1. CityHousing Hamilton Board Meeting Wednesday November 24, 2010 2011 Budget

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

3. OPERATIONAL PLAN 1.Create financial sustainability 2.Maintain and improve building conditions 3.Create healthy, secure communities 4.Reinvest in communities and increase affordable housing 5.Leadership: Influence and adapt social housing reform

4. CityHousing Hamilton Division Complement (FTE) ManagementOtherTotalStaff/Mgt Ratio 20104.0094.3598.3523.6:1 20115.0094.3599.3518.9:1 Change1.00 **cost absorbed in CHH operational budget 0.001.00 CHIEF EXECUTIVE OFFICER Administrative Assistant (1.0) Manager Tenant Support Services (11.5) Manager, Housing Operations (62.85) Manager, Asset Renewal/Maintenance (8.0) Manager Business/Strategic Serv **. (11.0)

5. Current Financial Status (as of October 2010) Description 2010 Annual Budget 2010 Forecast Actual Variance Operating Revenue $33,184,234 $32,923,939 $(260,295) Salaries & Benefits7,352,2996,532,846819,453 Other Administration2,343,4062,521,206(177,800) Maintenance10,103,75210,009,62294,130 Utilities9,857,9199,493,931363,988 Municipal Taxes12,266,18412,089,146177,038 Mortgage & Interest13,668,96413,854,450(185,486) Capital Reserve Allocation7,218,364 0 Total Expenditures$62,810,888$61,719,5651,091,323 Service Manager Subsidy29,421,43029,380,748(40,682) Current Year Surplus/(Deficit)$(205,224)$585,122$790,346

6. 2011 Operating Budget Process Alignment with timing of City Budget process Property Managers prepared maintenance expense budget proposals by account line by building. Maintenance expense budget created in conjunction with Capital budget Finance staff populated balance of templates Review budget by property with each property manager and operations manager Budget Assumptions Revenues were estimated based on current year forecast Administration utilizes the City’s budget process for determining Salary & Benefit costs Other Administration expenses based on forecasted 2010 YTD expenditures Utilities expenditure based on current trending and guidelines issued by SHSC and the City of Hamilton guidelines Property tax expense assumed a 2% increase over current year Mortgage/debenture costs based on amortization schedules

7. SWOT analysis OPPORTUNITIES -Operational review directives -new SHRA legislation THREATS -poor economic conditions -bed bug infestations -increased complexity of tenant issues/needs -expiration of debentures -legislative changes STRENGTHS -supportive Board of Directors -well-trained, dedicated staff (intellectual capital) -community partnerships WEAKNESSES -aging workforce -vacancies -financial reporting software -culture shift for changes will not be overnight INTERNAL FACTORS EXTERNAL FACTORS

8. Challenges - 2011 Managing bed bug infestations Aging housing stock Implementing Operational Review directives Expiration of debentures Our aging workforce Implementation of new property management software Growing need for on-site presence within the housing portfolio e.g., superintendents Vacancies

9. Challenges - 2011 (continued) Arrears management Portfolio mix - market/RGI Limited statistical information on tenant characteristics, needs and assets Increased insurance costs [flooding in July09 incurred $3.6M in claims]

10. Challenges-Actions CHALLENGEACTION Managing bed bug infestationsBed bug RFP closes Dec 7-10 Aging housing stockBCA – final reports May 2011 Operational Review findingsMgmt response presented at June 22- 10 board mtg; many directives have been met or are in progress. Expiration of debenturesPlan needs to be formulated on how to deal with reduced funding of $461,400 for 2012 Our aging workforceSuccession planning New Property Management softwareRe-engineering project kicked off July 2010; Jan 2012 – new software ‘go- live’ date Need for on-site presence within portfolio Superintendent model approved at June 22-10 board mtg

11. Challenges-Actions CHALLENGEACTION Vacancies Arrears managementCreation of Property Management Assistant pods; one focussing on rent collection. POD to work closely with Accounts Receivable prior to vacancy Portfolio mix – Mkt/RGIWorking with Tenant Placement to ensure vacancies are filled appropriately based on the current mkt/RGI mix for each building Limited statistical information on tenant characteristics, needs and assets Existing CHH process re-engineering project is re-evaluating all processes in order to capture requirements for a new software system Increased insurance costs

12. Expiration of debentures – Public Housing 20112012Reduction Debenture total $ 5,533,751$5,453,352$ (80,399) Funding total from federal gvmt $7,424,963$6,963,563$ (461,400) * *potential levy pressure

13. 2011 Pressures Bad debts [current write off for July09-June10 is $510K] Revenues – increasing & maintaining occupancy and improving unit turn over times Operational Review Updated legislation - SHRA Staff transition [new PMA pods] Portfolio Mix – Market vs RGI [@ Dec09, 74 units over target; represents $600K in revenue]

