Quarterly Finance Report Item 1 for Second Quarter ended ... · Quarterly Finance Report for Second...

Quarterly Finance Report for Second Quarter ended June 30, 2008

Item 1July 23, 2008

Finance Committee

To: Finance Committee Report: FC:2008-13

From: Chief Executive Officer

Date: July 17, 2008 of 2

PURPOSE: To provide the Finance Committee with an update on 2008 second quarter Financial Commitments outlined in the Community Management Plan 2008-2010 and the quarterly financial performance. RECOMMENDATION: That the Finance Committee receive the report for information and forward to the Board of Directors through the submission of the 2008 Second Quarter Performance Report. BACKGROUND: The 2008-2010 Community Management Plan includes four initiatives related to Financial Management and one related to Debt Management and the funding of deferred maintenance and repairs. The second quarter progress against these initiatives is attached together with the second quarter financial performance report for Toronto Community Housing. The report is intended to provide the Committee with information on the corporation’s financial and capital plan performance against identified targets and benchmarks. REASONS FOR RECOMMENDATIONS: The Mandate for the Finance Committee includes the review of the financial performance of Toronto Community Housing. CONSULTATION PROCESS: /A

Second Quarter 2008 Finance Committee Report Report: FC:2008-13 of 2

CONCLUSION: The attached report highlights key indicators for the second quarter ended June 30, 2008 pertaining to Toronto Community Housing financial performance. FINANCIAL IMPLICATIONS: N/A LEGAL IMPLICATIONS: N/A COMMUNICATION IMPLICATIONS: N/A Derek Ballantyne Chief Executive Officer Attachment: 1: Quarterly Performance Report – Finance Commitments for the

Second Quarter ending June 30, 2008 2: Quarterly Performance Report – Financial Performance for the

Second Quarter ending June 30, 2008 Staff Contact: Gordon Chu .................................................................... 416-981-4801

Chief Financial Officer [email protected]

Finance Commitments

Quarterly Performance Report | 2nd Quarter 2008 Finance Commitments | Page 1

Focus on

Finance Financial sustainability is critical to the ongoing operation of the Toronto Community Housing portfolio. Toronto Community Housing has spent the past five years being both diligent and creative in reducing costs and generating revenues. The corporation has redirected those dollars toward much needed investment in the portfolio. But it has pretty much tapped out both savings and revenue generation potential. Without an investment in social housing by higher levels of government, Toronto Community Housing can only put their fingers in the dam. It cannot stop the flood of repairs.

Finance Report for the Second Quarter ended June 30, 2008 The following is the quarterly report for initiatives identified under the Finance focus area of the Community Management Plan 2008 | 2009 | 2010. Progress in the Financial Commitments initiatives was highlighted by the City of Toronto allocation of $36 million in provincial funding to the Deferred Maintenance and Improvement Program. In addition, the City announced that $75 million from the sale of Toronto Hydro Telecom Inc. would be allocated to repairing the aging Toronto Community Housing buildings with the intent of refurbishing 5,000 units and retrofitting 10 buildings with energy efficient systems.

Finance Commitments


5.1 FINANCIAL MANAGEMENT 5.1.1 Financial Controls – Financial & Procurement Systems

The new Financial & Procurement System (Enterprise One) was installed toward the end of 2007. The benefits of the new system include: User friendly and easy to use, Information easily accessible for analysis; Increased security features; Increased speed in information recovery. The new system will be in full use January 2008. Enhancements will be geared to ensuring access and controls are aligned with the allocation of responsibilities and accountabilities As Toronto Community Housing develops its’ Value Based Procurement System and leveraging procurement the corporations’ Financial & Procurement systems will need to be enhanced to respond to any changes. This may take the form of new or revised reporting/controls/access/information. However, where the corporation makes significant shifts in its procurement style it needs to ensure that its systems support the changes, including the addition of risk management features.

5.1.1 Value Based Procurement System Through the introduction of a values based procurement system, the corporation hopes to achieve the following goals: Provision of economic benefit to low-income households and communities; Support of tenant-enterprise in Toronto Community Housing work; Embedding the purchase of “green” products into its procurement culture; Offer apprenticeships and work experience to Toronto Community Housing youth; Dedicate a percentage of its procurement power to the economic benefit of its communities.

2008 Milestones X Full system live - January 2008

Review of access in line with responsibilities of community model – 3rd quarter 2008

Review of controls in line with accountabilities of community model– 3rd quarter 2008

Review of procurement enhancements required to align with Procurement Policy & Values Based Procurement systems – 3rd quarter 2008

Response to procurement enhancement review – 2nd quarter 2009

System enhancements in response to results of access and control reviews – 2nd quarter 2009

2008 Milestones Values Based Procurement Policy – 1st quarter

2008 Values Based Procurement System - 1st quarter

2008 Vendor Education Program – 2nd quarter 2008 Green product & specification list – 2nd quarter

2008 Tenant-enterprise partnerships with vendors – 4th

quarter 2008 Contract with tenant-led business – 2009

1st Quarter 2008 Status • System in full use. • Post implementation review underway re the

improvement of system functionality. • Reviewed CHU Office Procurement & Payment

process

1st Quarter 2008 Status • Review of CHU procurement/payment process is

continuing.

