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
The average co-op with an approved capital replacement plan tucks away more than $3,600 per unit in reserves each year--triple the 2007 amount. Does their future hold better windows? New kitchens? Savings mean more choices.
