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Over the years, both the provincial and federal
governments have created programs to support the development of
non-profit housing co-operatives. Unfortunately, at the present
time, there are no government programs to create new non-profit
housing.
The following information provides a brief overview
of the housing programs that contributed to the development of the
existing non-profit housing co-ops.
Federal Programs
Section 61 Program
(34.18)
The first non-profit and co-op housing program
in Ontario began in 1974. The provincial government of the time
had created the Ministry of Housing in 1973 in response to the failure
of the public housing program and to the urgent need for affordable
housing. This first program was funded by the federal government
which invited provincial governments to offer rent geared to income
subsidies. The Rent Supplement Program was known as the Community
Sponsored Housing Program. Section 61 featured a fifty year mortgage
at a fixed rate (8%) and a federal government loan, of which 10%
was forgivable. The rent geared to income agreement with the provincial
Ministry of Housing was to be re-negotiated after fifteen years.
This program came to an end in 1978.
Section 95 Program
(56.1)
The federal government continued its commitment
to non-profit and co-operative housing in 1979 with a new program
known as the 56.1 program, now known as Section 95 (section numbers
refer to the National Housing Act). The federal government offered
100% mortgage financing to allow projects to find a mortgage on
the private market. Provincial governments had no part in the program,
although Ontario offered a "piggy-back" program called
the Ontario Co-operative Housing Assistance Program (OCHAP). This
offered rent geared to income for residents if the co-op was unable
to provide subsidies for 25% of its residents from its federal subsidy
pool. The federal program was discontinued in 1984, and was replaced
briefly by the Federal Co-operative Housing Program (Index-Linked
Mortgage Program (ILM)).
Federal Co-operative
Housing Program (formerly ILM)
Announced in 1986, this program was a five year
trial program. The federal government funded it. Rent supplement
is cost shared with the province (Ontario Rent Supplement Program).
Its best known feature was the index-linked mortgage. This meant
that private lenders were invited to provide 100% of the cost of
the mortgage with a floating rate of interest which gave a fixed
rate of interest plus inflation. This feature had two effects:
- the government's subsidy costs per unit were lower than under
the 56.1 (section 95) program
- the co-ops' monthly mortgage payments rise with inflation even
though costs were lower in the first few years.
Other features are:
- a minimum of 15% of the units must be rent geared to income
units. There can be up to 50% rent geared to income units.
- the remaining units must have market occupancy charges. Each
year there are indexed contributions if they are needed to bridge
the gap between economic and market charges in the first years
of a project. Assistance is reduced after the fifteenth year of
operation.
Under this program, 13,588 co-op units were allocated.
Provincial Programs
Federal/Provincial
Program (F/P)
The next program started in 1986, and is jointly
funded by the federal and provincial governments. The provincial
Ministry of Municipal Affairs and Housing (MMAH) administers it.
The federal government put a dollar cap on its contribution in 1989.
About 115 co-ops were developed in Ontario under this program. There
were no more allocations after 1993.
This program introduced a key feature called "targeting".
A significant part of housing is targeted to the neediest households,
while there is also a range of incomes. Each co-op has an Access
Plan. Under its plan it must allocate a minimum of 40% to 50% of
its units to core-need households. (Canada Mortgage and Housing
Corporation (CMHC) establishes core need limits annually.) At least
25% of the total units must be in the category of "deep need".
(The Ministry establishes "deep need".) The rest of the
units may be a mix of "shallow non-core" and market households.
The co-op must generally keep this mix throughout its life as a
co-op.
Definition 15 of the Operating Agreement defines
the term "Core Need". It refers to the way the federal
government measures need. It sets the federal portion of the funding
for the F/P program. Each year the Ministry sends a CNITs (Core
Need Income Thresholds) Newsletter to give co-ops the current CNITs
levels and the income cut-offs for deep need. Note that the F/P
program is the only provincial program which uses the term "household
in core need".
The federal government pays 60% of the bridge
and geared to income (GI) subsidies on core units. The province
pays 40% of the core need subsidies and 100% of any non-core and
market subsidies.
The initial targeting plan sets limits on the
number of core units that are eligible for federal funding. If the
co-op goes over this number, the provincial government is responsible
for the geared to income subsidy on the extra core units.
Some other key features of the F/P program:
- interest-free development loans (DASH)
- guarantees for mortgages from private lenders
- a bridge subsidy to allow housing charges to be set at market
rates. A formula adjusts the annual amount of bridge subsidy.
The amount decreases each year. Note that the formulas and guidelines
for the administration of the GI subsidy are standard for all
provincial rent supplement programs
- payment of all government funding is through the provincial
government. Monthly payments cover bridge subsidy and GI subsidy.
Homes Now
Homes Now is the first program funded entirely
by the Province of Ontario without any federal funding. It began
in 1988 as a five year program with a target of 30,000 units of
non-profit housing. It produced slightly more than 30,000 units.
Almost 9,000 were co-op units.
Some key features of the Homes Now program are:
- mortgage arrangements. At first, the Ontario Housing Corporation
(OHC) provided direct mortgage funding (twenty year terms), using
Canada Pension Plan (CPP) funds. This was because CPP funds were
available to the government at interest rates below market rates.
About 25 co-ops received this kind of funding. The remaining Homes
Now co-ops were funded under the Ministry's centralised mortgage
tendering system which assigned a lender to a project. The project
then entered into a conventional 35 year mortgage agreement. All
the co-ops originally with the OHC/CPP mortgages were eventually
transferred to a conventional mortgage agreement.
- geared to income units. The co-op must allocate at least 50%
of its units to households that qualify for geared to income subsidy.
It must allocate at least 25% of its total units to "deep
need" households and the rest of the units may be a mix of
shallow subsidy and market households
- administration. The administration of Homes Now is similar to
that of the other provincially funded programs. The main difference
is that in the F/P program, funding is shared by the federal and
the provincial governments
The province introduced this program in 1987 as
a special initiative to target the neediest groups. These were:
- people who are homeless
- women who are assaulted
- people who are physically, developmentally or mentally challenged
- single people of low income
The funding arrangement is similar to the Homes
Now program.
Co-ops received very few allocations under this
program.
P3600
The province introduced this program to develop
non-profit housing in 1988/89. It targeted single people with low
incomes. Many projects were 100% GI units.
Financing arrangements were similar to P3000.
Ten co-ops were financed under this program.
P10,000
The province announced this program in its budget of 1991. It was
to produce 10,000 units of non-profit housing.
The Ministry's centralised financing arrangements assigned a mortgage
lender.
Four thousand units were assigned to co-ops.
jobsOntario Homes (joHomes)
The 1992 provincial budget announced this program aimed at producing
20,000 non profit units over three years. It followed the Ministry's
Framework Consultation process. In June of 1995 the new Conservative
governmant cancelled 385 co-op and non-profit housing developments
that had been planned under this program.
About 5,000 units were allocated to co-ops, but
fewer than 1,500 were committed before the end of the program.
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