Finance Commitments


5.1.1 Financial Controls – Financial & Procurement Systems (Cont’d)

5.1.1 Value Based Procurement System Through the introduction of a values based (Cont’d)

2nd Quarter, 2008 Status • Options Document for operating unit processes

prepared for review in Q3. • Evaluation of Purchasing process using the new

system in process with some improvements already in place

2nd Quarter, 2008 Status • Selected green janitorial products are being tested

in 3 CHUs. • Improve monitoring with E1 inventory enhancement

on direct-sourced supplies • Re-schedule Vendor Education to Q3

Status for the 2nd Quarter: On Track


Finance Commitments


5.1 FINANCIAL MANAGEMENT (Continued)

5.1.2 Revenue Improvement – Geared-to-Income Revenue Over the past four years, Toronto Community Housings’ geared-to-income revenues have declined significantly. There has been a cumulative reduction of $14 million over 4 years. To ensure that staff are current on revenue calculation methods, cross-organizational training for all staff engaged in rent calculations was conducted and completed by 90% of staff. The training was aimed at ensuring consistent and complete application of rent calculation regulations. The remaining 10% of staff will complete their training in the second quarter of 2008. The implementation of the new tenancy management system will take place in 2008 and the training for that system will integrate practical applications of the new software with the policies and procedures for each function. This holistic approach will bring together both the practical and the theory in order to reinforce the functions staff must perform.

5.1.2 Commercial Revenues Toronto Community Housing has increased its non-rental revenues by 23% over the past two years. In 2007 Toronto Community Housing approached the City with a proposal that an administrative charge to meet parking enforcement costs be added to the current contract with the City .Setting non-rental revenue charges at the low-end of market along with increases in other commercial activity such as leasing, rooftops and building signage have all contributed to improvements in non-rental revenue performance. Additional commercial revenues will be sought through enhancements to service offerings through telecommunication providers, and building energy partnerships. Toronto Community Housing is considering the exploration of new opportunities in the field of electric energy. These include opportunities to not only “earn through reduction” but to earn by responding to what is known as “Demand Response” programs, defined as hydro participants who can both “respond” to requests to “cut back” energy in peak times and be able to “provide” energy to the grid at these and other times. Toronto Community Housing will monitor these early explorations and its own energy performance to prepare for possible participation in this emerging field.

2008 Milestones Development of training records to ensure all staff

receive appropriate training, refreshers and upgrades – 1st quarter 2008

Comprehensive training for field staff in order to improve their efficiency with the new tenancy management system – 2nd quarter 2008

Remaining 10% of staff complete rent calculation training – 2nd quarter 2008

Analysis of revenue patterns – 2nd quarter 2008 Response to findings of revenue pattern analysis –

3rd quarter 2008

2008 Milestones Follow up on response to Parking Tag proposal to

City – 1st quarter 2008 Implementation of Parking Control System -2nd

quarter 2008 Commercial marketing plan – 3rd quarter 2008 Monitor and decide on participation in new

programs in hydro management and “Demand Response” – 3rd quarter 2008

Laundry facilities meet Toronto Community Housing physical and safety standards - end of 2008

Parking facilities meet Toronto Community Housing physical and safety standards – end of 2008

Rates are consistent across the entire portfolio – end of 2008

Visitor Parking System implemented across portfolio – 2009

Finance Commitments


5.1.2 Revenue Improvement – Geared-to-Income Revenue (Cont’d)

5.1.2 Commercial Revenues (Cont’d)

1st Quarter 2008 Status • 100% of staff completed rent calculation training • Record of all staff completing RGI training • Staff (with emphasis on new staff and CHU

Managers) are being registered for RGI training in 1st and 2nd quarter to avoid overlap with new tenancy management system training in 3rd quarter

• Partnered with TMS Project Team to ensure comprehensive training

1st Quarter 2008 Status • No official response to parking TAGS administration

cost sharing has been received to date • Implementation of parking control projects to register

tenants and non-tenants and income on target as of end of February

• Income for tenant parking has increased by 4%. Where re-registration has occurred. Following re-registration many parkers are shifting to the more appropriate non-tenant status and that income in February was up 25% from the beginning of the year.

• Income from laundry was slightly behind budget in January but this is seen as a timing issue on the flow of income.

• Demand response still under study. Discussions with some potential partners have taken place

• Other projects on target with regard to first quarter activity.

2nd Quarter, 2008 Status • 36% of new and seasoned staff completed RGI

refresher training • Developed training plan for TMS • Eviction Prevention Information Sessions

completed, approx. 82% of TSCs attended. A make up session will be scheduled for early July.

2nd Quarter, 2008 Status • Parking re-registration completed at end of June. • Non-tenant parking revenue increasing as non-

compliant parking routed out • Visitor Parking issues need to be monitored since

there is opposition to charging visitors for parking in multi-residential buildings across the City.

• Laundry revenue below expectations but 6% above 2007 levels

Status for the 2nd Quarter:

On Track Status for the 2nd Quarter:

Requires Monitoring

Finance Commitments


5.2 DEBT MANAGEMENT 5.2.1 Funding of Deferred Maintenance & Repairs Toronto Community Housing does not currently have the cash flow capacity to borrow the funds needed to bring the housing stock up to a state of good repair. The current debt capacity was only able to support about $90 million of financing toward the deferred capital and maintenance requirements. There is no additional cash flow to borrow the resulting gap. In order to lever the needed investments, Toronto Community Housing is seeking the support of the Provincial government. Working with tenants and other interested community partners, Toronto Community Housing has been pressing the urgent need for increased investment in the housing infrastructure to preserve affordable housing for low-income households. Both Toronto Community Housing and its tenants had their own campaigns to convince the higher levels of government to make the investment they so badly need to make. While the campaigns were successful enough to get the issue raised in provincial election commitments, the election is complete and action on those commitments is now needed. In 2008, Toronto Community Housing will release its commissioned report on “Housing for the Toronto Economy”, showing that the investment in social housing is a good one. The report will provide further background for the ongoing board and tenant campaigns. Toronto Community Housing will keep the pressure on the provincial government to ensure that social housing in Toronto does not decrease or decline because of a legacy debt that won’t be paid.

