Skip to content
You are here > Home > About the Ministries > Housing Agencies > Ontario Mortgage and Housing Corporation > Ontario Mortgage and Housing Corporation: Annual Report 2016-2017

Follow us

Ontario Mortgage and Housing Corporation: Annual Report 2016-2017

Email this page


ANNUAL REPORT

Message from the Chair

I would like to thank my colleagues on the Board, the officers of the Corporation and Ministry staff for their work supporting the Ontario Mortgage and Housing Corporation (OMHC) for the 2016-2017 fiscal year. 

The OMHC continues to manage and administer obligations related to former housing programs, including debt retirement and environmental obligations related to its former public housing land and properties.  OMHC indemnifies the Canada Mortgage and Housing Corporation (CMHC) for certain social housing mortgages and manages a portfolio of legacy mortgages and land leases issued under former housing programs. 

We look forward to continuing the work of the Corporation in 2017-2018.

Janet Hope
Chair
Ontario Mortgage and Housing Corporation Board of Directors 

Introduction

The Ontario Mortgage and Housing Corporation (OMHC) is a statutory corporation, formerly named the Ontario Housing Corporation, continued under the Ontario Mortgage and Housing Corporation Act (OMHCA).  The Corporation’s enabling legislation consists of two statutes:  the OMHCA and the Housing Development Act (HDA).  OMHC is classified as a board governed provincial agency which reports to the Minister of Housing.  Audited financial statements are prepared annually by the Office of the Auditor General of Ontario, as required by the OMHCA.

In accordance with amendments to the OMHCA and the HDA, the Ontario Mortgage Corporation (OMC) was dissolved.  As of April 1, 2015, OMHC assumed the assets, liabilities, rights and obligations of the Ontario Mortgage Corporation.  The consolidation reduced duplication in the management of a declining portfolio of legacy mortgages and leases.  The same civil servants in the Ministry of Housing who provided support to OMC continue to provide support to OMHC, providing continuity for our clients. 

The Corporation was funded by the Province through an annual transfer payment during 2016-2017.  Provincial funding to OMHC covered debentures and capital costs for environmental remediation for certain public housing projects formerly owned by OMHC.

Staff of the Ministry of Housing and the Ministry of Municipal Affairs provided all of OMHC’s administrative and operational support. 

Board of Directors

The Ontario Mortgage and Housing Corporation’s Board of Directors was appointed by the Lieutenant Governor in Council and was accountable to the Minister of Municipal Affairs and Housing, and subsequently to his successor, the Minister of Housing, in 2016-2017 for ensuring that the Corporation carried out its mandate effectively.

A five-member Board of Directors, composed of senior provincial public servants, oversees the Corporation’s business.  As of March 31, 2017, the Board consisted of: 

 Name

 Position

 Date of
First Appointment

 Appointment
Expires 

 Janet Hope  Chair, Member   February 1, 2007  December 31, 2017
 Jim Cassimatis  Vice-Chair, Member  December 10, 2012  December 31, 2017
 Elizabeth Harding  Member  January 1, 2012  December 31, 2017
 Kate Manson-Smith  Member  December 10, 2014  December 31, 2017
 Larry Clay  Member  January 1, 2016  December 31, 2017

Memorandum of Understanding, 2016

The Memorandum of Understanding between the Minister of Housing and the Ontario Mortgage and Housing Corporation, 2016 (MOU) is an administrative agreement that promotes mutual understanding of the roles and responsibilities of the agency, the Minister, the Board, and its officers and support staff.

A new MOU was signed in 2016 to reflect a change in the responsible Minister and Ministry.  In June of 2016, the Ministry of Municipal Affairs and Housing was split into two Ministries:  the Ministry of Municipal Affairs and the Ministry of Housing.  OMHC reports to the Minister of Housing.  

The MOU also reflects a change in the indemnification provisions required by the Agencies and Appointments Directive, 2016.  Agency directors and officers will not be indemnified in instances of bad faith, wilful misconduct or gross negligence.  Additional sections on administrative functions were added to the MOU, in accordance with an MOU template for board governed provincial agencies prepared by Treasury Board.  The revised MOU was approved by the Board and signed by the Chair and by the Minister on December 12, 2016.

