Collecting Your Documents, Documenting your Co-op
This note follows up on a piece in our last E-bulletin about backing up and securing important documents and messages. We find that many co-ops can’t easily lay hands on valuable technical documents such as site plans, as-built drawings, electrical and plumbing drawings, building condition assessments and other studies. These documents will be very helpful when your co-op needs to get major repairs done.
Legal documents such as operating agreements, lease agreements, workout agreements and property management agreements may also go missing. You will need these, or some of them, if your co‑op decides to borrow money to invest in your property. (Your agreements with CMHC are available from your relationship manager.)
If you don’t know where to find them, it is not a waste of time to start going through little-used files or storage boxes, or, for volunteer-only co-ops, asking long-time maintenance committee members and former presidents if they can help. As you retrieve these documents, create a special place in your co-op office where they can be kept together.
If your co-op has no office, why not create a virtual office through an e-Post vault, available at a small annual cost? You would first need to get the documents scanned and put a policy in place so that your co-op doesn’t lose track of this storage after a few years.
Innovation and the Innovator
CHF Canada has a sister organization in the United States called the National Association of Housing Co-operatives (NAHC). Recently, NAHC established an international award to honour innovation and impact in the development and preservation of housing co-operatives.
Alexandra Wilson, the CEO of the Agency, was honoured as the second recipient—and the first individual to receive the award. Early in her career, she played a leadership role in fighting off attempts to condo-ize the historic garden-city development that became Bain Apartments Co-operative. She was part of the creative team of volunteers that won a third co-op program, based on the innovative index-linked mortgage, from a reluctant government. As the executive director of CHF Canada, she oversaw that effective campaign that won support for the creation of a new agency that would take over much of CMHC’s role in managing the co-op programs, while drawing on a deep understanding of the co-operative sector. The Agency would not only ensure that co-operatives complied with their CMHC agreements and repaid their mortgages, but would support them and encourage their effective operation as sustainable businesses long into the future.
In response, Alexandra said this to NAHC:
We saw that by adopting contemporary technical methods, media and tools, oversight and reporting functions could be expanded to include value-added services. These services would involve the electronic collection and return of data to housing co-operatives in language and a format that they could understand. With the guidance of our specialized staff, our reports would help co-ops to strengthen their operations and improve their performance.
Accepting the honour on behalf of the Agency as a whole, she generously thanked her “dream team” for helping her build an organization that was risk-based, data-driven and client-focused.
The Agency’s clients also deserve thanks and credit for their participation in helping to bring the Agency into being and for their adoption of new ways of thinking and acting in the course of their work with the Agency over the past seven years.
Safety Three Ways
Every co-op has to take on a construction project from time to time. While co-ops that defer the care of their property are putting themselves at risk in a serious way, construction comes with its own risks.
One way to protect your co-op is make sure you won’t be liable in case of injury to a hired worker. The rules are a bit different from province to province, but the principle is the same. In B.C., the law requires contractors to have worker’s compensation coverage for their workers through WorkSafeBC. Before signing a contract, ask the company if they have this coverage and if it’s up to date. You can check on this yourself at on the WorkSafeBC website. In Ontario, the law is now so strict that you will need a copy of the clearance certificate for your co‑op’s files before you let anyone pick up a hammer for pay. You can find out more at the Workers Safety and Insurance Board (WSIB). In Alberta and PEI the Workers’ Compensation Board (WCB) insures workers against injury and sets the rules for employers.
A second way to keep your co-op safe has to do with building permits, which are needed for many, but not all, renovation projects. Usually your contractor or project manager will apply for the required permit on the co-op’s behalf. But don’t assume anything. Make sure you check. If the project is too small for a project manager or general contractor, you may need to apply for the building permit yourself. You can find out more through this link for B.C.: http://www.safetyauthority.ca/permits-approvals. Information is available here for Alberta, here for Ontario and here for PEI.
The third safety issue has as much to do with maintenance as construction. It concerns your co‑op’s mechanicals, especially for apartment-style co-ops: such things as elevators, boilers and gas fittings. These are often regulated by government, but B.C. has an independent self-funded organization that oversees the safe installation and operation of technical systems and equipment. The BC Safety Authority issues permits, licences and certificates, but also works with industry to reduce safety risks. Before your co-op has an accident, or even an incident, here’s where you can find out what to do and not to do. (For Ontario, the organization is the Technical Standards and Safety Authority. In Alberta, information is available through Municipal Affairs. Because of the building type of housing co-operatives in PEI, boiler and elevator inspection is not a safety issue there.)
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For some years we’ve been passing on the message to our S95-program clients that they should plan to use up their subsidy surplus funds to help lower-income households—or expect to lose them when their operating agreement ends. We now are officially eating our words.
CMHC has put out a press release telling S95 co-ops (and non-profits) that they will no longer have to return these funds when their agreement ends and their mortgage is paid off. As CMHC put it,
Effective immediately, social housing providers whose operating agreements allow for the establishment of a Subsidy Surplus Fund can now retain any money they may have in this fund to use after their operating agreements mature. These funds can be used to continue to lower the cost of housing for low-income households living in existing social housing, including individuals, families, seniors, persons with disabilities and aboriginal people.
Even better, co-ops that returned the money in their fund after their operating agreement ended are due for a surprise. As the decision is retroactive, their repayment will be returned to them.
So far, we’ve only been given the general information above, but we do know that S95 co-operatives can expect to get a letter from CMHC with details. We thank CMHC for this excellent decision.
Losing the Message: A Horror Story
Some years ago, the board of one of our clients consulted an expert co-op lawyer using a personal e-mail account. They received an answer via the same convenient medium. This legal advice formed the basis for an important financial decision. However, with the passage of time, the board and the staff changed and the record of the decision was lost, apart from references in the Agency’s own files. The financial consequences are still unwinding, but the matter may not end well. (Some details above have been changed to protect the privacy of those involved.)
We think there are two lessons to be learned from this:
The Agency’s records are showing that, at last count, 125 Agency clients now have rules (B.C.) or a by-law provision (other provinces) prohibiting members who are in arrears from serving on the board in any circumstances. Congratulations to these co-ops for raising the ethical standard they operate under, while taking steps to improve their financial performance.
On the same topic, the Agency has been fine-tuning the model language we developed for co-ops to use in amending their by-laws or rules on this subject. Our language provides for the automatic removal from the board of any director in arrears, after notice of the arrears is given. The big advantage is that when a co-op has made the decision to adopt this wording, all pressure is taken off the rest of the directors to be enforcers for one another, much to the relief of most co-op boards. You can find our model language on our client website under Resources.
More good news in a (mostly) good-news issue of the E-bulletin! Here’s the story.
Nick Van Dyk, one of our analysts, has worked in the co-operative housing movement for about 40 years. A man who knows finances inside out, Nick spotted the unduly high interest rates on some of the workout loans of ILM co-ops that had been helped by the Federal Co-operative Housing Stabilization Fund. When the Fund closed down, these loans were taken over by CMHC.
Alexandra Wilson, our CEO, pointed out the problem to CMHC and asked that the matter be looked into. CMHC concluded that the interest rate for 36 clients with Stabilization Fund loans was too high and should be lowered retroactively to the date when the loan moved to CMHC. So 36 clients will be able to pay off their workout loan earlier, and at a lower total interest cost, than we or they had expected. Special thanks to CMHC for listening to our argument and acting on it to the benefit of our clients. Feels like partnership to us, and, we hope, our clients!
The Agency has learned that co-ops are running into
In case you’re new to the e-bulletin or the Agency, the Agency produces the Plain-Language Financials as a service to our clients. We take your audited annual financial statements and recast them in a form that is easy for the average member to read and understand. You can find them on our client website, which is password protected to keep co-ops’ financial information confidential. Click here to learn more.
It seems that when co-ops access their statements on line and print them, some of the content disappears. You can solve this problem by changing the print setting on your machine to landscape format before printing.
Our technical staff will be making changes to the default setting at our end, but until this is complete, we ask you to use this work-around. We will let you know as soon as we have fixed the problem. We hope it won’t prevent you from reviewing and sharing your Plain-Language Financials with the full board, the full membership or whoever your co-op decides would benefit from reading them.
Need a Quote or a Bid for Capital Work? Check with Us First
Your co-op’s relationship manager would like you to be in touch before asking for bids or issuing a proposal call for complex capital repairs. (Three bids are recommended for all but tiny projects.)
Full specifications are essential to ensure that quotes come in for the full scope of the job and that everyone is bidding on the same thing. We can help with some ready-made specifications that we keep on file for common jobs. Using them will help ensure that your co-op and the bidders have a common understanding of the work to be done. If you need something for a non-standard capital project, we can help you by providing custom specs for a fee meant to cover our costs. We also have a sample tender package that will make it much easier for you to issue a proposal call.
Please bear in mind that you may need the Agency’s agreement to pay for the project from your capital replacement reserve. Without permission, you can spend from your co-op’s reserve on items listed in your operating agreement or in the current years of an approved capital plan. Otherwise, speak to your relationship manager. A fast response is guaranteed.
Use It or Lose It: Unspent Subsidy Reclaimed
As you know, CMHC provides the money for your subsidy pool each month. (Roughly one-quarter of S95 co-ops top up the pool with funds from their own revenues.) Some co-ops like to keep as much as $500 per unit—the maximum allowed—of these funds on hand, in case of unexpected member need.
When your operating agreement ends, CMHC’s role in subsidizing the charges for your low-income members will end along with it. At that time, CMHC expects your co-op to return any money left in your subsidy-surplus fund, including unspent interest the fund has earned. Given this, you may wish to look again at your current practices to see whether you are holding money back that could benefit your members. For instance, are you asking low-income households to pay a higher share of their income than the operating-agreement minimum of 25 per cent? Is help going to every household whose income merits a subsidy?
No Secrets from the Board
In our latest annual report to CMHC, the Agency noticed once again that general arrears are much higher in co-ops where directors owe the co-op money. In fact, arrears in these co-ops are costing members more than three times as much as in co-ops where no board members are behind.
This may seem like bad old news, but a fresh possibility has come to mind. What if some directors don’t pay off their arrears because their fellow board members don’t know they owe any?
In the reports presented to some co-op boards, the name and unit number of the person in arrears are carefully concealed. Many co-ops have adopted this practice because they mistakenly believe that privacy laws don’t allow the names to be revealed. That isn’t so. Privacy laws mean that information about a member’s mental health, for example, can’t be made public without the member’s consent. But no consent is needed where information is shared in the course of collecting a debt to the co-op. Because boards have a duty to see to it that members pay their housing charges, they are entitled to know who owes the co-op money and how much. They can also freely present the facts to the membership if a decision to evict for arrears is being appealed.
Many co-ops have decided that no one in arrears should serve on the board. If the directors don’t know that one of there number isn’t up to date, and the manager thinks identities must be kept secret, an important ethical standard will be breached without the board’s knowledge.
Ontario Only – Free Retrofits for Energy Savings? Where Do We Sign Up?
Through Globe, an organization associated with Housing Services Corporation, Enbridge Gas is offering two programs that will reduce utility costs, increase residents’ comfort and make eligible homes more energy efficient. One program is intended for medium to high-rise buildings; the other could benefit co-operatives made up of row or townhouses, duplexes or single-family dwellings. The retrofit could include draft-proofing, caulking and weather-stripping, attic and basement insulation, work on the building envelope or replacement of old heating equipment. A cost-free retrofit is available to any Enbridge customer co-op with qualifying units where the air or water is heated by natural gas.
In order to qualify, the units must meet certain tests of size, age, condition, predicted level of savings and more. The co-op office, whether paid or volunteer, will need to work closely with Globe to select the units for testing and retrofitting and keep the members informed about their role in the process.
If a unit qualifies, the retrofit won’t cost the co-op or the residents anything. Organizing the project at the co-op end will take time, but we think it’s worth it. You can find more information on the Globe website here for townhouses and single-family dwellings; here for medium-rise or high-rise co-ops.
The Tender Spot
Co-ops follow one of four models to get their management work done. These models are volunteers only; volunteers and a paid bookkeeper; one or more employees; and a contract with a management company for a variety of services. (Some co-ops use a blend of these methods.)
Each approach has its strengths and its weaknesses. Whichever your co-op chooses, the Agency believes that you can avoid many problems by taking care right at the beginning.
To help our Ontario clients get off on the right foot if they opt for the management-company model, we have developed a sample tender package for management services, which is posted on our client website.
Just as when hiring a contractor, the tender package ensures that both you and the company are clear on what services are needed and how much they will cost. And it ensures that a fair process is followed in calling for bids and awarding the contract. Please note that the model is designed only for use in Ontario and only by housing co-operatives operating under federal programs.
“Out of this Nettle, Danger,… We Pluck this Flower, Safety.”
The Agency is pleased to present our annual report for 2012, which is posted on our website in both official languages. The title of the report is taken from Shakespeare’s Henry IV, Part I. As applied to the Agency’s work, it is a poetic way of stating our message to co-op clients: winning your way to security means bravely facing your risks and dealing with them. In the end, though, the hard choices are worthwhile, because they lead to a secure future.
Our annual report introduces our directors, lists our staff, shows our clients’ locations and programs, presents a summary of our financials and includes a brief review of 2012, as well as a word from the CEO about what she sees for 2013.
A Treasure Chest of Information
Recently we’ve learned that, over the past 12 months, some clients did not visit their client website even once. Do they know what they’re missing? There is valuable information there, and it’s free.
What do co-ops find there? We post all the Agency reports that we share with clients about their performance. If an e-mailed copy is lost in the shuffle, you can always find our reports on
any risks your co-op is facing, whether or not you are following your CMHC agreement, and how your co-op compares with its peers in all sorts of ways from spending on your property to energy use (in most cases). You will also find the Plain-Language Financials, which are not available elsewhere. They translate your co-op’s audited financial statements into a friendly form, using ordinary language. For visual people, there are pie charts that show how much of your co-op’s income comes from each source and how it is spent. Another chart shows how your co-op’s finances have changed from year to year. Your operating agreement is there, and any other legal agreement you have with CMHC. Most recently, we have posted a model tender package for management services in both PDF and Word format, so co-ops can easily adapt it to their needs. But more on this in our next e-bulletin.
Your client website is kept private for your co-op’s representative, who, we hope, is sharing the information. (If not, ask about it!) Getting to the client website is easy. Just go the the home page of our public website and click the words “client login” underneath the little house on the right. When the welcome page comes up, fill in your co-op’s user name and password. If you don’t know them, your relationship manager can help. If you don’t know your relationship manager’s name, you can ask for this information here, by e-mail, and we’ll get back to you. If you have suggestions for improving the site, don’t be shy, because we’d love to hear from you.
The Agency Reports to You
Just as the Agency helps co-ops stay on track with the terms of their CMHC agreement, so we have our own obligations to fulfill. To make sure we serve our co-op clients as well as we can, we developed a strict set of client-service standards. These standards were approved by our board of directors and you can read them on our website.
Our information system tracks all of our work closely, including, for example, how long it takes a staff member to answer a client’s request to spend from its capital reserve fund. Once a year, we add up our successes and failures and grade the result on a scale from A+ to D-. The marks appear on our website, along with an explanation for each one.
We realize that clients’ first reaction may be “Of course they grade themselves A!” But the standards we test ourselves against are objective, calling for us to achieve a specific level of performance with no wiggle room. If the Agency fails to meet a standard, there is always a reason, but we don’t treat that as an excuse to bump up our mark.
We usually do pretty well, but we don’t get a perfect score. This year, for example, because several things went wrong, we took a few days longer than the limit of two weeks to post the highlights of one of our three yearly board meetings. This pulled us down to a B.
