Jack Quarter
The changing identity of Co-operative housing in
Canada
Recent legislative and policy changes to the
non-market housing system in
Introduction
In
Three different models of non-market housing
have emerged over the past fifty years - that is, public; co-operative;
"', and non-profit. Recent efforts by the federal and provincial
governments to simplify the different policies and programmes
has blurred the distinctive nature of the non-market housing models and in turn
transformed the non-market housing system. This paper argues that the recent
legislative and policy reforms to the non-market housing system have resulted
in major changes to co-operative housing.[1]Additionally,
cooperative housing has also started to influence organisational
aspects of the other non-market housing models. The reforms are not yet
complete, but our research findings, which are based on a sample of non-market
housing organisations in
One indication of this blending pattern is
that government legislation associated with the housing programmes
increasingly refers to all non-market housing as social housing (
This paper describes how the blending pattern
has come about and explores the implications, particularly for co-operative
housing. Including the introduction, this paper has five sections. The second
section will provide a brief history of housing policy in
Non-market housing in Canada
According to Dennis and Fish (1972), Bacher (1993) and Wexler (1996), the private sector has
always been seen as the appropriate provider of housing for all levels of
income. However, the private sector's inability to provide affordable housing
for low-income earners gave rise to the government's increased role in
non-market housing - that is, housing that is not purchased or sold on the
market (Hulchanski 1990). In
Public housing was the original form of
non-market housing, and was introduced as the primary approach to meeting the
housing needs of low-income individuals and families on social assistance (Rose
1980). Beginning in the 1940s the different levels of government began to share
the responsibilities of financing and managing public housing projects of
varying scales across
By the 1960s public housing projects across
1994). As a result, governments in both
countries started to reconsider their commitment to providing non-market
housing (Hellyer 1969). The National Housing Act in
Canada, which is the legislation regulating housing practices, was amended in
1973 to encourage the production of other forms of non-market housing (Rose
1980; Van Dyk 1995) and to decrease the government's
direct administration in non-market housing (that is, public housing). Social
housing quickly gained acceptance as the new name for non-market housing.
Income mixing and increased resident participation became the hallmarks for
these new housing models. The overall goal was to give the residents a sense of
control and ownership of their community, as well as increasing the stock of
affordable housing. Social housing incorporated the new forms of housing as
well as the original public housing programmes.
The new models of non-market housing arose as
partnerships between the state and community-based nonprofit organisations (Carter 1997). Under the partnership
arrangement, the state provided financing and participated in varying degrees
in the formulation of different policies. The non-profit organisations
would develop and administer non-market housing (Smith 1995; Van Dyk 1995). In the post-war period, approximately 600,000
units of non-market housing have been built in
Co-operative housing
The co-operative movement was encouraged by
these changes, and many cooperative organisations2 entered into an operating
agreement with the specific level of government. The agreement outlines the
financial and reporting responsibilities of the individual organisations,
and highlights the funding they receive from either the federal government (if
built prior to 1985), provincial governments, or from the municipality
government. Under the partnership arrangement co-operative housing flourished
as vibrant member-controlled communities. Over the past thirty years, the
co-operative housing model has become one of the more successful ways of
providing affordable housing for low-income earners. Since 1973, 91,209
co-operative housing units have been built in
The funding arrangement was the impetus for
many co-operative organisations to enter into a
partnership with the government and to build new communities. Since 1973,
co-operatives received guaranteed lower mortgage rates from the federal
government housing agency,
As indicated above, the state would guarantee
the financing of development costs through various mortgage-financing programmes. Additionally, the government provided two types
of subsidies in order to sustain reasonable housing charges below market rates.
The first type is a rent-geared-to-income (RGI) subsidy to assist low-income
households, particularly tenants who qualified for social assistance (Smith
1995). The second form is a bridge subsidy that permits the organisations
to make housing charges affordable by ensuring that there is enough revenue to
account for any budget shortfall. The bridge subsidy has also been used to
finance capital improvements as well as to defray a portion of the development
cost. After 1985, the provincial governments started to have a greater role in
financing co-operative housing, but the approach to providing lower mortgage
rates and subsidies remained.
While the financing arrangements ensured that
non-market housing was built, it was the philosophy and history of the cooperative
movement that ensured the success of these developments (Cooper and Rodman
1992). Co-operatives thrive because they are generally small in scale (fewer
than 100 units) and fit well into the neighbourhood.
The majority of the housing units are geared to families with a low and
moderate income (Co-operative Housing Federation of Toronto 2002). The
residents are referred to as members, who have a voice in decisions that could
affect their home and community through the board of directors and
participating in committees that develop the organisation's
bylaws. Ultimately, the community meets to reach agreement democratically on
decisions that are perceived as being in the members' best interests.
