SHSC 2005 Annual Report - Empowering Our Members

8/9/2019 SHSC 2005 Annual Report - Empowering Our Members

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The Fourth Annual Report of the

Social Housing Services Corporationfor the year ending December 31, 2005

our membersempowering


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chairmansmeSSage

In many ways, 2005 was a bellwether year for

SHSC. It was our rst year without the seed funding

provided by the province. It was a year that saw us

establish new programs and initiatives that address

the needs of social housing providers and municipal

service managers in concrete ways. And it was a year

in which we continued to prove that we are effective

managers of group programs.

When SHSC was established in 2002, as social

housing was in the midst of being downloaded

to local governments, there was great concern

that the new organization would be an additional

cost for municipalities. In fact, SHSC is not only

self-sustaining but we are helping to minimize

and stabilize social housing costs. Not only

will municipalities not receive a bill for SHSCs

operations they will benet from them through our

group programs for housing providers, and through

the services we offer directly to service managers,

including research and continuous improvement.

One of the most signicant concerns for housing

providers became one of SHSCs most important

initiatives in 2005. With the cost of fossil fuels and


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EMPOWERING OUR MEMBERS

electricity increasing sharply, housing providers told

us that they needed help managing consumption

more effectively. We saw the need for a coordinated

program that would help providers negotiate the maze

of possible approaches, incentives and products. Now,

were helping providers reduce their energy usage and

create a culture of conservation in their communities.

Almost since we launched the comprehensive group

insurance program for housing providers in 2003,social housing providers and service managers have

been asking us to source other types of coverage

beyond the property and liability insurance offered

through our main program. This interest in insurance

for tenants contents, builders risk, homeless shelters,

and District Social Services Administration Boards

(DSSABs) led us to establish an insurance brokerage

so that we can offer new coverages without

introducing additional risk to the current program, at

the same time minimizing costs and fees.

SHSC continues to investigate the potential of

assuming the provincial role of administering social

housing mortgages. The board is convinced that

this work should be done at the municipal level,

since these mortgages account for more than two-

thirds of municipal social housing costs. In 2005, we

furthered discussions with the Ministry of Municipal

Affairs and Housing about the feasibility of having this

responsibility transferred to SHSC. Toward the end

of the year, SHSC established a working group of

representatives from the Association of Municipalities

of Ontario, the Service Manager Housing Network,

the Municipal Finance Ofcers Association of

Ontario, the Ontario Non-Prot Housing Association,

the Co-operative Housing Federation of Canada, and

Toronto Community Housing, as well as a number of

municipal treasurers.

Moving into 2006,

the working group is

expected to develop a

business case for the

transfer of this role to

the municipal realm.

As a province-wide

organization, SHSCis ideally positioned to help both service managers

and housing providers compare their experiences

and data, and identify practices that will enable them

to operate more efciently and effectively. In 2005,

we launched performance indicator systems for both

service managers and housing providers: web-based

tools that help users gather performance data and

compare their results anonymously to other users

province-wide.

Recognizing the value of enabling service managers

to share ideas and experiences in a less formal venue,

SHSC supported the development of a website

especially for service manager housing staff to enable

them to post information and reports of interest, share

ideas on a discussion board, and archive meeting

documents. In addition, SHSC funded conferences

and research in areas of concern to service managers

and housing providers most notably capital reserve

funding, housing and health issues, and utility

metering.

SHSC negotiated reduced premiums for, and

enhancements to our insurance program coverage,

attracting more non-prots and local housing

corporations to the program than ever before. We

offered new claims management workshops province-

Were helping

providers create

a culture of

conservation

in their

communities.


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SHSC 2005 ANNUAL REPORT

wide, and introduced a Tenant Risk Awareness Kit to

help housing providers work with residents to prevent

losses and improve safety in their communities.

Our Social Housing Investment Program, overseen

by SHSC Financial Inc., saw more social housing

providers sign up to take advantage of both

competitive mutual funds and a comprehensive

education program. SHSC Financial staff met with

non-prot and co-op boards across the province anddelivered a variety of workshops on request to meet

local needs. SHSC Financial conducted surveys

of both investors and municipal service managers

to better understand their needs and attitudes.

The results of those surveys will help shape the

companys direction in 2006 and beyond.

We continued to offer social housing providers

access to stable and competitive natural gas pricing.

