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April 22, 1997
(Municipal and Provincial Affairs)

The following is being distributed at the request of the Newfoundland and Labrador Housing Corporation:

Canada and Newfoundland sign Social Housing Agreement

An agreement to transfer the administration of social housing resources from the Government of Canada to the Province of Newfoundland, was signed today by Diane Marleau, Minister of Public Works and Government Services and Minister responsible for Canada Mortgage and Housing Corporation (CMHC), Brian Tobin, Premier of Newfoundland and Labrador and provincial Minister Responsible for Intergovernmental Affairs, and Art Reid, Minister of Municipal and Provincial Affairs and Minister Responsible for Housing.

"This agreement will eliminate overlap, improve service delivery and maximize the impact of taxpayers' dollars in managing social housing. It follows our commitment, made in the 1996 Speech From the Throne, to work in close partnership with the provinces," said Ms. Marleau. "The new partnership arrangement with the Newfoundland and Labrador government makes good sense as governments at all levels strive to become more efficient."

"Through this agreement, we as a government are once again confirming our commitment to the provision of decent, affordable housing in this province," said Premier Tobin. "The orderly transfer of social housing management responsibilities is an important, tangible step towards more co-operation and partnership between the province and the federal government."

"This new agreement will give us the flexibility to deliver housing programs best suited to the specific needs of the people of Newfoundland and Labrador," Mr. Reid added.

The agreement follows through on the decision, announced in the 1996 Federal Budget, to transfer the administration of social housing programs and projects and to seek new partnerships with provinces and territories.

This agreement, between the Government of Canada and the Government of Newfoundland and Labrador, is part of an overall focus on working co-operatively with provinces. An implementation plan is being developed to ensure a smooth transition over the coming months.

There are some 13,500 assisted social housing units in Newfoundland. The federal government currently contributes $55 million annually, out of a national budget of $1.9 billion, to support these units. The provincial government, through the Newfoundland and Labrador Housing Corporation (NLHC), contributes $23 million annually.

Negotiations are continuing with the other provinces and territories to finalize agreements to transfer the administration of federally funded social housing. Agreements have already been signed with Saskatchewan which covered approximately 33,000 social housing units, and with New Brunswick which covered some 16,400 units.

Contact:

• Claude Poirier-Defoy
  CMHC
  (613) 748-2221

  Karen Humphreys Blake
  Newfoundland and Labrador
  Housing Corporation
  (709) 724-3054

  Jean Leroux
  Office of Minister Marleau
  (819) 994-5364

___________________________________________
THE SOCIAL HOUSING AGREEMENT
between
Canada Mortgage and Housing Corporation (CMHC)
and
Newfoundland and Labrador Housing Corporation (NLHC)

OVERVIEW
Over the years some 13,500 social housing units were developed in the province under various programs, 9,400 which are under NHLC's administration and 4,100 under CMHC's direct administration.

Under this new Canada - Newfoundland agreement, the province will receive social housing funding from the Government of Canada for each year, based on agreed 1995/1996 levels for the remaining term of the commitments for social housing units currently making up the portfolio in Newfoundland. These commitments, made over a period of more than 45 years, will expire on a staggered basis during the first half of the next century. This federal support will provide stability and predictability to the provision of social housing programs and their administration in Newfoundland in future years.

CMHC will continue to administer program and project agreements with First Nations for Aboriginal Housing, On-Reserve.

NEW DIRECTIONS

1. Transfer of Programs

• CMHC will transfer its remaining responsibilities for the management and administration of the portfolio of projects funded under non-profit and co-operative housing programs, which it has been administering directly in Newfoundland, to Newfoundland and Labrador Housing Corporation (NLHC). The NLHC will be assuming all rights and responsibilities which CMHC had under project operating agreements with non-profit project sponsors and co-operative housing groups.

