7935.4 NHC cover eng:7935.4 NHC cover eng · 7935.4 NHC cover_eng:7935.4 NHC cover_eng 6/5/07 4:33 PM Page 1. NUNAVUT HOUSING CORPORATIONANNUAL REPORT 2004 2005 1 Our Mission To provide

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Our MissionTo provide opportunities for all residents of Nunavut to have

homes that support a healthy, secure, independent and dignified lifestyle through working with our communities

to allow them to assume the role of providing housing to Nunavummiut.

Our VisionTo ensure families and individuals in Nunavut

have access to a range of affordable housing options.

Our Principles and ValuesThe Nunavut Housing Corporation (NHC) believes in and strives for:

• Placing “human capital” – its employees, Local Housing Organization (LHO) partners, tenants and clients – first when targeting housing solutions for Nunavummiut;

• Recognizing the contribution NHC and LHOstaff make to housing in Nunavut and providingthem with the proper work environment and tools to enable them to maximize that contribution;

• Making a positive impact on the quality andaffordability of housing;

• Quality of advice, assistance and support toLHOs, other client organizations and agencies,and individuals;

• Quality of property management services forNunavut Public and Staff Housing;

• Ensuring housing services and support are provided in an equitable manner;

• Use of Inuit Qaujimajatuqangit in Corporationdecision-making;

• Building constructive relationships with othergovernments, agencies, departments, and bothcommunity and Aboriginal organizations.


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Table of ContentsLetter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Minister’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Corporate Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Core Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Departmental Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Report on Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Management’s Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Advisory and Administration Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Public Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Homeownership Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Staff Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


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Letter of Transmittal The Honourable Ann HansonCommissionerGovernment of Nunavut

Dear Madam:

I have the honour of presenting the Annual Report for the Nunavut Housing Corporation, covering the periodApril 1, 2004 to March 31, 2005.

Respectfully submitted,

Olayuk AkesukMinister responsible for the Nunavut Housing Corporation


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Minister’s MessageThe Nunavut Housing Corporation is committed to meeting the needs of all its stakeholders. It does so bydelivering consultations and counseling in its clients’ language-of-choice, with its insistence on inclusive dialogue and consensus building with its territorial and national partners, and by continually striving for culturally relevant, energy efficient, northern housing designs.

Over the past year I have enjoyed working with our dedicated staff and knowledgeable community housingpartners. I am confident in the Nunavut Housing Corporation’s ability to make the most of future opportunitiesto improve access to safe, affordable and adequate housing options for Nunavummiut. I look forward to thework ahead.

I remain committed to strengthening and building on the Corporation’s excellent record of embracingopportunities for housing dialogue at the community, territorial and national levels as we face the challengesof the next fiscal year. Together, with all of our partners and stakeholders we will make a strong and positivecontribution to housing in Nunavut in 2005-2006.

Best regards,

Olayuk AkesukMinister Responsible for the Nunavut Housing Corporation


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President’s MessageHaving built a solid foundation in 2003 – 2004, we took the next step in 2004-2005 by “framing a housingsolution” that will help Nunavut meet its immediate and long-term housing needs.

Fiscal year 2004-2005 was a decisive year for the Nunavut Housing Corporation. Its heavy investment inrelationship building in 2003-2004 paid off and the results are encouraging. The implementation in the summerof 2004 of the $40 million Canada-Nunavut Strategic Infrastructure Fund Agreement for Social Housing, withInfrastructure Canada, has demonstrated that the Corporation has matured in its capacity to negotiate substantiveagreements with federal partners such as CMHC and Infrastructure Canada, which has done much to raise ourprofile with the federal government.

Evidence of this was the success we achieved in relating Nunavut’s housing crisis at the national level through the production and distribution in the fall of 2004 of the Ten-Year Inuit Housing Action Plan.In partnership with Nunavut Tunngavik Incorporated (NTI), we completed a comprehensive argument forrenewed long-term federal intervention in housing for Inuit in Nunavut. In the process, we set the standard forfuture cooperation with our territorial land claim organization. Our joint document outlines the need for atotal federal investment of $1.9 billion dollars over ten years.

I am proud of our accomplishments over the past twelve months, recognizing that these represent ongoingcommitments. They are the foundation on which we must continue building to reach our goal of a solid housingsolution for Nunavut. It is with great satisfaction that I present the 2004 – 2005 Annual Report.

Sincerely,

Peter ScottPresident, Nunavut Housing Corporation

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2 0 0 4 2 0 0 5 N U N A V U T H O U S I N G C O R P O R A T I O N A N N U A L R E P O R T

The Nunavut Housing Corporation (the Corporation)is a Public Agency of the Government of Nunavut(GN), created through the Nunavut Legislature bythe Northwest Territories Housing Corporation(Nunavut) Act. As such an agency, the Corporationis at arms-length from the GN, and its operatingboundaries are set out in part IX of the FinancialAdministration Act, the section of the Act specificallydevoted to Public Agencies.

The Corporation reports to the LegislativeAssembly, Executive Committee and Nunavummiutthrough its President and the Minister responsiblefor the Nunavut Housing Corporation. This approachallows the Minister to maximize the effectiveness ofthe Corporation for the present and future benefitof Nunavummiut.

Status as a Crown Corporation affords manyadvantages, including:

• The ability to enter into funding partnershipswith others, principally the Canada Mortgageand Housing Corporation (CMHC). This meansthat Nunavut’s transfer payments from the federalgovernment are not affected by the funding thatthe Corporation receives.

• The ability to carry over funds from one year to the next, ensuring that funds from all sourcesdesignated for housing initiatives remain dedicatedto housing solutions.

• The stewardship of funds in the Capital andOperating and Maintenance pools, giving theCorporation full authority for the delivery ofhousing initiatives.

Core BusinessThe core business of the Nunavut HousingCorporation (NHC) is the delivery of targetedhousing solutions in Nunavut. This includes offeringeducation, training and support to Local HousingOrganizations (LHO) in the areas of administration,finance, program delivery and technical constructiontechniques and procedures; providing homeownerservices in the areas of finance, life skills and tech-nical assistance; and coordinating housing-relatedlobby efforts on behalf of all Nunavummiut. Theseservices are organized into three distinct lines ofbusiness: Public Housing, Staff Housing andHomeownership.

Public HousingPublic housing is delivered in close cooperation withour twenty-five community partners, the LHOs.Through funding agreements between the NHCand the LHOs, the financial resources needed toprovide ongoing public housing services toNunavummiut are transferred to a local level.LHOs are responsible for the complete care of the3,900-unit portfolio, from unit allocations, rentalassessments and collections, to maintenance andrepairs.

