PEEL HOUSING CORPORATION
 
(the "Corporation")
 
BY-LAW NO. 3
 
A by-law establishing financial controls related to the Current Budget, the Capital Budget and reserve management of the Corporation.


1. Definitions in this by-law:

a) Financial Terminology

    i) "Account" means a classification of expenditure or revenue within a Cost Centre to which an estimated budget value and actual expense or revenue amount is assigned;

    ii) "Capital Budget" means the annual Peel Housing Corporation Board approved plan of the Peel Housing Corporation for expenditures and financing sources to acquire or construct capital assets;

    iii) "Capital Forecast" means the projection of expenditures and financing sources for years beyond the Capital Budget approval year in which the forecast is made;

    iv) "Capital Plan" means the combined Capital Budget and Capital Forecast;

    v) "Capital Project" means an undertaking for which expenditures of a capital nature are made or are to be made including expenditures to acquire, improve or maintain land, buildings, structures, machinery and equipment, to install computer software and to conduct studies relating to Corporate assets;

    vi) "Contingency Project" means a Capital Project related to not specifically foreseen event but which may reasonably be expected to occur within the given budget year;

    vii) "Current Budget" means the annual Peel Housing Corporation Board approved plan for expenditures, revenues, staffing levels and service levels for operations of the Peel Housing Corporation taking place from January 1st to December 31st each year;

    viii) "Current Forecast" means the projection of expenditures, revenues, staffing levels and service levels for years beyond the Current Budget approval year in which the forecast is made;

    ix) "Emergency" means an unforeseen situation of an urgent nature, presenting an unacceptable risk to the health and safety of persons or to property, requiring an immediate expenditure of funds;

    x) "Financial Report" means the summary of financial activities related to the Current Budget, Capital Budget and reserve management provided to the Board by the Treasurer;

    xi) "Reclassification of a Sub Reserve" means the transfer of the unexpended amount of a Reserve from one Sub Reserve Cost Centre to another which does not change the purpose for which the unexpended amount will be spent;

    xii) "Redeployment of the Capital Budget" means the transfer of an Unexpended Budgeted Amount from one Capital Project Cost Centre to another which has the effect of changing the purpose for which the Unexpended Budgeted Amount will be spent;

    xiii) "Redeployment of the Current Budget" means the transfer of an Unexpended Budgeted Amount from one Current Budget Cost Centre to another which has the effect of changing the purpose for which the Unexpended Budgeted Amount will be spent;

    xiv) "Redistribution of the Capital Budget" means the splitting of the financing sources of one Capital Project into financing sources for new smaller Capital Projects having the same purpose;

    xv) "Reserve" means the unrestricted accumulation, at the discretion of the Board, of appropriations from net revenues. Reserves include Working Funds, capital financing and capital replacement;

    xvi) "Reserve Forecast" means the projection of contributions to and withdrawals from Reserves for the year in which the forecast is made and for years beyond the year in which the forecast is made;

    xvii) "Restructure of the Capital Budget" means the transfer of an Account's Unexpended Budgeted Amount from one Capital Project to another which does not change the purpose for which funds are budgeted or will be spent;

    xviii) "Restructure of the Current Budget" means the transfer of an Account's Unexpended Budgeted Amount from one Cost Centre to another which does not change the purpose for which funds are budgeted or will be spent;

    xix) "Sub Reserve" means the result of the splitting by Program of a Reserve into smaller amounts;

    xx) "Unallocated Project" means a Capital Project related to corporate initiative events not specifically foreseen but which may reasonably be expected to occur within the given budget year and includes Contingency Projects;

    xxi) "Unexpended Budgeted Amount" means the amount of approved budget funds in an Account that have not been spent or committed for spending;

    xxii) "Working Funds Reserve" means a Reserve arising from the operating surplus to minimize annual fluctuations in revenue and expenses.

b) Organizational Structure

i) "Board" means the board of directors of the Peel Housing Corporation;

ii) "Cost Centre" means a component of the Corporation's financial summary for revenue and expense accounting purposes, and has its own distinct name and number in the accounting system, with applicable coding to identify it as a Current Budget Cost Centre, Capital Project Cost Centre or a Sub Reserve Cost Centre. Cost Centres are currently referred to as DeptIDs in the accounting system;

iii) "Cost Centre Manager" means the person designated by the General Manager, who is responsible for planning and implementing a Current Budget or Capital Budget or a portion thereof;

iv) "Deputy Treasurer" means the person appointed by the Board and any person who has been authorized to temporarily act as the Deputy Treasurer during the incumbent's absence or a vacancy in the office;

v) "Director" means the person designated by the General Manager, who is responsible for the delivery of programs;

vi) "General Manager" means the person appointed by the Board and any person who has been authorized to temporarily act as the General Manager during the incumbent's absence or a vacancy in the office;

vii) "Peel Housing" means the Peel Housing Corporation operating as Peel Living;

viii) "Program" means a housing program with prescribed administration and funding requirement in accordance with the Social Housing Reform Act and/or any applicable operating agreement in effect;

ix) "Treasurer" means the person appointed by the Board and any person who has been authorized to temporarily act as the Treasurer during the incumbent's absence or a vacancy in the office.