14. Proposed 2011 Operating Budget Description 2010 Budget 2010 Forecast Actual 2011 Budget Variance $ 2011 vs 2010 Budget Variance % 2011 vs 2010 Operating Revenue $33,184,234$32,923,939$33,530,899$346,6651.0% Salaries & Benefits7,352,2996,532,846$7,888,724536,425 7.3% Other Administration2,343,4062,521,206$2,256,320(87,086)(3.7%) Maintenance10,103,75210,009,62210,905,896802,1447.9% Utilities9,857,9199,493,9319,239,113(618,806)(6.3%) Municipal Taxes12,266,18412,089,14612,456,484190,3001.6% Mortgage & Interest13,668,96413,854,450$13,635,347(33,617)(0.2%) Capital Reserve Allocation 7,218,364 7,457,243238,8793.3% Total Expenditures$62,810,888$61,719,565$63,839,1271,028,2391.6% Service Manager Subsidy 29,421,43029,380,74830,308,228886,7983.0% Current Year Surplus/(Deficit) $(205,224)$585,122$0$205,224

15. 2010 Expenditures Controllable vs. Fixed Description 2010 Budget % of total Expenditures 2011 Budget % of total Expenditures Salaries & Benefits 7,352,29911.7%7,888,72412.3% Other Administration ** 2,343,4063.7%2,256,3203.5% Maintenance 10,103,78216.1%10,905,89417.1% Utilities ** 9,857,91915.7%9,239,11314.5% Total Controllable Costs 29,657,40647.2%30,290,05147.4% Municipal Taxes 12,266,18419.5%12,456,48419.5% Mortgage & Interest 13,668,96421.8%13,635,34721.4% Capital Reserve Allocation 7,218,36411.5%7,457,24311.7% Total Fixed Costs 33,153,51252.8%33,549,07452.6% Total Expenditures 62,810,918100.0%63,839,125100.0% **Utilities&Insurance 10,017,99215.7%

16. 2011 Cost Drivers Operating Revenues –Rent Revenue *Bridgewater Court [full rent up]$430,000 *SHH rental revenue for First Place$126,000

17. 2011 Cost Drivers Other Administration –Bad Debt $(80,000) –Estimate based on current trend and current level of arrears –Insurance $93,000

18. 2011 Cost Drivers Maintenance $802,000 –More realistic based on needs identified by front line staff –With superintendent model, we will see a reduction of maintenance expenses, specifically in cleaning costs, electrical, plumbing

19. 2011 Cost Drivers Utilities –SHRA benchmarks for benchmarked portfolios [Municipal, Dundas, Portuguese, and First Place *Electricity 8.99% increase *Fuel6.49% increase *Water6.13% increase –City guidelines used for other portfolios [Public Housing, 100% market]

20. 2011 Cost Drivers Service Manager Subsidy –Public Housing$421K –Municipal (Hamilton) Non-Profit 131k –Dundas Valley Non-Profit 32K –Portuguese Community Homes 16k –First Place – 185/206 Jackson 20k –First Place – 405 York 15k –100% Market 0k

21. Social Housing Provider Funding Applicable for the former Municipal (Hamilton) Non- Profit, Dundas Valley Non-Profit, Portuguese Community Homes Based on Benchmark increases / decreases established by the Province 2011 Benchmarks are as follows: –Administration / Maintenance / Capital Reserve 1.9% –Insurance 14.1% –Electricity 8.99% –Water 6.13% –Natural Gas (Fuel) 6.49% –Additional adjustments for mortgage renewals based on actual and property taxes at 2%

22. Public Housing Funding The following funding formula applies: –Revenues from Operations –Less: Expenditures (Administration, Maintenance, Utilities, Capital Reserve, Debentures, Property Taxes) –Equals Subsidy Required from Service Manager Increases / decreases are at the discretion of the Service Manager, generally a mix of City Guidelines and Provincial Benchmarks –2011 Subsidy Increase – 2.0% or $421K

23. Capital Reserve Forecast Balance for 2010 Description$$ 2010 Opening Balance$8,622,262 ADD : 2010 Allocation 7,437,605 SHRRP3,936,896 Interest254,000 LESS: 2010 Capital Expenditures Committed (13,145,592) 2010 Ending Balance$7,105,171

24. Capital Reserve 2011 Budget Description$$ 2011 Opening Balance$7,105,171 ADD : 2011 Allocation 7,457,243 SHRRP funding7,909,582 Interest275,000 LESS: 2011 Capital Plan(18,222,250) 2011 Ending Balance$4,270,746

25. Conclusion From board directive, staff are now regularly reporting on KPIs Improved financial reporting due to accrual actg Strong involvement from front line staff in budget process Continue to work on improving the current budget process for future years Greater accountability and awareness at all staff levels for revenues and expenditures

26. QUESTIONS ?