Staff HousingThe Corporation administers GN staff rental andhomeowner units, and provides policy support toenhance housing options and services available tothis important segment of the population inNunavut.

Corporate Overview


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HomeownershipThrough its homeownership and financing capitalprograms, the Corporation assists residents whocan afford the costs of homeownership to secureand maintain their own housing. The Corporationcan also provide short-term guarantees for interimfinancing. As well, client-counseling services areprovided to homeowners. These services include,but are not limited to, consultations regarding newconstruction/renovation, bank financing, homebudgeting and energy conservation in the home.

Departmental RolesTo administer the Corporation’s programs, a smallcorporate team of seventy housing professionalsworks diligently to make the NHC an action-oriented service delivery agency. Structured aroundfive distinct offices, this cohesive group is furthersupported by a network of twenty-five local housingorganizations which provide a crucial link toNunavummiut and their communities.

DirectorateThe Executive is responsible for managing theCorporation to ensure consistency in all its activitiesacross Nunavut, including the application of policies,standards and procedures, and the delivery of programs. It also oversees the development of long-range strategies, policies, and operationalguidelines on Corporate matters for the Ministerresponsible for the Nunavut Housing Corporationand for the Executive Council (Cabinet). As well, itensures that programs are delivered according tothe Corporation’s funding agreements with CanadaMortgage and Housing Corporation (CMHC).

Corporate HeadquartersCorporate Headquarters is responsible for thedevelopment of corporate policy, strategic planningand communications related to key program areas.Corporate Headquarters provides support to theMinister, the Corporate Executive and to theDistrict Offices. It coordinates the preparation,monitoring and reporting of the Corporate O&Mand capital budgets, administers the loan portfolioand provides accounting and treasury services. It also provides support to the District Offices in the areas of programs, contracting, project management, design and maintenance.

District OfficesDelivery of services and support to communities inprograms and services is managed through theCorporation’s District Offices. District Offices setregional priorities and work with LHOs and individual clients to ensure programs are beingdelivered to appropriate standards through monitoringand assessment. The District Office is responsiblefor ensuring the construction program is successfulin their region. They are also responsible for devel-oping a positive relationship with other governmentdepartments and agencies.

Local Housing Organizations (LHOs)The Corporation is partnered at the community levelwith LHOs, or in some cases, with municipalitiesthat have assumed responsibility for housing services.Our community partners perform most of the day-to-day duties associated with program delivery toindividuals and families. Virtually all LHOs areformed as independent organizations under theSocieties Act (Housing Associations); one exceptionis the Iqaluit Housing Authority, which is formedunder the Northwest Territories Housing Corporation(Nunavut) Act.

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Organizational Chart

President (Iqaluit – 70PY)

Vice President (Arviat – 14PY)

Executive Director/CFO, Corporate Services (Iqaluit – 12PY)

Director Qikiqtaaluk (Cape Dorset – 19PY)

Director Kivalliq (Arviat – 12PY)

Director Kitikmeot (Cambridge Bay – 12PY)

Director of Operations (Arviat – 10PY)

Manager Staff Housing (Iqaluit – 3PY)

Corporate Comptroller (Arviat – 9PY)

Manager Policy & Planning (Iqaluit – 2PY)


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HeadquartersThe 2004-2005 fiscal year was one of active planningfor the Nunavut Housing Corporation. High on theheadquarters group’s list of accomplishments arethe renegotiation of the Residential RehabilitationAssistance Program (RRAP) with the CanadaMortgage and Housing Corporation (CMHC) andthe signing of a major capital funding agreementwith Infrastructure Canada for the construction ofpublic housing units. As well, the past year saw anew partnership with Nunavut Tunngavik Inc.(NTI) to make a joint case for sustainable federalfunding for Inuit Social Housing in Nunavut.

In February 2004 the Corporation joined forceswith Nunavut Tunngavik Inc. to form the SocialHousing Advocacy Working Group (SHAWG).Through SHAWG, the NHC has set a precedentfor future GN/NTI relations by successfully collab-orating on a joint proposal for greater federal inter-vention in social housing in Nunavut. Together, theNHC and NTI presented Minister Joe Fontana,federal Minister of Labour and Housing with theTen Year Inuit Housing Action Plan in September2004. The Ten Year Inuit Housing Action Planclearly describes the need for an assertive approachto alleviate the overcrowding and meet the growinghousing demand of future generations. The NHCmet with Minister Fontana on several occasionsthroughout 2004-2005 to start the negotiationprocess towards fulfilling the proposed solution of$1.9 billion over ten years.

In January 2005, the Goverment of Nunavut andInfrastructure Canada formalized the Canada-

Nunavut Social Housing Strategic InfrastructureFunding Agreement. In this cost-matching agreement,the Government of Nunavut and InfrastructureCanada will contribute $20 million each to build atleast 160 new public housing units in Nunavut.

The renegotiation of the RRAP agreement in2003-2004 meant a new formula with increasedfunding for Nunavut in 2004-2005 and 2005-2006.The agreement provided the NHC with $450,000in 2004-2005 and will increase to $500,000 in2005-2006. CMHC accepted Nunavut’s suite of homerepair programs which represents an augmentationof the regular RRAP programs on both the fundingand program component sides of the ledger. Thesemade-in-Nunavut programs will build the foundationfor home repair in the territory over the next fiveyears.

The NHC committed itself to conducting consultations and gathering local input as part ofthe BCIN initiative and finished the process byconducting final consultations in Iqaluit. The NHCis in the process of tabulating the feedback fromthese consultations.

Using a focus group format, NHC consultationteams of District and Headquarters staff met withelders, youth and community leaders to collecttheir feedback on four key themes examined atthree BCIN symposia:

• Affordable Housing Supply

• Design and Technology

• Health and Housing

• Training, Education and Capacity Building

Report on Operations

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DistrictsDistrict Operations focused on delivering theCorporation’s major lines of business, namely the Public Housing, GN Staff Housing andHomeownership programs. District Program,Technical and Financial staff saw their responsibilitiesincrease, as they assumed a greater support role tothe LHOs. Working closely with their communitypartners, the LHOs, District Operations, ensuredthe successful contracting and delivery of 88 newunits in the summer of 2004-2005, and finished theground work for an additional 80 units for the2005-2006 construction season.

