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Co-op Housing: What It Is and How It Works

Shedding some light on a misunderstood affordable housing alternative.

Co-op housing made headlines recently, as Olivia Chow’s declaration of candidacy prompted supporters of rival mayoral campaigns to resurrect decades-old stories about how she and her late husband Jack Layton had lived in Hazelburn Co-operative Homes from 1985 to 1990. As Chow and Layton had a combined income of $120,000, much confusion arose about whether the couple were occupying a low-income unit (they weren’t), whether they had broken any co-op or municipal rules (they hadn’t), and if they were preventing others in need from obtaining affordable housing by living there (not really).

Many years later, Torontonians still seem uncertain about how co-op housing differs from other forms of affordable housing, whether and to what extent it is subsidized, and why we don’t have more of it. Please allow us to explain in this, er, explainer.

What is co-operative housing? How is it different from private low-income housing or “social housing”?

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. This economic diversity within co-op communities is crucial to their financial support and overall success. 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.

And this hints at the true difference between co-operative housing and other forms of non-profit housing: management—not just from a building manager or front office staff, but from the board and from the members themselves, the people who choose to live and work in them, who contribute to them, and who actively shape them into thriving communities.

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. Plus, much like house owners, many co-op residents pay a far lower tax rate through their housing charges than do condo owners or renters of apartments.

As a result, housing charges for all members can be kept low while still addressing the cost of utilities, maintenance and repair, and replacement reserves. Interestingly, some of Toronto’s most successful housing co-ops were originally public housing complexes that were taken over by their residents and converted.

How does co-op housing work? Who runs it, who manages it, and who maintains it?

Each co-op is governed by a board of directors elected from the co-op membership at an annual general meeting. Each co-op has a set of bylaws that were ratified when the co-op was founded, and that are amended as necessary by the membership. Larger co-ops often have greater resources to work with, and may have dedicated building managers and maintenance staff; smaller co-ops have fewer resources, and may share building management with other co-ops or engage outside management companies. Many housing co-ops have committees apart from their boards that are responsible for finances, capital projects, safety, environment, member engagement, and more. Quite a few co-ops require a minimum amount of participation from each member, measured in hours per week or per month.

Some co-ops have a particular membership focus: Toronto’s Arcadia Court, for example, is for people working in the arts, and Local 75 Housing Co-operative was developed for low-income restaurant and hotel workers.

Co-op housing sounds great! Co-op housing sounds terrible!

Well, it can be either, or both. Co-ops are by their nature diverse communities, and include people of varying ages, backgrounds, sexual identities and orientations, abilities, and beliefs. The best co-ops have a clear vision of what they want to achieve for their community, skilled building management familiar with the residents and their needs, a committed and capable board, and an engaged and active membership. And every co-op faces difficulties when one or more of these areas falls short, as they do from time to time.

Living in a co-op often takes more social effort than in the average house or apartment building, as members continually have to work with each other (and with people different from themselves) to make sound decisions, navigate financial challenges and personality conflicts, and maintain the integrity of the community.

Basically, if you’re the kind of person who just wants to come and go from your home and not interact with your neighbours, go to meetings, or contribute your time and energy to your shared surroundings, you will likely find that co-op living is not for you.

Why is co-op housing in decline? Why isn’t more co-op housing being created?

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). While some are mixed-income communities, and achieve this by various means, others are uniformly low-income by default or design. While CMHC continues to honour its mortgage agreements with co-ops across the country, many of those agreements are set to expire in the next few years as the mortgages are paid in full. As the agreements end, so do the subsidies.

While, in theory, all that money currently going to mortgage payments could go towards subsidizing low-income units and paying the bills, in reality these co-ops are finding themselves with aging buildings that need replacement of essential infrastructure like roofs, boilers, elevators, plumbing, and electrical systems. Even with beefed-up replacement reserves, they may not have enough cash to make such big-ticket investments. Without continued assistance, these affordable housing communities could cease to be affordable for all their residents. Organizations like the Co-operative Housing Federation of Canada and the Co-operative Housing Federation of Toronto are working with affected co-ops to help with the transition and to lobby for funding from other levels of government to prevent the loss of thousands of low-income units.

However, there are some small signs of hope. Despite funding challenges and the lack of formal government programs for new co-op housing, a few new housing co-ops have sprung up in recent years—notably Atkinson Housing Co-op (formerly the Alexandra Park housing project) and Local 75 Housing Co-operative at 60 Richmond Street East, at what used to be the site of Dixon Hall homeless shelter.

Where can I find out more? How do I find out about the availability of co-op housing, and to put myself on a waiting list?

Noted activist Alicia Pang (@Neville_Park) has a handy cheat sheet on housing co-ops that includes some information not captured here. Additional information can also be found at the CHF Canada website and at CHF Toronto. You might want to bookmark this page of all CHFT member co-ops with open waiting lists. If you do decide to apply, be sure to read up on each co-op first, as some are tailored to specific needs or have special requirements.

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