In our rst three years, our board established

programs and structures to enable the corporation

to operate self-sufciently. Our focus this past year

was to build on this work to ensure that SHSC

will have the strength and stability to move into the

future, continuing to add value to the social housing

community in Ontario.

I share SHSCs success this year with a creative

and committed board and a small group of dedicated

employees. I owe a great debt to the board members

who have not only brought their

vast experience and innovative

ideas to SHSC, but have also

shared SHSCs message with their

peers throughout the province.

Throughout most of 2005, they

were: Roger Maloney, who continued in 2005 as

Vice-Chair, Bas Balkissoon, Derek Ballantyne, David

Court, Rick Craven, Diane Deans, Chuck Dowdall,

Colin Gage, Merv Hughes, Bob Macdonald, Don

McCausland, Lori-Anne McDonald, Gerry Moss, and

Peter Smith.

I especially want to recognize three individuals who

left the board late in 2005. Bas Balkissoon, who

was part of the corporations founding board andits treasurer, stepped down after being elected as

a member of provincial parliament. New service

manager representative Chuck Dowdall left the board

late in the year to accept a position with the Ontario

Non-Prot Housing Association. I know the other

board members share my thanks and best wishes

to both of these individuals for success in their new

roles. Finally, I am grateful to non-prot representative

Gerry Moss, who after two years on SHSCs board

agreed to serve on the founding board of SHSCsafliate brokerage, SoHo Insurance Inc.

With the growing support of social housing providers

and municipal service managers, SHSC has not

only survived but thrived over the past year. We

look forward to continuing to nd ways to help our

colleagues in the social housing sector effectively

serve their constituents social housing residents

and the broader communities in which they live.

After all, their constituents are ultimately our

constituents, too.

Gordon J. Chong

Chairman


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In response to rIsIng energy costs and rising

concerns about them among social housing providers SHSC

launched a pilot Energy Management Program early in 2005. We

wanted to see if we could add value by offering a coordinated approach

to energy audits, incentives, data monitoring, and expertise.

SHSC launched the pilot in over 90 buildings representing 46 co-ops,non-prots, and local housing corporations across the province,

choosing a representative group from a deluge of volunteers. We

set up a database to record energy consumption and coordinated

standardized audits and collected energy data for all involved buildings.

We sought out partners who could provide funding and expertise for

the program, and we were pleased to establish partnerships with the

following organizations that have supported the pilot:

Ontario Ministry of Energy;

Natural Resources Canada and the Canada Mortgage and Housing

Corporation;

Gas companies Enbridge and Union Gas; and

Utility companies Hydro One, Enersource, PowerStream, Horizon,

Toronto Hydro, Hydro Ottawa, Milton Hydro, Enwin, Kitchener-

Wilmot Hydro, Guelph Hydro, and Midland Power.

The energy audits found annual potential savings of 2.5 million kilowatts

of electricity and 700,000 cubic metres in gas, and projected annual

new initiativeSto address social housing need

An Energetic Approachto Conservation


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operating cost savings of $1.5 million. However,to realize those savings will require a projected

investment of $17.5 million.

By the end of 2005, SHSC had structured a revolving

loan to enable housing providers to borrow money to

fund energy work and obtained substantial funding:

$1.9 million from Natural Resources Canada

through Opportunities Envelope funding

administered by the Ontario Ministry of Energy

to fund 25% of the costs of retrots for pilotproviders and discount the rst years interest;

$1.5 million over three years for Hydro One

customers to fund electricity-saving initiatives for

up to $500 per unit;

a memorandum of understanding with the

Conservation Bureau of the Ontario Power

Authority, expressing a commitment to work

through SHSC to support energy conservation in

social housing; and

Various agreements in process to facilitateincentives from gas and hydro utilities.

At the same time, we developed resources to

support energy conservation in both existing and new

affordable housing. In the fall, we produced Building

in Energy Savings a report describing the cost of

building multi-residential housing with energy-efcient

elements, and the resulting payback in energy

savings. In addition, we surveyed housing providers

to better understand issues around individual

metering and smart metering of utilities.

Potential savings identied by energy audits


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a lmost s I nce s H sc launc H e d its

main group insurance program, housing providers

and service managers have asked whether we

could provide other types of insurance, such as

tenant contents, builders risk, homeless shelter,

and a package of coverages geared to the needs ofDSSABs.

