Evidence of meeting #6 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was co-ops.
A video is available from Parliament.
Conservative
The Chair Conservative Blake Richards
Thank you very much.
Mr. Butt, the floor is now yours for the next five minutes.
Conservative
Brad Butt Conservative Mississauga—Streetsville, ON
Thank you very much, Mr. Chair.
Mr. Kitchen and Mr. Hood, thank you for making the long trek from the Vancouver area to come and see us today. We very much appreciate your taking the time. Particularly, Mr. Hood, congratulations for your particular project. I found that quite interesting, and if I get enough time I will ask you a couple of questions about your project in particular.
Just for everybody's benefit, and some around the table will certainly be aware of this—Mr. Kitchen, you may be as well—it was actually a decision in 1994 by the Chrétien government to basically get the federal government out of the business of direct provision of housing. So the decision was made a long time ago that the federal government wasn't going to be involved in the direct provision or direct construction of any sort of housing on a go-forward basis. In that government's defence, it was really the lobbying from the provinces that pushed a lot of that, including Quebec in particular, which told the federal government to get out of its backyard because its jurisdiction provincially is housing. It's not a federal area of jurisdiction.
So this fiscal year this federal government will transfer more than $1 billion to the provinces, with a lot of flexibility in those affordable housing agreements as to what each province can do, province by province. British Columbia, I'm sure you would agree, is a heck of a lot different from Newfoundland and Labrador, versus Alberta, versus Ontario. The needs are different; the communities are different; the housing is different.
Let me just ask this of you, as a provincial representative, because I had an opportunity to ask Mr. Gazzard a number of federal questions when he was here. As a provincial representative, do you think that is good housing policy? Does that not make sense that the federal government transfers a blanket amount of money and then says to the provinces, “You're the experts on housing; you know what the needs are on the ground; you spend that money as you see fit”—rent subsidies, building co-op housing, whatever those provincial governments decide to do? Is that not really the right model for an efficient way of dealing with affordable housing in the country?
Director, Government Relations, Co-operative Housing Federation of British Columbia
I think it's certainly true that the closer you get to the ground the more aware the people there are of what's actually necessary. My personal belief is that it can't be a blank cheque. Outcomes have to be part of that, right, because what can happen is the province gets the money and substitutes it for what it would have done if you hadn't given it money. So outcomes need to be specified, and those outcomes I think should be related to broad factors in the housing market, such as the reduction of core need, for example.
In my own province of British Columbia, the province has focused almost to the exclusion of everything else on street homelessness and providing supportive housing. Now, that's a laudable goal, but in consequence, other important goals, such as housing for low-income and moderate-income families, have kind of fallen off the table. So you're addressing a need here but ignoring and making worse another one there. I think some targets and some balance would be a good thing.
Conservative
Brad Butt Conservative Mississauga—Streetsville, ON
Yes, and there are a couple of different programs. I was talking about the affordable housing agreement. I wasn't talking about the housing partnership initiative, which funds the streets-to-homes program for street homelessness. That's a completely separate program, for which the federal government actually funds municipalities directly. I had a lot of involvement in that in the city of Toronto prior to being elected. And it was extremely effective, because it was actually one of the first relationships in which the federal government, our government, got back into directly funding municipalities to actually show results in the reduction of street homelessness. It was a wildly successful program, which I'm particularly proud of.
You talked about the CMHC mortgages and your concern that those mortgages can't be broken, so to speak. This is a difficult challenge, because 30 or 35 years ago, when these agreements were put in place, CMHC went out and borrowed that money at a preferential rate and provided it to the federal co-ops at a preferential rate at that time. That allowed stability. You talked about developers not building rental housing because they can't get their money out fast. Well, co-ops are exactly the same. We had to look at it longer term.
You are aware that if a co-op breaks a mortgage with CMHC with five years left, then CMHC has to pay the penalty to the bondholder it borrowed the money from. You're not suggesting that taxpayers should have to pick up the difference when CMHC has to pay its penalty for a broken mortgage so that a co-op can break its mortgage more quickly to take advantage of today's interest rates.
Director, Government Relations, Co-operative Housing Federation of British Columbia
I would be surprised if, given a large cash payout on a mortgage, CMHC couldn't find a way to invest that money to generate a return to pay the bondholders. As well, if the co-op were to pay the full interest that would have been owed, CMHC gets to invest its money twice. It gets to invest the principal that is repaid, and it gets an extra sum to invest from this extremely large penalty. It seems to me that they should be able to find a way to invest the principal in another way that compensates their bondholders.
I'm not suggesting that the co-op should not pay any penalty. Obviously, there's a transition cost for CMHC. It would take a while to do this. We're willing to contemplate a reasonable penalty. Mortgage holders in the private sector do this all the time, right? It's not a new idea. But we think that the full burden of the interest until the rollover to the next term is simply excessive, and it's a barrier to preserving affordable housing in Canada. We don't think it's in the federal government's interest, in the co-ops' interest, or in anyone's interest, in fact.
Conservative
The Chair Conservative Blake Richards
Thank you very much.
We'll now move to Mr. Bélanger for the next five minutes.
Liberal
President, Kootenay Columbia Seniors Housing Cooperative
That's strictly cooperative housing.
Liberal
President, Kootenay Columbia Seniors Housing Cooperative
Personally, I didn't know he was in existence.
Director, Government Relations, Co-operative Housing Federation of British Columbia
CHFBC so far works with non-profit co-ops. That's our membership.
Director, Government Relations, Co-operative Housing Federation of British Columbia
We don't yet, but we do think that a niche is emerging in the housing market for affordable ownership.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
That's something I'd like to explore. I won't have time to do it.
I'm hearing that equity co-ops are not particularly welcome in the traditional housing co-op world. Is that accurate?
Director, Government Relations, Co-operative Housing Federation of British Columbia
I think there's been some protectiveness of the brand, if you like, on the part of some of the non-profit co-ops. I think that would be one way to put it.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
I want to revisit the CMHC matter a little bit. My understanding is that the amortization period might indeed be 35 years. It is 35 years, but the mortgage period itself is not 35 years. It's considerably less. It's five, six, seven, and up to ten years.
Director, Government Relations, Co-operative Housing Federation of British Columbia
It's typically a five-year term.
Director, Government Relations, Co-operative Housing Federation of British Columbia
Yes, they are.
