In the Grassways community in northwest Toronto, the walls are literally coming down.

Standing on the pathway between townhome complexes in the Toronto Community Housing neighbourhood at Jane St. and Firgrove Cres., Sheila Penny, vice-president of facilities management, holds out a jagged chunk of speckled red brick the size of her palm to demonstrate.

The crumbling brick exteriors, the deterioration exacerbated by water damage, have already left 22 units uninhabitable. One unit has been closed some 15 years, building officials said. Back yards have been quarantined with construction fencing strewn with “danger” signs.

An entire block of townhomes is now pegged for closure.

“People will be living in air. They’ll be living in nature,” Penny says.

Last year, this community was slated for revival, one of three areas selected for co-ordinated and expedited repairs as part of what’s called the “ReSet” program — a fresh start meant to prioritize needs with help from residents and to save money through bulk purchasing. Mayor John Tory was on hand in September to make the announcement, standing on the Grassway’s basketball court. He called the closure of units due to lack of repairs “not an acceptable situation.”

But heading into budget season, TCH faces a $96 million gap in operating funding and is short $1.7 billion that was expected but has yet to materialize from higher levels of government to make much-needed repairs across the city.

With a council-approved budget direction led by Tory requiring all agencies and departments to find 2.6 per cent in savings, the housing corporation’s CEO Greg Spearn said inevitable cuts will mean cancelling quality-of-life improvements proposed by Tory’s own housing taskforce last year.

And with budget uncertainty, TCH says they can’t yet move forward with plans to fix Firgrove.

“We don’t have any choice,” Spearn said in an interview. “There will be a number of homes boarded up this year and next, the only question is: How many?”

As with many agencies, including the TTC, the TCH budget is fast approaching a wall. Despite recent moves to refinance mortgages and other one-time solutions, city manager Peter Wallace has warned short-term fixes won’t make up the obvious lack of revenue.

In TCH’s case, much of the revenue comes from rents, most of which are geared to what tenants can afford based on their incomes. About $200 million is provided in city subsidies annually, enough to cover just less than a third of TCH’s total budget.

As tenants’ incomes and revenues have generally flat-lined, operating expenses have ballooned — the cost for hydro within TCHC’s 2,100 buildings has increased 43 per cent since 2012, water costs are up 39 per cent.

A 2.6 per cent reduction on the city’s $200 million in subsidies would represent about $5 million in additional pressure, Spearn said.

That alone would not be an insurmountable challenge, he noted. But on top of the $96 million existing gap, Canada’s largest housing provider faces a very real question of how to adequately take care of their 110,000 tenants.

“The 2.6 per cent just makes it a $101 million problem. That’s really what we have to confront,” Spearn said.

Tory’s spokesperson Amanda Galbraith said in a statement that the mayor “has placed a huge priority on the need to repair and fund Toronto Community Housing,” including $250 million in 2016 for capital repair projects.

“But we can’t go it alone. Funding for housing is a shared responsibility, and the federal and provincial governments need to step up.”

She said the city will be “working closely with TCH to find reductions that don’t affect tenants.”

Spearn promised they would start the budget from scratch for 2017, building it up from zero to question every needed expense. They will attempt more debt restructuring to raise another $200 million for capital repairs next year.

Some 30,000 repairs have been completed already as part of the corporation's 10-year, $2.6 billion plan that anticipated funding from all three levels of government. But so far, only the city has contributed with just a quarter of the needed repairs — including on roofs, elevators and furnaces — completed.

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“We’re making headway,” said Spearn. “With what we know today, we cannot continue the repair program in 2017 in the levels we’ve had at the past because we're going to run out of money.”

Housing advocate and TCH board member Councillor Ana Bailao said TCH’s budget trouble is much bigger than the 2.6 per cent request.

She questioned why funding from other levels of government has been slow to arrive and disproportionate to the city’s need — with more than half of the waitlist for affordable housing in the province centered in Toronto and TCHC housing more low-income residents than any other corporation in the country.

“These are the questions I want to start getting answers for and that we’ve been asking,” she said.

Though Tory’s taskforce earlier tabled long-term ideas to make TCH more sustainable, in the short-term Councillor Joe Cressy, who also sits on the TCH board, said the current budget direction is effecting tenants now.

“It is painfully obvious to anyone who’s paying attention or who’s looked at the books that a decrease rather than an increase in funding for TCHC means residents of TCHC will live less quality lives,” he said. “There are no pencils to save. The impact will be felt by residents.”

Though Tory and his council allies have argued looking for the 2.6 in reductions is a necessary exercise, Cressy called it “political showmanship.”

“The only reason the mayor is proposing this 2.6 per cent is to look like he’s fiscally responsible before we have the revenue tools debate,” Cressy said of a pending discussion this fall on whether to impose new taxes and fees to increase funding for city needs.

In preliminary budget submissions, Spearn has told the council that to find $5 million, they would need to mostly reverse the extra $5.4 million investment approved by council as part of Tory’s taskforce — money that would have been used, for example, to hire frontline staff to manage extreme hoarding situations.

“We can just simply say to council, ‘thank you very much, you can have the money back,’ ” Spearn said. “Which means the tenant experience slips backwards again and then we said: ‘Oh, by the way, we still have this $96 million hole in the budget.’”

Asked simply by Councillor Gord Perks at budget committee in June whether TCH could maintain its duty to be a good landlord and make the cuts, Spearn’s answer was simple: “No.”

“This is the thing about using a blunt instrument,” Perks told the Star about Tory’s across-the-board 2.6 per cent request. “It shows a complete lack of understanding on how each budget works.”

In the Firgrove Cres. community, where a growing fissure in the concrete floor on the third level of a townhome complexes gives residents an unwelcome view of the second floor and where crews have scraped muddy concrete over the brick faces of the buildings just to hold them together, Penny said residents aren’t asking for much — just a decent place to live. They deserve that, she said.

“When we have certainty in funding then we’ll work with the community on what is the best strategy to rebuild this community,” she said. “They’re ready for this. We just have to find the money.”

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