Honestly tracking our performance is important, because if we don’t know where we’ve gone wrong, and why, we’ll never do better. Also, feeling embarrassed motivates us to strive for a higher score next year.
Filing Made Easier
We want to make it simpler for clients with financial workouts to file their monthly or quarterly reports, so we’ve gone web-based. As with the AIR, we created a form for filing on line. This time, though, the co-op office files, rather than the auditor.
Here’s how it works. When your report is coming due, your co-op gets an e-mail with a link to the on-line form. Just click the link, fill in the blanks and submit. If you want some guidance, short video tutorials will take you step by step from log-on to finish. Our testers told us that web-based filing was faster and easier, and our co-op clients are liking it too.
Starting in July, a second wave of co-ops will start using the on-line monitoring form. It’s easy to complete and will get even easier the second time. Why? Because the next time you file, a mouse click will let you carry over information from your last report. If you’d like some help, take a look at our video tutorials or call your relationship manager for some guidance. Once you try it, you’ll like it.
Financials Get Even Friendlier
Early in 2012 we enriched the Plain-Language Financials with a few new features. Then we collected comments from clients and the Agency relationship managers who work with them. In response, we’ve tweaked our easy-reading financials a little more.
Imagine that your AIR, with all documents, was filed about four weeks ago and you’re rushing to our client website to see your results in plain language and pie charts. What will be different?
First, your financials now start with the small picture and move toward the big picture. The first page talks about how your co-op did in its most recent year of operation. Page two is the financial story of your co-op over time. Page three sums up your financial position (where you stand as of your year end) and could be the most important page of all. Why this change? We decided it would be more dramatic to save the climax for the end. We also know that most readers find the income statement the easiest to read.
We made a second change because there seemed to be some confusion between funds available to spend and lifetime earnings. As of now, we first give the amount of a co-op’s earnings so far, after operating expenses. Next, where a co-op has invested part of what it has earned to date in its buildings, we say so. Then we point out that $XX of its earnings—the amount spent on the property—can’t be used to meet operating expenses.
Just to remind you, two key items, and some smaller ones, changed in 2012. Here are the ones we think are most important.
A statement about how much vacant units have cost your co-op now appears at the bottom of each of “How did we do this year?” and “How have we done over time?” This makes it easier to see how much better you could have done if all units had been full.
There was also a major change for those B.C. and Alberta co-ops that account for their property in their financial statements more or less according to Generally Accepted Accounting Principles (GAAP). The misleading annual surpluses and deficits in operations that plagued the original version are gone. Since we’ve changed some of the calculations, the Plain-Language Financials give a more reliable answer to the questions, “How did we do this year?” and “How have we done over time?”
Another of Our Own is Honoured
People familiar with co-op housing in Canada will be pleased, but not surprised, that a Diamond Jubilee medal has been awarded to Tom Clement, executive director of the Co-operative Housing Federation of Toronto. CHFT is a federation of about 165 housing co-operatives in Toronto and York Region.
In charge of member services in the early 1980s, Tom pioneered the use of plain language in CHFT communications, training manuals and reference materials for housing co-operatives. As executive director of the federation since 1993, Tom has introduced many innovations including the Here to Stay Fund to help co-ops avoid eviction for responsible members with a short-term financial problem, the CHFT Charitable Fund, and the Diversity Scholarships, which help young co-operators attend university. Under his leadership, CHFT presents a variety of awards and honours that celebrate co-ops’ strengths and achievements. With support from social services and health-care agencies, Tom encourages the federation’s Aging in Place Committee in measures that enable elderly co-op members to remain in their homes for as long as possible.
Revised Accounting Standards for Canada and What They Mean for Your Co-op
The word is out that the Canadian Institute of Chartered Accountants (CICA) has overhauled Canada’s accounting rules for non-profit organizations as of fiscal years beginning after December 31, 2011. For housing co-operatives asking if the new regime applies to them, the answer is yes. As non-profit organizations, they do come under the new standards.
However, more than 95 per cent of the Agency’s clients are largely sheltered from these changes for now, because most auditors follow what is called a Special Purpose Framework when preparing co-op clients’ audited financial statements. Under this framework, which CMHC encourages co-ops to use, several things are accounted for differently than for other organizations.
For one thing, these co-ops write off the cost of their property at the same rate they pay back their mortgage. For another, they treat the money they put into their capital replacement reserve as an operating expense, allowing them to build this annual contribution into their housing charges. A third feature of the Special Purpose Framework is that what is spent from a co operative’s capital replacement reserve is not added to its capital cost. Following the change in Canada’s accounting rules, co-ops whose accounting has been based on the framework can continue to use it and will see no more than a few minor changes in their audited financial statements. The Agency is preparing a document for their auditors that will confirm, on the authority of the CICA, that these co-ops continue to qualify for financial reporting under the Special Purpose Framework.
However, once their operating agreements have come to an end, all co-operatives will have to account for their operations according to Accounting Standards for Non-Profit Organizations (ASNPO), a variation of GAAP. These accounting rules include certain transitional provisions. One such is called the fair-value option for accounting for a co-op’s assets. By the time their mortgage is repaid, most housing co-operatives will have entirely written off their capital assets, which typically consist of land and buildings. Under the fair-value option, a co-operative may choose—once only—to restate the value of its property on the financial statements at current value, as supported by a professional appraisal.
As of today, about 30 Agency clients in western Canada do not follow CMHC’s recommended accounting policies, preferring to use a version of GAAP. The Agency will be in touch with their accountants with more specific advice about how to present the audited statements.
If you are unsure whether or not your co-op follows a Special Purpose Framework or have other questions or concerns, you can contact our AIR Help Desk Officer, Ken Lawson.
Ontario Alert: New WSIB Rule for Boards and Managers
As of January 1, 2013, boards and managers in Ontario have a new step to take when hiring a contractor. Penalties for failing to do so strike not at the co-op, but at directors and staff as individuals.
A recent change in regulations means that Workplace Safety and Insurance Board (WSIB) coverage is required for all contractors, including independent contractors, business owners, and everyone in the construction industry that a co-op will likely deal with. WSIB delivers no-fault workplace insurance for employers and their workers, including disability benefits and helping injured workers return to work, once they have recovered.
In the past, co-ops were able to hire self-employed trades who did not need to have this coverage. Unfortunately, some so-called independent operators used their exemption as a loophole to avoid paying premiums for people working for them. By hiring other independent operators to do the actual work, people claiming to be sole proprietors got around the rules. As a result, if the workers were injured, they found themselves without any insurance or other protection.
The new regulation states that managers and boards of directors face fines and penalties if they hire any contractor without WSIB coverage. Responsibility for getting proof of insurance lies with the manager or board, who must ask the contractor for proof of insurance in the form of a clearance certificate. (A clearance certificate confirms that a contractor or subcontractor is registered with the board and has an account in good standing, with all reporting and premiums taken care of.) As the WSIB website puts it, “No clearance means no work.” Fortunately, a grace period for compliance of one year (expiring January 1, 2014) will give co-op boards and staff time to adjust to this new rule and make sure their preferred contractors are ready.
As a result of this change, the cost of hiring independent contractors will increase. However, co-ops should enjoy some peace of mind from knowing that anyone injured doing construction work on their property will be protected by no-fault insurance. More information is available on the WSIB website.
Coverage for Loss of Housing Charges
Over the past few weeks, housing co-operatives have been reviewing premium notices for their 2013 insurance. The Agency takes a strong interest in this matter, because being under-insured puts a co-op at risk. Insurance protects against a misfortune that strikes without warning. In a housing co-op anything can happen, from a fire – several major fires have occurred over the past few years – to a staff person or president gone missing, along with the entire capital replacement reserve.
When you get your premium notice, you should make sure that your co-op is fully covered for loss of housing charges. This term is not exactly clear. It does not refer to money lost through arrears or vacancies, but to the loss your co-op would suffer if a fire or another disaster kept you from having paying members in all your units. Because your housing charges probably rise every year, your co-op will need to increase its protection annually to reflect your current charges. So please take action to be certain you’re fully insured.
Co-op Housing and International Good Governance
The Housing Committee of the International Co-operative Alliance (ICA) has recently approved a Good Governance Charter, one of the ICA’s projects in honour of the International Year of Co-operatives. The charter was created under the oversight of Nicholas Gazzard, Executive Director of CHF Canada.
The new charter is intended for housing co-ops. It lays out in general terms what boards should strive for in governing their co-operatives. As part of acquainting the board with its role, the document is well worth a thoughtful reading at an early meeting soon after your co-op’s AGM.
CHF Canada has sent a hard copy to the official address of each member and associate and written about the charter in its eNEWS. To allow other interested people to read the charter, we have included a link here. We think very highly of it, and we’re sure you will too.
The Queen’s Medal
At a recent reception, Maril Bélanger, M.P., presented Alexandra Wilson, the Agency’s CEO, with a medal struck in honour of Queen Elizabeth’s Diamond Jubilee. Among the guests were representatives from the Canadian Co-operative Association, CHF Canada, CHRA, The Co-operators and CMHC. The MP and other speakers emphasized Alexandra’s lifetime of devoted service to the cause of co-operatives. After thanking many people and stressing that achievements in the co-operative world are always owing to the work of many people, Alexandra spoke about the importance of renewed development of mixed-income co-op housing.
We understand that our movement includes other medal recipients, such as Mark Goldblatt, of Ottawa, who began his career as the co-founder of the Co-operative Housing Federation of Toronto in the 1970s. Mark has worked with many kinds of co-operative since, including the new Ottawa funeral co-op. We are delighted to announce that a similar honour has gone to Kathy Dimassi, formidable organizer and currently treasurer of the Golden Horseshoe’s board; and Eleanor McDonald, community and co-op activist, and sector member for more than three decades. If readers know of other medal recipients associated with co-op housing, please send us a message through firstname.lastname@example.org. It will be our pleasure to report on the honour in a future issue of the Agency’s e-bulletin.
Where’s the Market? How are we Doing?
As of October 2012, the average vacancy rate for rental apartments in Canada’s 35 major centres had risen to 2.6 per cent from 2.2 per cent the year before, according to the fall Rental Market Survey released recently by CMHC.
Once a year, most co-ops can find out how they did in relation to the market by checking the comparison in their Co-op Data Report. The Agency sends this report annually to every client co-op within about five months of its year end. If you don’t know about the Co-op Data Report, you’re missing something good. Ask your board or staff for a copy of your co-op’s latest report.
CMHC’s fall Rental Market Survey also noted that, overall, the average rent for two-bedroom apartments in existing structures increased 2.2 per cent between October 2011 and October 2012 in Canada’s major centres. This same pace of rent increase was recorded between October 2010 and October 2011. You can view highlights and reports from larger markets here.
Saving Time for Agency Clients with Financial Workouts
Most Agency clients with a financial workout have to file a report with the Agency every month, or every quarter, depending on their agreement with CMHC. The report updates the Agency on important indicators of the co-op’s operating performance, such as arrears and vacancies.
Completing this report can be time-consuming, but the Agency has plans to speed up the process. Early next year we will invite co-ops to file the report on line, instead of in an Excel workbook. Video tutorials will guide co-ops through the process of filling in the information. Several co-ops are piloting the new report right now and we’ve been hearing some good things from them.
Once the report moves into general use, we think that co-ops will find it relatively painless to complete. You may even find that filing it is fun, provided you don’t get out much.
Co-ops with Workouts: Splitting Up Reserve and Maintenance Spending
The Agency has been reluctant to ask for changes in the way co-ops keep their books or present their audited financial statements. However, the operating agreements do allow the Agency, on CMHC’s behalf, to ask you to report your information in a particular way.
We are now asking co-ops with financial workouts to make a change, if they are expensing capital repairs to operations instead of the capital replacement reserve. From now on, please report capital repairs separately from your ongoing maintenance costs on your income statement. This will help us validate your AIR and get our reports to you more quickly. Please check with your relationship manager if you’d like more information.
In reverse order of importance…
5. Heating and Cooling
4. Light and Power
1. Building Envelope
This is the age of on-line information and also a time when many Canadians change cities for work or personal reasons. These two facts together suggest that a housing co-op should make itself accessible from any location by building and maintaining a good website.
Your website can be a great marketing tool for filling vacant units with members who get what your co-op is about. Of course, you want people to know what units they can apply for and whether they’ll move in soon or go on a waiting list. However, a well-made website does more. It uses images and text to express the look and feel of your community and make a viewer want to be part of it. Many co-op websites include floor plans, a photograph or drawing of a typical unit or the front entrance of the building and a city map that shows the location of the co-op. It’s also good to give some information about the co-op principles and the movement.
Once you’ve drawn someone’s interest, why not make it easy for them to apply by including an application form that they can download? This is especially important for someone in another city. While co-ops distribute applications in different ways, if you have any vacancy issues, you’ll want to remove all the barriers you can. Don’t forget to include information on where to e‑mail or phone with any questions.
Some co-ops do very well advertising through the website of their federation, and we recommend that all co-ops do so. However, the information available is usually limited. Without your own website, your co-op looks less professional as a housing option. Given the choice between a co-op that just lists its name, address and phone number and one with a website like this one, which would you apply to?
If your co-op can’t afford a web designer, why not see if the talented youth in your co-op have the skills to create a website over the summer? (Remember that you will need to put a contract in place, supervise the work, approve the result and arrange to keep the website current in future.)
Auditors often advise co-ops with arrears to write them off as bad debts once the member has moved out. Not all co-ops realize that, even afterwards, they can still go after their money. As provincial laws vary, hiring a collection agency may or may not be the best option. There are other possibilities, but using this service means that the co-op generally gets back some of what it is owed.
Advising members in arrears before move-out that they will be reported to the credit bureau may make some think twice before damaging their credit rating. Others may be surprised to learn that collection agencies can be quite successful at tracking down walk-aways and collecting from them. Of course it’s better to take action early before the arrears have walked out the door, but getting even half your money is better than none.
Vacancy losses can be harder on a co-op than arrears. If your office acts fast and the Board is firm, you can usually collect most or all of any arrears you’re owed, but vacancy losses are gone forever. If the local market is tight, you have little reason for vacancies, unless you need to keep a unit empty to refurbish it. Even in neighbourhoods with many empty rental units, the Agency sees some co-ops that do better than the private market.
How is this possible? Curb appeal is one answer. Your co-op may be short of money but some cosmetic changes don’t cost much. Make sure that the path to your co-op office looks good. Pick up litter every day, if that’s a problem. Fix the steps and paint the door. Move the smelly garbage. Plant some ground cover in place of the dying grass. Is there a spot for some annuals or a hanging basket of geraniums? Ask yourself if it’s time to replace your weatherworn old sign. (Yes.)
Once you’ve got your co-op making a good first impression, there are other things you should be thinking about. Is it easy to get an application and an interview? How smooth is your approval process? Your relationship manager knows some tricks that they’d be happy to share with you, like working with a commercial rental agency. The Agency is here for you, so why not draw on our expertise?
Resolving serious disputes between members and their housing co-ops in Ontario should be less painful as a result of new provincial legislation making its way into law.
Governed by the Co-operative Corporations Act, Ontario co-ops have to follow a long process when they believe a member has fallen into arrears or otherwise breached the by-laws. There are appearances in front of the board and often the membership before the household is told that their relationship with the co-op must end. Currently, if the member doesn’t leave on their own, disputes then go through the courts in a costly and time-consuming process.
Under the proposed legislation, co-ops would be able to apply to specially trained members of the Landlord and Tenant Board to resolve tenure disputes about matters, such as arrears, that are covered for other landlords by the Residential Tenancies Act (RTA). This process will be more cost effective, transparent and efficient for members facing eviction, as well as for co-ops. Because co-ops and their members will now have access to mediation services, it may be possible to agree on collection arrangements and avoid eviction altogether.
