2. Operating Agreements After Expiry Some restrictions removed Subsidies end Mortgage payments end Before Expiry Rules of operations Subsidies Mortgage payments
3. Rules that Continue to Apply Non Profit Corporations: Letters Patent By-laws Policies & Procedures
4. Things to Consider Continue to be: Affordable – Provincial Property Tax Exemption Viable - Replacement Reserve Accountable e.g. Financial Statements
5. In a Nutshell Operating Agreement restrictions end and Government subsidies end
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9. What Steps Have Been Taken? 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. Development of Templates (CHRA) to help providers determine viability of their projects and enable them to test remedies Joint awareness effort – Province has offered sessions on Expiry at NBNPHA annual conferences since 2005.
10. What Else is Being Done? Injection of Stimulus Funds to rejuvenate and undertake necessary repairs to affected housing projects – over $37,000,000 will be spent in 3 years. - Priority is being given to those with earlier expiry dates.
11. CHRA Study Results Two key findings: Most Pre’86 projects will be viable Post’85 projects will need to implement remedies to ensure viability because of high % of RGI units
14. If Not this is a warning flag e.g. Mortgage Payment – Subsidy = potential viability $98,817 - 29,352 = $69,465 (surplus)
15. Evaluate Your Project (Template) Test # 2– Determine Net Operating Income (NOI) - Current NOI and NOI at Expiry (NOI = Cash flow excluding mortgage payments and subsidy revenue)
19. Possible Remedies Assess potential to raise rents Reduce subsidy requirements by selecting tenants/members requiring shallower subsidy Shift units from RGI to market rent
20. Possible Remedies (continued) Evaluate feasibility of repair loan from private lender (bank) Government programs may provide a source of additional funding
21. What else? Review current delivery practices and policies for improvements to help minimize impact Discuss possible solutions with other providers at forums such as this Discussions with your Portfolio Management Officer