NBNPHA 2014 Conference Saint John Workshop D - Expiry of operating agreements

Expiry of Operating Agreements

May 2014

Outline for the day Expiry of Operating Agreement

- Overview of Federal and Provincial Statistics - Operating differences before and after Expiry

- Role of NBNPHA - Quick Reminder about the EOA Tool - Financial and Technical Preparation to Expiry - Importance of the Replacement Reserve

- Open discussion on best practices

- Access to Other Housing Programs after Expiry

As cited by Steve Pomeroy, Is Emperor Nero Fiddling as Rome Burns? Assessing Risk when Federal Subsidies End (2011)

On the National Level

On the Provincial Level

2000-2012 2013-2014 2015-2016 2017-2018 2019-2020 2021-2022 2023-2024 2025-2026 2027-2028 2029-2030

1910

3223

60

36

63

74

57

21

Number of Expired Agreements

2000-2012 2013-2014 2015-2016 2017-2018 2019-2020 2021-2022 2023-2024 2025-2026 2027-2028 2029-2030

130 110

428

547

971

726

663

1140

461

158

Number of units involved

* Includes Non-profits, Co-ops and Skigin-Elnoog Projects only

What Does EXPIRY Mean?

– After Expiry, Projects no longer have:

- Federal & Provincial Agreements (Sections 26, 27, 95)- Subsidies- Mortgage Payments

– After Expiry, Projects continue to be governed by:- Rules of Operations- Letter Patents- By Laws, Policies- Other Agreements, Obligations

Provincial Property Tax Exemption

Our proposal…The exemption will remain available after Expiry

conditional upon projects providing the following…

- Confirmation of non-profit status- Annual Financial Statements- Attestation of rents being charged - SD will advise at Expiry (particulars / deadlines)

Things to Consider

Continue to:

- Operate as a Non Profit – Provincial Property Tax Exemption

- Be Affordable - Targeting low to moderate income clients

- Be Viable - Ensuring sufficient revenues for maintenance & repairs(Replacement Reserve)

- Be Accountable – Tenants, communities, lenders

Challenges after Expiry

- Limited ability to house Low Income Seniors / Families

- Financial Expertise

- Technical Support

- Access to programs such as Projects in Difficulty

About NBNPHA

The New Brunswick Non Profit Housing Association offers individualized support to help our housing groups plan for the expiry of their operating agreements.

Program Activities

• Obtain financial statement worksheet from your PMO at the Department of Social Development.

• Complete a copy of the planning for Expiry of Agreements (EOA) Tool.

• Complete a copy of the Replacement Reserve Assessment Tool.

EOA Tool Results

Program Activities cont…

• Ensure that the Housing Group has applied for and is in receipt of both the Municipal Designation GST/HST rebate and the Provincial Property tax rebate.

• Work with Housing Groups to create an Action Plan based on the results from their EOA tool.

• Explore multiple possible RGI rent solutions.

Result Indicators

• Non-Profit and Co-operative Housing units remain affordable and the units are sustained in good condition.

• The NBNPHA gathers data and evidence required to develop a strong advocacy plan and policy in support of our members’ interests.

• Develop case studies to be used as templates for future groups approaching expiry of their operating agreements.

Information Collection

• Individual member information will be stored securely and remain confidential and will only be used with permission.

• As the groups work through the expiry of their agreements, data will be aggregated to summarize the overall health of the non profit housing and co-operative housing sectors in New Brunswick.

• This data will aid in the development of the Association’s advocacy plan.

Resources available to groups

• Staff at the New Brunswick Non Profit Housing Association (NBNPHA) – Dave Shalala dshalala@nbnpha-alsblnb.ca

• (506) 206-3795

• Social Development• NBNPHA guide sheets (How to sheets)

Where to find the Tools…

Replacement Reserve Planning and Expiry of Operating Agreements Assessment Tools…

http://www.nbnpha-alsblnb.ca/en/index.php/member-resources

Suggestions to Remain Viable

• Increase rent• Less Income testing• Rent spaces – Commercial• Rethink Clients’ needs (looking at aging in place)• Amalgamate several small projects (cut operating costs)• Engage municipalities – possibility of lowering taxes or service

costs• Engage Local MPs and MLAs • Evaluate the Replacement Reserve• Engage Staff and Tenants• Engage Youth• Open Houses

Financial & Technical Preparation

Checklist:

- Financial capacities * Heat & Lights * Maintenance/Repairs * Vacant units/Bad debts- Physical condition of the building and the units * Replacement Reserve Planning

- Review the needs of the project on a regular basis- Management capabilities- Allocation to Replacement Reserve (Post-85 projects)

Replacement Reserve

Before Expiry After Expiry

Current Process

Capital Item Fails:

Determine Need for Replacement (Inspection)

Obtain 3 Quotes

Submit Request to PM Officer

Receive Written Approval

Purchase Item

Recommended Practice

Adopt Policy to maintain RR that includes:

• List of items• # of quotes to obtain• Board approval / discussion

Develop Replacement Reserve Plan

Tips about Maintenance

Rental RRAPResidential Rehabilitation Assistance Program

May 10, 2014 Leanne Smith

Housing & Homelessness / Logement et itinérance

Social Development / Dévelopement sociale 

Leanne.smith@gnb.ca

Rental RRAP

• Rental Residential Rehabilitation Assistance Program

• Provides financial assistance to owners/landlords for mandatory repairs to self-contained units that are substandard and rented to low-income households.

• Assistance is in the form of a forgivable loan & the maximum assistance is $24,000 per eligible unit.

Rental RRAP Eligibility

• Property must be owned by a non-profit corporation, or a housing cooperative that is not receiving any government housing assistance.

• Must contain 1 or more self-contained units, rented or intended to be rented to low income households.

• Post RRAP rents will be at or below levels established by SD & CMHC

Eligibility - Continued

Property must lack basic facilities or require major repairs in one of the following areas: Structural Heating Electric Plumbing Fire Safety Health Safety

HOW DOES IT WORK?

• The amount you may recieve is based on the cost of madatory repairs and the number of self-contained units within the project.

• The forgivable loan is earned over a period of years ranging from 7 to 12, depending on the number of units and the cost of eligible mandatory repairs

For Program Information:

• http://www2.gnb.ca/content/gnb/en/services/services_renderer.8795.html