CityHousing HamiltonBoard Meeting

Wednesday November 24, 2010

2011 Budget

MISSION STATEMENT

We provide affordable housing that is safe, well-maintained, cost effective and supports the diverse needs of our many communities

OPERATIONAL PLAN1. Create financial sustainability2. Maintain and improve building conditions3. Create healthy, secure communities4. Reinvest in communities and increase

affordable housing5. Leadership: Influence and adapt social

housing reform

CityHousing Hamilton Division

Complement(FTE)

Management Other Total Staff/Mgt Ratio

2010 4.00 94.35 98.35 23.6:1

2011 5.00 94.35 99.35 18.9:1

Change 1.00**cost absorbed in CHH operational

budget

0.00 1.00

CHIEF EXECUTIVE OFFICER

Administrative Assistant(1.0)

ManagerTenant Support Services

(11.5)

Manager, Housing Operations

(62.85)

Manager,Asset Renewal/Maintenance

(8.0)

ManagerBusiness/Strategic Serv **.

(11.0)

Current Financial Status (as of October 2010)

Description2010

Annual Budget

2010 Forecast Actual

Variance

Operating Revenue $33,184,234

$32,923,939 $(260,295)

Salaries & Benefits 7,352,299 6,532,846 819,453

Other Administration 2,343,406 2,521,206 (177,800)

Maintenance 10,103,752 10,009,622 94,130

Utilities 9,857,919 9,493,931 363,988

Municipal Taxes 12,266,184 12,089,146 177,038

Mortgage & Interest 13,668,964 13,854,450 (185,486)

Capital Reserve Allocation 7,218,364 7,218,364 0

Total Expenditures $62,810,888 $61,719,565 1,091,323

Service Manager Subsidy 29,421,430 29,380,748 (40,682)

Current Year Surplus/(Deficit) $(205,224) $585,122 $790,346

2011 Operating Budget Process• Alignment with timing of City Budget process• Property Managers prepared maintenance expense budget proposals by

account line by building. Maintenance expense budget created in conjunction with Capital budget

• Finance staff populated balance of templates• Review budget by property with each property manager and operations

manager

Budget Assumptions• Revenues were estimated based on current year forecast• Administration utilizes the City’s budget process for determining Salary &

Benefit costs• Other Administration expenses based on forecasted 2010 YTD

expenditures• Utilities expenditure based on current trending and guidelines issued by

SHSC and the City of Hamilton guidelines• Property tax expense assumed a 2% increase over current year• Mortgage/debenture costs based on amortization schedules

SWOT analysis

OPPORTUNITIES-Operational review directives-new SHRA legislation

THREATS-poor economic conditions-bed bug infestations-increased complexity of tenant issues/needs-expiration of debentures-legislative changes

STRENGTHS-supportive Board of Directors

-well-trained, dedicated staff (intellectual capital)

-community partnerships

WEAKNESSES-aging workforce

-vacancies -financial reporting software

-culture shift for changes will not be overnight

INTERNAL FACTORS

EXTERNAL FACTORS

Challenges - 2011• Managing bed bug infestations• Aging housing stock• Implementing Operational Review directives• Expiration of debentures• Our aging workforce• Implementation of new property management

software• Growing need for on-site presence within the

housing portfolio e.g., superintendents• Vacancies

Challenges - 2011 (continued)

• Arrears management• Portfolio mix - market/RGI• Limited statistical information on tenant

characteristics, needs and assets• Increased insurance costs [flooding in July09

incurred $3.6M in claims]

Challenges-ActionsCHALLENGE ACTION

Managing bed bug infestations Bed bug RFP closes Dec 7-10

Aging housing stock BCA – final reports May 2011

Operational Review findings Mgmt response presented at June 22-10 board mtg; many directives have been met or are in progress.

Expiration of debentures Plan needs to be formulated on how to deal with reduced funding of $461,400 for 2012

Our aging workforce Succession planning

New Property Management software Re-engineering project kicked off July 2010; Jan 2012 – new software ‘go-live’ date

Need for on-site presence within portfolio

Superintendent model approved at June 22-10 board mtg

Challenges-ActionsCHALLENGE ACTION

Vacancies

Arrears management Creation of Property Management Assistant pods; one focussing on rent collection. POD to work closely with Accounts Receivable prior to vacancy

Portfolio mix – Mkt/RGI Working with Tenant Placement to ensure vacancies are filled appropriately based on the current mkt/RGI mix for each building

Limited statistical information on tenant characteristics, needs and assets

Existing CHH process re-engineering project is re-evaluating all processes in order to capture requirements for a new software system

Increased insurance costs

Expiration of debentures – Public Housing

2011 2012 Reduction

Debenture total $ 5,533,751 $5,453,352 $ (80,399)

Funding total from federal gvmt

$7,424,963 $6,963,563 $ (461,400) *

*potential levy pressure

2011 Pressures• Bad debts [current write off for July09-June10 is

$510K]• Revenues – increasing & maintaining occupancy

and improving unit turn over times• Operational Review • Updated legislation - SHRA• Staff transition [new PMA pods]• Portfolio Mix – Market vs RGI [@ Dec09, 74

units over target; represents $600K in revenue]