Co-operatives normally have an income mix,
meaning that one household can receive a subsidy from the government while its neighbour may be paying market price. The members have
security of tenure such that they can live in the community for as long as they
wish provided that they adhere to community-established bylaws and pay the
community-established housing charge. Until recently the tenant selection
process was coordinated by the cooperative, in the form of a waiting list for
both subsidised and non-subsidised
units and the selection of new members must be approved by the board of
directors.
Public housing
The public housing model is significantly
different from the co-operative housing model. There are 84,000 households
living in public housing in
Unlike the co-operative model, the scale of
public housing developments can vary according to the geographical location in
the province. For instance, some housing projects in Northern
100 units, while projects in Metro Toronto can
be as large as 2,000 units. All residents of public housing projects pay their
rent according to their income level. Consequently, there is no income mixing
in these communities. Tenants of public housing have always been selected
from a centralised waiting list, and each family
must qualify for a subsidy through income contingent criteria. In most public
housing projects, the residents adhere to policies set forth by managers who
are distant from the issues faced by the community.
Changing nature of the non-market housing system
The non-market housing system has gone through
many changes since 1940. While there are similarities there are a number of
key differences. First, co-operatives have different levels of resident involvement
in their decision-making; however, in public housing the residents normally do
not have a direct say in how their community is maintained.
The governance of public housing differs from co-operatives
in that the board of directors is part of a government agency that administers
and manages the public housing stock. All board members are government
appointees and are therefore neither independent of the government nor accountable
to the residents. Furthermore, with such a board structure residents do not
have a direct say in the development and management of their community.
However, in
Another key difference is the existence of a
legislated capital reserve fund for the co-operative communities. The fund allows
the individual communities to decide on the capital priorities; however, the
provincial co-operatives must follow a list of predetermined priorities. The
capital reserve fund is made up of various sources including the bridge
subsidy and a portion of the housing charges. As a result of accessing an
independent fund, the co-operatives have been able to maintain a properly that
is clean, in good repair and reflective of the vision of the membership.
However, in the public housing model there is no capital reserve fund for the
individual housing projects. In fact, the communities must vie for access to
fund capital projects. Furthermore, the property manager and the government
decide what the priorities will be. ...
While governments have always had a tremendous
amount of control over the operations of public housing projects, their
involvement in co-operative housing was less intrusive and limited to that of
fun-der and overseer. For instance, the main relationship
between co-operatives and government was to submit an annual financial report
confirming that all agreements and obligations were being met. In the mid-1990s
the influence of neo-conservative policies led to federal and provincial governments
reconsidering their role hi non-market housing. The first major change, in
1993, was the federal government's withdrawal from the direct financing of
non-market housing by downloading the responsibility to the provinces (Carroll
and Jones 2000). Following the 1995 election in
In 1998 the province initiated legislation to
transfer, or devolve, the responsibility of non-market housing to the municipalities.
These changes were proposed with the belief that «... social housing is best administered
by local governments who are closest to the people they serve and who best
understand the needs of their communities» (Ontario 2000 a, p. 4). Introduced
in 2000, that legislation, known as the Social Housing Reform Act (SHRA),
proposed the most far-reaching and radical reforms to occur to housing policy
in
According to the
These changes are perceived as the root cause
of the diminishing distinctiveness between the non-market housing models.
In January 2001, devolution became a reality
and reluctant municipal governments have replaced the federal and provincial
governments as a primary stakeholder for non-market housing. The changes are
meant to increase cost effectiveness as well as uniformity within the
non-market housing system (
The municipal governments, who feel financially
incapable to deal with the portfolio of non-market housing, have assumed
increased responsibilities for the ownership, financing and management for the
public housing projects. Additionally, for the first time the funding and some
administration of co-operatives are now part of the same agency involved in
managing public housing.
Each local housing corporation is responsible
for creating and implementing new policies and practices within the guidelines
of the SHRA. A board of directors ap-lines of the
SHRA. A board of directors appointed by the municipal government oversees the
operations of the local housing corporations, who approve the different priorities
that can affect the lives of the individual households, including
co-operatives. The local housing corporations' professional management serve as
the board's representatives in the daily operations of the projects.
For public housing, tenants' rights within the organisation are limited; however, tenants have started to
become increasingly involved in the governance structure, a change that
reflects the influence of co-operative housing. There are indications that
municipal governments are attempting to enhance the role of tenants within
public housing and decentralise control to a greater
extent.
