Thank you, Madam Chair. My other question is does the Housing Corporation have any other debt, or do we take on debt? Is that something that -- I'll start there. Thank you.
Debates of Feb. 28th, 2022
This is page numbers 3559 - 3602 of the Hansard for the 19th Assembly, 2nd Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was know.
Topics
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Young
Thank you, Madam Chair. If I could, I'll defer that to vice-president Martin.
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Martin
Thank you, Madam Chair. Aside from our regular accounts payables and environmental liabilities as well as retirement and post-employment leave type benefits that are accrued each year, it is only the loans and mortgages payable to CMHC that we have for debt. Thank you, Madam Chair.
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Rylund Johnson Yellowknife North
Thank you, Madam Chair. Yeah, I guess I want to get into a bit of a debt debate. Can I -- you know, we had spoke to the Power Corp today. They sure have a lot of debt. They like to take on debt to build all their infrastructure, and they have, you know, a relatively comparable revenue stream to the Housing Corp. I'm just curious why, you know, this crown corporation, which has $100 million a year in revenue, does not go leverage that and get a bunch of financing. I'm kind of curious, is there -- is that something we shouldn't do, or the reasoning for that? I just think of the way the private sector mortgages all of their housing assets. You know, it's quite common to go out and maximize all of your debt you can when you own housing. Is that something the Housing Corp considered, or is that just a terrible idea? Thank you, Madam Chair.
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Martin
Madam Chair. The Housing Corporation, in order to take on debt, would have to seek the approval of the FMB, the Financial Management Board, recognizing that any debt that the Housing Corporation takes on would be included in the overall debt limit for the government calculations. So that's an important consideration in that process.
And another consideration that we take into account as well, in terms of when it comes to debt, is the interest associated with that debt, and that would also generate additional O and M expenditures for the corporation that would have to be addressed annually as well within our current fiscal framework. Thank you, Madam Chair.
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Rylund Johnson Yellowknife North
Thank you, Madam Chair. Yeah, I -- you know, to one extent, I wish that the Power Corp and the GNWT had the -- had the debt that the Housing Corp had, but I just -- it seems a little odd that the Housing Corp seems to be playing a different -- completely different game than everyone else when it comes to debt.
I'm curious, you know, if we, for example, were to look at Yellowknife, where we are spending a lot of money on leasing and we could go to a bank and borrow the money to build public housing, I think it's been made quite clear multiple times we don't actually have the capital on hand to build public housing. But other than approval from the FMB, is there any reason to not simply go and borrow money to build public housing, especially when we're already paying rent on it? Thank you, Madam Chair.
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Martin
Thank you, Madam Chair. Yeah, so as was noted, the Housing Corporation certainly does lease units in addition to its own units to support its public housing program operations. We have looked at cases in the past on a case by case, and it has been shown in the past that ownership was, in fact, cheaper in these particular case studies that we looked at versus leasing. So the Housing Corp going forward will continue to look at these opportunities on a case-by-case basis. Thank you, Madam Chair.
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Rylund Johnson Yellowknife North
Yeah, thank you, Madam Chair. I -- I think I'll probably ask some more questions about the potential of the Housing Corp taking out mortgages. I'll also note that they're different than any other government debt because if we build a building and a bank will mortgage it and we decide we don't want it, we could sell it. You know, the bank's not going to give us a mortgage if the asset we build is not worth something. It seems like a different category of debt that we should be leveraging, in my mind.
But I wanted to get one question in about 2038. Can I just get an update on -- my understanding is that in 2038, we will stop having the $20 million a year from the Housing Corp, and it is slowly declining up until then but there's an interim agreement that is preventing it from declining. Can I just get a bit of an update on what's going on with 2038? Thank you.
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Young
Madam Chair, and yes, currently the agreement with CMHC is in play for 2038, that operations and maintenance funding will be decreased on a sliding scale down to the point of not receiving any O and M funding effective 2038.
We currently have a bilateral agreement in place with CMHC which they allowed us to use some of that funding to mitigate the reduction of the O and M funding, and so we were able to from now until I believe it's 2028, Mr. Martin can correct me if I'm wrong, have balanced off those declining funds through the bilateral agreement, and this of course is one of our number 1 issues as part of our conversation with our federal colleagues on addressing that long-term situation. Thank you, Madam Chair.