The legislation has been introduced but has not yet become law, so Ontario co-ops may want to monitor the process through the Ontario section of the CHF Canada website. Once the new law is in place, training should be available through local federations or CHF Canada.
There for You
What was going on with your co-op's board of directors in 2011? The Agency thought this question belonged at the centre of our annual report, so we asked our frontline staff what they thought.
Our relationship managers saw many co-ops where board members were looking to the future with great concern. Even with fear. They worried about their own future, their co-op's future and the future of the low-income members.
Fortunately, relationship managers had ideas about how to help co-ops address their fears and move forward. Why not check out our annual report, either the PDF or the animated version? Whether or not you agree with everything we say, you'll recognize the passion for co-op housing that inspires everything we do.
You can also check out our board of directors, our client profile and our financial-statement highlights. Our CEO wraps it all up with comments on the International Year of Co-operatives and our plans for 2012.
Where We Fell Down
We try to be perfect, but we just can't pull it off.
When we started our work with co-ops in 2006, the Agency adopted a set of standards for service to our clients. (Most of them have to do with not keeping co-ops waiting around for our response.) We went public with these standards by putting them on our website.
Every year we report on how close we came to meeting them 100 per cent of the time. In 2011 some of our performance was good, but not all of it. We could make excuses, but, in the end, the result is all that really matter. So this is how we did. We're trying for a perfect score in 2012.
Two-Tier Housing Charges
A recent message to the Agency asked whether two-tier housing charges are a bad thing. The question dealt with a co-op that had some renovated and some unrenovated units.
In the Agency’s view, it is fair to charge more for renovated units, which are worth more out in the market. The key is transparency. Make higher charges for renovated units part of your co-op’s plan. Include the higher charges in your budget and put the case clearly at the budget meeting so that the members will support the higher charges.
Co-op boards sometimes have to deal with a household arguing that the condition of their unit means they should pay less. Why not turn this debate around and charge a better price for a premium unit? Your capital replacement reserve will thank you.
Embarrassment, Loyalty and Interest
Our thanks to the kind friends who took the trouble to point out an error in our November E-bulletin. We were embarrassed, but hearing about it has allowed us to make a correction.
What we should have said is that a conflict of interest or loyalty occurs if a member of the board puts their own interest before their co-op’s interest. Unfortunately, our silly mistake may have caused some people to make light of a very serious issue.
Our relationship managers often see co-ops where the members believe that the board is taking decisions for its own benefit, rather than for the co-op as a whole. When members lose trust in the motives of the people they have elected, they often become cynical about the co-op movement’s vision and values. They may withdraw from the life of the co-op and act more like tenants.
To repeat some of what we said before,
The best way to deal with a situation where a director or someone close to them stands to benefit more than other members is to declare it. ...After declaring a conflict, the person in question should remove themselves from the discussion and the vote, perhaps even leaving the room. (This should be noted in the minutes.)
When you are open about an issue, you may not get what you want, but the co-op as a whole will benefit and your honesty will earn people’s respect. In the long run, that may make you happier than having your kitchen renovated before anyone else.
Accessibility for Ontarians with Disabilities Act: Emergency Response
The Agency’s November 2011 E-bulletin reminded Ontario housing co-operatives about the recent Regulation 429/07 on customer service for people with disabilities. These new rules now apply to all Ontario co-ops with one or more employees.
We should have pointed out a second change. This new provision applies to fewer co-ops, but is very important for those affected. It deals with the security of employees with disabilities. Under the new rules, co-ops and any staff with disabilities have to work out an individual plan to secure the safety of those staff members in a workplace emergency. If the plan assumes that a person with ordinary abilities will assist, the co-op must get the employee’s permission before explaining the nature of their disability to that person. Be sure, as well, that the assistant knows just what is expected of them.
Even where staff seem well enough, we suggest that, without compromising their privacy, boards should ask their employees whether they would need help in an emergency. (Keep a written record of the answer, just in case.) Never forget that some disabilities are invisible and others are temporary. A broken leg, for example, could leave an employee struggling on even a short flight of stairs.
If you missed our earlier E-bulletin about these matters, you can read it on our website. Free training on the regulations is available on line from the Ontario Ministry of Community and Social Services and you’ll find other resources there, including “Tip Sheet: Helping Employees with Disabilities Stay Safe.” CHF Canada on offers on-line training targeted especially for housing co-ops. Training is also available for a fee from On Co-op.
Exit and Entrance
Exit and Entrance
Gail Church, the Agency’s Director, Corporate Services, retired at the end of October. Few of our clients have met Gail, but she’s been with the Agency since our start-up more than five years ago. At that time, the Agency had little more than a vision, a business plan and a contract with CMHC. Gail was responsible for building the infrastructure that enables relationship managers to serve our co-op clients. She always went the extra mile, and we are deeply grateful.
In her place, the Agency has hired Colin MacDougall of La Siembra Co-operative, a worker co‑op that sources and supplies fair-trade and organic food products. (Chocolate? Yes!)
Fluently bilingual, Colin has a Bachelor’s degree in international business, as well as an MBA. During his nine years with La Siembra, he played roles ranging from business analysis and development manager to chair of La Siembra’s board of directors. He oversaw La Siembra’s information technology, as well as all aspects of the co-op’s finances.
The Agency is distressed to report that yet another client has had a fire. The unit was heavily damaged and the kitchen destroyed. A member was hospitalized with non-life-threatening burns.
In the past we’ve mentioned guidance on CHF Canada’s website about reducing the risk of fire. There is good advice there, but co-ops can take another step to protect themselves and their members.
If you don’t already do this, think about asking all members to have up-to-date contents and liability insurance. If they are insured, they will receive the funds they need to replace their household goods after a fire. And they will not be liable for a moment’s carelessness that could have harmed other members, made one or more units unliveable and cost the co-op dear.
CHF Canada’s MemberGuard insurance program with The Co-operators is affordable and tailored for co-op households, but of course members can choose their own insurer.
Early Notice of Rule Change for Section 26/27 and 61 Co-ops
CMHC has recently asked the Agency to remind our S26/27and S61 clients about a rule change that takes place in the last five years of your operating agreement. It is not a new rule, but because the end of operating agreements was so far off, few co-ops were aware of it. We want to call it to your attention now, because it could be important to you in future.
Starting in the 46th year of the agreement, you will no longer have to apply ingoing income limits or surcharge members with higher incomes. Your co-op will be allowed to fill units with any household approved by your board of directors.
Loyalty and Interest
Relationship managers tell us that, from time to time, they see a co-op struggling with conflict of interest or loyalty. By this, we mean a situation where someone in the co-op, or their friend, relative or business, got an improper financial gain or another benefit. A conflict also occurs if a member of the board is putting the co-op’s interest before their own, as their duty requires.
Sometimes conflict of interest happens innocently. A board member may be so sure his employer offers the best deal that no bidding process takes place. A board may honestly believe that, since the directors give so much to the co-op, they should get work done on their units before anyone else.
Any real or perceived conflict of interest leads to bad feelings and makes members cynical about their co-op and its volunteers. Yet sometimes conflict of interest or loyalty is unavoidable.
The best way to deal with a situation where a director or someone close to them stands to benefit more than other members is to declare it. When you air out an issue by naming it, people can more easily see and do what is fair and in the co-op’s best interest.
After declaring a conflict, the person in question should remove themselves from the discussion and the vote, perhaps even leaving the room. (This should be noted in the minutes.) Going public and being open will help to shut down the gossip mill!
There are good points made about conflict of interest on page 13 of CHF Canada’s Getting Governance Right. The Agency also recommends the publication Conflict of Interest, which you can get from the Co-op Housing Bookstore.
We’re Here for You
The Agency was surprised to learn why some co-ops are putting off seeking approval for a capital replacement reserve plan. There seems to be fear that, with a plan in place, we will no longer discuss their capital needs with them.
This rumour is not true! Your co-op’s relationship manager would be delighted to talk about your capital replacements and give you their help and guidance—plan or no plan. Of course, with an approved plan in place, you won’t need to ask for approval before spending on items listed in plan, but we’ll be there for you if you have doubts or questions.
New Accessibility Training for Ontario Co-ops: It’s the Law!
Ontario housing co-operatives with one or more employees have only until January 1, 2012 to comply with a new law on customer service for people with disabilities.
The Accessibility for Ontarians with Disabilities Act dates from 2005, but Regulation 429/07 is recent. The regulation applies to all co-ops with full-time, part-time, seasonal and contract employees. It does not apply to co-ops staffed only by volunteers or independent contractors, such as management companies. However, co-ops should get written confirmation that the management company has arranged for disability-service training for staff dealing with residents and applicants.
Here is a summary of the rules for Ontario housing co-operatives with one to 19 employees:
Co-ops must have a publicized process for receiving and responding to all feedback on how they serve persons with disabilities. (And bear in mind that feedback can come in the form of a letter, an e-mail, a phone call or a face-to-face meeting. The form doesn’t matter.)
Free training is available on line from the Ontario Ministry of Community and Social Services. CHF Canada offers on-line training targeted especially for housing co-ops. Training is also available for a fee from On Co-op.
Don’t Waste the Warranty
In the past few years CMHC’s Social Housing Renovation and Retrofit Initiative helped many housing co-operatives replace major building components. It is important to remember that these items must be maintained according to the manufacturer’s specifications. Otherwise, the warranty will not stand.
If your co-op has completed major work in the last year or two, check the timing and maintenance required and make sure to budget for the cost of upkeep. Then take care to schedule visits from the appropriate trade or inspector. Keep a good record of the visits, just in case. Most co-ops say it was hard enough to get the work done. You don’t want to pay to do it a second time.
How to Budget
Co-ops sometimes do their budgets the way members handle their household money. (“Here’s my paycheque and that’s all I’ve got to spend!”) This is better than plunging into debt, but there is an even better way.
The Agency suggests that co-ops start the budget process by looking at their expenses in the past year and working out what they will need to spend money on in the year to come. Step two is deciding how to raise the money you will need from housing charges and other sources.
This approach will give your co-op an honest picture of what it really costs to run a community-based housing business. At first, the picture may not be pretty, but, in the end, truth is beauty, and truth makes for successful operations.
Small Project, Big Difference
Small Project, Big Difference
Does your co-op have an idea for a project that would make your property more accessible and life easier for members with disabilities? For a short time, grants of up to $50,000 are available to help.
Human Resources and Skills Development Canada is calling for proposals for “renovation, construction and retrofitting of buildings...” that will enable Canadians with disabilities to participate in and contribute to their communities. Proposals are due before September 24, 2011, but you should apply as soon as you can because the money may run out. Your co-op will have to pay 25 per cent of the cost of the work from its own funds, which could include your capital reserve fund. (Be sure to check first with your relationship manager at the Agency.)
Details and application forms are available on the Human Resources and Skills Development Canada website. There are rules about process, estimates, environmental impact and how soon and how late the work can start. Please read all the information carefully.
Your Home is on Fire
So far this year, three of our clients have reported serious fires that did heavy damage to their property and, for one co-op, resulted in loss of life. Member households appear to have been responsible for at least two of the fires; in the third case, the cause has yet to be determined.
Our first concern must always be for people’s safety, but fires also endanger the co-op and the membership as a whole. If the co-op has too little insurance, a fire can result in a significant unplanned expense or revenue loss. And it usually leads to higher insurance premiums.
How can a co-op protect itself and its members? Information is available on CHF Canada’s website about a program to help co-ops reduce their risks, including risk of fire.
If your co-op should experience a disaster that makes units unliveable, some tax relief may be available. Rules vary, but most cities will reduce the property taxes on a housing unit that cannot be occupied because it has been destroyed by fire or is undergoing major renovations. If disaster strikes, ask your city councillor about this.
Every year, when filing the annual information return (AIR), auditors fill in the co-operative’s answers to a set of representations. One newer addition to this section is 108 (b), which reads, “The Co-operative’s by-laws or rules prohibit members in arrears from serving on the board of directors. (Please give details.)”
Answers to date suggest that some co-ops may not quite understand what the Agency wants to know. If your co-op allows a member in arrears to join or stay on the board, provided they have signed and are following a repayment agreement, then the response to this statement should be “no.”
If the by-laws or rules state that a director must be “in good standing” to run or serve, the auditor needs to clarify what the co-op means by this. If it refers to a serving director having a repayment agreement, then, again, the answer to representation 108 (b) is “no.”
Experience tells us that a co-op is putting itself at risk by letting members who owe it money serve as directors, whether or not those members are catching up with their arrears. As a group, co-ops with indebted directors report much higher member arrears than co-ops where all the directors pay their housing charges on time. That’s why we encourage you to look at adopting stricter rules on who can serve.
The First Pair of Shoes
When you’re buying shoes, do you try on more than one pair? We hope so. If you buy the first pair you see in the first store you walk into, you may be ruining your feet while paying more than you need to.
The same principle applies when a co-op has a project in mind. Sometimes our staff are asked why a co-op would ever need more than one quote. Our answer is that it’s a best practice to get at least three (and for work over $100,000, more than that). This may seem like a lot of trouble, but your co-op will have to live with the results for a long time. Certainly for longer than you’ll be wearing that new pair of shoes you chose so carefully.
Operating Agreements and Endings
Why does the Agency tell co-ops they have to do certain things? Most co-ops are well aware that their by-laws or rules bind the membership, the board and the co-op as a whole. Beyond that, boards are usually aware that a provincial co-op act trumps their internal rules, if the two disagree.
The Agency has found, though, that not all directors know that each federal co-op started out by signing an operating agreement with Canada Mortgage and Housing Corporation (CMHC). In return for funding that allowed the co-op to come into being, the co-op agreed to do certain things, which are set out in the operating agreement. CMHC also made some promises.
Operating agreements last for 30 to 50 years, depending on the program, and many are nearing their end. When the agreement is up, a co-op will no longer have obligations to CMHC or the Agency, but CMHC will no longer be giving it money for housing-charge subsidies. Co-ops should start preparing now for life after their operating agreements. Talk to your relationship manager or your co-op housing federation about what you should be doing to get ready. Like objects in a car’s side mirror, the future is always nearer than you think.
Agreement Breach? What Agreement Breach?
Some auditors—especially those with few federal co-ops among their clients—may not be aware that, over the life of a housing program, CMHC’s thinking sometimes changes.
One such change has to do with the way co-ops manage their capital replacement reserve fund. At one time, money put aside for capital projects had to be kept in an account or term deposit separate from the co-op’s operating and other funds. Today, in their financial statements, co-ops must still separately and accurately track money set aside for capital purposes. However, in spite of the language in the operating agreement, CMHC long ago agreed that a co-op may comingle all of the funds set aside for special purposes. A capital reserve fund is considered fully funded if the total amount of commingled cash and investments a co-op holds is equal to or greater than the amount required to back its reserves. Note, however, that the right to combine different reserve funds and operating cash doesn’t mean that you can spend reserved money for other than its intended purpose.
For the long-term benefit of your co-op, the Agency encourages our clients to put most of their cash not needed immediately into an interest-bearing account or into one more certificates of deposit. If you haven’t done so already, we encourage you to join your local federation’s CHIP program, where you’ll earn interest on your current account and more interest (usually) on your term deposits.
Small is Beautiful Again
Housing co-ops of no more than three storeys and 20 units have been pleased to learn that the federal government is extending its popular ecoENERGY retrofit program, which is not available to larger developments.
Co-ops can apply for a grant to retrofit heating, cooling or ventilation systems, water-heating or conservation equipment, or for air sealing and other measures and technologies. The application deadline is March 31, 2012 but, as always, the watchword is to apply early or risk disappointment if the money runs out.
For more information, check out the Natural Resources Canada website.
