From prevention to support: our action for long-term social rental housing

Transcription

1 2007 annual report

2 02 From prevention to support: our action for long-term social rental housing Table of Contents 4 Meet the growing needs of social rental housing organisations 6 Chairman's statement 8 Cglls: a double status for a single cause 12 Significant events in Support organisations involved in urban renovation projects 18 Help organisations to be financially stronger and more adapted to the territories 22 Support the development of organisations by a broader role in guarantees 26 Make a supportive and lasting contribution to the financing of social rental housing 30 Financial aid to rise to the challenges of the sector 36 An organization suited to Cglls role

3 03 Since it was first created in December 2000 by the law on solidarity and urban renewal (SRU law), the Social Rental Housing Guarantee Fund or Caisse de Garantie du Logement Locatif Social (Cglls), has seen its missions develop with the law on urban planning and renewal program of August 2003 (Borloo Act). While Cglls remains true to its vocation of guaranteeing the long-term viability of social housing organisations, the ways in which it conducts this mission have changed: henceforth, not only does it provide support to organisations in difficulty but, more and more on a preventive basis, it helps housing providers to maintain their position alongside local authorities. Its global, on-going action makes it a key player in the financing of social rental housing. > Guarantee loans granted by the Caisse des Dépôts et Consignations to social housing providers, in the absence of guarantees from local authorities. > Contribute to the recovery of organisations in difficulty to enable them to fulfil their missions, both in terms of new production and renovation or improving tenant well-being. > Support organisations which invest in improving the quality of housing. > Help organisations to re-structure and merge in order to optimise the management of the social rental housing stock in each housing area. This mission was entrusted to Cglls by the Borloo Act of August 2003 for Hlm organisations and extended to Sem organisations by the law on the National commitment in favour of housing (ENL Act) of July > Contribute to funding the key players of social housing: the Union sociale pour l habitat and its member federations, Sem federation (semi-public company or Sem = société d économie mixte), Social rental housing fund (Fonds d intervention pour le logement locatif social or FILLS), the Urban renovation school (Ecole de la rénovation urbaine or ERU, the representative national tenants associations and local associations providing information on housing (Associations Départementales d Information sur le Logement or ADIL). > Take part in urban renovation projects, together with Anru, both by granting aid to organisations to strengthen their financial capabilities and professional skills, and by paying the organisations contribution to the National agency for urban renovation (Agence nationale de renovation urbaine or Anru).

4 04 Meet the growing needs of social rental housing organisations

5 05 To fulfil its missions and particularly to help the organisations rise to the challenge of urban renovation, in 2007, Cglls allocated the two contributions paid by social housing providers as follows: M were committed as aid ( 82.2 M in 2006) to help finance: 74.4 M for financial recovery schemes ( 60.7 M in 2006) 26.6 M for prevention and consolidation operations ( 14.1 M in 2006) 24.2 M for re-organisation projects ( 7.4 M in 2006) 82.5 M were paid as aid ( 68.1 M in 2006): 65.5 M for financial recovery schemes ( 57.7 M in 2006) 8.2 M for prevention and consolidation operations ( 7.6 M in 2006) 8.8 M for re-organisation projects ( 2.8 M in 2006) 93.8 M in guarantees were granted ( M in 2006) enabling the construction, acquisition-improvement or the renovation of 2,307 housing units against 2,380 in M were paid to key players in the sector in financial aid against 47.2 M in 2006, including 26.5 M to the Anru ( 29.5 M in 2006). In addition to this sum of 26.5 M paid to the Anru in 2007 out of the proceeds from the supplementary contribution, a one-off payment of 25 M was made out of the Cglls own funds to Anru in 2007 to cover insufficient payments for 2004 and 2005, i.e. a total payment to Anru of 51.5 M in 2007.

6 06 As public authorities increasingly took the housing crisis in France into account, Cglls activity developed and broadened. Jean-Pierre Caroff

