Board of Directors Meeting - December 8, 2016

Agenda

Revised December 6th at 2:45 p.m. 

1. Chair’s remarks 

Action: Information 

Pre-read: Verbal report 

Presenter: ​Chair 

2. Consent agenda 

2. a) Approval of Public Meeting Agenda 

Action: Approval 

Pre-read: Agenda 

Presenter: Chair 

2. b) Chair’s Poll re: Conflict of Interest 

Action: Declaration 

Pre-read: Agenda and Conflict of Interest Policy 

Presenter: Chair 

2. c) Confirmation of Board of Directors’ Public Meeting Minutes of ​November 14, 2016​ 

Action: Approval 

Pre-read: Minutes 

Presenter: Chair 

2. d) Business Arising from the Public Meeting Minutes and Action Items Update 

Action: Information 

Pre-read: Action item list 

Presenter: Chair 

2. e) City and TCHC Staff – Strategic and Operational Meetings 

Action: Information 

Pre-read: TCHC:2016-55 

Presenter: Interim President and CEO 

2. f) OCHE – 2017 Work Plan 

Action: Approval 

Pre-read: TCHC:2016-59 

Presenter: Chair, RSC 

2. g) OCHE – Quarterly Performance Report (Q3 2016) 

Action: Information 

Pre-read: TCHC:2016-54 

Presenter: Chair, RSC 

3. RSC Chair’s report 

Action: Information 

Pre-read: Verbal report 

Presenter: Chair, RSC 

3. a) Participatory Budget (BP) Consultation Results 

Action: Information Approval 

Pre-read: TCHC:2016-52 

Presenter: Chair, RSC 

4. GCHRCC Chair’s report 

Action: Information 

Pre-read: Verbal report

Presenter: Chair, GCHRCC 

5. BIFAC Chair’s report 

Action: Information 

Pre-read: Verbal report 

Presenter: Chair, BIFAC 

5. a) 2017 Operating and Capital Budget 

Action: Approval 

Pre-read: TCHC:2016-57 

Presenter: Interim Chief Financial Officer 

6. Interim President and Chief Executive Officer’s remarks 

Action: Information 

Pre-read: Verbal report 

Presenter: Interim President and CEO 

6. a) Monthly President’s report 

Action: Information 

Pre-read: TCHC:2016-56 

Presenter: Interim President and CEO 

TERMINATION

Minutes

The Board of Directors of the Toronto Community Housing Corporation held a public meeting on December 8, 2016 at 9:08 a.m. in in the Main Floor Conference Room at 931 Yonge Street, Toronto. 

Directors in Attendance: 

Bud Purves (Chair) 

Councillor Ana Bailão (arrived at 10:07 a.m.) 

Councillor Joe Cressy  

Councillor Frank Di Giorgio 

Vincent Gasparro 

Linda Jackson (left at 12:53 p.m.) 

Joseph Kennedy (left at 11:51 a.m.) 

Colin Lynch 

Kevin Marshman (Vice Chair) 

Pamela Taylor 

Catherine Wilkinson 

Directors Absent: 

Robert Carlo 

Management present: 

Cathy Barker, Vice President, Human Resources 

Angela Cooke, Vice President, Resident and Community Services  

Leslie Gash, Chief Development Officer 

Rose-Ann Lee, Chief Financial Officer & Treasurer (Acting) 

Mark Johnson, General Counsel & Corporate Secretary 

Hugh Lawson, Director, Strategic Planning and Stakeholder  Relations 

Graham Leah, Vice President, Asset Management 

Bruce Malloch, Director, Strategic Communications 

Mark McDonald, Vice President, IT 

Ted Millward, Legal Counsel, Corporate 

Lisa Murray, Manager, Media and Public Relations 

Sheila Penny, Vice President, Facilities Management 

Greg Spearn, President & Chief Executive Officer (CEO) (Interim)/ Chief Development Officer 

Wayne Tuck, Chief Operating Officer (Interim) 

A quorum being present, the Chair called the meeting to order and Ms. Charmaine Zina served as recording secretary.  