Mandate Responsibilities

OMHC’s mandate responsibilities are listed in the 2016 MOU.  Responsibilities are primarily financial in nature and include:

  1. administration of public housing debt to Canada Mortgage and Housing Corporation (CMHC) and the Province;
  2. managing OMHC’s contingent liability to CMHC with respect to certain social housing mortgages for non-profit housing programs in accordance with OMHC’s loan insurance agreement with CMHC;
  3. managing any environmental liabilities under the Environmental Protection Act on public housing properties formerly owned by OMHC that were transferred to Local Housing Corporations;
  4. managing and administering Affordable Home Ownership Program legacy mortgages transferred to it by Minister’s Order in accordance with the OMHCA;
  5. using the monies in the Affordable Home Ownership Revolving Loan Fund and the monies received under the transferred Affordable Home Ownership Program mortgages, including interest earned on the monies, only for housing purposes in accordance with a Minister approved by-law;
  6. administering marketable and forgivable loans and mortgages related to former housing programs, including loans and mortgages that were owned by OMC  and transferred to OMHC on April 1, 2015;
  7. administration of loans to colleges and universities under the Ontario Student Housing program for the development of on-campus student housing;
  8. administration of housing programs, or parts of housing programs, as may be prescribed under the OMHCA, including making grants and loans related to such prescribed programs and taking security for such loans;
  9. making housing related loans, grants, guarantees or advances in accordance with the OMHCA and the HDA;
  10. carrying out building developments as defined under the HDA in accordance with the OMHCA and HDA;
  11. coordinating and arranging all borrowing, financing, short-term investment of funds and financial risk management activities through the Ontario Financing Authority, unless the Minister of Finance approves otherwise; and
  12. subject to applicable legislation, such other matters which are within OMHC’s statutory mandate as may be assigned to, or may have been assigned to OMHC by the Minister. 

OMHC By-Law #1:  Administration

The Board of Directors approved an amended, updated version of OMHC By-law #1:  Administration (By-law #1) at the Annual General Meeting on June 14, 2016.  By-law #1 was last revised in 2008 and needed to be amended to align with certain sections in the Agencies and Appointments Directive, 2016 and amendments to the OMHCA which came into force on April 1, 2015. 

To align with the provisions of the Agencies and Appointments Directive, 2016 governing the indemnification of Directors and Officers, By-law #1 was amended so that OMHC directors and officers will not be indemnified in instances of bad faith, wilful misconduct or gross negligence.

Sections concerning the execution and registration of documents were revised to clarify which officers acting alone or together, are authorized to execute and register “contracts, documents and instruments”.

The new By-law #1 also specifies that all borrowing is to be co-ordinated and arranged through the Ontario Financing Authority, unless approved otherwise by the Minister of Finance.

Activities Related to the Affordable Housing Revolving Loan Fund and Related Mortgages

On February 25, 2016, the Minister signed a Minister’s Order which transferred and vested mortgages under Program A2 – Affordable Home Ownership Program (AHP) in OMHC.  The mortgages were previously registered on title in the name of Her Majesty the Queen in right of Ontario as represented by the Minister of Municipal Affairs and Housing.  The transfer was effective April 1, 2015.

Amendments to the OMHCA also transferred the AHP Revolving Fund to OMHC effective April 1, 2015.  Historically, monies received from mortgage payouts were deposited in the AHP Revolving Fund which is held outside the Consolidated Revenue Fund.

Under the OMHCA, OMHC may spend the monies in the Fund, including interest thereon, and monies received under the transferred mortgages, only for housing purposes in accordance with an OMHC by-law signed by the Minister.  

The Board will be considering a proposed by-law governing how monies in the AHP Revolving Fund, including interest thereon, and monies received under the transferred mortgages, may be spent.