7 07 As public authorities increasingly took the housing crisis in France into account, Cglls business developed and broadened. Thus, in 2007, the ambitious programmes decided by the Government for urban renovation and to boost social housing construction weighed heavily on the social housing providers capital requirements. The organisations were forced to seek support from Cglls for consolidation purposes and to increase their teams numbers. Cglls partly financed this reinforcement, which resulted in an increased budget for the Reorganisation committee. To better help organisations, Cglls first established a new warning procedure to make organisations in difficulty aware of their responsibilities, and then tried out a new approach to help conveyance of housing units between organisations. As for our role in terms of providing guarantees, it was broadened. The scope of loans that can be guaranteed by us is now defined depending on the nature of the operations to be guaranteed, and not solely according to the class of loans granted by the Caisse des Dépôts et Consignations (CDC). Cglls is now able to guarantee certain non-subsidised regulated loans. As a project owner and a partner to public authorities, to the Union sociale pour l habitat, to all the federations of social housing providers and to CDC, Cglls finalised the Harmonia project for the collection of accounting data from Hlm and Sem organisations in Requested by the Cour des Comptes (French court of audit) in 2001, this work has resulted in five platforms being opened which have been operational since the beginning of At the same time, as a specialized finance institution, Cglls continued to adjust to the requirements of the banking sector and to look for solutions to avoid certain organisations exceeding thresholds on major risks. The first step of a large mortgage valuation project concerning mortgages held as guarantees was completed in order to continue meeting demand for guarantees from organisations and the heightened risk created by them merging. Today, the housing sector is affected by a series of government measures, some of which are expected to give rise to a new law. In this context, the months ahead will be strategic for social housing providers and Cglls will remain a key player in implementing policies in favour of social housing and urban renovation. Jean-Pierre Caroff Chairman of the Cglls

8 08 Cglls: a double status for a single cause

9 09 Cglls is both a national public administrative institution placed under the supervision of the housing, economy and finance ministries, and a specialized finance institution which must comply with the same requirements as the entire banking sector. Working for a single cause: social rental housing. Board of directors The board of directors consists of 10 directors who are appointed for 3 years and represent the State and the social housing sector; the board determines Cglls strategic orientation. Directors with voting rights Jean-Pierre CAROFF, Chairman of Cglls, Vice-president of the Social union for housing (Union sociale pour l habitat), president of the National federation of Local council housing organisations (Fédération des offices publics d habitation or OPH) Alain LECOMTE, representative of the Ministry of Housing Marie-Dominique HEBRARD de VEYRINAS, representative of the Ministry of Housing Guillaume CHABERT, representative of the Ministry of the Economy Clément LECUIVRE, representative of the Ministry of Budget Pierre QUERCY, representative of the Social union for housing Yves LAFFOUCRIERE, representative of the Social union for housing Jean-Pierre SCHOSTECK, representative of the National federation of Sem Philippe Van de MAELE, Managing director of the Agence nationale pour la rénovation urbaine (Anru) Paul DREZET, Appointed by the government Non-voting directors Patrick LAPORTE, Managing director - Cglls Bruno SOULIE, Assistant director at the general directorate for public accounts Denis VILAIN, Head of the Interministerial task force for the inspection of social housing (Mission interministérielle d inspection du logement social or Miilos) Guy PILOQUET, Accounting director - Cglls Government auditor Christian BODIN, Financial activities auditor Statutory auditors Franck BOYER and Maeva LHOMME, MAZARS & GUERARD Rémy TABUTEAU and Xavier de CONINCK, KPMG Financial aid committee This committee consists of 7 members and the Chairman of the Cglls board of directors. It gives its opinion on organisations applications for financial aid and on some guarantee applications. Members with voting rights Jean-Pierre CAROFF, Chairman of Cglls Marie-Dominique HEBRARD de VEYRINAS, representative of the Ministry of Housing Philippe BRY, representative of the Ministry of Housing Stéphane ROCHE, representative of the Ministry of the Economy Luc LEGRAS, Maurice CARRAZ, Valérie FOURNIER, representatives of the Social union for housing Eric LEDOUX, representative of the National federation of Sem Non-voting directors Patrick LAPORTE, Managing director - Cglls Isabelle DAGES, Editor to the General directorate for public accounts Denis VILAIN, Head - Miilos Guy PILOQUET, Accounting director - Cglls

10 10 Government auditor Christian BODIN, Financial activities auditor Re-organization committee This committee consists for the most part of representatives of the social housing sector and decides on financial aid granted for responsibilities entrusted to Cglls by the law on urban planning and renewal program (loi d orientation et de programmation pour la ville et la rénovation urbaine or Borloo Act, 01 August 2003): reorganisation, merging of organisations, training and technical support actions in favour of urban renewal. Members with voting rights Jean-Pierre CAROFF, Chairman of Cglls Marie-Dominique HEBRARD de VEYRINAS, representative of the Ministry of Housing Philippe BRY, representative of the Ministry of Housing Stéphane ROCHE, representative of the Ministry of the Economy Philippe Van de MAELE, Managing director of the Anru Pierre QUERCY, Maurice CARRAZ, François QUENIART, Vincent LOURIER, representatives of the Social union for housing Franck BERTHOD, representative of the National federation of Sem Non-voting directors Patrick LAPORTE, Managing director - Cglls Bruno SOULIE, Assistant director at the General directorate for public accounts Denis VILAIN, Head of the Miilos Guy PILOQUET, Accounting director - Cglls Government auditor Christian BODIN, Financial activities auditor Audit committee The Audit committee consists of 3 members and verifies the clarity and accuracy of information, assesses the accounting methods and the quality of internal control. It reports on its work to Cglls board of directors. Members Marc PREVOT, Coordinator of the Collège logement of the Conseil général des Ponts et Chaussées Stéphane ROCHE, Assistant head of bureau, Banc Fin 3 DGTPE, Ministry of the Economy Luc LEGRAS, representative to the General Delegate of the Social union for housing Non-voting member Paul DREZET, appointed by the government Government auditor Christian BODIN, Financial activities auditor Statutory auditors Franck BOYER and Maeva LHOMME, MAZARS & GUERARD Rémy TABUTEAU and Xavier de CONINCK, KPMG

