Ontario Mortgage and Housing Corporation. Three-Year Business Plan

Transcription

1 Ontario Mortgage and Housing Corporation Three-Year Business Plan 2015 to 2018

2 Ontario Mortgage and Housing Corporation Three-Year Business Plan 2015 to 2018 Introduction The Ontario Mortgage and Housing Corporation, formerly the Ontario Housing Corporation, is a corporation without share capital. In 2006, under the Ontario Mortgage and Housing Corporation Act, the Ontario Housing Corporation was continued under the name Ontario Mortgage and Housing Corporation (OMHC). The OMHC is classified by Treasury Board Secretariat as a board-governed provincial agency under the Agencies and Appointments Directive, The agency reports to the Minister of Municipal Affairs and Housing. In accordance with amendments to the Ontario Mortgage and Housing Corporation Act (the OMHCA) that came into force on April 1, 2015, another provincial agency, the Ontario Mortgage Corporation (OMC), was dissolved and its assets, liabilities, rights, obligations and functions were transferred to the OMHC. Ontario Mortgage and Housing Corporation: Vision, Mandate, and Major Functions OMHC s responsibilities, which are primarily financial in nature, include: 1. administration of public housing debt to the Canada Mortgage and Housing Corporation (CHMC) and the Province; 2. administration of loans to colleges and universities under the Ontario Student Housing program; 3. owning land relating to the programs for which OMHC is responsible; 4. administration of contingent liabilities related to loan insurance agreements with CMHC for provincially funded non-profit housing programs; 5. administration of the Affordable Home Ownership Program, including administration of the Affordable Home Ownership Revolving Loan Fund; Ontario Mortgage and Housing Corporation 1

3 6. managing and administering Affordable Home Ownership Program mortgages transferred to it by Minister s Order in accordance with the OMHCA; 7. using the monies in the Affordable Home Ownership Revolving Loan Fund and the monies received under the transferred Affordable Home Ownership Program mortgages, including interest earned on the monies, only for housing purposes in accordance with a Minister approved by-law; 8. administration of such housing programs, or parts of housing programs, as may be prescribed under the OMHCA, including making grants and loans related to such prescribed programs and taking security for such loans 9. managing the marketable and forgivable loans and mortgages that were owned by OMC prior to its dissolution and that were transferred to OMHC on April 1, 2015; 10. making housing related loans, grants, guarantees or advances in accordance with the OMHCA and the Housing Development Act (HDA); 11. carrying out building developments as defined under the HDA in accordance with the HDA and OMHCA; 12. coordinating and arranging all borrowing, financing, short-term investment of funds and financial risk management activities through the Ontario Financing Authority, unless the Minister of Finance approves otherwise; and 13. subject to applicable legislation, such other matters which are within OMHC s statutory mandate as may be assigned to, or may have been assigned to OMHC by the Minister, including the Province s environmental liability, if any, with respect to its former public housing properties under the Environmental Protection Act; As of the date of the report, no by-law giving OMHC the authority to spend the monies in the Affordable Home Ownership Revolving Loan Fund has been approved. Ontario Mortgage and Housing Corporation 2

4 Governance and Accountability The OMHC Board, appointed by Order-in-Council of the Lieutenant-Governor in Council, consists of at least five part-time Directors, or members, with one member appointed by the Lieutenant-Governor in Council as Chair. These Directors are currently all provincial public servants. The OMHC is governed according to a Memorandum of Understanding (MOU) that sets out the mandate of the agency and the accountability relationship between the Minister and OMHC. With the change in OMHC s mandate as a result of the transfer to OMHC of OMC s assets, liabilities, rights, obligations and functions, the current MOU dated February 17, 2011 will need to be updated. Ontario Mortgage and Housing Corporation s assets and revenues do not form part of the Consolidated Revenue Fund and are audited annually by the Provincial Auditor General. To comply with the Agencies & Appointments Directive (AAD), OMHC is required to provide the Minister annually with a Three-Year Business Plan, Audited Financial Statements and an Annual Report. OMHC is also required to work with the Ministry in producing an annual Risk Assessment Evaluation Report. Ontario Mortgage and Housing Corporation 3