Administration of the Public Housing Debt

In the past, the Corporation borrowed funds from CMHC and the Province to finance investments in real property.  Under the Social Housing Reform Act, 2000, the Lieutenant Governor in Council transferred, by Transfer Order for no consideration, ownership of public housing land from the Corporation to the Local Housing Corporations (LHCs) controlled by the Service Managers.  

OMHC is responsible for the administration of public housing debt owed to CHMC and the Province in accordance with the provisions of the OMHCA.  This function is a mandate responsibility listed in the MOU.  The Ministry of Housing provides the Corporation with subsidies to cover its debt servicing payments and other expenses.  

The Corporation’s public housing debt appears on the Statement of Financial Position as “Long-term debt” and consists of debt to CMHC and “to the Province”.   Debenture interest for “devolved properties” appears in the Statement of Operations. 

There were a total of twenty-nine (29) consolidated debentures that were extended past their initial maturation date (in 2003).  Two projects were transferred to the City of Sarnia and completed in 2008-09.  Fourteen (14) debentures matured between 2003 and March 31, 2017.  As of March 31, 2017, thirteen (13) remained outstanding. 

Administration of Loans to Colleges and Universities

Between 1969 and 1972, OMHC, formerly named the Ontario Housing Corporation, advanced loans to twelve (12) colleges and universities for a total of twenty-two (22) loans for the development of on-campus student housing.  Funding for these loans was obtained from CMHC and the Province. 

Although these loans are scheduled to reach maturity over the 2019 to 2023 period, the institutions are entitled to make early repayment at any time, without penalty or bonus.  As of March 31, 2017, eighteen (18) loans have been retired and four (4) are outstanding.

Potential Environmental Liability for Public Housing Properties

OMHC maintains certain liabilities related to its former ownership of public housing properties.  This includes potential environmental liability relating to environmental contamination under the EPA.

OMHC may be required to undertake actions deemed necessary by the Ministry of the Environment and Climate Change to rectify any environmental contamination that may have existed at the time OMHC transferred the public housing portfolio to Local Housing Corporations.  The Corporation, being a previous owner, may also be held responsible to clean up environmental contamination which it did not cause on these properties.  Currently, there are two remediation matters of concern to the Board:  potential remediation at Alexandra Park in Toronto and ongoing claims from the Toronto Community Housing Corporation for the Regent Park redevelopment in Toronto. 

Remnant Parcels that Remain on Title to OMHC

OMHC has been conducting a detailed review of the few remaining properties registered in the name of OMHC or its previous name, Ontario Housing Corporation (OHC).  The objective is to transfer these remnant parcels to Local Housing Corporations or the applicable Service Manager, if the parcels were missed in Transfer Orders previously issued.

Based on the best available information, as of March 31, 2017, six locations with one or more properties were identified where the ownership status was uncertain and additional work is required.

Other Activities in 2016-2017

During 2016-2017, the Corporation indemnified the Canada Mortgage and Housing Corporation (CMHC) against defaults for certain non-profit social housing mortgages.  No claims have been made to date under this obligation.

OMHC continued to administer the Affordable Home Ownership Program and the AHP Revolving Fund.  OMHC also administered loans to colleges and universities under the Ontario Student Housing Program.

The OMHC administered a small, declining portfolio of mortgages under various programs including the:  Home Ownership Made Easy Program (HOME), Low-Rise Rehabilitation Program (LRR), Low-Rise Jobs Ontario Program (LR3), Low-Rise Rupert House Program (LRT), Low-Rise Anti-Recession Program (LRX), Permanent Homes for the Homeless Program (PHH) and Project 3600 Ontario Non-Profit Housing Program (P3600). 

Performance During the Year 2016-2017

1. Operational Performance

The Corporation carried out its duties during the course of the year as required by its mandate. 

2. Administration and Administrative Support 

The following employees of the Ministry were the Officers of the Corporation in 2016-2017:

  • Keith Extance, Chief Executive Officer
  • Jason Arandjelovic, Treasurer
  • Margaret Booth, Corporate Secretary

The Chief Executive Officer is responsible for managing the day-to-day operations of the agency, including compliance with the accountability and reporting requirements of the Agencies and Accountability Directive, 2016.  The Treasurer is responsible for financial business practices, financial controllership of the Corporation, as well as the provision of financial advice to the Board and reports on the Corporation’s financial position.