Item 1 - Chair’s remarks 

The Chair welcomed everyone to today’s Board meeting and advised that the meeting will begin with the public session and then the Board will proceed with the confidential session.    

The Chair identified the following items that were approved in the confidential session at the November 14, 2016 Board meeting: 

• The Board approved management’s recommendation to extend the contract property management program for three years, subject to a more robust request for proposals and contracts that set clearly defined performance standards and service levels.  
• The RFP for contract property management services was issued this week, with a submission deadline of January 23, 2017. It is posted on Toronto Community Housing’s website. 

Additionally, the Chair provided a brief update on the President and Chief Executive Officer (CEO) search indicating that the process is continuing and the Board is working to have the process completed by the end of March 2017.

The Chair identified the following items to be discussed in today’s public session: 

• 2017 Operating and Capital Budget. Ms. Lee, Acting Chief Financial Officer and Treasurer will provide a presentation to the Board.   The Board has played an active role in reviewing the budget this year. The Chair thanked Board members and staff for their strong efforts in developing a budget that, despite TCHC’s financial challenges, keeps the focus on the tenants. 
• Chair’s Reports. The Chairs of the Board committees will each provide a verbal report of their committee’s activities.  
• President’s Monthly Report. Mr. Spearn will present the President’s Monthly Report for October 2016, which describes how the company is doing in meeting its public commitments and organization priorities.  

Lastly, the Chair noted it was the last Board meeting of 2016 and on behalf of the Board, wished a safe and happy holiday season to the tenants and staff of TCHC.  

Deputations

The Chair polled for any deputations to be heard at the meeting.  The following deputations were presented: 

• Item 5A – 2017 Operating and Capital Budget, deputed by: 
  • Cathy Birch,  
  • Miguel Avila-Velarde  
  • Rebecca Keenan 

Consent Agenda Items

Item 2 - Approval of Consent Agenda Items

The following consent agenda items were approved: 

• Item 2A – Approval of Public Meeting Agenda; 
• Item 2B – Chair’s Poll re: Conflict of Interest; 
• Item 2C – Confirmation of Previous Board of Directors’ Public Meeting Minutes of November 14, 2016; 
• Item 2D – Business Arising from Public Meeting Minutes and Action Items Update;  
• Item 2F – OCHE – 2017 Work Plan; and 
• Item 2G – Q3 2016 OCHE Quarterly Performance Report. 

Item held: 

• Item 2E – City and TCHC Staff – Strategic and Operational Meetings. 

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors approved those consent agenda items not held for discussions (Items 2A, 2B, 2C, 2D, 2F and 2G). 

Item 2A - Approval of Public Meeting Agenda 

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors approved the agenda with the following revision: 

Move Item 5A on the public agenda (2017 Operating and Capital Budget) to be heard at 10:10 a.m. 

Item 2B - Chair’s Poll re: Conflict of Interest 

The Chair requested members of the Board of Directors to indicate any agenda item in which they have a conflict of interest, together with the nature of the interest. No conflicts were declared. 

Item 2C - Confirmation of Board of Directors’ Public Meeting Minutes of ​November 14, 2016​ 

The Board of Directors had before it the draft Board minutes for November 14, 2016. 

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors confirmed the above-captioned minutes without amendments. 

Item 2D - Business Arising from the Public Meeting Minutes and Action Items Update 

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors received the report for information. 

Item 2E - City and TCHC Staff – Strategic and Operational Meetings, TCHC:2016-55

The Board of Directors had before it the above-captioned report (TCHC:2016-55) from the President and Chief Executive Officer (Interim).   

The Board and Management briefly discussed the report.  The Board noted a meeting which took place at the Executive Committee and City Council regarding the installation of multi-antenna on rooftops. Concerns were raised on the electromagnetic frequencies and the long term impact as a result to the number of antennas.  Mr. Spearn advised the Board that the antenna program is robust and TCHC is following all regulations and requirements.   

The Chair suggested this item could be discussed in further detail at RSC. 

Motion carried 

ON MOTION DULY MADE by Mr. Marshman, seconded by Mr. Kennedy and carried, the Board of Directors received the report for information. 

