METRO VANCOUVER HOUSING CORPORATION (MVHC) BOARD OF DIRECTORS

Transcription

1 Meeting 4 of 10 METRO VANCOUVER HOUSING CORPORATION (MVHC) BOARD OF DIRECTORS REGULAR BOARD MEETING Friday, October 28, :00 A.M. 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia Membership and Votes R E V I S E D A G E N D A 1 A. ADOPTION OF THE AGENDA 1. October 28, 2016 Regular Meeting Agenda That the MVHC Board adopt the agenda for its regular meeting scheduled for October 28, 2016 as circulated. B. ADOPTION OF THE MINUTES 1. June 10, 2016 Regular Meeting Minutes That the MVHC Board adopt the minutes for its regular meeting held June 10, 2016 as circulated. Added 2. October 21, 2016 Metro Vancouver Joint Board Budget Workshop Minutes That the MVHC Board adopt the minutes for the joint meeting held October 21, 2016 as circulated. C. DELEGATIONS D. INVITED PRESENTATIONS E. CONSENT AGENDA Note: Directors may adopt in one motion all recommendations appearing on the Consent Agenda or, prior to the vote, request an item be removed from the Consent Agenda for debate or discussion, voting in opposition to a recommendation, or declaring a conflict of interest with an item. 1 Note: Recommendation is shown under each item, where applicable. October 25, 2016 Metro Vancouver Housing Corporation - 1

2 MVHC Board Agenda October 28, 2016 Agenda Page 2 of 3 1. HOUSING COMMITTEE REPORTS 1.1 Payout of Heather Place Mortgage That the MVHC Board authorize staff to pay out the existing CMHC mortgage / 033 for the Heather Place property at West 13th Avenue, Vancouver BC, having a legal description of PID and , Lots B and C, Block 438, District Lot 526, Plan 19390, estimated to be $600,887 as of October 1, 2016, plus the interest that would be paid to maturity of $14,721, for a total of $615,608 subject to confirmation of eligible reserve use under the Umbrella Agreement from BC Housing. 1.2 Prepayment of Section 27 CMHC Debentures That the Metro Vancouver Housing Corporation Board approves MVHC to apply to the Canada Mortgage Housing Corporation (CMHC) to prepay the Section 27 debentures and to obtain financing through GVRD, contingent on approval by the GVRD Board. 2. CHIEF ADMINISTRATIVE OFFICER REPORTS Added MVHC Budget That the Metro Vancouver Housing Corporation Board approve the 2017 Revenue and Expenditure Budget, Capital Expenditures and Application of Reserves, as shown in the following schedules: A1 Revenue and Expenditure Summary A4 Application of Reserves B Revenue and Expenditure Budget B Capital Expenditures F. ITEMS REMOVED FROM THE CONSENT AGENDA G. REPORTS NOT INCLUDED IN CONSENT AGENDA H. MOTIONS FOR WHICH NOTICE HAS BEEN GIVEN I. OTHER BUSINESS J. BUSINESS ARISING FROM DELEGATIONS K. RESOLUTION TO CLOSE MEETING Note: The Board must state by resolution the basis under section 90 of the Community Charter on which the meeting is being closed. If a member wishes to add an item, the basis must be included below. That the MVHC Board close its regular meeting scheduled for October 28, 2016 pursuant to the Community Charter provisions, Section 90 (1) (g) as follows: 90 (1) A part of a board meeting may be closed to the public if the subject matter being considered relates to or is one or more of the following: Metro Vancouver Housing Corporation - 2

3 MVHC Board Agenda October 28, 2016 Agenda Page 3 of 3 (g) litigation or potential litigation affecting the regional district. L. RISE AND REPORT (Items Released from Closed Meeting) M. ADJOURNMENT/CONCLUSION That the MVHC Board adjourn/conclude its regular meeting of October 28, Metro Vancouver Housing Corporation - 2.1

4 Section B 1 METRO VANCOUVER HOUSING CORPORATION BOARD OF DIRECTORS Minutes of the Regular Meeting of the Metro Vancouver Housing Corporation Board of Directors held at 2:07 p.m. on Friday, June 10, 2016 in the 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. MEMBERS PRESENT: President, Mayor Mike Clay, Port Moody Vice President, Mayor Lois Jackson, Delta Director Linda Buchanan, North Vancouver City Director Jonathan Coté, New Westminster Director Colleen Jordan, Burnaby Director Bob Long, Langley Township Director Doug MacKay-Dunn, North Vancouver District Director Bill McNulty, Richmond Director Geoff Meggs, Vancouver Director Nicole Read, Maple Ridge Director Tim Stevenson, Vancouver Director Richard Stewart, Coquitlam Director Judy Villeneuve, Surrey MEMBERS ABSENT: None. STAFF PRESENT: Don Littleford, Director, Metro Vancouver Housing Corporation Carol Mason, Commissioner/Chief Administrative Officer Deanna Manojlovic Assistant to Regional Committees, Legal and Legislative Services 1. ADOPTION OF THE AGENDA 1.1 June 10, 2016 Regular Meeting Agenda It was MOVED and SECONDED That the Metro Vancouver Housing Corporation Board of Directors adopt the agenda for its regular meeting scheduled for June 10, 2016 as circulated. CARRIED Minutes of the Regular Meeting of the Metro Vancouver Housing Corporation Board of Directors held on Friday, June 10, 2016 Page 1 of 3 Metro Vancouver Housing Corporation - 3

