There have barely been any new BC housing co-ops developed in over a decade. In addition to our efforts to lobby government at all levels to create mixed income, affordable, self-managed housing, we could also enable new housing co-op development from within the current housing co-op sector.
A necessary part of developing a new housing co-op is finding someone to guarantee the mortgage needed for planning, land acquisition and building. Individual members of potential new co-ops can rarely afford to pay their share of the property and development without outside support. Traditionally, this has come from the CMHC or another government body, which would guarantee the mortgage while we take 25-50 years to pay it off. However, support for housing infrastructure of this sort has gone out of fashion in recent years and, despite hints from the federal government, may not be back in for a long time yet.
This is where the co-op movement can step in. Without actually spending any money, each co-op in the province could set aside some of their savings as a restricted fund to guarantee the mortgages of new co-ops being developed. Once the new co-op is completed and occupied, it will have enough assets to guarantee its own mortgage, and the fund can be used for another development.
It may be said that housing development is a risky business and that we don’t want to take a chance with our members’ valuable assets. However, there are a few reasons to use our assets and make them work for us:
- We have highly skilled and efficient housing co-op developers who simply need to be given the resources to work with;
- There are also huge profits made from housing development. These benefits could be appropriated to make an even more efficient development process;
- By sharing the risk around many co-ops, the potential loss for any one co-op would be minimal; and finally. It’s part of our job. It is not enough for us to reap the benefits of co-op housing without contributing to the growth of the sector.
Two of the co-op principles are about “co-operation among co-operatives” and “concern for community.” If there is one way the housing co-op movement can contribute to mitigating the effects of very difficult times for so many BC residents who are less fortunate than us, it is by creating secure affordable housing in the form of more co-ops.
Let’s say each co-op in the province restricted the equivalent of its members’ share capital to be used as part of the mortgage guarantee fund. At an average of $1500 per share, the fund would be over $20 million! That’s surely enough for the development of 3 or 4 co-ops at any one time! However, many co-ops could afford to set aside much more than their members’ share capital.
These funds would not have to be set aside all in one go either. A co-op could decide for instance to place $10,000 each year in the mortgage guarantee fund until, after ten years, $100,000 has been reached. Then the co-op could decide to roll the fund over to keeping the amount constant, or decide to increase it.
Although it may not always feel like it, we are an affluent movement. We have many millions of dollars in assets and probably have a cash flow of around $10m in housing charges each month. Creating this fund is not actually spending our assets, just using them as collateral for new co-ops to get mortgages. There is a low risk of loosing more than a small part of the fund and even that risk could be shared amongst many co-ops. So, rather than sit around waiting for the next co-op housing program, let’s use what we have! Start developing new co-ops ourselves and show government what it should be doing.