New Brunswick Non Profit Housing Association Conference Karen Brodeur, Program Manager CHF Canada
Jun 15, 2015
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?