Treasurer’s Comments on 2020 Operating Budget

This budget was accepted by the Board at their Sept. 25th meeting for presentation to the General Membership.

  1. The Board is recommending that we increase Housing Charges effective January 1, 2020, by 2.25 %. This is close to the inflation rate for Canada for the year 2018. There was no housing increase in 2019 so this represents about a 1.12% increase per year over the last two years (2019 & 2020). Specifically, this means Housing Charges will be increased to: $909 per month for a 1 Bedroom; $1,161 (2 BR); $1,240 ( 3 BR) and $1,471 (4 BR). This will generate an additional $19,309 in Income.

Total annual income will increase by $32,070 and Expenses by $44, 716. Overall this will result in an annual Net Operating Income of $59,525 (Arlington $54,811 & Evanson $4,714). This meets our Mortgage agreement with ACU which calls for a debt coverage amount of 10% of our annual mortgage payments, ie 10% of $489,912 or $48,991.

2. Other Income Items:

2.1)    No increase or changes to Amenity charges, Laundry cards, Parking lot, Common & Guest Room charges or Wiband. Wiband users may experience a net reduction since we intend to make rebates in December of each year to bring Wiband income and costs to a near breakeven position.  Also, we are estimating a net gain in room rentals of $3,065 based on 2019 experience.

2.2)    Vacancy Loss Allowance: This budget item covers loss of monthly housing charges after residents leave the co-op but before new residents move in. We have reduced this to $6,021 (one month vacancy for one suite of each size) to reflect the fact we have over 300 persons on our waiting list. This results in a net gain of $11,895 on the income side.

3. Expense Items:

3.1) General Comment: Most expense item estimates are based on our 7 month experience to July 31, 2019, and the last 5 months of 2018 plus known or estimated rate increases as below.

3.2) Rate increases have been included as follows: Gas and Electricity 2.5%, Water 3%, insurance 5% and Property Taxes 3%. It should be noted that City of Winnipeg has completed their property tax assessments and the expense is based on their assessments for 2020.

3.3) Total Utility costs have been increased by $12,101 and insurance by $3,574.

3.4) Maintenance Costs for Arlington have been increased by $22,911 to reflect the cost increases expected when both developments are no longer covered by warranty. As part of this increase we have included a handyperson for 8 hours per month ($2,112) to support our maintenance volunteers. Also, an allowance for minor improvements and equipment purchases of $5,000 as requested by the maintenance committee has been included under other operating expenses.

3.5) Management Fees are based on our Contract with Brydges and result in an increase of $3,552 over 2019 budget. Plus, we have Communication Expenses (delivery, copying, postage, etc.) estimated at $5,680.

3.6) The Democratic Function expense includes our membership fees to the Cooperative Housing Federation and the Manitoba Non-Profit Housing Association.

4. Capital Replacement Reserve Fund:

The intent for this fund is to build up a reserve to be used for future replacement costs related to the building and equipment. HCL Consulting Ltd. provided a Property Condition Assessment report on August 21, 2017 for the 200 Arlington St. building as part of the Phase 1 project. In their report they included a recommended amount that should be set aside for each unit per year at $652 in 2017 dollars. We increased this amount to $680 per unit for inflation for 2018 & 2019. We have used the same amount for the Evanson St. project. Interest earned on our investments will be added as well.

5.  Share Redemption Fund:

This fund is a reserve against the Coop having to pay back a members share after six months’ notice if no resident is found. The Phase 1 Construction/Development budget set this at $210,000. So with potential overruns in the construction budget of approximately $100,000 and a waiting list of over 300, the Board made a decision to temporarily reduce the Share Redemption budget amount by $105,000 to cover these extra costs. After, some thoughtful review, it was concluded that a permanent reduction to a Fund of $155,000 for both phases would be prudent.  The additional $36,000 will be added at year-end to bring the Fund total to $155,000 (Phase1 $105,000 + Phase 2 $14,000 +$36,000). Interest earned is added to the Fund as we go.

6. In conclusion, we all have a responsibility to conserve as much energy and water as possible. Please refer to the OGHC Environmental Sustainability policy on our web site under By-laws, Policies and House rules for complete details. It outlines what the OGHC has done in constructing our building to make a huge difference in our energy consumption. You can make a difference yourself by: setting  your suite temperatures at moderate levels during winter, summer and when not in the suite; switching off lights, computers and other devices when not in use; doing full loads of laundry and dishwashing, saving water for watering plants and flushing toilets. Also, you can help by being careful not to cause insurance claims (fire & water damage) and by looking after your suite to save maintenance costs. Every little bit helps. We have a great building and community: let’s care for it and each other as much as possible.

 

Submitted by                                                                                   September 28th, 2019

Don Winstone, Treasurer                                                                 Based on Version 7

 

Français, Kurdî, عربى, English, Kiswahili, Pilipino »