In response to these requests, SHSC began looking

at how we could oer additional coverages at

favourable rates for our customers without adversely

aecting our main insurance program. We determined

that the most eective way to meet these needs

coverages while minimizing costs and fees, and

without introducing additional risk to the current

program.

In the fall of 2005, SHSCs board of directors named

the founding board for the brokerage, which is called

SoHo Insurance Inc. The board is chaired by Don

McCausland, SHSC Board Member and its members

Accommodations and past SHSC Board Member;

Carol Conrad, CEO, Nipissing District Housing

Corporation; Linda Stephenson, Commercial Services

Canada Ontario Region; Gordon Chong, SHSC

Chairman; and Lindsey Reed, Chief Executive

SHSC.

SoHos board expects to begin to oer insurance

products in 2006.

A New

Insurance

Brokerage

s H s c s s uccess is closely linked to the

success of the social housing sector across the

province. We depend on committed and engaged

service managers and housing providers to serve on

our boards and committees, to communicate their

needs and concerns, and to make the most of theservices and programs that we oer.

In 2005, SHSC broke new ground in our support

for the social housing sector and continuous

improvement initiatives, by launching performance

indicator systems, funding research and conferences,

and supporting the development of the Service

Manager Housing Network and a rent arrears

database.

We continue to work closely with sector

Housing Association and the Co-operative Housing

Federation of Canada, to better understand the needs

of our customers and to communicate about our

initiatives.

Continuous Improvemen

S O CI AL H O U SI NG S E RV IC ES C O RP OR ATI ON


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In 2005, following more than a year of consultation

and development, SHSC launched web-based

performance indicator systems to allow for the

collection and sharing of key performance data.

Separate systems were developed for service

managers and housing providers both with the full

participation of advisory groups.

The system for service managers, which was

launched in April, had two-thirds of service areasparticipating by year-end. The system allows service

manager staff to enter and compare data for ve

performance indicators:

Administration costs as a percentage of total costs

Subsidy costs per unit

Coordinated access costs per household on

wait list

Average RGI tenant revenue per unit

Administration costs per unit

Performance

Indicator

Systems

The system for housing providers, which was

launched in November, allows housing provider staff

to compare data for 18 indicators:

Manageable cost per unit

Maintenance and administration cost per unit

Arrears rate

Bad debt rate

Other revenue per unit

Operating surplus or decit per unit

Total capital reserves per unitAnnual capital contribution per unit

RGI vacancy revenue loss rate

Market vacancy revenue loss rate

Total vacancy rate

Eviction rate

Insurance cost per unit

Gas cost per unit

Electricity cost per unit

Oil cost per unit

Alternative energy cost per unit

Water cost per unit

In 2006, our focus will be to encourage the greatest

possible participation in these systems, to rene and

enhance indicators, and to start developing a process

for identifying and sharing good practices based on

data in the system.


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as sHsc Has become establIsH ed in the social

housing sector, we have increasingly attracted proposals for housing-

related research and other projects from service managers and housing

providers.

In late 2004, the our board approved a $20,000 grant for a team of

three service managers and scientists based at St. Michaels Hospital

in Toronto to develop a proposal for a multi-year study of the health

effects of housing. The study team is pitching the proposal to national

and American health funding bodies, with decisions expected in the

months ahead.

Partly as a result of this request, our board set up a small research

committee in 2005 to develop a process and criteria for consideringand funding research proposals. In the fall, the board approved

procedures and an annual budget of at least $50,000 to support

external research. A call for proposals was planned for early 2006,

outlining the areas of SHSCs interest and describing how proposals

will be evaluated.

SHSC continued to conduct research in its own program areas,

such as the adequacy of providers capital reserves, and in areas of

particular interest to service managers and housing providers. One

signicant research area in 2005 was the cost to municipalities up

to $175 million annually of the levels at which the Ontario Works

program and Ontario Disability Support Program will fund shelter costs

for clients living in social housing. We gathered data and brought

together municipal and sector representatives to explore the province-

wide impact of these program rules. We have subsequently handed

over this issue to the Association of Municipalities of Ontario, but we

continue to offer research support.

Research


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sHsc pursued a variety of activities to support

the social housing sector in 2005.

We continued to sponsor and participate in

conferences for housing providers and service

managers, and we began participating in similar

events focusing on energy.