5 2. ADOPTION OF THE MINUTES 2.1 April 22, 2016 Regular Meeting Minutes 3. DELEGATIONS No items presented. It was MOVED and SECONDED That the Metro Vancouver Housing Corporation Board of Directors adopt the minutes of its regular meeting held April 22, 2016 as circulated. CARRIED 4. INVITED PRESENTATIONS No items presented. 5. REPORTS FROM COMMITTEE OR STAFF 5.1 Tenant Incentives Program Report dated May 17, 2016 from Ulryke Weissgerber, Tenant Programs and Services Supervisor, Housing, seeking approval to proceed with two incentive programs that provide modest recognition and incentive for tenants who support MVHC goals of rent payment by direct debit, and timely and complete rental assistance qualification confirmation information. Discussion ensued on the need to better understand the factors creating the issue of late rent payments and low uptake of direct debit in order to find effective solutions and to quantify savings of incentive programs; and the level of bad debt expense for the MVHC. Request of Staff Staff was requested to bring back to the next MVHC meeting a report on the bad debt expense for the MVHC. It was MOVED and SECONDED That the MVHC Board endorse a staff proposal to implement two modest incentive programs on a pilot basis as presented in the report titled Tenant Incentives Program dated May 17, CARRIED 5.2 Manager s Report No items presented. Minutes of the Regular Meeting of the Metro Vancouver Housing Corporation Board of Directors held on Friday, June 10, 2016 Page 2 of 3 Metro Vancouver Housing Corporation - 4

6 6. INFORMATION ITEMS It was MOVED and SECONDED That the Metro Vancouver Housing Corporation Board of Directors receive for information the following Information Item: 6.1 MVHC Board 2016 Work Plan CARRIED 7. OTHER BUSINESS No items presented. 8. BUSINESS ARISING FROM DELEGATIONS No items presented. 9. RESOLUTION TO CLOSE MEETING It was MOVED and SECONDED That the Metro Vancouver Housing Corporation Board of Directors close its regular meeting scheduled for June 10, 2016 pursuant to the Community Charter provisions, Section 90 (1) (e) and (i) as follows: 90 (1) A part of the meeting may be closed to the public if the subject matter being considered relates to or is one or more of the following: (e) the acquisition, disposition or expropriation of land or improvements, if the board or committee considers that disclosure could reasonably be expected to harm the interests of the regional district; (i) the receipt of advice that is subject to solicitor-client privilege, including communications necessary for that purpose. CARRIED 10. ADJOURNMENT/CONCLUSION It was MOVED and SECONDED That the Metro Vancouver Housing Corporation Board of Directors adjourn its regular meeting of June 10, CARRIED (Time: 2:28 p.m.) Deanna Manojlovic, Assistant to Regional Committees Mike Clay, President FINAL Minutes of the Regular Meeting of the Metro Vancouver Housing Corporation Board of Directors held on Friday, June 10, 2016 Page 3 of 3 Metro Vancouver Housing Corporation - 5

7 Section B 2 METRO VANCOUVER JOINT BOARD BUDGET WORKSHOP Minutes of the Regular Joint Meeting of the Greater Vancouver Regional District (GVRD), the Greater Vancouver Water District (GVWD), the Greater Vancouver Sewerage and Drainage District (GVS&DD), and the Metro Vancouver Housing Corporation (MVHC), Board of Directors held at 2:17 p.m. on Friday, October 21, 2016 in the 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. MEMBERS PRESENT: Port Coquitlam, Chair, Director Greg Moore Vancouver, Vice Chair, Director Raymond Louie Abbotsford, Director Moe Gill Anmore, Director John McEwen Bowen Island, Director Maureen Nicholson Burnaby, Director Derek Corrigan (arrived at 2:19 p.m.) Burnaby, Director Sav Dhaliwal Burnaby, Director Colleen Jordan Coquitlam, Director Craig Hodge Coquitlam, Director Richard Stewart Delta, Director Lois Jackson Electoral Area A, Director Maria Harris Langley City, Director Rudy Storteboom Langley Township, Director Charlie Fox Langley Township, Director Bob Long Lions Bay, Director Karl Buhr Maple Ridge, Director Nicole Read New Westminster, Director Jonathan Coté North Vancouver City, Director Darrell Mussatto (departed at 4:01 p.m.) MEMBERS ABSENT: Abbotsford, Henry Braun Belcarra, Director Ralph Drew North Vancouver District, Director Richard Walton Pitt Meadows, Director John Becker Port Moody, Director Mike Clay Richmond, Director Malcolm Brodie (departed at 4:01 p.m.) Richmond, Director Harold Steves Surrey, Alternate Director Tom Gill for Linda Hepner Surrey, Director Mary Martin (arrived at 2:19 p.m.) Surrey, Director Barbara Steele Surrey, Director Judy Villeneuve Tsawwassen, Director Bryce Williams Vancouver, Director Heather Deal Vancouver, Director Kerry Jang Vancouver, Director Geoff Meggs Vancouver, Director Gregor Robertson Vancouver, Director Tim Stevenson West Vancouver, Director Michael Smith White Rock, Director Wayne Baldwin Surrey, Director Bruce Hayne Vancouver, Director Andrea Reimer STAFF PRESENT: Carol Mason, Chief Administrative Officer Agata Kosinski, Assistant to Regional Committees, Board and Information Services Chris Plagnol, Corporate Officer Vice Chair, Director Raymond Louie chaired the meeting. Minutes of the Regular Joint Meeting of the GVRD, GVWD, GVS&DD, and the MVHC Board of Directors held on Friday, October 21, 2016 Page 1 of 5 Metro Vancouver Housing Corporation - 5.1

