The long-neglected co-op housing sector received a major boost in the federal government’s 2022 budget, but given the scale of the affordability challenge in Canada, some are hoping it’s just the start of something bigger.
“It’s tempting to say to the government, ‘Get serious: the housing promised in this budget falls far short of the demand for affordable housing,'” said Thom Armstrong, Executive Director of the Co-operative. British Columbia Housing Federation. “But on the other hand, we are much better off today than yesterday… The last prime minister to approve a federal housing program was Brian Mulroney.
Mr. Mulroney also completely scrapped the federal co-op housing program (which had built 60,000 homes in his lifetime) in 1992, his last budget before he resigned in 1993.
At the time, the government said that social housing costs were rising 6.5% per year, reaching about $2 billion in 1991-92. In 1995, a new Ontario government led by Progressive Conservative Premier Mike Harris canceled nearly 17,000 planned provincially funded co-op and non-profit housing units and transferred responsibility for these programs to municipalities. In British Columbia and Quebec, governments continued to create new co-operatives, but at a much slower pace than in previous decades.
The budget presented by Finance Minister Chrystia Freeland (who grew up in Edmonton’s Hromada housing co-op co-founded by her mother Halyna Chomiak Freeland) will allocate $1.5 billion to co-op housing in the form of grants $500 million that will serve as seed capital to launch projects and another billion dollars in low-interest financing to pay for construction.
“This program is likely to be a game-changer,” said Tim Ross, executive director of the Co-operative Housing Federation of Canada, whose organization has lobbied hard for federal funds for provincial co-ops. “We are obviously looking forward to the detailed design of the program, to ensure that it works efficiently and quickly. Many projects are stuck on desks due to lack of funding or funding, and there are significant infill opportunities, to consider redevelopment of underdeveloped public lands.
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In total, the budget proposes about $10 billion for housing programs (including a housing innovation acceleration fund). If this were spread over five years, this would represent 0.44% of federal spending per year; assuming government spending, set at $452 billion for 2022, follows its own projections.
“It’s not huge in the order of things, the order of magnitude is not like the magnitude of pandemic relief spending,” said housing policy and research consultant Greg Suttor. .
At the height of Canada’s spending on social housing between the 1970s and 1980s, almost 20,000 social housing and co-op spaces were built each year – often with significant funding from provincial and municipal governments. A CMHC study found that at its peak – between 1979 and 1985 – it cost $2.7 billion to build 38,715 co-op units in 1,089 projects, an average of 6,400 units per year.
Today, the calculation is a little more difficult.
“It would be difficult to build a new rental apartment for less than $400,000 [per unit]. And it may well be higher, because the average co-op unit is a two-bedroom unit,” Suttor said. Assuming that co-ops can capitalize on the use of their own land reserves (which some of the larger organizations have) or rely on municipal land donations and tax relief on charges, Suttor could see reduced capital contributions between $100,000 and $200,000. on this construction price. “This is a program that will increase to $76 million in two years, or about 380 units per year” that could be delivered, he estimates.
“The housing construction economy is very tough right now…we won’t be able to go that far with this investment,” Ross said.
The other challenge for the new funding is how well it can cater to the portion of residents whose rent is geared to income. Historically, between 25 and 30 percent of co-op residents paid well below market rent, with market rates being paid by middle-income residents. This design is intentional in that it maintains mixed income in the building, hoping to avoid the concentrations of poverty once found in sixties-style public housing projects.
“Most co-ops that have been in operation for three decades or more charge 65 to 75 percent of the market,” Armstrong said.
In January, the federal government announced an agreement to spend $118.2 million over seven years for existing co-op housing providers to keep these rent-geared-to-income subsidies. However, the recently announced program does not include any explicit mechanism to provide subsidized rents.
“There must be more money on the road, the new supply is great, but there is a whole cohort that is coming to the end of its useful life and needs redevelopment,” Mr. Armstrong said. “No one wants to see an entire generation of co-ops break down.
“I’ve had many conversations with many housing ministers, and they say, ‘You’re never satisfied. It’s my job to not be satisfied until everyone in need has a safe and affordable place to call home.
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