Special Committee on Cooperatives Committee on July 26th, 2012

[Kenneth Hood]

Thank you.

[Malcolm Allen, NDP, Welland, ON]

Mr. Kitchen, my friends across the way are constantly telling us about how much money has gone in. What's the need like?

[Darren Kitchen]

I can only really speak for B.C. There's a great deal of need. More money always helps. What can I say? The more money you have, the more projects you can do and the more units you can build. I understand that there are limits to the amount of money that can be brought to the table by the government.

I am hopeful that some of that money might be targeted in B.C. a little more broadly and to more people than is currently the case. In concentrating on a single group and reducing need among that group, the B.C. government is running the risk of neglecting low-income families, for example, working families who are very important to the fabric and the economy of cities like Vancouver, Burnaby, New Westminster, and Surrey and who are increasingly being priced out of that market. That kind of pricing out, the kind of displacement of those kinds of families that we see in high-priced areas like Vancouver, is something that should be of concern to all levels of government. We're talking about the tax base of those cities; we're talking about the livability of those cities; we're talking about the ability of those cities to remain diverse places. Many lower-income immigrants have a very hard time in places like Vancouver.

So my concern is not just about the grand total of cash that's being put on the table. There is a fair bit of that. My concern is that a key demographic is being neglected to the long-term detriment of our urban fabric and ultimately of the country.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll move now to Ms. Gallant. You have five minutes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

I tried to get your attention right before we suspended last time, because I wanted to correct the record. I had said there was $71 million in reserve for that eco fee. It was actually $71 million that was collected in fees in the first six months of the fee and about $20 million in reserve.

I just wanted to fix the record and thank Mr. Harris for giving me the link. It didn't give me the list of environmental organizations, but it did give me a few partners in the region. So thank you for that.

Co-op housing isn't something we're really familiar with in our community. I understand we have some in Ontario and in Ottawa here. But with our oppressive rent controls, they're becoming increasingly important to finding affordable housing. Also, with seniors housing, we're in that situation where people aren't quite sick enough to be in assisted living or in a nursing home but still not well enough to be all on their own. So the model you're describing is quite interesting.

Not having seen one in action in our community, I'm wondering if you could distinguish between the ways the housing co-op and a condo corporation work. What are the similarities? What are the distinguishing features?

[Kenneth Hood]

They're basically the same, I think. We have a strata fee. We have individual housing, but the strata looks after all the outside grounds, cuts the grass, and plows the snow. It's established. In that regard, we're personally responsible for the inside of our homes. I think condos are mostly strata corporations too, and that's the way their setup is too. They look after the outside because of the strata fees, and the inside of your place is your own responsibility.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Could Mr. Kitchen describe what the separate features would be?

[Darren Kitchen]

In the day-to-day operations and just the way they go about their business, there's not a whole lot of difference between a strata corporation and a co-op. Both have an elected board of directors that takes care of the day-to-day running of the co-op. It typically has a finance committee. It will have a maintenance committee, perhaps, and a gardening committee. These are just some of the more common committees that report to the board on those kinds of functions. If you look at it strictly as how you get done what you have to do every day, there's not much difference between the two.

A big difference comes at the level of ownership. In a condominium, what you own is the air space of your unit, right? That's yours; you have a separate mortgage that you pay to the bank or the credit union every month, and then you pay strata fees to look after the common property: the corridors, the elevators, that kind of thing.

In a co-op, you don't have a mortgage on your particular unit. The cooperative itself owns the building, and you have shares in the cooperative that entitle you to residence in one of the units of the co-op under its laws and regulations, so there's no individual ownership. That's true of an equity co-op as well as a non-profit, except that the equity co-op shares are obviously worth considerably more and they trade on the market.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

Mr. Hood, you mentioned that you had supportive living and assisted living. What is the difference between the two?

[Kenneth Hood]

That's if the Château Grandview gets built—it's not a reality yet, but it will become one. The supportive living is getting one main meal a day, cleaning, and those types of things, and in the assisted living there are people on board to help them with their daily needs—for example, if they need to be taken somewhere or whatever. I'm not sure of all the differences, but in the first phase, that's the way it will be, one main meal a day. Even those of us in the cooperative, if we didn't feel like cooking one day, we would have the right to buy a meal and go over there and partake.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll move now to Mr. Butt. You have the floor for the next five minutes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you very much, Mr. Chair.