2. Current Budget Financial Controls

a) The Current Budget shall be submitted annually to the Board for approval;

b) All Current Budgets submitted to the Board, must first be reviewed by the Treasurer and by the General Manager;

c) Reports with financial implications submitted to the Board for approval must first be reviewed by the Treasurer to ensure availability of financing sources and compliance with Board financial by-laws and then shall be reviewed by the General Manager;

d) The Corporation shall annually prepare a Current Budget and a Current Forecast;

e) The Board shall be informed of any variance between the approved Current Budget and actual expenditures, actual revenues, or actual service levels where such variance is deemed to be material by the Treasurer not less frequently than semi-annually in a Financial Report including a written status report on each such variance;

f) The General Manager and Directors, together with their Cost Centre Managers, have the responsibility to provide the budgeted level of service approved by the Board, using the corresponding discretionary spending authority within the Board approved net Current Budget for the Corporation, Program or Cost Centre, subject to the following:

i) goods and services shall be expensed in the fiscal year in which they are actually received, in accordance with Canadian generally accepted accounting principles with the exception of certain specific accounting policies prescribed under the Program operating agreements legislated by the Minister of Municipal Affairs and Housing (MMAH), and

ii) unanticipated revenues shall not be spent or committed without approval of the Board, unless revenues which are received in consideration of or conditional upon the provision of a budgeted service requiring an expenditure of funds may be so expended without a requirement of further approval. At year-end unexpended unanticipated revenues shall be treated in the same manner as Unexpended Budgeted Amounts and shall become a part of the year-end surplus or shall be applied against the year-end deficit.

g) Unless otherwise provided in accordance with this by-law, a Restructure of the Current Budget or a Redeployment of the Current Budget shall be approved in accordance with the provisions of Schedule "A" to this by-law;

h) The General Manager is authorized to make contributions to or withdrawals from Sub Reserves established for the purposes of Programs funded from operating surplus including a Working Funds Reserve to adjust any operation surplus or deficit at the end of the current year. Such contributions or withdrawals shall be based upon a recommendation of the Treasurer, and shall be for the purpose of minimizing any fluctuations in revenue and expenses which would otherwise result from an unadjusted surplus or deficit. All such contributions or withdrawals shall be reported to the Board in the current year-end Financial Report;

i) The General Manager is authorized to approve contributions to or withdrawals from the Working Funds Reserve up to $250,000 as transitional funding to meet an unanticipated expenditure pressure or a revenue receipt that was not budgeted for. All such contributions to or withdrawals from the Working Funds Reserve shall be reported to the Board in the next Financial Report following the contribution or withdrawal;


3. Capital Budget Financial Controls

a) The Capital Budget shall be submitted annually to the Board for approval;

b) All Capital Budgets submitted to the Board for approval must first be reviewed by the Treasurer and by the General Manager;

c) Reports to the Board which seek authority for the release of funds for the purposes of a Capital Project or which seek authority for the commencement of a Capital Project must first be reviewed by the Treasurer, to ensure availability of financing sources and compliance with Peel Housing financial by-laws and then shall be reviewed by the General Manager;

d) The Corporation shall annually prepare a Capital Budget and a Capital Forecast;

e) The Board shall be informed of any variance between the approved Capital Budget and actual expenditures, actual revenues or actual service levels where such variance is deemed to be material by the Treasurer not less frequently than semi-annually in a Financial Report including a written status report on:

i) each such variance;

ii) Capital Projects in progress including a summary of major activity;

iii) all Contingency Project activity;

iv) all Unallocated Project activity; and

v) a summary of capital spending.

f) In order to avoid major changes to the financing requirements of the Capital Plan, new Capital Projects introduced to the Capital Plan shall not be scheduled in any of the first three years of the Capital Plan, unless Capital Projects of equal approved net budget value are deferred for that purpose. New Capital Projects can be recommended to the Board for approval in the first three years of the Capital Plan without deferral of another project, at the discretion of the General Manager. New Capital Projects may be scheduled into the Capital Plan for years four to ten of the Capital Plan without deferral of another project;

g) No Capital Project which has not received the Board's approval shall commence prior to the approval by the Board of that Capital Project within the Capital Budget, unless:

i) Approval is granted by the Board via a report outside of the budget process;

ii) The Capital Project is financed, in accordance with a Redeployment of the Capital Budget, or a Redistribution of the Capital Budget in accordance with the provisions of Schedule "B" to this by-law;