Better Off than You Thought
Scott Wylie, one of our relationship managers, drew our attention recently to an article in Canadian Business Magazine arguing that, in today’s economic climate, renting is better than buying. (And co-op living has all the advantages of renting and few of the disadvantages.)
In a culture that glorifies the single-family home, renting is not always seen as respectable among people who can afford to buy. But the article makes many excellent points about its benefits. You might want to cite some of them the next time your funny uncle teases you because you’re not a home owner.
In particular, the author argues that rent is not money thrown away, as opposed to the “investment” of mortgage payments. Instead, a home owner with a mortgage is renting money from a bank or credit union, just as a tenant (or co-op member) rents space. While at some time, if all goes well, the owner will not need to rent money any longer, he or she will still have maintenance costs and taxes and at some point may have to remortgage to pay for necessary capital work. Meanwhile, the money tied up in the house may return less when the house is one day sold than the same amount invested elsewhere. At the present time, according to the International Monetary Fund, in Canada renting your home is the better financial deal. By a long shot.
Have You Been Served?
When the Agency started up, we made a commitment to ask co-ops with the Agency about our client service every three years. Administered by the professional survey firm PRA Inc., our survey goes to each co-op client and should now be in your in-box or on your desk. Fifteen minutes should give you enough time to answer a range of questions about our service. We will compare the results with those collected in our last survey to learn where we are meeting your expectations or where we need to try harder. We’ll share what we’ve learned through our website.
The Agency Gets Press
The spring issue of CHF Canada’s National Newsbriefs includes a long article about the Agency. (See “Risky Business” on page 6.) The hard-hitting piece lays great stress on what the Agency has to say about the importance of planning and saving for capital replacements.
Highlighting the impressive turnaround of Connaught in Vancouver and Catalpa in Ottawa, the article notes that both co-operatives benefited from CMHC grants under the Social Housing Renovation and Retrofit Initiative. Intended to support an economy in crisis, these funds are no longer available. In future, co-ops at risk will have the advice and support of the Agency and their regional and national federations, but will need to rely on their own or borrowed money and on boards and members who make the right decisions.
At one time, the mortgage-burning party was a happy fantasy for co-op boards. Now, the end of operating agreements is not so far off. As the dream draws closer, co-ops can see that it has a dark side. The ending of government rent-geared-to-income subsidies is not something to rejoice over.
On the subsidy front, Section 95 co-ops have a special concern. CMHC advises that everything left in the subsidy surplus fund at the end of the operating agreement—not just the portion beyond the maximum permitted reserve—belongs to CMHC. Some co-ops spend all they get from CMHC, and more, on keeping a good income mix. Others like a nice financial cushion beneath them, in case another household runs into trouble and needs help. As you decide on your own co-op’s policy, bear in mind how soon your CMHC agreement ends. If you choose, you can plan to give qualified members the assistance they need, rather than sending money back.
Every year, more co-ops work with their auditor to get their AIR in to us on time or even a little early. A client who files by the due date makes for a happy relationship manager, and, as we say around the Agency, “If the RM ain’t happy, ain’t nobody happy.”
If timely filing still eludes you, we can help. Last year we drew up a document we call the Pre-audit AIR Checklist. This guide sets out all the steps we think you need to take to get ready for your AIR filing. Ideally, co-op staff should start preparing as soon as the new fiscal year begins—well before the auditor arrives.
We’ve sent the checklist out with the E-bulletin and given it to auditors, but staff change and things get forgotten. So we thought a reminder would be good. Ask your relationship manager for a copy or download it from our password-protected client website where it appears under Agency Resources. (Please check with your relationship manager if you can’t find your username or password.) Follow the steps faithfully and we guarantee you’ll file earlier. In the near future, we plan to attach the checklist to our routine AIR reminder through the magic of automation.
Living on their Neighbour’s Money
At the Agency we think the first step toward change is finding out and sharing the facts. So here’s what co-ops are telling us about directors who owe them money.
Of our 537 client co-ops, 51 have a by-law that disallows directors in arrears from serving on the board. Another 231 say either that a director must be in good standing or else that that they must have a repayment plan on file. Twenty more co-ops tell us they have a by-law in place, but give no details.
So what does this say about directors in arrears? It suggests to us that too many Agency clients could possibly have someone on their board considering the eviction of a household in pretty much their own situation. Directors set an example for other members. A repayment agreement is a useful tool for collecting arrears, but it doesn’t change the facts: a board member who fails to pay their charges in full and on time sets a poor example for their neighbours.
As the Agency’s CEO pointed out in her guest editorial in Scoop, CHF BC’s magazine,
As at their latest report to the Agency, one in four co-ops had at least one indebted director. The arrears and bad-debts rate for the membership of these co-ops was four times the rate seen in co-ops without director arrears.
We don’t know which comes first, the director in arrears or the co-op full of members who owe it money, but the place to start the reform is at the top. We urge co-ops to look at their by-laws and think about how to say that a director in arrears may not stay on the board, with or without a repayment plan. Your relationship manager can help.
Fuel in the Tank
The Agency has long spoken of a service that we can’t yet deliver: Benchmarking and Best Practices. The idea seems so simple. Many co-ops have systems and tricks that help to make them successful. So why not get them to tell other co-ops how they do what they do best? Even good co-ops would be able to pick up an idea or two that could move them from good to great.
Our problem is that developing a new service takes money. Recently we learned that we have been approved for a grant of more than $100,000 over two years under the federal government’s Co-operative Development Initiative. This money will get us started on a pilot project. Results won’t happen over night, but we’re on our way.
More Money in Capital Replacement Reserves
Congratulations, Agency clients! It’s clear that many of you are putting more money aside for the future. Over the course of their 2010 fiscal years, Agency clients as a group increased their contributions to capital replacement reserves by more than ten per cent.
It’s great to see our clients moving in the right direction as a group, but each co‑op needs to study its own situation closely and work out what it needs to set aside. Your Agency relationship manager can help walk you through the steps towards ensuring that your future is secure.
"Co-operative Enterprises Build a Better World."
By now most Agency clients have heard that 2012 will be the United Nations’ International Year of Co-operatives. The slogan for the year appears above.
We hope that the Agency’s clients will find this language appealing. The co-operative housing movement has many idealists who see the values and practices of mutual self-help leading to a better world. And who believes more strongly in the importance of building than the members of housing co‑ops?
The word “enterprise,” however, may be unexpected. “Enterprise” implies many good things: energy, fresh thinking and productive work. But here it also means “business.”
Sometimes we, who live and work in and for housing co-operatives, need to remember that—although non-profit—housing co-operatives are indeed businesses. When operating as intended, they provide a valuable service, create jobs and strengthen the communities in which they are based. Initially, the government of Canada, and then their members, built them up through financial investment and sweat equity. Their assets need continued nurturing through attentive management and careful stewardship, just like any other business.
We hope that in 2012 all co-ops will support a project, large or small, that celebrates the full meeting of the slogan. A bold statement about our unique organizational model, it draws together all co-operatives, both equity-based and non-profit, in a single sentence. So let’s start building. What are we waiting for?
B.C. and Ontario: Money Back on Big Construction Contracts
Did your co-op sign a large construction contract before or soon after July 2010 for a big capital project? If so, you may be able to claim a tax rebate.
Prior to that date, contractors included provincial sales tax (PST) in their bid and contract, as part of the cost of materials. But after the HST was introduced, PST was no longer charged on materials, because it was bundled up into the HST.
If materials were bought after July 2010 for capital work bid on or contracted before that date, your co-op has probably paid twice the province’s share of the tax. (In a few cases, a contractor may have made a downward adjustment to the contract to remove the PST originally priced into the materials cost.)
If there was no such change to your construction contract, you will need the contractor to confirm the purchase date for the materials (before or after July 1/10) in writing. Give the information to your auditor and ask the firm to apply to Revenue Canada for a refund of this double payment.
Information from Revenue Canada is available here. It’s very public-spirited of your co-op to pay its taxes twice, but not even the hungry tax departments of B.C and Ontario would ask this.
Ontario—Secure with your Contractor
In Ontario, contractors are required to make payments to the Workplace Safety and Insurance Board (WSIB) for their workers. If the contractor hired by your co-op is not current with these premiums, the co-op could be financially liable.
When a contractor’s payments are up to date, the WSIB issues a clearance certificate that is public information and available for review. Co-ops should make sure their contractors have acted to protect themselves, their workers and their clients.
Checking the company’s clearance is now much easier, with clearance numbers available through eClearance, once you’ve signed up and logged in. Clearances are good for up to 90 days.
For more information about clearance certificates, you can telephone the WSIB department at (416) 344-6851 or read about them on the website above at Employer Accounts.
A New Commitment to Your Co-op
A New Commitment to Your Co-op
December 2010 marks the launch of a new Agency initiative to increase co-ops’ contributions to their capital replacement reserve. As buildings age, it becomes ever more clear that co-ops will have to put more money aside for capital repairs and replacements, starting as soon as possible.
Ideally, the amount of money contributed in each year would be set out in an approved capital-reserve fund plan, drawn up following a building condition assessment. But since many co-ops have no plan, Agency relationship managers will need to talk to them individually about what their co‑op should be putting away.
Some co-ops have seen the need and have been raising their budgeted contributions for some years. These co-ops are candidates for a formal commitment to continue putting a larger amount into their capital reserve fund than their operating agreement requires.
Does a formal commitment matter? We’ve all seen how changes in the board and management can result in a good co-op’s losing its way for a few years. The Agency believes that a formal reset of the contribution will help to ensure that the financial leadership of responsible boards, managers and members will not easily be forgotten, either by the co-operative or the Agency.
Mutual Self-Help: The Seed of the Co-op Idea
Anthropologists tell us that people have co-operated for as long as human beings have existed, so the co-op idea has deep roots. Mutual self-help is the seed the idea grew from.
Returning to the source is part of the answer for co-operatives starting into a financial workout. By taking ownership of the problem and tackling it together, co-op directors and members not only move toward a solution, but strengthen the human side of their organization. Doing so is good preparation for the day when operating agreements have ended and housing co-ops are on their own. By demanding housing charges high enough to meet their co-op’s real business and property needs, co-op members are being true to the past of the movement when people with very little put their pennies together so that crumbs could gather into loaves of bread.
While new money is an important part of a workout, it is not in itself the solution. Workouts succeed only when members give up hoping for a co-operative that is the same as the one they have known, but with better buildings. A successful workout can take housing co-ops through pain to transfiguration, provided the members embrace the concept of mutual self-help. At its best, a workout can mean a revitalized organization devoted to the stewardship of a cluster of homes that the membership intends to leave to the next generation.
Plain-Language Financials: the Friendliest Option for Co-op Members
The Agency will soon start to collect feedback from co-operatives that have consulted their Plain-Language Financials (60, so far). These restatements of their co-op’s audited financial statements in plain English or plain French are intended to help members who aren’t financial experts get a clearer picture of what the co-op earned and spent, owns and owes.
Those co-ops that haven’t viewed their Plain-Language Financials can find them on our secure client website, under Agency Reports. (You can reach the client website from www.agency.coop. Click on “Client login” and fill in your co-op’s username and password. Or ask your relationship manager for help.) If you haven’t had a year end since we launched the report, it’s still worth logging on. Our system generates a set of statements for every AIR you’ve filed to date.
These financials will be most useful to the co-op that files its AIR and other documents before it holds its annual meeting. (Remember that the members don’t need to approve the audited statements before you submit them.)As soon as we validate your return, your plain-language financials will be ready. If your members get a copy before, or even at your annual meeting, you can be sure they’ll understand your co‑op’s finances better than ever before.
Big Federal Grant to Increase Accessibility: Last Chance?
Over the next month, larger housing co-ops concerned about accessibility should plan to work on an application to Human Resources & Skills Development Canada for a grant of between $500,000 and three million dollars. These grants are for bigger projects that will improve the integration of people with disabilities through retrofits, renovations or construction of new facilities. The deadline is January 13, 2010.
More information is available on the government website under Mid-sized Project Component of the Enabling Accessibility Fund.
A Tool for Money Tracking
Co-operatives are now starting to consult their Plain Language Financials, which they can find posted on the Agency’s secure client website. Windmill Line Co-operative Housing in the St. Lawrence area of Toronto has the distinction of being the first of the early adopters.
For anyone who has just come back from a very long vacation and missed our postcard mailing, the Plain Language Financials are a restatement of your co-op’s audited financial statements in plain English or plain French. This three-page document is a new tool prepared for you by the Agency to help you show the clearest possible picture of your finances to your members.
Special features: on page one, if two numbers are highlighted in the same colour, those numbers are related. On page two, a pie chart shows where your money came from (housing charges are the biggest wedge) and how you spent it (most went for mortgage payments and taxes).On page three, you can see what you charged and spent in each of the past five years. This will make it easy to spot any trends, such as a mysterious drop in laundry and parking revenue.
Agency staff will soon be touching base with co-operatives that have already accessed their Plain Language Financials. We’ll want to know if the process was easy and how you used the document. The E-bulletin promises to print any good stories that come our way. We hope they will inspire the not-as-early to take up this new tool and place it in their members’ hands.
Financial Management according to Shakespeare
When should a co-op take financial advice from one of Shakespeare’s worst villains? When the advice is better than the source.
Many people have heard the story of the military hero Othello, who is tricked into murdering his loving wife. The trickster Iago knows very well how the world works and recommends: “Put money in thy purse.” This is advice that every co-op should take.
But where do you get more money to put away? Wherever you can. Raise your housing charges? Check. Use a collection agency for bad debts? Check. Change your membership procedures to fill units faster? Check. Advertise vacancies before they happen? Check. Water-saving toilets and showers? Check. Be tougher with members in arrears? Check. Then put the money into your capital replacement reserve.
Not everyone will love you for it, but getting your co-op to build a bigger reserve is the right thing to do. The Agency will think you’re a hero, and your co-op will have the money to solve its problems.
“Failure to Pay in Full and On Time”: Fieldstone vs. Rodriguez (September 23, 2010)
An excellent written decision from the Ontario Superior Court last week offers hope for co‑operatives with members who repeatedly pay late, fall further and further into arrears and then clear their debt at the last possible moment.
Citing other decisions, the judge found for Fieldstone Co-operative, in Toronto, in spite of the members' plea of financial hardship and their argument that they were no longer in arrears. Fieldstone was awarded costs, although not in the full amount requested.
The court mentioned the co-op’s difficult financial situation and its need, shared with other co-ops, to run its business according to the board’s best judgement, within its by-laws. This tipped the scales in Fieldstone’s favour against the members' claim that they could not afford to move or find other housing.
The phrase, "Failure to pay in full and on time," was repeated by the judge and should replace "repeated late payment" in Ontario eviction documents. Co-ops in other provinces might also consider this.
Congratulations to Fieldstone for sending a clear message that co-op living means paying your fair share on time. This is a Co-op Principle, and an Ontario court has shown that it agrees.
Round Two: Renovation and Retrofit
The Agency has just had word that year two of CMHC's Renovation and Retrofit initiative is going ahead. Eligible projects include replacement of major worn-out building components, facilities and equipment; energy-efficiency retrofits; and modifications for the benefit of people with disabilities. Please note that CMHC is looking for an element of modesty in the applications. (This means basic work and materials of average quality-nothing lavish.)
Information is available on the CMHC website. While the application package has been mailed to co-operatives, we recommend that you go to the website if you have not received it so that you can start to draft your application immediately. You can also call this toll-free number for information: 1-800-668-2642.
Applications will be accepted as of February 1, 2010. Here are several points to bear in mind:
You may apply online or by mail. (As the guide does not mention applying by e-mail, we don't encourage you to experiment with this filing method.) On-line applications require your CMHC reference number, which you can find on the Agency's client website (look for your CMHC account number). A list of CMHC offices with mailing addresses is included with Frequently Asked Questions. Please do not try to deliver an application in person.