Blending of the models
Since the non-market housing system relies on
government funding in order to be sustainable, each organisation
is vulnerable to changes in government and housing policy. As discussed above,
the SHRA outlines the conditions for each non-market housing organisation to sustain its funding. In contrast to public
housing, the development and administration of cooperative housing can still
be viewed as a partnership between the government and cooperative development
groups; however, the legislative changes are causing housing cooperatives to
adopt practices normally found in the administration of public housing projects.
Our research shows that the line distinguishing
co-operative and public housing is beginning to disappear, and a blending of
the models is occurring within specific areas of administration and management.
The blending includes an increase in contracting out services normally done by
employees of each organisation; a change in sources
of revenue for the operating and capital budgets; a centralised
waiting list; the procedure for establishing market rents; and a trend toward
increased resident participation. Each of these issues is discussed in turn.
Contracting out services
The escalating costs associated with managing a
housing property, in addition to the increased need for affordable housing in
Contracting out services has been a strategy
used by many co-operatives to reduce costs associated with managing a property.
Until recently, the public housing models have not widely used contracting out
as a cost saving measure. However, since the devolution of housing to the municipalities,
there has been a noticeable increase to the number of functions contracted out
by local housing corporations to include property management and security.
Operating and capital revenue
The sources of revenue for non-market housing
are a combination of rents, the rent-geared-to-income subsidy, and the bridge
subsidy to subsidise the cost of new developments.
The co-operatives still receive the bridge subsidy, most commonly associated
with the federal commitments that remained in place until the expiration of the
operating agreements. The key change to the sources of revenue is that the
municipality is now the primary funder for the
non-market housing organisations.
For all non-market organisations,
there has been a lack of support for capital projects such as major maintenance
and rehabilitation. This is a major concern since many of the properties are
over 30 years old. According to several co-operative communities, the
rent-geared-to-income subsidy is stable and is used for the operating budget,
but the continuation of the bridge subsidy is a greater risk. Once the current
operating agreements expire, the continuation of the bridge subsidy to support
capita! projects is uncertain. According to a long-time advocate of
co-operative housing, there is a common concern that that since public housing organisations access a central fund for capital
improvements and development, coops may have to try and access the same source
for capital improvements.
The implication is that there will be less money
for individual properties requiring capital improvements. Furthermore, should
they have to access the same fund as public housing and other non-market housing
developments, there is a concern that co-operatives will lose control over
capital planning because the priorities will be governed by the policies of
the central fund. In effect, the process that establishes the priorities for
housing co-operatives will be similar to that found in public housing.
With the devolution of non-market housing to
municipal governments, all non-market housing organisations
have had to adjust their budgeting and reporting practices in order to continue
to receive funding from the municipality. However, a municipality's tax base
cannot support the increased costs of the non-market housing system. The
squeeze on capital expenditures has caused co-operatives to increase the rents
or housing changes from non-subsidised units in order
to make up the shortfall of government funding.
Centralised waiting list
In 1996 the provincial government mandated
that there be a central waiting list, referred to as a co-ordinated
access list, of individuals who are eligible to receive a subsidy and live in
non-market housing. The SHRA formally stated that each local housing
corporation must establish a centralised waiting
list of tenants eligible for the rent-geared-to-income subsidy and that this
apply to all forms of non-market housing. All non-market housing organisations, including co-operatives, must access and
accept individuals from the same waiting list in order to continue to receive
the rent-geared-to-income subsidy.
The centralised list
is now the standard practice across the province and is commonly associated
with the social services division of the municipality. The existence of a
central list is not new for public housing. What has changed is that cooperatives
with subsidised households will now have to accept
members from the centralised waiting list. On
average cooperatives have a one-to-one ratio of tenants who receive rent
subsidies and those who do not. By forcing the co-operatives to access the centralised waiting list, the responsibility of tenant
selection has shifted outside the housing community and the board's role in
selecting tenants becomes largely symbolic.
With an increased reliance on a centralised waiting list by all non-market housing models,
there will be less community control over who will become a member and an
overall change in the communities themselves. Co-operatives in particular are
considering the option of forgoing future subsidies and opting instead for an
increase to units based on market rents. However, this option is not realistic
without compromising the principle of affordability upon which the housing
co-operative movement was founded. Maintaining and accessing a centralised waiting list of lower income individuals and
families has been the practice for public housing projects for many years. The
expanded use of a central waiting list demonstrates a similar practice of
housing models in terms of the tenant selection process.
Establishing market rents
As stated earlier, public housing projects are
one hundred per cent low-income and all residents must be eligible to receive a
rent-geared-to-income subsidy, thereby making it impossible to have a mixed income
community. One of the changes occurring in public housing has been the adoption
of a rent cap, or maximum rent, which is based on equivalent market units.
