Program Objectives
- To provide modest, affordable housing appropriate to the needs of low- and moderate-income families and individuals
- To produce housing at minimum cost by implementing appropriate cost controls
- To encourage approved lenders to provide capital for low- and moderate-income Households
Program Features
- Unilateral federal program
- Income-mixing
- 100 % financing for eligible costs provided through Canada Mortgage and Housing Corporation (CMHC)-insured loan from NHA-approved lender (On maturity of these loans, CMHC has been providing direct loans, insured by the MIF)
- Short-term (typically five-year) renewable mortgage loan at market interest rate; maximum 35-year amortization period
- Annual federal assistance equal to difference between cost of amortizing 100 % of approved capital cost of co-op’s shelter component at approved mortgage interest rate, and amortization cost at two % payable for 35 years
- Assistance initially used for two purposes:
- predetermined assistance to bridge gap between co-op’s economic rent (actual debt service and operating costs) and its revenue potential at low-end-of-market rent
- income-tested assistance to bridge gap between co-op’s full occupancy charge and reduced charges based on households’ incomes (incomes verified annually, for assisted households only)
- Predetermined assistance reduced at rate that increases share of co-op debt service paid from co-operative’s own resources by five % annually, compounded
- Reduction in predetermined assistance added to pool of income-tested assistance income-tested assistance unused by year end may be reserved, provided co-op is not in receipt of continuing provincial or municipal assistance; when reserve exceeds $500 per unit plus interest, excess must be returned to CMHC
- Depending on the specific operating agreement, at least either 15 % or 25 % of households must be subsidized, provided sufficient income-tested assistance is available.
CMHC Authority under Operating Agreement
- Right to change Graduated Occupancy Charge Scale for households paying less than regular occupancy charge
- Right to define income
- Right to inspect co-op’s books and records at any reasonable time
- Right to approve annual replacement reserve contribution and maximum level of reserve, in consultation with co-op
- Right to designate additional eligible replacement reserve expenditures not listed in agreement
- Right to designate form of Annual Project Data Report (APDR)
- Right to request, for statistical purposes, explanations of information contained in APDR
- Right to inspect property
- Right to suspend or terminate assistance in event of breach of agreement
- Right to be informed when co-op enters into a contract for management, other than an employment contract
- Discretionary right to approve allocation of vacant units to non-income-tested occupants if co-op is not meeting minimum requirement of 15 % low-income households
- CMHC approval required for investment of replacement reserve funds and surplus subsidy funds outside of eligible investments listed in agreement (does not apply during operating agreement extension)
- Co-op may not mortgage or encumber property without CMHC’s approval (does not apply during operating agreement extension)
- Co-op may not sell or otherwise dispose of all or part of property without CMHC’s approval
- Co-op may not lend or give away funds or guarantee obligations of a third party without CMHC’s approval (restriction does not apply to member capital)
- CMHC approval of co-op auditor required, other than for auditor with recognized accreditation
- CMHC approval required for changes to incorporation documents that would change co-op’s non-profit status
Accountability Framework
- Operating agreement
- Annual audited financial statement and information return
- Co-op fully responsible for operating results