At the request of the Service Manager Housing

Network (established by service manager housing

staff in 2004 to enable them to share information

and experiences), we developed and launched a

member-only website for the group. The site features

shared documents, news, information about network

meetings, and a discussion board. We continue

to maintain the site, which is visited by some 100

service manager housing staff every month.

Other Sector Support

We supported the creation of a rent arrears database

for social housing residents. Provincial law states thatan applicant for housing who has arrears with a social

housing provider cannot be added to the province-

wide waiting list unless an approved payment plan

is in place. A province-wide database in which

community access centres can enter information

about former tenant arrears will enable social housing

providers and service managers to comply with this

legislation. We funded the development of the web-

based database, and by the end of the year, we were

piloting the site with nine service manager areas.

We advised service managers and the Ministry of

Municipal Affairs about realistic benchmarks for

insurance and utilities. Managing insurance and

energy management programs gives SHSC both

up-to-date information and a unique province-wide

perspective.


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sHsc and our program broker , Aon Reed Stenhouse,

negotiated reduced property insurance premiums for the second year

of our insurance program, along with enhancements to coverage. Thesemeasures attracted more non-prots and local housing corporations

to the program than ever before. The average cost of comprehensive

property and liability insurance has dropped to around $115 per unit.

In response to provider concerns about handling paperwork and

approvals during peak summer holiday time, SHSC and Aon moved the

insurance programs expiry date from September to November.

SHSC expanded its education program with new claims management

workshops, which were offered at locations across the province in the

spring.

In the fall, SHSC introduced a Tenant Risk Awareness Kit (TRAK)

to help housing providers work with residents to prevent losses and

improve safety in their communities. TRAK offers resources, including

ideas to use at meetings, posters, fact sheets, and tips to add to tenant

newsletters.

enhancingcurrent programs

Managing the Group

Insurance Program


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Overseeing the

Investment Programour socIal HousIng Investment

program is managed by a subsidiary

corporation, SHSC Financial Inc. 2005 was the

Programs third year, and saw growth in participation

and investments. By the end of the year, more than

850 non-prots and co-ops had invested in one or

more of our four social housing investment funds.

The total asset base of the funds had grown to$312 million. The Program has attracted customers

and funds beyond its base of capital reserve dollars

held by former provincial non-prots and co-ops; more

than 60 other providers have contributed $11 million

to the funds.

In 2005, after two years of providing province-wide

orientation and training workshops, SHSC Financial

concentrated on addressing the needs of individual

non-prots and co-ops. Workshops on capital

reserve planning, cash management and investing

were offered on request, in response to interest in

local communities. SHSC Financial offered to attend

providers board meetings to discuss the Program. In

2005, staff met with two dozen boards.

In the fall of 2005, SHSC Financial conducted its rst

province-wide surveys of both investors and service

managers to better understand their needs and

attitudes.

The survey of 182 non-prot and co-op investors

(22% of the total population) found a wide variation

in levels of satisfaction with the Social HousingInvestment Program. The Program and its fund

manager Phillips, Hager & North received the

highest ratings from those providers who had placed

some of their reserve funds in the Programs equity

fund those who had taken full advantage of the

diversication potential offered by the program.

Providers who had invested only in the money market

fund were the least satised with the Program.

Some providers responses were inuenced by their

perspectives on a number of fundamental issues

beyond the scope of SHSC Financial, including the

mandatory nature of the Program, the perception

that they had earned better returns when they

were on their own, an attachment to the one-on-

one service they used to receive from their local

nancial institution, and concern that they do not have

sufcient reserves overall.

Satisfaction with investment program overall

Satised 55%

Declined 2%

Dissatised 19%

Neutral 24%



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The survey of 44 of the 47 service managers found

that most felt the Social Housing Investment Program

is well run. Service managers value the ease with

which they can monitor providers capital reserve

levels and returns, and most support keeping the

Program mandatory.

The results of the surveys will help shape the

companys plans for the Program, including education

and outreach, in 2006 and beyond.

