PEEL HOUSING CORPORATION BOARD OF DIRECTORS

Transcription

1 PEEL HOUSING CORPORATION BOARD OF DIRECTORS AGENDA PHC-9/2016 DATE: Thursday, November 3, 2016 TIME: LOCATION: 8:30 AM 10:30 AM Regional Council Chamber, 5th Floor 10 Peel Centre Drive, Suite A Brampton, ON MEMBERS: F. Dale G. Miles C. Fonseca E. Moore M. Mahoney B. Shaughnessy Chaired by Vice-President Miles 1. DECLARATIONS OF CONFLICTS OF INTEREST 2. APPROVAL OF MINUTES 2.1. Minutes of the Board of Directors (PHC-8/2016) meeting held on October 6, APPROVAL OF AGENDA 4. DELEGATIONS 4.1. Mohamed Bhamani, Senior Manager, KPMG LLP, Regarding the Twin Pines Project 5. REPORTS 5.1. Update on Board Directed Action Items for the Peel Housing Corporation (For information) 5.2. Peel Living 2017 Budget Presentation by Janice Sheehy, Acting General Manager and Dave Bingham, Treasurer, Peel Living

2 PHC-9/2016 Board of Directors Agenda -2- Thursday, November 3, COMMUNICATIONS 7. GENERAL MANAGER'S UPDATE 8. IN CAMERA MATTERS 8.1. Advice that is subject to solicitor-client privilege, including communications necessary for that purpose (Oral) 9. OTHER BUSINESS 10. NEXT MEETING Thursday, December 1, 2016, 8:30 a.m. - 9:30 a.m. Regional Council Chambers, 5th Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A Brampton, Ontario 11. ADJOURNMENT

3 PEEL HOUSING CORPORATION BOARD OF DIRECTORS MINUTES PHC-8/2016 The Board of Directors of Peel Housing Corporation met on October 6, 2016 at 8:32 a.m., in the 5 th Floor Boardroom, 10 Peel Centre Drive, Suite A, Brampton. Directors Present: F. Dale, via teleconference; C. Fonseca; M. Mahoney; G. Miles; E. Moore; B. Shaughnessy Directors Absent: Nil Also Present: D. Szwarc, Chief Administrative Officer ; J. Sheehy, Commissioner of Human Services, J. Arcella, Deputy Treasurer, P. O Connor, Corporate Counsel; K. Lockyer, Regional Clerk; A. Macintyre, Corporate Secretary; C. Thomson, Deputy Corporate Secretary; M. Sodiya, Acting Legislative Assistant Chaired by Vice-President Miles 1. DECLARATIONS OF CONFLICTS OF INTEREST - Nil 2. ADMINISTRATIVE MATTERS 2.1. Resolution to Present a By-law for Enactment Regarding Quorum Requirements of the Peel Housing Corporation Board of Directors Meetings Moved by Director Fonseca, Seconded by Director Mahoney; Whereas the Ontario Business Corporations Act requires that, at a minimum, two-fifths of the members of the Board of Directors constitute quorum; Therefore be it resolved, that a By-law to amend By-law , being a by-law relating generally to the conduct of the business and affairs of Peel Housing Corporation (PHC), by amending the quorum requirement for PHC Board of Directors meetings to be five members, be presented for enactment. Carried * See text for arrivals See text for departures - 1 -

4 PHC-8/2016 Thursday, October 6, 2016 Item 9.1 was dealt with. 9. BY-LAWS 9.1. By-law : A By-law to amend By-law relating generally to the conduct of the business and affairs of Peel Housing Corporation. Moved by Director Moore, Seconded by Director Shaughnessy; That the by-law listed on the Peel Housing Corporation agenda, being By-law , be approved. Carried Director Dale concluded his participation via teleconference at 8:37 a.m. and the remainder of the meeting was conducted in the Council Chamber Removal of General Manager Moved by Director Moore, Seconded by Director Fonseca; That Shadrack Mwarigha be removed as General Manager, Peel Housing Corporation, effective September 19, Resignation of Peel Housing Corporation Directors Moved by Director Moore, Seconded by Director Fonseca; Carried That the resignation of the following four Peel Housing Corporation Directors be accepted: D. Austin; S. Elias; R. Mendis; J. Mirza. Carried Additional Items Items 2.4 and 2.5: 2.4. Peel Housing Corporation Signing Officers Moved by Director Fonseca, Seconded by Director Mahoney; That the Corporate Secretary and the Deputy Corporate Secretary be appointed and designated as signing officers of the Peel Housing Corporation Carried

5 PHC-8/2016 Thursday, October 6, Responsibilities and Authorities of the General Manager Moved by Director Moore, Seconded by Director Fonseca; That the responsibilities and authorities of the General Manager be fulfilled by Janice Sheehy, the Commissioner of Human Services, on an Acting basis, at the pleasure of the Board. Carried APPROVAL OF MINUTES 3.1. Minutes of the Board of Directors Meeting (PHC-7/2016) meeting held on September 15, 2016 Moved by Director Shaughnessy, Seconded by Director Mahoney; That the September 15, 2016 Peel Housing Corporation (PHC-7/2016) Board of Directors Meeting minutes be approved. Carried APPROVAL OF AGENDA Moved by Director Fonseca, Seconded by Director Mahoney; That the agenda for the October 6, 2016 Peel Housing Corporation (PHC-8/2016) Board of Directors Meeting be approved. Carried DELEGATIONS 5.1. Marlyn Addai, President, Cedar Grove Residents Community Corporation, Regarding the Twin Pines Project Received Marlyn Addai, President, Board of Directors, Cedar Grove Residents Community Corporation, provided an overview and history of the Cedar Grove community. She highlighted the stress to residents related to the community s uncertain future, noting that while residents own their homes, the land is rented and many residents still have mortgages or collateral loans. She invited the Board of Directors, Commissioner of Human Services and KPMG Consultants to tour the community in order to gain a better understanding of what the residents stand to lose

6 PHC-8/2016 Thursday, October 6, Dan Ferguson, Partner, Weir Foulds LLP, Regarding the Twin Pines Project Received Dan Ferguson, Partner, Weir Foulds LLP, stated that the failure to extend the security of tenure provision and the proposal for redevelopment of the park has created great social and economic disruptions to the residents and that any redevelopment of Twin Pines must provide equivalent housing and security of tenure to members; preserve investments and compensate members for losses; and, address the social and economic impact and needs of residents. Dan Ferguson reaffirmed the commitment of the Cedar Groves Residents Community Corporation to work cooperatively with Peel Living and the expectation that Peel Living s legal obligations with respect to security of tenure will be performed in full. Director Fonseca stated that as a Peel Housing Corporation Director and the Regional Councillor for the area, she is fully committed to continue working with residents to ensure their concerns are addressed and that Cedar Grove residents remain engaged going forward Mohamed Bhamani, Senior Manager, and Will Lipson, Engagement Partner, KPMG LLP, Regarding the Twin Pines Project Received Denise Occhipinti, Project Manager, Office of System Integration, introduced the following representatives from KPMG: Mohamed Bhamani, Project Lead and Will Lipson, Engagement Partner, who presented on the Twin Pines Project. Mohamed Bhamani provided an overview of the three key phases associated with the Twin Pines Redevelopment Project: Project Definition, Transaction Implementation and Project Delivery. He explained that the approach to defining the redevelopment project is to focus on the desired outcomes and identify the total public value. The total public value is a set of criteria by which to assess the business case and preferred development option that considers matters such as the overall public good for Peel Living, the residents of Twin Pines and the surrounding community. Once a direction is chosen and a business plan approved, the project will move to phase two which is the implementation of the commercial transaction, such as entering into a partnership with a developer to achieve the service delivery model. Phase two is expected to take the project into late Phase three will begin once a commercial transaction is completed and the partner is selected for the execution of the site development in order to achieve the total public value outcomes. Denise Occhipinti confirmed that Twin Pines residents will be engaged at key intervals and she recognized the need for ongoing communication with stakeholders throughout the course of phase one. Development of the Communication Strategy and Engagement Plan will describe the approach to engaging with each of the stakeholders and include key messages and timelines. Stakeholder engagement activities will commence in the coming weeks and continue throughout the development of the framework and business case, which will inform the recommendations to be delivered in June