2. Federal Principles

• Money for Housing - Federal funds allocated under the new arrangements are to be used solely for housing purposes. They cannot be used to support other provincial priorities, e.g. roads, schools, etc.
• Residential Accommodation - Federal funds will be used to provide residential accommodation and related shelter services though a portfolio of programs described in the new agreements. Related shelter services exclude the costs of services in such areas as health, education, corrections and food services.
• Income Limits - CMHC will establish housing income limits which will reflect the maximum income for a household to be eligible for targeted federal assistance.
• Targeted Assistance - Federal funds currently directed to households with incomes insufficient to cover the cost of appropriate accommodation will continue to be used for this purpose. If the funding is not needed in the program where it is currently directed, provinces can use this funding for another program, but it must be directed to households with incomes below established income limits.
• Non-Targeted Assistance - Federal funding currently directed to moderate income households can continue to be used for this purpose until such time as the units no longer exist. Should this funding be freed-up in the future it is to be used to provide targeted assistance.
• Savings - Savings will remain in the jurisdiction where they originate. This means that provinces can use federal funding savings achieved through cost reductions and efficient management and administration of the portfolio to serve households in their respective jurisdictions.

3. Programs covered under new agreement

• Public Housing Programs - Under these programs, the federal and provincial government shared capital and operating subsidies on a 75/25 or 50/50 basis, depending on the period of specific project commitments, for up to 50 years. Projects providing rental accommodation are owned by Newfoundland either directly or in trust. Rents are calculated according to the provisions of the Newfoundland rent-to-income scale.
• Rent Supplement Programs - These programs permit subsidy assistance for social housing projects or units owned by private landlords, non-profit organizations and co-operatives. For units committed prior to 1986, subsidies were shared on a 50/50 basis between Canada and Newfoundland. The subsidy is determined as the difference between the rent that the household is able to pay, according to the Newfoundland rent-to-income scale, and the market or agreed rent for the dwelling unit. A portion of the post 1985 version of the program provided for the subsidizing of up to 50 per cent of the units in an ILM co-operative housing project.
• Limited Dividend "Entrepreneur" Program - This program provided lower than market interest rates on project capital financing for up to 50 years so rental housing projects owned by private landlords could be built and operated at below market rents. Projects are expected to serve moderate income households. Some units receive Rent Supplement Program subsidies so they can serve low income households.
• Non-Profit Low Rental Housing Program - This program provided lower than market interest rates on project capital financing for up to 50 years, and in some cases 10 per cent capital grants, so rental housing projects owned by non-profit housing sponsors could be built and operated at below market rents. Projects are expected to serve moderate income households. Some units receive Rent Supplement Program subsidies so they can serve low income households.
• Non-Profit "2 per cent Write-Down" Housing Program - This program provides contributions for up to 35 years to public and private non-profit housing corporations which own and operate rental housing projects for persons of low and moderate income, through contributions equivalent to a mortgage interest rate write-down to as low as 2 per cent.
• Non-Profit & Urban Native "Fully Targeted" Housing Program - This program provides subsidized rental housing projects for households in need on a rent-to-income basis in urban and rural areas. Projects are owned and operated by the province or public or private, including Urban Native, non-profit housing corporations or associations. Subsidies for up to 35 years are equal to the difference between approved operating costs and revenue.
• Rural and Native Homeownership Programs - These programs assist households in rural areas to acquire affordable, adequate and suitable accommodation. Subsidies for up to 25 years are equal to the difference between a unit's carrying charges and the monthly payment made by the household, based on the application of the Newfoundland rent-to-income scale.
• Rural and Native Rental Programs - These programs provide subsidized rental housing units for households in need on a rent-to-income basis in rural areas. Projects can also be owned by private non-profit, including Native, housing corporations or associations. Subsidies for up to 25 years are equal to the difference between approved operating costs and revenue.
• Co-operative "2 per cent Write-Down" Program - This program provides contributions for up to 35 years to non-profit continuing housing co-operatives which own and operate co-operative housing projects for persons of low and moderate income, through contributions equivalent to a mortgage interest rate write-down to as low as 2 per cent.
• Co-operative "ILM" Program - This program provides ongoing assistance to non-profit continuing co-operative housing associations for up to 35 years to support the provision of modest housing offering security of tenure for households otherwise unable to afford homeownership. The program makes use of indexed linked mortgages as a funding mechanism. Up to 50 per cent of the units receive Rent Supplement Program subsidies so they can serve low income households.