Phillips, Hager & North report the following rates

of return (net after fees) for the social housing

investment funds as of December 31, 2005:

Fund Year Years

Social Housing CanadianMoney Market Fund

1.97% 1.86%

Social Housing Canadian

Short-Term Bond Fund

1.58% 3.27%


Bond Fund

6.01% 6.15%


Equity Fund

20.47% 18.21%

SHSC Financial is governed by a board of directors

of municipal, housing, and investment experts. As of

December 2005, board members were:

Dr. Gordon Chong, Chairman, Social Housing

Services Corporation; Ex-ofcio Chairman,

SHSC Financial

Derek Ballantyne, Chief Executive Ofcer, TorontoCommunity Housing

Len Brittain, Director, Corporate Finance, City of

Toronto

Sandra Cartwright, former Treasurer, York Region

Danielle Ccile, Executive Director, Federal

Co-operative Housing Stabilization Fund

Dino Chiesa, Chair, Canada Mortgage and

Housing Corporation; Vice-Chair, Canadian

Apartment Properties Real Estate Investment

TrustBrian Coleman, retired investment manager

James Donegan, CFA, Senior Portfolio Manager,

External Funds, OMERS

Arthur Donner, PhD, Economic Consultant

Keith Ward, Commissioner of Housing and

Property, Region of Peel

Fund totals for SHSC Financial


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sHscs natural gas program seeks to offer housing

providers a balance of stable and competitive pricing, protecting againstthe volatile marketplace while obtaining the lowest possible price.

2005 began with higher levels of gas storage good news for supply

and pricing but forecasts of more hurricanes than average for the fall

season. Persistent oil price hikes, demand from industrializing nations

such as China and India, and concerns over future supply all pushed up

prices. When hurricane forecasts proved correct with the devastating

effects of Katrina and Rita, already sky-high market prices escalated

further.

SHSC maintained a xed price of 29 cents per cubic metre for our

customers throughout 2005 a price that compares favourably with

both system gas and xed contracts over the same period. SHSC has

been able to protect its clients from the various peaks in prices over the

last several years, including the 150% increase in prices during 2005.

Customers costs were reduced further by reductions in consumption, a

warmer-than-average winter and conservation initiatives.

Natural Gas Program

Comparing natural gas prices


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a sound structure for

the future

In our fI rst tHree years, SHSC received seed funding

from the Ministry of Municipal Affairs and Housing. In 2005 our rst

year without provincial funds we continued to improve our existing

programs, while expanding our services to both housing providers andservice managers.

SHSCs board laid the groundwork in its rst three years to enable the

corporation to operate self-sufciently. In 2005, the board continued

this work, establishing a structure to support the corporation in

continuing to offer programs and support the social housing sector

in Ontario. We are well-positioned and ready for the challenges and

opportunities that the future brings.

In 2005, following a nomination process in 2004, SHSC welcomed four

new service manager members to the board: Diane Deans, Rick Craven

David Court, and Chuck Dowdall. Chuck left the board late in the year

to accept a position with the Ontario Non-Prot Housing Association.

Founding board member Bas Balkissoon left the board when he was

elected to the provincial legislature.

Governance


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In 2005, SHSC conducted a nomination process

for non-prot and co-op representatives to the

board. As the year ended, we were looking forward

to welcoming Trevor Lester as a director effectiveJanuary 1, 2006. Founding board member Gerry

Moss moved to the new board of SHSCs afliate

brokerage, SoHo Insurance Inc.

As of December 31, 2005, members of the SHSC

Board of Directors were:

Dr. Gordon Chong, Chairman

Roger Maloney, Vice-Chair, former Chief

Administrative Ofcer, Region of Peel

Derek Ballantyne, Chief Executive Ofcer, Toronto

Community Housing

David Court, Chief Administrative Ofcer, Algoma

District Services Administration Board

Rick Craven, Burlington City Councillor, Halton

Regional Councillor

Diane Deans, Ottawa City Councillor

Colin Gage, General Manager, Victoria Park

Community Homes

Merv Hughes, Manager of Social Housing,

Counties of Haldimand and NorfolkBob Macdonald, Javelin Co-operative Homes

Don McCausland, former Mayor, Municipality of

Grey Highlands; former Grey County Councillor

Lori-Anne McDonald, Guhbawin Co-operative

Homes

Gerry Moss, Port Elgin Rotary Non-Prot

Accommodations

Peter Smith, former chairman, Canada Mortgage

and Housing Corporation; president,

Andrin Ltd.


