by the Ministry of Housing. Service Managers must allocate funding and sign agreements for projects and programs by December 31 of each year and begin and complete projects within prescribed timelines. Peel Living should consider exploring further funding opportunities in partnership with the Region of Peel.

6.3.2 Government and Community Partnerships There is limited supply of land in the City of Mississauga that is available for residential development, which creates significant opportunities for governments to leverage the site for the development of public assets, such as affordable housing and community facilities. For instance, while it is undetermined at this time, the Region of Peel may decide to partner with Peel Living to use a portion of the site for developing additional affordable units.

There are also opportunities for Peel Living to partner with community organization(s) and/or non-profit developer(s) to redevelop the site. Developers may propose innovative partnership structures, where, as an example, a community/non-profit organization is able to bring financial contributions, including donations and experience, which can lower development costs.

6.4 Procurement Strategy 6.4.1 Procurement Strategy Considerations The choice of delivery model and procurement strategy are highly interconnected. There are a number of considerations in developing a procurement strategy for the project, and examples are outlined below.

• One-Stage versus Multi Stage Procurement: While the procurement processes for the project is anticipated to include a Request for Proposal (RFP) stage, Peel Living may also consider stages that would run prior to the issuance of an RFP, such as a Request for Expressions of Interest (RFEOI), or prequalification process known as a Request for Prequalification (RFPQ).

- An RFEOI can serve to gauge the level of interest and capacity in the marketplace to deliver the project. In addition, an RFEOI process can be used to request information from potential parties to describe their ability to satisfy the requirements and to provide ideas and suggestions on how the procurement process might be structured. This information can be used by Peel Living in finalizing its requirements and in developing achievable objectives.

- The intention of an RFPQ process is to obtain and evaluate relevant information from interested parties and to establish a short list of firms to submit proposals under the RFP. Peel Living could either specify the number of firms that would be shortlisted or set minimum standards and any firms that meet or exceed the standards would be invited to proceed to the RFP stage. An RFPQ may be appropriate if it is deemed that the nature and complexity of the services required from a development partner warrants the time and effort required to pre-select the most experienced and qualified firms.

• Engaging Proponents during the Procurement Process: There are different approaches that Peel Living can follow if certain requirements for the project cannot be clearly defined prior to the release of an RFP. Prior to releasing the RFP, procedures would be established based on leading practices in order to facilitate engagement with proponents in a fair and transparent manner. For instance, Peel Living may design a procurement process that allows for negotiations with

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more than one proponent in order to refine its requirements to maximize the value of the project, and to allow proponents the opportunity to ensure their proposed solutions address Peel Living’s needs.

• Degree of Innovation: Peel Living should determine the extent that it would like to encourage creative solutions from proponents, and establish a procurement framework that supports this strategy. For instance, innovation can be encouraged through the procurement process by allowing proponents to consider solutions not contemplated in the technical requirements. Any innovative solutions for the site would still be required to meet the functionality requirements set out in the technical requirements.

6.4.2 Project Policy Decisions Regardless of the procurement strategy that is designed for the project, Peel Living has a range of policy decisions that will need to be made prior to commencing the procurement process. Several policy decisions were identified as part of the sensitivity analysis described in Section 5.5.2, including:

• Confirmation of number of affordable housing units;

• Community space allocations;

• Reduction in land for market housing;

• Relocation of Peel Family Shelter off-site;

• Confirmation of the role of the Region of Peel as a project partner; and

• Defining the site area and parameters.

In addition, Peel Living should also arrange for any funding that may be required from its funding partner prior to commencing the procurement process. Depending on the funding available for the project, and Peel Living’s requirements, there are several potential approaches that Peel Living can consider to specify the number of affordable rental units it requires its development partner to deliver as part of the procurement process.

• Each of these policy decisions are on the critical path for the project and are required prior to RFP issuance in January 2018, and as a result addressing each is critical in order to ensure the project remains on schedule. As planning for the project progresses, there may be addition policy decisions that will need to be made.

6.4.3 Procurement Objectives A number of factors can influence the success of a procurement process and, ultimately, generate value for Peel Living. Key

procurement objectives include ensuring the procurement process is competitive, fair, and transparent and encourages

innovation.

Conducting a Competitive Procurement Process

A competitive procurement that gets the best value from the private sector is a key objective of the project. A competitive process would result if there is sufficient private sector expertise and interest in the project.

Peel Living can consider holding an ‘industry day’ in advance of issuing the RFP. All interested parties would be invited to attend. Attendees would receive a brief overview of the project and would have the chance to participate in a question and answer session. The designated contact person for the procurement would issue the invitation publically via standard procurement information portals. An industry day would also provide an opportunity for interested parties to interact with each other and position themselves for team formation. To further maximize competitive tension, Peel Living may decide to invite all potential proponents to a bidder’s meeting to provide an overview of the project and the procurement process.

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Peel Living may consider engaging the shortlisted bidders with Commercially Confidential Meetings (CCMs) to assist it in developing the optimal RFP and project agreement. The intent of CCMs is to facilitate a collaborative discussion between the sponsor and the proponents in a one-on-one setting to discuss the RFP and project agreement. These discussions would allow Peel Living an opportunity to solicit feedback from bidders on the project requirements, the procurement process and the project agreement and potentially adjust its procurement documents to best meet the needs of the proponents. This approach would result in more compliant and responsive bids for Peel Living to evaluate.

Ensuring a Fair and Transparent Process

Peel Living should widely publish the RFP and give a sufficient amount of time for bidders to respond to ensure that all qualified firms have equal opportunity to access and respond to the RFP. All potential and actual bidders would receive access to the same type and level of information throughout the entire procurement process through a data room.

The procurement strategy and process would be designed in considerable detail prior to release of the RFP, in part to ensure the evaluators and individuals involved in the procurement process have a common understanding of the procurement and project objectives. A comprehensive evaluation framework would be developed in order to ensure a rigorous and unbiased evaluation process. Developing documentation of all aspects of the evaluation in advance facilitates the administration of a fair and transparent procurement process. The evaluation framework would provide guidelines for the conduct of the procurement process, would detail the evaluation criteria, and would identify roles, responsibilities and codes of conduct for each participant in the evaluation process. This approach would ensure that the evaluation process yields a result that is fair and transparent, and clearly identifies the preferred proponent to take on the project.

Prior to the release of the procurement documents, Peel Living would establish a designated contact person to the proponents. It is expected that all of the questions and answers would be posted to all proponents, all of the communications between the designated contact person and proponents would be documented, and all of the transaction documents including the final project agreement would be disclosed to the public.

6.4.4 Suggested Procurement Strategy The procurement strategy for the project is expected to be a multi-stage procurement process that includes a RFP process and negotiations with one or more proponents. As part of the RFP process, proponents would submit a technical proposal and a financial proposal. The technical proposals would respond to submission requirements identified in the RFP, where certain elements would be evaluated on a pass/fail and others would be scored. Scoring certain elements would support Peel Living in rewarding proponents that exceed its requirements for the project (such as its TPV outcomes). After the technical evaluation is complete, Peel Living would evaluate the financial proposals. Proponents that meet minimum requirements would be invited to enter into initial negotiations with Peel Living.