8 ADOPTION OF THE AGENDA It was MOVED and SECONDED That the GVRD, GVWD, GVS&DD, and MVHC Boards adopt the agenda for their joint meeting scheduled for October 21, 2016 as circulated. CARRIED 1. PRESENTATION 1.1 Proposed 2017 Budget Metro Vancouver Districts and Housing Corporation Carol Mason, Chief Administrative Officer, provided members with an overview of the 2017 budget, evolving budget process, annual work plan, and the preparation of 5 year financial plans. 2:19 p.m. Directors Martin and Corrigan arrived at the meeting. Phil Trotzuk, Chief Financial Officer/General Manager, Financial Services, provided members with an overview of the 2017 Metro Vancouver Districts and MVHC budget highlighting expenditures, revenue sources, household impact, capital expenditures, proposed debt management for 2017, debt management , net debt, and total expenditures. Centralized Support Phil Trotzuk, Chief Financial Officer/General Manager, Financial Services, provided members with an expenditure overview of the Centralized Support budget, including budget highlights, 2017 key actions, 2017 proposed staffing changes, along with allocation, support budget drivers, and allocation methodology. In response to questions, members were informed about the following: Cost allocation methodology and the impact on the MVHC 15 year amortization period and its effect on the household impact Greater Vancouver Water Services Tim Jervis, General Manager, Water Services, provided members with an overview of the GVWD system and presented on the 2017 water budget expenditures, operations, 2017 water budget highlights, capital program, household impact, and key budget drivers. Greater Vancouver Sewerage and Drainage District Simon So, General Manager, Liquid Waste Services, provided members with an overview of liquid waste services 2017 proposed budget, highlighting expenditures, operations, capital program, household impact, sewer levy, and key budget drivers. Minutes of the Regular Joint Meeting of the GVRD, GVWD, GVS&DD, and the MVHC Board of Directors held on Friday, October 21, 2016 Page 2 of 5 Metro Vancouver Housing Corporation - 5.2

9 In response to questions, members were informed about the following: Development Cost Charges (DCC) in relation to growth Approval process for staffing increases Cumulative increases in inflation to be considered at a future Board workshop Solid Waste Services Greater Vancouver Sewerage and Drainage District Paul Henderson, General Manager, Solid Waste Services, provided members with an overview of solid waste services and presented on the 2017 proposed budget, highlighting expenditures, operations, 2017 solid waste budget overview, capital program, household impact, and key budget drivers. In response questions, members were informed about the following: Status of the Surrey Residential Transfer Station Performance indicators, and their effect on waste reduction goals Metro Vancouver Housing Corporation Phil Trotzuk, Chief Financial Officer/General Manager, Financial Services, provided members with an overview of housing services and presented on the 2017 proposed budget, highlighting expenditures, 2017 MVHC budget overview, capital program, and revenues. 4:01 p.m. Director Mussatto departed the meeting. Greater Vancouver Regional District Phil Trotzuk, Chief Financial Officer/General Manager, Financial Services, presented on the 2017 proposed budget for the air quality program as part of regional services providing the 2017 air quality budget overview, 2017 regional parks budget overview, 2017 regional parks budget capital program, 2017 regional planning budget overview, 2017 other regional services budgets overview, household impact, and key drivers. Phil Trotzuk, Chief Financial Officer/General Manager, Financial Services, summarized the 2017 proposed budget, providing information on the proposed reserve applications, and projected reserves. In response to questions, members were informed about the following: Presenting the Federal Homelessness fund separate from the general housing budget Minimizing surpluses during the budget process, and respecting the separate legal functions 4:11 p.m. Director Brodie departed the meeting. Minutes of the Regular Joint Meeting of the GVRD, GVWD, GVS&DD, and the MVHC Board of Directors held on Friday, October 21, 2016 Page 3 of 5 Metro Vancouver Housing Corporation - 5.3

10 2. REPORTS Presentation material titled 2017 Budget Board Budget Workshop is retained with the October 21, 2016 Metro Vancouver Joint Meeting agenda. 2.1 Metro Vancouver Cultural Grants Program Report dated October 7, 2016, from the Intergovernment and Finance Regional Culture Sub Committee, requesting that the GVRD Board approve a fifty percent (50%) increase, phased in over five years to the current annual funding of $100,000 for cultural grants awarded to regional cultural organizations to be funded from the GVRD Cultural Grant Reserve. It was MOVED and SECONDED That the GVRD Board approve a fifty percent (50%) increase, phased in over five years to the current annual funding of $100,000 for cultural grants awarded to regional cultural organizations to be funded from the GVRD Cultural Grant Reserve. CARRIED Cariboo Dam Project Members were informed about the following motion brought forward from the Intergovernment and Finance Committee, regarding funding for the Cariboo Dam Project. It was MOVED and SECONDED That the GVS&DD Board approve $362,400 for the Cariboo Dam Project, in the Still Creek / Brunette Drainage Area, to be funded from reserves. CARRIED 3. REFERENCE MATERIAL 3.1 Proposed 2017 Budget Metro Vancouver Districts and Housing Corporation The following on table documents titled A1 MV Summary, A2, A3, A4, B1 WS, B18 RD Summary, B22 EA, and B24 LR are retained with the October 21, 2016 meeting agenda. Comments were offered about the impact on the Housing Corporation of centralizing support costs, and the need to review that model in light of a policy of subsidizing the Housing Corporation. 3.2 Proposed 2017 Budget in Brief Minutes of the Regular Joint Meeting of the GVRD, GVWD, GVS&DD, and the MVHC Board of Directors held on Friday, October 21, 2016 Page 4 of 5 Metro Vancouver Housing Corporation - 5.4

11 Standing Committee Budget Reports The following on table documents titled Legal and Centralized Support Costs, and Supplemental Information to 2017 Budget and Work Plan Regional Parks agenda page 188, are retained with the October 21, 2016 meeting agenda. 4. Q&A/COMMENTS FROM PUBLIC The Chair asked if there were any members in the public gallery wishing to ask questions about the 2017 proposed budget. No persons stepped forward. At this point members considered a motion to close the meeting for a personnel matter. It was MOVED and SECONDED That the GVRD Board close its regular meeting scheduled for October 21, 2016 pursuant to the Community Charter provisions, Section 90 (1) (c) as follows: 90 (1) A part of a board meeting may be closed to the public if the subject matter being considered relates to or is one or more of the following: (c) labour relations or other employee relations. CARRIED It was MOVED and SECONDED That the GVRD, GVWD, GVS&DD, and the MVHC Board adjourn its regular meeting of October 21, CARRIED (Time: 4:38 p.m.) CERTIFIED CORRECT Chris Plagnol, Corporate Officer Greg Moore, Chair FINAL Minutes of the Regular Joint Meeting of the GVRD, GVWD, GVS&DD, and the MVHC Board of Directors held on Friday, October 21, 2016 Page 5 of 5 Metro Vancouver Housing Corporation - 5.5