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conSoLidated financial StatementS

Auditors Report

To the Members of theSocial Housing Services Corporation

We have audited the consolidated balance sheet of Social Housing

Services Corporation as at December 31, 2005 and the consolidated

statements of revenue and expenses and changes in nancial

position for the year then ended. These nancial statements are the

responsibility of the corporations management. Our responsibility is toexpress an opinion on these nancial statements based on our audit.

We conducted our audit in accordance with Canadian generally

accepted auditing standards. Those standards require that we plan

and perform an audit to obtain reasonable assurance whether the

nancial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and

disclosures in the nancial statements. An audit also includes assessing

the accounting principles used and signicant estimates made by

management, as well as evaluating the overall nancial statementpresentation.

In our opinion, these consolidated nancial statements present

fairly, in all material respects, the consolidated nancial position

of the corporation as at December 31, 2005 and the results of its

consolidated operations and the changes in its consolidated nancial

position for the year then ended, in accordance with Canadian generally

accepted accounting principles.

Gordon Hardcastle LLP

Chartered Accountants

Dorchester, Ontario

March 17, 2006


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year ended December 31, 2005

Consolidated

Balance Sheet

00 00

$ $

Assets

Cash 2,823,000 2,696,714

Investments (note 3) 4,321,960 4,174,080

Accounts receivable:

Gas program (note 10) 1,509,644 3,092,184

Other 550,384 164,144

Deferred development expenses (note 2) 129,373 258,744

Deferred energy program expenses (note 12) 515,150 Insurance program fund (note 11) 2,330,772 2,276,112

12,180,283 12,661,978

Liabilities

Short term indebtedness 1,470,438

Accounts payable:

Gas program (note 10) 3,550,286 3,254,840

Other 192,152 121,791

3,742,438 4,847,069

Net assets 8,437,845 7,814,909

Represented by:

Revenue fund (note 5) (515,055) (738,441)

Reserves (note 6) 7,700,000 7,700,000

Gas fund 1,252,900 853,350

8,437,845 7,814,909

The accompanying notes are

an integral part of this nancial

statement.


20/26



Consolidated Statement of

Revenue and Expenses

00 00

$ $

Revenue

Grants and transfers 1,000,000

Gas program 38,901,509 35,746,960

Energy program pilot 393,593

Benchmarking and best practices 4,132 19,215

Group insurance program 575,173 636,784

Capital reserves pooling program 2,348,030 2,014,218

Investment income 143,287 154,291

42,365,724 39,571,468

Expenses

Gas program 37,501,959 33,638,619

Energy program pilot 606,480

Benchmarking and best practices 935,705 1,102,411



Capital equipment purchases 159,708 2,467

41,742,788 37,282,590

Excess of revenue over expenses 622,936 2,288,878

Net assets, beginning of year 7,814,909 5,526,031

Net assets, end of year 8,437,845 7,814,909



statement.


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Consolidated Statement of

Changes in Financial Position

00 00

$ $

Operating activities

Excess of revenue over expenses 622,936 2,288,878

Changes in non-cash operating items:

Accounts receivable 1,196,300 1,021,189

Deferred development expenses 129,371 129,371

Deferred energy program expenses (515,150)

Insurance program fund (54,660) (646,386)

Accounts payable 365,807 (1,320,761)

1,744,604 1,472,291

Financing activities

Investments (147,880) (1,023,492)

(147,880) (1,023,492)

Increase to cash 1,596,724 448,799

Cash, beginning of year 1,226,276 777,477

Cash, end of year 2,823,000 1,226,276

Comprised of:

Cash 2,823,000 2,696,714

Short-term indebtedness (1,470,438)

2,823,000 1,226,276



statement.


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EMPOWERING OUR MEMBERS0


Notes to the Consolidated

Financial Statements

. Purpose of the organization

The Social Housing Services Corporation (SHSC) was

established under the provisions of the Social Housing Reform

Act, 2000. Its membership includes all service managers,

local housing corporations, and all prescribed non-prot and

co-operative housing providers. The corporations mandate

includes:

coordination and management of insurance programs;

pooling of capital reserve funds;

schemes for joint purchase of goods and services; and

advice to the province and SHSCs members with respectto the establishment of benchmarks and best practices to

achieve the efcient and effective provision of housing.

. Signicant accounting policies

(a) Consolidation

The consolidated nancial statements reect the assets, liabilities,

revenues and expenses of the corporation and its wholly-owned

subsidiaries SHSC Financial Inc. and SoHo Insurance Inc. All

intercompany assets and liabilities and revenues and expenses

have been eliminated on consolidation.