The Corporate Secretary’s duties include preparing Board and Ministry reports, recording minutes of Board meetings, preparing compliance reports, and coordinating mortgage and lease discharge requests.  Other staff in the Ministry of Housing provide the Corporation’s administrative and operational support and financial administration.  Legal services are provided by the Ministry of the Attorney General. 

Financial Performance

The Corporation managed the business and funds for which it is responsible as required by its mandate, applicable provincial financial laws, directives, guidelines and policies, and the terms of individual transactions and agreements.

3. Variance Analysis

Ontario Mortgage and Housing Corporation
Statement of Operations

for the year ending March 31, 2017

 

Budget
($ 000)

2017
($ 000)

Revenue

 

 

Subsidies from Province of Ontario:

 

 

Debt service obligations

81,632

81,632

Environmental Remediation

12,026

9,871

Affordable Home Ownership Program Mortgages

-

85

Interest received from Student Housing

245

245

Miscellaneous

10

32

Total revenues

93,913

91,865

Expenses

 

 

Debentures Interest:

 

 

Devolved properties

20,115

20,115

Student housing

245

245

Environmental Remediation

687

321

Miscellaneous

10

1

Total expenses

21,057

20,682

Excess of Revenues over Expenses

72,856

71,183


The significant variances of actuals as at March 31, 2017 to budget are as follows:

Revenue: 

Environmental Remediation:  actuals were less than budget by $2.1 M as a result of a delay in environmental remediation work for Regent Park.  These costs vary significantly year over year and are based on actual costs incurred. 

Expenses:

Environmental Remediation:  actuals were less than budget by $0.3 M due to revisions in the estimates, timing differences and change in the interest rates.

Excess of Revenues over Expenses:

The actuals were less than budget by $1.7 M mainly as a result of the above variances.

4.  Future Performance Measures and Targets

The Corporation’s performance targets, over and above its general commitments, are to continue to practice good management and comply with applicable rules of financial and administrative performance.



ONTARIO MORTGAGE AND HOUSING CORPORATION
FINANCIAL STATEMENT

for the Year Ended March 31, 2017 

Management’s Responsibility for Financial Statements

The accompanying financial statements of the Ontario Mortgage and Housing Corporation have been prepared in accordance with Canadian public sector accounting standards and are the responsibility of management.  The preparation of financial statements necessarily involves the use of estimates based on management's judgement, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods.  The financial statements have been properly prepared within reasonable limits of materiality and in light of information available up to June 12, 2017.

Management maintains a system of internal controls designed to provide reasonable assurance that the assets are safeguarded and that reliable financial information is available on a timely basis.

The system includes formal policies and procedures and an organizational structure that provides for appropriate delegation of authority and segregation of responsibilities. An internal audit function independently evaluates the effectiveness of these internal controls on a periodic basis and reports its findings to management and to the Board of Directors.

The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal controls. The Board of Directors reviews and approves the financial statements.

The financial statements have been audited by the Office of the Auditor General of Ontario. The Auditor General's responsibility is to express an opinion on whether the financial statements are fairly presented in accordance with Canadian public sector accounting standards. The Independent Auditor's Report, which appears on the following page, outlines the scope of the Auditor General's examination and opinion.