11 11

12 12 Significant events in 2007

13 13 > Introduction of the new status of Offices: the OPHLM and OPAC became public offices of housing (Offices Publics de l Habitat or OPH) on 1st February They are governed by a new legislative system and have two years to fully comply with their new status as public industrial and commercial establishments (établissements publics industriels et commerciaux or EPIC). > Eligibility of Sems for reorganisation committee aid since 1 st January In accordance with the law on the national commitment in favour of housing (ENL), Sems are henceforth liable to the supplementary contribution. > Launch of the contribution remote declaration and payment procedure, after the trial period in > Development of a decisionmaking tool for conveyance of housing units which specifies the conditions in which the Reorganisation committee may grant aid to organisations when they totally or partially transfer housing units between themselves. > Greater consumption of aid to organisations involved in urban renovation projects: the aid increased from M (forecasts 2007) to M for 48 organisations receiving such aid. Through the Re-organisation committee, Cglls is stepping up its support to social housing providers invested in several urban projects or weakened by the size of the stock to be demolished, by meeting their needs for hiring and technical support. > Creation of the warning procedure: this procedure is intended to make up for the insufficiencies of the aid procedure for organisations in financial difficulty but refusing any aid from their federation, i.e. that of Cglls. > Finalisation of the a collection tool: this tool enables the social housing organisations to electronically send their financial data to the DGUHC, and their questionnaire about specific data (dossier individuel de situation or DIS) to the relevant federations. a was officially launched in April > Extension of the scope of operations guaranteed by Cglls: the institution may now guarantee certain non-subsidised regulated loans. > 9% decrease in income from the supplementary contribution in 2007 against 2006 due firstly to the change to the calculation base of this contribution and, secondly for 3.3 M, to the reform of accounting standards.

14 14 Support organisations involved in urban renovation projects

15 15 To enable social housing organisations to conduct the urban renovation projects in which they are involved -with budgets having a significant incidence on their capital requirements-, Cglls has been providing them with constant support for three years. Re-organisation committee: greater means and concentrated aid for organisations The Re-organisation committee was created in 2005 to help organisations involved in one or more urban renovation projects by partly financing internal hiring (positions as project leaders or rehousing officers) or external services (assistance to project owners, consultancy, studies), and by subsidising the Urban renovation school (Ecole de la Rénovation Urbaine or ERU). The Re-organisation committee s resources come from the supplementary contribution; since 2007, a portion of the Sems now also contribute to this. The subsidy base is limited to 1% of the total cost (exclusive of tax) of the social housing provider s investment. Since April 2007, the subsidy rate has been increased to 70% (50% Cglls + 20% Anru) of the base for general cases but it also takes into account any other public aid as well as that of Anru granted to housing providers for this purpose. As regards organisations benefiting from a Cglls financial aid procedure and in a weak or difficult financial situation, this maximum rate can reach 80%. The calculation also includes any public benefits or those of Anru. In order to allocate the aid granted by the Re-organisation committee to the most complex and significant cases, applications for urban renewal support are limited to organisations for which demolitions account for more than 5% of the housing units and/or which are involved in more than four urban renovation projects. In addition, the Re-organisation committee has changed the way it works in order to make relationships with partners easier and to improve efficiency. Better Anru/Cglls coordination in rehabilitation operation financing The terms and conditions pursuant to which aid is granted to finance rehabilitation operations considerably changed in 2007 in order to better coordinate the efforts of Cglls and Anru. Housing providers in a tricky financial situation and benefiting from a Cglls financial aid procedure after signing a long-term agreement with Anru, may now benefit from higher rates on rehabilitation operations in certain conditions M were added to the initial budget of the Re-organisation committee by Cglls to rise to the priority challenge of implementing urban renovation projects for social housing organisations.