Item 2F - OCHE – 2017 Work Plan, TCHC:2016-59

The Board of Directors had before it the above-captioned report (TCHC:2016-59) from the RSC Chair.

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors unanimously approved the recommendations in this report. 

Item 2G - OCHE – Quarterly Performance Report (Q3 2016), TCHC:2016-54 

The Board of Directors had before it the above-captioned report (TCHC:2016-54) from the RSC.   

Motion carried 

ON MOTION DULY MADE by Councillor Cressy, seconded by Mr. Marshman and carried, the Board of Directors received the report for information. 

Item 3 - Resident Services Committee (RSC) Chair’s Report 

The Chair of the RSC provided a verbal update to the Board on the work of the RSC, including the following: 

• OCHE work plan; 
• OCHE performance objectives; and 
• Participatory Budget Process.  

Mr. Lynch commended OCHE, Resident and Community Services and Asset Management staff for working collaboratively together over the last number of months.  Ms. Jackson expressed agreement with Mr. Lynch’s statement and thanked OCHE, Resident and Community Services and Asset Management staff. 

Item 3A - Participatory Budget (BP) Consultation Results, TCHC:2016-52

The Board of Directors had before it the above-captioned report (TCHC:2016-52) from the RSC.   

Ms. Jackson identified the importance of involving tenants in the participatory budget process and indicated adjustments are required to refine the process. The Board and Management discussed the report and Mr. Spearn advised that the PB process will be suspended for 2017 pending the review of the program. It was confirmed that all existing approved PB projects will still move forward.

The Board requested that discussions regarding the PB program be a standing item at Board meetings.   

The Board asked that Management provide information regarding how TCHC decides what money is donated to other agencies, how these donations are reflected in the budget and what related policies or procedures apply to donations.  

Motion carried 

ON MOTION DULY MADE by Ms. Wilkinson, seconded by Mr. Gasparro and carried, the Board of Directors unanimously approved the recommendations in this report.   

1. approve a suspension of the existing PB process for 2017 to allow tenants and staff to work together to improve decision-making in two particular areas:   
2. Capital repairs: develop a new mechanism for tenant input into decision-making around Toronto Community Housing’s capital repair plan, and integrate the insights of tenants into the planning process for large-scale capital projects in their communities. 
3. Social Investment projects: refine the mechanisms for tenants to make democratic decisions about funding locally-focused projects that enhance tenant engagement in their communities.  

Action Items:   

Management to report to the RSC on: 

• How TCHC decides what money is donated to other agencies; and 
• How donations are reflected in the budget. 

Management to report to the GCHRCC on: 

• TCHC’s practices and policies for making donations to other agencies.

Item 4 - Governance, Communications, Human Resources and Compensation Committee (GCHRCC) Chair’s Report 

The Chair of the GCHRCC provided a verbal update to the Board on the activity at GCHRCC, including discussions on the following: 

• Collective bargaining for Local 79 – discussions are ongoing; 
• Pay for Performance for non-union/no-executive staff – ongoing discussions, the Committee will recommend a policy to the Board in January 2017; 
• Extension of Chief Operating Officer Contract; and 
• Board/Committee 2017 Schedule – discussions on frequency and structure of meetings and locations of future meetings.  

Item 6A - Monthly President’s report, TCHC:2016-56

The Board had before it the above-captioned report (TCHC:2016-56) from the President & Chief Executive Officer (Interim).   

Mr. Spearn presented the report and advised the Board that performance in October remained consistent with September levels.  Of TCHC’s 39 scorecard metrics with targets, half improved or remained constant while half declined. 

When adjusting for seasonality and comparing TCHC’s October 2016 performance against the same period last year, it was noted that TCHC is headed in the right direction.  For metrics with targets, 60 per cent have improved over October 2015 levels. 