12 Section E 1.1 To: From: Housing Committee Don Littleford, Director, Housing Date: September 26, 2016 Meeting Date: October 14, 2016 Subject: Payout of Heather Place Mortgage RECOMMENDATION That the MVHC Board authorize staff to pay out the existing CMHC mortgage / 033 for the Heather Place property at West 13th Avenue, Vancouver BC, having a legal description of PID and , Lots B and C, Block 438, District Lot 526, Plan 19390, estimated to be $600,887 as of October 1, 2016, plus the interest that would be paid to maturity of $14,721, for a total of $615,608 subject to confirmation of eligible reserve use under the Umbrella Agreement from BC Housing. PURPOSE To request MVHC Board approval to pay out the Heather Place mortgage prior to maturity. BACKGROUND The Heather Place project, Phase 1, to construct 67 units of rental housing, will start construction following final approvals by the City of Vancouver. Part of the final approvals involves legal agreements, drafted by the City, which need to be registered as charges against title to the Heather Place lands. These legal agreements embody various terms and conditions required by the City of Vancouver in granting the development approval. The legal agreements to be registered on the land title of the Heather Place property must, by the City s requirements, be in first position as charges against title to the lands. However, at present, the existing CMHC mortgage is registered in first priority position preventing this from happening. Title Charges The CMHC mortgage on Heather Place has a balance of approximately $600,887 and is due to mature on January 1, The mortgage is in first position as a charge against title to the lands, and it must either be discharged through the mortgage maturity, early payout, or be moved to a lower priority position charge. The City appears unwilling to register its charges in a lower position than the CMHC mortgage, and this is the position it takes with all development requiring registered charges. The MVHC could wait until the mortgage matures and is discharged from title but this would mean delaying the Heather Place project until January 1, This is untenable given the acute rental housing shortage being experienced in the region, and especially in Vancouver. The MVHC could also request that CMHC consent to granting the new City of Vancouver charges priority over its existing charge. However, following discussions with BC Housing, which administers the CMHC mortgage funding programs (which are linked to the operating agreements) on behalf of CMHC, this Metro Vancouver Housing Corporation - 6

13 would be a very lengthy process. CMHC would require a formal application through BC Housing and there would be no guarantee that CMHC would agree. Metro and BC Housing staff agree that the MVHC should pay out the balance owing on the mortgage now and discharge the mortgage from title to the lands. There is no payout penalty. Interest of about $14,700 is due either way, if the mortgage is paid out now, or held until maturity. Another charge against title to the lands is required under homeowner protection legislation to allow the Heather Place redevelopment to proceed. BC Housing administers the Homeowner Protection Warranty program whereby all new residential buildings in the province are required to be registered under the program. There are certain exemptions. The Heather Place development can be exempt from the requirements of the program if, among other things, MVHC registers a covenant against title to the lands prohibiting sale of any single dwelling unit and requiring that the dwelling units and common property in the development be used solely for rental purposes for a period of ten years. The MVHC has received confirmation from BC Housing that they will accept their charge on title in a subordinate position to any financial charges so this does not affect the City of Vancouver charges. It would, though, require that CMHC agree to lower the priority of its mortgage (as this is a financial charge) if it remains on title. ALTERNATIVES 1. That the MVHC Board authorize staff to pay out the existing CMHC mortgage / 033 for the Heather Place property at West 13th Avenue, Vancouver BC, having a legal description of PID and , Lots B and C, Block 438, District Lot 526, Plan 19390, estimated to be $600,887 as of October 1, 2016, plus the interest that would be paid to maturity of $14,721, for a total of $615,608 subject to confirmation of eligible reserve use under the Umbrella Agreement from BC Housing. 2. That the MVHC Board authorize staff to formally request that CMHC agree to grant priority to the new City of Vancouver charges over its existing charge against title to the Heather Place lands. 3. That the MVHC Board receive the report titled Payout of Heather Place Mortgage dated October 7 th, 2016 and provide alternate direction. The first alternative is recommended. FINANCIAL IMPLICATIONS Should the Board select the first alternative, there is no prepayment penalty for paying out the mortgage now. The MVHC will immediately pay off the principal of $600,887 plus $14,721 in interest, which is the same if it was paid over the balance of the term. Subject to confirmation of eligible reserve use under the Umbrella Agreement from BC Housing, the total of $615,608, will be paid from the anticipated $1.2 million surplus expected in the 2016 operating budget. The use of annual surplus for paying out the mortgage reduces the amount of surplus available at year end, however this will all be recovered by the end of 2017 due to the eliminated monthly debt servicing costs. Metro Vancouver Housing Corporation - 7

14 Alternative 2 would carry significant administrative and legal costs to request CMHC change the priority of their charge on the title. Monthly payments of principle and interest would continue as currently scheduled. Interest expense will be $14, 721 to maturity on January 1, 2018, the same as if paid out in full now. Delays in the commencement of the Heather Place Building A redevelopment extends the amount of time that the property continues to operate with reduced rental revenue from the vacant building to be redeveloped, approximately $30,000/mth, and ultimately delays the additional rental revenue expected from the new building. SUMMARY / CONCLUSION In order to proceed with the Heather Place redevelopment, certain legal agreements required by the City of Vancouver must be registered in first position against the Heather Place land titles. This requires that the existing first mortgage be removed from priority position and the preferred way to do this is by paying out the mortgage now, prior to maturity, as shown in Alternative 1. There is no interest penalty for doing so Metro Vancouver Housing Corporation - 8