16 16 Preventing financial difficulty and aiding financial recovery Cglls takes part in the National Programme for Urban Renovation in two ways: it assesses the impact of urban renovation projects on the financial situation of organisations and their ability to complete them. it contributes financially to the handling and prevention of financial risks in the rental business. It is therefore required to adopt prevention, consolidation and financial recovery schemes to support organisations involved in an urban renovation project. 48 housing providers out of the 65 in total benefiting from a Cglls procedure are in this situation. Financing modernisation through Fills Cglls finances organisations modernisation projects through the Social Rental Housing Fund (FILLS). Most actions supported are in line with the two key priorities of the National programme for urban renovation: improving services to tenants and furthering development and management strategies. Total aid amounted to 3 M in Strengthening of organisations internal services For the period running from 2005 to 2007, Cglls invested 30 M in training and technical support actions in organisations, i.e. 0.27% of investments for housing providers. 84 organisations, including 83% of OPH, benefited from this aid. With the multiplicity of urban renovation projects involving a same organisation and the increasing complexity of their implementation, the amount of aid for training and technical support greatly increased in 2007 to 25.2 M, from 2.1 M in However, as most projects have been examined by Anru and as many of them have entered an operational phase, the Reorganisation committee may well now have processed the majority of these aid applications. Applications should therefore decrease significantly in Urban renovation school (Eru): a complete and acclaimed institute Eru is the result of an agreement signed by the Union The existing system needed bringing up to date (by sociale pour l habitat and Cglls in 2004, for the purpose of changing the current cycle into a five-day cycle, training organisations executives in the various topics of decentralising several sessions, creating additional urban renewal. improvement modules and by introducing a cycle of For Eru, Cglls paid to the USH: thematic conferences), 473 K to create educational programmes in 2004, Creation of a Local Urban Management School (EGUQ) to 1,491 K under the three-year management agreement further professionalise field managers, (including 380 K for 2007) Development of the Internet site to improve After three years of activity, an assessment report was communications. drawn up which revealed the need to complete the current An additional subsidy of 302 K was granted by Cglls in system in three ways: 2007 to carry these projects through.

17 17

18 18 Help organisations to be financially stronger and more adapted to the territories

19 19 In accordance with its role of ensuring the long-term viability of social housing organisations, Cglls uses its resources and know-how to prevent risks, to help organisations recover financially and to foster mergers or transfers of housing units in order to optimally manage the social rental housing stock in each housing area. The law on the National commitment in favour of housing (ENL Act) of July 2006 confirmed this role of Cglls. Financial aid in 2007 Cglls can grant organisations three types of aid: Aid to prevent difficulties, designed to avoid implementing an expensive financial recovery aid scheme, Aid to consolidate their capital, so that they can invest in housing units to maintain or guarantee the quality of housing, Aid for financial recovery, for organisations facing the worst financial situation, within the framework of a five-year scheme. To fulfil this role, Cglls uses the income from contributions paid by housing providers. In 2007, income from the contributions enabled M to be allocated in aid, against 79.4 M in This decrease is due to the drop in income from the supplementary contribution. Investment earnings from guarantee fund investments an alternative source of financingamount to 14 M against 8.4 M in Sums committed amount to M (see table below). Provisions booked in 2007 amount to 85 M corresponding to cases not finalised by a memorandum or an agreement by the end of the year Aid committed and paid in 2007 Breakdown per type of aid Commitments 2007 Commitments 2006 Payments 2007 Payments 2006 Financial recovery 74.4 M 60.7 M 65.5 M 57.7 M Prevention-consolidation 26.6 M 14.1 M 8.2 M 7.6 M Reorganisation 22.2 M 7.4 M 8.8 M 2.8 M Total M 82.2 M 82.5 M 68.1 M Profile of organisations benefiting from a Cglls procedure 72 aid procedures were processed including 8 prevention schemes, 14 consolidation schemes, 49 financial recovery schemes and one warning procedure. 65 housing providers benefit from an aid procedure: i.e. 8% of the total number of social housing providers and they manage 9% of housing units, i.e. 407,000 housing units. 48 of them are involved in one or more urban renovation projects, 63% are OPH, 70% manage less than 6,000 housing units and 38% are in the Paris region.

