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The cooperative housing program : a program and policy evaluation Johnston, James A. 1983

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THE COOPERATIVE HOUSING PROGRAM: A PROGRAM AND POLICY EVALUATION BY JAMES A. JOHNSTON B.Com., The U n i v e r s i t y of B r i t i s h Columbia, 1981 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF SCIENCE in Business A d m i n i s t r a t i o n i n THE FACULTY OF GRADUATE STUDIES Commerce and B u s i n e s s A d m i n i s t r a t i o n (Department of Urban Land Economics) We accept t h i s t h e s i s as conforming to the r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH A p r i l 1984 © J A M E S A. JOHNSTON, COLUMBIA 1 984 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y a v a i l a b l e for reference and study. I further agree that permission f o r extensive copying of t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the head of my department or by h i s or her representatives. I t i s understood that copying or p u b l i c a t i o n of t h i s t h e s i s for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of The University of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date II ABSTRACT T h i s t h e s i s i s a d e s c r i p t i v e and e v a l u a t i v e study of the f e d e r a l government's NHA S e c t i o n 56.1 Cooperative Housing Program. The study d e s c r i b e s the nature of the housing tenure which the Cooperative Program promotes and the subsidy with which the program d e l i v e r s i t s a s s i s t a n c e . In a d d i t i o n , the study e v a l u a t e s the Cooperative Program in terms of process, impact, and e f f i c i e n c y and on the b a s i s of the program's c o n s i s t e n c y with the o b j e c t i v e of Canadian s o c i a l housing p o l i c y . T h i s e v a l u a t i o n i s based on analyses of the data from a n a t i o n a l survey of S e c t i o n 56.1 c o o p e r a t i v e households and p r o j e c t managers and from a small sample of S e c t i o n 56.1 c o o p e r a t i v e housing u n i t s l o c a t e d i n the Vancouver area. The d e s c r i p t i o n of the c o o p e r a t i v e housing tenure i n d i c a t e s that there are fundamental o r g a n i z a t i o n a l and economic c h a r a c t e r i s t i c s that d i s t i n g u i s h n o n - p r o f i t c o o p e r a t i v e housing from the t r a d i t i o n a l home ownership and r e n t a l tenures. The d e s c r i p t i o n of the program's subsidy mechanism i n d i c a t e s that the Cooperative Program implements both a demand-side and a s u p p l y - s i d e form of subsidy and that the magnitude of these s u b s i d i e s can d i f f e r s i g n i f i c a n t l y among c o o p e r a t i v e households and p r o j e c t s i n r e l a t i o n to a number of v a r i a b l e s . The process and impact e v a l u a t i o n s suggest that there are a number of fundamental problems i n the design and implementation of the Ill Cooperative Program. The e f f i c i e n c y e v a l u a t i o n suggests that the Cooperative Program must generate a very s u b s t a n t i a l d o l l a r amount of e x t e r n a l b e n e f i t s i n order to be j u s t i f i e d on the b a s i s of a l l o c a t i v e e f f i c i e n c y and that the program i s both v e r t i c a l l y and h o r i z o n t a l l y i n e q u i t a b l e . The o v e r a l l c o n c l u s i o n of t h i s study i s that the Cooperative Program i s an i n e f f e c t i v e means of a c h i e v i n g the o b j e c t i v e of Canadian s o c i a l housing p o l i c y . IV TABLE OF CONTENTS A b s t r a c t II Table of Contents IV L i s t of Tables VIII L i s t of F i g u r e s X Acknowledgement XI CHAPTER 1 An I n t r o d u c t i o n 1.1 An Overview , 1 1.2 An I n t r o d u c t i o n 1 1.3 The O b j e c t i v e s of the Research 8 1.4 An O r g a n i z a t i o n a l D e s c r i p t i o n of the Research 