As described previously in Section 6.4.1, Peel Living may also enter into initial negotiations with more than one proponent focused on addressing key issues and creative business solutions that Peel Living identified in each proponent’s proposal with the objectives of (1) achieving closer alignment between Peel Living’s needs and the proponents’ proposals (2) ensuring that proponents’ proposals meet Peel Living’s financial expectations. This may lead to requiring proponents to submit to Peel Living a revised financial proposal (also known as a written Best and Final Offer or “BAFO”) reflecting the discussions and agreements (if any) from initial negotiations and a revised technical proposal that more closely addresses Peel Living’s business, technical, legal and financial needs.

6.4.5 Request for Proposal Process

Overview of RFP Process The purpose of the RFP stage is:

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• To provide proponents the opportunity to demonstrate their understanding of the project, as well as their respective role and responsibilities;

• To enable the proponents to develop and present their technical and financial solutions to meet the project objectives;

• To allow proponents to review and comment on the draft agreement that would be signed by the preferred proponent; and

• To select the preferred proponent.

After the RFP is released, it is estimated that proponents would be given approximately 3 months to prepare their technical

and financial submissions. This period from when the RFP is issued to the submission deadline would be known as the “Open

Period”.

To assist proponents in preparing their technical proposals, CCMs could be held during the Open Period with each proponent

to clarify the design, scope, and the performance criteria, as well as to explore innovative or cost-saving technical solutions.

Innovative solutions are those that differ from what is prescribed in the technical requirements, but can be demonstrated to

exceed the minimum technical requirements. The feedback received by a proponent in a CCM is intended to assist the

proponent in preparing a technical proposal submission that would meet or exceed the project requirements. The feedback

received by a proponent in a CCM would be non-binding. Proponents must submit a question as stipulated by the questions

and answers process in order to receive a binding response. In addition to the technical component, CCM’s could also include

a legal/commercial component where proponents would be provided with an opportunity to discuss their comments on the

draft PA with Peel Living on a confidential basis. This gives Peel Living the opportunity to solicit early feedback and comments

from RFP Bidders in order to identify and clarify issues raised, to support a fair, open and transparent process, and to

ultimately minimize the possibility of unacceptable technical proposals.

The CCMs would afford Peel Living the opportunity to hear the proponent’s issues and provide some insight into proposed

technical solutions, but Peel Living would not be obligated to amend the terms and provisions of the draft PA or schedules to it,

as a result of such discussions. That is, all CCM discussions are non-binding.

A final version of the draft agreement would be issued to all proponents prior to the closing of the RFP that would incorporate

any amendments arising out of the CCMs. This agreement would be further amended as a result of initial and final

negotiations.

Overview of Evaluation Process Proponents could be evaluated based on factors such as their relevant real estate experience, business proposal, familiarity

with the broader community and response to Peel Living’s objectives for the redevelopment of Twin Pines. Peel Living would

also reserve the right to approve all consultants for development that falls within the formal partnership agreement between

Peel Living and the proponent, such as architects. Examples of technical criteria that proponents may be evaluated against,

depending on Peel Living’s requirements, are:

• Demonstrated experience: the overall team and individual team members would be evaluated based on their experience and qualifications developing projects of similar role, complexity, size and location to the redevelopment of Twin Pines;

• Team structure: evaluated based on the effectiveness of the proposed breakdown of roles, responsibilities and reporting structure;

• Approach to meet Peel Living’s strategic project objectives: evaluated based on the proposed approach to meet Peel Living’s objectives, such as meeting the TPV Framework;

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• Proposed overall business concept: evaluated based how well the proposal would allow Peel Living to meet the financial requirements of redeveloping the site, such as total net proceeds/disbursement to/from Peel Living, reasonableness of assumptions, extent to which the proponent would manage various aspects of the redevelopment (more extensive involvement is anticipated to be scored more favourably);

• Design and construction approach: examples of elements evaluated would be the reasonableness of the proposed build-out schedule and its ability to minimize impact to the community; and

• Analysis of risk and risk mitigation strategy: evaluated based on Peel Living’s exposure to risk through the proposed solution.

As well, financial strength and capacity would be evaluated on a pass/fail basis based on whether the proponent has sufficient

financial strength and capacity to undertake the development of the market component of the project.

As mentioned above, the submission process would be staged where proponents would be required to submit their technical

submissions and financial documents to support the financial capacity analysis, in advance of their financial submissions. This

would allow technical submissions to be evaluated prior to reviewing the financial submissions to ensure that the bid is

technically compliant.

Financial proposals would be evaluated based on the total net proceeds (or subsidy required) to (or from) Peel Living after all

project costs are taken into consideration.

Initial Negotiations After the technical and financial submissions have been evaluated, Peel Living would invite one or more proponents into

negotiations (for instance, all compliant proponents that meet minimum requirements, or the top scoring proponent(s)). Initial

negotiations would focus on addressing key issues Peel Living has identified in each proponent’s proposal with the objectives

of (1) achieving closer alignment between Peel Living’s needs and the proponents’ proposals (2) ensuring that proponents

proposals meet Peel Living’s financial expectations.

Best and Final Offer (BAFO) After initial negotiations, Peel Living may require that each proponent submit to Peel Living: (a) a written BAFO reflecting the

discussions and agreements (if any) from the initial negotiations, and (b) a revised proposal that more closely addresses Peel

Living’s business, technical, legal and financial needs.

Typically, proponents would be provided with two to four weeks to prepare and submit the BAFO and accompanying revised

proposal. Proponents may be requested to meet with representatives of Peel Living to respond to any questions that Peel

Living may have concerning the BAFO and accompanying revised proposal.

Identification of Lead Proponent for Final Negotiations Following the completion of initial negotiations and the submission of any BAFO (and accompanying revised proposal) by

proponents, Peel Living would identify a lead proponent to engage in final negotiations with Peel Living. Peel Living would

determine the lead proponent by re-calculating the technical evaluation and pricing evaluation score incorporating information

Peel Living received as part of the initial negotiations.

Finalization of Project Agreement Since a draft project agreement would be issued to all proponents prior to the closing of the RFP, and initial negotiations would

occur prior to submission of BAFO proposals, after the preferred proponent is selected, there would be limited negotiations.

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Instead, this stage of the procurement process would involve mainly incorporating elements of the preferred proponent’s

submissions into the final agreement (e.g., the preferred proponent’s financial offer and its technical plans).

6.5 Preliminary Procurement Timeline The preliminary procurement timeline is presented in Table 15, which identifies major milestones and timeframes for the procurement process as currently envisioned. The timeline schedule will be established through the development of a procurement plan/strategy during the beginning of Phase 2. The actual time that will be required for each item in Table 15 is subject to change from that shown below, and the changes could be material. For example, Peel Living may require more time to identify RFP requirements given the complexity of the project, the market could require more time to develop a competitive proposal, and/or more time may be needed to evaluate proposals or negotiate than anticipated due to unknown factors at this time.

Table 15: Preliminary Procurement Timeline Item Timeframe RFP Requirements Identification and Scoping July to December 2017 Development of Procurement Plan/Strategy September to October 2017 Development of RFP Documents October to December 2017 RFP Release January 2018 RFP Open Period January to April 2018 RFP Close / Submission of Initial Proposals April 2018 Evaluation of Initial Proposals April to May 2018 Negotiations with Proponents July to August 2018 Submission of BAFO Proposal September 2018 Selection of Preferred Proponent October 2018 Finalization of Project Agreement October to November 2018 Commercial and Financial Close December to January 2019

6.6 Potential Deal Structure Elements This section describes potential deal structure elements that can be considered in structuring a deal with a development partner, assuming a shared risk model is used to deliver the project. The deal structure will need to be developed before an RFP is issued to the marketplace.