Two great projects coming out of 2004-2005 andspearheaded at the District level demonstrate thepositive effect of a close working relationshipbetween the Corporation’s Headquarters, Districts,and LHOs:

• As a spin-off of the synergy from the Canada-Nunavut Social Housing Strategic InfrastructureFunding Agreement, the NHC initiated a newpublic housing 5-Plex design project. Wellreceived by CMHC and other housing stakeholders,the new design places greater focus on northernlifestyles and energy efficiency measures. Theproject was finished in time to meet the constructionschedule for 2005-2006.

• Qikiqtaaluk District worked with the Clyde RiverHousing Association to support a community initiative that involved local contractors, a tailoredInuit labour training program, and the use of publichousing funds for the construction of a dedicatedSenior Citizen Independent Living facility for thecommunity. The Facility represents a combinationof individual residences with a shared area thatallows more traditional gatherings and gives theresidents of Clyde River a space to interact withtheir Elders.


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Advisory and Administration ServicesAdministration In 2004/2005 administration costs (not includingadministration related to staff housing) increasedfrom $10.745 million to $11.298 million primarilydue to collective bargaining approved increases andother salaries and benefits costs.

Revenues and RecoveriesRevenues and recoveries decreased by .2 million in2004/2005 primarily due to lower gains on the disposal of capital assets.

EquityThe Nunavut Housing Corporation is showing anequity deficit of $22.7 million. This is primarily dueto the high level of interest and the long terms ofsome of the CMHC mortgages. The long term debthas so far decreased slower than the correspondingCMHC portion of the assets. Over time this trendwill be reversed as the principal repayment of theseliabilities increases and the related asset amortizationdecreases.

Management’s Discussion Public HousingThe NHC accomplishes community-sensitivedelivery of the Public Housing Program by providingfinancial resources, as well as ongoing professionalsupport, to its delivery agents, the twenty-fiveLHOs. LHOs are responsible for the complete careof the 3,900-unit portfolio, from unit allocationsand rental assessments/collections, to maintenanceand repairs.

Local Housing Organization Write-OffsIn 2004-2005, Local Housing Organizations wroteoff $9,083 of bad debt.

LHO Write-offs for the year 2004-2005Community Client AmountClyde River M. Sivugat 919Igloolik Rebecca Irngautt 32Igloolik Norman Kipsigak 230Igloolik Lucien Ukkalijanuk 7,411Igloolik Patrick Aula 491Total 9,083

Contributions for Social HousingIn 2004/2005 contributions for social housingincreased from $60.985 million to $63.776 millionan increase of $2.791 million. This is primarily dueto increased utility costs.

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Contributions for Social Housing for fiscal year ended March 31, 2005

Kitikmeot Kivalliq Baffin 2004 - 2005(‘000) (‘000) (‘000) Total

RevenueRental Assessments 1,226 1,896 3,860 6,982Doubtful Accounts -11 -371 -465 -847Miscellaneous Income 39 35 235 309

Total Revenue 1,254 1,560 3,630 6,444Expenditures

Administration 1,400 2,197 3,993 7,590 Honorariums 33 99 139 271 Leasing 1,140 2,022 3,924 7,086 Maintenance and Repairs 3,947 4,959 7,805 16,711 Power 2,546 3,184 5,277 11,007 Fuel 2,371 3,122 4,166 9,659 Water and Sanitation 5,403 6,905 11,280 23,588 Taxes 105 300 815 1,220

Total Expenditures 16,945 22,788 37,399 77,132 Deficiency of Revenueover Expenditures 15,691 21,228 33,769 70,688

Deficits paid by LocalHousing Organizations -552 -1,165 -786 -2,503

Surpluses retained by LocalHousing Organization - - 0 0

Total Local HousingOrganization's Contribution 15,139 20,063 32,983 65,185

Contributions to Sponsor Groups 245 - 114 359

Total Contributions for Social Housing (Note below) 15,384 20,063 33,097 68,544

Note - The above amount indicated for contributions for social housing differs from the amount shown on the Corporation's financial statements(Statement of Operations) due to the required accounting treatment of capital leases and warehouse leases for financial statement purposes


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Despite delivering 85 units, the book value of the social housing portfolio decreased slightly asdepreciation on these assets was greater than thecombined amounts for the GN funded portion ofthe new public housing and the few major capitalM&I projects. It should be noted that 3rd partycontributions for new public housing as well asmost M&I projects are not capitalized.

Homeownership ProgramsThrough its Homeownership Programs andCorporation financing options, the NHC assistsresidents who can afford the costs of homeownershipto secure and maintain their own housing.

The NHC offers a number of programs to home-owners with funding received from both the GN and CMHC. Actual programs delivered andpercentage of any one program depends on home-owner demand in each area/community. DistrictDirectors are charged with the responsibility toapportion their percentage of this funding appro-priately. Demand for these programs is high. Toensure fairness, each District uses a priority alloca-tion rating to determine application approval. Theprograms offered in 2004/2005 were as follows:

Public Housing – Capital ProjectsPublic housing remains the single tenure type mostin crisis. To remain consistent with the birth ratealone requires 273 new units per year, at an estimatedcost of over $68.3 million. The NHC continues tostrive to deliver as many new public housing unitsas possible.

Breakdown of New Construction underthe Public Housing ProgramPublic Housing New Construction*

Units ExpenditureKitikmeot 25 $2,844,000 Kivalliq 23 $3,646,000 Qikiqtaaluk 46 $10,813,000 Total 94 $17,303,000

* Note: All projects were complete or in progress at year end.

Public Housing - Repairs and MaintenanceThe Corporation is responsible for approximately3,900 units in the public housing portfolio. TheRepairs and Maintenance program ensures thehealth, safety and suitability of these units. In2004/2005, $ 5.86 million was used for repairs andmaintenance and minor improvements. Funding forthe program came from the following sources:

• GN $1,570,000• CMHC $4,290,000

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GN/CMHC funded:• Emergency Repair – up to $15,000 per client

• Home Renovation – up to $50,000 per client

• Senior Citizen Home Repair – up to $15,000(plus shipping) per client

Breakdown of homeownership spending by region and by program*

Kitikmeot Kivalliq Qikiqtaaluk TotalSCHRP - $46,472 $15,923 $62,395ERP $34,913 $163,950 $149,383 $348,247HRP $104,906 $235,241 $361,992 $702,139NDAP $120,000 $285,000 $560,000 $965,000Warranty - $10,745 - $10,745Shelter Assistance - $16,990 - $16,990Total 259,820 758,397 1,087,298 2,105,515

*Note: All projects were complete or in progress at year end.