9 CHAPTER 2 A D e f i n i t i o n and E x p l a n a t i o n of Cooperative Housing 2.1 A D e f i n i t i o n of Cooperation and Cooperative Housing 12 2.2 An H i s t o r i c a l D e s c r i p t i o n of the Cooperative Movement 13 a. The Cooperative Movement Worldwide 13 b. The Cooperative Movement i n Canada 15 c. The E v o l u t i o n of the Cooperative Housing Movement i n Canada 16 2.3 A D e f i n i t i o n of the Continuing Cooperative 17 a. A D e s c r i p t i o n of the D i f f e r e n c e s Among the Forms of Cooperative Housing O r g a n i z a t i o n s 17 b. The D i s t i n g u i s h i n g C h a r a c t e r i s t i c s of the Con t i n u i n g Housing Cooperative 20 V c. The Non-Prof i t C o n t i n u i n g Housing Cooperative and the Housing Sector 25 2.4 A Summary of the B e n e f i t s and Costs Which Accrue to and are Incurred by Cooperative Members From the Nature of the Cooperative E n t e r p r i s e 38 a. The D i r e c t E f f e c t s 38 b. The I n d i r e c t E f f e c t s ....43 2.5 The Prevalence of Co n t i n u i n g Cooperatives in Canada 46 CHAPTER 3 The E v o l u t i o n of The Cooperative Program 3.1 The E v o l u t i o n of the Cooperative Program 51 CHAPTER 4 The E v a l u a t i o n Methodology 4.1 The E v a l u a t i o n of S o c i a l Housing Programs 63 4.2 A D e f i n i t i o n of E v a l u a t i o n and a D i s c u s s i o n of the N e c e s s i t y f o r E v a l u a t i o n 66 a. The Purpose and Hypothesis of E v a l u a t i o n 66 b. The D i s t i n c t i o n Between E v a l u a t i o n and E v a l u a t i o n Researh 68 c. A D i s t i n c t i o n Between Process, Impact, and E f f i c i e n c y E v a l u a t i o n 69 d. A D i s c u s s i o n of the Design of P u b l i c P o l i c y E v a l u a t i o n 71 4.3 The Framework of E v a l u a t i o n f o r the Cooperative Program 75 4.4 A S p e c i f i c a t i o n of the S t a t i s t i c a l and Data I n d i c a t o r s to be Used 78 4.5 CMHC's Se c t i o n 56.1 E v a l u a t i o n 83 VI CHAPTER 5 The Cooperative Housing Program: A D e s c r i p t i o n of the NHA A s s i s t a n c e to N o n - P r o f i t Cooperative Housing 5.1 A D e s c r i p t i o n of the Post-1978 Cooperative Housing Program 88 a. An I d e n t i f i c a t i o n of the Elements and I n t e r f a c e s of the Cooperative Program 89 b. An E x p l a n a t i o n of the Subsidy Mechanism 91 5.2 The O b j e c t i v e s of the Cooperative Program 110 a. An I d e n t i f i c a t i o n of the Program's O b j e c t i v e s 110 b. An " O p e r a t i o n a l i z a t i o n " of the Program's Ob j e c t i v e s 111 5.3 The Nature of P r o v i n c i a l and M u n i c i p a l A s s i s t a n c e to F e d e r a l l y - A s s i s t e d Cooperatives 121 CHAPTER 6 The Program P e r s p e c t i v e of E v a l u a t i o n 6.1 The Process E v a l u a t i o n 126 a. Does the Program's A s s i s t a n c e Reach i t s Target? 1 26 b. Does the D e l i v e r y Mechanism Provide the A s s i s t a n c e Intended by the Program's Design? 133 c. Does the D e l i v e r y System Implement the Approp r i a t e Cost C o n t r o l s ? 139 6.2 The Impact E v a l u a t i o n 143 6.3 The E f f i c i e n c y E v a l u a t i o n ' 154 a. A D e f i n i t i o n of E f f i c i e n c y 157 b. An A n a l y s i s of the A l l o c a t i v e E f f i c i e n c y of the Cooperative Housing Program 160 c. An A n a l y s i s of the D i s t r i b u t i o n a l E f f i c i e n c y of the Cooperative Program 174 VII CHAPTER 7 Summary and Conclus i o n s 7 .1 Summary 187 7.2 Conclus i o n s and Recommendations f o r Change and Future Research 192 B i b l i o g r a p h y 197 Appendix 1 206 Appendix 2 207 Appendix 3 239 Appendix 4 241 VI LIST OF TABLES Table Page 1.1 Net Cash Fow F o r e c a s t s For S o c i a l Housing S u b s i d i e s For Years 1982/83 Through 1986/87 4 1.2 S o c i a l Housing Program A c t i v i t y 1973 to 1982 5 1.3 Commitments f o r S e c t i o n 56.1 Cooperative Housing