On behalf of Management,

Keith Extance
Chief Executive Officer

Independent Auditor’s Report

To the Ontario Mortgage and Housing Corporation
and to the Minister of Housing

I have audited the accompanying financial statements of the Ontario Mortgage and Housing Corporation, which comprise the statement of financial position as at March 31, 2017, and the statements of operations, changes in net debt and accumulated deficit, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Ontario Mortgage and Housing Corporation as at March 31, 2017, and the results of its operations, change in net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Susan Klein, CPA, CA, LPA
Assistant Auditor General
June 12, 2017
Toronto, Ontario

Ontario Mortgage and Housing Corporation
Statement of Financial Position

As at March 31, 2017

 

March 31, 2017
($ 000)

March 31, 2016
($ 000)

Liabilities

 

 

Accounts payable and accrued liabilities (Note 7)

8,373

11,862

Long-term debt (Note 8)

275,654

337,977

Long-term Environmental Remediation (Note 4)

44,433

53,983

 

328,460

403,822

Financial Assets

 

 

Cash (Note 5)

1,560

1,485

Accrued interest from Universities and Colleges

60

70

Due from Canada Mortgage and Housing Corporation

-

6

Due from Province of Ontario

8,248

11,680

Investments in student housing properties (Note 6)

3,301

4,107

 

13,169

17,348

Net Debt and Accumulated Deficit

(315,291)

(386,474)

Contingent Liabilities (Note 9)

 

 


The accompanying notes are an integral part of these financial statements.

On behalf of the Board:

Janet Hope, Chair
Keith Extance, Chief Executive Officer

Ontario Mortgage and Housing Corporation
Statement of Operations

For the year ended March 31, 2017

 

Budget
($000)

2017
($000)

2016
($000)

Revenue

 

 

 

Subsidies from Province of Ontario:

 

 

 

Debt service obligations

81,632

81,632

87,320

Environmental Remediation (Note 4)

12,026

9,871

9,991

Affordable Home Ownership Program (AHP) Mortgages

-

85

975

Interest received from Student Housing

245

245

245

Miscellaneous

10

32

49

Total revenues

93,913

91,865

98,669

Expenses

 

 

 

Debenture Interest:

 

 

 

Devolved properties

20,115

20,115

24,587

Student housing

245

245

334

Environmental Remediation (Note 4)

687

321

1,916

Loss on Restructuring (Note 3)

-

-

50

Miscellaneous

10

1

1

Total expenses

21,057

20,682

26,888

Excess of Revenues over Expenses (Note 10)

72,856

71,183

71,181


The accompanying notes are an integral part of these financial statements.

Ontario Mortgage and Housing Corporation
Statement of Changes in Net Debt and Accumulated Deficit

For the year ended March 31, 2017

 

Budget
($000)

2017
($000)

2016
($000)

Net Debt and Accumulated Deficit, beginning of year

(386,474)

(386,474)

(458,255)

Excess of Revenues over Expenses (Note 10)

72,856

71,183

71,181

Net Debt and Accumulated Deficit, end of year

(313,618)

(315,291)

(386,474)


The accompanying notes are an integral part of these financial statements.

Ontario Mortgage and Housing Corporation
Statement of Cash Flows

For the year ended March 31, 2017

 

2017
($000)

2016
($000)

Operating transactions

 

 

Excess of Revenue over Expenses

71,183

71,781

Changes in non-cash working capital:

 

 

Increase (Decrease) in Accounts Payable and Accrued Liabilities

(3,489)

3,852

Decrease in Long-Term Environmental Remediation

(9,550)

(8,033)

Decrease in Accrued Interest from Universities and Colleges

10

49

Decrease (Increase) in Due from Canada Mortgage and Housing

6

(6)

Decrease (Increase) in Due from the Province of Ontario

3,432

(4,765)

Cash provided by operating transactions

61,592

62,878

Financing transactions

 

 

Long-Term Debt Repayment

 

 

– Province of Ontario

(6,602)

(7,029)

– Canada Mortgage and Housing Corporation

(55,721)

(59,016)

Cash applied to financing transactions

(62,323)

(66,045)

Investing Transactions

 

 

Collection of Ontario Student Housing Long-Term Debt

806

3,312

Increase in Cash

75

145

Cash Balance at Beginning of Year

1,485

1,340

Cash Balance at End of Year

1,560

1,485


The accompanying notes are an integral part of these financial statements.