This means that should a household's income increase over time, the rent will
not exceed market levels. The rent cap is perceived as a strategy to encourage
households that are upwardly mobile to remain in the community. The change in
public housing toward allowing mixed income households is a shift in attitudes
by the government and makes public housing similar to housing co-operatives,
which have always been mixed-income communities. For a variety of reasons rent
caps do not exist in many public housing organisations
outside of Metro Toronto, an issue which will be explored in the discussion section.
Establishing the rent cap in public housing is
based on an annual rent survey conducted by the Canada Mortgage and Housing
Corporation (CMHC), which looks at census metropolitan areas that encompass . a
larger area then the immediate neighbourhood. In the
past, the non-market housing organisations have
determined rents using the immediate neighbourhood as
a frame of reference. However, our data shows that since there is an increased
dependence on the revenue collected from market units, cooperatives are making
greater use of the CMHC rent survey as the basis for establishing market
rents. The survey is seen as a way of justifying higher rents or housing
charges. According to an individual associated with a larger housing
co-operative, the CMHC survey often recommends higher rent levels than we are
comfortable with. We don't normally use the CMHC survey, but our need for
revenue is growing from year to year.
Resident participation
Resident participation in decision-making in
the various non-market housing models can be presented on a continuum ranging
from minimal involvement found in public housing to full member involvement in
co-operatives. The high degree of resident involvement is one of the strengths
of co-operative housing and a pillar on which the movement was founded. This
positive feature of housing co-operatives has not gone unnoticed, and over the
past ten years, many local housing corporations have recognised
the benefits of involving residents in the decision-making processes. In the
public housing model, residents are not given the opportunity to be as involved
as in co-operative housing. That said, there is increasing recognition of the
importance of resident involvement. According to one public housing official:
The increases in resident involvement over the past ten years in the public
housing ... is a recognition that local resident involvement is the best way to
ensure that the communities are well maintained and that the needs of the
residents are accounted for. For the public housing residents, the best way to
ensure that their needs are addressed is to participate in anything available
to them.
Analysis
The Social Housing Reform Act (
The non-market housing organisations
have had to adjust their administrative and management practices, and the
changes have created a fundamental reduction in the autonomy of co-operatives.
In a few instances the changes represent minor adjustments to fiscal
constraints. Prior to the Social Housing Reform Act (
Housing co-operatives still retain areas of
distinctiveness despite the legislative and policy changes — for example, control
over the housing charges for non-subsidised units;
control over creating their own bylaws; discretion over the administralive
practices such as hiring the staff; and capital planning. However, there are
two areas where a shift of the co-operative model towards public housing is
occurring.
The first area of change is in funding. Funding
refers to both the RGI subsidy for low-income households and the bridge subsidy
for rehabilitation or capital improvements. At this time most of the federal
and provincial co-operatives have guaranteed the bridge subsidy because of preexisting
operating agreements. However, once the agreements expire co-operatives will
have to access the same funding source as the other three non-equity housing
models because of the limited funds available at the municipal level.
The second area of change is related to
selection of low-income households. In the past, co-operatives have decided
independently whom they will admit as new members. However, housing cooperatives
are expected to use the same central tenant selection list as the other
models, a procedure mandated by the Social Housing Reform Act and reflective
of the blending of the models. Like public housing, cooperatives must now
accept residents from the same centralised waiting
list. The emphasis on a centralised waiting list of
rent-geared-to-income eligible tenants, previously used by public housing
only, clearly indicating that co-operatives no longer have discretion over the
process of who is selected, which is an important area of distinctiveness.
However, in spite of the two areas of overlap with public housing, cooperatives
still retain some distinctiveness operatives still retain some distinctiveness
in the area of market rent units and of governance.
There are two additional areas where there
appears to be a blending of practices found in public housing and cooperative
housing. The first area is in the increase in services being contracted out.
While the pattern of contracting out is uniform, the approval process and the
individuals involved differ. For public housing, the board of directors of the
local housing corporation and management of a particular development are
making the decisions about contracting out, and the residents are not involved.
It is conceivable that a company can be hired to perform a service that is not
a priority for the community, for instance, situating garbage containers in an
area of the community frequented by children. The process differs quite
significantly for housing co-operatives because the board of directors
consists of residents, which means that the decisions are motivated by the interests
of the community and not only to save money.