Mr. Spearn advised of the following results/trends in the Monthly President’s Report (MPR): 

• Excess of Revenue over Expenses: year-to-date, TCHC continues to have a $47-million excess of revenue over expenses. This is in contrast to the projected loss of $25.2 million which is a result of the timing of non-recurring items, such as gains on the sale of lands and the sale of standalone homes.  In addition to the $21 million in credits received to October 31 under the Ontario Clean Energy Benefit program. This trend is expected to continue for the remainder of 2016, with a resulting cash surplus. It is not expected to continue in future years. 
• Capital Repairs: the capital repair program has completed $172.8 million in repairs year-to-date as for October 31, on more than 12,000 projects. Purchase orders for more than $238.6 million have been issued year-to-date and TCHC expects that at least 88-per-cent ($221 million) of the $250 million in capital repair for 2016 will have been completed or paid for by year end, with the balance underway. 
• Community Safety: the Community Safety Unit conducted 65 joint patrols with the Toronto Police Service in October, a 5-per-cent increase over September.  However, there was a 10-per-cent increase in the number of crimes committed, which unfortunately is a typical occurrence each October.  The good news with this is that the total number of crimes committed in October was 19-per-cent lower than this period last year.   
• Support for Vulnerable Residents: The number of referrals made to external support services for TCHC residents continued to exceed the target level of 75 referrals per month. Despite declining from September levels, to date we have made an average of 163 referrals per month.  
• Customer Service: call volumes increased by 3-per-cent in October, with just over 34,000 calls made to the Client Care Centre due to cooler weather.  The number of elevator calls increased by 5-per-cent, which is partly driven by an increase in the number of elevators being replaced across the portfolio.  
  
  As a result of increased tenant calls and elevator disruptions, service levels for calls to the Client Care Centre declined in October. However, three quarters of service level metrics have improved when compared with October 2015. Improvements in service levels for elevator calls were higher for the first three quarters of 2016 compared with the first three quarters of 2015.    
• Service Requests: TCHC exceeded its target of containing 90-per-cent of emergency maintenance requests within four hours and again exceeded the target of closing 80-per-cent administrative service requests within two days.  Service levels for administrative requests have improved over last year, with an average of 80-per-cent closed within 2 days year-to-date, compared with 77-per-cent for the same period last year. 
  
  However, levels for closing routine maintenance requests within five days declined to 66-per-cent, which is well below the target level of 80-per-cent. The decline was partially due to a collectively bargained transfer process for maintenance staff across all operating units that happened in October. This process, involving more than 200 employees, led to some delays in responding to service requests.  
• City Councillor Inquiries: Each month TCHC receives a large number of inquiries from City Councillors regarding tenants in their wards. In October, TCHC closed 100-per-cent of the 183 inquiries received within five business days.  
• Days to Re-Occupy Vacated Units: the number of days between when a unit is vacated and when it is re-occupied decreased by 8-per-cent in October. As discussed, at the November 14 Board meeting, TCHC is working to find out how its IT system can break this measure into the various stages of vacancy. It is expected that this bread down will be included in the MPR by the end of the first quarter of 2017. 
• Vacancy: vacancy rates for rent geared-to-income (RGI) units increased to 2.95 per cent in October. 

The Board commented on the vacancy rates and arrears trends and the increase over the period.  The Board requested Management to identify resolutions on how to address the increase in vacancy rates and arrears trends.  

Another concern amongst the Board was the number of the unanswered calls at the call center.  Management was asked to track unanswered calls and report back to the Board on that number and the issues surrounding unanswered/disconnected calls.  

There was a discussion regarding elevator service that included the following: 

• Elevator service calls per year (approximately 500 elevators). 
• Installation of elevator monitoring software which indicates when an elevator is down. 
• Industry standard metric on the length of time elevator is out of service. 
• Results of the elevator pilot project applied to 10 buildings. 

Motion carried 

ON MOTION DULY MADE by Mr. Lynch, seconded by Mr. Gasparro and carried, the Board of Directors received the report for information. 

Action Items:   

Management to report back on: 

• Steps being taken to address increase in vacancy rates and arrears trends (report to BIFAC then the Board). 
• Issues impacting call centre performance and the number of unanswered calls (report to RSC). 
• Results of the elevator pilot project and rationale for expansion (report to RSC). 

