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There is an issue looming on the horizon for half of Ontario’s housing co-ops. As co-ops regulated by the Housing Services Act (HSA) come to the end of their mortgage, a negative operating subsidy could threaten their viability.

CHF Canada is calling on the Ontario government to update the outdated funding formula that’s hurting thousands of families living in affordable housing and protect these communities for the future.

The Funding Formula Problem

The 260 Ontario co-ops that fall under the HSA are currently provided three types of funding by the City or Regional Municipality: operating subsidy, rental assistance, and property tax subsidy.

The funding formula for these subsidies has gone through a number of legislative changes over the years which has resulted in an unintended consequence: a co-op will experience a significant reduction in funding when it reaches the end of its mortgage.

This is because when a co-op’s mortgage expenses are removed from the operating subsidy formula, the calculation returns a negative value.

The current funding formula effectively removes the mortgage savings from a co-op’s operating budget.

Impact on Co-ops

When Maple Glen Co-op’s mortgage ended early in 2017, the negative operating subsidy forced the co-op to delay crucial capital repairs. The result was leaking roofs and units left vacant for months as the co-op secured emergency funding in the form of government grants. If mortgage savings had remained in their budget, Maple Glen would have had the capacity to pay for repair work with their own funds.

The majority of HSA co-ops reach the end of their 35-year mortgages in the coming years. A recent study commissioned by CHF Canada shows that the negative operating subsidy will lead most of these co-ops to long-term cash deficiency. As seen with Maple Glen, this is a dangerous scenario, as aging buildings require costly renovations to remain in operation.

Nearly 21,000 co-op units are at risk if the funding formula doesn’t change.

The Solution

CHF Canada proposes a simple solution to the end of the mortgage problem: set the operating subsidy to zero if the calculation would otherwise return a negative value.

This would allow co-ops to leverage their mortgage savings to do necessary capital repairs as their buildings age.

Ensuring we fix the formula is the key to the sustainability of our HSA co-ops and the security of the low and moderate-income households who live there.

How to Help

For more details, please visit the #FixTheFormula page at CHF Canada.

This page features additional background information, a case study, a resolution document to be shared within your co-op community, and a mailing list to help you stay informed.


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