GN funded:Nunavut Downpayment Assistance - $15,000 for anexisting unit or $25,000 for a new client

In 2004/2005, $2.106 million was spent onHomeownership Programs. Funding for this program came from the following sources:

• GN $1,675,000• CMHC $ 431,000


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Mortgage ReceivableIn addition to the above programs the NHC alsohas geared to income mortgages with 461 clients.The net mortgage receivable of these mortgagestotals $2.9 million as of March 31st 2005. Netmortgage receivable decreased by $1.029 milliondue to sale of some units by clients which saw$177,495 in mortgage receivable converted intocash. The falling of incomes by some clients causedthe mortgage subsidy expense to decrease by$65,000. The aging of the portfolio resulted in$366,802 being paid down and mortgages nowconsidered impaired increased by $550,322.

Staff Housing Through the Staff Housing Program, the NHCprovides rental and homeowner units to GN staff,as well as a range of housing-related programs and

services to support eligible staff. Currently, over90% of staff housing stock is in the form of leasedunits, tying up the lion’s share of the budget.

Staff Housing ProgramIn 2004/2005 costs related to the staff housing program (not including costs for leases consideredcapital in nature worth $468,122) increased from$33,333,000 to $34,262,000,an increase of $929,000.This is primarily due to an increase in both leasedand owned units under the staff housing program.Revenues are accrued to the Goverment ofNunavut.


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Financial ReportManagement’s Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Statement of Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

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Management’s Responsibility for Financial Reporting

To the Honourable Olayuk AkesukMinister Responsible for theNunavut Housing Corporation

The accompanying financial statements have been prepared by Management in accordance with Canadiangenerally accepted accounting principles. Management is responsible for the integrity and objectivity of thedata in these financial statements and, where appropriate, the statements include estimates and judgementsbased on careful consideration of information available to Management.

Management has developed and maintains books of accounts, records, financial and management controls,information systems and management practices. These are designed to provide reasonable assurance as to thereliability of financial information that assets are safeguarded and controlled and that transactions are in accor-dance with the Financial Administration Act, the Housing Corporation Act and policies of the Corporation. TheCorporation’s management recognizes its responsibility for conducting the Corporation’s affairs in accordancewith the requirements of applicable laws and sound business principles, and for maintaining standards of con-duct that are appropriate to a territorial Crown corporation.

The Auditor General of Canada provides an independent, objective audit for the purpose of expressing heropinion on the financial statements of the Corporation. She also considers whether the transactions that cometo her notice in the course of this audit are, in all significant respects, in accordance with the specified legis-lation.

Peter Scott Eric Whitworth, CMAPresident Chief Financial Officer

Iqaluit, NUFebruary 12, 2007

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Balance Sheet as at March 31, 2005

2005 2004(’000) (’000)

ASSETSCurrent

Cash and cash equivalents (Note 5) $ 6,368 $ 3,790Short-term investments (Note 6a) 12,369 18,445Accounts receivable (Note 7) 11,750 4,657Due from the Government of Nunavut (Note 11) 873 3,824Capital contributions receivable (Note 12) – 19

31,360 30,735Fixed-term investments (Note 6b) 7,363 4,043Investment in housing projects

Land and buildings (Note 8a) 318,401 321,899Mortgages receivable (Note 8b) 2,944 3,974Direct financing lease 425 426

321,770 326,299Property and equipment (Note 9) 5,054 5,260

$ 365,547 $ 366,337LIABILITIESCurrent

Accounts payable (Note 10) $ 15,577 $ 17,177Capital contributions advanced (Note 12) 3,750 –Current portion of long-term debt and capital leases 11,585 10,516

30,912 27,693Long-term debt (Note 13) 170,466 179,922Obligation under capital leases (Note 14) 29,764 31,893Employee future benefits (Note 15) 69 84Deferred capital contributions (Note 16) 157,020 149,953

388,231 389,545EQUITYDeficit (22,684) (23,208)

$ 365,547 $ 366,337Contingencies and commitments (Notes 20 and 21)

Approved by Management:

Peter Scott Eric Whitworth, CMAPresident Chief Financial Officer

The accompanying notes form an integral part of the financial statements.

(restated Note 4)


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Statement of Operations For the year ended March 31, 2005

2005 2004(’000) (’000)

ExpensesRental housing programsContributions for social housing $ 63,776 $ 60,985

Interest on long-term debt 22,199 23,213Amortization 18,247 18,291Repairs, maintenance and other costs 5,860 5,664Allowance for write down of housing – 440

Homeownership programsHomeownership grants and contributions 2,106 2,086Mortgage subsidies / bad debts 91 1,266

Staff housing programBuilding lease costs 28,118 27,589Administration 6,144 5,744

Administration (Note 19) 11,298 10,745157,839 156,023

Revenues and recoveriesOther revenue and recoveries 1,250 1,017Mortgage interest revenue 242 326Investment revenue 909 1,030Gain on disposal of land and buildings 652 938

3,053 3,311Net cost of operations prior to government funding 154,786 152,712Government funding

Government of Nunavut 88,805 84,299Canada Mortgage and Housing Corporation (Note 18) 58,245 58,268Amortization of deferred capital contributions 8,175 7,940

155,225 150,507Net funding (cost) of operations $ 439 $ (2,205)


(restated Note 3 & 4)

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Statement of Deficit For the year ended March 31, 2005

2005 2004(’000) (’000)

Deficit, at beginning of year $ (23,208) $ (22,832)Effect of change in accounting policy for services provided without charge (Note 3) – –Effect of correction of errors (Note 4) – 2,561

Deficit, at beginning of year, as restated $ (23,208) $ (20,271)

Sale of non-depreciable capital assets – (603)Transfer of non-depreciable to depreciable capital assets (564) (931)Net funding (cost) of operations 439 (2,205)

(23,333) (24,010)Funding from the Government of Nunavut

Acquisition of non-depreciable capital assets – 196Long-term debt principal repayment 649 606

649 802Deficit, at end of year $ (22,684) $ (23,208)


(restated Note 3 & 4)


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Statement of Cash Flows For the year ended March 31, 2005

2005 2004($’000) ($’000)

Cash flow from operating activitiesCash received from:

Government of Nunavut $ 90,427 $ 78,687Canada Mortgage and Housing Corporation (CMHC) 51,714 56,628Miscellaneous revenue and recoveries 2,543 2,849

144,684 138,164Cash used for:

Contributions for social housing 66,823 58,999Staff housing 34,262 33,629Interest on long term debt 22,225 23,237Administration 9,468 8,731Repairs, maintenance and other costs 5,860 3,951Homeownership grants and contributions 2,106 2,086

