CONVERT-TO-RENT/ REHABILITATION ASSISTANCE PROGRAM (2015)

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1 CONVERT-TO-RENT/ REHABILITATION ASSISTANCE PROGRAM (2015) More affordable rental housing is needed in the City of London. Additional rental housing through conversions contributes to neighbourhood revitalization through an increased population base, sustaining local commercial businesses, reusing vacant building space and making better use of the existing built infrastructure. This can be accomplished in two ways: 1. By encouraging the conversion of vacant unused second and third floor space above street-front commercial establishments & street level space behind store fronts to selfcontained rental residential units; and 2. By encouraging the redevelopment/conversion of derelict and/or underutilized residential and non-residential structures to create new rental units. THE PROGRAM The City of London Convert-To-Rent/ Rehabilitation Assistance Program provides three types of financial assistance: 1. to convert non-residential properties into affordable self-contained rental housing units; 2. for substantial rehabilitation of rental buildings that are vacant and uninhabitable; 3. to undertake accessibility work to modify dwellings intended for occupancy for persons with disabilities. PROGRAM AREA This program is available in the Downtown Business Improvement Area, the Old East Village Business Improvement Area, the properties between these two areas fronting on Dundas Street, Hamilton Road Business Area and the SOHO District Community Improvement Area. Exceptions to these geographic areas will be reviewed, on a caseby-case basis, for specific properties outside the program area that meet all other criteria. TERMS AND CONDITIONS Funding The City of London Convert-to-Rent/Rehabilitation (CTR/Rehab) Assistance Program financial assistance will be up to $48,000 per self-contained rental unit, to a maximum of seven (7) units or a maximum of $336,000 per property. This is a fully forgivable loan, which will not have to be repaid provided the proponent meets certain conditions. The loan may be transferred to a new owner providing that the new owner meets and agrees to the terms and conditions of the loan. The proceeds of the forgivable loan will be advanced when the approved residential rental unit or units are deemed to be substantially complete and in a condition suitable for occupancy. This will be verified by a final inspection arranged by the City of London Housing Division. Loan Forgiveness The loan amount shall be fully forgiven on the last day of the month at the end of the term of the loan, provided that the Proponent has fulfilled all the requirements of the program. Accessible Units: Additional funds are available from the City of London to modify any apartment in the conversion/rehabilitation proposal for a person with a disability. Eligible modifications are

2 items such as a ramp, chairlift, bathtub lift or wheel-in-shower, suitable height adjustments to kitchen workspace and cupboards, and handrails (Net cost only. Credit must be applied for standard kitchen and washroom). Loan Security: Loans will be secured by a charge/mortgage registered on title. Program Duration: The City of London agreement will be for a period of 25 years Maximum Affordable Rents Rents for the Projects must be affordable with 2/3 of the affordable units that do not exceed 80% of the CMHC Average Market Rent and 1/3 of the affordable units that do not exceed 70% of the CMHC Average Market Rent at the time of occupancy. Tenants for the low rent units must come from the Housing Access Centre s Waiting List. Rent, Household Income and Unit Size Chart Apartment Unit Type AMR CMHC 2015 IAH Rent 70% AMR IAH Rent 80% AMR Maximum Household Income 5X 70% AMR Maximum Household Income 5X 80% AMR Standard Unit Size 1 Bedroom $774 $540 $619 $32,400 $37, ft² to 650ft² Accessible Unit size 600ft² to 750ft² Note: Rents will not be adjusted prior to occupancy. The average market rent is taken from the October 2014 CMHC Rental Market Survey. These rent targets are based on the inclusion of utilities (heat, hydro, water, hot water). Proponents intending to have the tenants pay some or all of the utilities should propose reductions to the target rents listed in the above table. The impact of utilities and other charges (i.e. parking, storage lockers) to be paid by the tenants on rent levels will also be considered in evaluating submissions. Proponents may increase rents by no more than the annual guideline increase under the Residential Tenancies Act. Maximum Income Limits At time of initial occupancy the total household income cannot exceed five times the monthly rent. Rent Increases The Proponent may increase the rent charged with respect to a unit only if at least twelve (12) months have elapsed, (a) (b) since the day of the last rent increase respecting the unit, if there has been an increase, or since the day the unit was first rented for the first (1 st ) rental period following the completion of the conversion/rehabilitation. No additional increase is permitted when a unit becomes vacant within 12 months of the annual rent increase. The Proponent shall not increase the rent during the affordability period by more than the then prevailing rent increase guideline established for each calendar year pursuant to the Residential Tenancies Act, 2006 or any successor legislation. The Proponent acknowledges that the rent increase guideline of the Residential Tenancies Act, 2006 or any successor legislation does not apply to the affordable units and agrees that the rent increase guideline applies by virtue of the contractual terms of the agreement. Revised January 16,