7 PHC-8/2016 Thursday, October 6, 2016 Director Fonseca requested that meetings with Twin Pines residents be held at Twin Pines and that efforts continue to be made to address the residents challenges throughout the project. In response to a question from Vice-President Miles, Mohamed Bhamani confirmed that KPMG would not be repeating the survey conducted by Planning Alliance but would seek to gain a better understanding of the responses that were received. 6. REPORTS 6.1. Affordable Housing Program Update (Oral) Received Janice Sheehy, Commissioner of Human Services and Acting General Manager, Peel Housing Corporation (PHC), provided clarification on how reports to Regional Council on the Affordable Housing Program relate to the PHC Board. She noted that Regional Council allocated $32 million to PHC for the support of regeneration projects on existing lands, as well as, the creation of new affordable housing. Staff are now proceeding with an invitational Request for Proposal (RFP) to the 21 respondents to the Request for Expressions of Interest Vera M. Davis Performance Management System Report 6.3. Semi-Annual Financial Report - June 30, 2016 (Unaudited) Received Received Councillor Moore requested that the format of future semi-annual financial reports be simplified for ease of understanding. The Chief Administrative Officer suggested that staff provide a brief presentation of highlights to accompany such reports in the future. 7. COMMUNICATIONS - Nil 8. GENERAL MANAGER'S UPDATE - Nil 9. BY-LAWS 9.1. By-law : A By-law to amend By-law relating generally to the conduct of the business and affairs of Peel Housing Corporation. This item was dealt with under Resolution

8 PHC-8/2016 Thursday, October 6, IN CAMERA MATTERS The Board of Directors of Peel Housing Corporation opted not to move In Camera Closed Session Report of the Peel Housing Corporation Board of Directors Meeting (PHC 7/2016), held on September 15, 2016 Received OTHER BUSINESS - Nil 12. NEXT MEETING Thursday, November 3, 2016, 8:30 a.m. - 10:30 a.m. Regional Council Chamber, 5th Floor Regional Administrative Headquarters 10 Peel Centre Drive, Suite A Brampton, Ontario 13. ADJOURNMENT The meeting adjourned at 9:33 a.m. Vice-President Secretary - 6 -

9 5.1-1 REPORT Meeting Date: Peel Housing Corporation For Information DATE: October 26, 2016 REPORT TITLE: FROM: UPDATE ON BOARD DIRECTED ACTION ITEMS FOR THE PEEL HOUSING CORPORATION Janice Sheehy, Acting General Manager, Peel Housing Corporation OBJECTIVE To provide a status report to the Peel Housing Corporation Board with respect to Board directed action items. REPORT HIGHLIGHTS The Peel Housing Corporation (PHC) Board was restructured in 2014, and began its new term at the start of Staff have reviewed the Peel Housing Corporation Board minutes for 2015 and 2016 and have noted outstanding and completed action items. The attached listing will form the basis of a work plan that includes recommended priorities, deliverables and timeframes. The work plan will also include the implementation of the recommendations of the Peel Housing Corporation Review presented at the November 3, 2016 meeting. The work plan will be presented to the Board at the February 2, 2017 meeting. DISCUSSION The Peel Housing Corporation Board was restructured in 2014 to operate as a policy board and included six representatives chosen from Regional Council and five citizen members. The new Board began its term at the start of On September 26, 2016, the four standing citizen members of the Board tendered their resignations. At the Board meeting on October 6, 2016, the current Board members revised the by-laws to reflect a change in quorum to five members. This was necessary to ensure the ongoing and effective functioning of the Board and to achieve continued progress on the priorities of the organization. As such, it is timely to review the minutes and note outstanding and completed action items. Appendix I provides a listing of items. Staff will report to the March 2, 2017 meeting with a detailed work plan that includes recommended priorities, deliverables and timeframes of the attached outstanding action items.

10 5.1-2 UPDATE ON BOARD DIRECTED ACTION ITEMS FOR THE PEEL HOUSING CORPORATION CONCLUSION In light of the recent changes to senior management of Peel Living and the composition of the Peel Housing Corporation Board, it is timely to review the actions of the last two years and report back on a status of outstanding and completed work. A work plan will be presented to the Board at the March 2, 2017 meeting. Janice Sheehy, Acting General Manager APPENDICES Appendix 1 PHC Outstanding Items For further information regarding this report, please contact Janice Sheehy, Commissioner of Human Services/Acting General Manager, Peel Housing Corporation, ext. 4939, janice.sheehy@peelregion.ca - 2 -

11 5.1-3 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation Peel Housing Corporation List of Outstanding/Ongoing Items Date Item Status PHC March 5, 2015 PHC April 2, 2015 PHC April 2, 2015 PHC May 7, 2015 PHC May 7, 2015 That the PHC positions of General Manager, Treasurer, Deputy Treasurer, Corporate Secretary, and Deputy Corporate Secretary, be reviewed with the Board in one year s time. President Palleschi directed that the issue of Twin Pines become a standing item of PHC Board Agendas, so the Board can stay involved in the process. Mary Jo MacCrae, Manager, Housing Operations and Tenancy Management provided the Board with an update on the recent incidents that occurred at Queen Frederica. She reported that staff did follow-up immediately and have found that this was an isolated incident. Director Dale suggested that staff request the Chief of Peel Regional Police come to a future Board meeting to discuss protocol when an incident such as the one at Queen Frederica occurs, and explain how best staff can work with them during a crisis. Carolyn Kearns, Consultant, provided the Board with information regarding effective notfor-profit board best practices. President Palleschi informed staff that a future session on development and its related costs would be of great value to the Board. Director Fonseca stated that AMO has organized a housing working group of various stakeholders and suggested that staff look at inviting this group to speak to the Board on the topic of advocacy for increased housing funding to the higher levels of government. In progress will form part of the governance model review. In progress. November 5, 2015: Brian Bowen, Senior Planner, planningalliance, provided the Board with information related to the progress made at the Twin Pines site in Mississauga. January 2016 further Twin Pines updates provided to Board. March 3, 2016 Updates provided to Board. April 7, 2016 Updates provided to Board. September 15, 2016 Reports provided. October 6, 2016 Delegations. No action taken. In progress discussions in early 2016 have further informed the matter of development and potential sources of funding. No action taken.