2008 Milestones X Outreach campaigns continue - ongoing X Participation in provincial and federal strategy – 1st quarter 2008 X Policy development for poverty reduction and housing – 2nd quarter 2008 X Participation in City’s 10 year Affordable Housing Framework Consultations – 2nd quarter 2008

Safe and adequate housing included as a measurable outcome in the provincial poverty reduction strategy - 4th quarter 2008

X Presentation on Social Housing Capital Facility to enable housing providers repair and regenerate the stock – 2nd quarter 2008 1st Quarter 2008 Status • “Housing for the Toronto Economy “ report making the economic case for investment in social housing

finalized in preparation for public release in partnership with U of T Centre for Urban Studies and the Toronto Community Foundation

• Toronto Community Housing Board of Directors presented on the Social Housing Capital Facility as a financial solution to the $300 million inherited capital repair backlog at 2008 provincial Pre-Budget presentation

• Outreach to a wide range of social justice, political, financial, culture and the arts “champions” results in 12 publicly recognized voices outside of housing and the city committing to advocate within their networks and to the Premier and key Cabinet Ministers on the need to invest in the repair and regeneration of social housing

• Participation in the Provincial Cabinet Retreat on Poverty Reduction and ongoing work with the Premier’s office and key Cabinet Ministers to keep investment in social housing a priority within the Poverty Reduction Strategy, long-term Affordable Housing Strategy and highlight potential changes in Public Policy.

• Social Housing Capital Facility administered by SHSC put forward as a solution in Pre-Budget briefs by ONPHA and other housing stakeholders.

• Tenant SOS Campaign joins Fair Deal for Our City coalition of labour, immigrants, education, social justice and anti-poverty activists and funding for the capital repair backlog in Toronto Community Housing becomes a key ask in the coalition lobbying campaign along with TTC and Social Assistance

• Tenant Campaign connects with social housing tenants in Windsor, Hamilton and Ottawa to peer mentor re advocacy campaign

• Province announces $100 million to 47 municipal service managers to repair existing housing stock based on number of units in encashment area – Toronto will receive about $39 million

• OSIFA expanded to include loans up to $500 million to repair social housing with focus on energy efficiency

Finance Commitments


5.2.1 Funding of Deferred Maintenance & Repairs (Cont’d) 1st Quarter 2008 Status (Continued) • Province announces $1 million to Social Housing Services Corporation to set up the Social Housing Asset

Management Centre for service managers and providers. • Province announces $1 billion for infrastructure to municipalities and includes affordable housing with transit

and roads – ultimately up to municipalities • Province proposes Investing in Ontario Act, which would direct a portion of provincial surpluses in excess of

$800 million to municipalities for capital needs

2nd Quarter, 2008 Status • SOS Campaign, Toronto Community Housing staff and community partners participate in the City of

Toronto’s 10 Year Affordable Housing Framework “HOT” Consultations to ensure the state of repair of the existing stock is a priority

• Paper on the Social Housing Capital Facility through SHSC complete, presented to MMAH, Finance and key provincial cabinet ministers

• Presentation on the Capital Facility as a highlight of a June policy/discussion forum for leading financiers and government officials “When Governments Don’t Invest: Then what?” Led by the Social Housing Services Corporation and P3 Advisors with support from Toronto Community Housing

• Toronto Community Housing CEO selected to publish and present a policy research paper on Creative Financial Solutions for Renewal and Regeneration of Affordable Housing on behalf of the Canadian Delegation to the Tri-Country Housing Conference October ‘08

• Toronto Community Housing continues work with housing stakeholders – ONPHA, SHSC, CHF, OSIFA and MMAH on policy development for budget allocations and support a business plan and framework for the SHSC Social Housing Asset Management Centre

• Research Report – “Housing for the Toronto Economy” by professor Duncan MacLennan complete and to be published by U of T Centre for Urban Studies as a Research Bulletin – timing TBD

• Carpenters Local 27 Training and Trust Fund hire a government relations consultant to work with TCHC and others to make “Rehabilitation of Social Housing a Top Priority” through a province wide “champions” campaign for 2009 – 2010 that builds upon our work with the goal: government commitment for a massive rehabilitation, renewal and re-investment in social/public housing stock across the province. The action plan is being developed with Toronto Community Housing and other stakeholders and focuses on 5 key elements: social good, poverty reduction, jobs and the economy, and skills development for youth and minorities.

• City of Toronto allocates the $36 million Toronto portion of the $100 million province wide commitment resulting from strategic government relations and advocacy from tenants, staff, board and media. 10% of what is needed – it acknowledges the issue as a priority and confirms provincial accountability going forward.

• City of Toronto announces $75 million from the City proceeds from the sale of Toronto Hydro Telecom will be invested in the “much needed repair of Toronto’s public housing”. “Using these funds to repair Toronto’s aging public housing stock will mean the City and it’s housing company, Toronto Community Housing, can refurbish 5,000 units of housing and retrofit 10 buildings with new energy efficient building systems”.


Quarterly Performance Report | 2nd Quarter 2008 Financial Performance | Page 1

Financial Performance

REVENUE

Tenant Rent YTD

Rental Revenue ($M) Actual

Target/ Benchmark Variance Status

RGI $105.8 $106.1 -0.3% Monitor

Market $24.7 $25.2 -1.8% Monitor

Total $130.5 $131.3 -0.6% Monitor

• Bad Debt Allowance for tenant rent and commercial revenues is higher than budget by 14.7% ($147K).

• Tenant Rent revenue is 0.6%

($0.8M) lower than budget due to market rent that is ($0.45M) or 1.8% below budget.

