OTTAWA – Co-operative housing providers are being given a multi-million-dollar financial boost by the federal government to help thousands of low-income tenants stay in their homes.
The minister in charge of the federal housing file says co-ops will be able to pay off the federally backed, high-interest mortgages they signed decades ago with no penalty.
Social Development Minister Jean-Yves Duclos says the government will provide $150 million over four years to federally funded co-ops and non-profit housing providers to help them pay off their federal loans, allowing them a chance to test the private market for mortgages at vastly reduced rates.
For a place like Winnipeg’s Village Canadien, the move will save the co-op about $50,000 a month in interest payments.
The previous Conservatives government promised the money in the 2015 budget, but deferred the spending until this year.
Duclos, in a speech Saturday to co-op housing providers in Hamilton, said the funding should reduce their expenses, let them use private capital to finance repairs and become self-sustaining and not reliant on federal funding to keep operations afloat.
The 40- and 50-year mortgage agreements captured in the announcement were signed between housing providers and the Canada Mortgage and Housing Corp., in the 1970s and 1980s and came with interest rates of up to 13 per cent.
Some providers have found the prepayment penalties are more than the cost of their interest payments.
The government plans to use $30 million from the affordable housing money set aside in its first budget to renew funding agreements that have expired since April 1 and those that are set to expire before the end of March 2018.
“Thousands of low income, co-op residents are going to sleep a lot easier,” said Nicholas Gazzard, executive director of the Co-operative Housing Federation of Canada..
“Right now, there’s a lot of nervousness out there in housing co-op land. People who have been living securely in their housing for many years are suddenly worried that they won’t be able to afford to stay there.”
The Liberals first budget put $2.3 billion into affordable housing initiatives over the next two years to buy the government time to work on a long-term housing strategy for the country that takes into account the complex web of shelters, transitional housing, co-op housing, social housing, rental units and market housing.
The housing strategy is expected to be a key agenda item when Duclos and his provincial and territorial counterparts meet at the end of the month in Victoria. Final details on the plan are expect later next year.
Gazzard said his group wants to see federal and provincial governments provide more income assistance to low-income, or fixed-income tenants like seniors and those with disability issues so co-op housing providers could focus funds on managing properties instead of income subsidies.
“We want the co-ops to be self-sustaining. The co-ops themselves want to be self-sustaining,”he said. “What’s not sustainable, though, is the provision of affordable rents to low-income people. That, we believe, is a government assistance duty and the government should pick that up.”