3 General Program Rules All proposals must comply with respective municipal official plans, zoning-by-law regulations and appropriate Building Code requirements. The loan may only be used for the eligible work that has been approved by the City of London. The City of London Convert-to-Rent/Rehabilitation (CTR/Rehab) Assistance Program financial assistance will be up to $48,000 per self-contained rental unit, to a maximum of seven (7) units or a maximum of $336,000 per property. Proponents must provide a minimum cash equity contribution from their own resources equal to at least 10% of the total project costs for the residential units and 100% cash equity for the commercial space. All proposals must describe the intended target group (i.e. families, seniors or youth) and type of rental residential units to be developed (i.e. bachelor, onebedroom apartments). Tenants are required to sign a document verifying household income. Priority will be given to projects that are composed of one bedroom apartment units between 525ft² to 650ft². All outstanding property taxes must be paid in full prior to the release of any loan monies under the Convert-To-Rent/Rehabilitation Assistance Program. Electric heat is not permitted. Proponents are required to provide details of energy saving features that will be included in the project; for example, LED lighting, high efficiency heating & cooling system, insulation beyond OBC, energy star windows, doors & appliances, window blinds, products that reduce water consumption and programmable thermostats. Loan monies will not be available for construction that has started prior to Council authorizing the loan. Proponents are required to submit two detailed quotes for the work to be completed once approval has been given. If a property inspection reveals deficiencies relating to the building code those items become mandatory repairs. Proponents must keep copies of all receipts and payments made to contractors and submit to the City of London Housing Division for payment upon completion of all work. Invoices submitted other than those for which the loan was approved will not be accepted for payment. One payment for the total approved loan will be made at the completion of the conversion/rehabilitation work once verified by the final inspection report arranged by the City of London. The loan may be cancelled if the conversion/rehabilitation work is not started within two months and completed within six months of receiving the commitment letter from the City of London Proponents are responsible for withholding sufficient funds from the contractor at all times to cover the cost of finishing the work. Approved Proponents will be required to submit annually an information report to the City of London confirming the rent levels for the current year and stating the household income of any new tenants renting a unit in the past year. Revised January 16,

4 Scoring Preference will be given to proposals: 1. That attains lower rents and requires less government funding per unit; 2. That leverage funding partnerships with other levels of government; and 3. That have energy efficient features that exceed the OBC; 4. That will be completed within six months. Method of Program Delivery A request for funding under the City of London Convert-To-Rent/Rehabilitation Assistance Program will be submitted on the program application form complete with cost estimates for the proposed improvements. Proponents must provide evidence on their ability to perform and complete the work or provide the name of a general contractor that will coordinate the conversion or renovations to the property. If appropriate, submitted applications will be recommended for loan approval. Default Should the proponent be in default under the terms of the loan or operating agreements, or under the terms of any mortgage or other encumbrance registered on title, the City of London shall have the right to declare the unearned portion of the forgivable loan due and payable immediately with interest. Vacant Unit If the proponent is unable to locate a tenant with income below the established income limit, they must notify the City of Housing Division immediately. Failure to comply may result in the forfeiture of assistance and loan repayment. Forfeiture of Assistance During the term of the Convert-To-Rent/Rehabilitation Assistance Program Agreement, the number of units rented to tenants who have income at or below the established income limit must be maintained at the original number agreed upon. If this requirement is not met, the unearned portion of the forgivable loan for any assisted unit(s) not rented becomes immediately due and payable. Sale of Property The proponent must notify the City of London in writing twenty days prior to the closing date of the sale of the property. Any purchaser must agree to the terms and conditions of the CTR/Rehab Agreement and sign a new agreement before the City consents to the sale in writing. No increase in rent will be permitted except for those permitted in accordance with the terms of the original agreement. If the property is sold or otherwise disposed of without the prior knowledge and written consent of the City, any unearned loan forgiveness shall become immediately due and payable with interest. Applying for City of London Funding Proponents must complete and submit the City of London application form and identify the amount of funding being requested under the Convert-To-Rent/Rehabilitation Assistance Program. Applications are accepted on a continuous basis; there is no deadline to apply. Applications must be sent to the following address: City of London Housing Division Attn: Stacy Badeen P.O. Box 5035 London, ON N6A 4L9 Via Courier: 267 Dundas Street, 3 rd Floor Revised January 16,

5 For more information and to obtain an application form contact: Janette MacDonald DOWNTOWN LONDON Phone: Sarah Merritt OLD EAST VILLAGE BIA Phone: Neil Watson CITY of LONDON Housing Development Consultant Phone: CITY OF LONDON Covert-To-Rent Rehabilitation Assistance Program (2015) Questions and Answers Q. Can a proponent be funded for more then one project at the same time? A. No. A proponent would have to successfully complete one project prior to being approved for a second project. Q. Is Construction Loan Interest during construction a cost covered under this program? A. Yes. Construction Loan Interest during construction is an eligible expense but must be included in the Estimated Other Costs on the application form. Q. How much equity is a proponent expected to contribute to the project. A. Proponents must provide a minimum cash equity contribution from their own resources equal to at least 10% of the total project costs for the residential units and 100% cash equity for the commercial space. Q. When will the City of London pay the proponent for the cost of construction work? A. City funds will be paid in one cheque when all work has been completed, inspected and the occupancy permit has been issued. All receipts for construction work, building materials and other costs must be submitted with the request for final payment. Q. At the request of the proponent, could the reimbursement cheque be paid directly to the lending institution or the general contractor? A. Upon request the City will make the final payment jointly payable to the proponent and the lending institution or the general contractor. Q. Can the proponent self contract? A. Two quotes must be provided for a CTR/Rehab project. A proponent can be the general contractor but if it is a large project he/she must provide proof that they have recent experience with completing similar projects on time and on budget. The proponent would not be able to charge the cost of their time to the amount of City funds being requested. Q. What additional City Incentives are available to business owners in the Downtown and OEV BIA? A. The City offers a number of opportunities for funding (through loans or grants) to help with improvements to buildings within the downtown such as Upgrade to Building Code Loan Program and Façade Improvement Loan Program. For more information regarding these programs contact Downtown London ( ), Old East Village BIA ( ) or Eric Lalande, Planner, City of London ( x.7602). Revised January 16,