Federal Program Housing Co-ops: Getting Better All the Time

Date
6 September 2019

There’s no doubt that, as a group, the Agency’s client housing co-operatives are continuing to produce better results. We compared their performance in 2018 with their operations in the Agency’s early years—now more than a decade ago—and we are impressed with our clients’ progress. It was also good to be able to tell CMHC that that we’re meeting the objectives set out in the 2005 agreement that we signed so ambitiously.

Every two years the Agency produces a Portfolio Performance Review, which we share on our website in English and French. The review draws on information sent to us in co-ops’ Annual Information Returns and contrasts it with data from the past.  These comparisons show plainly whether or not we’ve been able to help our clients achieve the results that CMHC expects to see. What we found this time is quite amazing.

Risk Levels are Falling

In the Agency’s first year of operation, more than 60 per cent of our clients were at High or Above-Average risk, according to our newly minted method of risk assessment. One of the objectives we agreed on with CMHC was to increase or maintain the number of co-ops rated Low or Moderate risk and reduce the number of co-ops at High risk. Now, for the majority of our clients, risk levels have fallen to Low or Moderate. And, because 89 per cent of clients are stable or strengthening, we know that this result is not a temporary blip. The improved risk assessment promises that these housing co-ops will be able to provide affordable housing for as far into the future as anyone can imagine.

Vacancy Losses Lowest Yet

If our clients are to provide much-needed housing for years to come, they will need to operate effectively. One of CMHC’s goals for the Agency was to help clients adopt improved management practices that would result in smaller losses to vacancies, arrears and bad debts. When the Agency looked at recent results, the facts spoke for themselves. Half of all Agency clients are now giving up less than $33 per unit per year to vacancies—the smallest loss ever.

Director Arrears Down by Two-Thirds

At one time, board members weren’t ashamed of owing money to their co-op, as long as they had signed a repayment agreement. However, this behaviour is associated with arrears as much as four times higher throughout the co-op as a whole. In 2007, 28 per cent of Agency clients had one or more directors in arrears. By 2018, better management and governance had driven this number down by nearly two-thirds, as co‑ops recognized that directors lack the moral authority to govern when they don’t pay housing charges in full and on time.

46% Increased Spending on Properties

In another example of improved operations, co-ops are spending 46 per cent more on their properties than they did in 2007. While they are 11 years older now, this extra spending represents an important investment in their chief asset, and also in their members’ comfort and pride of ownership.

These nuggets of information are a small sampling of what you’ll find in Agency’s Portfolio Review Report, which is now available on our website. Warm congratulations to our clients whose hard work has produced these results, in co-operation with the Agency’s relationship managers. We’re proud to have been able to meet the goals we agreed on with CMHC, but our achievement was possible only because our co-op clients decided to pursue these objectives along with us.

Capital Reserve Balance

45% of Agency clients hold a capital reserve balance of at least $6,000 per unit. Almost double the rate in 2007.