6.6.1 Number of Affordable Units Under a shared risk model, Peel Living could disclose its affordable housing requirements in its procurement documents (e.g., RFP and project agreement), such as the number of affordable units required.

As mentioned previously, there are several potential approaches that Peel Living can consider to specify the number of affordable rental units it requires its development partner to deliver. A developer could be compensated for the design and construction of the units through the provision of the land at below market prices or no cost. If the value of land is not sufficient to cover the design and construction cost of the affordable rental units that are assumed to be owned and operated by Peel Living, additional government support would be required (e.g., a capital subsidy). To ensure cost certainty for Peel Living, any financial support provided to a development partner could be a fixed amount that would be paid at construction completion or specified milestones.

There are two potential approaches for specifying the number of affordable units required and/or the level of subsidy Peel Living is willing to pay a development partner:

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• Focus on Maximum Subsidy: In order to ensure Peel Living does not provide financial support above the amount it can afford (termed “affordability threshold”) if the value of land is not sufficient to cover the development costs of Peel Living owned building(s), Peel Living could disclose its affordability threshold in the procurement documents. Proponents would then be required to identify the number of units they can afford to deliver in their proposals, which would in turn be scored as part of the evaluation process for the procurement. It should be noted that Peel Living’s affordability threshold could be set at $0; in this case, proponents would identify the number of affordable units it can afford to deliver based on the value of land. The evaluation process could then take into consideration the number of units, where a proponent that is able to deliver the greatest number of affordable units (or the lowest subsidy cost per unit) would be scored higher than its competition.

• Focus on Minimum Number of Units: If Peel Living decides that it does require a minimum number of affordable units, it would ask bidders to propose the level of financial support that they require (if any). Bidders would be allowed to exceed the minimum number and would be evaluated both in terms of the level of financial support and the number of affordable units that they commit to. This could be accomplished by including a schedule of incentives/credits for any affordable units above the minimum requirements.

6.6.2 Development Standards and Requirements Peel Living can create a supportive policy environment for a private developer by considering the application of development standards and requirements to the project. For instance Peel Living can work with the City of Mississauga and the Region of Peel to review development standards and requirements to possibly remove certain barriers that prevent the development of affordable housing, such as waiving/deferring development charges or implementing tools such as pre-zoning for the site to permit the built forms and densities needed to produce affordable housing on the site along the Dundas Street East frontage.

Another approach to encourage the development of affordable housing is through Section 37 contributions, where a private developer enters into a Section 37 agreement with the Region of Peel to design and build affordable housing units on the site. This agreement can allow a private developer to exchange additional building height and density for community benefits, or to waive a Section 37 payment. The rationale behind this support is that, to the extent that there is market demand, higher density benefits would offset much of the additional cost of a developer providing affordable housing units. An example is presented to the right11.

6.6.3 Affordable Home Ownership Depending on the needs of Peel Living and/or the Region of Peel, there could be opportunity to offer affordable home ownership options on the site. If Peel Living determines that affordable home ownership is a requirement of the project, this

11 Urbanski, Adelina, General Manager, Housing York Inc.; “Transfer of Affordable Housing Units through Section 37 Agreements in the Town of Richmond Hill”, dated May 1 2014; available at - http://www.york.ca/wps/wcm/connect/yorkpublic/55d3892d-d993-439a-9b5a-3394d7fe0144/may+1+urbanski.pdf?MOD=AJPERES

PRACTICAL EXAMPLE

• In 2013, Housing York entered into Section 37 Agreements that required two private developers to transfer five affordable housing units in the Town of Richmond Hill to Housing York.

• The Agreements allow the private developers to exchange additional building height and density for community benefits (considered in this case to be the affordable housing). Housing York will in turn execute a purchase and sale agreement with the developers to complete the transfer of units.

• Originally, there were no provisions that restricted Housing York from selling the units at market rates once constructed. However, the Town of Richmond Hill added restrictions that Housing York is to use the units for affordable housing, but, if at any time in the first 20 years of operations, Housing York no longer uses or intends to use the units, the Town of Richmond Hill will have the first right to purchase the units for two dollars.

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would be disclosed in its procurement documents and identified as a term and condition in the legal agreement(s) (e.g., a Land Sale Agreement or partnership agreement).

Affordable home ownership options are typically offered through a second mortgage model. Under this model, the second mortgage is equal to the difference between the unit's at-cost purchase price and its market value (usually equal to about 10 to 15 per cent of the purchase price). The firm that provides the second mortgage defers taking a profit until the unit is resold, at which point the firm shares in the market appreciation of the unit. For example, if the value of the second mortgage is $20,000, or 10 per cent of a $200,000 purchase price, the firm will receive 10 per cent of the eventual selling price, which would be $30,000 if the unit is sold for $300,000. Since there is no payment on the second mortgage until resale, the owner can carry the unit at a substantially lower monthly cost than a conventional market unit. This, in turn, lowers the income threshold for purchasing the home.

The second mortgage could be offered through a non-profit organization that specializes in affordable home ownership, such as Trillium Housing, Options for Homes, or Habitat for Humanity. Although the second mortgage models are similar between the organizations, there are some differences. For instance, Options for Homes typically acts as a development manager to develop entire buildings where all residents hold second mortgages, while Trillium Housing works with developers to offer second mortgages to a portion of residents of a new development, allowing a mix of affordability levels in a single development.

Under the Habitat for Humanity model, the homeowner receives a 0% interest mortgage, with payments based on their household income. Mortgage payments are never more than 30 per cent of a partner family’s household income and are reinvested by the firm used to build more homes for low-income families in their community. If home buyer moves out of the house prior to paying off the entirety of the mortgage, they receive their mortgage payments less taxes and fees, while the firm retains the property and retains the house in its affordable housing stock. If the home owner pays off the entire mortgage, they receive full ownership of the house12.

The opportunities for affordable home ownership of the site will be investigated further during Phase 2. For instance, through the procurement process for the project, Peel Living may request proponents to submit an optional proposal for affordable ownership on the site. As part of this proposal, a proponent could be required to describe their financial plans for delivering a specified number of affordable ownership homes on the site.

6.6.4 Encouraging Innovative Solutions Peel Living may decide to encourage creative business solutions that fulfill its goals and create value for both Peel Living and its development partner. Innovation can be encouraged through the procurement process by allowing proponents to consider solutions not contemplated in the technical requirements. Any innovative solutions for the site will still be required to meet the technical requirements.

As described previously in Section 6.4.1, Peel Living may also enter into initial negotiations with more than one proponent focused on addressing key issues and creative business solutions that Peel Living identified in each proponent’s proposal with the objectives of (1) achieving closer alignment between Peel Living’s needs and the proponents’ proposals, and (2) ensuring that proponents proposals meet Peel Living’s financial expectations. This may lead to requiring proponents to submit to Peel Living a revised financial proposal or BAFO reflecting the discussions and agreements (if any) from initial negotiations and a revised technical proposal that more closely addresses Peel Living’s business, technical, legal and financial needs.

