Section 95 Program (1979–1985)

Exterior of Arcadia housing co-operative

Program Objectives

  • To provide modest, affordable housing appropriate to the needs of low- and moderate-income families and individuals
  • To produce housing at minimum cost by implementing appropriate cost controls
  • To encourage approved lenders to provide capital for low- and moderate-income Households

Program Features

  • Unilateral federal program
  • Income-mixing
  • 100 % financing for eligible costs provided through Canada Mortgage and Housing Corporation (CMHC)-insured loan from NHA-approved lender (On maturity of these loans, CMHC has been providing direct loans, insured by the MIF)
  • Short-term (typically five-year) renewable mortgage loan at market interest rate; maximum 35-year amortization period
  • Annual federal assistance equal to difference between cost of amortizing 100 % of approved capital cost of co-op’s shelter   component at approved mortgage interest rate, and amortization cost at two % payable for 35 years
  • Assistance initially used for two purposes:
    • predetermined assistance to bridge gap between co-op’s economic rent (actual debt service and operating costs) and its revenue potential at low-end-of-market rent
    • income-tested assistance to bridge gap between co-op’s full occupancy charge and reduced charges based on households’ incomes (incomes verified annually, for assisted households only)
  • Predetermined assistance reduced at rate that increases share of co-op debt service paid from co-operative’s own resources by five % annually, compounded
  • Reduction in predetermined assistance added to pool of income-tested assistance income-tested assistance unused by year end may be reserved, provided co-op is not in receipt of continuing provincial or municipal assistance; when reserve exceeds $500 per unit plus interest, excess must be returned to CMHC
  • Depending on the specific operating agreement, at least either 15 % or 25 % of households must be subsidized, provided sufficient income-tested assistance is available.

CMHC Authority under Operating Agreement

  • Right to change Graduated Occupancy Charge Scale for households paying less than regular occupancy charge
  • Right to define income
  • Right to inspect co-op’s books and records at any reasonable time
  • Right to approve annual replacement reserve contribution and maximum level of reserve, in consultation with co-op
  • Right to designate additional eligible replacement reserve expenditures not listed in agreement
  • Right to designate form of Annual Project Data Report (APDR)
  • Right to request, for statistical purposes, explanations of information contained in APDR
  • Right to inspect property
  • Right to suspend or terminate assistance in event of breach of agreement
  • Right to be informed when co-op enters into a contract for management, other than an employment contract
  • Discretionary right to approve allocation of vacant units to non-income-tested occupants if co-op is not meeting minimum requirement of 15 % low-income households
  • CMHC approval required for investment of replacement reserve funds and surplus subsidy 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 (does not apply during operating agreement extension)
  • Co-op may not sell or otherwise dispose of all or part of property without CMHC’s approval
  • Co-op may not lend or give away funds or guarantee obligations of a third party without CMHC’s approval (restriction does not apply to member capital)
  • CMHC approval of co-op auditor required, other than for auditor with recognized accreditation
  • CMHC approval required for changes to incorporation documents that would change co-op’s non-profit status

Accountability Framework

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

Program Guidelines for S95 Co-ops (Pre-86)

Agency for Co-operative Housing
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Q&A on the End of your S95 CMHC Operating Agreement

Agency for Co-operative Housing
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Directors in Arrears

10% of Agency clients have board members in arrears. Too high, but well down from 28% in 2007. More boards are leading by example.