P r o j e c t s and U n i t s as of January 1983 7 2.1 A S t a t i s t i c a l Summary of C o n t i n u i n g Housing Cooperatives i n Canada 47 6.1 A Summary of the Incomes of P a r t i c i p a n t s of the Cooperative Housing Program 128 6.2 The Incidence of P r i o r t i y Groups Among Cooperative Households Among a l l Canadian Households 131 6.3 The A l l o c a t i o n of Cooperative Program S e c t i o n 56.1 Subsidy u n i t s by Housing Type and by Year ( i n number of u n i t s ) 132 6.4 The A l l o c a t i o n of Cooperative Program S e c t i o n 56.1 Subsidy u n i t s by Housing Type and by Year ( i n number of p r o j e c t s ) 134 6.5 Summary of Rent-to-income R a t i o s For S e c t i o n 56.1 Cooperative Households 136 6.6 The E f f e c t of a Change i n E l i g i b i l i t y R a t i o s 138 6.7 A summary of the C r i t e r i a of A p p r o p r i a t e Housing 145 6.8 Sources of F i n a n c i n g f o r S e c t i o n 56.1 Cooperative P r o j e c t s (by year and i n number of p r o j e c t s ) 148 6.9 P r i v a t e l y - I n i t i a t e d Loans to S e c t i o n 56.1 Cooperative P r o j e c t s 1978 - 1982 (by type of lender) 148 6.10 A Comparison of the D i s t r i b u t i o n of Household Incomes f o r a l l Canadian Households and S e c t i o n 56.1 Coo p e r a r a t i v e Households 151 6.11 The D i s t r i b u t i o n of Coopera t i v e Households on the Ba s i s of 1981 Income Q u i n t i l e s 152 6.12 S e c t i o n 56.1 Cooperative Housing Commitments and the Stock of P r i v a t e Rental Housing ......155 IX LIST OF TABLES Continued 6.13 S e c t i o n 56.1 Commitments by Census M e t r o p o l i t a n Area and by Vacancy Rate ( i n number of p r o j e c t s ) 156 6.14 S e c t i o n 56.1 Cooperative Households as a P o r t i o n of A l l Canadian Households on the B a s i s of Income .....176 6.15 S e c t i o n 56.1 Cooperative Households as a P o r t i o n of A l l Renter Households on the B a s i s of Income 177 6.16 The D i s t r i b u t i o n S e c t i o n 56.1 Cooperative Households by Income and Income-testing Status 180 X LIST OF FIGURES F i g u r e Page 2.1 An I l l u s t r a t i o n of the Components of the Canadian Housing Sector 27 2.2 The Housing Stock and Flow Model (by Tenure Submarket) 28 2.3 The Housing Stock and Flow Model (by Tenure Submarket) and an Exogenous Change in Demand 29 2.4 The Determination of the P r i c e of Housing S e r v i c e s in the P r i v a t e Sector and i n the T h i r d Sector 30 4.1 The E v a l u a t i o n Framework 76 5.1 An I l l u s t r a t i o n of the Elements and I n t e r f a c e s of the Cooperative Housing Program 90 5.2 An I l l u s t r a t i o n of the C a l c u l a t i o n of S e c t i o n 56.1 A s s i s t a n c e to Cooperative U n i t s 99 5.3 An I l l u s t r a t i o n of the C a l c u l a t i o n of S e c t i o n 56.1 A s s i s t a n c e throughout the the A m o r t i z a t i o n P e r i o d on a Monthly and Per Unit B a s i s 102 5.4 An I l l u s t r a t i o n of the C a l c u l a t i o n of S e c t i o n 56.1 A s s i s t a n c e throughout the the A m o r t i z a t i o n P e r i o d on a Monthly and Per Unit B a s i s Assuming that the Mortgage i s Renewed A f t e r Year 5 and 10 at 17% and 14% 104 5.5 An I l l u s t r a t i o n of the A l l o c a t i o n of the A s s i s t a n c e A v a i l a b l e to Income-tested Occupants 107 6.1 Consumer Choice i n the Case of P u b l i c Housing 163 6.2 Consumer Choice in the Case of Cooperative Housing 165 6.3 Consumer Choice in the Case of Cooperative Housing and the Determination of Net D i r e c t B e n e f i t s 168 XI ACKNOWLEDGEMENTS I would l i k e to thank the committee Mark, Dr. Michael Goldberg, and Dr. support and encouragement, without which able to complete t h i s t h e s i s . members, Dr. Jonathan Aidan V i n i n g , f o r t h e i r I would not have been 1 CHAPTER 1 AN INTRODUCTION (1.1) An Overview E v a l u a t i n g the f e d e r a l government's