12 5.1-4 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation PHC May 7, 2015 Date Item Status M.S. Mwarigha stated that engagement with the Cedar Grove Board is going well, and the residents seem open to providing their input into the long-term redevelopment of the site. In progress see June and September 2016 reports. PHC May 7, 2015 PHC June 4, 2016 PHC June 4, 2015 PHC September 3, 2015 PHC October 1, 2015 M.S Mwarigha introduced the Business Transformation Project. He stated that staff is looking to engage with the Board in 3 areas: governance, financial and asset viability, and tenant and community experience. He suggested the Board appoint certain members to be advisors to staff on each of the three major areas. While volunteer Directors were chosen for the areas of governance, and tenant and community experience; it was agreed the entire Board of Directors would be engaged on the topic of financial and asset viability. Tim Welch Consultants provided a summary of a report that went to the Board in 2014, outlining options for PHC to return to full financial viability. He stated that any viability strategy needs to recognize the unlikely possibility that upper levels of government will provide significant funding in the future, and rather PHC needs to think about options that can make it more self-sustainable in the long term. Councillor Miles encouraged staff to investigate and test ideas popular in other regions such as the Scotland where similar reinventions of the housing provider system have occurred due to shrinking investment by the upper level of government. M.S. Mwarigha advised that a report would be coming to the Board later this year on a Board expense policy to be approved. Director Moore directed staff to provide members with a list of community agencies that Peel Living is currently working with. Director Austin inquired if staff had noticed any trends occurring in arrears over the years. M.S. Mwarigha stated that this information would be included in the upcoming budget report. In progress - selected Directors have been engaged in specific projects, the entire Board has been updated on the Financial Viability work. In progress other models continue to be investigated through the Financial Viability work. Incomplete. Incomplete - Subsequent General Manager updates provided some information about the community agencies Peel Living works with. No action taken.

13 5.1-5 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation PHC October 1, 2015 Date Item Status M.S. Mwarigha provided updates regarding several phases of the Business Transformation Project currently underway. He stated that consultants have begun work on the Service Model Review and Financial Viability phases and will report back to the Board later in the year; while the Tenant and Community Value Model update is likely to be ready in the new year. In progress - December 22, 2015 REPORT TITLE: PROGRESS UPDATE ON FINANCIAL VIABILITY WORK January Ray Drost, Senior Vice President, Transaction Real Estate, Ernst and Young provided an update on the financial viability project for Peel Housing Corporation (PHC). He provided details on how E&Y collected information related to all housing sites; how they would be valuating each site as an income-producing asset; and details regarding the six typologies they consider for increasing revenue and maximizing value at each site. Director Moore emphasized that the final recommendations should take into account the overall social benefit to the community surrounding housing sites, not just each site individually. March 3, 2016 Further updates provided to Board. April 7, 2016 Updates provided to Board. June 2 nd meeting Updates provided. Financial Viability likely to have a final report and presentation for the September 2016 Board meeting. September 15, 2016 meeting high level update. PHC November 5, 2015 In response to Directors questions regarding the length of time required before reviewing a service agreement, David Szwarc suggested that five years would be best in that it provides stability in which to judge what services are still useful to the Board. Directors also provided feedback related to: the need for clarity of how long a Director sits on the Board before needing to be reappointed; a consecutive term limit to ensure there is change on the Board; the difficulty in obtaining quorum for the months immediately after an election while the Board waits for new Councillor representation; and a need to keep remuneration status equal for all Directors. David Szwarc stated that answers to these questions will be brought back to the next scheduled Board meeting; before the final Direction is presented to Regional Council as Shareholder along with a completed services agreement, to be finalized approximately over the next three months. In progress - February 23, 2016 REPORT TITLE: REVIEW OF THE SHAREHOLDER DIRECTION AND SERVICES AGREEMENT BETWEEN THE REGION OF PEEL AND PEEL HOUSING CORPORATION - To provide a review of the Shareholder Direction, Services Agreement and financial management alignment between the Region of Peel and Peel Housing Corporation. Documents remain in draft.

14 5.1-6 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation PHC-1/ January 7, 2016 Date Item Status Director Moore stated that any new advocacy positions brought before the Board should be specific to the Region of Peel and the local circumstances of what is required for housing. No action taken. PHC-2/2016 February 4, 2016 PHC-3/ March 3, 2016 PHC-3/ March 3, 2016 PHC-4/2016 April 7, 2016 PHC-5/2016 May 5, 2016 PHC-5/2016 May 6, 2016 PHC-6/2016 May 6, 2016 That a smoke-free policy be developed and brought back to the PHC Board for approval as the first phase of the PHC Healthy Homes Initiative. That PHC explore and analyze the feasibility of collaboration with Martinway Contracting Ltd. regarding a proposal for the development of new affordable rental housing units in the City of Brampton, in response to the Region of Peel s RFP P (New Affordable Rental Housing Development), including collaboration by means of making a joint proposal in response to the RFP; And further, that the analysis with recommendations including the details of any proposed collaboration be presented to the Board of Directors of PHC at the April 7, 2016 Board meeting. Director Moore supported the idea of staff reporting back to the Board on a possible partnership, and stated that other providers may now come forward to the Board with similar proposals, and staff should be prepared to manage future requests when they report back. Director Dale suggested that the Peel Regional Police delegate to a Board meeting about security around Townhouse developments, specifically to Police patrols on bicycles. Christine Pacini, SHS Consulting, provided an update of the work regarding a PHC Tenant and Community Value Model and Strategic Plan. She outlined the objectives of the model, expected outcomes and the tasks to completion. Vice-President Miles requested much of the business language in the draft documents be simplified for readers. Staff Arrange for a Governance Workshop That staff work with the Board Ad hoc Committee (Austin, Mendis, Moore) to provide a short list of potential candidate to fill the vacant seat. In progress - See PHC Report presented to the board on the Healthy Homes Initiative. Follow up action is proceeding with the Health Department as the lead. In progress - Funding stream established through a report to Regional Council on July 7, 2016, REPORT TITLE: A NEW PLAN FOR HOUSING INVESTMENT. Update provided to the Board at the October 6, 2016 meeting. In progress see above No action taken. In progress. To be rescheduled. On hold.

15 5.1-7 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation Date Item Status PHC-7/2016 September 15, 2016 Update on Financial Viability (Ernst & Young) In progress - draft report submitted to Management in June awaiting feedback for completion. PHC-7/2016 September 15, 2016 PHC-7/2016 September 15, 2016 PHC-7/2016 September 15, 2016 PHC 7/2016 September 15, 2016 Update on Service Model Review (SHS Consulting) Both Financial Viability (E&Y) and Service Model Review (SHS) Report requested on the Peel Housing Corporation how staff is supported with dealing with tenants that have mental health challenges. Report requested on the Annual Income Verification process and strategies to deal with adult children. In progress - draft report submitted awaiting feedback for completion. In progress both are elements of tenant and community model and strategy plan. In progress consulting with on-site staff and exploring the training and supports that are available. In progress - report will include recommendations for the implementation of findings in the SHS Consulting Review done in Note however that the Housing Services Act legislates subsidy requirements related to occupancy. There is no local flexibility to make changes.

16 5.1-8 Appendix I Update on Board Directed Action Items for the Peel Housing Corporation Peel Housing Corporation List of Completed Items Date Item Status PHC June 4, 2015 PHC June 4, 2015 PHC September 3, 2015 PHC November 5, 2015 PHC-3/ March 3, 2016 PHC-4/2016 April 7, 2016 PHC-4/2106 April 7, 2016 PHC-6/2016 June 2, 2016 PHC-6/2016 June 2, 2016 M.S. Mwarigha advised that a report would be coming to the Board later this year on a tenant survey currently being administered. Mary-Jo MacCrae, Manager, Housing Operations and Tenancy Management advised the Board that a report would be coming in the fall regarding an update on insurance claims for fires that have occurred in Peel Living buildings for The Board directed staff to seek a new appointee for the Board drawn from Regional Council at the next meeting of the Shareholder. Director Shaughnessy asked staff to report back to the Board regarding adopting a policy on tobacco use in Peel Living buildings. Director Shaughnessy asked that any proposal for the site give consideration to providing recreational facilities and amenities on site. In response to a question from Director Shaughnessy, M.S. Mwarigha undertook to investigate enhanced security measures such as panic buttons in hallways and parking lots. Connect For Success Internet through Rogers. That staff be authorized to enter into negotiations with KPMG LLP with the intent of forming a firm contract for the provision of services as set out within RFP # P related to leading the Twin Pines Community Redevelopment Project. Director Dale inquired if staff could provide information related to infrastructure requirements at the Twin Pines site, and any other financial implications, to the next Board meeting. March 29, 2016 REPORT TITLE: SUMMARY OF 2015 PEEL LIVING TENANT SURVEY November 5, 2015 REPORT TITLE: OVERVIEW OF PEEL S HOUSING CORPORATION INSURANT OVERALL COSTS report addressing costs including reference to fire claims Completed December 2015 with appointment of Junaid Mirza January 28, 2016 REPORT TITLE: HEALTHY HOMES: SMOKE-FREE LIVING No response required As a follow-up to questions from the April Board meeting M.S. Mwarigha noted: the cost of panic buttons are likely prohibitive due to the large infrastructure costs that accompany them, as well as a difficulty in providing a deeper analysis of the recent Tenant Survey due to statistical challenges Board Report approved and initiative implemented October 1, 2016 September 15, 2016 REPORT TITLE: TWIN PINES PROJECT PHASE 1 STRATEGIC OUTCOMES, DELIVERY OPTIONS AND BUSINESS CASE September 15, 2016 REPORT TITLE: TWIN PINES PROJECT FINANCING September 15, 2016 REPORT TITLE: TWIN PINES INFRASTRUCTURE & OPERATIONAL STATUS REPORT