Changes in the AIR
In December, the Agency gave advance notice to each co-operative's auditor of record that as of the first week of January 2010, we were updating the form used for filing Annual Information Returns (AIR). Auditors will need to add some extra information and will find that some items have changed places.
The Agency's AIR Help Desk Officer is telephoning auditors to offer all possible help to any who have been caught by the change in mid-stream while filing an AIR. As further support, we have updated our on-line help and Auditor's Guide to the Federal AIR, which are available on the auditor's password-protected section of the Agency's client website. While change is never easy, we've done our best to make sure that the adjustment will be as fast and smooth as possible.
A New Way to Spot Success
Since 2006, the Agency has been collecting information from each client co-op on financial and operating matters and sending it back in the form of plain-language reports. We're pleased that many co-operatives find this feedback useful.
Recently, the Canadian co-operative housing movement has come up with a new way to look at how well a co-op works. We think it is time to start asking how satisfied the residents are. CHF Canada has developed a survey and other information that you can use to help you find out.
Measuring member satisfaction is commonly done in many sectors and makes good business sense. The quality of service housing co-ops provide will show up on a co-op's bottom line, as unhappy members pay their housing charges reluctantly, contribute less to their community and stay for a shorter time than they otherwise might. CHF Canada's survey form is available free of charge to the federation's members. We commend it to your attention.
Quality in Accounting
Most housing co-operatives are aware that Canadian accounting standards have been changing, partly because their audit fees have been increasing. Not everyone may know that these multi-year changes are in response to the new international auditing standards that have been overtaking Canadian audit firms since 2006, one step at a time. Although the Agency has CMHC's agreement that co-operatives' audits will not need to meet these standards, auditors themselves are affected.
On December 15, 2009, the most recent changes came into force with alterations in auditors' quality-control standards. The new standard may hit smaller firms harder as certain functions that used to be done in-house may now need to move to an outside firm.
If auditors incur greater costs in meeting these new quality-control standards, they can be expected to pass them on to their clients. Unfortunately, the Agency cannot tell co-ops how much their audit fee may rise. Some of the new costs would be due to an increase in the general overhead of the firm, while others would relate directly to an individual client's situation. The size of firm and type of clientele served could also influence the extent of the increase. Co-operatives may not feel much of a pinch if they are with audit firms that work with many co-ops.
Insurance Today, Insurance Tomorrow
Insurance companies did not find 2009 a good year. Neither did the growing number of housing co-operatives that experienced fire losses. Low interest rates, the housing boom and the law of supply and demand have boosted the cost of repairing or replacing damaged property. As a result, CHF Canada has advised us that the average 2010 premium increase for those in its insurance program with The Co-operators is about 15 per cent.
CHF Canada has been very much concerned about the effect of this increase on its members and is encouraging them to give special attention to risk-management techniques that will protect their buildings, their membership and the public. It has managed to negotiate a small discount with The Co-operators for those co-ops with the fewest claims. Most co-ops can further reduce their premium by increasing their deductible. However, a small number with large and frequent losses will find that their deductable has already been raised to $5,000 to protect the interest of co-ops that have more successfully managed their risk. Visit CHF Canada's website for information about the risk management kit and the new risk-managemen! t DVD. (If you're in the insurance program, your co-op was sent both of them. Check in your office or with your officers of the past year.)
Looking ahead, CHF Canada is working with The Co-operators to redesign the insurance program from start to finish. Together they are determined to build a better, stronger program that will meet housing co-ops' insurance needs for the foreseeable future. Members who use the program are being asked to comment on what they like and what should be improved. There is now a thread in Co-op Talk, on the CHF Canada website, where co-op members and staff can air their views about the program. Or you can send an e-mail directly to Linda Stephenson at email@example.com.
New Q&A on Covering Your Assets [N.B.: Not Necessarily the Exact Title]
Co-op members benefit most when they and their boards behave like reasonably prudent persons. (If you check, you might even find that your co-op act requires it.) Part of being prudent is making sure that you are protected against various kinds of disaster. At first, this may not seem very exciting, but if your co-op ever faces a major loss, the security of adequate insurance will suddenly have much more appeal. Such losses can range from fire to fraud and have been known to drive an under-insured co-op to its knees.
The first alert for a co-operative at risk may come through its annual risk assessment from the Agency. Even when a co-op has done well with its property and finances, it will not receive a good rating without the right levels and types of insurance. While your board should consult your agent or broker and make its own decisions, please bear in mind that the Agency’s general recommendations are based on much experience with housing co-ops, and housing co-ops only.
Do you know the five kinds of insurance co-ops need (six in some locations)? You’ll find the information in our new Q&A on Insurance, along with many practical suggestions. (Do discuss your insurance with your co-op’s relationship manager, but remember that, unlike a Q&A, he or she can’t be duplicated, shared with others or taken home for further study.)
What You Told Us
In the third quarter of 2009, the Agency launched two new feedback questionnaires. For the first time, we asked co-ops for feedback on the next steps that we recommend when we present the results of a co-op’s risk assessment. The feedback is still trickling in, but, so far, two-thirds of the co-ops that responded were very positive, and one third fairly positive. We’re glad to hear this, because recommendations for improving a risk rating can be hard for our staff to develop and deliver. And, of course, hard for co-ops to act on.
Unfortunately, we have more work to do with co-operatives waiting for a financial workout from CMHC. Understandably, they want to sign their refinancing agreement as early as possible so that work can begin on their building. For these co-ops, we will try our best to improve this complex process and to win earlier approval for workout proposals.
Having co-ops complete an Agency feedback form is always helpful, as are client interviews, calls, e-mails and meetings. Our approach is to dig as deep as necessary to understand any discontent. Then we look for ways to do better in future. Thank you for speaking honestly to us and for taking the time to help us improve our service.
The Latest Thing
Clients are receiving a small gift from the Agency that we hope will make their lives easier. We’ve heard good things from co-ops whose auditors give them a checklist to help them prepare for the annual audit. So we’ve developed our own checklist to help our clients get information ready for the annual information return (AIR) filed by their auditor on their behalf.
We are so pleased with this new tool that we are now sharing it as an e-mail attachment, but, in future, the Pre-audit AIR Checklist will go out with the message we send to co-ops marking their fiscal year end.
Please try out our checklist and let us know if it helps your co-op file the different parts of your AIR within the required four months after the end of your fiscal year. We think it’s good but, with your guidance, maybe it could be better.
S95s’ Choice of Tools
The income-tested assistance reconciliation (also called the ITA rec) is a part of the AIR filing for S95 co-ops. Because it often comes in late, the Agency thinks a lot about how we can help.
We’ve already developed a spreadsheet and posted it on our website for downloading. We update it regularly when we find a problem. For example, some co-ops were accidently giving personal information about assisted households, including names and addresses. That won’t happen any more with the new spreadsheet.
We think the version with macros can (almost) be fun to fill out, but we’ve learned that some co-ops prefer a basic spreadsheet. So we have a macro-free version on our website. To make reporting even easier for S95s, we’re also e-mailing them the updated macro-free version as an attachment. By using the latest model—macro or macro-free—the privacy of assisted households in your co-op will be assured.
Where Did All the ITA Go? Long Time Passing...
Some co-ops do just about everything right at year end. The books are up to date. The auditor completes the audit and delivers their report, collects non-financial information for the co-operative’s representations and files the co-op’s annual information return (AIR) on line. The board approves and signs the statements and sends them to the Agency, along with the board AIR confirmation. What could be wrong with this picture?
The co-op we’re talking about was developed under the Section 95 Program. It has not yet sent the Agency its report on how it spent its income-tested assistance. Until we have this, Agency staff cannot verify a S95 co-op’s AIR. Four months after the fiscal year end, S95 co‑ops are not in compliance with their CMHC operating agreement if the ITA reconciliation remains outstanding. Their risk rating worsens.
Once into your co-op’s new fiscal year, we suggest that as soon as you’ve collected and accounted for the housing charges, you turn to the reconciliation. Treat it as a part of the preparation that you need to finish before the auditor arrives. The work can be done by co-op staff or a skilled volunteer, using the Agency’s spreadsheet available on our public website. Please read the text carefully to choose the best version for your co-op.) Or you can use a spreadsheet of your own design, as long as it gives us the same information.
AIRing Your Co-op’s Renovation Grant
In May 2009, CMHC launched the $150 million renovation and retrofit program for federal social housing, including co-operatives. Since the application deadline, CMHC has been hard at work reviewing the stack of applications that flooded in by the 2009 cut-off point.
With money soon to flow, the Agency wants co-ops to be prepared. We know you have planned your renovation or energy retrofit project, but you may not have thought about accounting and reporting concerns.
For reporting purposes, the Agency will consider your grant from the Social Housing Renovation Fund to be extraordinary income. Your auditor will report this revenue on Schedule S of the annual information return (AIR), where we are adding a new line (S5 Federal Renovation and Retrofit Grant) that will be used only for this purpose. It will allow us to track how much co-ops receive over the program’s two-year lifespan. Reporting may not seem important to co-ops waiting to hear or busy gathering quotes, but that will change when the funds are in hand and a year end is coming up.
Co-ops recognize that they need solid facts about their property on which to base their planning for capital replacements and reserve contributions, not to mention their application for a federal renovation grant. A building condition assessment (BCA) is the best way to pull together this information.
If your co-op needs a BCA, you should know that the Agency has a list of engineering firms that are qualified for this work and ready to do business with co-ops. They are set out by region on our password-protected client website, which you reach through the Agency home page.
If you don’t know your co-op’s user name and password, check with your relationship manager. If you are not sure who he or she is, use the info feature on the Agency’s contact page and we’ll get back to you with this information.
Moving Forward with CMHC’s Social Housing Renovation Program
By now, co-ops that applied by the early-bird deadline have heard from CMHC if their co-op has been chosen to move forward to the inspection stage, or they soon will. A letter will also go to those that have not been chosen. Within a week or two, co-ops that applied by the June 26 deadline should find out whether they have been successful up to this point.
Reaching the inspection stage does not guarantee that in the end your co-op will be approved for funding. Based on the inspector’s report, CMHC could decide that the co-op does not qualify.
Co-ops need an energy audit in order to qualify for funds for an energy efficiency retrofit. Few had one in hand when the program was announced. If you are turned down for funding under the renovation program this year, we suggest that you arrange for an energy audit as soon as possible so as to be prepared for the second phase of the program in 2010. Once you have this information, you can make long-term plans that will save you money, even if your co-op does not receive grant funds.
Please be aware that the retrofit program is a government initiative that was announced in the 2009 federal budget. It is not one of the services that the Agency is delivering on CMHC’s behalf. If you have questions, we suggest that you e-mail them to firstname.lastname@example.org or call CMHC’s toll-free number at 1-800-668-2642 and ask to speak to someone about the Renovation and Retrofit Program for Social Housing.
The Retrofit Initiative
The Retrofit Program
On Sunday, May 24, 2009, CMHC launched the long-heralded renovation and retrofit initiative for federal social housing, including co-operatives. The program is open for business and information is available at a click of your mouse on the CMHC website. $150 million is to be spent on general improvements, upgrades or conversions for energy efficiency, and supports for persons with disabilities. There is an early-bird deadline of June 12th for your initial application.s.You will need your CMHC Account number to complete the on-line application. You can find this number when you log into your Agency client website or call your relationship manager.
Always Something New: The Pre-Audit AIR Checklist
Many co-ops are blessed with auditors who provide a checklist that helps them prepare for their audit. Building on that idea, we have developed our own checklist at the Agency to help co-ops prepare for their annual information return (AIR) filing. It will go out to co-ops through an introductory e-mail from their relationship manager.
We know your AIR filing will go more smoothly (and time is money) if you have certain materials ready before the auditor arrives. For Section 95 co-ops, a common stumbling block is the income-tested assistance reconciliation. Until this is in hand, we cannot begin our review of your AIR.
A Challenge to Satisfy
In an earlier E-bulletin, we thanked co-ops for taking part in a survey of client satisfaction commissioned last fall by the Agency and CHF Canada. We’re now pleased to announce that the results have been posted on the Agency’s website. The survey showed a high level of satisfaction. Asked to rate the overall quality of our service on a five-point scale, a majority (51%) gave the highest possible score, and 32 per cent the next highest. Twelve per cent rated our service at the mid-level, indicating that it was acceptable. Only five per cent of respondents gave a negative opinion. Go to Client Satisfaction Survey and see for yourself what you and your peers had to say. Thanks again for sharing your thoughts.
While you’re in the client service area, you’re also invited to check the Agency’s report card for 2008. This sums up how we performed against our client service standards – most of them about speedy reporting or responding to co-ops’ requests. We can’t pretend to be perfect, but we’re meeting a very high standard almost every time. It’s hard work keeping up to the mark, but your approval is our reward.
Housing Co-ops, Not Credit Unions
Some months ago the Agency noticed that certain co-ops in Alberta, Ontario and PEI were serving as non-profit bankers. These co-ops all used rent-supplement programs administered by CMHC. Under these programs, co-ops receive a standing advance for the first of the month. The co-op calculates the total supplement its members qualify for and claims an additional payment if the advance does not match the total.
Over time, housing charges increased but the initial payment did not. Some co-ops found themselves financing the federal government’s expenditure on rent supplement. In effect, for some weeks they were lending CMHC the difference between the amount of the advance and the co-op’s rent-supplement claim, until the second payment came in. When the Agency pointed out the problem, CMHC agreed to send co-ops under its programs a lump sum to compensate for the gap between the advance and the total rent-supplement cost. This sum will act as a float, while the co-op waits for its monthly reimbursement.
In return, CMHC has asked the Agency to remind co-ops that their rent-supplement report is due by the 15th of each month, or the following Monday, if the 15th falls on a weekend. In future, CMHC will be closely monitoring the timeliness of these reports. As the song says, “You win a little, lose a little, always have the blues a little....”
We apologize to our readers for the duplicated item on our last E-bulletin, which directed you to the riches of our client website. Our E-bulletin distributor has explained that it was due to a system hiccup connected with a recent change of servers.
We think there is another possibility. It may be that our highly intelligent information system knows how useful our client website can be and undertook a well-intentioned promotional exercise all on its own. Do visit your personalized section of the client website, and we’ll try to curb future bursts of automated exuberance.
Corruption from the Agency?
The Agency has learned that some of our clients receive an alarming message when they attempt to open our PDF documents: “This file is corrupt.” Worried co-op staff and volunteers have expressed fears that our documents may be carrying a virus into their system.
We can assure you that the documents pose no risk, and we want you to be able to open them. After considerable investigation, we can’t explain why this is happening, but we have a solution. It appears that the problem strikes those clients who use an older form of Acrobat Reader. If you run into this difficulty, we recommend that you download a later version from the website. Just clink on the link and you will be guided through the process.
The First 100-Year Celebration
The year 2009 is the 100th anniversary of CCA, the mother of all Canadian associations of co-operatives, though not under that name.
CCA’s precursor organization, the Co-operative Union of Canada (CUC) was formed in 1909 to give voice and momentum to the emerging co-op sector and to introduce Canadians to the power and potential of mutual self-help. It was Canada’s first national co-operative association. In 1987 the CUC merged with the co-operative movement’s educational wing, the Co-operative College of Canada, to create the Canadian Co-operative Association (CCA).
From June 16 to 19th, this distinguished organization is hosting a congress in Ottawa on the theme Celebrating a Century of Co-operation: Honouring the Past, Building the Future. National and international co-operative leaders will be present as speakers and participants. Nothing like this will happen again in your lifetime, so come if you can, but register soon. Information is available at CCA.
