A good long-term plan incorporates information from engineers, co-op financial and legal information, and co-op preferences.Asset Management | Member Input | Renewal Schedule | Energy Efficiency | Financial Plan
Once a co-op has the appropriate technical reports, CHF BC staff can work to develop a long-term asset management plan (AMP).That plan will incorporate not just the engineers’ findings, but potentially a lot of other information as well: member survey results, board direction, co-op financial data, operating agreements with government, co-op policies (on internal subsidies or painting, for instance) and other agreements such as leases.
The AMP will take the form of a written report and spreadsheets. It will contain both a renewal schedule and a long-term cash flow projection – typically covering 30 years and looking at both operational and capital budgets.
When developing an asset plan for a co-op, CHF BC wants to hear from co-op members. At the start of the process, we offer co-ops a survey for members to share their observations of conditions at the co-op and their priorities and goals for the co-op. The AMP team can then incorporate that feedback throughout its work. Ultimately, the plan is developed to meet the needs of the co-op’s board of directors with the interests of the co-op foremost in mind.
We seek feedback from the co-op board from the start and ask for feedback during the AMP drafting process. Unless alternate requests are made, we schedule a workshop with the broad co-op membership to explain the AMP and the analysis that went into it. We take comments and make adjustments again before issuing a finalized plan.
Based on the engineers' recommendations and the co-op members' priorities, the AMP team will create a renewal schedule. This is a schedule of capital works that takes into account what the co-op buildings need, what the members want, and the most effective way of grouping similar or related activities (like window replacements being timed with siding replacement). Member feedback is especially important in considering renewals of unit interiors, but health and safety issues will always have priority.
The schedule will usually cover a 30-year period, the period covered by an IRC building condition assessment. It will make adjustments for inflation, and consider associated professional fees and taxes. The information from the optimized schedule will link to the overall financial plan.
Non-profit housing operators can sometimes take advantage of energy efficiency incentives offered by utilities like BC Hydro and Fortis BC. CHF BC and BC Non-Profit Housing Association, which shares offices with the federation, can help connect co-ops to those programs.
The Energy Conservation Assistance Program (ECAP) is now fully open to non-profit housing co-ops, and does not require income-testing for each household. This is a free program and all members are urged to learn more about it.
The heart of the asset management plan is an inter-linked set of financial projections with two main parts: (1) a set of operating budget projections, and (2) a set of capital budget projections.
These allow the co-op to plan for the future, based on current conditions, anticipated changes in relationships with government (e.g. operating agreement expiries) and debt obligations, and using reasonable assumptions about future costs (inflation and interest rates).
The AMP team will analyze a client’s situation and develop a recommended approach to looking after the co-op’s buildings and finances. We’ll examine in detail the co-op’s revenue (and housing charges), regular operating expenses (utilities, taxes, maintenance costs, etc.), existing debt and capacity to contribute to its reserve fund. We’ll develop a recommended scenario for the co-op based on its individual situation.
Sometimes the recommended scenario will include borrowing to supplement reserve contributions. This is a standard approach in business, but not all co-ops will need to take on new debt. The AMP team will look at borrowing as an option on a case-by-case basis, and, if recommended, will forecast when best to look at approaching a lender.
To maximize a co-op’s options, we attempt to ensure a co-op’s financial position will satisfy lenders and meet the requirements of co-op regulatory bodies.
As always the co-op makes the decisions on how to proceed, but with an AMP it can do so with the information it needs. Plans should be updated every three to five years and be adjusted annually.