17 5.2-1 REPORT Meeting Date: Peel Housing Corporation DATE: October 27, 2016 REPORT TITLE: FROM: PEEL LIVING 2017 BUDGET Janice Sheehy, Acting General Manager, Peel Living David Bingham, Treasurer, Peel Living RECOMMENDATION That the 2017 Operating Budget with total revenue of $98.5 million and total expenditure of $90.1 million before Reserve transfers, as identified in Appendix I of the 2017 Budget Document, be approved; And further, that the net transfers to reserves of $8.4 million as identified in Appendix I of the 2017 Budget Document, be approved; And further, that the 2017 Capital Budget for Peel Living for a total of $13.9 million for State of Good Repair (SOGR) items of high-need nature, as identified in Summary I of the 2017 Budget Document, be approved; And further, that the Acting General Manager and Treasurer of Peel Living be authorized to request, negotiate, settle the terms of, and execute on behalf of Peel Living, in accordance with the Financial Control By-Law, loan agreements with the Region of Peel in its capacity as Service Manager, in an amount up to and not exceeding $7.5 million for building renewal, along with such ancillary agreements and documents in furtherance of such loans as they may deem appropriate; And further, that the Treasurer of Peel Living be authorized to establish in 2016, one new working fund reserve and one new replacement reserve for Peel Living properties that have reached their end of operating agreements; And further, that the Treasurer be authorized to draw from the Working Fund Reserves as necessary to finance capital expenditures to maintain the financial flexibility of the Corporation.

18 5.2-2 PEEL LIVING 2017 BUDGET REPORT HIGHLIGHTS The 2017 budget includes operating revenues of $98.5 million and expenditures of $90.1 million, before reserve transfers Budgeted net reserve transfers are $8.4 million an increase of $0.8 million from 2016 The 2017 Capital Budget of $13.9 million for State of Good Repair (SOGR) is funded by: o a $6.4 million draw from Peel Living reserves; and o $7.5 million in Service Manager loans DISCUSSION The 2017 budget document (attached as Appendix 1) includes the operating and capital budget for the Peel Living-owned buildings only; the budget for the ROP-owned buildings will be part of the Region of Peel budget as of The Peel Living 2017 budget is benefiting from increased rent revenues and lower debt-related costs. These additional revenues and cost savings are helping to partially offset inflationary pressures. The net reserve contributions have increased by $0.81 million compared to the 2016 budget. The reporting on capital projects includes updates on the existing approved capital in addition to the new capital being requested Operating Budget Overview The 2017 operating budget includes revenues of $98.5 million and net expenditures of $90.1 million that result in an $8.4 million net reserve contribution. The following chart summarizes Peel Living s 2017 operating budget Proposed 2016 Approved 2016 Projection (As at Budget Budget Change % Change % 2017 vs vs (In $ 000) Budget PHC PHC Budget June 30, 2016) Net Revenues $98,470 $98,037 $97,861 $ % Net Expenditures* $90,095 $90,472 $89,906 ($377) -0.42% Net Reserve Contribution $8,375 $7,565 $7,955 $ % (* Includes minor capital expenditures) The year over year budget increases result in a surplus of $0.81 million as a result of the following: Revenues Revenues increase by $0.43 million or 0.44% over 2016 due to: o $1.36 million increase in rental revenue from annual rent adjustments of 2.0% for the majority of Peel Living sites and a shift in units from Rent Supplement to Market and Rent Geared Income (RGI) targets. Revenues are offset by: o $0.71 million decrease in non-rental revenues, mainly due to the removal of energy rebates ($0.6 million) related to LED lighting retrofits (received in 2016) and rooftop revenue reductions, - 2 -

19 PEEL LIVING 2017 BUDGET o $0.22 million decrease in Service Manager subsidies in the various programs under the Housing Services Act, 2011 comprised of: o $0.6 million decrease in Program 56.1 mainly due to lower mortgage costs and sites with expired Operating Agreements (total of 5 sites) o $0.4 million increase in the Federal/Provincial/Unilateral and Peel Region Housing Corporation program subsidies due to benchmarked adjustments and increased costs. Expenditures Expenditures decrease by $0.38 million or 0.42% over 2016 as a result of the following budget drivers: Increases: o $1.34 million increase in utility costs driven by: o Electricity: A $2.09 million increase in expenditures was due to a higher rate. However, this was offset by a decrease in consumption from lighting retrofits, which were in turn offset by $1.08 million capital repayment reduction for energy retrofits (almost all costs were acknowledged in 2016). o Natural Gas: $0.07 million increase due higher rate, offset by lower consumption o Water: $0.26 million increase due to increases in both rates and consumption o Other: $0.36 million administration increase due to higher charge backs from the Region of Peel, net of decrease in salary and benefits for superintendents and cleaners $0.06 million inflationary increase for Building Services and Systems Decreases: o $1.76 million decrease in mortgages and loans as mortgages expire and renewals are at lower interest rates, net of $0.14 million increase in Service Manager loan payments (three sites have reached the End of the Operating Agreement) o $0.23 million decrease in insurance costs due to lower premiums o $0.15 million decrease in bad debt (fewer tenant move outs with arrears), salaries and a property tax adjustment (due to a newly-exempt site) Transfer to/from Reserves The 2017 proposed budget results in a surplus, before reserve transfers, of $8.38 million which is $0.81 million higher than The increase is a net result of a $0.2 million decrease to capital reserve contributions and a $1.01 million increase to the working fund reserve contributions. It is critical that the corporation continue to generate surpluses and maximize discretionary reserve contributions. Any surpluses generated are transferred to capital and working fund reserves to support long-term sustainability. The work previously completed by Tim Welch Consulting and the work currently under way with Ernst & Young will lead to financial performance improvements in both the short-term and long-term