• Geared to Income rentals are 0.3% ($O.35M) UNDER budget.

Revenue Generation Revenue generation is a measure of commercial and twenanat services revenues. Copmmercial revenues include areas such as non-tenant parking, commercial retail rentals, interest income, wireless antennas, third party advertising and film shoots. Tenant services revenues include laundry, tenant parking and cable services revenue sharing.

YTD

Target Area ($M) Actual Target Variance Status

Commercial Revenue ($M) $10.5 $10.3 2.0% OnTrack

Services at low end of Market ($M) $6.1 $6.3 -2.2% Monitor

Revenue Generation Totals $16.6 $16.6 0.4% OnTrack

• Overall non-rental revenue generation is 0..4% ($0.1M) higher than budget primarily due to higher interest revenue from unused bond proceeds, higher commercial and wireless revenues, commercial parking, partly offset by lower sundry revenues.

• Tenant and business services revenues will increase with full tenant parking re-registration and payment enforcement, commercial leasing of parking spots in the downtown core and laundry price increases in all upgraded facilities..

OnTrack = On Track

Monitor = Requires Monitoring

Action = Requires Action


Quarterly Performance Report| 2nd Quarter 2008 Financial Performance | Page 2

Tenant and Business Services Revenue • Revenue from the following sub-set of initiatives

(i.e., excluding interest income, other revenue) is $10,309,400 or 2% above the 2nd quarter revenue target of $10,104,700.

• Laundry revenue is 4.5% below target partly due to higher vacancy rates at some locations, the loss of units at Regent Park, out of order machines providing free laundry for an extended period.

• Tenant parking is 1.9% below target with 1,300 fewer tenants paying for parking than in 2004 again partly due to increased vacancy rates.

• Non-tenant parking is 54.8%% above target as unregistered users are routed out of tenant parking facilities and negotiations with a commercial user are expected to result in increased revenue in future quarters.

• Bulk parking is a new commercial revenue stream and 10.6% below target for the 2nd quarter due to the termination of an agreement at one facility that is now being made ready and marketed to car dealers for inventory storage.

• Cable TV revenue sharing is 22.2% above target as increased subscriptions have resulted form the marketing efforts of providers in old and new developments with the addition of new subscribers for cable television, internet and phone services.

• YTD Commercial Rent from retail and commercial space leasing is 1.9% above target due to higher than expected renewal rates.

• Wireless Antenna revenue is 12.2% above target with reflecting new agreements and continuing growth in the wireless sector.

• Third Party Advertising revenue is 11.5% above target due to favourable revenue sharing whereby Toronto Community Housing is entitled to a percentage of the revenue generated by advertisers over and above monthly aggregates.

• Film Shoot revenue is 40.2% below expectations due to unforeseen and unfavourable conditions in the film industry in the 1st quarter, which have since been resolved. Increased activity is expected next quarter.

YTD Revenue Source

($)

2008 Revenue Budget Budget Revenue Variance Status

Laundry $5,020,000 $2,346,200 $2,241,552 -4.5% Monitor

Tenant Parking $7,175,600 $3,589,300 $3,522,790 -1.9% Monitor

Non Tenant Parking $633,400 $317,200 $490,786 54.8% OnTrack

Bulk Parking $381,000 $190,500 $170,306 -10.6% Action

Cable TV – Revenue Sharing $1,495,000 $343,300 $419,376 22.2% OnTrack

Commercial Retail $4,839,357 $2,419,900 $2,466,174 1.9% OnTrack

Wireless Companies $1,500,000 $782,800 $878,502 12.2% OnTrack

Third Party Advertising $196,500 $98,200 $109,483 11.5% OnTrack

Film Shoots $34,500 $17,300 $10,350 -40.2% Action

Total $21,275,357 $10,104,700 $10,309,400 2.0% OnTrack

OnTrack=On Track

Monitor=Requires Monitoring

Action=Requires Action


Quarterly Performance Report| 2nd Quarter 2008 Financial Performance | Page 3

EXPENDITURES Toronto Community Housing is committed to achieving operating costs comparable to similar housing organizations. Manageable cost per unit is a measure that is used by social housing providers to ensure that service costs are comparable to the private and non-profit sectors. For the 2nd quarter of 2008, the manageable cost target is $1,194 per unit. Actual costs at $1,169 were below target by 2.1% • Building Operations and Maintenance

o over budget by 0.5% ($217K), due to higher janitorial services ($431K), building supplies ($267K), heating repairs ($179K) and increased fire alarm services ($179K), partly offset by staff savings, and lower costs for waste management and grounds.

• Tenancy Management o under budget 3.1% ($375K) due to lower staffing, training and office costs.

• Community Support Services o below budget 18.6% ($470K) due to delayed community development activities.

• Community Safety Services o below budget 1.1% ($63K) due to lower use of external guards.

• Corporate Services o under budget 8.5% ($784K) due to lower or delayed consulting services and traing

costs, and lower replacement for staff on WSIB. • Utilities

o under budget 1.9% ($1.1M) due to reduced electricity and gas consumption. • Insurance

o under budget by 1.9%% ($30K) due to lower premiums. • Property Taxes

o Marginally over budget by 0.5% ($261K) on preliminary tax bills. Final tax bills adjust for tax rate increases of 1.32% versus the 3% budgeted, but savings will be offset by reduced subsidies as per funding agreements.