(b) Capital assets

Capital assets are recorded as expenses in the year they are

acquired.

(c) Insurance program

The corporation treats assets and liabilities related to its operation

of the insurance program as trust funds. The net balance is shown

on the Balance Sheet as Insurance Program Fund. Revenue from

insurance is recognized at the later of the effective date of the

insurance or the billing date.

(d) Deferred development expenses

SHSC Financial Inc. was established to manage investment

vehicles for capital reserve funds from housing providers. The

investment funds became operational in early 2003. Expenses

prior to this related to the development of the funds have been

deferred and are being amortized on a straight line basis over four

years commencing in 2003.

. Investments

Investments are comprised of:

00 00

$ $

Fixed income 3,798,570 3,594,919

Canadian equity 434,035 327,141

Short-term 89,355 252,020

4,321,960 4,174,080

The market value of the corporations investments was

$4,445,000 (2004 $4,293,000).

. Investment funds

SHSC Financial Inc. manages four investment funds. The

net assets of these funds remain the property of the housing

providers and consequently are not recorded in these nancial

statements. The four investment funds are audited by another rm

of chartered accountants. The audited nancial statements of the

funds reect net assets (at market value) as follows:

00 00

$ $

Canadian Money Market Fund 107,780,000 116,337,000

Canadian Short-Term Bond Fund 116,311,000 115,240,000

Canadian Bond Fund 57,882,000 37,364,000

Canadian Equity Fund 30,726,000 16,797,000

. Revenue fund

The revenue fund is comprised of:

00 00

$ $

Social Housing Services Corporation 582,522 257,689

Social Housing Services Corporation

Energy program (220,886)

SHSC Financial Inc (819,570) (996,130

SoHo Insurance Inc. (57,121)

(515,055) (738,441


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The SHSC Financial Inc. revenue fund decit of $819,570will be recovered from future years revenue earned from

management fees.

The SoHo Insurance Inc. revenue fund decit of $57,121 will

be recovered from future brokerage fees paid by the insurance

programs once the company is fully operational.

. Reserves

Reserves are comprised of:

00 00

$ $Gas program 4,200,000 5,200,000

Group insurance program 2,100,000 1,100,000

Capital reserves pooling program 650,000 650,000

Contingency 750,000 750,000

Total 7,700,000 7,700,000

The following transfers were made between funds during the

year:

$

From Revenue Fund to Energy Fund 220,886

From Gas Fund to Insurance Fund 1,000,000

From Revenue Fund to Capital Fund 151,709

. Income taxes

The corporation claims exemption from income taxes as a

not-for-prot corporation under Paragraph 149(1)(l) of the Income

Tax Act.

SHSC Financial Inc. and SoHo Insurance Inc. are subject to

income taxes.

SHSC Financial Inc. can carry forward losses totaling

$945,000 for income tax purposes. The expiration date for using

these losses to reduce income taxes is 2010.

SoHo Insurance Inc. can carry forward losses totaling

$48,000 for income tax purposes. The expiration date for using

these losses to reduce income taxes is 2013.

. Commitments

(a) Gas contracts

As part of its bulk purchasing plan of natural gas for its members,

the corporation has entered into contracts to purchase natural

gas at xed and market rates, as follows:

Fixed Market

$ $

Period:

January 1 to December 31, 2006 17,289,000 11,727,000

January 1 to December 31, 2007 5,016,000 16,815,000

January 1 to December 31, 2008 1,385,000January 1 to December 31, 2009 8,181,000

January 1 to December 31, 2010 6,366,000

In addition to these gas supply commitments, the corporation

is nancially responsible under its delivery contracts with

Enbridge Gas Distribution and Union Gas for the xed costs

under assignments of pipeline capacity from TransCanada

Pipelines (TCPL) to transport natural gas supply from Alberta to

Ontario. These current transportation assignments from the gas

utilities expire on October 31, 2006. The xed cost associated

with these contracts for January 1, 2006 to October 31, 2006 is

$698,150, based on TCPLs January 1, 2006 and March 1, 2006

interim tolls.

. Pension agreement

The corporation participates in the Ontario Municipal Employees

Retirement Fund (OMERS), which is a multiemployer plan. The

plan is a dened benet plan which species the amount of

retirement benet to be received by the employees based on the

length of service and rates of pay.