20 5.2-4 PEEL LIVING 2017 BUDGET ( in millions) 2017 Budget 2016 Budget Year over Year Change Mandatory Replacement Reserve Contribution $ 5.32 $ 5.25 $ 0.07 Discretionary Replacement Reserve Contribution (0.28) Minor Capital Reserve Draw (1.33) (1.33) - Net Replacement Reserve Contribution $ 6.29 $ 6.50 $ (0.21) Net Working Fund Reserve Contribution Total $ 8.37 $ 7.56 $ 0.81 Furthermore, in 2016 two Peel Living properties, Arcadia Glen and Springmill Terrace, have reached their end of operating agreements. In 2017, three more Peel Living properties will also see the end to their operating agreements. In order to accurately track the performance of these buildings, Peel Living recommends that a new working fund reserve and new replacement reserve be established in 2016 for properties that have reached their end of operating agreements. These two reserves will provide transparency and accountability regarding the surpluses and capital contributions generated by these respective buildings Capital Budget Overview The 2017 capital budget of $13.9 million for state of good repair includes funding for design, investigation work, and purchasing charges. It will be funded as follows: $6.4 million from capital reserves and $7.5 million from the Service Manager as a loan request. Peel Living will seek approval from the Service Manager for an infrastructure loan up to a maximum of $7.5 million. Service Manager capital loans are payable over 15 years commencing one year after the property s mortgage end date. Service Manager loans are only requested and assigned to buildings that are able to repay the loan under the agreed terms, and the loans will be reported to both the Board and Council in accordance with the Region s policy. In the July 7, 2016 Regional Council report titled A New Plan for Housing Investment, a notational funding allocation of $32 million for new development was identified for Peel Living. This funding is to be used to support regeneration projects on existing land and/or the creation of new affordable housing units for applicants from the Centralize Wait List. Staff has set a target to create a minimum of 100 new units from this funding. Peel Living will be required to provide the Service Manager with a detailed development plan, which will include financial pro formas for review and approval by the end of The overall 2017 capital budget will also be augmented by an additional $12.7 million in capital work-in-progress being carried forward from prior-year capital budgets and minor capital budget of $1.3 million. The total available capital, including the carry-forward, minor capital and new requests, is $28 million

21 5.2-5 PEEL LIVING 2017 BUDGET Classifications of Capital Plan Carry- Forward from Prior Years (in $'000) 2017 Capital Budget (in $'000) Total Capital in 2017 (in $'000) State of Good Repair $ 12,707 $ 13,933 $ 26,640 Minor Capital - 1,334 1,334 Available Capital in 2017 $ 12,707 $ 15,267 $ 27, Capital and Working Fund Reserves Forecast As per the following chart, over the past four years ( ), replacement reserve contributions have continued to increase steadily as per the prescribed legislated amounts. However, the cumulative capital requirements (repair and replacement backlogs) continue to outpace the level of reserve contributions resulting in depleted capital replacement reserves. The total discretionary and working fund contributions continue to be lower than 2013 levels. This is as a result of increased operational expenditures and the reduction of some subsidies as mortgage rates drop and sites reaching their end of operating agreements. In 2017, net working fund contributions will rise, while discretionary contributions will remain relatively flat. 4 Year Reserve Contribution History & 2017 Budget 6,000 5,000 $ in thousands 4,000 3,000 2,000 1,000 - Contribution To Replacement Reserves Net Contribution To Working Fund Reserves Discretionary Contribution to Replacement Reserves -1, Actuals 2014 Actuals 2015 Actuals 2016 Projection 2017 Budget 4,974 5,077 5,173 5,251 5,329 1, ,593 1,275 2,078 4,114 2,067 3,223 2,494 2,301 * Contribution to Replacement Reserves does not include minor capital draws of $1.33 million - 5 -

22 5.2-6 PEEL LIVING 2017 BUDGET CONCLUSION The 2017 proposed Budget for Peel Living continues to manage risks within the resources available while simultaneously minimizing the impacts to the capital reserves. Work on a longterm viability strategy is underway and will be presented to the Board in early Janice Sheehy, Acting General Manager, Peel Living David Bingham, Treasurer, Peel Living - 6 -

23 5.2-7 PEEL LIVING 2017 BUDGET APPENDICES Peel Living 2017 Budget Document o Appendix I 2017 Operating Budget Pressures o Appendix II 2017 Capital and Working Fund Reserve Forecast o Summary I 2017 Capital Budget by Funding Sources For further information regarding this report, please contact David Bingham, Treasurer, Peel Living, Ext.4292, dave.bingham@peelregion.ca. Authored By: John Arcella - 7 -

24 5.2-8 Peel Living 2017 Budget Document

25 5.2-9 Table of Contents Section I. Existing Services and Service Levels Who we are and who we serve Existing Services and Service Levels Key Initiatives in Section II. Issues and Trends... 3 Section III Business Focus... 4 Section IV Operating Budget Operating Budget Overview Operating Budget... 5 Section V Capital Budget and Reserves Capital Budget Overview Existing and Carry-forward Capital Projects for Year Capital Plan Capital and Working Fund Reserves Forecast... 9 Section VI. Staffing... 9 Section VII. Future Outlook... 9 Section VIII. Disclosure of 2017 Budget Risks and Key Program Assumptions Section IX. Useful Links Appendix I Operating Budget Pressures Department Summary Appendix II Capital and Working Fund Reserve Continuity Schedule Peel Living Summaries... 13

26 Section I. Existing Services and Service Levels 1. Who We Are and Who We Serve Peel Housing Corporation or Peel Living, is a Region of Peel owned social housing provider mandated to provide affordable housing to low and moderate income families and individuals. Peel Living is one of 48 housing providers under the oversight of the Region s Service System Manager. Peel Living has a diverse building stock and service management portfolio, including operation of a number of Region of Peel buildings. Peel Living 2017 Budget Document Peel Living s services are provided through the Housing Operations and Management Services (HOMS) Division in the Human Services Department. The organizations mission is to provide safe, well maintained properties that enhance opportunities for advancing the overall quality of life of its tenants. The demographic make-up of Peel Living s housing portfolio, relative to the Region s population make-up, is highly populated with children and independent living elderly people. The integrated Human Services context of Peel Living s services combines access to housing and social supports to its demographically and culturally diverse tenant population. 2. Existing Services and Service Levels The key services delivered by HOMS to Peel Living are provided by the following units: General Management Office, Housing Operations and Tenancy Management and Technical Supports. General Management Services The General Manager (Peel Living) is accountable for the management of the Corporation, and including oversight of the overall service model to its tenants. The service model is defined by the various program funding requirements and the direction outlined by the Corporation s Board of Directors and the Region of Peel as the sole shareholder. Working within the framework of a new governance structure and Board, the General Manager will work with the Board of Directors to develop the Corporation s future Strategic Plan for at least the coming decade. Housing Operations and Tenancy Management This unit is led by two Managers of Housing Operations and Tenancy Management who are accountable for the day to day housing services and operations of Peel Living. This unit also ensures that all relevant legislation and by-laws are upheld, while ensuring a high standard of service to tenants and clients. The key service areas include: tenancy management services ensuring vulnerable and at risk tenancies are supported directly or indirectly in partnership with community agencies to enable successful tenancy outcomes. tenant empowerment to enable social mobility, tenant engagement, and connection to neighbourhoods and the larger community. cost management strategies and revenue maximization. Technical Supports The Technical Supports Unit provides expertise in the areas of: Capital planning development, building services oversight and budget management Preventative maintenance, vendor negotiations and performance and monitoring of service standards (over 330 current contracts, vendors, commodities/services and POs) Performance Management and development of best business practices for HOMS 1