140,744 130,633Net cash provided by operating activities 3,940 7,531

Cash flow from financing activitiesFunding from Government of Nunavut for capital assets 18,447 23,153Funding from CMHC for loan repayment 7,095 6,335Repayment of long term debt and capital lease (10,516) (9,485)

Net cash provided by financing activities 15,026 20,003

Cash flow from investing activitiesCapital assets purchased (21,450) (25,184)Mortgage payments received 939 953Sale of capital assets 1,509 3,122Fixed-term investments purchased (3,320) (3,659)Short-term investments sold 5,934 –

Net cash used for investing activities (16,388) (24,768)

Net increase in cash and cash equivalents 2,578 (2,766)Cash and cash equivalents, beginning of year 3,790 1,024Cash and cash equivalents, end of year $ 6,368 $ 3,790


(restated Note 4)

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1. PURPOSE OF THE ORGANIZATIONThe Nunavut Housing Corporation (the Corp -oration), established under the Nunavut HousingCorporation Act, is a Territorial Crown Corp oration.The Corporation is exempt from income tax but issubject to Goods and Services Tax.

The Corporation is committed to working inpartnership with communities and to provideopportunities for communities to become account-able for their own choices and delivery of housingprograms. Through this partnership, opportunitiesare provided to all community residents to havehomes that support a healthy, secure, independentand dignified lifestyle. The Corporation’s principalobjective is to develop, maintain and manage pub-lic and staff housing programs in the NunavutTerritory.

Pursuant to provisions of the Nunavut HousingCorporation Act, the Corporation is dependent uponthe Government of Nunavut, either directly or indi-rectly through guarantees, for the funds required tofinance the net cost of its operations and for capitalprojects.

2. SIGNIFICANT ACCOUNTING POLICIESThe Corporation's financial statements are pre-pared in accordance with Canadian generallyaccepted accounting principles. The significantaccounting policies are as follows:

Revenue recognitionLegislative appropriations are restricted subject tothe provisions of Section 20 of the NunavutHousing Corporation Act, Part IX of the FinancialAdministration Act, and an Agreement between the

Corporation and the Government of Nunavut.Accordingly, appropriations received are recog-nized as revenue in the year in which the relatedcosts are incurred.

The portion of the legislative appropriation usedto purchase depreciable capital assets is recorded asdeferred capital funding in the year in which therelated expenditures are incurred and is amortizedon the same basis and over the same period as therelated capital assets. The portion of Governmentfunding used for non-depreciable capital assets andlong-term debt principal repayments are crediteddirectly to equity in the year the expenditures areincurred.

The Government provides certain services with-out charge to the corporation. The estimated valueof these services is recorded as funding from theGovernment of Nunavut and included in adminis-trative expenses.

Federal contributions from Canada Mortgageand Housing Corporation (CMHC) are restrictedunder provisions of the Social Housing Agreement.Accordingly, federal contributions are recognizedas revenue in the year in which the related expens-es are incurred. Federal contributions for the repay-ment of loans towards the purchase of capital assetsapproximates the annual amortization expense ofthese assets and are recognized in the year received.

Federal contributions from CMHC, providedunder the Affordable Housing Program agreementand from Infrastructure Canada, are creditedagainst the capital costs of housing units built underthe assisted rental housing programs.

Finance income related to the direct financinglease is recognized in a manner that produces a

Notes to Financial Statements March 31, 2005


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constant rate of return on the investment in thelease. The investment in the lease is composed ofnet minimum lease payments less unearned financeincome.

InvestmentsShort-term investments are valued at the lower ofcost or market value, held to maturity and not con-sidered cash equivalents. Fixed-term investmentsare valued at cost; with unrealized losses only rec-ognized when there has been a permanent declinein the value of investments. Interest income isrecorded on the accrual basis.

Investment in housing projects – land and buildingsLand and buildings constructed or purchased by theCorporation for the rental portfolio are stated atcost. Buildings transferred to the Corporation fromCMHC or the government, are stated at theirrespective book value when transferred. This isconsidered a reasonable estimation of cost.Construction in progress includes amounts whichmay be transferred to land and buildings for rentalprograms and are carried at cost. Construction inprogress and housing for sale, including amountsthat may be transferred to homeowners and a mort-gage taken back against the property, are carried atlower of cost and estimated realizable value.Housing materials are valued at lower of cost andnet realizable value.

Social and staff housing units are recorded ascapital leases when the Corporation enters intolease agreements where, in effect, the risks and ben-efits of ownership are transferred to theCorporation. In such cases, the cost of the asset isdetermined as the discounted net present value ofthe minimum lease payments and is amortizedusing the straight-line method over the lease term.Obligations recorded under capital leases are

reduced by rental payments net of imputed interestand executory costs. Interest expense is included ininterest on long-term debt.

Amortization for social housing, lease/purchasehousing and staff housing is provided using thedeclining balance method at an annual rate of 5%.The provisions for amortization begin in the yearthe building is completed or transferred in and aretaken for the full year.

Housing for sale and construction in progress arenot amortized.

Investment in housing projects – mortgages receivablea) Mortgage subsidiesThe Corporation, under section 44(1) of its Act,subsidizes principal and interest payments due fromhomeowners under the legal terms and conditionsof mortgages. These subsidies vary in amountdepending on the income of the mortgagees.Subsidies are expensed in the year the mortgage isapproved and are recorded as mortgage subsidies.

Accordingly, the mortgage receivable balancerepresents the present value of the expected futurepayments from clients on the mortgages, prior to anallowance for impairment.

Subsequent changes to the amount of the sub-sidy provided, resulting from change in income ofthe mortgagee, are recognized in the year thechanges occur.

b) Allowance for impaired mortgages Mortgages are considered impaired when deteriora-tion in credit quality has occurred and there is rea-sonable doubt as to the timely collection of princi-pal and interest. A mortgage is considered impairedwhen a payment is six months in arrears. Anallowance is established to reduce the recordedvalue of mortgages specifically identified asimpaired to estimated realizable value.

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Initial and subsequent changes in the amount ofmortgage impairment are recorded in the year thechanges occur.

Mortgage interest revenueInterest income on mortgages is recorded on theaccrual basis. When a mortgage becomes impaired,recognition of interest ceases. Thereafter, interestincome is recognized on a cash basis, but only afterprior write-offs arising from credit losses and theallowance for impairment have been recovered.

Property and equipmentProperty and equipment are stated at amortizedcost. Amortization is provided using the followingmethods and annual rates:

Office furniture and equipment Declining balance 20 %Warehouses and office buildings Declining balance 5 %Leasehold improvements are amortized on astraight-line basis over the term of the leases.

