Wednesday, August 30, 2017

Co-op Housing and the situation in Toronto

A housing cooperative, co-op, or housing company  is a legal entity, usually a cooperative or a corporation, which owns real estate, consisting of one or more residential buildings; it is one type of housing tenure.

The corporation is membership-based, with membership granted by way of a share purchase in the cooperative. Each shareholder in the legal entity is granted the right to occupy one housing unit. A primary advantage of the housing cooperative is the pooling of the members’ resources so that their buying power is leveraged, thus lowering the cost per member in all the services and products associated with home ownership.

Another key element in some forms of housing cooperatives is that the members, through their elected representatives, screen and select who may live in the cooperative, unlike any other form of home ownership.

Co-operative housing is a form of non-profit housing that emerged in the 1800s as part of the co-operative movement, but only really in the mid-1960s took hold in Canada as a method of providing affordable housing for families. Several pilot projects were funded by the Canada Mortgage and Housing Corporation (CMHC) in 1969, and thousands more co-op homes were created via various federal and provincial programs through to the early 1990s.

Unlike privately owned low-income housing or City-run “social housing,” co-ops offer a mix of market-value units and geared-to-income units in a fixed ratio or funded from a subsidy pool.

Some co-ops are designated low- to moderate-income housing, with income limits imposed on their members as part of their federal agreements. Others have no income limits, and can have a broader range of incomes among their residents.

While each co-op is owned by its membership, individual members do not own equity in their housing. If a member moves out, the vacated unit is available to another individual or family on the co-op’s waiting list.

Though each co-op operates somewhat differently, many co-ops maintain two lists: one for those awaiting market-value units, and one (generally much longer) for those requiring geared-to-income subsidy.

In addition, many co-ops try to accommodate changes in the lives of their members—a household might find itself able to transition from geared-to-income to market-value, for example, or obliged to go from market-value to geared-to-income.

How is co-op housing funded? What makes co-op housing affordable?

Historically, co-ops across the country have been funded through a variety of federal, provincial, and municipal programs. While some other provinces continue to provide funding for the non-profit housing sector, Ontario revoked its operating agreements with housing co-ops and non-profit housing providers in the early 2000s, transferring its housing programs to municipal control.

In Toronto, the vast majority of co-ops are federally funded, and such co-ops are defined by the section of the National Housing Act that was in effect when the co-op was founded. (For example, a Section 56.1 co-op is one that was founded between 1979 and 1985, while Section 56.1 of the National Housing Act was in effect.)

Government subsidies for co-ops most often take the form of CMHC-provided, long-term fixed-rate mortgage agreements provided for co-op properties, and funding to bridge the difference between subsidized members’ housing charges and those of market-value members.

Interestingly, some of Toronto’s most successful housing co-ops were originally public housing complexes that were taken over by their residents and converted.

Around the mid-1990s, federal and provincial governments decided that they wanted to change their approach to affordable housing, emphasizing privately owned projects with government-assisted rent supplement units, and public housing built and managed by municipal housing authorities (both of which are taxed at a higher rate than co-op housing—and taxes are most definitely a factor). 

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