Ontario Mortgage and Housing Corporation
Notes to the Financial Statements

For the year ended March 31, 2017

1.  Nature of Operations

The Ontario Mortgage and Housing Corporation (the Corporation), formerly the Ontario Housing Corporation, was established without share capital in 2006 under the Ontario Mortgage and Housing Corporation Act (OMHCA), as a provincial government agency.  The Corporation’s responsibilities include maintaining debt retirement obligations, debt service administration and satisfying obligations related to former public housing. The Corporation also carries out any other duties assigned by the Minister of Housing in respect of matters under the OMHCA. 

In addition, the Corporation has the authority to manage, administer and deliver the Affordable Home Ownership Program, set out in the Canada-Ontario Affordable Housing Program Agreement, and to manage, administer and deliver other prescribed programs.

Under the Social Housing Reform Act 2000, the Corporation transferred, for no consideration, ownership of public housing units to Local Housing Corporations (LHCs) which are controlled by Service Managers. The Corporation retained its Investment in Student Housing and certain other assets, and responsibility for administering the Corporation’s debts, and contingent liabilities.  The Ontario Ministry of Housing (the Ministry) provides the Corporation with subsidies to cover its debt service payments and other expenses.

In accordance with the amendments to the OMHCA that came into force on April 1, 2015, the Ontario Mortgage Corporation (OMC) was dissolved and its assets, liabilities, obligations and programs were transferred to the Corporation. The Affordable Home Ownership Program (AHP) Revolving Loan Fund was transferred to OMHC at that time. The AHP mortgages were transferred and vested in OMHC by Minister’s Order in 2016. The Corporation is responsible for managing the marketable and forgivable loans and mortgages that were owned by OMC prior to its dissolution and that were transferred to the Corporation on April 1, 2015.

The Corporation is exempt from federal and provincial income taxes under the Income Tax Act and the Taxation Act. 

2.  Significant Accounting Policies

Significant accounting policies followed by the Corporation are summarized below: 

(A)  BASIS OF ACCOUNTING

These financial statements are prepared by management in accordance with Canadian public sector accounting standards for provincial reporting entities established by the Canadian Public Sector Accounting Board.

(B)  REVENUES

Subsidies from the Province of Ontario (the Province) are accounted for as revenue when received, which is when the related expenses are incurred and when the environmental remediation liability is settled.

(C) EXPENSES

Expenses are reported on an accrual basis as incurred.  These expenses include debt servicing cost such as interest expenses. 

(D)  FINANCIAL INSTRUMENTS

The Corporation’s financial assets and liabilities are accounted for as follows:

  • Cash is subject to insignificant risk of change in value so the carrying value approximates fair value.
  • Accrued Interest from Universities and Colleges, due from the Province, Investments in Student Housing Properties (note 6) and Interest Receivable are measured at amortized cost.
  • Long-Term Debt, which consists of loans from the Province and Canada Mortgage and Housing Corporation debentures (note 8), is measured at amortized cost.
  • Accounts Payable and Accrued Liabilities (note 7) are measured at cost. 

(E)  ACCUMULATED DEFICIT

The Accumulated Deficit that resulted from the transfer of properties to LHCs for no consideration is reduced each year by an amount equal to the portion of the subsidy from the Province required to cover principal payments on the Corporation’s long-term debt. The Accumulated Deficit is also reduced by the revenues provided by the Province to settle the Corporation’s Long-Term Environmental Remediation Liability.

(F) USE OF ESTIMATES

Preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts.  Actual results could differ from those estimates. Significant estimates include Long-Term Environmental Remediation Liability and Contingent Liabilities for Contaminated Sites.

3.  Restructuring Transactions

In the 2014 Ontario Budget, the Province of Ontario identified a number of agencies with “overlapping functions”.  The OMC and the Corporation were identified within this group and as a result the OMHCA was amended to address the overlapping functions and dissolve the OMC.  

On April 1, 2015, the Corporation completed a restructuring transaction whereby the OMC was dissolved and all its assets, liabilities, rights, obligations and programs were transferred to the Corporation.  No monetary compensation was involved in the transaction and no costs were incurred as a result of the restructuring.