New on Your Client Website
For easy reference, the Agency has added your mortgage agreement to the materials already available on our password-protected client website. Feel free to visit.
If your co-op has misplaced its username or password, we encourage your designated contact person to phone or e-mail your relationship manager, who will get you connected. Don’t know who your relationship manager or your designated contact is? Inquire at info @ agency.coop. We’ll find out for you.
Q and A on Post Year 15
ILM housing co-ops work within a complicated program. Co-ops developed under other programs would be impressed if they knew all the requirements these co-ops need to meet!
The Agency has tried to help by creating a Question and Answer handout focused on one aspect of the ILM program: what happens to co-ops’ federal assistance after year 15. All of our ILM clients have now passed this milestone, but it is still important for their operations. Please visit our website if you would like to refresh your understanding of this program feature. The Q and A is available on line or as a downloadable PDF that you can print out and pass around.
P.S.: Of course there is really no Lowball or Downmarket Housing Co-operative in Canada. We made up those names to protect the struggling-but-well-intentioned, who may recognize themselves in the examples.
Tips for Filing the AIR
Co-op auditors have been filing annual information returns (AIRs) on line for nearly three years now. The Agency has learned a lot in the process, and we hope that perhaps co-ops have learned a little too.
In order to save auditors’ time and co-ops’ money, we have compiled a list of tips to help with the filing. They answer the questions we hear most often and try to solve some problems before they arise. These tips are available for auditors only on the Agency’s client website, accessed through our home-page portal.
Freedom and Security of Tenure
ILM co-ops have a unique reserve fund called the Security of Tenure Fund. Mandated under their program, it is used to assist households that would have difficulty in paying the market housing charge. (There are various conditions for its use. You can read about them in the program guidelines on the Agency’s website.)
The fund is unique in another way. ILM co-ops are not required to add back the interest earned on money held in the fund, as Section 95 co-ops need to do with the interest on their Subsidy Surplus Fund. (Not every auditor is aware of this.) ILM co-ops should take advantage of their freedom to put the interest wherever it would benefit them most: capital replacement reserve, operations, or, of course, the Security of Tenure Fund.
Because we collect information from our clients in so many ways, we are grateful to those who are not yet tired of giving their opinion. Our heartfelt thanks to the 54 per cent of co-ops (up from 43 per cent in 2005) who graciously agreed to complete our client satisfaction survey. This survey was conducted in the fall by an outside firm chosen so that co-ops could speak frankly and fearlessly.
The Agency will present the survey results at the CHF Canada AGM in May 2009 in Victoria. About the time of the AGM, we will post the results on our website so that interested parties can learn what was said without cycling, driving, taking a ferry or buying a plane ticket to Victoria. Come if you can, though. The event is well worth it.
Don’t Wait for Spring
It may not feel like spring yet, but we’re already preparing for our 2009 property inspections. (The Agency arranges for a visual inspection of each co-op every two years.) The inspection firm is putting on their work boots and getting their checklists ready. We are encouraging housing co-ops to do their part by confirming or correcting the basic information in our records. (This is information we need to know in order to plan your inspection.)
The easiest way to check and correct your building information is to complete an on-line pre-inspection questionnaire, which is already partly filled out to save you time. You will find the link to the questionnaire in the letter the Agency recently sent to co-ops being inspected in 2009. We ask you to complete the questionnaire by March 31 and will remind you before the deadline if we have not received it. If you think you’re due for an inspection this year and your co-op is not sure where to find the link for this questionnaire, please check with your relationship manager.
In fact, why not complete it right now? Doing so will mean fewer phone calls or messages from us in your inbox within a few weeks.
More for Co-ops in Financial Difficulty
More for Co-ops in Financial Difficulty
Through our review of co-operatives’ annual information returns, the Agency has learned a lot about the financial difficulties many federal-program co-ops are facing. So we’ve decided to add another position to our staff – a specialist in strategies for co-ops in financial difficulty.
The new default management officer will support the work of our relationship managers with co-ops rated at High financial risk. He or she will also study comparative results and analyze performance trends for this group of clients. We are confident that their work will give rise to ideas for valuable new tactics and tools that will help return these co-ops to effective operation.
The job notice is on our website. Please reply by Friday, January 9, 2009.
A Bond to be Honoured
The firms that help co-ops with their day-to-day management are invaluable partners in our clients’ success. But very occasionally an employee of a management firm misuses the trust placed in them. So before signing a service contract with a property-management company, the Agency asks that co-ops make sure the company bonds its staff.
Early in the New Year the Agency will ask all property management companies that work with our clients to tell us whether they are bonded and to what extent. We’ll encourage those that don’t have coverage to help protect co-ops against losses from dishonesty by filling this gap.
Inspections on the Back Burner for Now
We’ve come to the end of our 2008 inspections of co-op properties. Once the snow begins to fly, we can’t count on the inspection results – so we stop doing them.
If your co-op was not inspected in 2008, your turn will come in 2009. We’ll start preparing for the new inspection season in January by sending co-ops a request to complete a pre-inspection questionnaire. This questionnaire will collect or confirm information about your property so that when the inspector arrives, the visit will go smoothly and will take less of your representative’s time.
The Ins and Outs of the Net Operating Revenue Policy
Nearly a decade ago, CMHC and the Co-operative Housing Federation of Canada agreed on a new policy for the treatment of surpluses in Section 95 (formerly S56.1) co-operatives. Questions frequently arise about the proper application of the policy. Our new Q&A on Net Operating Revenue, posted on our website in English and French, is intended to give you the answers.
There are a number of fine points to the policy, as you might expect. However, for most co-ops, the general rule is that when you run a surplus, the money goes to your capital replacement reserve. The policy is beneficial in ensuring that these extra funds will be used to refurbish and restore the property for the benefit of present and future members.
Planning for Another Service
When the Agency was first proposed more than ten years ago, co-op people were especially excited about the suggested benchmarking and best-practices service. This service is based on the idea that the success of well-run co-ops is due to a number of different strategies and techniques that other co-ops could adopt if only they knew about these practices.
The Agency is now beginning a year-long planning and development process that we hope will result in the launch of this service in 2010. We are excited at the prospect of providing good co-ops with the means of becoming even better. If your co-op is risk rated Low or Moderate, you are likely to have us come to you for advice. Other co-ops that do something very well may also be asked to share their secrets. Over the year, you will hear more about our plans for this service. Please stay tuned.
The Eighth Agency Value
At its November meeting, the Board of Directors approved a new core value for the Agency. This value speaks about Agency operations and our role in helping clients. It reads as follows:
Sustainability joins innovation, transparency, excellence, respect, accountability, trust and co‑operation as the guiding lights by which the Agency steers our course through smooth or turbulent waters.
And to All a Good Night
This is the Agency’s final e-bulletin for 2008, barring the unforeseen. We thank you, our faithful readers, for your time and attention and hope that you will enjoy happy holidays.
Sympathizing with co-ops that have struggled over the past year, we praise those that have made progress and wish all of them less trouble in 2009. Above all, we honour the hardworking volunteers and staff who ensure that their co-ops are shining examples of the principles we all hold dear. Your dedication makes our work a pleasure.
Heads Up for the Client Satisfaction Survey
We think you’ll be interested to hear that the Agency has commissioned a study of clients’ satisfaction with the Agency’s service. This will be a follow-up to the 2005 survey that some of you may remember on how satisfied co-ops were with CMHC’s service. Now that we’ve been operating for more than two years, we feel it’s time for an in-depth look at what you’ve experienced with us.
Agency client co-ops will be receiving a detailed questionnaire very soon. Please take the time to complete it. As with the 2005 study, we plan to post the survey report on our website.
In 2008 Co-op Week falls on October 12 to 18. It is a festival unique to Canada that dates back fifty years. First celebrated by the francophone co-op movement in 1958, co-ops in Saskatchewan and the Maritimes took up the idea in 1981. The next year the celebration went national with the encouragement of the Co-operative Union of Canada, a forerunner of the Canadian Co-operative Association, which is now the federation of senior anglophone co-ops in Canada. If you have a board or members’ meeting this week, do take a moment to honour co-ops and co-operators, past and present, whose joint efforts have helped to build the country we love.
A New Director for the Agency’s Board
The Agency has learned that our member, the Co-operative Housing Federation of Canada has decided to name Laird Hunter to the Agency’s board of directors. A space opened up when Barb Millsap, on our board from the first, resigned before the end of her term in order to run for office at CHF Canada’s annual meeting in June 2008. An Edmonton-based lawyer, Laird is well-informed about the Agency and its mission, since he provided us with legal advice in our early days. We look forward to meetings enriched by Laird’s deep knowledge of co-op matters and enlivened by his sense of humour.
A Fresh and Juicy ITA Spreadsheet
Our thanks to the Section 95 housing co-ops that are using the Agency’s spreadsheet to report every year on how they spend their subsidy money. Just one problem…some co-ops liked the original version so much that they saved it on their office hard drive and kept on using it.
We’re embarrassed to say this, but our first version had a few bugs. You’ll have an easier time if you download the current version, which is now posted on our password-protected client website. (Can’t find your user name and password? Check with your co-op’s relationship manager.)
Pleased to Meet You! Hope You Guess Our Name…
The Agency normally communicates just with co-op boards and staff, but we recognize how important your members are. We’d like to get to know them and have them get to know us. After all, sooner or later most co-op members find themselves serving on the board.
Why not give your new members a copy of our Q&A about the Agency, which you can download from our public website? This and any of our other Q&As could also go to new board members. We think the information will help them understand what the Agency is and how we work with co-ops.
The Agency would also like to give your members a chance to meet our staff. Please invite us to your annual meeting, or any meeting of members. We’d be glad to say a few words about what the Agency does. (We promise to keep it short.)
All for One, E-mail for All
Since the Agency normally communicates via the Internet, we’ve been giving thought to co-ops that don’t have an e-mail address. We’ve learned that some are worried that the board as a whole may not see our correspondence if we send it only to their manager or to a co-op officer. Some smaller co-ops may not have a computer at all.
We can partly answer the first concern by e-mailing correspondence to more than one contact person for the co-op and committing ourselves to updating a co-op’s contact information as soon as we are notified of a change. For co-ops with a management firm, you may want to add to their contract a requirement to provide the board with Agency correspondence in a timely fashion.
We also have a suggestion for co-ops that would like to be able to receive and store messages, even though their office is without a computer or Internet access. Nowadays, most public libraries offer access to a computer and the Internet. The co-op’s primary contact can go to www.gmail.com and sign up for a Gmail (e-mail) account. This will allow the co-op to store up to seven gigabytes of data in the account and receive an e-mail attachment of up to 10 megabytes—more than enough for Agency correspondence.
This is a temporary measure. A desktop computer is no longer expensive, and we see more and more co-ops realizing that if they are to run a successful small business, they need access to the tools that businesses rely on today. They’re worth it and so are their members. If you don’t have the operating funds to buy a computer, you can ask the Agency for permission to pay for it from your replacement reserve.
Fidelity Bond / Commercial Blanket Bond: Does It Matter?
Back in April the Agency included a note in our e-bulletin about fidelity bonds. A fidelity bond is a form of insurance that protects against losses resulting from dishonest acts by specified individuals or holders of specified offices. We should have said that the same coverage can also be called a commercial blanket bond.
As we noted last spring, a typical bond insures a business against losses caused by the acts of its employees. Because housing co-ops are different from other businesses, they need a slightly different kind of bond.
If your co-op uses the services of a property management company, we ask that you carry a bond of at least $25,000 to protect you against any losses arising from fraudulent or dishonest acts committed by volunteers, including but not limited to your directors and officers. You should also ensure that your property manager has coverage of its own.
If your co-op has its own staff, even just a bookkeeper, or is run by volunteers alone, the bond should be for no less than the lower of $100,000 or $1,000 per unit. It must cover losses arising from fraudulent or dishonest acts committed by either volunteers or staff.
This coverage protects your co-operative. It is different from directors’ and officers’ liability insurance, which protects individuals fulfilling their role as directors and officers in good faith. If your insurance company does not offer coverage for volunteers other than directors and officers, your relationship manager can give you the names of at least two insurance companies that do.
Don’t judge your coverage by its name, but do make sure your co-op has the protection it needs.
Presenting the Agency’s Report Card on Client Service
Curious about how well the Agency did last year in meeting its client-service standards? This report card sums it up. We arrived at with our scores by comparing the standards we have set for ourselves in certain key areas with the way we actually performed.
Please take a look and see what you think. We’re proud of the way our staff delivered service, but we had to work through some challenges. Of course, there’s still room for improvement. Please share the report card with your co-op’s delegate, assuming that you’ll be represented at CHF Canada’s annual meeting in June.
A Place to Talk and Listen
We’re hoping for an hour of your company at the upcoming CHF Canada AGM in Toronto, especially if you’re from a federal co-op in B.C., Alberta, Ontario or PEI. As we noted above, your representative at the CHF Canada AGM has some advance reading: our report card on how we did over the past year. Our accountability session “A Place to Talk and Listen” is where you get to comment on it.
While you sample a dessert, we’ll explain what lies behind scores that range from stellar to just passable. We’ll also invite you to share your thoughts on some other important areas of our work. Join us. We count on you to tell us what you think and, in doing so, to help us do better. Time and location are listed below. Hope to see you there.
The Time: Wednesday, June 11 at 7:00PM
The Place: Toronto’s Harbour Castle Hotel (not the convention centre)
Share the Wealth of Information
Recently, during an Agency workshop, we talked to members about the Co-op Data Report. This report was developed by the Agency to give co-ops access to their own information in a form they could use. We produce it once we have confirmed that a co-op’s data about the past year has correctly entered our information system.
The Co-op Data Report shows how your co-op compared with its peers last year in vacancies; arrears and bad debts; replacement reserve contributions and spending; and maintenance spending. What do these results mean? Vacancies and arrears are never good news, but there are various ways of interpreting different levels of replacement reserve contribution and spending on your property.
Co-op members at our workshop were excited by the possibilities of the Co-op Data Report, but many had not seen one for their own co-op. The Agency encourages co-op boards to share the wealth of information that the Agency makes available. We think you’ll find that doing so increases members’ interest and commitment—and that’s a good thing.
Clearing the Ground
Now that blossoms are falling instead of snowflakes, the Agency is scheduling its inspections across the country. These visual inspections help us to work out co-ops’ risk ratings. It’s in everyone’s interest to make sure the inspections go as well as possible. We’d be grateful for your help, as we’ll explain.
In our last E-bulletin, we announced the launch of our new on-line questionnaire for co-ops due for an inspection. Our heartfelt thanks to all those that have already completed their questionnaire. Unfortunately, not every co-op has done so. We’re not trying to make your life difficult by raising this matter again. The idea is to make the inspection easier on us all.
If the questionnaire is completed SOON by a person who knows about maintenance and capital replacement in your co-op, we can use the information to plan for a faster and more efficient on-site visit. This means that, with the basics dealt with in advance, the inspector can focus on issues of importance. To us, it’s like raking the yard after winter before cutting the grass.
Eastern Leader of Promise
Dave Howard is the new team leader for the region of Ontario/PEI. He comes with more than a year’s experience as a relationship manager in our Toronto office and some months acting in the position while the previous team leader was absent.
A former director of the Co-operative Housing Federation of Canada and the Golden Horseshoe Co-operative Housing Federation, Dave earned his credentials as a co-op manager in the Hamilton and Kitchener/Waterloo areas. His continuing status of co-op member keeps him close to the concerns and hopes of our clients. With Dave on the job, the interests of housing co-operatives will continue to be well served.
Beating the Clock
We like the Agency’s logo the way it is, but lately we’ve been thinking it should include a clock or even an hourglass. Why? To remind co-ops whenever they see our logo that time is ticking away.