12 Habitat for Humanity Greater Toronto Area; “Homeowner Criteria”, accessed on May 2017; available at - http://www.habitatgta.ca/homeownership/homeowner-criteria.html

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6.7 Approvals The anticipated approvals and timelines that may be required under the Planning Act for redeveloping the Twin Pines site are described in this section on a basic level since a will ultimately depend on a number of factors, including the ultimate development concept developed for the project.

As mentioned previously, the City of Mississauga is presently undertaking a master planning process along the Dundas Street Corridor called Dundas Connects. Dundas Connects is a project designed to create a master plan on how to best increase transportation capacity, connect the city, and intensify use in appropriate areas along the Dundas Street corridor. It is anticipated that the master plan will be brought to City Council for approval in late 2017. Following Council endorsement of the Dundas Connects master plan, the City of Mississauga is expected to implement its recommendations, through amendments to the Official Plan and zoning by-law before the end of 2018. The Dundas Connects Master Plan and implementing amendments have not been considered by City Council and may not be aligned or fully accommodate the final Twin Pines development concept. As such, the timing associated with securing approvals for implementation of the project could vary from the timing estimated in the Business Case.

In general, amendments to the existing Official Plan designation and Zoning By-law categories applicable to the site would be required to implement the preliminary Twin Pines development concept. Following amendments to the Official Plan and Zoning By-law (either through the City’s implementation of the Dundas Connects Master Plan or through Peel Living initiated applications), applications for Draft Plan of Subdivision, Site Plan Approval and Draft Plan of Condominium would be required prior to obtaining necessary Building Permits. With respect to the former, if a development partner is selected after the implementation of the Dundas Connects Master Plan, then amendments to the Official Plan and Zoning By-law may not be required, depending on the details of the Master Plan and implementing amendments. Applications for Draft Plan of Subdivision, Site Plan Approval and Draft Plan of Condominium will be required regardless of the outcome and details of Dundas Connects. As a result, there could be benefit to Peel Living to continue its current engagement with the City of

PRACTICAL EXAMPLE

- Alexandra Park is an 18-acre community located in a dynamic growth area in downtown Toronto. Currently in the second, and final phase, of the Alexandra Park revitalization, it envisions the redevelopment of 12.7 acres of land with: residential and retail/commercial space, 122 new family-sized rental townhouses, 150 social housing units, and 334 units in two refurbished rental apartment buildings owned by TCHC, a new community centre, public park and basketball courts, new public and private streets, and infrastructure.

- Phase 2 of the Alexandra Park revitalization involves Toronto Community Housing partnering with a developer to coordinate the development of the project, including securing all necessary approvals.

- As part of the procurement process, TCHC is requiring proponents to submit a “Vision Statement” in their proposals which will be evaluated based on the extent that it addresses TCHC’s goals for affordable housing, design excellence and sustainability, and the extent to which the proponent is committed to working with Alexandra Park residents (in support of the principle of zero displacement).

- Proponents were also required to describe their approach to not only providing affordable rental housing, but also affordable ownership housing that is sold for an amount less than the full market sale price.

Source: Alexandra Park Phase 2 Revitalization RFP, April 2016, Toronto Community Housing

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Mississauga on the Dundas Connects project in order to increase the chances of proceeding without Peel Living led amendments to the City’s Official Plan and Zoning By-law.

Appendix E provides details of each of the above approvals with respect to the Twin Pines project with a particular focus on the possible schedule implications of each.

6.8 Preliminary Project Schedule A preliminary project schedule has been developed to provide an estimated timeframe the major milestones of the project. The procurement process is expected to extend for approximately 12 months (comprised of the RFP open period, evaluation of proposals, and negotiations) with commercial and financial close anticipated to be achieved in early 2019 (refer to Section 6.5). Based on this timeline, construction may commence as early as 2021 (subject to a number of factors such as further planning work, project scope changes, applicable planning approvals and/or the selected development partner’s construction schedule and phasing strategy).

Figure 6 presents the preliminary project schedule. This schedule is presented for illustrative purposes only and does not reflect that certain key milestones and tasks, such as approvals and construction, could be undertaken through a phased approach. The actual project schedule is subject to change from that shown in Figure 6, and the changes could be material.

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Figure 6: Preliminary Project Timeline

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6.8.2 Risk Management As with any project of this complexity, early consideration of the key risks associated with the delivery of the project is

important in order to gain confidence in the strategy chosen, the schedule and costs. Examples of the project risks that could

impact the delivery of the project include:

• Insufficient funding;

• Delays in internal decision making; • Changing market conditions; • Community support; • Planning approval delays; and • Unplanned site remediation.

It would be beneficial for the project team to assess project risks as part of the early work during Phase 2.

6.9 Stakeholder Engagement and Communications 6.9.1 External Stakeholders The Twin Pines redevelopment involved multiple key stakeholders with varying degrees of influence and interest that are connected through their unique interactions with the site. In order to ensure their needs, concerns, and insights are a part of the project, similar to Phase 1, a comprehensive stakeholder engagement process will be developed for Phase 2. The list below highlights the external stakeholders that have been and will continue to be engaged:

• Cedar Grove Resident’s Association

• City of Mississauga

• Dufferin-Peel Catholic School Board

• Dundas Connects

• Hydro One

• Mississauga Halton LHIN

• Neighbouring Community

• Peel District School Board

• Summerville Pines residents

• Toronto & Region Conservation Authority

• Twin Pines residents

6.9.2 Stakeholder Engagement Activities To ensure the stakeholder engagement process successfully meets its objectives, the following principles were adopted in Phase 1 and will serve as the ongoing principles to guide the development of the stakeholder engagement process in Phase 2.

• Access and inclusivity

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The engagement process must be accessible and inclusive. This means that the process must be designed such that it will provide all stakeholders the opportunity to inform decisions and develop balanced perspectives. No single stakeholder group should feel that they did not have an opportunity to make their voice heard.

• Transparent and open

The engagement process needs to be transparent both in fact and in appearance. This means that information regarding the redevelopment process must be shared via forums that work for each individual stakeholder. In addition, questions from stakeholder groups should be both encouraged and responded to.

• Timely communications

The engagement process cannot only be transparent in its information sharing, but also timely. Information must be provided in a timely, accurate, objective, and easily understood manner.

• Mutual trust and respect

Key to the success of any engagement process is trust in the effectiveness of participating. In Twin Pines, the project team will look to ensure that all parties involved in the stakeholder engagement process work in an equitable and respectful manner that fosters an understanding of diverse views, values, and interests.

• Listen and learn

The engagement process cannot begin with preconceived notions or assumptions. Facilitators and stakeholders alike must engage with an open-minded approach to inform and enhance the discussion on Twin Pines’ redevelopment.

A formal stakeholder engagement plan will outline the specific activities, tools and timelines for Phase 2 and may include the following:

Resident Newsletter

During Phase 1, a newsletter was published describing critical project activities and announcements. It is anticipated that the newsletter will be continued into Phase 2. The newsletter frequency is expected to vary depending on project activities.

Project Website

A project website (http://www.peelregion.ca/twinpines) has been developed and updated to summarize project activities and provide users with access to all relevant documents and project information. It is expected that the website will be updated on a regular basis as new information becomes available.