Effective April 1, 2015, the Corporation also early adopted the new Public Sector Accounting Standard 3430 Restructuring Transactions. The Corporation’s assets and liabilities in the following financial statement classifications were increased at the restructuring date to recognize the transfer from OMC: 

OMC Carrying Value (as of April 1, 2015)

 

($000)

Due from Canada Mortgage and Housing Corporation

11

Total Assets Recognized


11


Accounts Payable and Accrued Liabilities

11

Due to Province of Ontario

50

Total Liabilities Recognized

61

Loss recognized in the statement of operations due to restructuring

(50)


4.  Long-Term Environmental Remediation

The balance in the Liability for contaminated sites as at March 31, 2017 is $44.4 million. The liability is discounted using the provincial borrowing rate for debentures with similar maturity (average 1.22%). The undiscounted value of the accrued liability is $46.6 million.

The liability is management’s best estimate based on environmental investigations performed by independent experts and reflects the costs required to remediate the sites.  Remediation is expected to occur within the next five years.

There are two commitments as at March 31, 2017 - the multi-year Regent Park redevelopment project and the Alexandra Park redevelopment.

Regent Park, formerly owned by the Corporation, is being re-developed by the Toronto Community Housing Corporation (TCHC). The site has soil contamination as a result of historical industrial uses. Based on the redevelopment plan prepared by TCHC, it is expected that phases 2 and 3 will be completed by 2018-19 after which phases 4 and 5 will start. Current cost estimates, based on site testing reports, to complete phases 2 and 3 are $13.9 million and for phases 4 and 5 are $29 million.

In June 2013, TCHC advised that an Environmental Site Assessment (ESA) identified soil and groundwater contamination on the Alexandra Park site. In March 2014, TCHC requested that the Corporation provide financial assistance for soil remediation work. Cost estimates to remediate the contamination total $3.7 million. 

The Long-Term Environmental Remediation liability balance is comprised of the following:

 

($000)

April 1, 2016 Opening balance

53,983

Increase: Revised Estimate

321

Decrease: Remediation Undertaken

(9,871)

Balance as at March 31, 2017

44,433


Cumulative costs for site remediation to March 31, 2017 are $32.6 million (2016 – $22.5 million).

5.  Cash

The cash balance is made up of the following:

 

March 31, 2017
($000)

March 31, 2016
($000)

Cash

500

510

Internally Restricted Cash

1,060

975

Total Cash Balance

1,560

1,485


The internally restricted cash includes monies received from the Affordable Housing Program (AHP) which are to be used under the OMHCA for housing purposes only.

6.  Investments in Student Housing Properties

The Corporation’s investments in student housing properties represents funds advanced to universities and colleges to cover building costs for student accommodation projects. Each advance is associated with a specific long-term debt obligation of the Corporation and each educational institution makes semi-annual payments to the Corporation equal to the payments on the Corporation's corresponding long-term debt. When the debt is fully repaid, any related encumbrances in favour of the Corporation on the properties are discharged.

 

March 31, 2017
($000)

March 31, 2016
($000)

Original Cost

35,115

35,115

Less: Accumulated Capital Repayments

31,814

31,008

 

3,301

4,107


7.  Accounts Payable and Accrued Liabilities

Most of the Accounts Payable and Accrued Liabilities balance is comprised of accrued interest payable on the Corporation’s Long-Term Debt and amounts owing for environmental remediation costs incurred prior to year end.

8.  Long Term Debt

Long term debt is comprised of the following:

 

March 31, 2017
($000)

March 31, 2016
($000)

Canada Mortgage and Housing Corporation

246,941

302,662

Loans Repayable to the Province

28,713

35,315

 

275,654

337,977


The Corporation borrowed funds from the Canada Mortgage and Housing Corporation (CMHC) and received capital funds from the Province to finance investments in real property – now devolved to the LHCs. The capital funds provided by the Province are Loans Repayable to the Province, with interest and principal payments being made to the Ontario Ministry of Finance.