• Mortgage & Head Lease Payments o under budget by 0.2% ($115K) due to reduced interest rates on renewals, which are

offset by reduced subsidies per funding agreements. • Commercial Operations

o under budget 13.7% ($193K) due to delayed commercial space maintenance charges. • Overall Manageable Cost

o the sum of building operations, tenancy management, community support, community safety, and corporate services under budget by 2.1% ($1.5M), due to lower costs in corporate services, community support services, tenancy management, and community safety services, partly offset by higher building operation and maintenance costs.

YTD

Target Area ($/unit)

2008 Annual Budget Budget Actual Variance Status

Building Operations & Maintenance 1,454 687 690 -0.5% Monitor

Tenancy Management 445 207 201 3.1% OnTrack

Community Support Services 108 44 36 18.6% OnTrack

Community Safety Services 207 96 95 1.1% OnTrack

Corporate Services 338 160 147 8.5% OnTrack

Manageable Cost per Unit 2,551 1,194 1,169 2.1% OnTrack

OnTrack=On Track

Monitor=Requires Monitoring

Action=Requires Action



CAPITAL INVESTMENT Projected Reserves Reserve Contributions (Capital and Other) $7,532,000

Reserve BRP Equity $890,000

Reserve Contributions (Regeneration & CES) $16,000,000

Corporate Contingency $3,000,000

• The commitment in the CMP is to increase operating revenues and direct such savings into replacement reserves, redevelopment and other CMP capital investment initiatives.

• The projected reserves for 2008 are shown to the left.

Capital Investment PlanFor 2008, the Building Capital Plan submitted for Board approval totals to $138.47M. The Plan has been allocated among seven major programs. • Building Repair Capital Program (including the

Unit Refurbishment and Preventive Maintenance Programs)

• Community Based Capital Program; • Building Renewal Program; • Energy & Water Demand Management

Program; • Building Energy Program • Appliance Replacement Program; and • Corporate / Common CMP Programs.

The programs are further divided into capital components as shown in the table on the following page which provides a financial summary of expenditures as of the 2nd quarter 2008. The expenditures in the table are summarized based upon preliminary financial results.

In the 4th quarter of 2007, the Board approved the acceleration of up to $4.06 M of projects planned for 2008. Approximately $2.98M of this work was

completed and expensed in the last quarter of 2007 and thus the expenditures associated with these accelerated items were excluded in the 2008 Financial Summary of expenditures on the following page.

In order to provide a more complete picture of the status of (construction) of the 2008 Building Capital Plan, a summary table outlining the progress by earned value completion of the seven major programs has been provided following the financial summary. Brief comments on the different capital programs have also been provided following.

Capital Project financial expenditures will typically lag behind the actual project completion for several reasons. Contractor billings often occur when a given percentage of completion is reached or may not be billed until after full completion. For larger more complex capital projects, a detailed design and tendering process may be needed which can skew the majority of major hard construction expenses towards the end of the project time line. These factors contribute to the majority of expenditures being skewed to the 3rd and 4th quarters of the year.



Financial Summary of Expenditures for the Building Capital Plan: Q2 June 30, 2008

Program Component 2008 Budget YTD Actual Budget Left Building Repair Capital Program Building Condition Assessments 800,000 122,822 677,178 Electrical 1,000,000 882,139 117,861 Elevators 2,184,000 5,890 2,178,110 Envelope 3,167,000 705,128 2,461,872 Grounds/Site 500,000 62,263 437,737 Interiors 583,000 185,709 397,291 Life Safety 3,667,000 278,711 3,388,289 Mechanical 3,596,000 1,023,718 2,572,282 Roofing 4,440,000 1,639,594 2,800,406 Community Safety 2,000,000 224,756 1,775,244 Scattered Houses 1,500,000 466,258 1,033,742 Structural 6,175,000 1,121,008 5,053,992 Other 500,000 10,762 489,238 Building Repair Contingency 2,000,000 0 2,000,000 Regular Building Repair Capital Total 32,112,000 6,728,758 25,383,242 Unit Refurbishment 32,000,000 10,675,571 21,324,429 Components Replacement 6,880,000 3,255,136 3,624,864 Building Repair Capital Program Total 70,992,000 20,659,465 50,332,535 Community Based Capital Program Tenant Priority Envelope 6,500,000 697,139 5,802,861 CHU Capital Plans 9,000,000 3,065,761 5,934,239 Community Based Capital Program Total 15,500,000 3,762,900 11,737,100 Building Renewal Program BRP Construction Insurance 50,000 13,500 36,500 Phase 1 23,450,000 10,327,452 13,122,548 Building Renewal Program Total 23,500,000 10,340,952 13,159,048 Energy & Water Demand Management Program Energy Retrofit and Re-commissioning 986,000 11,776 974,224 SHSC Energy Retrofit Pilot 1,384,310 0 1,384,310 Toilet retrofit Program 3,759,690 739,941 3,019,749 Co-Generation Plant 1,000,000 593,512 406,488 Renewable Energy Pilot 200,000 5,000 195,000 Energy Information System - Phase 2/BAS 1,300,000 34,447 1,265,553 Energy & Water Demand Mgt Total 8,630,000 1,384,676 7,245,324 Building Energy Program Building Energy Program Total 11,000,000 0 11,000,000 Energy Programs Total 19,630,000 1,384,676 18,245,324 Appliance Replacement Program Appliance Replacements Total 500,000 5,226 494,774 Corporate Programs Accessibility Initiatives 1,500,000 212,999 1,287,001 Commercial Envelope 2,900,000 70,854 2,829,146 Green Plan Implementation 3,945,000 280,251 3,664,749 Common/CMP Programs Total 8,345,000 564,104 7,780,896 Grand Total 138,467,000 36,717,323 101,749,677



Comments on the Building Capital Plan

Summary of Capital Programs: Following is a table outlining the progress of the capital plan for the major capital programs. This table shows the approximate completion level (Earned Value) of capital work at the end of the 2nd quarter.