15 Section E 1.2 To: From: Housing Committee Dean Rear, Director - Financial Planning and Operations Date: September 28, 2016 Meeting Date: October 14, 2016 Subject: Prepayment of Section 27 CMHC Debentures RECOMMENDATION That the Metro Vancouver Housing Corporation Board approves MVHC to apply to the Canada Mortgage Housing Corporation (CMHC) to prepay the Section 27 debentures and to obtain financing through GVRD, contingent on approval by the GVRD Board. PURPOSE To obtain authority to prepay the CMHC Section 27 debenture loans through new financing arrangements without penalty under the Federal Government s Loan Repayment program. BACKGROUND In June 2016, the Federal Government announced that they will provide $150 million of funding over four years to allow prepayment of long-term debt held by CMHC without penalty so that social housing providers may access financing from the private market at current lower interest rates. If approved by the Board, MVHC plans to submit the prepayment application to CMHC by the next available application due date of February 1, The projected prepayment date is April 1, Metro Vancouver Housing Corporation (MHVC) holds five properties under Section 27 portfolio that are eligible for prepayment: Property Address Projected Debenture Balance as at April 1, 2017 Earle Adams Village 7550 Northumberland Avenue, Vancouver, BC $ 2,988,212 Euclid Square 3485 Foster Avenue, Vancouver, BC $ 877,775 Grandview Gardens 2535 N. Grandview Hwy, Vancouver, BC $ 638,350 Kelly Court 2929 Nootka Street, Vancouver, BC $ 1,246,527 Semlin Terrace 100, 150, 200 Semlin Drive, Vancouver, BC $ 943,419 These properties are on 60-year City of Vancouver leased lands with approximately 20 years remaining until the properties revert to the City of Vancouver. The Operating Agreements for the Section 27 portfolio fall under the National Housing Act but are administered provincially by BC Housing. This arrangement is costly, restrictive and creates administrative load with little benefit to MHVC. In 2005, MHVC bought out three Section 27 Metro Vancouver Housing Corporation - 9

16 properties (Minato West, Meridian Village and St. Andrews Place) and noted that efforts would be made towards buying out the remaining five properties in the future. The CMHC Section 27 debentures have a fixed-rate of 8% with expected maturities ranging from September 2026 to January This is significantly higher compared to the current available borrowing rates that range from 1.89% to 2.49% as illustrated in Appendix A. PREPAYMENT OF LOAN The total prepayment balance or the outstanding debenture balance as at April 1, 2017 will be $6.69 million. The potential savings from refinancing the existing loan are estimated to range from $1.19 million to $1.55 million as illustrated in Appendix A. In addition to lower financing costs, prepayment of the Section 27 debentures would provide us with an opportunity to terminate the existing operating agreements without incurring penalties, estimated at $3.9 million at the end of This would allow MHVC to gain full control over operations of these properties without any stipulations imposed by the operating agreements. With the cancellation of the operating agreements, the rental assistance from BC Housing would likely be discontinued. However, the rental assistance is not material in value and the loss of revenues is expected to be fully offset by the increase in rental revenues. FINANCING Financing options are as follows: 1. GVRD Internal Financing The GVRD can provide MVHC with financing under its general corporate power, under subsection 176(1)(c) of the Local Government Act, in that it provides assistance for the purpose of benefiting the community of any aspect of the community. Similar to the existing internal mortgages, the interest rate would be variable based on GVRD s internal rate of return which represents opportunity cost of capital or the rate of interest had the monies been invested rather than loaned to the MHVC. The key advantage of internal financing is flexibility which would allow for preferred terms such as an early repayment clause. This option requires the approval by the GVRD Board. The estimated net savings on a 10 year amortization internal mortgage at the current variable rate of 1.89% is $1.55 million. 2. MFA Debenture Financing MHVC cannot borrow directly from the MFA but could borrow through the conduit of GVRD. Debenture financing is less flexible compared to internal financing. Furthermore, the timing of the loan is limited to twice a year, spring and fall; therefore, MHVC may require bridge financing from the time of the prepayment to when the MFA loan proceeds are received. This option requires the issuance of security and loan bylaws as well as an approval by the GVRD Board. The estimated net savings on a 10 year debenture loan at an indicative rate of 2.49% is $1.45 million. Metro Vancouver Housing Corporation - 10

17 3. Commercial Mortgage A traditional commercial mortgage could be obtained. The estimated costs associated with setting up the new mortgages exceed $200,000 as illustrated in Appendix A. Like the MFA loan, a temporary bridge financing may be required due to the timing of the prepayment and the receipt of loan proceeds. This option does not require the approval by the GVRD Board. The estimated net savings on a 10 year mortgage at an indicative rate of 2.28% is $1.19 million. For all three financing options, a 10 year term was selected in order keep the loan payments comparable to the existing debenture payments. This would reduce potential variances against the current budget and alleviate cash constraints from increased payments. ALTERNATIVES 1. That the Metro Vancouver Housing Corporation Board approves MVHC to apply to the CMHC to prepay the Section 27 debentures and to obtain financing through GVRD, contingent on approval by the GVRD Board. 2. That the Metro Vancouver Housing Corporation Board approves MVHC to apply to the CMHC to prepay the Section 27 debentures and to obtain financing through the MFA which is contingent on the approval by the GVRD Board and the passing of the appropriate bylaws. 3. That the MHVC Board receives the report titled Prepayment of Section 27 CMHC Debentures dated September 28 th, 2016 and provides alternate direction. FINANCIAL IMPLICATIONS If the Board approves alternative one, MVHC may realize the highest potential savings of approximately $1.55 million and allow for flexibility in the borrowing terms. If the Board approves alternative two, MHVC may realize the second highest potential savings of approximately $1.45 million but have less flexibility in the borrowing terms and may require temporary bridge financing. The commercial loan still offer potential net savings of $1.19 million but will incur significant administrative and set-up costs including brokerage fees, CMHC insurance application and premium fees and legal fees, and it may require temporary bridge financing. Not approving the initiative to prepay the Section 27 debentures may result in lost savings up to $1.55 million and lost opportunity to terminate the Federal operating agreements without penalty. SUMMARY / CONCLUSION MHVC has an opportunity to prepay the existing Section 27 portfolio debentures at a fixed-rate of 8% through alternate financing arrangements. Metro Vancouver Housing Corporation - 11

