Expiring Agreement? Planning for a Sustainable

Transcript:Expiring Agreement? Planning for a Sustainable:
Expiring Agreement? Planning for a Sustainable Future BCNPHA Housing Central Conference November 21th 2016 Steve Pomeroy steve@focus-consult.com steve.pomeroy@carleton.ca 1 Steve Pomeroy Focus Consulting Inc Session Objectives To outline the meaning of Expiring Operating Agreements (EOA) Identify potential impacts Using some scenarios illustrate both the impact and options to address or respond 2 Steve Pomeroy Focus Consulting Inc End of Operating Agreements 3 Social Housing Funded with long term operating subsidies, matching mortgage amortization period (50 yrs./35yrs) Mixed funding: Federal/Prov/Terr cost shared; Federal unilateral Provincial unilateral Subsidies usually terminate in tandem with maturing mortgage Under F/P/T agreements Federal subsidy obligation terminates - P/T’s then have to decide how to manage Steve Pomeroy Focus Consulting Inc Future is Now Public Housing 1964+ 50 yrs; Non Profit 1978 +35 years Nationally federal funding declines by $650 Mill in next decade 4 Steve Pomeroy Focus Consulting Inc Two types of concern Without mortgage, does project collect sufficient rent to be viable (cover operating costs)? Does project have sufficient capital reserves or capacity to refinance to maintain building in sound condition? Implications for both funders (Ontario = Service Managers) and for Providers (NP and Co-ops) Separate concern and advocacy over federal withdrawal – especially re fiscal capacity Steve Pomeroy Focus Consulting Inc 5 Project Financial Viability Operating Viability With no mortgage payment and reduced or no subsidy, will rents cover operating costs? Capital Adequacy What capital renewal is required and are current reserves or ongoing surpluses (if any) sufficient to support capital renewal Steve Pomeroy Focus Consulting Inc Quick viability test: As a basic rule of thumb, if the current annual subsidy is greater than the total annual mortgage (P&I), the project is very likely to experience post-expiry difficulty. With no corrective actions, a project in this situation today will have negative Net Operating Income (NOI) at expiry. 6 Project Potential Outcomes (at Expiry) Steve Pomeroy Focus Consulting Inc * NOI = Net Operating Income Projects will fall into one of four categories, Multi project providers may have a mix of outcomes across their portfolio 7 Using Scenarios Provide a cross section of situations 4 single project Three multi-project portfolio Try to find one that is similar to your own case For each we highlight the key issues and challenges, and reasons why it may be in category 2,3,4 Then look at possible options to improve or rectify the outcomes Draw on BCNPHA Planning Guide