For instance, your deadline for filing your annual information return (AIR) is four months after your fiscal year end. (Of course your auditor does the filing, but it’s at your direction.)
Not all co-ops realize that the AIR filing has several parts. Besides the auditor’s financial piece and the co-op’s representations, there are also a signed copy of the audited financial statements and a signed board certification for the AIR. Section 95 co-ops also have an income-tested reconciliation due at the Agency on or before the four-month deadline.
Some of our clients impress us by getting all this right, meeting due dates and providing every document on time or even well before the deadline! Once we’ve received the full annual filing, give us a month or so, and then co-ops can start watching their inboxes for the various reports that will flow to them from the data they’ve sent us. In the meantime, if you’re having difficulty with any part of your filing, please check with your relationship manager. Helping you is their priority.
Use It or Lose It, S95
Section 95 co-ops, this one’s just for you! Many S95 co-ops spend every cent of the income-tested assistance they get from CMHC and also provide an internal subsidy for their poorer members. Others hold back some funds in their subsidy pool so that they can help any member household whose financial situation worsens over the year.
A third group does not allocate all income-tested assistance and may not have done so for several years. The S95 program allows co-ops to keep up to $500 per unit (subsidized and non-subsidized) in their subsidy pool, plus interest earned on these funds. When the level of money in the pool rises beyond this point, the co-op is required to return the extra.
A cheque for this unused assistance is due no later than four months after the fiscal year end, at the same time the complete AIR filing is due. Please note that you make out the cheque to CMHC, but send it to the Agency. You can enclose your cheque with the other paper documents—those needing board signatures—that form part of your AIR filing.
Better yet, make sure your members know that housing charge assistance is available at any time for members who qualify. It could happen that by the end of the year, having made good use of the money, your co-op will not have to return anything.
An Ontario ROOF Over Your Head
We’ve recently learned of an Ontario-only program intended to help low-income families paying a market rent or on a waiting list. The program is restrictive, but it could pay up to $100 a month, backdated to January 2008. The application deadline is June 30, 2008.
A person can apply if they
Adjusted Net Income is the amount from line 236 in your 2006 income tax return, minus your Universal Child Care Benefit. Adjusted Family Net Income is the total adjusted net income of the applicant, plus the adjusted net income of any spouse or common-law partner.
The Agency has asked the government to send a few brochures to co-ops with at least one unit that could be occupied by a qualified person. You can read about this program and get an application on line at the Ontario Ministry of Housing website at www.mah.gov.on.ca. We’re told that the government has made a special effort to ensure that the application will not take long to complete.
The program is intended to run for five years. We hope that a few co-op households with children may benefit.
Now that tempers have cooled, we hope we can safely say how embarrassed we are about an irritating malfunction of our information system, which is normally very well behaved.
For some reason—possibly owing to the entry of an indigestible piece of information—our automated system suffered from an attack of hiccups a few weeks ago and sent duplicate e-mails, or worse, to 71 of our clients. One bilingual co-op received triplicate messages in two languages! The e-mails announced a matter close to the system’s simple binary soul: your year end is nearing and it’s time to prepare for your audit. Understandably, our clients felt they were being nagged, and we apologize to everyone we annoyed.
Every two years, the Agency sends an inspector out to look at the condition of your property. Inspection season begins when the warm south-west winds bring the flowers into bloom, or at least start to thaw the locks and melt the snow banks.
To smooth the process we’ve brought in some new ideas this year. We’ll soon launch an on-line questionnaire that will help your co-op prepare for the inspection by answering some questions in advance.
If your co-operative has access to the Internet, this new tool will ease your workload in responding to the inspector’s questions about the co-op and your capital replacement and maintenance practices.
The Agency spends 51 weeks a year sending co-ops reports on different aspects of their performance. But during the week of the CHF Canada AGM, we’re asking for your thoughts on our own performance.
In the service of our value of transparency, we share our successes and shortcomings and explain how we’re measuring up to our published standards of client service. Please be there on June 11 at 7:00 PM to tell us how we’re doing.
We’re presenting you with our report card in advance so that you can decide whether to bring us bouquets or something less fragrant. To top things off, we’re serving dessert.
On Thursday June 12 we’ll offer a workshop at the CHF Canada AGM for volunteers and another for staff on how to interpret the Co-op Data Report. This is the new personalized report that we send to each federal co-op showing how it compares with its peers in key areas. Many co-ops have questions about what the information means. We’ll be pleased to talk about the story the numbers tell.
To help you look at your co-op’s performance from all angles, we’ll also briefly review the risk assessment and compliance reports and what they say about your co-op’s operations.
Your audited statements and Annual Information Return (AIR) are due at the Agency no more than four months after your co-operative’s fiscal year end. How can you hope to meet this deadline?
There are two secrets for success: start early and practise teamwork. Filing a complete AIR on time calls for your co-op’s board, auditor and management—paid or volunteer—to work together like the parts of a well-oiled machine.
You can complete your year-end statements for the auditor’s review as soon as you have your bank statement and bills for the final month of your fiscal year—normally within about three weeks of year end. If your books are in good shape and the auditor’s visit is scheduled well in advance, within two months your statements should be ready for approval. Once signed by the board of directors, the statements can go to the Agency. Submission to the members can follow.
With the statements done, your auditor files the AIR on line, ensuring that accurate financial information about your co-op enters the Agency’s information system. Before completing the filing, the auditor will give you a questionnaire to fill out, known as the co-op’s representations, and ask your board to sign a certification. Your auditor is available to explain the representations and help you find the answers.
Section 95 co-operatives have one more task: completing and sending the Agency a reconciliation of the income-tested assistance your co-op gave to qualified members during the year. You can download a spreadsheet for this purpose from the Agency’s website. Or you may create your own, as long as it gives us the same information.
Here’s our suggestion: why not complete this reconciliation during the first month of your new fiscal year, while waiting for your final bills and bank statement? Reconciling the assistance then means that your auditor will have the information when the audit starts and you can find and solve any problems before your AIR is filed. Get it right from the start and you’ll experience a less costly audit, which is never a bad idea.
In the course of your audit each year, when your co-op completes the “co-operative’s representations” section of the Annual Information Return, you will be asked whether you have a fidelity bond in place. A fidelity bond is a form of insurance policy that protects against losses resulting from dishonest acts by specified individuals. A typical bond insures a business against losses caused by acts of its employees. But the bond a housing co‑op needs is a little different.
If your co-op uses the services of a property management company, we ask that you carry a bond of at least $25,000 to cover any losses arising from fraudulent or dishonest acts committed by your directors, officers, or other volunteers.
If your co-op has its own staff, the fidelity bond should be for no less than the lower of $100,000 or $1,000 per unit. It must cover losses arising from fraudulent or dishonest acts committed by either volunteers or staff.
This coverage for the co-operative is different from directors’ and officers’ liability insurance, which protects individuals in their role as directors and officers. But because most insurance companies are unfamiliar with volunteer organizations like housing co-ops, not all offer the appropriate coverage. While they may be ready to insure against dishonest acts of directors, most will not bond other volunteers.
The Agency urges co-operatives to consult their insurance company or broker about arranging for the right coverage, which past experience has shown to be vital. If they do not offer a fidelity bond that meets the standards above, your relationship manager can give you the names of at least two insurance companies that do.
Special thanks are due to our Vancouver office. Determined leadership there has brought this issue forward and ensured that co-operatives will be able to protect themselves against one of the most traumatic events possible in a volunteer-led organization.
We often hear from co-operatives that are spending to make their playgrounds safer. But others, worried that they may be unsafe, are simply taking out their playgrounds altogether.
Before you take this step, you should know that playground equipment is an eligible replacement-reserve expenditure. Your municipality can give you up-to-date information on the safety rules you need to meet.
Your auditor may have told you that the Auditing and Assurance Standards Board (AASB) has clarified certain standards for the profession. As a result, your auditor is no longer able to provide your co-op with an auditor’s confirmation.
An “auditor’s confirmation” is the name of a report most co-ops are expected to submit each year after the audit is done. This report speaks to your co-op’s compliance with parts of your operating agreement with CMHC (e.g., rules about verifying incomes).
Now CMHC has agreed instead to accept an opinion under Section 5815 (Audit Reports on Compliance with Agreements, Statutes and Regulations) of the CICA Handbook. Aiming to keep costs reasonable, CMHC is working with AASB staff to develop clear guidelines for auditors. We expect that detailed information will be available in the first half of 2008. At that time, we will explain how co-ops can again meet this longstanding requirement. We will also let you know when the new approach will come into effect.
The Asset Management Group (AMG) of the Social Housing Services Corporation is conducting a survey on how Ontario not-for-profit housing organizations manage their financial assets.
We provided the AMG with public information about our Ontario clients so that survey information could be sent to them. At the same time, we protected volunteers’ privacy by withholding the contact information co-ops have shared with us, except where the contact is the co-op office.
This survey is less detailed than an earlier version but is still lengthy. Please read the background information carefully. The deadline for submission is early January 2008.
Once a year, the Agency receives a reconciliation of income-tested assistance from each co-operative in the Section 95 program (once called the 56.1 program). We thank these co-ops for sending us valuable, accurate information, but in a few cases cases, we have a problem. Some of you are telling us more than you should.
When you complete the ITA reconciliation form or its equivalent, please don’t mention the names of your assisted members or give us their addresses. We agree that receipt of assistance is nothing to be ashamed of, but, like you, we respect your members’ privacy. So please tell us only what we need to know.
We remind you that the Agency has developed the ITA Reconciliation Spreadsheet, available online, to help co-ops report on the assistance they give out. One advantage to using our form is that it asks for specific information not including the names and addresses of your assisted members. We think this is yet another reason to try out our spreadsheet, if you haven’t already. Three-quarters of our S95 clients prefer it.
Every co-op has access to the Agency’s password-protected client website. There you will find your reports from the Agency and such important documents as your operating agreement.
At first, we planned to send each co-op a new password every year. We now realize that these frequent changes may inconvenience you. In future, if you want a new password for your area of our client website, please contact us through your relationship manager and we’ll be pleased to send you one. Until then, you can continue to use your current password.
The provincial institutes of chartered accountants now expect their members to apply higher auditing standards than ever before. These new standards give more protection, but will be harder for auditors to meet. Higher standards also mean higher audit costs.
Housing co-ops are not the only not-for-profit organizations feeling the pinch. Everyone’s audit fees have been going up. Audits, especially of small organizations, are getting more costly.The Agency recognizes that the AIR filing adds to your audit expense. If your co-op has 35 or fewer units, why not let us help? We offer an AIR filing service for these co-ops at a cost of $10 a unit. Your co-op can save money by having your auditor contact our AIR Help Desk for this service at email@example.com.
Prying Bricks out of the Welfare Wall
Housing co-ops worry about households on social assistance. These members need paying work for the sake of their future, and their children’s, but in the short term taking a poorly paid job could be hard on their finances. This catch, known as the Welfare Wall, often prevents people on social assistance from re-joining the workforce.
The government has made a first step toward knocking down the wall by creating the Working Income Tax Benefit. This benefit provides a refundable tax credit equal to 20 per cent of each dollar of earned income above $3,000, with a maximum and a ceiling after which the benefit is phased out. CMHC has made an effort to ensure that people on welfare benefit as much as possible from this measure. So the Working Income Tax Benefit does not count as income when you are calculating housing-charge assistance. And when a co-op reviews a membership application, again the benefit does not count as income—important for deep-subsidy co-ops and others limited by income thresholds. For more information, check the Canada Revenue Agency website at http://www.cra-arc.gc.ca/agency/budget/2007/witb-e.html.
A Measure of Performance
There are many ways of measuring a co-op’s level of excellence. Some are complex, but one important test is very simple. Did the co-op file its Annual Information Return (AIR), audited financial statements and other associated documents by the deadline in its operating agreement?
The information about individual co-ops is confidential, but we can say that the performance of co-ops as a group has improved. A year ago only 39 per cent of filings took place, as required, within four months of the end of the co-op’s fiscal year. In contrast, 59 per cent of co-ops filed on time in the past quarter. B.C. co-ops led the way, with 68 per cent filing on time. We would love to see more co-ops in other regions follow their example.
Getting Through to the Ontario/PEI Service Centre
We think we’ve solved an irritating problem in our Toronto office. As a new organization we had no way of knowing ahead of time how many calls would take place in each office. The short answer for the Ontario/PEI Service Centre was “A lot more than we had expected.”
Portrait of a Client
“A co‑op’s arrears and bad debts tell a clear story about the quality of its management and governance. Lower arrears and bad debts indicate consistently good collection of housing charges, supported by firm leadership.”
This observation refers to data from a new report the Agency will launch in October 2007. Made possible by the electronic filing of AIRs, the report will soon start going out following our review of financial information from co-ops with fiscal years ending 30 April 2007, or later. The Co-op Data Report is a way of moulding some of the information the Agency has collected into a comparative report that co-ops can use and understand.
The Co-op Data Report supplies co-ops with year-on-year information in five important areas:
Each report is unique, setting that co-op’s performance against other co-op’s. It is accompanied by a Question & Answer sheet, which has suggestions about how to interpret the results. The Q&A will soon be posted on the public area of the Agency’s website at www.agency.coop, and the report for each co-op on the password-protected area.
Dealing with a Surplus
Introducing the Agency’s Technical-Services Department
This department consists of Michel St-Denis, Manager, Technical Services and his team of regionally based independent consultants, each one with sound professional qualifications. Here are two of this department’s main responsibilities.
Based on the inspection, each co-op gets an overall physical-condition rating. This rating is one of three primary tests used to come up with the co-op’s risk rating. The risk rating itself serves as a basic marker of a co-op’s financial health.
Replacement Reserve Plans
The Agency encourages co-ops to submit their replacement-reserve plan, along with a recent building-condition assessment. With Michel’s help, the relationship manager reviews them both and lets the co-op know if its plan is acceptable.
Once the Agency has approved a plan, for the next three years that co-op will not need to ask for permission to spend reserve funds on items listed in that three-year period of the plan. This provision gives co-ops much more freedom to manage their business without having to ask for access to their own money. Co-ops can enjoy this level of independence as long as they send in an updated plan every three years to the Agency for a fresh review. (And co-ops can always spend from their plan on any item listed in their operating agreement, which can be viewed on the password-protected section of our website at www.agency.coop. Click on Client login, key in your co-op’s password and go to Agreements.)
Please contact your relationship manager with any questions about your replacement-reserve plan. You’ll find your relationship manager’s e-mail and phone number at Contact us on our public website.
For more information on how to develop a replacement-reserve plan, you can talk to your relationship manager or visit the Agency’s public website at <www.agency.coop>. (Go to Resources and then On-line documents.) Or you can visit the CHF Canada website at www.chfc.ca. The information is free.
Your Excess Unspent ITA
In the past, co-ops have made this repayment at different times. However, the section 95 operating agreement says that the refund is due four months after the co-op’s fiscal year end, along with a report on ITA spending over that year. So we ask in future that all co-ops in the section 95 program repay any money they owe at the time their AIR and related documents are filed.
Not everyone knows what happens to these refunds. Far from vanishing into CMHC’s general revenue, they are used for the enhanced assistance that CMHC offers to housing co-operatives that could benefit from extra money. So co-ops that must make these repayments are at least helping other co-ops, if not low-income co-op members.
Presenting the Agency Provincially
Soon after, Olga Tasci, Director, Information Services and Best Practices made a presentation to Quebec civil servants and co-op housing leaders, who had many questions about what we do and how we do it. The Agency’s risk-rating model and systems were of particular interest to the Quebec housing ministry, whose staff proposed a follow-up visit to our Support Centre in Ottawa. If this takes place, we will be very glad we have so many French-speaking staff in that office.
