3 Ways to Structure a Housing Co-op
While in Manitoba’s Interlake region, and at the Association of Manitoba Municipalities forum, we heard from many community leaders engaged with a wide array of opportunities and challenges. But the most pressing concern raised by far was housing. More specifically, how smaller communities can provide housing that matches the needs of their community.
Many of these community leaders noted that seniors housing, assisted living and entry-level homes are in high demand, and not finding solutions to these opportunities raises serious questions about the long-term sustainability of these communities.
Here are the three ways groups and communities can structure a housing co-op:
For-profit housing co-ops
Like most private ownership, for-profit co-op housing allows individuals to accrue asset value from a single housing unit or from the development itself. Plus, the model can provide options for direct, broader community involvement, which is particularly valuable to assisted-living and senior housing operations.
Traditionally, for-profit housing co-operatives have a simple common share membership, like condos. New homeowners purchase units from outgoing ones and outgoing homeowners benefit individually from any asset value accrual. Like condos, the co-operative maintains common areas, which benefits homeowners through shared maintenance expenses, community building (safety and security) and cost-savings (group efficiencies).
In rural communities, the need to increase diversity in housing stock within a community may not happen through traditional market forces alone, and developing housing co-ops may be the solution to increasing diversity in a local housing market.
Non-profit housing co-ops
A common model in prairie provinces is the non-profit housing co-operative. Because this model is shared-ownership and not-for-profit, people do not own their individual units and will not accrue asset value on their units individually. The organization itself fully owns the assets.
Accessing capital for a housing project is always a concern connected to these types of projects, but the co-operative model offers a fair amount of flexibility when it comes to financing. Options may include a life-lease model that secure up-front capital in exchange for a par valued share, which would be returned to the resident once they left the co-op. Another option could be to issue preferred shares to local investors or developers that recognize the need for local housing, want to invest in their community’s sustainability and are interested in receiving a return on their investment.
Public funding support is also sometimes an option. The Canadian federal government recently announced an intention to invest in housing and create a national housing plan, which could lead to more federal grants for housing projects. Similarly, provincial governments often invest in or manage low-interest loan options for social housing projects.
Community service co-operatives
Housing co-operatives are normally governed by the people that live in the development, and some even perform maintenance and management duties. But in the case of assisted living and seniors housing, the governance of the organization may require external support.
A successful example of this model operates in Mossbank, SK at the Furrows and Faith Retirement Villa Co-operative Ltd.
Formed in 2014, Furrows and Faith incorporated as a community service co-operative that provides housing and assisted living services to seniors. The community opened this facility to decrease the number of local seniors leaving the community as they age or require greater levels of care. The co-op is managed by a volunteer board consisting of engaged community members, and employs health, cleaning and cooking staff. Funding for the initiative came from an impressive fundraising effort, government grants and a long-term loan.
Where to start
If you’re interested in housing co-ops or how the co-operative model could be shaped to benefit your community? Contact us.