18 As presented in alternative one, it is recommended that the Board approves MHVC to move forward with the prepayment of Section 27 portfolio debentures through internal financing from GVRD upon approval by the GVRD Board. This would allow MHVC to realize the maximum potential savings and to set up loan arrangements similar to the existing internal mortgages with flexible terms Metro Vancouver Housing Corporation - 12

19 Appendix A Prepayment Financing Options Metro Vancouver Housing Corporation - 13

20 Section E 2.1 To: From: Metro Vancouver Housing Corporation Board of Directors Phil Trotzuk, Chief Financial Officer Date: October 21, 2016 Meeting Date: October 28, 2016 Subject: 2017 MVHC Budget RECOMMENDATION That the Metro Vancouver Housing Corporation Board approve the 2017 Revenue and Expenditure Budget, Capital Expenditures and Application of Reserves, as shown in the following schedules: A1 A4 B16 B17 Revenue and Expenditure Summary Application of Reserves 2017 Revenue and Expenditure Budget 2017 Capital Expenditures The attached budgets were presented and discussed at an Intergovernment and Finance Committee meeting and a Board Budget Workshop on October 21 st. The report 2017 Budget Metro Vancouver Districts and Housing Corporation sent to the Intergovernment and Finance Committee meeting and the Board Budget Workshop on October 21 st is attached for information. Attachment 1: A1 Revenue and Expenditure Summary A4 Application of Reserves B Revenue and Expenditure Budget B Capital Expenditures Attachment 2: 2017 Budget Metro Vancouver Districts and Housing Corporation, dated October 12, Metro Vancouver Housing Corporation - 14

21 A1 ATTACHMENT 1 METRO VANCOUVER DISTRICTS REVENUE AND EXPENDITURE SUMMARY 2017 BUDGET % BUDGET BUDGET CHANGE REVENUES Water Sales $ 251,824,851 $ 261,710, % GVS&DD Levy 200,250, ,889, % Tipping Fees 80,015,101 85,373, % GVRD Requisition 48,862,866 51,620, % Compensation Services Revenue 323, , % Collective Bargaining Services Revenue 741, , % Housing Rents 35,770,618 36,761, % BOD/TSS Industrial Charges 8,518,412 8,658, % Energy Sales 5,719,900 5,719, % Transfer from DCC Reserves 3,488,610 6,809, % User Fees 5,305,821 5,280,414 (0.5%) Housing Subsidies 3,965,673 3,321,289 (16.2%) Non-Road Diesel Permit Fees 1,992,000 2,689, % GPS User Fees 324, , % Electoral Area Requisition 363, , % Other External Revenues 8,143,465 8,988, % Sustainability Reserve Funds 1,613, ,000 (52.6%) Reserves 6,655,814 5,612,633 (15.7%) TOTAL REVENUES $ 663,879,736 $ 699,056, % EXPENDITURES Operating Programs: Greater Vancouver Water District $ 254,419,317 $ 264,146, % Greater Vancouver Sewerage & Drainage District: Liquid Waste 216,126, ,025, % Solid Waste 90,799,623 94,396, % Metro Vancouver Housing Corporation 40,572,020 41,083, % Greater Vancouver Regional District Air Quality 9,188,196 10,008, % E911 Emergency Telephone Service 4,126,798 4,187, % Electoral Area Service 551, , % General Government 5,817,712 6,176, % Labour Relations 2,614,348 2,703, % Regional Emergency Management 300, , % Regional Global Positioning System 754, ,719 (50.9%) Regional Parks 34,428,648 35,968, % Regional Planning 3,312,924 3,771, % Sasamat Fire Protection Service 867, ,232 (61.4%) 61,962,114 64,405, % TOTAL EXPENDITURES $ 663,879,736 $ 699,056, % Metro Vancouver Housing Corporation - 15