Resident Open Houses

Resident open houses may serve as an in-person forum to share and discuss project updates and information. Open houses are anticipated to be held at key milestones or ongoing intervals throughout the redevelopment.

Stakeholder Meetings

There will be ongoing stakeholder engagement at key project milestones or as required. Meetings will be held leading up to key decision points or as new information becomes available. For example, it is anticipated that there will be active engagement with Dundas Connects as the Master Plan is being developed. Peel Living will initiate these meetings as required.

Media Relations

It is anticipated that the media will be engaged at key project milestones in order to share with and inform the broader community about the redevelopment.

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6.10 Project Governance A preliminary project governance framework has been developed to provide direction for the planning and procurement of the project during Phase 2. The governance structure identifies key roles that will provide the necessary support, expertise and resources required to successfully deliver the project. The preliminary project governance structure is illustrated in Figure 7.

Figure 7: Governance Structure

Executive Sponsor PHC Board of

Directors

Project Sponsor

Steering Committee

Twin Pines Project Manager

Project Management Team

Transaction Lead Engagement and Transition Lead

Procurement Lead Planning Lead Technical and Programming Lead

Support Teams

Operations Lead

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Potential key roles and responsibilities for Phase 2 of the project are outlined in Table 16. These roles and responsibilities may change as planning for the project continues during Phase 2.

Table 16: Potential Key Project Roles and Responsibilities

Role Main Responsibilities

Executive Sponsor: PHC Board of Directors

The Executive Sponsor is the main decision authority for the project to ensure Peel Living’s strategic objectives are met. The Executive Sponsor will have delegated authority to permit Peel Living to negotiate and enter into an agreement with a development partner.

Project Sponsor The Project Sponsor will provide oversight and governance over the duration of the project, including providing direction to the Steering Committee on key strategic decisions.

Steering Committee The Steering Committee will be responsible for delegating authority to the Project Manager and the project teams, as necessary. Additional responsibilities include providing reviews, feedback, and approvals at various points in the project.

Project Manager The Project Manager’s role will be to oversee the project, including the entire procurement process, and manage the day-to-day work tasks and teams. The Project Manager will need to work closely with the Engagement and Transition Project Lead and the Transaction Lead to ensure collaboration and alignment with the overall desired outcomes, while also being a key advisor to the Executive Sponsor, Project Sponsor and Steering Committee.

Project Management Team (supporting role)

The Project Management Team supports the Project Manager, as required.

Engagement and Transition Lead

The Engagement and Transition Lead will provide support to the project by continuing to manage and implement the engagement strategy, support the transition process, and address any pertinent issues as they arise during the planning and procurement periods, with particular focus as it pertains to the residents and the surrounding community.

Engagement and Transition Project Team (supporting role)

This team will provide support to the Engagement and Transition Project Lead and will be comprised of communications and legal staff, and issues management advisors.

Transaction Lead The Transaction Lead will oversee the day-to-day workings of the Procurement Team, Planning Team, and Technical Team, identified below. The Transaction Lead will be responsible for reporting to the Project Manager, as well as assisting with overseeing and coordinating all major deliverables and resources for the transaction.

Procurement Lead The Procurement Lead will work closely with the Purchasing Advisor, and will be responsible for leading the procurement, negotiation and financial close processes. Responsibilities include developing procurement documents, supporting communication with bidder’s, providing advice on all procurement matters, structuring commercial and financial terms of the agreement, and providing support through negotiations and finalization of the project agreement.

Purchasing Advisor (supporting role)

The Purchasing Advisor is anticipated to be a senior member of the Region’s purchasing / procurement division. Responsibilities include providing procurement related advice and assistance to the Project Manager and the Procurement Lead, as well as ensuring that procurement is compliant with the Region’s policies and processes.

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Role Main Responsibilities

Due Diligence Committee (supporting role)

To ensure compliance with best practices, a Due Diligence Committee comprised of Peel Living and Region of Peel employees not engaged in the project will be established. The Due Diligence Committee will provide an opinion as to any apparent conflicts of interest brought forward during the procurement. The findings of the Due Diligence Committee will be reported directly to the Project Steering Committee.

Evaluation Committees (supporting role)

Technical and Financial Evaluation Committees will be established to evaluate submissions during the procurement process.

Procurement Solicitor (supporting role)

The Procurement Solicitor will provide assistance and guidance on legal issues as they arise, and will manage the work of the Legal Advisor.

Legal Advisor (supporting role)

The Legal Advisor’s role will include drafting legal documents, providing procurement legal advice, reviewing documents for consistency and advising on legal issues as it relates to the transaction.

Financial Advisor (supporting role)

The Financial Advisor will provide financial expertise and advice on all financial and commercial issues that arise. The Financial Advisor’s responsibilities will include compliance with the Region’s policies and procedures, and supporting the evaluation of responses to the RFP.

Technical and Programming Lead

The Technical and Programming Lead will provide technical advice pertaining to the development of the project. Responsibilities include leading the preparation of design documentation, technical specifications and other technical documentation that fully details the design requirements for the project (collectively referred to as the output specifications) that will form the basis for the proponents’ proposals. The Technical and Programming Lead will also support the development of programming needs on the Twin Pines site that may feed into the procurement documents.

Technical Team (supporting role)

The Technical Team will support the Technical and Programming Lead. The Technical Team will serve as part of the expert panel for the Steering Committee and Project Manager to consult with on an as-needed basis for technical matters during the procurement process.

Planning Lead The Planning Lead will be responsible for overseeing and coordinating the planning activities during Phase 2. This includes providing planning advice and support prior to and during the procurement process. The Planning Lead will also assist in developing planning documentation and required applications.

Planning Team (supporting role)

The Planning Team supports the Planning Lead, as required. The Planning Team may include a planning advisor to assist in developing

Operations Lead The Operations Lead will be responsible for providing support during the transition and implementation phases of the project to ensure operations of the site is effectively managed. The Operations Lead will also be responsible for managing the day-to-day operations of the Twin Pines site.

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7.0 Conclusion

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This section summarizes the key conclusions from the Business Case. This section also identifies next steps that are to be considered by Peel Living and the Region of Peel to support the implementation of the project.

7.1 Conclusion KPMG’s role during for Phase 1 was to support Peel Living in developing a vision for the site’s redevelopment, together with a plan to achieve that vision. The purpose of the Business Case is to develop a plan for delivering the project, which includes a preliminary development concept (which describes what could be developed in Twin Pines) and a preferred delivery model (which describes how the project is recommended to be delivered) based on the strategic vision articulated in the Total Public Value Framework.

The market sounding identified a number of considerations for Peel Living to consider during the planning, procurement and transition periods of the project. These considerations, along with a set of development principles, the TPV Framework, market demand, and site constraints, were used to develop an assumed preliminary development concept for the site. The development concept illustrates a range of specific design parameters for the site, such as secondary streets and blocks, development characteristics, street and pedestrian connections, and open space.

The preliminary development concept allowed for development costs and revenues to be estimated in order to analyze the net financial impact of redeveloping the site. It also provided a basis to assist Peel Living in defining its requirements for the site. While the site is a valuable public asset, there are considerable constraints surrounding the site and project. The financial analysis indicated that the residual land value from the market housing is not sufficient to cover the development costs of constructing 200 units in an affordable rental building with retail/commercial space and other project costs (i.e., there is a negative cash position, although the net financial position is positive). To achieve that level of affordable housing, Peel Living will require additional funding from the Region of Peel and/or other funding partners.