Interest on both the CMHC debt and the Loans Repayable to the Province are payable at various rates based on individual agreements – the average rates are 5.93% and 6.81% respectively (2016 – 6.08% and 6.88% respectively). Interest expense for the year ended March 31, 2017 totaled $20.4 million (2016 – $24.9 million); $2.4 million (2016 – $2.9 million) of which was paid to the Province.

The interest expense is included in Debentures Interest in the Statement of Operations and is offset by the subsidy from the Ministry.

Scheduled payments over the next five years and thereafter are as follows:

 

Gross
Payments
($000)

Principal
Payments
($000)

2018

70,320

55,643

2019

63,858

53,192

2020

41,483

34,604

2021

31,410

26,799

2022

22,327

19,381

Thereafter

31,314

28,085


9.  Contingent Liabilities

(A)  GUARANTEED DEBT

The Corporation previously entered into loan insurance agreements with CMHC pertaining to mortgage loans on projects funded under various provincially-funded non-profit housing programs administered by the Ministry. Under these agreements, CMHC has insured mortgage loans made by lenders approved under the National Housing Act for the purpose of purchasing, improving, constructing or altering housing units. While the insurance is provided by CMHC, the Corporation is liable to CMHC for any net costs, including any environmental liabilities, incurred as a result of the loan defaults.

The Corporation would request that the Ministry reimburse any costs incurred by the Corporation. As of March 31, 2017, there were $4.2 billion (2016 – $5.0 billion) of mortgage loans outstanding on provincially funded projects. To date, there have been no claims for defaults on the insured mortgage loans.

(B)  CONTAMINATED SITES

The Corporation retains potential liability for cleaning up environmental contaminants of former public housing properties under the Environmental Protection Act, as noted in the former Social Housing Reform Act, 2000 and maintained in the Housing Services Act, 2011. The Ministry reimburses the Corporation for costs incurred.

The Ministry completed its review in 2014-15 of the more than 1,500 former OMHC sites in order to better refine potential liabilities for environmental contamination. The potential liability is for soil and groundwater contaminants as defined under the Environmental Protection Act. Estimates were developed using a risk-based approach that analyzed current and historical land uses, local redevelopment potential, construction date and building type to assess potential environmental risk. A total of 50 sites were identified as having a high degree of risk for potential contamination. These 50 sites represent a potential contingent liability of approximately $295 million. The need for remediation would be confirmed if and when a Service Manager has identified a site for redevelopment.

10.  Excess of Revenues over Expenses

The Corporation derives its revenues from two subsidies from the Province: the debt service obligation subsidy and the environmental remediation subsidy. The debt service obligation subsidy covers the interest on long-term debt included in Corporation’s expenses, and the remaining portion represents the excess of revenues over expenses that is applied to the principal payments on the long-term debt.

Similarly, the environmental remediation subsidy covers the environmental remediation costs included in the Corporation’s expenses, and the remaining portion represents the excess of revenues over expenses that is applied to offset the site remediation costs that are accounted for in the Long-Term Environmental Remediation obligation as described in note 4.

The Corporation is controlled by the Province and is therefore a related party to other organizations that are controlled by or subject to significant influence by the Province. Transactions with related parties were:

(A)  LOANS TO ONTARIO COLLEGES

As of March 31, 2017, the outstanding balance due from colleges with respect to loans for Student Housing Properties (note 6) was $518,000 (2016 - $585,000). Total interest and principal payments received from colleges was $108,000 (2016 - $108,000).

(B)  ADMINISTRATIVE EXPENSES

The Ministry provides administrative, financial, and program services to the Corporation at no charge. The cost for these services amounted to $150,000 (2016 - $150,000). All Board members are senior civil servants and support services are provided by staff of the Ministry in the normal course of their duties.

12.  Risk Management

The Corporation is not exposed to significant credit risk as amounts classified as loans and receivables are due primarily from the Province and publicly-funded Ontario colleges and universities. The Corporation is also not exposed to significant liquidity risk or interest rate risk. These risks are borne by the Province.

13.  Comparative Figures

Certain comparative figures have been reclassified to conform to the basis of the financial statement presentation adopted in the current year.

Return to Top