Get answers to key questions about mortgage interest, property taxes, subsidies and more.
1. Why does BC Housing over- or under-pay subsidies?
The subsidy is estimated for the year at the start of the non-profit provider’s fiscal year based on the current tenant rent applications for subsidy submitted to BC Housing by the non-profit provider and the approved budget amount. Throughout the year, the tenant rent contributions may change which will impact the amount of subsidy required.
BC Housing does not adjust subsidy when changes in tenant rent contributions occur. Rather, the subsidy is reconciled at year end based on actual tenant rent contributions calculated for the year and subsequent adjustments are made for any over or under payments of subsidy.
2. What financial policies should our society have?
Written financial policies and procedures should cover items such as:
- Financial controls such as board review and approval of the budget, clearly defined spending authority, and prohibiting signed blank cheques
- Financial record keeping and financial statements, in accordance with Canadian Generally Accepted Accounting Principles, including books of account with invoices, receipts and vouchers for all expenses
- Purchasing practices with selection criteria
- Investment policy regarding replacement reserves
- Rent/housing charge payments and arrears
- Maintaining rents for market units at the levels prescribed in your operating agreement to prevent deficits
- Fees for standard charges (such as changes on door locks, chargeable call outs and move-out charges)
- Security deposits/membership shares
- Marketing to minimize vacancy loss
For more information on developing policies, refer to the Administrative Guide, or contact the BC Non-Profit Housing Association (BCNPHA) to obtain a copy of their Policy Template Guide. Housing co-ops can contact the Co-operative Housing Federation of BC (CHF BC) about workshops on policy development and to access their resource library with sample policies. Both organizations provide training.
3. Why does BC Housing adjust to the mortgage interest amounts we report in the audited financial statements?
If 12 mortgage payments are included in your budget for the purpose of calculating subsidy, then we may adjust the amount reported for mortgage interest and principal reduction on your Statement of Operations to the 12 payments.
4. What does the term “not fully funded” mean when referring to replacement reserves?
When a reserve is not fully funded, the amount of cash in the reserve account is less than the amount that should have accumulated through annual provision transfers and interest earned, less approved expenditures. Reserves that aren’t fully funded develop when the annual provision is not transferred to the reserve bank account, or cash from the reserves is used for expenditures not yet authorized.
5. What can we do when we’ve underestimated operating costs and the approved budget is wrong?
If your budget significantly underestimates operating costs in a particular category, such as property taxes or utilities, contact your Non-Property Portfolio Manager to discuss a mid-year budget review.
6. BC Housing has asked us to repay the surplus from last year, but if we do, we will be short of cash. Do we have to pay it back?
Yes, if your operating agreement requires you to repay any surplus funds or overpayments to BC Housing for each fiscal year, then you are required to pay the surplus back. If you do not have the funds to repay BC Housing, contact your non-profit portfolio manager to discuss repayment arrangements. We will also work with you to identify the source of your cash shortage and develop strategies to address the issue.
7. What can we do if we don’t have enough cash to pay the property taxes?
Sometimes the timing of the property tax payment can cause cash flow problems for housing providers. BC Housing can provide an extraordinary payment for a property tax advance and, if applicable, your budget will be reduced to reflect this payment. Contact your non-profit portfolio manager to discuss this option. BC Housing will work with you to find solutions so the problem does not occur from year to year.
8. How does BC Housing calculate economic rent for units in the development?
The economic rent of the units is equal to the total estimated monthly operating costs, based on the approved budget, divided by the number of units. Adjustments may be made for unit size.
9. What can we do if BC Housing’s Summary of Tenants and Rent Subsidy Required Report shows the wrong amount for a rent or housing charge?
If the amount on the report does not match the submitted Application for Rent Subsidy form, call the Rent Desk at BC Housing at 604-439-4167 for assistance in having this corrected. Housing providers that are using the On-Line Rent Calculation functionality can make the updates in the Housing Registry system for time periods where the financial review has not been finalized. Contact the Rent Desk if you require assistance making the corrections.
10. How does BC Housing determine the subsidy for the development?
Subsidy calculation differs for various programs. Please refer to your operating agreement or contact your non-profit portfolio manager for details.
11. Does BC Housing automatically adjust rent subsidy when resident rent information changes?
No. BC Housing estimates the subsidy required for the year and reconciles the rent subsidy annually when we review your audited financial statements. We do, however, periodically monitor the level of subsidy required throughout the year, and if resident changes have a significant impact on the level of subsidy, we’ll make the applicable adjustments to the monthly amount paid for the development.
12. What do we post to the contingency for vacancy loss budget line item?
Nothing is posted to this budget line item; BC Housing uses it to provide cash flow for vacant units.