Summary Capital Program Original Budget

Completion on 2008 Capital Plan Budget

(Earned Value) ($)

Completion on 2008 Capital Plan Budget

(Earned Value) (%)

Building Repair Program $70,992,000 $24,952,336 35% Community Based Program * $15,500,000 3,762,900 24% Building Renewal Program ** $23,500,000 $10,314,283 44% Energy & Water Demand Program $8,630,000 $1,672,063 19% Building Energy Program $11,000,000 $0 0% Appliance Replacement Program * $500,000 5,226 1% Corporate Programs $8,345,000 $1,654,122 20% Total Building Capital Plan $138,467,000 $42,360,930 31%

* For these programs (Community Based Program, Appliance Program) actual financial expenditures are used for completion estimates on plan. The actual work initiated for these two programs may be higher than recorded based upon the financial summary.

* *Building Renewal Total Excludes insurance costs

• As of the end of the 2nd quarter 2008 the Total Building Capital Plan is approximately 31% completed ($42.3

M of estimated earned value) on the $138.47M of budget for the year. Brief comments on the major programs groups are as follows.

Building Repair Capital Program: This is a major program under the approved Capital Plan for 2008. The Unit

Refurbishment and Preventive Maintenance Programs (PMP) fall under this program group. As of the end of the 2nd quarter approximately $24.95 M of work (earned value) has been completed representing (35%) of the $70.99M budget. It should be noted that over $ 38 M of capital work has been initiated based upon approved commitments. Emergency and unplanned expenditures in this program draw upon the Building Contingency fund which had an original approved budget of $2M. Approximately $4.2 M of additional capital work has be identified as part of the Building Contingency as of end of the 2nd quarter.

• Approximately $0.32 M of originally planned 2008 capital jobs have been cancelled, deferred or satisfied under other programs within the Capital Plan such as the Preventive Maintenance Program (A list of jobs identified in Q2 over $20K is included in Table A).

• Over $4.2 M of emergency or unplanned jobs have been added to the Building Capital Plan in

the 2nd quarter of 2008. (A list of jobs identified in Q2 over $25K is shown in Table B). These jobs will be funded through the Building Repair Contingency fund as well as through savings achieved on other planned or cancelled jobs



Community Based Capital Programs: This program is divided into two major components: Tenant Priority

Envelope and Community-Based Capital Plans which are managed by Community Housing Units. Financial expenditures indicate that approximately 24% ($3.7 M) of billings have been expended against the $15.5 M budget for this program.

Energy and Water Demand Management Programs: This program is divided into six components: Toilet

Retrofit Program, Co-Generation Plant, Energy Retrofit and Re-commissioning, SHSC & Ameresco Energy Retrofit Pilot, Renewable Energy Pilot, and the Energy Information System. At the end of the 2nd quarter approximately $1.67 M (19%) worth of 2008 work has been completed.

Building Energy Program: This program involves implementation of energy retrofit measures on a pre-

selected group of buildings. Changes in 2007 initiated by the City which invited Toronto Community Housing to partner with external agencies such as the Clinton Climate Foundation had initially delayed the proposed implementation until 2008. An Expression of Interest (EOI) has recently been completed by TCHC. Currently an RFP is being developed.

Building Renewal Program: The Building Renewal Program is a multi-year initiative planned over four years.

The contract was executed in the fall of 2005 and the majority of expenditures are to be incurred in the second and third years. Expenditures as of the 2nd Quarter 2008 ~ $10.3 M (44%) of the 2008 forecast budget of $22.97 M.

• A number of measures have or are now

reaching substantial completion. Toronto Community Housing has been preparing and initiating a substantial amount of review and administration associated with reviewing the completion of the measures, related to holdback releases and to account and ensure proper completion packages of inspections, deficiency lists, drawings, warranties etc. are provided.

• The program is approximately 34 months into a planned 48 month project life and considered to be on track for completion within the forecast timelines. A brief summary of the multi-year progress is shown below.



Building Renewal Program Multi-Year Update to end of Q2 2008

Development Name

Original (Multi-year)

Budget ($)

Total Progress Invoicing for 2005, 2006 & 2007 & 2008 inc.

Preliminary Invoices ($)

Completion Overall on Multi-year

Budget (%)

Ameresco Projects: $59,845,302 $51,607,276 86%

MCW Projects: $42,420,358 $30,306,593 71%

Program Support Costs $8,280,000 $1,899,943 23%

Total BRP Summary $110,545,660 $83,813,812 76%

Appliance Replacement Program: The Appliance Replacement Program as a bulk replacement program is

in its final stages and is now dealing mainly with incremental appliance replacements. At end of the 1st quarter approximately $0.074 M (15%) of billings were reported as expended against the $0.5M budget for this program. Since this last report the project management costs, which were related to manage bulk replacement have been transferred, At the end of quarter 2 $0.005 M (1%) was expensed against the $0.5 M budget for this program. Staff will continue to monitor one-off replacement requirement and re-deploy budget as required.

Corporate Programs (Common/CMP): This program contains three main components which are common to the

Community Management Plan and are being implemented by several operating units in Toronto Community Housing. These include: Accessibility Initiatives, Commercial Envelope and Green Plan Implementation. At the end of the 2nd quarter approximately $1.65 M (20%) of work has been completed against the $8.63 M budget for this program. It should be noted that approximately $2.03 M of capital work has been initiated based upon approved commitments



Table A Cancelled Jobs (Q2 examples over $20K) from the Building Repair Capital Program

Development Name Building Component Original Budget Job Description

Campbell Antler Mechanical - Heating System - Common Areas $60,000 Canceled - to be completed under

Preventive Maintenance Program

Perth Ave (136-152) Mechanical - DWS H.W. Heaters $55,000 Canceled - to be completed under


Roselawn Marlee Mechanical - Heating Boilers $55,000 Replacement no longer required.