22 A4 METRO VANCOUVER DISTRICTS 2017 Budget - Proposed Application of Reserves (To Be Approved by the Board in October 2016) Function Application Operating Reserves Designated Reserves MVHC GVRD Fund Capital Replacement Activities $ 5,944,309 Fund MVHC Capital Replacement and Development 6,680,137 Parks Fund Heritage Parkland Acquisitions 4,000,000 Fund Capital Maintenance Projects 2,600,000 Fund Capital Replacement and Development Projects 4,500,000 Fund Capital Maintenance Work at Delta Heritage Airpark 20,000 Contribution to Capital Maintenance Fund Reserve 9,659 Fund Burns Bog ECA operations and maintenance expenditures related to research grant 40,000 Fund SIF Restoration of degraded areas within the Burns Bog ECA (Ecological Conservancy Area) 35,000 Fund SIF solar panels for Colony Farm Service Yard 100,000 Fund Regional Parks 50th Anniversary 75,000 Fund implementation of new software for program registration and facility bookings 40,058 Fund tree removal and planting at Brae Island 50,000 Fund Pacific Parklands Foundation stewardship programs from legacy fund 53,000 Fund Colony Farm Wilson Farm project from Capital maintenance reserve 23,312 Fund Aldergrove Management Plan Phase 1 project from Aldergrove gravel reserve 75,000 General Government Fund Cultural grants 110,000 Contribution to Regional District Fleet Vehicle Reserve Fund 771,983 Information Technology Fund software development projects 1,990,738 Fund computer replacements 5,254,000 Building Operations Head Office building renovations Kingsway and 5945 Kathleen Ave and MetroTower III 3,650,000 Electoral Areas Fund Electoral Area Official Community Plan work 35,000 Air Quality Fund Equipment Purchases 631,927 Fund Non-Road Gasoline Engines Characterization study 40,000 Fund Finalize Air Emission Forecasts project 40,000 Fund Visual Air Quality Stakeholder Engagement program 10,000 Fund Stakeholder Consultation on New Open Burning Bylaw project 45,000 Fund Stakeholder Consultation on Bylaw for Mid-Size Organics Management Facilities project 40,000 Fund Stakeholder Consultation on Amendment of Automotive Refinishing Regulation project 30,000 Fund Stakeholder Engagement Support for Residental Burning Bylaw project 35,000 Fund Performance Assessment of Residential Wood Smoke Dispersion Tool study 25,000 Fund Scan of Non-Regulatory Options for Light-Duty Vehicle Fleet study 50,000 Fund Developing Framework for Integrating Air Quality Actions 15,000 Fund Analysis of Accuracy of Regional Venting study 25,000 Fund SIF Strate Energy Advisor Program 100,000 Contribution to Air Quality Equipment Fund - equipment purchases 1,002,200 Regional Planning Fund SIF City of Langley Urban Agriculture Demonstration 50,000 Fund SIF Transit Oriented Affordable Housing 100,000 Fund Metro Vancouver Grow Green project 10,000 Fund Agricultural Land Use Inventory 10,000 Fund Addressing Illegal Fill study 70,000 Fund Metro Vancouver Shaping our Communities Iniative program 20,000 Fund Industrial Lands Initiative program 30,000 Fund Frequent Transit Corridor Studies 20,000 Fund Regional Food System Action Plan Implementation 10,000 Fund Economic Prosperity in Urban Centres 20,000 Fund 100 Year Regional Land Use Projections study 40,000 Fund Transportation Consortium 20,000 Fund 2016 Census Canada Data Acquisition 20,000 Labour Relations Fund Technology Initiatives 65,000 Fund Arbitration Services 40,000 Financial Services Fund Specialist Services to support/supplement Internal Audit Continuous Improvement activities 70,000 Fund Property Services Process review 75,000 Fund Print Room equipment 9,000 Fund Regional District Fleet Vehicle purchases 3,846,450 GVWD Fund Lower Seymour Conservation Reserve project 175,936 Fund Laboratory equipment purchases 115,000 Fund Comprehensive Regional Water System Plan work 620,000 Fund SIF Assessing Densification Impacts on Water Demands 155,000 Fund SIF Mountain Lake Tapping Project 125,000 Fund Capital / Reduce debt or paydown existing debt 7,696,993 GVS & DD Solid Waste Liquid Waste Fund Equipment Purchases 1,600,000 Contribution to Solid Waste Reserves 3,127,755 Fund Movement of Biosolids from prior years' stockpiles at Iona 2,551,000 Fund SIF Smart Sewers - Development of In-Situ Sensors 200,000 Fund Cariboo Dam Repair Work 182,566 Fund Cariboo Dam Streambank Assessment 109,471 Fund Cariboo Dam Operation Manuals Update 70,363 Fund Capital / Reduce debt or paydown existing debt 7,383,804 TOTAL RESERVE APPLICATION $ 21,909,852 $ 44,874,809 Metro Vancouver Housing Corporation - 16

23 B16 - Housing METRO VANCOUVER HOUSING CORPORATION HOUSING 2017 BUDGET % BUDGET BUDGET CHANGE REVENUES Housing Rents $ 35,770,618 $ 36,761, % Housing Subsidies 3,965,673 3,321,289 Other External Revenues 835,729 1,001,032 TOTAL REVENUES $ 40,572,020 $ 41,083, % EXPENDITURES Operating Programs: Property Operations $ 17,673,262 $ 18,080,715 Maintenance 1,874,407 2,050,233 Financial Services 592, ,809 Tenant Program and Services 499, ,451 Site Administration 1,143,964 1,153,553 Administration and Department Support 662, ,003 22,445,844 23,054, % Allocation of Centralized Costs 2,080,217 4,124, % Total Operating Programs 24,526,061 27,179, % Debt Service 15,163,814 12,675,690 (16.4%) Contribution to Reserve 882,145 1,228, % TOTAL EXPENDITURES $ 40,572,020 $ 41,083, % Metro Vancouver Housing Corporation - 17

24 B17 GREATER VANCOUVER HOUSING CORPORATION CAPITAL PROGRAMS & PROJECT DETAILS REGIONAL HOUSING 2017 BUDGET CAPITAL EXPENDITURES 2017 CAPITAL Housing Development - Heather Place - Building A $5,650,000 Capital Replacement 6,974,446 TOTAL CAPITAL EXPENDITURES $12,624,446 Metro Vancouver Housing Corporation - 18

25 ATTACHMENT 2 To: From: Intergovernment and Finance Committee Carol Mason, Commissioner/Chief Administrative Officer Phil Trotzuk, Chief Financial Officer Date: October 12, 2016 Meeting Date: October 21, 2016 Subject: 2017 Budget Metro Vancouver Districts and Housing Corporation RECOMMENDATION That the Intergovernment and Finance Committee endorse the 2017 Metro Vancouver Districts and Housing Corporation Budgets and forward them to the Metro Vancouver Board Budget Workshop on October 21, 2016 for consideration. PURPOSE To present the 2017 Budgets for the Metro Vancouver Districts and Housing Corporation for consideration. BACKGROUND As a unique local government in British Columbia, Metro Vancouver represents a regional federation of 23 members, comprising 21 Member Municipalities, one Treaty First Nation and one Electoral Area. Metro Vancouver provides a range of key utilities and services, which include the provision of drinking water, liquid and solid waste services, affordable housing, regional planning, and regional parks to over 2.4 million people in the region. The mix of regional services provided to each municipality is determined by that municipality. All regional services fall within the specific authority and jurisdiction of their respective legislative entities: the Greater Vancouver Regional District (GVRD), Greater Vancouver Water District (GVWD), Greater Vancouver Sewer and Drainage District (GVS&DD) and the Metro Vancouver Housing Corporation (MVHC). These budgets have been prepared to ensure consistency and alignment with the legislative authority of the various Districts and functions which, upon approval, provide the expenditure authority for the operations of the Metro Vancouver Districts and Housing Corporation BUDGET PROCESS The 2017 Metro Vancouver District and Housing Corporation budgets have been prepared to support the vision and mission of the Regional Federation as articulated in the Board Strategic Plan 2015 to In the past year Metro Vancouver has initiated a long term financial planning process, in particular with an increased emphasis on the development of a five year financial plan. The focus of this report, and the budget and annual work plans attached, is Preliminary five year financial plans have been prepared utilizing the framework presented to the Intergovernment and Finance Committee on July 20, The Five Year Financial Plan will be an agenda item for the Board Strategic Workshop scheduled for early Metro Vancouver Housing Corporation - 19

