New Brunswick Non Profit Housing Association Conference

Karen Brodeur, Program Manager

CHF Canada

Objectives

Discuss the reasons that we are talking about scale at CHF Canada

Review the current scale of the co-operative housing sector in Canada and abroad

What a successful future looks like Advantages and disadvantages of our scale Why and how co-ops unite Other ways to work together

CHF Canada

CHF Canada • is the national voice of the Canadian co‑operative

housing movement• has more than 1090 members and associates

Membership in CHF Canada is voluntary. More than eight out of ten housing co‑operatives outside of Quebec are members of CHF Canada.

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What does scale mean?

the relative size of the sector we have built together, from individual co-ops to the organizations that serve them

Why are we talking about scale?

• 2011 CHF Canada member resolution

• End of operating agreements means that a loss of co-op housing is a real threat

• Increasingly complex demands being placed on co-operatives

e.g. Provincial legislation

Failure rates for small businesses in North America:

35-56% within five years. In co-op housing terms that

would mean up to 30,000 homes could be lost by 2025.

Surveying the landscape

Scale of Operations

IsolatedCo-op

Sector Affiliations

Cost-Sharing Partnerships &

Joint Operations

Mergers and Amalgamation

In Canada…

Co-op Size # of co-ops # of units % of all co-ops % of all units

Less than 25 1,088 15,572 49% 17%

25-49 510 18,234 23% 20%

50-99 458 31,569 21% 34%

100-199 137 17,882 6% 19%

200 and over 28 8,633 1% 9%

TOTAL 2,221 91,890 100% 100%

Average co-op size

Austria

Portuga

l

German

y

Pakist

an

Poland

Czech

Republic

Irelan

d

Hungary

Egypt US

Italy

Sweden

Spain UK

Canad

a0

1000

2000

3000

4000 3717

18001178

847 738 634 500 236 216 188 156 154 102 66 41

Avg Size

*Information taken from ICA Profiles of a Movement: Co-operative Housing Around the World

Looking at scale across Canada

Conversations on Scale

Vancouver/Victoria

Manitoba

PEI

Ontario

New Brunswick

Prince Edward Island

Steering Committee Purpose

To explore opportunities for housing co-operatives in Prince Edward Island to work together by considering the impact of the end of the Operating Agreements, new development and consolidation.

British Columbia

• 2012 CHF/BC AGM – member resolution

• Information sessions

• Vancouver – commercial drive area

• Victoria

• 30 co-operative members representing 13 co-operatives

• Both groups have agreed to a second meeting

Ontario

A co-operative is considering acquiring units in Southern Ontario that could be lost to the co-op sector.

Meetings have been held with two co-operatives in Northern Ontario who are exploring the options.

New Brunswick

One city, one co-op? (279 units)

• City Centre• Heatherway• High Meadow Park• Jenny’s Spring• Lower Cove

• Neighbourhood• North End• South City• Wright Street

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Manitoba

Protecting the co-operative housing stock.....

Work in progress.....

• Creation of standardized materials

• Pilot projects – mergers, expansion and hopefully new co-op development

• Documented examples of the benefits of scale in Canada and abroad

• Support to staff and federations

Getting the messaging right

Existing benefits of scale

Insurance Bulk purchasing Shared management agreement contracts Local and national federations

Housing co-operatives are not currently at their optimum size for success

Some disadvantages of the existing scale of co-ops

Duplication of effort and expense

Smaller pool of potential directors

Fewer management options

Less financial security

Less likely to have access to financing

Redevelopment a huge challenge

Unable to access and pay for specialized services

Board burnout – what we know!

If we assume that the average number of seats on a co-op board in Canada is 7 then....

We require 14,000 co-op members to be capable directors with a clear understanding of governance.

The importance of planning

Co-operatives that.... Less than 50 units More than 50 units

have an investment policy 29% 37%

have a long term financial plan 35% 71%

have a completed BCA 65% 88%

Growth may be the only option for some co-operatives

Why should co-operatives grow?

To strengthen their future viability

To better serve their members needs

To strengthen governance

To create different co-op management options

To achieve operating efficiencies

For long-term risk reduction

Create new services for members

For reasons unique to a co-op

Scale

What are the advantages and disadvantages of our housing co-ops’ existing scale?

?

Advantages to Current Scale

We have experience with this current size of operations We know how to build close-knit communities in our

current co-operatives

Disadvantages to Current Scale

Duplication of effort and expense Smaller pool of potential directors and fewer

management options Less financial security and opportunities

Why Should Co-ops Grow?

To strengthen their future viability To better serve their members needs To strengthen governance To create different co-op management options To achieve operating efficiencies For long-term risk reduction Create new services for members For reasons unique to a co-op

How Can Co-ops Grow?

Development Redevelopment Expansion Mergers

For many co-ops, the only viable way to grow is thro

Impact of Scale

Each one requires its own board of directors some form of competent operational management a maintenance and capital repair program an annual audit where this is a program

requirement, as it is for most Canadian housing co‑ops.

In Canada there are approximately 90,000 units of co‐op housing that are operated by some 2,100 co op ‐housing corporations.

Impact of Scale on Governance

Board member burn-out Lack of involvement Inability to have access to time and/or funding for

education Lack of new ideas and direction for the co-op

Drawing on too few members for the board often leads to:

Impact of Scale on Management

The present scale of the sector results in a great deal of duplication of effort and expense.

Consider audits: an audit of a 500 unit co‑op will not cost 10 times as much as the combined cost of the audits for ten 50‑unit co‑ops.

What about capital plans? Or procuring accounting services? Or the cost of governance training?

Merger Models

Brand new co-op modelTwo or more co-ops coming together to form a new co-operative.

Growing a co-op modelOne or more co-operatives joining an existing co-operative.

The Merger Process

Must be member led Led by a leadership group of co-op members Discussion of concept by co-op members Approval in principle by co-op members Foster environment of respect with full disclosure Technical work includes long-term financial planning,

capital repair planning, modification of governance and management structures.

Causes of Failure

Member mistrust Disinformation Strong sense of belonging Members are risk averse Fear of change

Keys to Avoiding Difficulties

Never underestimate the importance of member engagement and buy-in

Avoid a structure that entrenches previous co-op identities

Provide opportunities for information sharing and discussion

Dedicate special resources to support governance and community building

Other Options to Work Together

Maintenance services Contracted services Group buying Community building Co-ordinated capital repair projects Member recruitment

Comments or questions?