The last two B.C. co-ops under imminent threat of redevelopment have been saved by provincial government funding and a community land trust, says Thom Armstrong, CEO of the Co-operative Housing Federation of BC.
“We don’t anticipate there will be any similar actions needed to protect vulnerable co-ops,” said Armstrong, whose umbrella organization supports operations and financing for roughly 15,000 of the province’s 15,784 co-op units.
On Thursday, Katie Maslechko, CEO of the B.C. government’s evolving $500-million Rental Protection Fund, announced $71 million in funding to help secure the $87-million purchase of two co-ops in Coquitlam: the 169-unit Tri-Branch Co-op and the 121-unit Garden Court Co-op.
The $71 million is the first money out the door of the fund and is in addition to $5.8 million from the City of Coquitlam, $2.9 million from Canada Mortgage and Housing Corporation and $3.4 million from the federation’s financing entity, the Community Land Trust.
The trust is using the sum of monies to not just purchase the property but also pay off about $7 million in lease payment arrears to the property owner, the Operating Engineers Pension Plan, and upgrade the buildings to the tune of $23 million. The trust will use the funds to leverage outside loans for those upgrades. It’s also understood that the injection of equity (ownership of these properties) will assist the trust in securing even larger pools of money for other co-op projects.
Armstrong said rental payments will equate to 30 per cent of a tenants’ income, meaning rents will increase for the most part but for some they may decrease. The existing tenants, he said, are typically very low income individuals. Today, the average two-bedroom unit charge is $685 at Tri-Branch and $964 at Garden Court. A one-bedroom unit costs $552 at Tri-Branch and $685 at Garden Court.
The funding will allow the co-ops to operate long-term without operating grants, said Armstrong.
The properties at 2865 Packard Ave. and 2860 Packard Ave. were valued at $40.6 million and $40.4 million, respectively. Armstrong explained that the premium price, even during this time of heightened interest rates, was a result of speculation the sites could be further densified leading to a larger appraisal by the union.
What made these properties unique, said Armstrong, is that they sit on privately owned land.
B.C. co-ops were largely built between 1970 and 1990 on public land but a handful, such as these, were built on privately owned properties. Upon expiration of 40-year leases the prospect of big payouts has enticed owners — many of which are pension investments — to cash in on ever-rising urban land prices, especially in Metro Vancouver.
Such sales put co-op tenants out of their home, with the most recent example coming from Surrey.
But bringing the Coquitlam co-ops under the fold of the trust means there are only three remaining co-ops on private land; however, Armstrong said they are not under threat as one is on heritage land, another has a lease until around 2055 and a third has secured alternative plans.
Armstrong says for a co-op to work today it requires public land, seed funding (typically from senior governments) and assistance from municipalities. Construction costs are another obstacle.
But the largest headache has proven to be the challenges of leases expiring on private land.
“We certainly wouldn’t approve any new co-op developments on private land,” said Armstrong, adding Premier David Eby affirmed no such developments would take place.
The pickle, so to speak, moving forward, said Armstrong, is what appears to be a derelicition of duty by the federal government.
“Provincially, we’re pretty encouraged that the government continues to make progress but the feds are just MIA (missing in action). They keep saying there’s a housing crisis but they don’t have a crisis level response to it,” said Armstrong.
“They promised in the March 2022 budget a new co-op program and this is February 2024 and it’s just crickets,” said Armstrong.
On Friday, the analogous national group Co-operative Housing Federation of Canada issued a statement calling for the launch of the imagined $1.5-billion Co-operative Housing Development Program.
In the absence of the federal government, the Rental Protection Fund aims to fill some of the gap.
The $500-million fund was created in 2023 by the B.C. government to help non-profit groups purchase 2,000 rental units in buildings at risk of being developed into market condos.
On average, each unit will cost $250,000. This will act as a subsidy for the mortgage the non-profit incurs buying the property and the long-term operations are expected to be funded by the rent payments, explained Maslechko.
But, said the former director of development at Beedie Development Group, “we’re tracking toward exceeding that 2,000 unit target.”
That’s because these co-op units in Metro Vancouver are among the costlier units to save. Elsewhere, the fund may get more bang for its buck.
Furthermore, Maslechko said while the hope is to get another cash injection of public funds, her government-sanctioned organization is looking at leveraging private investment funds, not unlike how the trust has procured so-called environmental, social and corporate governance (ESG) investments.
“Social impact investors, philanthropist [and] a lot of these larger organizations who have an allocation of ESG dollars and assets are looking to deploy into impactful programs and investments. And a lot of them are very eager and very willing to be active in affordable housing,” said Maslechko.
The investment returns the fund may offer range between three and six per cent — a relatively low but safe return.
“You start to pull those funds together and it gets quite sizable quite quickly,” said Maslechko.
So far, the fund has leveraged $150 million in private capital using its $500-million seed fund.
“Over the next year, this could see the expansion of the community housing sector by over $1 billion dollars, all for a fraction of the cost of building new,” the organization stated Thursday.
Maslechko says the organization reports to the provincial government and will issue annual reports as to how the funding is allocated.
The first report, last October, noted B.C. lost about 100,000 units renting below $1,500 per month between 2016 and 2021, according to Statistics Canada.
Since the money is leaving taxpayer pockets and going to non-profit organizations to operate the subsidized rental homes, Maslechko says her team ensures the non-profits have a good track record of building maintenance and capacity to take on a new project.
To date, Maslechko has 90 applications, pre-qualified of about 30 applicants and approved about 700 units for purchase, including this first bundle in Coquitlam.