27 Peel Living 2017 Budget Document The majority of Technical Support services are performed in partnership with Region of Peel Divisions including Real Property Asset Management (RPAM), Corporate Asset Management (CAM) and Finance. Technical Support staff work with a range of service contractors and government compliance agencies, including municipal fire departments, the Technical Standards and Safety Authority (TSSA), and the Canadian Standards Association (CSA) to ensure legislative regulatory compliance by Peel Living. 3. Key Initiatives in 2016 Tenant and Community Initiatives Peel Living s customer profile remains stable at 15,618 tenants, primarily made of low and moderate income families and independent living seniors, with a healthy mix of 66/34 subsidized to market ratio. Peel Living continues to enhance customer service by providing a unique range of value-added services to tenants as well as opportunities for the success of tenants through partnerships that enhance supports, leadership and community engagement. Highlighted achievements in supporting tenants include: 74 community programs with our partner agencies Successful tenancies initiatives minimizing eviction, achieving an 89% successful tenancy rate through retention strategies based on face-to-face interventions On-site maintenance response rates for non-emergency work orders under the two day benchmark. A 2016 maintenance process review examined our process and will yield improvements as required Technology The Peel Living Tenant Survey in 2015 revealed a growing trend toward tenant use of technology. In 2016 Peel Living responded by enabling tenant self-serve options, through the Regional Housing Technology Initiative (HTI) launch. Tenants now have the ability to log concerns and maintenance issues on-line. Understanding the significance of tenant access to affordable internet, Peel Living worked with Rogers to reach an agreement to offer subsidized tenants a $9.99 internet program. Peel Living continues to explore the development of technology solutions through ongoing work with the Region, the HTI team and external partners. Youth Initiative A continued priority for Peel Living is investing in youth. Our efforts, along with community partners, lead to employment opportunities and relevant experience to support youth including those living in Peel Living Communities. Areas of focus include working with partners such as the Boys and Girls club to employee youth from Peel Living communities to gain job skills, such as, painting our seniors units. Secondly, Peel Living increased our internal hiring of University and College summer students to enhance the curb appeal of our communities. Thirdly, project experiences were provided such as the Human Centered Design project which utilized a mixture of students and staff to gain public input (145 interviews) on the Peel Living experience. Additional tenant feedback is in process through ongoing consultant work. The themes will be rolled into the development of the future strategic plan. 2

28 Peel Living 2017 Budget Document Business Efficiency In February 2016, Peel Living received the TWBA Creative Solutions Award in collaboration with RPAM-Energy Services, FSU, and Purchasing for the LED energy savings work. Peel Living retrofitted 50 properties using creative and innovative methods, while reducing operational costs as well as contributing to carbon reduction. The savings achieved since the first LED installation in 2015 leading up to June 6th 2016 are approximately $0.33 million or 2,965,000 kwh in reduced consumption. These savings and lower consumption rates will be used to offset escalating hydro prices that are forecasted to impact future operating budgets of Peel Living. Business Transformation Project (to update this section) A pivotal initiative, approved by the Board in June 2015, is the Business Transformation Project designed as a strategy to anchor the development of a new long-term Financial Sustainability Plan and a Strategic Plan for Peel Living. The key project areas of focus for the initiative include: To read more about Business Transformation, refer to the annual report presented to the Board back in June Section II. Issues and Trends The challenge for Peel Living and the Region of Peel is the ability to continue to provide housing either by building new units, refurbishments, repairs, and upgrading of existing stock, in a social housing sector environment that faces the ending of traditional funding by Federal and Provincial governments. 3

29 Peel Living 2017 Budget Document Peel Living s own housing stock is aging with escalating operations and building infrastructure costs that are proving difficult to manage within the existing business and financial model. Peel Living requires an alternative business model that is sustainable in the long term. The chart below summarizes key pressures driving the need for transformation: Section III Business Focus Strategic Plan Over the past few years Peel Living has invested in various initiatives, each one contributing to Peel Living s overall future direction. Incorporating all pieces into one plan is essential to creating a clear picture and direction for the transitional year of The components contributing to the strategic plan to be implemented in 2017 include: Current Business Transformation consultant results, as well as the Ernst & Young and TWC report Updated BCA s from the Service Manager Shareholders Directive outlining roles and responsibilities of the organization The new Service Agreement with the Region of Peel Implementation of the Strategic plan, to assist Peel Living s planning and budgeting decisions for the corporation s future social housing requirement, will be the focus for In addition, the Maintenance Review lead by the Region s Real Property Asset Management division, will impact decision making that is imperative to Peel Living moving forward. With the Boards support, Peel Living plans to act on the agreed strategic plan and start implementation in Future Growth With support from the Region of Peel, Peel Living will be exploring new development opportunities to expand the number of affordable housing units within the portfolio. Peel Living is preparing to take full advantage of development opportunities and will be creating a Development Advisor position (through HOMS) to help with this process. The Advisor s work will result in an overall Peel Living Development plan identifying potential redevelopment options as referenced by the consultants in the financial viability recommendations. In brief, 2017 will focus on results and implementation of initiatives that were approved by the new Board in The key focus of 2017 is developing and implementing the new Strategic Plan and long term Financial Plan for the organization to continue as a viable provider of quality housing for the success of tenants. The efforts of staff and Board in 2017 will complete a 4

30 Peel Living 2017 Budget Document milestone of the corporation s transformation and provide clear direction and next steps into the corporation s new future. Section IV Operating Budget Operating Budget Overview The 2017 operating budget is made up of $98.5 million in net revenues and $90.1 million in net expenditures, resulting in an $8.4 million net reserve contribution. The following chart summarizes the 2017 operating budget as compared to the 2016 budget Operating Budget Summary Projection Budget Budget Proposed Approved (As at Change % Change % (In $ 000) Budget PHC PHC Budget June 30, 2016) 2017 vs vs Net Revenues $98,470 $98,037 $97,861 $ % Net Expenditures $90,095 $90,472 $89,906 ($377) -0.42% Net Reserve Contribution $8,375 $7,565 $7,955 $ % (* Includes minor capital expenditures) The following charts provide a breakdown of revenues and expenditures by source. Note: Difference between revenues and expenditures equals the net transfer to reserves of $8.4 million Operating Budget The following is a summary of the 2017 proposed budget changes. Highlighted are the major financial drivers and the financial requirements to maintain existing service levels and to support increasing service demands. Details can be found in Appendix I. Budget changes include: 5

31 Peel Living 2017 Budget Document Revenues Revenues increase by $0.43 million or 0.44% over 2016 due to: o $1.36 million increase in rental revenue from annual rent adjustments of 2.0% for the majority of Peel Living sites and a shift in units from Rent Supplement to Market and RGI (moving towards RGI Target), Offset by: o $0.71 million decrease in non-rental revenues, mainly due to the removal of energy rebates ($0.6 million) related to LED lighting retrofits (received in 2016) and rooftop revenue reductions, o $0.22 million decrease in Service Manager subsidies in the various programs under the Housing Services Act, 2011, mainly comprised of: o $0.6 million decrease in Program 56.1 mainly due to lower mortgage costs and sites with expired Operating Agreements (total of 5 sites) o $0.4 million increase in the FP/Uni and PRHC program subsidies due to benchmarked adjustments and increased costs Expenditures Expenditures decrease by $0.38 million or 0.42% over 2016 as a result of the following budget drivers: Increases: o $1.34 million increase in Utility costs driven by, o Electricity: $2.09 million increase due to higher rate offset by decrease in consumption from lighting retrofit, offset by $1.08 million capital repayment reduction for energy retrofits as almost all costs were acknowledged in 2016 o Natural Gas: $0.07 million increase due higher rate offset by lower consumption o Water: $0.26 million increase due to increases in both rates and consumption o $0.36 million increase in administration increase due to increased charge backs from the Region of Peel, net of decrease in salary and benefits for superintendents and cleaners o $0.06 million inflationary increase for Building Services and Systems Decreases: o $1.76 million decrease in mortgages and loans as mortgages expire and renewals are at lower interest rates, net of $0.14 million increase in Service Manager loan payments (3 additional sites have reached the End of the Operating Agreement) o $0.23 million decrease in insurance costs due to lower premiums o $0.15 million decrease in bad debt (fewer tenant move outs with arrears), salaries and a property tax adjustment (due to a newly-exempt site) Transfer to/from Reserves The 2017 proposed budget results in a net surplus before reserve transfers of $8.37 million, $0.81 million higher than Of the $8.37 million, $6.30 million will be transferred to replacement reserves and $2.08 million to working fund reserves. This results in a decrease of $0.2 million to the capital reserves and an increase of $1.01 million to working fund reserves over 2016 contributions. 6