Item 5 - Building Investment, Finance and Audit Committee (BIFAC) Chair’s Report 

The Chair of the BIFAC provided a verbal update to the Board on the activity at BIFAC, including the following: 

• RPEI – making the entity financially sustainable. 
• IAC – review of reserves.  
• Internal Audit- the Chief Internal Auditor has brought reports on a number of important matters. 
• 2017 Budget process- the process began much earlier than usual, and the Committee has reviewed the Budget in great detail.   

Mr. Lynch commended Ms. Lee and her team on their hard work in putting together the 2017 Budget materials.  

Item 5A - 2017 Operating and Capital Budget, TCHC:2016-57

The Board of Directors had before it the above-captioned report (TCHC:2016-57) from the BIFAC.   

Mr. Spearn and Ms. Lee delivered the presentation included in the meeting documentation and answered questions.  Points of note from the presentation included the following: 

The proposed 2017 budget is $948.3 million. It consists of a $572.6-million operating budget and a $375.7-million capital budget. The total budget is $28.5 million less than TCHC’s 2016 budget of $976.8 million. 

Developing the 2017 budget has been challenging.  On the operating side TCHC faces a widening gap: revenues are flat while costs for utilities and other items TCHC does not control are steadily rising. Due to this trend, TCHC cannot continue to do all the things it has been asked to do without additional external funding support or additional draws against reserves. 

On the capital side, more financial support is needed to complete TCHC’s 10-year repair plan and the new rental replacement program in TCHC’s revitalization communities.  TCHC’s 10-year capital repair plan has an overall $1.7-billion shortfall and the 10-year development forecast shows a $109-million shortfall over 10 years for the planned revitalizations and a total $396-million shortfall to full completion in 2035. The ability to access funds for capital spending through “blend and extend” mortgage refinancing, as was done this year, is limited from 2018 and beyond.  

The Mayor’s Task Force recognized that TCHC’s funding model is simply unsustainable. Possible solutions to correct the funding model, stemming from the City’s process to implement the Tenants First report, won’t begin to happen until 2018 at the very earliest.  In developing the 2017 budget, TCHC has worked closely with the Board and the City to create a budget that reflects TCHC’s financial realities. This budget will get TCHC through the next 12 months while work continues through the City’s process on the Tenants First report.  It will allow TCHC to continue best efforts at improving living conditions for tenants, repairing and maintaining its buildings, and delivering better services, with the resources it does have. 

The proposed 2017 budget includes projected subsidies from the City totaling $200.9 million. This total includes the 2.6-per-cent reduction target that, at the Mayor’s direction, the City Budget Committee set for all City divisions and agencies. For TCHC, the reduction target is $4.0 million and the City is expected to provide TCHC with additional subsidies totaling $4.2 million to continue programs and services begun this year under the Getting It Done program that directly improve living conditions and benefit tenants.  

The balance of the majority of TCHC revenues come from rents paid by residential and commercial tenants, which is forecast at $315.3 million for 2017 compared with $313.3 million in 2016. 

The proposed 2017 capital budget is $375.7 million. This consists of $228.0 million for building repairs and $147.7 million for development. These investments will enable TCHC to both keep the momentum going in repairing buildings and also in replacing homes in six active revitalization communities.  

The proposed 2017 operating budget is $572.6 million and reflects a $12.5-million accounting deficit and $35.2-million cash operating shortfall. The projected cash shortfall of $35.2 million has been identified in City budget documents as an additional pressure on City resources and will be considered in their budget process.  That process has just begun and should conclude by late February 2017. 

Mr. Spearn listed a number of ways the projected 2017 operating cash shortfall could be funded.  He noted that Management recommends that the Board consider applying a larger portion of  its projected 2016 cash surplus to the shortfall, and further noted that Management can assure the Board that TCHC can count on about $20 million in 2016 cash surplus that is the result of mostly one-time non-recurring gains.  