Contributions for social housingHousing units owned by the Corporation are oper-ated by local housing associations, authorities andmunicipalities. The Corporation provides contribu-tions for the annual operating requirements of theselocal housing organizations, net of rent revenuescollected. These contributions are recorded on anaccrual basis by the Corporation.

Public Service Pension PlanEmployees participate in the Public Service PensionPlan (the Plan) administered by the Government ofCanada. The Corporation’s contributions reflectthe full cost as employer. This amount is based on amultiple of an employees’ contributions and mayfluctuate over time, depending on the experience of

the Plan. The Corporation’s contributions areexpensed during the year in which the services arerendered and represent the total pension obliga-tion. The Corporation is not required to make con-tributions with respect to actuarial deficiencies ofthe Plan.

Employee future benefitsUnder the terms and conditions of employment,employees may earn leave and termination benefitsbased on years of service. The cost of leave benefitsis accrued as a liability as employees render serviceand has been determined based on management’sbest estimates. Removal benefits are paid for by theGovernment, without charge to the Corporation.

Measurement uncertaintyThe preparation of financial statements requires theCorporation to make estimates and assumptionsthat affect the amounts of assets, liabilities, rev-enues and expenditures reported in the financialstatements. By their nature, these estimates are sub-ject to measurement uncertainty. The effect on thefinancial statements of changes to such estimatesand assumptions in future periods could be signifi-cant, although, at the time of preparation of thesestatements, the Corporation believes the estimatesand assumptions to be reasonable.

Some of the more significant management esti-mates relate to: valuation of social and staff housingincluding buildings under capital lease; valuation ofallowances for mortgages receivable and of mort-gage subsidies; and the allocation of the costs ofadministering social housing programs for CMHC.

Future Accounting ChangesThe Canadian Institute of Chartered Accountantsissued a new accounting guideline on accountingfor variable interest entities, and three new stan-dards on accounting for financial instruments. The


31

guideline on accounting for variable interest enti-ties establishes a new consolidation model that willbe in effect for the Corporation’s 2005-2006 fiscalyear. It requires that the Corporation review all itsfinancial interests to determine if current account-ing treatments are still acceptable. The three newstandards on accounting for financial instrumentswill be in effect for the Corporation 2007-2008 fis-cal year at the latest. They require the Corporationto review the form and elements of its income state-ment and review how it measures and recognizesfinancial assets and liabilities. Management has notyet assessed the impact of these new accountingstandards on its financial statements.

3. CHANGE IN ACCOUNTING POLICYThe Corporation has changed its accounting policyfor services provided without charge by theGovernment of Nunavut. As a result of this change,the cost of services provided without charge of$1,802,964 (2004 - $1,643,675) is included inAdministration expenses reported on the Statementof Operations. The related in kind contribution of$1,802,964 (2004 - $1,643,675) is included inGovernment Contributions, leaving the net resultsfor the year unchanged. This change has beenapplied retrospectively and the financial statementsof the prior year have been restated. As noted forthe current year, this change has no effect on thenet results for the prior year.

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4. CORRECTION OF ERRORS An agreement with the Government of Nunavutrequires the Corporation to calculate, with specificinclusions and exclusions, the amount of costsincurred and the resulting Government fundingrecognized as revenue. One cost incurred, CMHCfunded principal repayments, was missed in the

calculation. This omission meant the amount ofGovernment funding recognized as revenue wasunderstated. To correct this omission comparativeamounts have been restated retrospectively. Theimpact on the financial statements is as follows.

Financial Statement Component2005 2004

('000) ('000)Statement of Operations Increase funding from Government of Nunavut $ 811 $ 758Decrease net cost of operations 811 758Balance SheetDecrease deficit of the Government, at beginning of year 3,319 2,561Decrease deficit of the Government, at end of year 4,130 3,319Increase Due from the Government of Nunavut 4,130 3,319

In the first year that a housing asset is put into useit is transferred to investment in housing and amor-tization on the asset is recorded. One asset incor-rectly transferred to investment in housing was cash

paid to a 3rd party to hold in trust for a property tobe purchased. The asset was not purchased and thefunding was subsequently returned. The impact onthe financial statements is as follows:

Financial Statement Component2005 2004

('000) ('000)Statement of Operations Decrease in amortization expense $ 47 $ 50Decrease in amortization of deferred capital funding 47 50Balance SheetIncrease in cash and cash equivalents 995 995Decrease in land and buildings 898 945Decrease in capital funding receivable 995 995Decrease in deferred capital contributions 898 995Statement of Cash FlowsDecrease capital assets purchased – 995Increase in cash and cash equivalents, at beginning of year 995 –Increase in cash and cash equivalents, at end of year 995 995


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5. CASH AND CASH EQUIVALENTS2005 2004

('000) ('000)

Cash $ 5,373 $ 2,795Cash held in trust 995 995

$ 6,368 $ 3,790

(restated Note 4)

6. INVESTMENTSa) Short-term investmentsThe Corporation invests in the short-term moneymarket. The market yield of this portfolio rangedfrom 1.00% to 5.46% in 2005 (2004 - 1.00% to

5.46%). All instruments held are in high qualitydebt obligations with an average term to maturityof 48 days (2004 - 51 days).

b) Fixed-term investments 2005 2004

Carrying CarryingEffective Term to Value Value

rate of return Maturity ('000) ('000)Fixed-term investmentsGovernment of Canada 3.26% 1 to 3 years $ 1,031 $ 2,064Trust company 3.55% 1 to 3 years 1,015 979Provincial government 4.59% 1 to 9 years 5,317 1,000

$ 7,363 $ 4,043The average yield of this portfolio in 2005 was 4.26% (2004 - 3.85%).

7. ACCOUNTS RECEIVABLE2005 2004

('000) ('000)Trade accounts receivable $ 1,662 $ 3,096Infrastructure Canada 7,895 –Receivables from related parties

Local Housing Organizations 1,686 1,054Canada Mortgage and Housing Corporation 476 430Government of Nunavut 31 77

$ 11,750 $ 4,657

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8. INVESTMENT IN HOUSING PROJECTSa) Land and buildings

2005 2004('000) ('000)

AccumulatedCost Amortization Net Net

Land $ 316 – 316 $ 316Housing for sale 90 – 90 181Social housing 454,916 178,318 276,598 277,114Social housing under capital lease 39,760 12,669 27,091 29,790Lease/purchase housing 9,917 3,871 6,046 6,500Staff housing 6,648 980 5,668 5,492Construction in progress 2,592 – 2,592 2,506

$ 514,239 195,838 318,401 $ 321,899

b) Mortgages receivable2005 2004

('000) ('000)Mortgages bearing interest at rates varying between 6.00% and 14.25% per annum, repayable over a maximum period of 25 years $ 9,677 $ 10,977

Less: allowance for bad debts (6,733) (7,003)2,944 3,974

Interim financing loans bearing interest at rates varying between 8.95%and 10.5% per annum, repayable over a maximum period of 5 years 243 252

Less: allowance for bad debts (243) (252)– –

$ 2,944 $ 3,974

The recorded value of those mortgages specificallyidentified as being impaired is $6,976,000 (2004 -$7,255,000).

