Expiry of Operating Agreements 				- Are YOU Ready?<br />
Operating Agreements<br />After Expiry<br />Some restrictions removed  <br />Subsidies end<br />Mortgage payments end<br /...
Rules that Continue to Apply	<br />Non Profit Corporations:<br /> Letters Patent<br />By-laws<br />Policies & Procedures<b...
Things to Consider<br />Continue to be: <br />Affordable – Provincial Property Tax Exemption<br />Viable - Replacement Res...
In a Nutshell<br />Operating Agreement restrictions end			<br />and<br />Government subsidies end<br />
Who is Affected in N.B.?<br /><ul><li>Non-profit and co-op housing providers managing over 5,400 social housing units
Over 5,000 Provincially owned & administered RNH & Public Housing units</li></li></ul><li>When Will This Take Place?*<br />
 What Are The Issues?<br /><ul><li>Will there be enough revenues to maintain the properties and do capital repairs?</li></...
What Steps Have Been Taken?<br />2006 – National study on Impact of Expiry of Operating Agreements resulting in a report t...
What Else is Being Done?<br />Injection of Stimulus Funds to rejuvenate and undertake necessary repairs to affected housin...
CHRA Study Results<br />Two key findings:<br />Most Pre’86 projects will be viable<br />Post’85 projects will need to impl...
How Do YOU Prepare?<br />Evaluate your project<br />
Evaluate Your Project<br />Test # 1 - Does current year mortgage exceed amount of current year subsidy? <br /><ul><li>If Y...
If Not this is a warning flag </li></ul>e.g.  Mortgage Payment – Subsidy = potential viability   		$98,817  -  29,352 = $6...
Evaluate Your Project (Template)<br />Test # 2– Determine Net Operating Income (NOI)<br />- Current NOI and NOI at Expiry<...
Evaluate Your Project (Template)<br />Test #3 -  Evaluate Capital reserves:<br /><ul><li>Are reserves and contributions su...
A building condition assessment is RECOMMENDED
Comprehensive Replacement  Plan </li></ul>			(www.nbnpha-alsblnb.ca) <br />
Possible Remedies<br />Assess potential to raise rents <br />Reduce subsidy requirements by selecting tenants/members requ...
Possible Remedies (continued)<br />Evaluate feasibility of repair loan from private lender (bank)<br />Government programs...
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Expiry of operating agreements

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Expiry of operating agreements

  1. 1. Expiry of Operating Agreements - Are YOU Ready?<br />
  2. 2. Operating Agreements<br />After Expiry<br />Some restrictions removed <br />Subsidies end<br />Mortgage payments end<br />Before Expiry<br />Rules of operations <br />Subsidies<br />Mortgage payments<br />
  3. 3. Rules that Continue to Apply <br />Non Profit Corporations:<br /> Letters Patent<br />By-laws<br />Policies & Procedures<br />
  4. 4. Things to Consider<br />Continue to be: <br />Affordable – Provincial Property Tax Exemption<br />Viable - Replacement Reserve <br />Accountable<br />e.g. Financial Statements<br />
  5. 5. In a Nutshell<br />Operating Agreement restrictions end <br />and<br />Government subsidies end<br />
  6. 6. Who is Affected in N.B.?<br /><ul><li>Non-profit and co-op housing providers managing over 5,400 social housing units
  7. 7. Over 5,000 Provincially owned & administered RNH & Public Housing units</li></li></ul><li>When Will This Take Place?*<br />
  8. 8. What Are The Issues?<br /><ul><li>Will there be enough revenues to maintain the properties and do capital repairs?</li></ul>Will the projects generate enough revenue to provide rent/tenant subsidies?<br />Will there be funding to help build more housing units and will groups be encouraged to do so?<br />
  9. 9. What Steps Have Been Taken?<br />2006 – National study on Impact of Expiry of Operating Agreements resulting in a report titled ‘Was Chicken Little Right?’ Copy available on the CHRA web-site.<br />Development of Templates (CHRA) to help providers determine viability of their projects and enable them to test remedies<br />Joint awareness effort – Province has offered sessions on Expiry at NBNPHA annual conferences since 2005. <br />
  10. 10. What Else is Being Done?<br />Injection of Stimulus Funds to rejuvenate and undertake necessary repairs to affected housing projects – over $37,000,000 will be spent in 3 years. <br /> - Priority is being given to those with earlier expiry dates.<br />
  11. 11. CHRA Study Results<br />Two key findings:<br />Most Pre’86 projects will be viable<br />Post’85 projects will need to implement remedies to ensure viability because of high % of RGI units<br />
  12. 12. How Do YOU Prepare?<br />Evaluate your project<br />
  13. 13. Evaluate Your Project<br />Test # 1 - Does current year mortgage exceed amount of current year subsidy? <br /><ul><li>If Yes project is likely viable at expiry
  14. 14. If Not this is a warning flag </li></ul>e.g. Mortgage Payment – Subsidy = potential viability $98,817 - 29,352 = $69,465 (surplus)<br />
  15. 15. Evaluate Your Project (Template)<br />Test # 2– Determine Net Operating Income (NOI)<br />- Current NOI and NOI at Expiry<br />(NOI = Cash flow excluding mortgage payments and subsidy revenue)<br />
  16. 16. Evaluate Your Project (Template)<br />Test #3 - Evaluate Capital reserves:<br /><ul><li>Are reserves and contributions sufficient to maintain project in good condition?
  17. 17. A building condition assessment is RECOMMENDED
  18. 18. Comprehensive Replacement Plan </li></ul> (www.nbnpha-alsblnb.ca) <br />
  19. 19. Possible Remedies<br />Assess potential to raise rents <br />Reduce subsidy requirements by selecting tenants/members requiring shallower subsidy<br />Shift units from RGI to market rent <br />
  20. 20. Possible Remedies (continued)<br />Evaluate feasibility of repair loan from private lender (bank)<br />Government programs may provide a source of additional funding<br />
  21. 21. What else?<br />Review current delivery practices and policies for improvements to help minimize impact<br />Discuss possible solutions with other providers at forums such as this<br />Discussions with your Portfolio Management Officer <br />
  22. 22. Questions?<br />
  23. 23. Template: Hands On Exercise - CHRA web-site www.chra-achru.ca, - choose Library, - click on ‘Display All Files’ and - scroll and find ‘Single Project Template’.<br />
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