26 2017 Budget Metro Vancouver Districts and Housing Corporation Intergovernment and Finance Committee Meeting Date: October 21, 2016 Page 2 of 9 In October the Metro Vancouver standing committees were presented with individual 2017 budget reports that included a high level overview of both the budgets and work plans that fall within the purview of their respective committees (see Reference). These reports include information on multiple budget years as well as prior year actual results. The budgets and work plans have been endorsed by the Standing Committees and are summarized in this report WORK PLAN AND BUDGET The 2017 Metro Vancouver Districts and Housing Corporation budgets are presented to provide the Committee with the overall financial picture for 2017 as well as the impact of the proposed budgets on an average household within Metro Vancouver with an assessed value of $860,000. More details on the budget are attached for information, the Budget in Brief (Attachment 2) and the 2017 Financial Information (Attachment 3). BUDGET HIGHLIGHTS Overall Budget Impacts: As previously reported to the Board, the impact of the financing of the December 2015 purchase of a new head office complex has been included in the 2017 centralized support budget. As the total centralized support budget is allocated to the various Metro Vancouver entities and functions, the allocation reflects the 2017 borrowing costs. In addition to the centralized support allocation, a number of long term temporary positions exist throughout the organization. In situations where these positions have been determined to provide a sustained level of service, the applicable budgets are proposing to transition these positions to regular permanent status. This proposed change will have no incremental impact of the 2017 budget. GVWD - WATER Water Sales $261.7 million $9.9 million increase (3.9%) Avg Water Rate: $ per cubic metre 3.2% increase Increase to Avg Household: $4 Total Household Impact: $162 (assumes the avg household uses cubic metres annually) Total Expenditures: $264.1 million $9.7 million increase (3.8%) Total Capital Expenditures: $163.1 million $19.1 million decrease (-10.5%) Operating Expenditures: The 2017 operating budget in the GVWD is increasing by $5.5 million primarily due to increases in electricity and water treatment chemical costs. Some of the key actions planned for 2017 include updating the water Shortage Response Plan, a regional assessment of residential water metering and the optimization of operations at the Capilano Raw Water Pump Station. In addition to these operating initiatives, debt service costs related to the long-term debenture funding of capital expenditure are actually decreasing by $0.2 million due to a debenture maturity and there is a $5.4 million increase to the pay as you go capital funding program which will reduce future borrowing requirements and debt service costs. In order to meet the increasing operational demands in a cost effective manner, the 2017 GVWD Budget proposes the addition of 4.0 new regular full-time positions: 1.0 position to provide capital Metro Vancouver Housing Corporation - 20

27 2017 Budget Metro Vancouver Districts and Housing Corporation Intergovernment and Finance Committee Meeting Date: October 21, 2016 Page 3 of 9 project management expertise, within the Engineering and Construction division, as a result of increased project complexity, 1.0 position to support the source expansion project at the Coquitlam source, and 2.0 positions to address the operations and maintenance of both an expanding and aging system. In addition to these new positions, 5.0 long term temporary positions are proposed to be regularized into permanent positions to acknowledge these positions within existing service levels.. Capital Expenditures: The Water capital budget for 2017 reflects spending on infrastructure growth, risk management, maintenance and upgrade projects. The 2017 focus is on risk management regarding securing water crossing infrastructure and expanding existing infrastructure for regional population growth. Overall, there are a total of 124 capital projects included in the 2017 budget for Water Services. Highlights of major capital projects planned for 2017 to respond to requirements include the following: Complete construction of South Delta Main No. 1 Replacement Phases 2 and 3. Commence design of Capilano Raw water Pump Station back-up power project. Continue construction of Clayton Reservoir. Commence construction of Coquitlam Water Treatment Plant Ozone Generation Upgrades. Commence construction of Mackay Creek debris flow mitigation project. Continue design of the Annacis and Second Narrows Water Supply Tunnel projects. Commence preliminary design of the South Surrey Main No. 2 GVS&DD LIQUID WASTE Sewer Levy $214.3 million $14.0 million increase (7.0%) Sewer Levy Increase to Avg Household: 5.5% Increase to Avg Household: $10 Total Household Impact: $190 Total Expenditures: $235.0 million $18.9 million increase (8.7%) Total Capital Expenditures: $163.7 million $37.7 million increase (29.9%) The average municipal household impact on the Sewer Levy is expected to increase by $10 (5.5%), reflecting an assumed population growth of 1.5% based on average population growth experienced within the region and based on historical data. Operating Expenditures: The 2017 operating budget in Liquid Waste is increasing by $11.1 million primarily due to the commencement of lagoon decommissioning and the continued removal of stock piled biosolids from the Iona Island Wastewater Treatment Plant, continuation of the Annacis Island WWTP Stage 5 expansion, continuation of work on the Lions Gate Wastewater Treatment Plant (WWTP) Secondary Upgrade project, activities associated with the expansion of the environmental monitoring and source control programs and work towards the development of an asset management plan. Some of the other key actions planned for 2017 include source control regulations for hospitals and care facilities, enhanced environmental monitoring programs, develop water reuse and optimization opportunities at treatment plants and development of climate action mitigation and adaptation strategies. In addition to these operating initiatives, debt service costs related to the long-term debenture funding of capital expenditure is increasing by $3.3 million, due to long term debenture Metro Vancouver Housing Corporation - 21