St. Joseph St. (21) Mechanical - Air Makeup System $30,000 Canceled - to be completed under


Sheppard Victoria Park Mechanical - Air Makeup System $30,000 Canceled - to be completed under


Bathurst Eglinton Mechanical - Air Makeup System $20,000 Canceled - to be completed under




Table B

Emergency or Unplanned Job (Q2 examples over $25K) Added to Building Repair Program

Development Name Building Component Budget Brief Job Description

Sherbourne Shuter Roofing - Roof Systems $314,496 Emergency Roof replacement at 155 Sherbourne St

Dan Harrison Complex Elevators - Elevator General Repairs $295,325 257 Sherbourne- Material And labor to Replace

the two (2) elevators in the bldg.

Agnes MacPhail Electrical - Other $277,574 Out of Scope of BRP Budget - Emergency Hydro Vault Roof Repairs

Eglinton Ave. E (220) Electrical - Other $244,274 220 Eglinton Ave - Emergency Electrical Room Upgrade

Morningside Coronation Structural - Other $224,640 Emergency Basement slab repairs around area of sanitary sewers

Gilder Drive Roofing - Roof Systems $199,680 Roof Replacement at North side and mechanical room at 31 Gilder Drive, Phase II.

Asquith Park Envelope - Brick $175,294 Deteriorated brick replacement at NE elevation for top 4 floors and parapet

Morningside Coronation Mechanical - Sanitary Drainage $142,325 Emergency Work - To replace existing sanitary drains along units 160 - 172 Danzing.

Jarvis Carlton Apartments Envelope - Brick $140,236 Emergency brick removal and repairs

Leslie Finch Structural - Other $93,291 Emergency fallen concrete repairs - Balcony repairs at Lesile Finch (various locations).

Crombie Park Envelope - Brick $87,460 Replace missing or deteriorated masonry around the perimeter of the property deemed to be urgent.

Victoria Park Chester Le Roofing - Roof Systems $81,619 Emergency Roof Replacement(Shingle) at Block 162-172 (Units # 162, 164, 166, 168, 170 & 172),

Tandridge Crescent 2 Parking Garages - Other $81,120 Emergency Repairs to the expansion joint at the on-grade garage

The Esplanade (55) Envelope - Brick $75,504 emergency brick repairs at the East Elevation of the stair tower located at 55 The Esplanade.

Hydro Block Elevators - Elevator General Repairs $74,685 Repair 2 elevators due to sewage backup.

Larch St. (15) Structural - Other $70,512 Study to investigate termite damage

Leslie Finch Structural - Other $67,935 Emergency balconies repairs-water penetration to three balconies at Tree Sparrowway site

Wellesley Jarvis Place Envelope - Brick $52,921 Emergency Masonry Removals - Emergency Work

Lawrence Heights E.& W. Life Safety - Fire Alarm System - Panel $49,999 Emergency Fire Alarm system upgrades

Sunrise Towers Mechanical - DWS Shut-offs - Riser $49,622 Emergency In suite Kitchen/Bathroom Shut-offs

valves and repair of water leak damage.

Roselawn Marlee Mechanical - Air Makeup System $48,410 MAU Replacement

Atkinson Co-operative Mechanical - Sanitary Drainage $47,519 Emergency Sewer Repair

O'Connor Drive Mechanical - DWS H.W. Holding Tanks $44,053 Storage tank replacement.

Asquith Park Life Safety - Other Life Safety $42,370 Emergency investigation & loose brick masonry removal.



Table B (Continued)

Emergency or Unplanned Job (Q2 examples over $25K) Added to Building Repair Program

Development Name Building Component Budget Brief Job Description

John St. (190) Mechanical - Air Makeup System $40,000 Non-functional make-up air system. Repair

Eglinton Ave. E (220) Structural - Balcony Railings $40,000 Replace Railings Eglinton Ave. E (220) Structural - Balcony Railings $40,000 Replace Railings

Hydro Block Elevators - Elevator General Repairs $74,685 Repair elevator due to sewage backup.

Capital Planning Consulting - Consulting $35,100 Priority inspection of roofing for various locations Neptune Drive Mechanical - Heating Boilers $35,070 Emergency Boiler Replacement

Blair Court Life Safety - Roof Anchors $34,688 Upgrade roof anchor system to accommodate masonry repairs

Hubbard Blvd. (42) Life Safety - Remediated Substance Removal $29,772

Provide necessary labour, materials, and equipment for mould remediation inside the bathroom

Edgeley Village Driftwood Roofing - Roof Systems $29,578 Emergency roofs repairs work at 396 Driftwood Court at Units 2 and at 15 Driftwood Court

Edgeley Village Driftwood Roofing - Roof Systems $29,393 Emergency Roof Repairs - Water Penetration Gilder Drive Mechanical - Heating Boilers $28,792 Emergency Boiler Replacement

Neptune Drive Structural - Other $28,080 To investigate, design and build new poured in place reinforced balcony slabs at 135 Neptune Drive

McMurrich Place Life Safety - Other Life Safety $27,394 Emergency Envelope Repairs Adanac Apartments Mechanical - Heating Boilers $27,360 Emergency Boiler Repairs Islington St.Andrews Mechanical - Heating Boilers $26,730 Emergency Boiler Replacement Teesdale Pharmacy Mechanical - Heating Boilers $26,034 Emergency Boiler Replacement



INVESTMENT PERFORMANCE Long Term Investments

• Canadian equity recovered from losses of the previous 2 quarters. S&P Composite index advanced in the 2nd quarter, up by 9.1% as 7 of the 10 sectors rose led by energy, materials and utilities. Gain in MB Canadian fund of 6.8% was short by 2.3% compared to the benchmark - indicative of portfolio's underweighting on winning shares.