Ultimately, based on the analysis presented in this business case, the Shared Risk Model is identified as the recommended delivery model. While the success of a shared risk model requires more time and resources upfront to carefully design the procurement process and to oversee the performance of a development partner, it supports Peel Living to achieve its TPV objectives and requirements for the site. This model facilitates optimal risk allocation, supports Peel Living in achieving its objectives and requirements, provides considerable flexibility to Peel Living to adjust to changing circumstances and requirements over time, and supports high quality of affordable housing on the site.

7.2 Next Steps It is suggested that the following next steps are undertaken by Peel Living and/or the Region of Peel during Phase 2 of the project:

• Policy decisions be made, including decisions related to the role of the Region of Peel in redeveloping the site, the required number of affordable units (if any), community space allocation on the site (if any), whether the Peel Family Shelter should remain on the site or be relocated, and defining the site area and parameters;

• Depending on the number of affordable units to be delivered on the site, additional funding should be secured from the Region of Peel and/or other funding partners;

• Peel Living should retain additional internal and external resources in order to facilitate the delivery of the project (refer to Section 6.10); and

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• While the resident transitioning has not been included in the business case, it is an instrumental element of the project and needs to be managed appropriately. Developing a resident transitioning plan should be undertaken prior to commencing the procurement process.

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Appendices

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Appendix A Works Cited The report incorporated the various documents and strategies listed below in order to ensure alignment with ongoing initiatives and approaches.

• Altus Group. (2017). Construction Cost Guide.

• Build Toronto. (2016). 30 Tippet Road.

• City of Mississauga. (2017). Development Charges.

• City of Mississauga. (2017). Dundas Connects Website.

• Director, Affordable Housing Office, City of Toronto. (2016). A Program for 100 New Affordable Rental and Ownership Homes at 36 Tippet Road.

• Director of Community Planning, North York District, City of Toronto. (2015). 30 Tippet Road – Zoning By-law Amendment Application – Final Report.

• Habitat for Humanity Greater Toronto Area. (2017). Homeowner Criteria.

• Hobsonville Land Company. (2009). Buckley Hobsonville CDP.

• Hobsonville Land Company. (2015). Sustainable Development Framework for Hobsonville Point.

• Ministry of Municipal Affairs and Ministry of Housing. (2014). Investment in Affordable Housing for Ontario (2014 Extension) Program Guidelines.

• Ministry of Municipal Affairs and Ministry of Housing. (2015-16). Investment in Affordable Housing Program: Year Five Report.

• Peel Housing Corporation. (2016). Peel Living Annual Report.

• Region of Peel. (2015). Affordable Housing Design Guidelines and Standards for Apartment Buildings.

• Region of Peel. (2017). Budget Assumptions and Projection Rates.

• Region of Peel. (2014). Official Strategic Plan.

• Region of Peel. (2016). Peel Health Data Zone Profiles.

• Spearn, Greg, President and Chief Executive Officer, Toronto Community Housing Corporation. (2017). Rationale for Regent Park Funding Request to City Council.

• SvN Consultants. (2015). Twin Pines Community Survey – Housing Needs & Financial Impact Assessment.

• Toronto Community Housing. (2016). Alexandra Park Phase 2 Revitalization Request for Proposal 15493.

• Urbanski, Adelina, General Manager, Housing York Inc. (2014). Transfer of Affordable Housing Units through Section 37 Agreements in the Town of Richmond Hill.

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Appendix B Region of Peel Strategic Plan

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Appendix C TPV Framework Guiding Principles

The TPV Framework included five key outcomes for the redevelopment, which were informed by four guiding principles. The Guiding Principles will continuously inform the redevelopment of Twin Pines and provide guidance throughout the project’s planning, development, and implementation phases. The Guiding Principles are intended to support stakeholders throughout the redevelopment of the site.

Honouring Commitments

Upholding our commitments to residents

In 2012, Peel Living made six formal commitments to the residents of Twin Pines regarding the site’s redevelopment. The Twin Pines redevelopment is future-oriented, but needs to recognize the needs of the current residents and their well-being, as described in the commitments. As such, the first Guiding Principle, Honouring Commitments, is focused on turning the intent of the 2012 commitments into a reality.

This guiding principle provides that the commitments are incorporated and continue to drive the planning process moving forward. (Refer to Section 1.2.1 for the list of commitments.)

Being Responsive

Ensuring that the development will be flexible to change

Redevelopments are multi-year projects, flexibility throughout the phases of work should be a core element of the redevelopment approach.

The area around Twin Pines is undergoing considerable change, including shifting demographics, infrastructure renewal, and the planning related to Dundas Connects initiative. The strategic plans for the area around Twin Pines need to inform the redevelopment process in order to respond to the regulatory changes and transit enhancements. The redevelopment needs to be agile and responsive to change throughout the duration of the project.

Innovative Solutions

Remaining open to innovative ideas and solutions

The site’s redevelopment is a significant opportunity for Peel Living and stakeholders, including current and future residents, as well as members of the surrounding community. At the same time, there are competing priorities and an array of desired outcomes. For Twin Pines to optimally realize the desired outcomes and create a better community, innovation throughout the redevelopment journey will be necessary.

Considerate Transformation

Minimizing disruption to impacted stakeholders

The Twin Pines redevelopment will be transformative for the 25-acre site. For current and neighbouring residents, a focus on minimizing disruption during the redevelopment period will be a key consideration and may include:

• Ensuring formal transition plans for current residents are developed and carefully considered, taking into account the results of the Housing Needs and Financial Impact Assessment.

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• Minimizing disruption during redevelopment for the surrounding neighbourhood through considerate construction leading practices and actively liaising with the community.

Outcomes

The TPV outcomes define the vision for the future of Twin Pines. A final set of five outcomes emerged through the stakeholder engagement, review and analysis of relevant strategies, materials and case studies. The outcomes are categorized into two groups. The first group of outcomes are the key drivers for redevelopment: “Housing Options” and “Affordable Housing Sustainability”. To find the optimal solution for the redevelopment, a balance must be struck between these two outcomes.

The second group of outcomes are key priorities that will create a complete community. Successfully developing an “Age-Friendly Community”, a “Connected Community”, and fulfilling the “Environmental Responsibility” will support the diverse needs of the community.

These five outcomes are fundamental in achieving the optimal solution, and are discussed in more detail below.

Housing Options

Creating a mix of housing options that respond to community needs.

The Outcome Defined: Housing solutions are unique to each community. Underlying all options is an understanding that a housing option should meet the diverse needs of the individual.

The Outcome in Twin Pines: The mandate of Peel Living is to provide “quality housing and opportunities for success”. This outcome aligns with both the Region’s Strategic Plan: Imagine Peel and the Term of Council Priorities, which have identified the growing affordable housing gap as a concern.

The Outcome’s Significance to the Community: The housing options at Twin Pines should incorporate the diverse needs across the housing and affordability spectrum. The right balance of types of affordable housing units, together with market-priced units, will provide a suitable solution to satisfy residents’ core housing needs.