h) The General Manager may cause a previously active Capital Project which has become inactive for one year or more to be closed out. Such authority may be delegated by the General Manager to the Treasurer;

i) Notwithstanding sections 3(f)-(g), in the event of an Emergency requiring capital repairs, the General Manager is authorized to create a new Capital Project and to authorize its financing from sources recommended by the Treasurer. The General Manager shall cause any such Emergency Capital Project to be reported to the Board as soon as may be reasonably practical following the identification of the Emergency need for the Capital Project;

j) Upon approval of the Capital Budget, projects designated with the status "P" for "pending" shall require separate approval from the Board before funds may be released or project tenders may be issued. Upon approval of the Capital Budget, all Capital Projects not designated in the approved Capital Budget with the status of "P" for "pending" shall be designated with the status "A" for "approved" for purposes of the release of funds and issuance of project tenders;

k) Capital Project financing sources shall be authorized by Board resolution or by-law. Where external long-term debt financing is required, it shall be obtained in accordance with the requirements of applicable legislation, if any, to which the Corporation may be subject at the time of the required financing;

l) Capital Projects approved by the Board must be resubmitted by the General Manager to the Board in the event that the expenditure requirements for the Capital Project appear reasonably likely to increase substantially. An increase in the expenditure requirements for a Capital Project shall be deemed to be "substantial" where, by reason of a scope change to the service to be rendered by the Capital Project or otherwise, it appears to be reasonably likely that an increase in the net Capital Project budget which is greater than the lesser of $250,000 or 10% of the Board approved net project budget for Capital Projects set up after January 1, 2007, will be required;

m) No commitment shall be made to make expenditures upon Capital Projects which exceed the Board approved net project budget unless such expenditures are pre-approved in accordance with the provisions of Schedule "C" to this by-law;

n) Unless otherwise provided for in accordance with this by-law, a Redeployment of the Capital Budget, or a Restructure of the Capital Budget between Cost Centres within the same Program, shall be approved in accordance with the provisions of Schedule "B" to this by-law;

o) Unless the Capital Budget approval for the current year otherwise provides, the Unexpended Budgeted Amount for each Unallocated Project excluding Contingency Project shall be brought forward annually to that Unallocated Project for the current year, immediately following the approval of the Capital Budget for the current year. The General Manager and the Treasurer, in consultation with the Directors, shall annually assess the adequacy of all Unallocated Project balances and shall reduce such balances where it is possible to do so while maintaining their adequacy. Such reductions shall be reported by the General Manager and the Treasurer to the Board in the next Financial Report following the reduction;


4. Reserve Management Financial Controls

a) The Board may authorize the creation of a Reserve by means of a resolution, which shall identify the purpose of the Reserve;

b) The Treasurer may create a new Sub Reserve, within an authorized Reserve;

c) Reports submitted to the Board for approval which seek authority for the contribution or withdrawal of funds to or from Reserves must first be reviewed by the Treasurer to ensure availability of financing sources and compliance with Board financial by-laws and by the General Manager ;

d) Not less frequently than semi-annually, the Treasurer shall provide the Board with a Financial Report including a written status report on the Reserves;

e) All contributions to and all withdrawals from Reserves shall require advance approval by the Board either as part of the Current and Capital Budget approval process or by means of a resolution, save and except that:

i) The Treasurer may authorize at the Treasurer's discretion, the contribution to Reserves of revenues, including the contribution of settlements paid to the Peel Housing Corporation. A contribution which in the opinion of the Treasurer is material shall be disclosed to the Board in the next Financial Report following the contribution;

ii) The transfer of funds between Sub Reserve Cost Centres for the purposes of a Reclassification of a Sub Reserve may be authorized by the Treasurer. Such Reclassifications shall subsequently be reported in the next Financial Report to the Board; and

iii) Contributions to or withdrawals from Reserves may be authorized without a requirement of Board approval in accordance with sections 2(h)-(i) of this by-law.

f) Annually, the Treasurer shall present to the Board a Reserve Forecast for all Reserves based on the Capital Plan and all other relevant information;

g) Board authority is required to transfer Reserve balances between Reserves.


The Treasurer shall undertake a review of this by-law not less frequently than once every seven years and report to Board the results of such review.


General

a) This by-law, may be referred to as the "the Financial Control By-law"; and,

b) Compliance with the by-law shall be in accordance with other policies as adopted by the Board and procedures introduced by the Peel Housing Corporation.

 


ENACTED AND PASSED this 10th day of May, 2007.

 

P. Palleschi

A. Macintyre
_____________________________
____________________________
President
Secretary

 


Schedule "A" to Peel Housing Corporation By-law Number 3

Schedule "B" to Peel Housing Corporation By-law Number 3

Schedule "C" to Peel Housing Corporation By-law Number 3