s o c i a l i n i t i a t i v e s i s more a r t than s c i e n c e . The programs, even in t h e i r c o n c e p t i o n , are imprecise t o o l s f o r i n t e r v e n t i o n . They f r e q u e n t l y approach the problems they are meant to s o l v e from an o b l i q u e angle, and provide only p a r t i a l s o l u t i o n s . V a l i d and r e a l i s t i c standards f o r judging them are c r i t i c a l l y l a c k i n g . Implemented in an environment charged with emotional and p o l i t i c a l disagreement and subject to a number of u n c o n t r o l l e d v a r i a b l e s , the programs defy c a r e f u l and systematic e v a l u a t i o n . 1 Notwithstanding the above, the purpose of t h i s t h e s i s i s to c a r e f u l l y and s y s t e m a t i c a l l y evaluate a p a r t i c u l a r f e d e r a l l y -a d m i n i s t e r e d s o c i a l housing i n i t i a t i v e : the Cooperative Housing Program. (1.2) An I n t r o d u c t i o n to the Cooperative Housing Program F e d e r a l government i n t e r v e n t i o n in Canadian housing markets i s g e n e r a l l y i n s t i t u t e d by means of three instruments: the Canadian income tax system; the Canada Mortgage and Housing C o r p o r a t i o n (CMHC), the f e d e r a l Crown c o r p o r a t i o n r e s p o n s i b l e f o r the a d m i n i s t r a t i o n of the N a t i o n a l Housing Act (NHA); and the f e d e r a l departmental b u r e a u c r a c i e s that i n t e r v e n e i n housing markets in order to achieve both h o u s i n g - s p e c i f i c and non-h o u s i n g - s p e c i f i c goals ( f o r i n s t a n c e , the Department of Regional Economic Expansion, the Department of Veteran A f f a i r s , and the Department of Indian and Northern A f f a i r s . ) Although Canada's income tax system i s u n e q u i v o c a l l y the most c o n s e q u e n t i a l of 2 these instruments, CMHC i s c e r t a i n l y the f e d e r a l , government's most v i s i b l e and most d i r e c t instrument of i n t e r v e n t i o n in Canada's housing s e c t o r . CMHC has t r a d i t i o n a l l y performed two d i s t i n c t r o l e s on behalf of the f e d e r a l government: one r o l e which i s e s s e n t i a l l y of a f i n a n c i a l nature, and another r o l e which i s e s s e n t i a l l y of departmental nature. In i t s f i n a n c i a l r o l e , CMHC pr o v i d e s NHA mortgage insurance and d i r e c t l y lends mortgage funds to borrowers who are unable to ob t a i n funds i n the p r i v a t e market. 2 In i t s departmental r o l e , CMHC pr o v i d e s p o l i c y advice on housing and urban a f f a i r s , undertakes and sponsors housing-r e l a t e d r e s e a r c h , and desi g n s , c o o r d i n a t e s , and a d m i n i s t e r s housing programs. These a c t i v i t i e s are d i r e c t e d t o : "the p u r s u i t of s o c i a l housing g o a l s ; the r e h a b i l i t a t i o n and c o n s e r v a t i o n of the housing stock; community improvement; r e s e a r c h , development, and demonstration; and the d i s s e m i n a t i o n of i n f o r m a t i o n . " 3 The p u r s u i t of these a c t i v i t i e s c ost the government of Canada almost $1.4 b i l l i o n i n 1982. A l l of the c o s t s i n c u r r e d by CMHC i n i t s departmental r o l e are reimbursed by a p p r o p r i a t i o n s by the M i n i s t e r r e s p o n s i b l e f o r CMHC from the f e d e r a l government's C o n s o l i d a t e d Revenue Fund. The l a r g e s t component, i n terms of c o s t , of CMHC's departmental a c t i v i t i e s i s comprised of the instruments which CMHC implements and a d m i n i s t e r s i n p u r s u i t of i t s s o c i a l housing p o l i c y . The o v e r a l l o b j e c t i v e of CMHC's s o c i a l housing p o l i c y i s to pro v i d e a s s i s t a n c e to households "who lack the means to buy or rent housing that p r o v i d e s them with a reasonable standard of space and q u a l i t y . " * CMHC spent 3 more than $600 m i l l i o n on s o c i a l housing programs i n 1982. While CMHC's annual expenditures on s o c i a l housing do indeed r e q u i r e a l a r g e amount of p u b l i c resources, the f e d e r a l l y - s u b s i d i z e d s o c i a l housing stock r e p r e s e n t s l e s s than 4 percent of Canada's t o t a l housing stock, or approximately 290,000 s o c i a l housing u n i t s among about 8,438,000 housing u n i t s n a t i o n a l l y . 