20 20 The impetus of dynamics to foster mergers or the restructuring of organisations The aim of reorganising the world of social housing providers is to create local dynamics to reach the appropriate scale of configuration in a housing area and to optimise the efficiency of aid. In 2007, seven groups of organisations thus received aid from the Re-organisation committee totalling 0.6 M, against 5 in 2005 for 4.6 M and 9 in 2006 for 3.1 M. 150 conveyance operations received Cglls approval. Providing aid for the conveyance of housing units Cglls has defined a method and developed a tool to enable aid to be developed for the conveyance of housing units. The calculation method will be made available to organisations free of charge, whether or not they apply for aid from Cglls. In addition, Cglls has specified the operating rules and the terms of granting aid for the partial or full transfer of housing units between organisations. The projects must respond to at least one of the following challenges: Improving the organisations capacity to run complex urban renovation operations Durably improving services to tenants and the quality of housing by redefining the organisations modes and processes of intervention Creating local dynamics by encouraging the appropriate scale of reconfiguration of a housing area Seeking optimum efficiency of aid and its positive effects Boosting the production of social rental housing where there is demand. Cglls aid will finance any or all of the following points: Territorialisation adaptation costs (external services), The discounted deficit of the housing units assigned, The extra cost of fixed charges for the assignor, under certain conditions. Three initial files were handled in 2007 and concerned six organisations.

21 21

22 22 Support the development of organisations by a broader role in guarantees

23 23 Cglls guarantees the regulated loans extended by the Caisse des Dépôts et Consignations when local governments do not, or only partially guarantee them. Now, it may also guarantee certain non-subsidised regulated loans. With this extended scope of guarantees, organisations are able to conduct active development policies both for the construction and the acquisition-improvement or restoration of social rental housing. This change came with measures to improve management of the risks involved in the various systems. A broader scope of guaranteed operations Cglls can now guarantee nonsubsidised regulated loans. Thus, in addition to the loans PLAI, PLU (for highly social operations), PLUS, PDR CD, PRU CD (for social operations), PALULOS, PDR AS and PRU AS (for restoration operations), it can now guarantee the PEX (only for housing unit buy-outs), the PAM, QS, shortterm GAIA (in certain conditions) and the RHVS loans for social apartment hotels. A growing number of beneficiary organisations 108 operations were guaranteed for a total amount of 94 M against 106 K in The number of files increased by 19% while the average amount guaranteed per operation dropped from 1,163 K to 868 K. 58 organisations benefited from this procedure (vs. 42 in 2006), including 61% of ESH, 22% of Sems and 11.6% of OPH. These results confirm the growing recourse to Cglls, a natural effect of the implementation of the scheme to boost social housing construction. The guaranties granted contributed to the construction-improvement of 1,820 housing units (including 299 integration housing units) and to the renovation of 487 others. This latter activity has increased more than three-fold. Cglls agreed to maintain its guarantee in 10 property conveyance operations between organisations and signed 96 additional clauses for CDC loan restructuring. Interventions in French overseas departments vary greatly from one year to the next and mainly concern Guadeloupe and French Guyana: these territories accounted for 8.5% of the guarantee business, against 9.6% in operations were guaranteed by Cglls for a total amount of 94 M.

24 24 Completion of the introduction of the standard method (Basel II system) Cglls complies with the requirements of the banking sector and respects a minimum level of capital, in accordance with the Basel II agreement and the European Capital Adequacy Directive (CAD III). For the fiscal year 2007, Cglls used the new I.T. application (IDRISS) which automatically calculates the credit risk in the solvency ratio according to the Basel II standard. It further standardized IDRISS and linked this calculation engine to the regulatory reporting software package used to report to the Banking Commission. An improved organisation rating system developed with the CDC As a specialized finance institution, Cglls must assess its risks before extending its guarantee. In order to fully understand the risks specific to its business sector, it decided to improve its in-house organisation rating system and to bring it into line with the Basel II standards. Cglls is conducting this project in collaboration with CDC which shares the same objectives. Strict control of the risks of major groups The trend towards the merging of organisations led Cglls to monitor their developments given that some groups are nearing, or have even reached, the thresholds on major risks. Although the Banking Commission does not authorize Cglls to deconsolidate the risks of Hlm groups, it nonetheless studies the application for dispensation on a case-by-case basis. After the acceptance of a first case in 2006, it authorised another deconsolidation application in A growing guarantee fund The guarantees granted by Cglls amounted to 93.8 M, against M in 2006, accounting for 1.65% of contracts granted by CDC for loans that Cglls is authorized to guarantee. The total current commitments of the Cglls guarantee fund amount to billion euros. They correspond to 10,758 loans extended by CDC to 523 borrower organisations. The value of the investment portfolio dropped from 613 M in 2006 to 560 M by the end of This decrease results from the interaction of three main factors: The one-off debit of 25 M from the Cglls capital: this sum was paid to the Anru to make up payments on supplementary contributions for 2004 and 2005, the non-collection of the supplementary contribution in 2007 due to the postponement of the payment date, the transfer of a portion of the cash flow to the deposit accounts late in 2007 ( 28.9 M instead of 0.57 M in 2006), corresponding to the first payments of the supplementary contribution. However, in spite of this decrease, income from investments increased to 22.6 M against 10.8 M in The guarantee fund's net position was M ( M in 2006).