I appreciate Mr. Payne allowing me to take his turn to ask more questions, because this is an area of specific interest to me. A lot of my background is in housing and it's part of my being elected an MP, so it's great to have an opportunity to learn a little bit more about what you're doing in British Columbia.

Mr. Kitchen, what percentage of the co-ops in the province of British Columbia would be federally funded, federally administered, through CMHC versus those that would be provincial, through the provincial ministry of housing?

[Darren Kitchen]

There are very few provincial co-ops. My own co-op is actually a provincial co-op, but there are 15 or 16 of them, or something like that.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

That's a lot different from the province of Ontario, where I'm from, where a lot more of them are actually provincial than federal. I guess that's because there was quite a bit of a boom, I guess, in funding some of that in the late eighties and early nineties, at that particular time with those particular governments that decided they were going to be in the provincial housing business at that time. So that's interesting to know about that, because I was concerned about some of the comments about CMHC and the ability to break mortgages and so on. I didn't know what a larger percentage of co-op housing was, so that's helpful to know.

Mr. Hood, with your ownership model for the residents, they obviously purchase their unit and they live in their unit. What happens when they sell the unit? Are you like a Habitat for Humanity model, where they're not entitled to keep the capital gain? What happens with Habitat for Humanity is while they live there, they pay down the mortgage. Say they bought the house for $200,000 and by the time they sell the mortgage is down to $160,000. They've built up $40,000 in equity, which they can take with them as they go. But if the house sells for anything above the original price, they're not entitled to keep the capital gain. Is it a similar model you have in your complex?

I ask that because that, in and of itself, makes sure that those units stay affordable, that nobody's gaming the system, so the new purchaser...and then the real estate value keeps escalating. Is that how your model works?

[Kenneth Hood]

Not entirely. When it was first developed, it was a lease agreement and the cooperative owned the units. But if I wanted to move out and sell, the cooperative looked after all that. If I paid $300,000, and in the time I lived there it went up to $330,000, the co-op would get a third of the $30,000 that it went up.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

So there's a share in the capital.

[Kenneth Hood]

They would take that, and then I would get the other $320,000 myself. But since that time, only about seven of the people remain a life lease, and the rest we changed to fee simple. In the Château development we didn't have any choice. You couldn't get money anywhere for a lease, so we changed that to fee simple too.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Mr. Kitchen, you and I talked a little bit earlier about the affordable housing agreements with the provinces and the federal government. You had indicated that you would prefer to see more federal restrictions to make sure there's accountability for the money.

How would you propose we have that conversation with the provinces when they argue for the exact opposite? I can certainly tell you, in the case of the Province of Quebec, out of all ten provinces they were the last one to sign the last affordable housing agreement. They didn't like the conditions, because we, the federal government, wanted accountability measures. We wanted to know how that money was going to be spent and we wanted to know if some of it was for capital, to build new housing, and we wanted to know if some of it was going into rent supplements.

Actually, I'll give Quebec credit. They've got an excellent rent supplement program that they've run for years. It should be a model for the country, as far as I'm concerned. They're doing some good things in housing in that particular province, which I'm more familiar with, like I am with Ontario, but this is the dilemma we're in at the federal level.

You can write Minister Finley all the letters you guys want. She's in a really difficult position, because she's got ten governments she has to negotiate affordable housing agreements with, all of which quite often are saying very different things.

Have you got any advice I can share with the minister as to how British Columbia would sign a deal that had really strong benchmarks set by the federal government?

[Darren Kitchen]

I'm not sure I have much advice for Minister Finley, other than perhaps to remember that it's the federal government's money. I just know that when I'm in negotiations with things and I'm being asked to put something in in the way of resources or money, I typically regard that as entitling me to some degree of—

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

That's good, because I'm on the human resources committee. That's good advice. Thank you.

[The Chair, Conservative, Blake Richards]

Thank you, Mr. Butt.

I don't know, but Mr. Harris was looking to make a trade, I think. He wanted to answer the question. If you wanted to trade spots with him....

[Voices]

Oh, oh!

[Dan Harris, NDP, Scarborough Southwest, ON]

I was just going to say all the premiers are meeting right now. If the Prime Minister were to meet with them, they could have those conversations.

[The Chair, Conservative, Blake Richards]

All right. Thank you for that intervention.

We're closing out the second round with that one. We do have a little bit of time remaining, so we'll start a third round.

We will go with Mr. Lemieux for the first five minutes there.