Index-Linked Mortgage (ILM) Program

Program Objective

To provide assistance for co-operative housing to promote security of tenure for households unable to access homeownership.

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    Program Features

    • Unilateral federal program
    • Income-mixing
    • NHA-insured long-term index-linked mortgage loan from private lender for 100 % of eligible project costs
    • Loan amortized over 30-35 years—real (i.e., after inflation) interest rate fixed for full period
    • Mortgage payment adjusted annually by rate of change in CPI, less 200 basis points
    • Annual operating assistance to reduce initial housing charges to a level equivalent to market-rental rates for similar accommodation
    • Subsidy adjusted up or down annually at the same rate as the ILM mortgage payment is adjusted
    • One-time reduction of assistance after year 15, if maximum occupancy charges are less than 85 % of market rental rate for similar accommodation—reduction equal to five % of housing charges, phased in as necessary
    • Co-operative-financed security of tenure fund to assist households whose incomes drop when no rent supplement is available
    • A stabilization fund to assist co-operatives in defined circumstances (lapsed)
    • Rent supplements available for maximum of 50 % of units under separate federal/provincial cost-shared rent supplement program (all provinces and territories)
    • Co-op to use its best efforts to house at least the minimum percentage of assisted households specified in operating agreements (in no case less than 15 %)

    CMHC Authority under Operating Agreement

    • Right to register agreement or notice of it on title
    • Right to inspect co-op’s books, records and accounts at any reasonable time on reasonable notice
    • Right to inspect property and require remedial repairs
    • Canada Mortgage and Housing Corporation (CMHC) concurrence required for change in indexed replacement reserve contribution
    • Right to require annual information to assure itself of co-op’s compliance with fundamental purpose and obligations under operating agreement
    • Right to request explanations of information in audited financial statements and, for statistical purposes, other information readily available to co-op
    • CMHC approval required of any contract for management services, other than an employment contract
    • Various remedies in event of breach of operating agreement, including suspension or termination of assistance
    • CMHC approval required for investment of replacement reserve and security of tenure funds outside of eligible investments listed in agreement (does not apply during operating agreement extension)
    • Co-op may not mortgage or encumber property without CMHC’s approval.
    • Co-op may not sell or otherwise dispose of all or part of property without CMHC’s approval of the sale and disposition of proceeds.
    • Co-op may not lend or give away co-op funds, other than reasonable donations, or underwrite obligations of a third party, without CMHC’s approval (restriction does not apply to members’ capital and accumulated surpluses).
    • CMHC approval required for changes to incorporation documents and by-laws that would change co-op’s non-profit status
    • CMHC approval required to adjust the mortgage amortization period or make any prepayment of the ILM

    Accountability Framework

    • Operating agreement
    • Annual audited financial statement and information return
    • Co-op fully responsible for operating results

    Program Guidelines for ILM Co-ops

    Agency for Co-operative Housing
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    Q&A on the End of the ILM CMHC Operating Agreement

    Agency for Co-operative Housing
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    Q&A for ILM Co-ops Post Year 15

    Agency for Co-operative Housing
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    Co-ops without Paid Managers

    Since 2007, the percentage of co-ops without paid help has fallen by more than half to a mere 3% of Agency clients.  Another 12% just have a lonely bookkeeper.