25 25 Stabilisation of the decision-making time for guarantee applications Pursuant to act on finance laws (LOLF), Cglls developed an indicator to value the guarantee business. This tool takes the decision-making time necessary for guarantee applications into account. After being exceptionally reduced to less than 30 days in 2006, this time was 35 days on average in 2007, which is clearly below the target time of 2 months. Increased loan restructuring and new procedure As the past two years were marked by a decrease in interest rates, many organisations restructured their debt with CDC. Therefore, the volume of restructuring clauses greatly increased in Furthermore, the method of consulting Cglls to maintain its guarantee has changed; henceforth, the Cglls consent is confirmed by the sole execution of restructuring agreements. This does not mean that Cglls agreement is automatic, in particular when the restructuring increases the risks. An in-house procedure to examine restructuring operations was introduced late in Two mortgage valuation missions completed in 2007 In accordance with Basel II requirements, Cglls must value the real estate assets of organisations on which it has a mortgage under the guarantees extended. The aim is to limit the credit risk through mortgages but also to decrease major risks reported to the Banking Commission. A first mission was carried out in 2007 concerning six organisations: in total, only 10% of valuations made proved unsuccessful given that they did not exceed the threshold of 125% of the guaranteed amount, a criterion which authorises Cglls to use them to reduce the risk in the solvency ratio. A second mission was initiated late in 2007 involving 14 companies in the CDC group.

26 26 Make a supportive and lasting contribution to the financing of social rental housing

27 27 Cglls collects two contributions from organisations: the main contribution used to finance its role of providing guarantees and aid to housing providers, and the supplementary contribution which is used to finance certain urban renovation projects either by a payment to Anru or to the social housing providers, and to foster the reorganisation of organisations. Decreasing resources The income from contributions amounted to M. For the first year ever, income is down by some 6 M from the previous year as a result of the decrease in income from the supplementary contribution. Two events impacted the amount: the change to the calculation base and the reform of accounting standards. Income from the main contribution on a par with 2006 Income from the main contribution amounted to M, in line with the budget. The contribution rate (up to 1.5% of rent payments) and the reduction bases are determined every year. In 2007, the income was maintained at the same level as in 2006 by decreasing the 2007 rate by 4 basis points (1.36% instead of 1.40%); the other parameters remained unchanged. Over 4.5 million housing units were liable to the contribution. Out of this total, over one million housing units located in ZUS (sensitive urban areas) resulted in a reduction of -or even an exemption from- the contribution for organisations. Changes to the supplementary contribution The supplementary contribution underwent several changes in The Sems, which opted in advance to exempt their social rental business from corporate income tax, were made liable to the supplementary contribution. The base of the supplementary contribution changed: it takes into account subsidies received under Anru agreements and certain insurance benefits received further to claims. The late publication of the texts resulted in postponing the payment date to January Income is assessed at 54 M, down by 9% against Tighter control of contributions Two types of controls were developed in 2007: by producing documents: the files studied by Cglls showed a very small number of insufficient payments. on site: they concern both contributions and are exclusively performed by Miilos. In total, 243 control reports were sent to Cglls showing insufficient payments of 214 K for the main contribution and a net surplus of 516 K for the supplementary contribution M paid by Cglls to Anru for This total includes a first payment of 26.5 M in 2007 and a second payment of 25 M in 2008, to take into account the insufficient payments made in 2004 and 2005.

28 28 Changes to contribution parameters Contribution Limits set by law Parameters set by annual decisions Contribution rate Maximum legal rate: 1.25% 1.25% 1.25% 1.40% 1.40% 1.40% 1.36% % of rent payments received 1.50% Decrease in housing benefit ZUS decrease Decrease for 1st-time occupancy Amount set by Ministerial decision in euros Supplementary contribution a) Fixed part Contribution per housing unit in euros b) Variable part Allowance for rental income Self financing Limits set by law 10 maximum per housing unit 5% 15% Parameters set by annual decisions % 13% % 13% % 13% % 10% Assessment of the three-year agreements entered into by Cglls with social housing players Cglls contributes to the operating costs of the Union sociale pour l habitat and of the four federations of social housing providers, as well as to financing their missions in favour of social rental housing and the implementation of the housing aspect of the Social cohesion plan. Cglls also contributes to financing national tenants' associations and ADILs. M USH + federations FILLS Tenants associations ADIL Total In the light of the reports submitted by the various partners, Cglls has decided to renew the long-term agreements binding it to these partners for the period. 1 st assessment of the remote declaration and payment The remote declaration and payment procedure became operational in 2007 but is not yet compulsory. Concerning the main contribution, 40% of payees chose the remote declaration and nearly 14 M, i.e. 20% of the total, were received by remote payment. For the supplementary contribution, 62% chose the remote declaration, and 17.5 M (i.e. nearly one third) were paid on line. As of 2008, all organisations will be required to use the remote declaration and payment system.