A fourth area of blending is the creation of a
new accountability framework, stemming from the Social Housing Reform Act. The
new accountability framework has created an expectation that each non-market
housing organisation (regardless of the type) will
report to the local housing corporation and must adhere to its directives and
plans. In other words, the legislation has removed some control from each
housing organisation and has shifted it to the local
housing corporation. A variation of this model existed previously for public
housing; however, with the Social Housing Reform Act, it exists for
co-operatives as well. Therefore, in this regard, provincial legislation is
encouraging the blending of non-market housing in the direction of public
housing.
These first four areas involve a shift of
co-operative housing in the direction of public housing. However, there is evidence
that public housing is shifting in the direction of co-operative housing in two
areas: first, in establishing market rent levels, known as a rent caps; and
second, in increased resident participation and consultation. Instituting a
rent cap, or maximum rent that was greater than those on social assistance,
began as a pilot project in 1992 in Metro Toronto in order to encourage a
greater mix of residents. Having a mixed income public housing project is
controversial. Some public housing organisations believe
that families should leave once they could afford to. One official summed up
that point of view: We are in the business of housing and not of community. We
do not have enough housing stock for everyone, so people should be encouraged
to leave.
Despite the lack of housing stock, several
public housing organisations have instituted a rent
cap that is meant to encourage persons with relatively higher incomes to
remain in the community, and thereby effectively creating an income mix that is
similar to that found in housing cooperatives.
A second area where public housing is shifting
in the direction of cooperative housing is in resident consultation and
participation. While consulting with residents on capital priorities has some
similarities to co-operatives, the process is strictly consultative. Furthermore,
since the public-housing budget is centralised, decisions
are made on behalf of the whole housing system and not for an individual community.
Consultation does give public housing residents a say in the overall system,
and in that regard there is a shift in the direction of the co-operative
housing model, but unlike co-operatives, residents of public housing do not
have a voice in their own community.
There are indications from several experimental
programmes in
The second experiment is referred to as
community based budget planning. In this process residents are beginning to
have input into establishing capital priorities for all of the public housing
projects. The third experiment is even bolder and involves the conversion of a
public housing project to a tenant-managed co-operative.
Atkinson housing co-operative experiment
In a low-income community in Metro Toronto, the
residents decided over 10 years ago that they wanted more control over the
decision-making practices by becoming a housing co-operative. Atkinson Housing
Co-operative (formerly Alexandra Park) differs from other housing cooperatives
in that it remains within the public sector, all of its residents receive a
housing subsidy, and its managerial prerogatives are more limited than for
housing cooperatives in general. In this community, the tenants elect from
their group a board of directors that forms the legal governance of the organisation. In that respect, it differs from other public
housing projects, whose board of directors is through the local housing
corporation in which it is situated.
This Atkinson experiment follows a global trend
of increased resident control over their housing, while maintaining a
partnership with the government. In the
The Atkinson experiment represents a major
shift in the direction of public housing toward the other non-market models.
With the accompanying changes in the administration of co-operatives, if these
trends continue these models would become indistinct. The Atkinson project
remains unique in
Should the Atkinson experiment not be
replicated in other public housing projects, the blending pattern is still pronounced
- government is more tightly regulating the finances of non-market housing organisations and thereby reducing their degrees of
freedom in decision-making; the budgets are being reduced and thereby leading
to homogenous contracting for services, including management; the income mix is
being flattened in co-operatives and being enhanced in public housing, thereby
leading to homogeneity; and tenant consultation is becoming a norm for public
housing and external controls are reducing member impact in co-operative
housing.
With the exception of the increased tenant
consultation in public housing, the other changes can be attributed to the
neo-conservative agenda of smaller government with reduced services, less involvement
of government in the direct provision of service, and the targeting of government
expenditure to the neediest members of society rather than having universal programmes. Although tenant consultation can be viewed in
the context of the human resources tradition (Nightingale 1982), in fact the
selling point of the Atkinson conversion is that it will reduce costs
(Atkinson Co-operative 1996). According to one source, «by converting into a
co-operative the government can immediately save about 15 per cent in
administration costs.» In other words, even though this experiment can be
interpreted as part of a tenant rights tradition, it is viewed as creating
efficiencies that are associated with smaller, more efficient government.
Although the blending pattern found in the non-market housing system in
Notes
1. The authors wish to thank the Kahanoff Foundation and the Social Sciences and Humanities
Research Council of Canada (file number 842-2000-001) for supporting this
research.
2. All references to co-operatives in this
paper are to non-equity or non-profits co-operatives.
3. There
are a number
of Cooperatives built prior to
1985 that have different operating agreements with both the federal and
provincial governments.
4. Many of the older housing projects continue
to receive a form of bridge subsidy from the province, and is based on original
federal commitments to financing the housing projects. The subsidy is primarily
used for mortgage costs.