5 Major Operational Activities and Initiatives Mandate responsibility #1: Managing the Ontario Mortgage and Housing Corporation mortgage insurance obligations. Key Activities/Services Key Deliverables Partners & Clients Indemnify CMHC in respect of certain social housing mortgages in accordance with OMHC s loan insurance contracts with CMHC. Reimburse CMHC as required for any social housing mortgage losses covered by the indemnities. Partners internal to the Ministry of Municipal Affairs and Housing: 1. Controllership & Financial Planning Branch; and 2. Corporate Services Branch. Partners within the Ontario Public Service: 1. Ministry of Finance/Treasury Board Secretariat and Ontario Financing Authority; 2. Internal Audit. Clients external to the Ontario Public Service: 1. Service Managers; 2. CMHC. Ontario Mortgage and Housing Corporation 4

6 Mandate responsibility #2: Managing any environmental liabilities on public housing properties previously owned by the Corporation that have been transferred to Service Managers as a result of social housing devolution. Key Activities/Services Educate Service Managers on protocols to be used when environmental issues on properties formerly owned by OMHC are identified. Collaborate with Service Managers to ensure that timely and appropriate remedial action is taken. Ensure that OMHC business and budget planning activities address the known financial consequences of any environmental liabilities. Key Deliverables All Service Managers are fully aware of the required processes they must follow to inform OMHC of confirmed or anticipated environmental liabilities on properties transferred to them by OMHC. All potential environmental liabilities on properties devolved to Service Managers are assessed through appropriate due diligence. Any environmental liabilities acknowledged are required to be remediated in an economical and efficient manner; potential legal risk to the Province is minimized while maintaining a high level of Service Manager satisfaction. Partners & Clients Partners internal to Ministry of Municipal Affairs and Housing: 1. Municipal Services Offices; 2. Controllership & Financial Planning Branch; and 3. Corporate Services Branch. Partners within the Ontario Public Service: 1. Ministry of Finance/Treasury Board Secretariat; 2. Ontario Financing Authority; and 3. Internal Audit. Clients external to the Ontario Public Service: 1. Service Managers; 2. municipalities; 3. private development interests; and 4. social housing providers. Ontario Mortgage and Housing Corporation 5

7 Mandate responsibility #3: Managing the legacy mortgages and programs transferred to OMHC as of April 1, Key Activities/Services Administer legacy loans and mortgages. Respond to requests by mortgagors for services, especially in relation to removing charges on title where mortgages have matured or been paid out. Ensure the smooth transition of the administration of these legacy loans to OMHC. Key Deliverables Legacy mortgages are effectively administered. Client service related to legacy mortgages is maintained at a high level. OMHC is provided full and effective support in relation to its decisions and oversight of legacy OMC mortgages and programs. Partners & Clients Partners internal to Ministry of Municipal Affairs and Housing: 1. Municipal Services Offices; 2. Controllership & Financial Planning Branch; and 3. Corporate Services Branch. Partners within the Ontario Public Service: 1. Ministry of Finance/Treasury Board Secretariat; 2. Internal Audit. Clients external to the Ontario Public Service: 1. Legacy OMC mortgagees. Board Activities Board Meetings: Meetings are held at the discretion of the Board, subject to the requirement that the Board hold an Annual General Meeting. OMHC Board meetings are open to the public except in certain circumstances, where the Board deems an in camera session is required. Board materials and reports are prepared in advance, using the Agenda established by the Chair in consultation with the Chief Executive Officer. Minutes are prepared and approved by the Board, for both general and in-camera sessions. Ontario Mortgage and Housing Corporation 6