29 29

30 30 Financial aid to rise to the challenges of the sector

31 31 Cglls recorded 16.7 M in profits ( 16.9 M in 2006) which break down as follows: General section ( 2.9 M), Guarantee fund ( 12.5 M) and Financial aid section ( 1.3 M). This result is substantially greater than the budget forecasts ( 2.1 M) as a result of the interaction of the following parameters: income from the two contributions generated a shortfall of 2.8 M; cash flow and the investment portfolio generated a surplus of 1.8 M; overheads were lower than expected ( 1.4 M); mortgage costs were lower than expected ( 0.4 M difference); and write-back of provisions resulted in a positive balance of 13.8 M. Breakdown of income: M Breakdown of applications: M Contribution: M Supplementary contribution: M Contributions for previous years, repayments, penalties: 0.91 M Cash and portfolio: M Guarantee commission: 1.12 M Interest from Cglls loans: 1.49 M Write-back of provisions: M Financial recovery: 73.9 M Audits: 0.49 M Prevention: M Reorganisation: M Financial aid: M Mortgage and counter-guarantee costs: 0.22 M ANRU contribution: M Overheads: 3.69 M Repayment of contributions for previous years: 1.50 M Profit: M

32 32 Balance sheet as at 31 December 2007 Assets (in thousands of Euros) Government stocks and similar securities 24,195 24,026 Receivables from credit institutions 45,298 10,680 Short-term 45,298 10,680 Receivables from social housing organisations 56,881 60,167 Term loans 56,881 60,167 Bonds and other fixed-income securities 541, ,768 Intangible assets Tangible assets Other assets Adjustment accounts 0 0 Total assets 668, ,383 Optimised risk management As a specialized finance institution, Cglls must comply with banking regulations, and in particular two ratios defining the thresholds which guarantee the risk-related prudential provisions: Solvency ratio: with M in equity, Cglls more than meets the regulatory requirement in terms of global equity which amounts to M. Since June 2008, Cglls has been using a new software program to calculate capital requirements and this will enable it to swiftly and automatically assess risk coverage according to the Basel II standard. Risk division ratio: 14 organisations or groups of organisations have seen their gross commitments reach the threshold of 10% of equity, and 6 organisations are considered major risks as their weighted commitments exceed 10% of equity. No housing provider or group of housing providers exceeds the limit of 25% of equity. The 103 M limit below which the Cglls board of directors has decided to maintain the level of major risks for each case, was respected. Finally, the last limit -the sum of all weighted major risks which must not be 8 times greater than equity- was not reached.

33 33 Liabilities (in thousands of Euros) Other liabilities 10,238 7,824 Adjustment accounts 125, ,498 Provisions for contingencies and charges 88, ,867 Reserves 355, ,825 Balance brought forward 71, Profit 16,666 16,912 Total liabilities 668, ,383 Off balance sheet as at 31 December 2007 (in thousands of Euros) Commitments Financing commitments 17,750 3,500 to social housing organisations 17,750 3,500 Guarantee commitments 2,825,116 2,900,367 for finance institutions 0 0 for social housing organisations 2,825,116 2,900,367 Guarantee commitments 119, loans signed but not paid out 43,449 27,144 loans not signed 75,801 68,955 Commitments received Guarantees received 297, ,799 from government authorities 105, ,453 from financial institutions 191, ,346

34 34 Income statement as at 31 December 2007 Expenses (in thousands of Euros) Bank operating expenses 6,373 14,248 Management charges on securities Losses on securities 5,908 13,828 Counter-guarantee costs 0 0 Reimbursement of fees 0 0 Other ordinary expenses 239, ,780 General operating expenses 3,505 3,938 Depreciation allowances on fixed assets Other expenses incurred for Cglls operations 235, ,667 Negative balance on receivables 0 0 Negative balance on cancelled income or expenses from previous years 0 0 Non-operating expenses 1,499 1,951 Profit for the year 16,666 16,912 Total 263, ,891