The carrying amounts of mortgages receivableshould not be seen as the realizable value on imme-diate settlement of these mortgages due to theuncertainty associated with such a settlement.

(restated Note 4)


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9. PROPERTY AND EQUIPMENT

2005 2004('000) ('000)

AccumulatedCost Amortization Net Net

Warehouses and offices $ 9,628 $ 5,056 $ 4,572 $ 4,809Office furniture and equipment 958 597 361 346Leasehold improvements 152 31 121 105

$ 10,738 $ 5,684 $ 5,054 $ 5,260

10. ACCOUNTS PAYABLE

2005 2004('000) ('000)

Trade accounts payable $ 5,793 $ 4,755Accrued interest 894 920Employee leave benefits 316 274Deferred revenue – 18Payables to related parties

Local Housing Organizations 5,775 8,190Government of Nunavut 2,799 3,020

$ 15,577 $ 17,177

11. DUE FROM THE GOVERNMENT OF NUNAVUT

2005 2004('000) ('000)

Receivable at beginning of the year $ (3,824) $ (1,379)Operating funding from Government of Nunavut 87,360 77,785Services provided without charge 1,803 1,643Funding for long-term debt principal repayments (649) (606)Capital funding used for repairs, maintenance, grants and other costs 3,242 3,032Operating funding from Government of Nunavut (88,805) (84,299)Receivable at end of the year $ (873) $ (3,824)

(restated Notes 3 & 4)

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The Government of Nunavut makes advances tothe Corporation to fund operations and principalrepayments of long-term debt. The amount offunding recorded in the financial statements isdependent upon actual expenses incurred for theyear. Amounts advanced in excess of the actual

expenses at year-end, are carried forward as a non-interest-bearing advance for the following year.Amounts spent in advance of the funding are duefrom the Government of Nunavut and are carriedforward to be funded from future year’s funding.

12. CAPITAL CONTRIBUTIONS ADVANCED (RECEIVABLE)

2005 2004('000) ('000)

Receivable at beginning of the year $ (19) $ (580)Capital funding from Government of Nunavut 21,689 26,185Capital acquisitions funded by Government of Nunavut (14,678) (22,592)Capital funding used for repairs, maintenance,grants and other costs (3,242) (3,032)Payable (Receivable) at end of the year $ 3,750 $ (19)

(restated Note 4)

The Government of Nunavut makes advances tothe Corporation for capital acquisitions and forrepairs, maintenance, grants and other costs. Theamount of funding recorded in the financial state-ments is dependent upon actual acquisitions andcosts incurred for the year. Amounts advanced in

excess of actual capital acquisitions and costs atyear-end, are carried forward as a non-interest-bearing advance for the following year. Amountsspent in advance of the funding are due from theGovernment of Nunavut and are carried forward tobe funded from future year’s funding.


37

13. LONG-TERM DEBT

2005 2004('000) ('000)

Loans payable to Canada Mortgage and Housing Corporation,repayable in annual installments until the year 2033, bearing interest of 6.97% (2004 – 6.97%). The loans are guaranteed by the Government of Nunavut. $ 50,446 $ 51,906

Mortgages payable to Canada Mortgage and Housing Corporation for units transferred under the Social Housing Agreement, maturing between 2005 and 2037, at interest rates ranging from 4.5% to 21.5% (2004 - 4.5% to 21.5%). 129,476 136,572

179,922 188,478Portion included in current liabilities 9,456 8,556

$ 170,466 $ 179,922

Principal repayments and interest requirements over the life of outstanding loans are as follows:

Principal Interest Total('000) ('000) ('000)

2006 $ 9,456 $ 18,548 $ 28,0042007 10,445 17,528 27,9732008 11,092 16,420 27,5122009 11,195 15,256 26,4512010 11,222 14,101 25,3232011-2015 35,746 57,311 93,0572016-2037 90,766 118,727 209,493

14. OBLIGATION UNDER CAPITAL LEASES The Nunavut Housing Corporation is committed,in aggregate, to payments of $6,050,000 per annumfor 45 lease agreements for housing units that sup-port the Public Housing, Senior Citizens’ RentSupplement and Staff Housing Programs. Theselease agreements are based on implicit interest ratesvarying from 6.85% to 10.75% and expiry dates

ranging from 2013 to 2024. The lease paymentsmay be renegotiated every five years for changes inspecific operating costs such as interest rates andcost of utilities. The Corporation is also responsiblefor other operating costs not included in the annu-al lease payment.

38


Future Minimum Lease Executory Imputed LeasePayments Costs Interest Obligation

('000) ('000) ('000) ('000)Current2006 $ 6,050 $ 1,243 $ 2,678 $ 2,129Long term2007 6,050 1,243 2,485 2,3222008 6,050 1,243 2,280 2,5272009 6,050 1,243 2,041 2,7662010 6,050 1,243 1,794 3,0132011-2024 29,578 5,388 5,054 19,136

53,778 10,360 13,654 29,764Total $ 59,828 $ 11,603 $ 16,332 $ 31,893

15. EMPLOYEE FUTURE BENEFITSPension BenefitsThe Corporation and all eligible employees con-tribute to the Public Service Pension Plan (thePlan). This pension plan provides benefits based on

years of service and average earnings at retirement.The benefits are fully indexed to the increase in theConsumer Price Index.

Contributions to the Plan were as follows:2005 2004

('000) ('000)Employer’s contributions $ 594 $ 568Employee’s contributions 277 265

Liability for leave and severance benefits The Corporation provides leave and severance ben-efits to its employees based on years of service andfinal salary. This benefit plan is not pre-funded and

thus has no assets, resulting in a plan deficit equalto the accrued benefit obligation.