8 Administrative Activities The Chief Executive Officer is an employee of the Housing Funding and Risk Management Branch (HFUN), as is the OMHC Corporate Secretary. The Chief Executive Officer is responsible to the Board for the day-to-day operational management of the Corporation. The Corporate Secretary, who reports to the Chief Executive Officer, is responsible for the Board minutes, reports to the Board and advises on internal governance and corporate secretarial issues. Administrative and technical support is provided entirely by the Ministry of Municipal Affairs and Housing s Housing Division staff through the Housing Funding and Risk Management Branch s (HFUN) Risk Management and Program Compliance (RMPC) section of the Division. Responsibility for overseeing the mortgage and capital activities of the Corporation also rests with HFUN s the Risk Management and Program Compliance Section. Initiatives Involving Third Parties OMHC has no separate initiatives involving third parties other than its general partnerships described above. Ontario Mortgage and Housing Corporation s Strategic Directions and Priorities over the Next Three Years OMHC s strategic priorities for the next three years are to: continue to manage its existing obligations under the Ontario Mortgage and Housing Corporation Act and its stated mandate, to high standards of management and customer service quality; ensure that Service Managers are advised and supported in using the updated OMHC Environmental Remediation Technical Bulletin; co-operate with the Ministry in the implementation of any proposed structural or program changes that receive the necessary approvals; and ensure that the former OMC assets, liabilities, rights, obligations and functions are effectively administered. Ontario Mortgage and Housing Corporation 7

9 Relationship of Three Year Business Plan ( ) to Ministry Vision and Strategic Priorities OMHC seeks to support the Ministry of Municipal Affairs and Housing vision for: a range of housing choices; access to affordable housing initiatives; support for adaptive local communities; effective stewardship of local governance; strong customer service and program due diligence; and sustainable community development and leadership in public service delivery. Finances Resources Required to Meet Current Year Objectives and Proposed Operating Expenditures for Planning Year One and Projected Revenues and Expenditures for Planning Years Two and Three A total of $ million has been allocated by the Ministry of Municipal Affairs and Housing to support the operational activities of OMHC in the current fiscal year ( ). The following chart outlines the budgets for the Three- Year Plan from 2015 to Ontario Mortgage and Housing Corporation 8

10 ONTARIO MORTGAGE AND HOUSING CORPORATION 2015/16 Budget and Estimated Requirements ($ millions) 2015/16 Budget (approved) 2016/17 Budget (estimates) 2017/18 Budget (estimates) Revenues: Subsidies from Province: Debt Service Obligations Transfer Payment-Operating Sundry Interest received from Student Housing Environmental Remediation Recovery of Mortgage Advances Miscellaneous Total Revenues Expenses: Debentures Interest: Devolved Properties Student Housing Environmental Remediation Discharge Fees Miscellaneous Total Expenses Excess of Revenues over Expenses Liability and Indemnification The OMHCA provides that no proceeding shall be commenced against any director, officer, employee, servant or agent of the Corporation for any act done in good faith in the exercise or performance or intended exercise or performance of his or her power or duty or for any alleged neglect or default in the exercise or performance in good faith of that power or duty. The Corporation separately agreed to indemnify directors and officers against any and all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgement (an "Expense or collectively, the "Expenses") which may reasonably be incurred in respect of any civil, criminal, administrative, Ontario Mortgage and Housing Corporation 9

11 investigative or other proceeding (a Claim or collectively, the Claims ), in which the director or officer is involved because of being or having been a Director or Officer of the Corporation but this indemnity does not apply with respect to certain expenses. In addition, Directors and Officers of the Corporation are entitled under section 136(4.2) of the Business Corporations Act (Ontario) to be indemnified by the Corporation in respect of all costs, charges, and expenses reasonably incurred by him or her in connection with the defence of any civil, criminal, administrative, investigative or other proceedings to which the director or officer is subject because of his or her association with the Corporation, if the director or officer: (a) was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the director or officer ought to have done; (b) the director or officer acted honestly and in good faith with a view to the best interests of the Corporation; and (c) if the matter is a criminal or administrative proceeding that is enforced by monetary penalty, the director or officer had reasonable grounds for believing that his or her conduct was lawful. Human Resources over the Next Three Years The OMHC is directed by a Board, appointed by Order in Council. The Board of Directors, as of March 31, 2015 included: Name Position Date of First Appointment Appointment Expires Janet Hope Chair, February 1, 2007 December 31, 2015 Member Jim Cassimatis Vice-Chair, December 10, 2012 December 31, 2015 Member Elizabeth Harding Member January 1, 2012 December 31, 2015 Kate Manson-Smith Member December 10, 2014 December 31, 2015 Trevor Bingler Member September 29, 2010 December 31, 2015 Ontario Mortgage and Housing Corporation 10

