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Why isn’t anyone building co-ops anymore?

August 30, 2011

Minutes after I posted my “Why does social housing look like that?” entry two weeks ago I got an email from Jon Harstone, one of the very few people still developing social housing.

“Thought I’d share a couple of photos of Local 75 Housing Co-op,” he wrote. “The building is celebrated worldwide as an example of great Canadian architecture.”

Celebrated indeed!  This striking 11-storey co-op at 60 Richmond East won Teeple Architects an Ontario Association of Architects Design Excellence Award in 2010 and a Canadian Architect Award of Excellence in 2007. The LEED Gold building offers 85 one-, two-, three-, and four-bedroom units.. On the ground level there is parking for 40 bicycles, 9 privately-owned cars and one Autoshare car – a true downtown building.

But there’s another reason to celebrate 60 Richmond East. It is the only co-op built in Toronto since 1995.

Why the 15 year drought?

It’s not because people don’t want them. Most people love co-ops. In fact, when people come out to protest new social housing in their neighbourhood, someone invariably says, “Why don’t you build a co-op instead?”  They love co-op housing’s self-help ethos. And they love the income mix. Typically 25 – 50% of a co-op’s units are subsidized, with the rest rented at market rates.

It’s not because there’s no government funding either. It’s true that funding has slowed. But there has been a trickle of federal funding since 2001, and over 1000 Toronto affordable housing units are now in the works. Co-ops are eligible to apply for this funding, but they don’t. Why not?

 It’s mostly a matter of equity.

According to Jon Harstone, since 2001 all Toronto affordable housing proponents have been expected to put up on average $15,000 of their own money for every unit built. They also need “front-end” money to tie down land, get planning approvals, and do drawings.  That can amount to over $750,000 for an 80 unit building.

Co-ops don’t have equity, and can’t get it.  Their members don’t have money – that’s why they want to live in a co-op. Co-ops can’t raise money either. As self-help groups they are not eligible for charitable status.

Some co-ops have considered selling a portion of their property to finance new development. But most co-ops are locked into government agreements they can’t renegotiate. And besides, how many members would vote to sell their friends’ homes or turn the lawn outside their doors into a construction site?

 So how did Local 75 pull it off?

It was an exceptional convergence of political will, a major non-profit partner and unusual circumstances:

  • The political will came from Councillor Pam McConnell, a long-time co-op member herself.
  • The partner was Toronto Community Housing. TCH has its own development office, overseeing both the redevelopment of its own housing and the creation of new housing. Equally importantly, TCH had rent supplements it was willing to transfer to the co-op.
  • The unusual circumstance was the redevelopment of Regent Park. Over the next 12 or so years TCH needs to relocate over 2,000 households, at least temporarily, to make way for new construction. Many of these are hospitality workers – the low-paid men and women who staff downtown hotels, restaurants and bars.

Councillor McConnell brought together the partners. Local 75 of UNITE, the hospitality workers’ union, formed the co-op from among hospitality workers living in Regent Park. The Co-op Housing Federation of Toronto acted as the co-op’s development consultants. TCH hired the architect and developed the building under a turnkey agreement with the co-op. It also transferred its rent subsidies to anyone who had received subsidy at Regent Park.

Could it happen again?

 Perhaps. But if the experience of Ottawa’s Blue Heron Co-op – one of the very few other co-ops developed in the last few years – is any indication, it won’t be easy.

The City of Ottawa did all it could to support Blue Heron: no equity requirements; a $1.6 million municipal grant to top up federal-provincial funds, $954,000 in waived fees and charges; a speedy rezoning approval, and rent supplements for 21 units.

Even so, Blue Heron barely made it. An anticipated $25,000 per unit federal conservation grant disappeared when the government changed. A provincial energy rebate program came up short.

And it had cash flow problems galore. When the province was slow to advance promised funds, the sub-trades walked off the job, delaying construction for four months and forcing extra costs for winter construction. That burned up Blue Heron’s $240,000 contingency fund, and forced another $80,000 in cuts. Two years later, the co-op continues to operate on a shoe-string, with little money to put aside for unexpected expenses.

Should it happen again?

This is a tough question for an old co-oper like myself. I think housing co-ops have a history to be proud of. But I do not believe the challenge of new development is the only – or even the most important – hurdle co-ops face.

But that’s the topic of another entry.

Read Alex Bozikovic’s article in Spacing — lots more photos too! 

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5 Comments leave one →
  1. August 30, 2011 3:06 pm

    Jon left out a problem that has existed in Ontario for decades, and only made worse by the SHRA and successor legislation—the real lack of member control of non-profit housing co-operatives. Authority to manage, whether setting housing charges or determining members, has been eroded for provincially funded and supported co-operatives. Why develop a co-op that is a co-op in name only?

  2. August 30, 2011 3:13 pm

    I have always wondered about the history of 60 Richmond. It is right around the corner from where I work.
    Thanks for sharing this. Any vacancy there?

  3. September 6, 2011 9:53 am

    Thanks Joy. I understand at least one co-op is now up to 60% subsidized units. Is this a common change, or an exception?

    I’m operating on a sample of one, but I also hear that in the same co-op it’s difficult to pull together active groups. There isn’t necessarily a connection.

    Any thoughts or analysis on changes in co-operative ethos? Is there a widespread change in the “self-help” “we’re in this together” ethos that was widespread in early housing co-ops? Or was that overstated to begin with? Co-op values education is difficult.

    Fiona

    • September 6, 2011 9:59 am

      Interesting you should ask, Fiona. My next blog entry will be talking about some of the bigger issues in the co-op housing sector.

      In answer to your question, the subsidy levels vary with the government program that first funded the co-op. Under some programs, the average is around 25% of units. In others it is 50% or more.

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