Ms. Lee and Mr. Spearn answered questions and addressed concerns raised by the Board regarding the proposed budget and sources of capital an operating funding.  A lengthy discussion ensued. The following were among the issues discussed in detail: 

• ReSet Pilot Project – Concern was raised regarding the increase of the project costs over the years (from $66M to now over $200M).  Concerns were also expressed with suspending the projects due to the physical deterioration of these communities.  Management reassured the Board that repairs will still continue under the State of Good Repair program. 
• Maximum Capacity for Capital Repairs- The maximum threshold of work that TCHC can get out the door responsibly in any one year was discussed.  A potential outer limit of $300M was discussed, and TCHC’s inability to spend the full 2016 Capital Repair amount was raised.  Two elements discussed which limit the capacity to get projects out of the door are: (i) the procurement process; and (ii) the construction industry’s capacity to handle the workload. 
• The amount of the subsidy from the City – Management advised that City staff’s recommendation to City Council will be a subsidy of $204.5M.  
• The projected amount of the 2016 cash surplus – Management advised that the Board can be assured of the availability of $20M, but the actual figure may be as much as $27M.  
• Financing for Block 16 and 17 of Regent Park and the effect of putting these projects on hold – it was noted for Block 17 that if delayed the pricing commitments from the contractors could be lost resulting in additional costs of some $700k. 
• The 2017 operating shortfall – it was confirmed by City staff that the 2017 operating shortfall of $35.2M is the amount that will be presented to the City budget committee.  

MOTION #1 

Motion Carried 

ON MOTION DULY MADE by Mr. Lynch, seconded by Councillor Di Giorgio and carried, the Board of Directors approved the following recommendations in report TCHC:2016-57 as amended by Motion #2 and Motion #3 recorded below: 

1. Approve the 2017 Operating Budget of $572.6M as per Attachment 1. 
2. Approve the 2017 Capital Budget of $375.7M as per Attachment 1. 
3. Approve the drawdown of up to $44.97M from the internally restricted reserve – “Development Risk Reserve Fund” that was approved by the TCHC Board of Directors as part of its approval of the Investment Policy Statement, to assist in fully funding the 2017 Development Capital Budget of $147.7M. 
4. Authorize the appropriate staff to take the necessary action(s) to give effect to the above recommendations. 

MOTION #2  

That the Board direct $19M of the 2016 surplus towards the operating shortfall and the remaining funds are to be directed towards the 10 year capital plan. 

Motion carried 

ON MOTION DULY MADE by Councillor Bailão, seconded by Councillor Di Giorgio and carried, the Board of Directors approved the motion. 

MOTION #3 

That the Board approve a capital plan of up to $250M (comprised of $228M plus additional spending of up to $22M from restricted reserves) subject to a detailed report and BIFAC approval on the additional spending of up to $22M from restricted reserves to be provided to BIFAC in February; 

Motion carried 

ON MOTION DULY MADE by Councillor Bailão, seconded by Mr. Marshman and carried, the Board of Directors approved the motion. 

MOTION #4 

That the Board approve the development plan for block 16 and 17 N contingent on mortgage refinancing and/or loan guarantees secured debt financed and paid for by the City or any other level of government and report back at the January 2017 Board meeting.   

Motion carried 

ON MOTION DULY MADE by Councillor Bailão, seconded by Mr. Gasparro and carried, the Board of Directors approved the motion. 

MOTION #5 

Notify the provincial and federal ministers of finance of the shortfall in funding for block 16 and 17N in RP Phase 3; and 

That the submission to the provincial and federal ministers of finance be sent in coordination with the Board chair and the director of strategic and corporate policy, corporate inter-governmental and agency relations in the City of Toronto. 

Motion carried 

ON MOTION DULY MADE by Councillor Bailão, seconded by Mr. Gasparro and carried, the Board of Directors approved the motion. 

MOTION #6  

Endorse an operating budget with a 35.2m operating shortfall. 

Motion failed

The motion was made by Councillor Cressy but was not seconded by another Board member. This motion failed.  

MOTION #7

Direct the entire onetime 2016 surplus (whether 21m, 27m, or whatever final amount) to the capital building repair budget. 

Motion failed 

ON MOTION DULY MADE by Councillor Cressy and seconded by Ms. Taylor. This motion failed as the majority of the Board of Directors did not support this motion. Councillor Cressy was the only member that supported this motion.  

TERMINATION 

The public meeting terminated at 2:38 p.m.