Proposed 2011 Operating Budget Description

2010Budget

2010Forecast

Actual

2011 BudgetVariance $

2011 vs 2010Budget

Variance %2011 vs

2010

Operating Revenue

$33,184,234 $32,923,939 $33,530,899 $346,665 1.0%

Salaries & Benefits 7,352,299 6,532,846 $7,888,724 536,4257.3%

Other Administration 2,343,406 2,521,206 $2,256,320 (87,086) (3.7%)

Maintenance 10,103,752 10,009,622 10,905,896 802,144 7.9%

Utilities 9,857,919 9,493,931 9,239,113 (618,806) (6.3%)

Municipal Taxes 12,266,184 12,089,146 12,456,484 190,300 1.6%

Mortgage & Interest 13,668,964 13,854,450 $13,635,347 (33,617) (0.2%)

Capital Reserve Allocation

7,218,364 7,218,364 7,457,243 238,879 3.3%

Total Expenditures $62,810,888 $61,719,565 $63,839,127 1,028,239 1.6%

Service Manager Subsidy

29,421,430 29,380,748 30,308,228 886,798 3.0%

Current Year Surplus/(Deficit)

$(205,224) $585,122 $0 $205,224

2010 Expenditures Controllable vs. Fixed

Description2010

Budget% oftotal

Expenditures

2011 Budget

% oftotal

Expenditures

Salaries & Benefits 7,352,299 11.7% 7,888,724 12.3%

Other Administration ** 2,343,406 3.7% 2,256,320 3.5%

Maintenance 10,103,782 16.1% 10,905,894 17.1%

Utilities ** 9,857,919 15.7% 9,239,113 14.5%

Total Controllable Costs

29,657,406 47.2% 30,290,051 47.4%

Municipal Taxes 12,266,184 19.5% 12,456,484 19.5%

Mortgage & Interest 13,668,964 21.8% 13,635,347 21.4%

Capital Reserve Allocation

7,218,364 11.5% 7,457,243 11.7%

Total Fixed Costs 33,153,512 52.8% 33,549,074 52.6%

Total Expenditures 62,810,918 100.0% 63,839,125 100.0%

**Utilities&Insurance 10,017,992 15.7%

2011 Cost Drivers• Operating Revenues

– Rent Revenue*Bridgewater Court [full rent up] $430,000*SHH rental revenue for First Place $126,000

2011 Cost Drivers

• Other Administration– Bad Debt $(80,000)

– Estimate based on current trend and current level of arrears

– Insurance $93,000

2011 Cost Drivers

• Maintenance $802,000

– More realistic based on needs identified by front line staff

– With superintendent model, we will see a reduction of maintenance expenses, specifically in cleaning costs, electrical, plumbing

2011 Cost Drivers• Utilities

– SHRA benchmarks for benchmarked portfolios [Municipal, Dundas, Portuguese, and First Place*Electricity 8.99% increase*Fuel 6.49% increase*Water 6.13% increase

– City guidelines used for other portfolios [Public Housing, 100% market]

2011 Cost Drivers• Service Manager Subsidy

– Public Housing $421K– Municipal (Hamilton) Non-Profit 131k– Dundas Valley Non-Profit 32K – Portuguese Community Homes 16k– First Place – 185/206 Jackson 20k– First Place – 405 York 15k– 100% Market 0k

Social Housing Provider Funding• Applicable for the former Municipal (Hamilton) Non-

Profit, Dundas Valley Non-Profit, Portuguese Community Homes

• Based on Benchmark increases / decreases established by the Province

• 2011 Benchmarks are as follows:– Administration / Maintenance / Capital Reserve 1.9%– Insurance 14.1%– Electricity 8.99%– Water 6.13%– Natural Gas (Fuel) 6.49%– Additional adjustments for mortgage renewals based on

actual and property taxes at 2%

Public Housing Funding

• The following funding formula applies:– Revenues from Operations– Less: Expenditures (Administration, Maintenance,

Utilities, Capital Reserve, Debentures, Property Taxes)– Equals Subsidy Required from Service Manager

• Increases / decreases are at the discretion of the Service Manager, generally a mix of City Guidelines and Provincial Benchmarks– 2011 Subsidy Increase – 2.0% or $421K

Capital ReserveForecast Balance for 2010

Description $ $2010 Opening Balance $8,622,262

ADD: 2010 Allocation 7,437,605

SHRRP 3,936,896

Interest 254,000

LESS: 2010 Capital Expenditures Committed

(13,145,592)

2010 Ending Balance $7,105,171

Capital Reserve2011 Budget

Description $ $2011 Opening Balance $7,105,171

ADD: 2011 Allocation 7,457,243

SHRRP funding 7,909,582

Interest 275,000

LESS: 2011 Capital Plan (18,222,250)

2011 Ending Balance $4,270,746

Conclusion• From board directive, staff are now regularly

reporting on KPIs• Improved financial reporting due to accrual actg• Strong involvement from front line staff in budget

process• Continue to work on improving the current

budget process for future years • Greater accountability and awareness at all staff

levels for revenues and expenditures

QUESTIONS?