Affordable Housing Sustainability

Ensuring Peel Living’s affordable housing portfolio can be sustained and improved now and in the future.

The Outcome Defined: Meeting Peel Living’s mandate of providing affordable housing cannot continue to be met in the long-term without ensuring its financial sustainability is included in the design of any solution.

The Outcome in Twin Pines: Focusing on asset lifecycle management, maintaining optimal working capital and ensuring a sustainable operational model for Twin Pines will support Peel Living’s financial sustainability.

The Outcome’s Significance to the Community: Optimizing the site to respond to the affordable housing gap and provide Peel Living with an opportunity to expand or enhance its asset portfolio to provide relief to current and future housing needs in Peel.

Age-Friendly Community

Developing a community where residents can live active and healthy lives.

The Outcome Defined: There is a great emphasis on developing communities that allow residents to access services, engage with their community and maintain active lifestyles throughout their various stages of life.

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The Outcome in Twin Pines: Calibrating the building forms, development density and community plan to foster a community that will be accessible and supportive of residents throughout their various stages of life.

The Outcome’s Significance to the Community: As the community grows, it will support all age groups to thrive. This outcome may be achieved by: providing greater access to public transit and active living options, improving the proximity of health and social support services to residents, and adjusting development density with population projections and considering the current residents.

Connected Community

Fostering a connected and inclusive community.

The Outcome Defined: A connected community is one that fosters inclusivity of all residents by incorporating defined space for health, social, community and recreational services, and providing residents access to modes of transportation and active living

The Outcome in Twin Pines: Fostering an atmosphere where people know their neighbours, through shared indoor and outdoor spaces, to create a sense of community and connection among the residents.

The Outcome’s Significance to the Community: The opportunity to connect the site with the neighbouring area, while maintaining the sense of community within Twin Pines. This redevelopment should provide access to services and shared spaces to allow the community to thrive in and around Twin Pines.

Environmental Responsibility

Protecting and enhancing the environment for generations to come.

The Outcome Defined: Environmental responsibility refers to the long-term sustainability of a green, efficient, and resilient community. A green community is one that grows alongside its natural landscape, as opposed to one that grows to nature’s detriment.

The Outcome in Twin Pines: Environmental responsibility can be interpreted through two project states: development state and future state. The development state includes the environmental impact of the on-site construction, including the environmental costs of the methods and use of materials for the redevelopment. The future state is the efficiency of the redeveloped community, which may be achieved through the enhanced use of green infrastructure and other technologies for lower-emission or resource reuse.

The Outcome’s Significance to the Community: To help Twin Pines be a great place to live now and for generations to come, environmental safeguards and enhancements should be incorporated into land use planning.

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Appendix D Potential Funding Programs Overview of Program

Since 2011, federal funding for affordable housing has been provided through the Investment in Affordable Housing (IAH). In 2014, an extension of the IAH program for an additional five years was announced, providing new funding over $800 million13.

The 2016 federal budget announced the Social Infrastructure Fund, delivered through the IAH. This program doubles the funding to the IAH program over the next two years, bringing the total investment under the IAH program to over $1.6 billion. This includes over $336 million in new money to build, renovate, and provide critical affordable housing across the province. The province is cost-matching the increase to the IAH Program over a three year period, resulting in over $640 million in new housing funding through the 2016 SIF for Ontario14.

Under this program, funding is provided to Service Managers who are responsible for allocating the funding based on the local needs in their communities. Service Managers have the flexibility to select which program components to participate in, such as new rental construction, home repair, housing allowances or rent supplements. The IAH (2014 Extension) Rental Housing component will fund up to 75% of the total capital cost per unit or $150,000 per unit, whichever is less.

For new construction projects, funding will be advanced to Service Managers in three instalments15, as follows:

• 50% at signing of Contribution Agreement, registration of security, first available building permit, and construction start;

• 40% at completion of structural framing for new construction; and

• 10% at confirmation of occupancy, submission of Initial Occupancy Report and Confirmation of Employment of Apprentices Report, and submission of an updated capital cost statement in a form acceptable to the Ministry.

Service Managers will in turn advance funds to developers based on the completion of construction milestones and compliance with the program requirements.

Eligibility Requirements

There are several requirements for projects to be eligible for funding under the IAH program. For instance, IAH requires the size of new affordable units to be aligned with the provincial average size requirements, unless the Service Manager has its own size requirements.16 The Region of Peel’s size requirements for housing are detailed in the Affordable Housing Design Guidelines and Standards for Apartment Buildings (2015). In addition, IAH encourages Service Managers to give priority to projects that:

• Have Contributions by others, including the Service Manager, host municipality, and developer – to be used in partnership with IAH (2014 Extension) funding;

• Are sponsored by providers that agree to maintain affordability beyond the minimum 20-year term to ensure the longer-term supply of the affordable housing stock;

• Have energy efficiency features;

• Are fully accessible and/or have units that are accessible to persons with disabilities; and

13 Ministry of Municipal Affairs and Ministry of Housing; “Investment in Affordable Housing Program: Five Year Report (2015-16)”, dated October 4, 2016; available at - http://www.mah.gov.on.ca/Page10065.aspxt. 14 Ibid. 15Ministry of Municipal Affairs and Ministry of Housing; “Investment in Affordable Housing for Ontario (2014 Extension) Program Guidelines”, accessed on May 2017; available at - http://www.mah.gov.on.ca/AssetFactory.aspx?did=12338 16 Ibid.

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• Have support service funding in place, if applicable.

The IAH (2014 Extension) is anticipated to fund the creation and repair of an estimated 11,000 units, targeting 1,650 units (15%) for seniors and 1,100 units (10%) for persons with disabilities17. This allocation of funding for rental units to seniors and persons with disabilities aims to encourage Service Managers to deliver new rental units that accommodate these groups of people.

17 Ibid.

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Appendix E Approvals Official Plan Amendments The portion of the Twin Pines site fronting Dundas Street East is located within the Dixie Employment area and has a Mixed Use land use designation, which permits a range of employment and commercial land uses. Section 17.1.3 of Mississauga’s Official Plan is applicable to this portion of the site and states: “Residential designations will not be permitted, except for permitted residential designations in the Dixie Employment Area in existence at the time this Plan comes into effect.” Further, Section 17.1.4.2 of Mississauga’s Official Plan applies and states that: “Notwithstanding the Mixed Use policies of this Plan, Residential uses will not be permitted.” On the basis of these two key policies, a Municipal Comprehensive Review (MCR) based Official Plan Amendment would be required to accommodate residential land uses along the Dundas Street East frontage of the site.

The City of Mississauga has completed the Phase 1 MCR and advised that Dundas Connects will constitute the required Phase 2. Any privately initiated Official Plan amendments proceeding ahead of amendments that may be implemented as part of the Dundas Connects process would require additional technical study to meet the Phase 2 MCR requirement for these lands.

Through discussions it has had with the City of Mississauga, Peel Living indicates that it anticipates that land use planning permissions will be in place to implement Dundas Connects. On this basis, the preliminary findings of City staff indicate that Official Plan permissions would be in place to accommodate a range of housing options for the entire site, including townhouses and stacked townhouses (consistent with the preliminary development concept) to the rear (north). It is likely that an amendment to the Official Plan would not be required to accommodate traditional and stacked townhouses on the north portion of the site. However, sufficient details are not presently available to determine the density ranges envisioned through Dundas Connects or other special provisions that may affect the land use designation.