12 Administrative staff support for the OMHC is provided by Ministry staff as follows: Housing Funding & Risk Management Branch, Ministry of Municipal Affairs and Housing: Primary administrative responsibility is carried out by 1.4 fulltime-equivalent employees (FTEs) including part-time corporation administrative staff; a part-time Chief Executive Officer; part-time mortgage administrative support staff; and part-time general administrative support. Other Ministry and Ontario Public Service offices: In addition, the OMHC receives support on an as needed basis from the Controllership & Financial Planning Branch, Corporate Services Branch, as well as Legal Services Branch, Internal Audit and staff from the Community Services Cluster I&IT, which serve the Ministry of Municipal Affairs and Housing. Impact of the Present Business Plan on Human Resources over the Next Three Years: The 2011 provincial Budget identified a number of agencies that should be reviewed to determine whether they have overlapping functions or whose functions could either cease to exist or be performed more efficiently by other means. The OMC and the OMHC were identified within this group. As a result of amendments to the OMHCA which came into force on April 1, 2015, the OMC was dissolved and its assets, liabilities, rights, obligations and functions were transferred to the OMHC. Compensation Strategy: As OMHC is entirely supported by Ontario Public Service staff, its compensation strategy is determined by relevant Ontario Public Service and Ministry policies, and by collective agreements. Infrastructure (Real Property, Facilities, Assets and IT) Over the Next Three Years OMHC is on title as owner of certain real property that was not transferred in connection with devolution of public housing under the Social Housing Reform Act, 2000 due to anomalies such as the recording of different Property Identification Numbers. The Corporation will continue the process of transferring these properties to the appropriate owners. In accordance with the new Realty Directive, the Corporation will develop a Realty Management Plan in the current fiscal year. Ontario Mortgage and Housing Corporation 11

13 The Ministry of Municipal Affairs and Housing provides the facilities, assets and IT for staff to carry out services for OMHC. Legal/Regulatory Issues over the Next Three Years OMHC does not currently anticipate significant legal or regulatory challenges in the coming three-year period. These will be addressed if and when they arise. Customer Service over the Next Three Years OMHC anticipates no requirement for changes to its current customer services or standards in the period of the plan, as laid out in its Annual Report and in the Performance Measures section of the plan. Communications and Issues Management over the Next Three Years Communications OMHC communicates directly with its clients on an individual basis as follows: mortgage customers, through phone, letters and documents exchange; other clients, through phone and formal letters; and the Ministry, Minister and Deputy Minister, through information and briefing materials and direct briefings. The Corporation is required, by both the OMHCA and the Agencies & Appointments Directive (AAD), to produce an annual report describing the Corporation s activities in the previous fiscal year. These reports are tabled in the Legislature in both official languages. No special general communications, other than the above, are forecast for the period Any change which may result from future changes to the Corporation will be planned for and fulfilled as directed by the Minister. Issues Management No special issue management requirements are forecast for the three-year plan period. If such requirements arise, they will be dealt with in consultation with the Ministry of Municipal Affairs and Housing, as required by the Corporation s Memorandum of Understanding. Ontario Mortgage and Housing Corporation 12