Accounting for Our Actions
The Western Regional Service Centres
On 11 September and 14 September 2006, the Agency’s regional service centres for B.C. and the Prairies opened for business, with relationship managers hard at work getting to know their co-op clients and reviewing the materials transferred from CMHC. While Agency staff catch up with all this data, co-op auditors have already begun to file Annual Information Returns.
The Benefits of the Agency
Co-ops whose auditor has already filed their federal Annual Information Return (AIR) will soon be getting an invoice for the work. This year only, auditors have to do a double filing to provide older background information for the most recent fiscal year. We’ve been pleased to learn that the second filing goes quickly.
Because the AIR is new to them, auditors have to spend time reading our filing guide or consulting with our AIR Help Desk Officer. Some with a number of co-op clients are willing to spread these self-training costs over several years or across all their federal co-op clients. Co-ops concerned about their audit fee might wish to ask their auditor about these possibilities.
To keep the expense reasonable for small co-ops, the Agency offers an AIR filing service for the auditors of co-ops with 35 or fewer federal-program units. Our service costs $10 a unit and auditors agree to pass through the cost to their client without any surcharge. If you are a small co-op, please discuss the fee with your auditor before starting your audit and decide whether our filing service makes sense for your co-op.
What will co-ops get in return for the extra cost of the AIR filing? In the short term, the best answer is an honest report based on a fair test. Every two years the Agency conducts a property inspection at its own expense and shares the inspection results with each co-op. Drawing on this and the AIR, the Agency sends an annual report to the co-op about its financial health. Our report is a frank outside opinion on how well a co-op is doing, based on real numbers. As with medical tests—of blood pressure, say—some people will not be happy with the results. But until you know for sure what the problem is, you can’t begin to correct it.
The Agency's First Report
Co-ops that are struggling with reporting deadlines might like to know that the Agency has its own deadlines to meet. Besides our annual report, we send CMHC quarterly reports on our performance and the performance of the programs we administer. Our first report was due on 11 October 2006. For a week in advance, Agency staff pooled information, studied figures and drafted paragraphs.
The report was based on limited data, since we had been working with
After studying the results of its first few risk assessments and some initial feedback from housing co-ops, the Agency made changes to the form we use. We also revised the letter that goes with it. The letter now allows relationship managers to customize it to their client’s specific circumstances.
For the rest of 2006, we will continue to test the form and letter to make sure they give a true picture for every co-op we work with. Once you get your co-op’s risk assessment, please feel free to pass on any comments to your relationship manager. If necessary, we will make more changes to our risk-rating materials in January 2007.
Mailing the Consent-to-Share-Information Form
In October the Agency mailed a blank consent-to-share-information form to all B.C. and Alberta co-ops that have come under the Agency. In order to do its work, the Agency needs a signed copy of the form on file for every co-op.
Even though we will not roll out our best-practices service for at least a year, we are already thinking about it. This service calls for us to identify co-ops that are performing especially well in some way and tell the story of their achievement so that other co-ops can learn from their success. Before we begin to offer the official service, we will talk to co-ops that seem to be performing well in some area and consult local federations about these possible champions. Without a signed agreement in hand, the Agency will not be able to give particular co-ops credit for their successes.
We will need a copy of the consent form even more to help co-ops at risk. The Agency expects to talk to their mortgage lenders and CHF Canada or the local federation, if the co-op is a member. These experts will not work with us for the co-op’s benefit unless we have its written consent to share information.
For more on our consent form, you can read the Q & A on the Consent to Share Information at the Q&A tab on our website at www.agency.coop. Please have your co-op sign the form and mail it to our Support Centre in Ottawa, if you haven’t yet done so.
Co-op User Access
The Agency is now preparing for the late-November launch of the first
Early information for co-ops will be limited at first, but will grow. Right from the beginning, you’ll be able to see your operating agreement, with any addendums.
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All aboard the Agency
The Agency's staffing process is now complete. Jennifer Algera will handle administrative tasks for the B.C. Regional Service Centre and Susan Dafoe for the Prairies Regional Service Centre. Debbie Saidman has joined the Agency to work mainly with co-ops in Northern Alberta. To learn more about these and other staff members, visit the What's up/News page of our website.
CMHC has recently confirmed to our CEO that when Section 95 co-ops calculate housing charge assistance, they should not count the new Universal Childcare Benefit as income. Some co-op staff have figured this out already, but it is useful to know for certain.
Regional Service Centres set to go
Agency staff are now preparing the B.C. Regional Service Centre and the Prairies Regional Service Centre for full operation. CMHC and the Agency are trying a different approach as a result of our experience in Ontario. Before the transfer is a blackout period of two weeks to allow CMHC staff to complete their work. Because of various concerns, a small number of co-ops will remain with CMHC for some time longer.
The Agency is sending letters to B.C. co-ops with the name of the co op's relationship manager and their contact information. Although Agency staff will be settling in for the first few days, the letters are intended to reach co-ops on or about September 11, when the B.C. Regional Service Centre officially opens its doors in Vancouver. Alberta co-ops will receive letters close to September 14, when the Prairies Regional Service Centre begins operations out of Calgary. Relationship Manager Debbie Saidman will be working mainly from a home office in Edmonton. This will allow her to stay close to her group of client co ops.
September open house
On September 14, the Agency will celebrate the opening of its fourth office by holding an Open House at the Ontario/P.E.I. Regional Service Centre. The service centre is at 160 John Street, Suite 402, in Toronto. The Agency's Board of Directors will meet nearby on the day after the event.
A unique resource
The Agency has benefited from a joint project of the Co-operative Housing Federation of Canada and Canada Mortgage and Housing Corporation. The two organizations teamed up to produce a set of guidelines in plain language. There is one for each federal co-op housing program that the Agency works with, on CMHC's behalf. These guidelines are posted on the Publications/On-line documents page of theAgency's website.
Client-centred service and self-knowledge
Agency staff are fresh from several days of team-building and training in client service. New hires met with veterans of five months to exchange ideas and experiences. We all confirmed our commitment to co-ops first, while honouring the Agency's mandate.
Across the country Agency staff are speaking and presenting workshops at co-op housing's education events. These presentations are intended to help co-ops and sector partners understand what the Agency will mean for them. A recent focus is on the Annual Information Return, which many co ops are now working with their auditor to complete. The Agency expects to post confirmed events, dates and locations on the What's up/Events page of our website.
Many co-ops are inviting their relationship manager to anniversary events. These range from simple evenings with coffee and cake to elegant entertainments with live bands and members in evening dress. Relationship managers are delighted at the opportunity of getting to know the co-op better. If asked, they will be pleased to say a few words.
The Agency congratulates Arcadia Housing Co-operative, Ashworth Square Housing Co operative, Lawrence Gardens Housing Co-operative, Neilson Creek Housing Co operative, St. Nicholas Housing Co-operative, Tompkins Housing Co operative and Wyandot Co-operative Homes on their recent or upcoming anniversaries.
The Agency meets its clients and stakeholders
The Agency held its annual information session in London on June 8 at the CHF Canada AGM. It took the form of a workshop called The Agency Ten Years Later: Idea to Reality, presented by Alexandra Wilson, the Agency's CEO. Representatives of CMHC and many co-op housing organizations were on hand, as well as most of the Agency's board members.
At the management conference held the day before, Directors Olga Tasci and Penelope Winter gave a workshop on doing business with the Agency. Co-op staff had many practical questions about what the Agency's presence would mean for their co-op.
The new booth gets an airing
The Agency set up its new booth for the first time at the CHF Canada AGM. Staff members were there to answer questions, including several whose pictures graced the booth. The Agency's annual report for 2005 was given out, as well as Question & Answer sheets about the new Agency and its operations.
These are some of the questions visitors asked:
Members from provincial-program co-ops also stopped for a chat. Although the Agency does not work with these co-ops, many are interested because of the long, intense lobby that brought the Agency into being. Some are hoping to be among the Agency's clients one day.
Western staff on board
The Agency has now hired most of the staff for its western offices. Wendy Dragomir, Cole Dudley, Shawn Preus, Payam Ressalat, Franca Sorace and Jennifer Von Riesen will work out of the B.C. regional service centre and Greg O'Neill out of the Prairies regional service centre. All these staff members are relationship managers, who will deal one on one with co-op housing clients. The team leader for both B.C. and the Prairies is Joanne Mick. Visit our website for the full staff announcement.
The website goes live with more resources
The Agency launched the public section of its reconstructed website on June 30, in time for Canada Day. The website will grow from week to week as we add new items. We've already added copies of the Co-op Representations – part of the Annual Information Return (AIR) – and the income-tested assistance reconciliation spreadsheet for Section 95 program co-ops.
Please visit us often to learn more about the Agency and what we plan to do. Later in the fall of 2006, housing co-ops will be able to use the password-protected Client Login to access our information system. What will they find there? Relevant resources, a copy of their operating agreement and all their Agency correspondence or reports – and that's just to begin with.
Our service focus moves west
The Agency's regional service centres open in Vancouver on September 11 and Calgary on September 14. Now there's something positive to associate with Sept 11th!
The First Regional Service Centre
The Agency is getting ready to open the Ontario/PEI Regional Service Centre on May 8 at 160 John Street, Suite 402, Toronto, ON M5V 2E5. The local telephone number is 416.598.4464 and you can reach us toll-free at
Staff for the Ontario and P.E.I. Regional Service Centre
Guided by team leader Lori-Anne McDonald, the Agency’s first group of relationship managers combines different strengths and a range of backgrounds. They are Michel Brière, Margaret Callaghan, Donna Charbonneau, Jacqueline Cooper, Jane Davidson-Neville, Peter Gesiarz, Hans Handratno, Dave Howard, Sandeep Thethy and Scott Wylie. Marianne Smith will provide administrative support.
The AIR Takes Flight
The Annual Information Return (AIR), our newly crafted tool for sharing information, will come into use on May 8, starting with
During this transition period, the Agency is also offering auditors for
A Message for Ontario /P.E.I. Co-ops
We have given notice by mail to all Ontario and P.E.I. co-ops whose administration will move over to the Agency on May 8. A second mailing this week will provide contact information for each
Client Service Standards
The Agency’s board has established client-service standards that will help our staff and clients understand what the Agency expects and offers. Watch for the posting of these standards on our website very soon. Go to “Bylaws and Policies” and then look for "Client Service.” Our Client Service Champion, Chantal Roy, will be pleased to answer any questions about our client-service standards. Chantal can be reached by telephone at 613.234.4557 or toll-free at 1.866.660.3140 extension 610 or by e-mail at firstname.lastname@example.org.
Agency Workshops coming near you
CHASEO: April 22, 2006
Support Centre Ready to Go
The Agency’s Support Centre in Ottawa is now settling into its permanent office space on the sixth floor of 190 O’Connor Street in Ottawa. The new telephone number is (613) 234.4557 and the fax number (613) 234.7902.
Planning for Regional Service Centres
The Toronto office is set to open for service on May 8, 2006. Both the Prairie and Vancouver offices will start up a little later than originally announced. We expect them to begin operations in September 2006.
New Staff on Board
The Agency is pleased to present five new permanent members of staff:
Julie LaPalme, Information Officer
For information about current job postings at the Agency, please visit our website.
Ontario and P.E.I. Information Updates Nearly Complete
Thanks to your co-operation, the Agency has almost finished the Ontario /P.E.I. phase of our
Alberta and B.C. Information Updates Planned for May
Alberta and B.C. updates will begin in early May. In preparation, co-ops in Alberta and B.C. will have received a letter asking them to please let us know of any changes in their e-mail addresses or other contact information.
Mayday Launch for Agency AIR
Ontario and P.E.I. co-ops will lead the way when the Agency launches its new reporting tool on May 1, 2006. Co-ops will file an Annual Information Return (AIR) to report current financial information and update the Agency’s other data on the
Senior Staff in Place
The Agency is successfully staffing up. We earlier announced the appointment of Gail Church as Director, Corporate Services; Olga Tasci as Director, Information Services and Best Practices; Penelope Winter as Director, Program Management Services; and Mélanie Clement as Executive Assistant. The Agency now welcomes Dave Sullivan, Information Systems Administrator, as its newest staff member.
The Agency is now looking for some special people to fill other positions. The Agency website <www.agency.coop> will soon show postings for five positions based in Ottawa (Administrative Assistant, Information Officer, Communications Officer, Client Service Champion, Data Administrator) and one in Toronto (Ontario/PEI Team Leader).
The Agency has chosen a location for our support centre in downtown Ottawa at 190 O’Connor Street. The office is being renovated for a February launch. With an April opening planned for our Toronto office, we are looking hard for the best affordable space.
Appointment of Directors and Officers
The board of the Co-operative Housing Federation of Canada has appointed Peter Crawford and Carol Davis to The Agency’s board for another term. The Board has renamed The Agency’s officers, with Ray Hession remaining as President, Jill Kelly as Vice-President and Peter Crawford as Treasurer. Gail Church, Director, Corporate Services, has been appointed Corporate Secretary.
What Co-ops Said
Last spring The Agency asked co-ops to complete a survey on client satisfaction with CMHC’s services. A report on the results is now available on our website, under What's up?.
Early in 2006 The Agency will send introductory information to co‑ops and co-ops’ auditors, where you’ve told us who they are, about the new annual information return (AIR). This important document will be the lifeblood of The Agency’s information system and our new services to co-ops.
We Need Your Update
In November, each Ontario and PEI
Alberta and BC co-ops have not been overlooked. They will be asked to complete their update early in the new year.
A Canadian New Year's Wish
The Agency is excited by the opportunities 2006 offers for all of us as we begin to deliver services and build relationships with our
A Plainer Name
The Agency’s legal name is now the Agency for Co-operative Housing. It will still be known as the Agency.
A CEO for the Agency
As an organization, the Agency has no parallel in Canadian
The Board of Directors has named Alexandra Wilson as the Agency’s first CEO. Her job is to transform the Agency from a well-planned idea into a living reality.
Wilson is well known in the world of co-operatives. She worked in international development and was an active long-time member of the International Co-operative Alliance’s Housing Committee. For 15 years she was executive director of the Co-operative Housing Federation of Canada and currently serves on the boards of the Co-operators Group and Citizens Bank, an offshoot of VanCity Credit Union. Wilson has deployed her talents at many levels of the co-operative housing movement as a member, director, developer, manager and visionary.
The Agency is now recruiting its senior management team. It is seeking candidates for the positions of Director, Program Management Services, and Director, Corporate Services.
The Director, Program Management Services, will oversee the delivery of the Agency’s sophisticated services within an old-fashioned culture of client care. This director must combine a thorough knowledge of risk and housing management with leadership skills of a high order, a talent for people management and fluency in English and French.
The Director, Corporate Services, will immediately set up the Agency’s Support Centre and three regional offices and establish office management, human-resource and financial systems. This director must bring to the Agency attention to detail, a focus on customer service, a solid history of successful management and fluency in English and French.
See the website for more information. As it continues its hiring process, the Agency will post other job notices. Please check often at www.agency.coop/pager/employment.asp.
Getting the Details Right
Starting in October, the Agency will ask co-ops to confirm that all the details CMHC shared about them are correct. Region by region, co-ops will review and revise their information, which the Agency will post on a secure area of its website. Co-ops in Ontario and PEI will receive the first requests by e-mail, along with a username and password. If the Agency has no record of a
Support Centre to open in February
The Agency has found just the location it wanted for its Support Centre. This hub office will liaise with CMHC and help the regional centres work with their local co-ops. Housing seventeen staff, the Support Centre will open on February 1, 2006, at 190 O'Connor St. in downtown Ottawa.
Updated: February 3, 2014