32 Peel Living 2017 Budget Document It is critical that the corporation continues to generate surpluses and maximize reserve contributions. Any surpluses generated are transferred to capital and working fund reserves to support long-term sustainability. Measures have been initiated to find both operating and capital efficiencies to improve the financial performance. The following chart summarizes the year over year reserve contribution changes. Reserve Contribution Summary 2017 vs Budget ( in millions) Budget Section V Capital Budget and Reserves 2016 Budget Year over Year Change Mandatory Replacement Reserve Contribution $ 5.32 $ 5.25 $ 0.07 Discretionary Replacement Reserve Contribution (0.28) Minor Capital Reserve Draw (1.33) (1.33) - Net Replacement Reserve Contribution $ 6.29 $ 6.50 $ (0.21) Net Working Fund Reserve Contribution Total $ 8.37 $ 7.56 $ 0.81 In 2016, a new Building Condition Assessment (BCA) study was finalized for Peel Living buildings indicating that Peel Living requires $421 million in capital work over the next 10-year cycle, including backlog. BCA studies are based on life-cycle methodologies and do not take into consideration extension of life opportunities and other long-term strategic decisions such as divestment or redevelopment of sites. The capital requirements over the last 10 years have continued to outpace reserve contributions resulting in capital replacement reserves being depleted. Peel Living has focused its 2017 capital budget on the replacement of critical functional components which include projects for safety and compliance, infrastructure, building systems, modernization, and sustainability. Projects are prioritized and existing reserve contributions are used to fund the capital work. Shortfalls in capital funding will be met by the application for loans from the Service Manager (Accessing Capital/Infrastructure Subsidy program) or through Federal/Provincial funding for housing initiatives. A long-term sustainability strategy will be developed as part of the strategic plan to address the larger capital needs and the current state of replacement reserves. The 2017 capital budget is the result of collaborative work between Housing Operations Management Services (HOMS), Real Property Asset Management and Finance. The proposed 2017 capital budget is based on a joint review of the elements identified by the site specific Building Condition Assessments (BCA) plus on-going preventative maintenance data and visual verification of each building by the HOMS team. The actual year in which an item needs to be replaced can be extended through appropriate preventative maintenance, and any extension of the lifespan of the asset reduces the current draw on the replacement reserves. Over the next year, the BCA s will continue to see refinement as replacements approach and the long-term strategic plan is developed for specific sites. It is the intention that these BCA s will continue to inform PHC on its most critical repairs and replacements. 7

33 Peel Living 2017 Budget Document Capital Budget Overview The 2017 capital budget for state of good repair is $13.9 million (not including $1.3 million for minor capital), which is $0.5 million lower than The capital budget includes funding for design, investigation work, and purchasing charges and will be funded as follows: $6.4 million from capital reserves and $7.5 million from the Service Manager as a loan request. Service Manager capital loans are payable over 15 years commencing one year after the property s mortgage end date. Service Manager loans are only requested and assigned to buildings that are able to repay the loan under the agreed terms, and the loans will be reported to both the Board and Council in accordance with the Region s policy. New Development In the July 7, 2016 Regional Council report titled A New Plan For Housing Investment, a notational funding allocation of $32 million for new development was identified for Peel Living. This funding is to be used to support regeneration projects on existing land and/or the creation of new affordable housing units for applicants from the Central Waiting List. Staff have set a target for this funding to create a minimum of 100 new units. Peel Living will be required to provide the Service Manager with a detailed development plan, which will include financial pro formas for review and approval by the end of Existing and Carry-forward Capital Projects for 2017 In addition to the 2017 capital budget, Peel Living will carry forward an estimated $12.7 million of work-in-progress and unused capital budget from prior years. Based on projections, it is estimated that a total of $28 million will be available in 2017 for capital work, including $1.3 million for minor capital. The following chart summarizes the capital to be carried forward, minor capital, and major capital budgets for Classifications of Capital Plan Year Capital Plan Carry- Forward from Prior Years (in $'000) The current capital plan for the 10 years from 2017 through to 2026 is $14 million per year for a total of $140 million, specific to the state of good repair at Peel Living properties. The 10-year capital plan will continue to evolve as PHC reviews the latest BCA data and as the completion of the E&Y Viability project nears. This work will inform a long-term financial strategy anticipated to be completed within the next 6 months. Historically, PHC and Real Property and Asset Management (RPAM) have been able to complete an average of $10 million to $12 million in state of good repair work each year. The interim 10 year capital plan is in line with historical spending, resource and funding capacity. Appendix II forecasts major capital reserve draws of approximately $12.1 million for The Capital Budget (in $'000) Total Capital in 2017 (in $'000) State of Good Repair $ 12,707 $ 13,933 $ 26,640 Minor Capital - 1,334 1,334 Available Capital in 2017 $ 12,707 $ 15,267 $ 27,974

34 Peel Living 2017 Budget Document long-term strategy will identify the ideal level of spending and the resources required to execute the plan Capital and Working Fund Reserves Forecast Peel Living has taken measures over the last 4 years to increase the level of its reserve contributions. Over the past four years, reserve contributions have increased as a result of operational improvements and capital prioritization. However, the capital requirements for certain programs over the last ten years have continued to outpace the level of reserve contributions and the capital replacement reserves have been depleting. For the 2017 fiscal year, PHC will seek another Service Manager Loan of approximately $7.5 million to fund multiple projects at various properties. Appendix II provides the detailed forecast of the capital and working fund reserves, including anticipated loan reimbursements from the Service Manager for capital project work taking place at Peel Living owned buildings. Section VI. Staffing There are no proposed changes in staffing for the PHC sites. superintendents and cleaners only. PHC staffing includes site 2016 Approved FTEs * Proposed Changes in Proposed Total Change % 2017 vs PHC Sites % Region of Peel Sites % Total % Section VII. Future Outlook The following table provides a budget projection for 2017 to 2020 and the forecast assumptions. The 2017 contribution to reserves is $0.4 million lower than forecasted in the 2016 budget mainly due to higher utility and administration costs offset by higher rental revenue. (In $ 000) Budget Forecast 2017 Budget Forecasted in 2016 Budget 2017 Budget 2018 Forecast 2019 Forecast 2020 Forecast Net Revenues $ 97,801 $ 98,470 $ 99,003 $ 99,536 $100,615 Net Expenditures $ 89,013 $ 90,095 $ 89,783 $ 89,110 $ 89,669 Net Contribution to Reserves $ 8,788 $ 8,375 $ 9,220 $ 10,426 $ 10,946 $ Change $ (413) $ 845 $ 1,206 $ 520 % Change -4.7% 10.1% 13.1% 5.0% 9

35 Peel Living 2017 Budget Document Forecast Assumptions: The budget forecast includes the following assumptions: o Rental Revenue increases - 1.8% for 2018, 1.6% for 2019 and 1.8% for 2020 o Loss of subsidies due to end of operating agreements for various sites in 56.1 Program o Subsidy calculated based on existing operating agreements not ending by 2020 o 1.9% increase for operating maintenance costs o 3% increase for insurance o Property tax increases: 3.0% (2018); 3.0% (2019); 3.1% (2020) o Utilities increase for 2018, 2019 and 2020: o Hydro: 2.9%, 1.1%, and 2.8% o Gas: 3.2%, 3.0%, and 2.9% o Water: 5% Section VIII. Disclosure of 2017 Budget Risks and Key Program Assumptions Increasing operational costs in areas such as routine maintenance could put more pressure on capital and working fund reserves as increases in operating costs affects the amount contributed to these reserves The aging nature of Peel Living housing stock is causing our capital repair requirements to outpace available funding Continued assistance from the Service Manager may be required until a long-term financial sustainability plan is developed and implemented. Section IX. Useful Links Peel Living - Region of Peel Housing - Ministry of Municipal Affairs and Housing - Ontario Non-profit Housing Association - The Co-operative Housing Federation of Canada - Housing Services Corporation