14 Strategic Planning for the Three-Year Plan and Beyond None identified. Performance Measures and Targets over the Next Three Years The Corporation s performance in the previous business-planning period included no defaults on any loans. The Corporation s anticipated performance measures over the next three years are listed in the following table: Outcome Effective administration of public housing debt to CMHC and the Province. Environmental liability issues are addressed on a timely basis. Performance Measure 1. Terms of debenture agreements are adhered to. 2. OMHC guidelines and processes to resolve potential environmental liability issues are complied with. Standard or Target OMHC is Committed to Meeting 1.1. All debt service payments are made on the scheduled dates. Discharge of related debenture debt is made as per terms of the debenture agreement All Service Managers are fully aware of the required processes to inform the Corporation of confirmed or anticipated environmental liabilities on properties transferred to them by the Corporation All potential environmental liabilities on properties devolved to Service Managers are assessed through appropriate due diligence, as sites are identified by Service Managers Any environmental liabilities acknowledged are required to be remediated in an economical and efficient manner and potential legal risk to the Province is minimized. Ontario Mortgage and Housing Corporation 13

15 Outcome Effective administration of legacy OMC loans and mortgages Performance Measure 3. Mortgages administered effectively. Customer service standards are maintained at a high level. Charges registered on title are removed as mortgages mature or are paid out. Standard or Target OMHC is Committed to Meeting 3.1 Due diligence is performed to ensure mortgage conditions are being met, 3.2 Former OMC mortgagees are supported as questions and concerns arise. 3.3 Efficient and effective administration of mortgage discharges occurs in a timely fashion. Ontario Mortgage and Housing Corporation 14

16 Environmental Scan The following key factors may affect achievement of the strategic priorities and targets outlined above: External The age of the current social housing stock, much of which was built over the period, suggests a potential pressure on Service Managers and their housing corporations to secure the capital financing needed to retrofit and renovate their stock. Potential environmental contamination may be discovered during social housing renovation and regeneration work. The Corporation is potentially liable under the Environmental Protection Act for environmentally contaminated sites within the former public housing portfolio. Internal None identified. Ontario Mortgage and Housing Corporation 15

17 Risk Assessment and Mitigation Plan OMHC continues to assess its risks in each of the risk categories identified by Treasury Board Secretariat. By categorizing the risks that might prevent it from carrying out its duties, the Corporation will plan for their prevention or mitigation as part of its business planning process. Risk Evaluation Matrix IMPACT HIGH MEDIUM Mitigation controls & contingency plans Tolerate Monitor Mitigation controls & contingency plans; monitor closely Mitigation controls / contingency plans Take Urgent Remedial Action; Monitor Rigorously Mitigation controls / contingency plans; monitor closely LOW Tolerate; no action Tolerate; Monitor Mitigation controls / contingency plans LOW MEDIUM HIGH PROBABILITY The Board has identified the following risk. Risk: Environmental Liability The OMHC has potential liability under the Environmental Protection Act for environmentally contaminated sites within the former public housing portfolio. Issue: Unplanned/unbudgeted remediation costs may occur within the three years of this Business Plan. Ontario Mortgage and Housing Corporation 16

18 Regent Park, formerly owned by the Corporation, is being re-developed by the Toronto Community Housing Corporation (TCHC). Based on the re-development plan prepared by TCHC, this re-development is expected to take 12 to 15 years to complete. In this and some other cases, the Corporation s responsibility for any remediation is limited under the terms of an agreement making it responsible for only identified costs. Environmental remediation may be required at each stage of re-development. Based on the redevelopment plan prepared by TCHC, it is expected that phases 2 and 3 will be completed by after which phases 4 and 5 will start. Current cost estimates, based on site testing reports, for phases 2 and 3 are $34 million and, for phases 4 and 5 are $29 million. Estimated costs and timelines for the Regent Park redevelopment work are regularly updated through communication with the TCHC. In June 2013, TCHC advised that an Environmental Site Assessment (ESA) identified soil and groundwater contamination on the Alexandra Park site. In March 2014, TCHC requested that the Corporation provide financial assistance for soil remediation work. Cost estimates to remediate the contamination total $3.7 million. The Corporation retained potential environmental liability with respect to its former public housing properties under the Environmental Protection Act, as stated in the former Social Housing Reform Act, 2000 and continued under the Housing Services Act, The Ministry reimburses the Corporation for costs incurred. The Ministry completed its review in of the more than 1,500 former OMHC sites in order to better refine potential liabilities for environmental contamination. The potential liability is for soil and groundwater contaminants as defined under the Environmental Protection Act. Estimates were developed using a risk-based approach that analyzed current and historical land uses, local redevelopment potential, construction date and building type to assess potential environmental risk. A total of 50 sites were identified as having a high degree of risk for potential contamination. These 50 sites represent a potential contingent liability of approximately $295 million. Probability: MEDIUM: The Corporation s liability for environmental remediation under the Environmental Protection Act is only potential. Any need for remediation would be confirmed if and when a Service Manager has identified a site for redevelopment. Ontario Mortgage and Housing Corporation 17

