Sunrise Co-op wasn’t much to look at when Mariner Janes and his wife first moved in nine years ago.
Water was leaking into the building and causing serious structural damage. Sunrise was in such rough shape that the couple only had to spend a couple of months on the waiting list, as opposed to the more typical waiting period for a co-op of three months to three years.
“We almost didn’t come to the interview because we pulled up outside and were like, ‘I don’t know if we want to live here,’” he said.
Despite the conditions, along with the prospect of an impending renovation to fix them, the couple decided to accept a three-bedroom unit for $800 a month. They were planning to start a family and wanted to live in in a co-op in the Grandview-Woodland area.
“We wanted to be more engaged with where we were living,” said Janes, 36, a manager at the Portland Hotel Society’s mobile needle exchange. “We’ve always felt a strong sense of community and we were both very tied to this neighbourhood. I grew up just down the street and Robin grew up in the Burnaby Heights area, on the Vancouver side. She went to school with me at Templeton Secondary.”
Even though the damage has since been fixed, the cost of the repairs has left Sunrise in a difficult financial position. The leaky co-op has taken on additional debt to pay for repairs to the building envelope—the walls and roof.
That mortgage comes as the co-op is facing another financial challenge—the end of federal support in 2017. That funding has been a key piece of co-op housing finances since they were started, because the federal money (approximately equivalent to the amount of the main mortgage payment each year) has allowed co-ops over the year to provide subsidies to low-income renters in their buildings.
Sunrise members were hoping to pay off the co-op’s mortgages by the time federal support ran out, so that they could be financially self-sustaining and maintain the internal subsidy for the 10 families currently getting it. But with the most recent repair, along with others over the years, the co-op remains deep in debt.
“If we didn’t have the envelope mortgage, then we’d definitely pay off our first mortgage faster, in which case we could redirect that toward subsidy,” said Janes.
Leaky co-ops in debt
Sunrise is one of about 35 leaky co-ops or “leakies” in Vancouver, 28 of which have been repaired so far. In total, leaky co-ops represent 33 per cent of all Vancouver co-ops. Built during the same period as Vancouver’s leaky condos, the 1980s to 2000s, leaky co-ops are plagued by water damage from rain penetrating the building envelope.
To finance the envelope repairs, Sunrise had to take out a fourth mortgage. For the co-op to make loan payments, the housing charge on each suite had to be raised. As a result, Janes’ $800 suite now costs $1,300 a month.
But at least Sunrise has been fixed. Across Clark Drive, another Vancouver leaky is still waiting for its envelope to be repaired.
Northern Way Co-op has been under tarps for two years. Unfortunately for Northern Way, the company responsible for the repairs went out of business about a year ago, one month shy of completing the work.
This has left building residents in the lurch.
Kevin Spenst and his partner moved in just as repairs were beginning.
“Before we moved in, there was a view. The day that we moved in, the scaffolding had been put up,” he said.
The co-op originally had to borrow almost $6 million for the renovations, and the delay will add to the costs, though members don’t yet know how much. Before taking on the additional loan, Northern Way still owed $750,000 on its first mortgage, now the 60 families living there have to pay additional housing charges to cover annual mortgage payments of almost $500,000.
While the debt seems daunting, the co-op leakies may actually be in a slightly better position than their non-leaky counterparts. At least in the longterm.
Northern Way was able to borrow money for the repairs through Canada Mortgage and Housing Corporation on a no-interest loan, but when non-leaky co-ops eventually need to finance their own repairs, they won’t have the benefit of CMHC support.
Libby Davies is the Member of Parliament for East Vancouver and recently sent a letter to the Minister of Employment and Social Development urging the conservative government to renew co-op subsidy agreements.
Davies was the NDP’s housing critic from 2000 to 2006 and again from 2010 to 2011. She introduced a housing bill calling for a National Housing Strategy in 2009, but the bill died after the 2011 election.
“I’m a strong supporter of co-ops and very proud that we have many housing co-ops in East Vancouver. They are affordable and safe places to live and a key part of a healthy community,” she said in an email.
For now, leaky co-ops are the ones stuck carrying debt and they have difficult decisions to make about maintaining subsidies without federal funding.
Leaky co-ops face asking members who pay the highest rents already—renters who are paying what is called “market” rent, even though it’s typically less than the cost of the private apartments around them—to pay even more.
Sunrise is considering this possibility, but Janes says members can’t handle any additional increases.
That will impact one important aspect of co-op life, the ability to subsidize the lowest-income households.
“We can continue doing the things that make us a co-op on the kind of community and practical level. Like where we’re doing communal kind of cleaning, and we have committees around landscaping and so on,” said Janes. “But we won’t be able to have any subsidy suites.”
While leaders at the Cooperative Housing Federation of B.C. understand the spirit behind trying to continue supporting subsidized members, they don’t necessarily recommend it.
“Say you need to take out another mortgage to fix things, well then you’ll have to pay even more subsidy to keep those people there,” Fiona Jackson, communications director of the federation. “We don’t think we should expect to help the most vulnerable on the backs of the moderate-income people who live in the co-op.”
But including the most vulnerable is part of Sunrise’s mission statement.
“That’s part of the vision of being in a co-op,” said Janes. “That it’s not just people who can afford to live there, it’s people who want to live in the community and want to be part of it, regardless of income levels, or mental health, or disability, or anything. We aim to be as inclusive as we can.”
Co-op Funding Types in East Vancouver
Co-ops don’t just have problems with leaks and subsidies. They also operate under a patchwork system of government jurisdictions and programs that have come and gone since the early ’70s, which makes negotiating solutions even tougher. Some of the specialized classifications for B.C. co-ops include:
Federal Cooperative Housing Program
Co-ops were developed under the Federal Cooperative Housing Program between 1986 and 1992. The program used index-linked mortgages, and so it’s often referred to as the ILM program. An index-linked mortgage is a long-term loan where the lender is guaranteed a real rate of interest after inflation and the borrower’s payments are adjusted each year. Monthly payments for an ILM rise with inflation, though costs were lower in the first few years of the co-op. ILM co-ops typically subsidize 30 to 50 per cent of their units. Sunrise is an ILM co-op.
The provincial government’s housing program provides subsidies to co-ops for low-income or moderate-income members. Four of East Vancouver’s 62 co-ops are Homes B.C. co-ops.
This program ran from 1986 to 1993, and the costs were shared between the federal and B.C. governments. One co-op in East Vancouver is a provincial/federal co-op.
This was the first federal co-op housing program and it ran from 1973 to 1978. It was originally called the 34.18 program, based on the relevant section of the National Housing Act, but the section number later changed to 61. Two co-ops in East Vancouver are Section 61 co-ops.
Co-ops developed under section 95 of the National Housing Act between 1979 and 1985 receive funding from the Canada Mortgage and Housing Cooperation. Northern Way and Grandview are Section 95 co-ops.