Liability for leave and severance benefits is as follows:2005 2004

('000) ('000)Accrued benefit obligation, beginning of the year $ 358 $ 562Net costs (payments) for the year 27 (204)Accrued benefit obligation, end of the year 385 358Less: Employee leave benefits in accounts payable (316) (274)

$ 69 $ 84


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16. DEFERRED CAPITAL FUNDING – GOVERNMENT OF NUNAVUT

2005 2004('000) ('000)

Balance, beginning of year $ 149,953 $ 133,963Government of Nunavut funding

for depreciable capital assets 15,242 23,930Amortization of deferred capital funding (8,175) (7,940)Balance, end of year $ 157,020 $ 149,953

(restated Note 4)

17. FINANCIAL INSTRUMENTSa) Fair ValueThe fair values of the Corporation’s financial instruments are estimated as follows:

2005 2004(’000) (’000)

Carrying Fair Carrying FairAmount Value Amount Value

Fixed-term investments $ 7,363 $ 7,301 $ 4,043 $ 4,221Loans payable 50,446 57,278 51,906 58,326Mortgages payable 129,476 204,224 136,572 211,553

Fair values for fixed-term investments are the market value as at March 31.

The fair value of loans and mortgages payable isbased on an estimated market value of the debt.This is determined by applying the current yield fordebt with a similar maturity date issued by theprovince of Newfoundland & Labrador and apply-ing this yield to the Corporation’s debt. Thisapproach is used because the Government ofNunavut does not issue debt.

The fair value of mortgages receivable is estimat-ed to be the carrying amount due to the significantvaluation allowances provided. The fair value of the

remaining financial assets and liabilities approxi-mate the carrying amounts because of the shortterm to maturity.

b) Credit RiskInvestments are managed by the Corporation'sexternal investment managers. All investments havean R-2 high or an AA rating or higher from theDominion Bond Rating Service. Investments arelimited to a maximum of 10% to 50% of the totalportfolio and a maximum dollar value of $10

40


million depending on the issuer of the investment.There is no significant concentration in any oneinvestment counterparty.

Accounts receivable consists primarily ofamounts due from local housing organizations,Government of Nunavut, CMHC and federal government, which in aggregate represent 98%(2004 - 92%) of balances outstanding.

Mortgage credit risk arises from the possibilitythat clients might be unable to fulfill their obliga-tion under mortgage contract. This risk is mitigatedby verifying employment status and income, and byperforming a credit assessment, which includesensuring there are no rent arrears with local hous-ing organizations.

18. FUNDING FROM CANADA MORTGAGE AND HOUSING CORPORATION

Recoveries in respect of: 2005 2004('000) ('000)

Operations and maintenance Funding for social housing including interest expense $ 53,524 $ 53,590Repairs, maintenance, grants and other costs 4,721 4,678

$ 58,245 $ 58,268

Under the terms of a Social Housing Agreement(SHA) with Canada Mortgage and HousingCorporation (CMHC), the Corporation assumedfull responsibility and liability for the managementof social housing programs specified in the SHA.The Corporation receives annual funding fromCMHC to manage these programs. The SHA andthe funding expire in 2037.

CMHC’s ownership interest in the social hous-ing and loan portfolio affected by the SHA is trans-ferred to the Corporation as Trustee, in accordance

with a Declaration of Trust Agreement. A portionof the SHA funding is used to make payments onportfolio-related CMHC mortgages (note 10). Asthe related mortgages mature, the Corporationobtains clear title to CMHC's share of the bookvalue of the respective assets. Until clear title isobtained, CMHC is entitled to its respective shareof any gains realized upon the disposal of any port-folio assets.

Funding from CMHC under the AffordableHousing Program for 2005 is $610,000 (2004 – nil).


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19. ADMINISTRATION EXPENSES2005 2004

('000) ('000)

Salaries and benefits $ 7,190 $ 5,987Professional and special services 1,063 1,530Travel and relocation 1,016 1,061Office accommodations 902 893Miscellaneous 485 765Materials and supplies 236 153Workshops and studies 163 105Communications 92 83Computer services 53 82Building and equipment rentals 49 68Land title fees and expenses 49 18

$ 11,298 $ 10,745

20. CONTINGENCIESUnder the terms of the Social Housing Agreementwith CMHC, the Corporation is responsible forthe administration of a number of loans to thirdparties, where CMHC is the lender or insurer ofthese loans. The agreement provides that theCorporation shall indemnify and reimburse CMHCfor and save it harmless from all losses, costs andexpenses related to these loans. The outstandingbalances of these third party loans is $3,975,000 asat March 31, 2005 (2004 - $4,129,000).

The outstanding balances represent the maxi-mum amount of future loan principal paymentsunder the indemnities. In the event of default bythe borrowers, the lenders could request paymentfrom the Corporation. However, the loans aresecured by property which could also be sold tocover the guaranteed debt. The value of the under-lying assets is considered to be sufficient to coverthe debt guaranteed.

Since the indemnities were provided to CMHC,no claims have been made against the Corporationand no accrued liabilities recorded.

21. COMMITMENTSThe Corporation leases staff and public housingunits of an operating nature and is committed tobasic rental payments over the next five years. Theleases contain escalation clauses for operating costsand property taxes, which may cause the paymentsto exceed the basic rental. The basic rental pay-ments are as follows:

Total('000)

2006 21,2592007 19,0312008 15,8082009 15,4992010 14,738

(restated Note 3)

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22. RELATED PARTY TRANSACTIONSThe Corporation’s relationship with the variouslocal housing organizations (authorities, associa-tions, and hamlets) is as a “partner” in the deliveryof social housing, as provided under individualmanagement agreements. The housing authoritiesare incorporated under the Nunavut HousingCorporation Act and the Minister responsible for theCorporation appoints the members.

The Corporation funds the operating costs of thelocal housing organizations based on a funding for-mula. In addition the local housing organizationscomplete Modernization and Improvement projects on various social housing units, as

approved and funded by the Corporation.The Corporation is also related in terms of com-

mon ownership to all Government of Nunavut cre-ated departments, agencies and Crown corpora-tions. The Corporation enters into transactionswith these entities in the normal course of businessunder terms and conditions similar to those withunrelated parties.

The Corporation receives payroll processingservices, human resource support, information -technology support, office accommodations andemployee benefits without charge from theGovernment.

These services provided without charge are as follows:2005 2004

('000) ('000)

Office accommodations $ 902 $ 893Employee benefits 576 499Payroll processing and other services 325 251

$ 1,803 $ 1,643

(restated Note 3)

Documents

7935.4 NHC cover eng:7935.4 NHC cover eng · 7935.4 NHC cover_eng:7935.4 NHC cover_eng 6/5/07 4:33 PM Page 1. NUNAVUT HOUSING CORPORATIONANNUAL REPORT 2004 2005 1 Our Mission To provide