• Foreign equity shares continue to shrink. US equity down by another 3.9% as 6 of 10 sectors lost ground, for example, financials due to mortgage crisis and industrials caused by growing recession. International equity index fund also fell 3.3% which somehow mirrored the performance of the MSCI EAFE index. Actively-managed Global equity remains in the negative territory. Major markets in Europe - UK, France and Germany - posted losses between 1% to 4% while Japan had a modest gain of 0.4% (all rates in CAD terms)

• Performance of fixed income securities in the 2nd quarter is mixed. Mid and long-term bonds in the DEX Universe index have negative returns of 1% while short-term bonds down by 0.4%. Net effect to our portfolio is a loss of 0.55% versus the benchmark's negative 0.72%. Real return bond has been the consistent winner for the last 4 quarters. From the 1st quarter at 5.9%, the portfolio gained another 4.5% in the 2nd quarter.

• Overall, our long-term investments managed to grow 1.05%, equally matching the growth posted by the weighted policy benchmark. Canadian equities and Real Return bonds kept the portfolio afloat amidst the weak performances of the bond and foreign equity markets..

.

ACTUAL RETURN BENCHMARK

Investment Q2 2008 Name Q2 2008

McLean Budden (MB) Canadian Equity Pooled 6.76% S&P/TSX 300 Comp Index 9.09%

Fixed Income Pooled -0.55% DEX Universe Index -0.72%

Alliance Berstein (AB) Global Blend Equity -2.74% MSCI World Index -3.33%

TD Asset Mgmt (TD) Real Return Bond Fund 4.50% SC RR Bond Index 4.50%

International Equity Index -3.30% MSCI EAFE -3.40%

US Market Index -3.90% S&P 500 -3.90%

Total Pooled Fund (Weighted) 1.05% 1.05%



Short Term Investments Annualized

• Return on money market continued its declining trend during the 2nd quarter. In April, BoC again slashed it's policy rate by another 50 bps and US Fed followed suit by cutting 25 bps. Since then, policy rates have been unchanged at 3% and 2% respectively contrary to market expectations. Both central banks foresee that, all things considered, current rates are now well positioned to promote moderate growth and price stability in the 2 economies.

• Our short-term portfolio registered annualized return of 3.9%, slightly below the 90-day TB bill index. This was primarily due market's expectation in early May that BoC's rate will be cut by at least 25 bps but in contrast, was left unchanged. Actively-managed money market funds, like our UBS fund, were caught off guard and suffered losses on securities purchased with priced-in lower rates.

• About 60% of our short-term portfolio is managed by UBS and TD Securities. UBS percentage share is swelling (currently $122m versus TD’s $52m) as we continuously redeem the TD structured notes at $13m each month. Average term of the UBS portfolio at the end of June is in the 80 - 110 days range. The portfolio is focused on non-government holdings (banks and corporate papers) comprising 59% of the total

Actual Benchmark

Period Weighted Avg. Yield

91-day T-Bill

Over (Under)

Q1/02 2.49% 1.72% 0.77%

Q2/02 2.35% 2.32% 0.03%

Q3/02 2.80% 3.04% -0.24%

Q4/02 2.91% 2.80% 0.11%

Q1/03 2.74% 2.44% 0.30%

Q2/03 3.18% 3.28% -0.10%

Q3/03 3.18% 3.12% 0.06%

Q4/03 2.87% 2.56% 0.31%

Q1/04 2.75% 2.79% -0.04%

Q2/04 2.31% 1.93% 0.38%

Q3/04 2.08% 1.84% 0.24%

Q4/04 2.38% 2.63% -0.25%

Q1/05 2.44% 2.38% 0.06%

Q2/05 2.61% 2.54% 0.07%

Q3/05 2.67% 2.42% 0.25%

Q4/05 2.98% 2.95% 0.03%

Q1/06 3.65% 3.40% 0.25%

Q2/06 3.84% 3.81% 0.03%

Q3/06 4.29% 4.47% -0.18%

Q4/06 4.29% 4.23% 0.07%

Q1/07 4.25% 4.23% 0.03%

Q2/07 4.30% 4.18% 0.11%

Q3/07 4.65% 4.40% 0.25%

Q4/07 4.72% 4.35% 0.37%

Q108 4.53% 4.53% 0.00%

Q208 3.92% 4.19% -0.27%



FINANCIAL STATEMENTS The Line of Business Report breaks our financial statements into “business units” based on the Community Model – a network of community housing units, shared services, corporate and other services. The Line of Business Report complements the Operating Statement providing additional information as to how resources are used within these business units. The Lines of Business report breaks company operations into the following business units: • Community Housing Unit Operations

• Building Operations and Maintenance • Tenancy Management • Commercial Operations

• Shared Services

• Maintenance and Call Centre • Community Support Services • Community Safety Services • City Programs • Housing Connections • Rent Supplement Program

• Corporate and Other

The Operating Statement provides a breakdown of budget, actual and variances for: • Rental and non-rental revenues; • Housing subsidies, grants and program

revenues; • Manageable cost expenditures; • Other housing costs; • Other program costs; • Capital expenditures; and • Net operating revenue.



Lines of Business Report to June 30, 2008



Operations Revenue & Expenditures Statement to June 30, 2008



Operations Sources & Application of Funds to June 30, 2008

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