19 The system for evaluating claims is highly structured and is managed internally and with the expertise of Infrastructure Ontario. Due diligence on potential claims results in recommendations for board decision-making. OMHC s role and liability, if any, are managed through formal legal agreements. Impact: MEDIUM: Any unbudgeted costs will result in capital pressures on the Corporation and thus on the Ministry, creating a pressure on the Ministry s capital envelope and overall appropriation. These pressures are unfunded, since the potential liabilities are difficult to accurately forecast from both a cost estimate and timing perspective. Mitigation Strategy Mitigation: The Ministry reports these potential liabilities as capital risks on an annual and quarterly basis to provide Treasury Board Secretariat with the latest and best available forecast. The Ministry will be regularly reviewing and updating the current environmental remediation guidelines which were approved by the Board of Directors in October, These updated guidelines reflect recent changes to relevant legislation, and provide the Corporation, staff, and Service Managers with a clear application and review process for any contamination claims. Contingency Plan: Where the Corporation enters into an agreement to settle its potential liability with respect to a claim, careful planning and monitoring is undertaken to ensure further expenditures are foreseen and assist with financial planning. The Corporation works closely with the affected Service Managers to ensure that financially and environmentally prudent methods of risk management and remediation are chosen. OMHC Implementation Plan The agency s work plan and timing for its key activities are noted below, including high-level deadlines and major Ontario Public Service and Agencies and Appointments Directive compliance commitments. Ontario Mortgage and Housing Corporation 18

20 Strategic Priority Objective Action Planned 1) Manage administration of the OMHC loan portfolio and associated risks until maturity. Manage debt owed to the Corporation, and its repayment under loans to Colleges and Universities. Provide transfers of the title upon repayment. 2) Manage OMHC s mortgage insurance obligations. Manage low-risk social housing mortgage obligations. Maintain close liaison with CMHC on OMHC - indemnified loans. 3) Manage any potential environmental liabilities that may arise on public housing properties previously owned by the Corporation which were transferred to Service Managers. Service Managers are fully aware of processes to inform the Corporation of environmental liabilities on property devolved to them. Environmental contamination is addressed economically and efficiently, minimizing legal risk to the Province and the Corporation. Manage potential environmental liabilities. 4) Manage any additional programs or initiatives stipulated under the Ontario Mortgage and Housing Corporation Act and its regulations and comply with any directives that the Minister may issue in respect of any matter under the Act. Service Managers satisfaction is high. Property transferred to Service Managers is fully available to meet affordable housing needs. As required by the OMHCA, the Corporation administers the Revolving Loan Fund of the Home Ownership Component of the Affordable Housing Program as well as other prescribed programs. Management of programs to high standards. Ontario Mortgage and Housing Corporation 19

21 Strategic Priority Objective Action Planned 5) Carry out key accountability requirements of the Ontario Mortgage and Housing Corporation Act, the Agencies and Appointments Directive, and other applicable Ontario Public Service standards and processes that support OMHC s strategic objectives. Accountable, timely and transparent agency management. Submit on time to required standards: Chair s affirmation of Memorandum of Understanding with the Minister. Annual Report within 90 days of completion of the financial audit. Business Plan and Risk Assessment. I approve the business plan: Signed by the MINISTER OF MUNICIPAL AFFAIRS AND HOUSING Hon. Ted McMeekin Minister of Municipal Affairs and Housing Date: Ontario Mortgage and Housing Corporation 20