0. Gas program

The corporation operates a gas program for its participating

members. It purchases natural gas in bulk and resells it to its

members. Any excess revenue derived from this program is

periodically distributed to the program participants.


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Accounts receivable gas program and accounts payable gas program represent amounts owing from program participants

and amounts owing to gas suppliers respectively.

Under the terms of its contracts with gas suppliers, SHSC

was committed to purchase 181,000 gigajoules of gas that were

not resold during 2005. These purchases totalling $1,187,000

are included in the gas program expense on the Statement

of Revenue and Expenses for the year. The corporation may

sell these excess gas purchases anytime up to October 31,

2006. Any revenue from the sales would be recorded in 2006

to mitigate the 2005 expense. Management estimates that$1,250,000 could be recovered in 2006.

. Insurance program fund

The corporation is required to coordinate and administer group

insurance programs for its members. SHSC roles include

advocating, negotiating, coordinating, managing, administrating,

data tracking and communicating. In order to fulll these roles,

SHSC entered into the following arrangements for a term of ve

years effective September 1, 2003:

Zurich Insurance Company lead insurer

Aon Reed Stenhouse Inc. provides insurance brokerage

services including negotiating best insurance terms, advising

members on insurance requirements and issuing certicates

of insurance

Shumka Craig Moore Adjusters Canada Limited provides

claims handling services

SHSC is responsible for collecting premiums from

participants and remitting them to Aon.

During the year, premiums billed under the insurance program

amounted to $16,410,178 (2004 $16,168,000).

The Insurance Program Fund is comprised of:

00 00

$ $

Cash 974,939 1,255,433

Accounts receivable 1,975,521 1,146,993

2,950,460 2,402,426

Accounts payable 619,688 126,314

Net Insurance Program Fund 2,330,772 2,276,112

. Social Housing Energy Management Program

The SHSC Energy Management Program (EMP) was developed

to assist social housing providers identify energy savings

opportunities and fund energy management solutions in their

buildings. SHSCs role will include accessing qualied energy

auditors and providing standardized audit requirements,

accessing funding and products for energy retrots, and providing

education and tools for tracking energy savings.

During the year, a pilot program of more than 5,000 housing

units was implemented to achieve this goal.

The energy program operating costs, totalling $515,150have been deferred until the program has earned relating revenue

which is expected to start in 2006.

. Expenses by object

$

Gas program 36,946,032

Investment manager fees 1,341,825

Salaries and benets 1,250,929

Program consultants 753,811

Communication 206,590

Directors expenses and strategic planning 251,679

Capital equipment purchases 159,708

Occupancy 133,965

Ofce 139,478

Professional fees 149,569

Information technology 81,794

Interest 75,881

Amortization of development expenses 129,371

Education and training program 122,156

41,742,788


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Consolidated Schedule of

Revenue and Expenses

Bulk Purchasing Fund

Revenue Capital Reserves Gas Energy

Fund Fund Fund Fund Fund Total

$ $ $ $ $ $

Revenue

Gas program 38,901,509 38,901,509

Energy pilot program 393,593 393,593



Capital reserves pooling program 2,348,030 2,348,030Investment income 143,287 143,287

3,070,622 38,901,509 393,593 42,365,724

Expenses

Gas program 37,501,959 37,501,959

Energy program pilot 606,480 606,480




Capital equipment purchases 151,709 7,999 159,708

3,474,641 151,709 37,501,959 614,479 41,742,788

Net operating income (404,019) (151,709) 1,399,550 (220,886) 622,936

Transfers between funds (note 6) 627,405 151,709 (1,000,000) 220,886

Excess (deciency) of revenue over expenses 223,386 399,550 622,936

Net assets, beginning of year (738,441) 7,700,000 853,350 7,814,909

Net assets, end of year (515,055) 7,700,000 1,252,900 8,437,845



statement.


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For more information, please contact:

Social Housing Services Corporation

390 Bay Street, Suite 710

Toronto, ON

M5H 2Y2

Phone (Toronto): 416-594-9325

Toll-Free: 866-268-4451

Fax: 416-594-9422

Or visit our website at www.shscorp.ca

SHSC 2005 Annual Report - Empowering Our Members

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Transcript of SHSC 2005 Annual Report - Empowering Our Members