36 Peel Living 2017 Budget Document Appendix I PHC-Owned Sites 2017 Operating Budget Pressures - Department Summary 2017 Proposed Budget - PHC 2016 Approved Budget - PHC 2016 Year End Projection (Unaudited) 2017 Budget Variance Better/(Worse) $ % Revenue: Rental Revenue $ 59,760,996 $ 58,401,571 $ 59,009,886 $ 1,359, % Other Revenue 4,959,158 5,670,802 5,604,062 (711,644) -12.5% Government Subsidies Federal Assistance 8,105,627 8,313,322 8,304,643 (207,695) -2.5% Municipal Assistance 25,644,609 25,651,619 24,942,111 (7,010) 0.0% Total Government Subsidies 33,750,236 33,964,941 33,246,754 (214,705) -0.6% Total Revenue 98,470,390 98,037,314 97,860, , % Expenditures: Salaries & Benefits 5,216,119 5,282,627 4,888,669 66, % Building Services & Systems 13,464,752 13,403,215 13,097,618 (61,537) -0.5% Minor Capital 1,333,736 1,333,736 1,065, % Utilities 16,002,510 14,664,012 15,953,866 (1,338,498) -9.1% Administration 9,629,329 9,266,490 9,129,438 (362,839) -3.9% Mortgage, Loans & Depreciation 30,730,777 32,494,187 32,304,745 1,763, % Municipal Taxes 11,900,599 11,918,972 11,623,906 18, % Bad Debt 347, , ,704 60, % Insurance 1,469,145 1,700,205 1,494, , % Total Expenditures 90,094,925 90,471,682 89,906, , % Operating Surplus Before Reserve Transfer $ 8,375,465 $ 7,565,632 $ 7,954,537 $ 809, % Reserves Transfer: Legislated Replacement Reserve Contribution (5,329,437) (5,250,876) (5,250,876) (78,561) 1.5% Transfer from Replacement Reserve for Minor Capital 1,333,736 1,333,736 1,065, % Operating Surplus/(Deficit) $ 4,379,764 $ 3,648,492 $ 3,768,987 $ 731, % Discretionary Transfer of Surplus to Replacement Reserve* (2,301,328) (2,577,399) (2,494,366) 276, % Transfer (to)/from Working Fund Reserves (2,078,436) (1,071,093) (1,274,621) (1,007,343) 94.0% Net Surplus/(Deficit) $ - $ - $ - $ - * Permitted by the Service Manager or Board Directed ** Figures do not include current year unrealized gains or losses on investment held for trading 11

37 Peel Living 2017 Budget Document Appendix II Peel Living Reserves 2017 Reserve Forecast 12

38 Peel Living 2017 Budget Document Summary I Peel Housing Corporation 2017 Capital Budget Programs by Funding Sources ($'000) Project Number Project Name Total Budget Internal Funding SM Loan PL Major Capital 56.1 $ 7,019 $ 1,937 $ 5, PL Major Capital FP/Uni 6,857 4,455 $ 2, PL Major Capital PRHC Total 2017 Capital Budget $ 13,933 $ 6,449 $ 7,484 13

39 Budget Presentation Peel Housing Corporation November 3, 2016

40 PEEL LIVING Agenda: 2017 Budget Planning for Success About Peel Living Focus of Our Work General profile Issues and Trends The Budget Story 2017 Major Budget Drivers 2017 Budget Summary Rental Revenue Breakdown Operating Expenditures 2017 Operating Budget Demands Major Capital Summary State of Good Repair Reserve Status 2013 to 2017 ($ 000 s) Capital Needs Conclusion

41 PEEL LIVING Focus of Our Work o o o Affordable and safe housing Building partnerships to provide supports to tenants Maintaining the investment in our assets Core Mandate: provide affordable and subsidized rental housing in a state of good repair to low and moderate income households in the Region. 3

42 PEEL LIVING General Profile Market Rent, 34% Subsidized Rent, 66% Portfolio Tenant Rent Affordability Market Units Number of Units 2,349* Ratio of average rent to average monthly income is 30.0%** Subsidized Units Number of Units 4,495 Ratio of average rent to average monthly income is 30.0% ** * Excludes Superintendent units (48) and Vacant Units ** Data collected at time of lease signing for RSUP, HA and Mrkt Units 4

43 PEEL LIVING Issues and Trends

44 PEEL LIVING Issues and Trends Aging Stock PHC Buildings by Program and Period of Construction PROGRAM Section 27 Federal Program (15.1) Section 95 Federal Program (56.1) Federal/Provincial Unilateral Peel Regional Housing Corporation (PRHC) Non-Program (PHC-Owned) 6

45 PEEL LIVING 2017 Budget - Major Budget Drivers Revenue mix Inflationary pressures Asset renewal funding 7

46 PEEL LIVING 2017 Budget Summary ($ 000 s) 2017 PHC Budget 2016 PHC Budget 2016 Budget Variance $ % Rental Revenue 59,760 58,401 1, % Other Revenue 4,959 5,671 (712) -12.6% Federal Assistance 8,106 8,313 (207) -2.5% Municipal Assistance 25,645 25,652 (7) 0.0% Total Revenue 98,470 98, % Total Expenditures 90,095 90,472 (377) -0.4% Operating Surplus before Reserve Transfers 8,375 7, % Net Replacement Reserve Contributions* (3,996) (3,917) (79) Discretionary Transfer to Capital Reserves (2,301) (2,577) 276 Transfer (to)/from WF Reserves (2,078) (1,071) (1,007) * Legislated Replacement Reserve Contribution net of Draws to fund Minor Capital Expenditures 8

47 PEEL LIVING 2017 Rental Revenue Breakdown ($ Millions) Total Rental Revenue Budget - $59.7 million 9

48 PEEL LIVING 2017 Operating Expenditures Excluding Reserves ($ Millions) Total Expenditure Budget - $90.1 million Note: Difference between revenue and expenditures equals the net transfer to reserves of $8.4 million 10

49 PEEL LIVING 2017 Operating Budget Demands Expense Type Utilities $ 1, % Admin % Maintenance % Expenditure Increase $ 1, % Offset by: Budget Change ($ 000's) Budget Change (%) Salaries (67) -1.3% Property Tax (18) -0.2% Insurance and Bad Debt (291) -13.8% Loans and Mortgages (1,765) -5.4% Net Expenditure Change (before reserve transfers) $ (377) -0.4% 11

50 PEEL LIVING Major Capital Carry-Forward State of Good Repair Carry-Forward = $12.7 Million 12

51 PEEL LIVING Major Capital 2017 Budget State of Good Repair 2017 Capital Budget = $13.9 Million 13

52 PEEL LIVING Major Capital Total Available for State of Good Repair Total Capital Available for State of Good Repair = $26.6 Million 14

53 PEEL LIVING Stated Capital Needs 15

54 PEEL LIVING Conclusion Peel Living continues: To be a leading housing provider To be a steward of valuable community assets To encourage best practices and innovation Peel Living needs: To develop a long-term sustainable business model To secure its future in the new world of social housing enterprises 16