If an Official Plan amendment is required or initiated by Peel Living in advance of the completion of the Dundas Connects process including adoption of implementing amendments, current expectations are that it may take in excess of 18 months to obtain approvals.

Zoning By-law Amendment If the zoning amendments that result from the Dundas Connects process are too restrictive to accommodate the project, or Peel Living proceeds in advance of amendments initiated by the City of Mississauga, Peel Living may be required to initiate amendments to the City of Mississauga’s zoning by-law.

Presently, the north portion of the site is zoned with an “R4-51” zoning category, permitting only the mobile or land lease community as it presently exists. The south portion of the site, fronting Dundas Street East, is zoned “C3-1” and “C3-23”, permitting a range of industrial and commercial uses. The commercial lands to the west of the site have a “D” (Development) zone in place, restricting uses and buildings only to those which currently legally exist. Zoning on the site is shown in Figure 8.

If a Peel Living initiated Official Plan Amendment is required, amendments to the zoning by-law could be undertaken concurrently in accordance with the timelines described for Official Plan Amendments. Independent of a Peel Living initiated Official Plan Amendment, a zoning by-law amendment would take approximately 12 months to complete in conjunction with Draft Plan of Subdivision or Site Plan Approval.

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Figure 8: Twin Pines – Site Zoning

Draft Plan of Subdivision Large scale development projects that include the construction of public roads and municipal infrastructure are required to obtain approval of Draft Plan of Subdivision (DPS). The inclusion of municipal roads and piped infrastructure through the Twin Pines site will require the submission and approval of a DPS. The creation of individual lots and blocks fronting municipal roads and piped infrastructure will allow for the site plan approval process to be broken down on a lot by lot basis to better address phasing of the project.

DPS can be undertaken concurrently with any higher order planning approvals such as Official Plan Amendment and Zoning By-law Amendment without notable time delays.

Site Plan Approval The City of Mississauga requires that site plan approval is obtained prior to applying for a building permit. Site plan approval drawings are often supported by technical feasibility studies to inform the technical details of the drawings and to assess the impact of the proposed development on adjacent land uses, transportation system and other piped infrastructure. This work may be less onerous where requirements have been addressed by higher order planning approvals such as Official Plan Amendment, Rezoning or DPS. Given the size and scope of the Twin Pines site, the City of Mississauga may require the submission of multiple applications for individual development blocks created through the DPS.

Draft Plan of Condominium Under the Ontario Condominium Act, municipalities are required to review and approve applications to create new condominiums. It is anticipated that Depending on the final development concept, applications for a Draft Plan of Condominium may be required for individual buildings or groupings of buildings, which is typically approved following construction and prior to the completion of the sale of units.

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Building Permit Once site plan approval has been obtained and any conditions required under the approval are met, a building permit is required to obtain permission to begin construction. Individual building permits may take approximately two to three months to obtain.

Total Timing Assuming all the required drawings and technical studies are complete applications, an Official Plan Amendment, zoning by-law amendment, and site plan approval may be sought simultaneously but may also be offset, i.e., site plan submission follows initial OPA/Rezoning. The total timing for all three applications may therefore take approximately 18 months. Obtaining building permits may require approximately two to three months. Once materials are submitted, multiple building permits will be required to accommodate full build out of the site. As such, the total timing of the approvals required to begin construction on the Twin Pines site may be approximately 21 months.

Note: The timing above is predicated on the assumption that the detailed drawings, technical studies, and associated other application materials are complete. As such, the timing above does not account for the time required to prepare these materials (typically 3-6 months of time).

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As a firm with locations in more than 35 cities across Canada, we are actively connected to the communities where we operate – as a business, as an employer – in every sense.

The issues that impact our communities are the same issues that impact our people and their families, our clients and our operations. So making a commitment to having a positive impact is how we recognize the significance of our relationship with the communities where we operate and live.

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Twin Pines

Redevelopment Project

Updated May 2017

Stakeholder Engagement & Communication Efforts (Phase 1) – At a Glance Peel Living’s project team actively engaged and communicated with stakeholders throughout Phase I of the project between

October 2016 to May 2017 to create a clear vision for the redevelopment of Twin Pines and to provide project updates.

Engagement Activities:

Consultations / Engagement Cedar Grove Residents’ Board

o October 17, 2016 o November 14, 2016 o December 2, 2016 o February 10, 2017 o May 29, 2017

Twin Pines Residents o December 3, 2016 o February 13, 2017 o May 30, 2017

Summerville Pines Residents o December 6, 2016

Neighbouring Community o December 12, 2016

Meetings Peel Living Staff – September 29, 2016

PHC Directors – October 17 - 24, 2016

Region of Peel Staff – October 19 - 24, 2016

Staff Advisory Group – November 9, 2016, January 12, 2017, & May 23, 2017

PHC Board – October 6, November 3 & December 1, 2016

City of Mississauga & Dundas Connects – November 29, & December 23, 2016, & March 14, 2017

Dufferin-Peel Catholic School Board & Peel District School Board – December 13, 2016

Toronto & Region Conservation Authority – December 15, 2016

Mississauga Halton LHIN Meeting – December 19, 2016

Communications Activities:

Twin Pines Resident Newsletter (March 2017)

Twin Pines Redevelopment website updates

Social media updates

Pre-consultation mailed invitations & mobile signs

Twin Pines resident feedback forms

Resident & community engagement summaries

Email subscription update

Ongoing correspondence and public inquiries

Appendix II - Appendix II - Twin Pines Redevelopment – Project Delivery Model 6.4-94

General Manager’s Update June 1, 2017

8-1

Balanced Score Card

Our Client Our People

Our Infrastructure Our Finances

8-2

Presenter

Presentation Notes

Client Focus

• SHIP Health and Wellness pilot mobilization –July • Report on formal client complaint process coming to

July board meeting • Review draft recommendations from work group

looking at rationalizing annual tenant subsidy review process

• Smoking cessation survey kicked off • Working through HTI client portal pilot • Reviewed tenant/community value report and will

defer staff report to fall

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Presenter

Presentation Notes

People Focus

• Interviewing for Technical Support Manager position as a two-year contract

• Draft training framework has been developed, to be used to assess end state and identification of opportunities.

• Developing roll out plan for employee satisfaction survey results

8-4

Presenter

Presentation Notes

Infrastructure Focus

• Twin Pines – report on today’s agenda • Redevelopment opportunities update planned

for July board meeting • Facility condition Index briefing , on today’s

agenda • Preliminary 10 year capital plan under

development for 2018 budget cycle

8-5

Financial Focus

• Procurement review process has identified 5 priorities to explore further

• Reviewing draft recommendations from work group reviewing the arrears management process

• Working with Treasurer on a policy position -MPAC treatment of social housing

8-6

Governance

• Working with Legal and Human Services to bring forward a board workshop, likely in fall, to help move an amended Shareholder’s Direction document to an approved stage.

• Preliminary discussions with Internal Audit on developing a draft Risk Management Plan

8-7

Presenter

Presentation Notes

July Board meeting

Tentative issues to bring forward , subject to rationalizing one hour meeting timeframe: • Complaint process update • Redevelopment plan update • Investment strategy • Any feedback from June meeting.

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