35 35 Income (in thousands of Euros) Bank operating income 32,389 28,331 Interest from transactions with credit institutions 1,918 2,026 Interest from transactions with social housing organisations 1,489 1,595 Interest from securities 27,862 23,648 Commission 1,120 1,062 Other ordinary income 230, ,554 Other income from Cglls operations 229, ,903 Positive balance on receivables Positive balance on cancelled income or expenses from previous years 7 2,003 Non-operating income 913 2,006 Loss for the year 0 0 Total 263, ,891

36 36 An organization suited to the Cglls role

37 37 Under the leadership of the managing director, a team of 27 is employed to perform Cglls' missions. Staff benefit from an ambitious training policy (in 2007, training represented 5.8% of payroll), devoted in particular to IT, finance and management. Managing director Prepares and implements the Board of directors' decisions, the opinions of the Financial aid committee, the work of the Audit committee and the Re-organisation committee, schedules expenditure and income and is responsible for internal controls. General secretariat Manages human resources, drafts the communication policy, manages operating means and IT tools, monitors public contracts and handles legal affairs and subsidies. Financial aid department Drafts financial aid procedures (prevention, consolidation, financial recovery, re-organisation and mergers of organisations) and monitors the different schemes, examines urban renewal files (with Anru) and global registration agreements. Guarantee department Drafts procedures, examines guarantee and contract applications, monitors mortgages and group consolidated risks, and harmonises data collection of social housing organisations. Finance and accounting department Collects contributions, monitors mortgage guarantees and counter guarantees, monitors loans, the investment portfolio and cash flow, checks risks, and draws up and monitors the budget and financial and regulatory banking statements. Systems under surveillance Cglls strives on a permanent basis to have all of its procedures monitored by an independent service provider. After Ernst & Young which performed this mission from 2004 to 2006, the firm INEUM is responsible for auditing for the years Three assignments were conducted in 2007 concerning the Guarantee department and the General secretariat.

38 38 Managing director Patrick LAPORTE, Managing director Tel.: +33 (0) Fax: +33 (0) Roselyne DEBOST, Executive assistant Tel.: +33 (0) Secrétariat général Laurence COHEN, Head of administration Tel.: +33 (0) Fax: +33 (0) Sabine LACROUTE, Deputy head of department Tel.: +33 (0) Laurent BERTHIER, Information systems director Tel.: +33 (0) Marie-Noëlle DELABRE, Communications Director Tel. +33 (0) Pascaline GUSTIN, Executive assistant Tel.: +33 (0) Financial aid department Jean-François GRILLON, Head of the financial aid department Tel.: +33 (0) Fax: +33 (0) Myriam CHALMETON, Financial analyst Tel.: +33 (0) Pascale CHARTIER, Administration assistant Tel.: +33 (0) Jérôme DELALANDE, Financial analyst Tel.: +33 (0) Fatoumata KOMARA, Financial analyst Tel. +33 (0) Tangi LE ROUX, Financial analyst, Urban renewal manager Tel.: +33 (0) Anne PAPADOPOULOS, Statistician Tel.: +33 (0) Virginie THEVENOT, Financial analyst on parental leave Guarantee department Catherine ROUARD, Head of the guarantee department Tel.: +33 (0) Fax: +33 (0) catherine.rouard@cglls.fr Laurent CHAIZE, Deputy head of department Tel.: +33 (0) laurent.chaize@cglls.fr Omolara OLOUKPONA, Financial analyst Tel.: +33 (0) lara.oloukpona@cglls.fr Patrick STEGER, Applications manager: +33 (0) patrick.steger@cglls.fr Finance and accounting department Guy PILOQUET, financial manager, Accounting director Tel.: +33 (0) Fax: +33 (0) guy.piloquet@cglls.fr Eric LEROUX, Signing officer Tel.: +33 (0) eric.leroux@cglls.fr Paul BOLOGNA, Head of collections Tel.: +33 (0) paul.bologna@cglls.fr Lydia DONZELOT, Accountant Tel.: +33 (0) lydia.donzelot@cglls.fr Laurent KAEPPLER, Accountant Tel.: +33 (0) laurent.kaeppler@cglls.fr Christine LECOSNIER, Executive assistant Tel.: +33 (0) christine.lecosnier@cglls.fr Mina STANESCU, Accounting executive Tel.: +33 (0) mina.stanescu@cglls.fr Pierre THIVET, Bank accounting executive Tel.: +33 (0) pierre.thivet@cglls.fr

39

40 Caisse de garantie du logement locatif social 10 avenue Ledru-Rollin Paris cedex 12 Tel: +33(0) Fax: +33(0)