5 While p u b l i c housing s u b s i d i e s continue to be the primary user of s o c i a l housing funds, the p u b l i c housing program has s i g n i f i c a n t l y reduced i t s commitments f o r a d d i t i o n s to the p u b l i c housing stock s i n c e 1973 -- most of the c o s t s now i n c u r r e d by the p u b l i c housing program are a s s o c i a t e d with p r e v i o u s commitments. Since 1978, CMHC's p r i n c i p a l instrument of s o c i a l housing p o l i c y has been the NHA S e c t i o n 56.1 a s s i s t a n c e . S e c t i o n 56.1 a u t h o r i z e s CMHC to provide h o u s i n g - t i e d f i n a n c i a l a s s i s t a n c e to households who l i v e w i t h i n p u b l i c and p r i v a t e non-p r o f i t r e n t a l housing and c o n t i n u i n g housing c o o p e r t i v e s . Table 1.1 i l l u s t r a t e s the net cash flow f o r e c a s t s f o r S e c t i o n 56.1 expenditures as w e l l as those of the r e s t of CMHC's s o c i a l housing a c t i v i t i e s . The S e c t i o n 56.1 a s s i s t a n c e i s the primary component of the Cooperative Housing Program and pr o v i d e s d i f f e r e n t i a l i n t e r e s t a s s i s t a n c e f o r the mortgage payments of c o n t i n u i n g housing c o o p e r a t i v e s . In a d d i t i o n , the Cooperative Housing Program p r o v i d e s a s s i s t a n c e to c o n t i n u i n g housing c o o p e r a t i v e s in the form of s u b s i d i z e d mortgage insurance, t e c h n i c a l and a d m i n i s t r a t i v e a s s i s t a n c e , and c a p i t a l f i n a n c i n g when p r i v a t e funds are not a v a i l a b l e . 6 Table 1.2 i l l u s t r a t e s the gross annual commitments of S e c t i o n 56.1 d i f f e r e n t i a l a s s i s t a n c e f o r 4 Table 1.1 Net Cash Flow F o r e c a s t s For S o c i a l Housing S u b s i d i e s For years 1982/83 through 1986/87 ( i n m i l l i o n s of nominal d o l l a r s ) 1982/83 1983/84 1984/85 1985/86 1986/87 PUBLIC HOUSING S e c t i o n 40 Fed/Prov 86.9 S e c t i o n 44/43 and P r o v i n c i a l l y Financed 250.3 % of t o t a l 54.7 RENT SUPPLEMENT Se c t i o n 44(1)a. ( P r i v a t e Landlord) 20.5 S e c t i o n 4 4 ( l ) b . ( N o n - p r o f i t & Co-op) 10.2 S e c t i o n 44(1)a. CRSP % of t o t a l 5.0 NON-PROFIT/COOPERTIVE Se c t i o n s 15.1/34.18 13.4 S e c t i o n 56.1 P u b l i c 72.9 S e c t i o n 56.1 P r i v a t e 102.2 S e c t i o n 56.1 Cooperative 30.8 % of t o t a l 35.6 RURAL and NATIVE S e c t i o n 40 R & N 29.6 % of t o t a l 4.8 TOTALS 616.8 90. 3 97. 2 103.7 111. 7 271 . 5 283. 4 292.0 301 . 8 46. 1 39. 2 35.5 33. 6 22. 7 26. 3 29.3 32. 6 10. 3 10. 8 11.1 1 1 . 1 5. 3 13.9 23. 9 4. 2 4. 4 5.3 5. 5 13. 5 12. 9 12.7 12. 6 1 60. 7 1 57. 5 1 96.8 227. 1 82. 7 204. 6 238.2 266. 3 .13. 5 1 37. 7 175.0 203. 3 45. 0 52. 8 55.9 57. 6 36. 7 34. 6 35.9 41 . 7 4. 7 3. 6 3.2 3. 4 784. 6 970. 3 1113.6 1 232. 1 Source: CMHC's T r e a s u r e r ' s D i r e c t o r a t e A p r i l 1983 F o r e c a s t ; CMHC Comprehensive S o c i a l E v a l u a t i o n 5 Table 1.2 S o c i a l Housing Program A c t i v i t y 1973 to 1982 1 973 j 1974 ! 1975 [ 1976 ! 1977 i jCOMMITMENTS FOR i | |UNITS AND BEDS: i ! [ P u b l i c Housing 14,377 !12,635 ! 13,490 ! 14,505 [ 8,302 j [Rent Supplement 1 ,365 ! 1,141 [ 2,039 [ 2,637 [ 2,880 [ [S e c t i o n 15.1 & 34 .18 | Co-op & N o n - p r o f i t 2,825 !10,574 j10,354 !13,660 ! 7,488 ! [Rural and Native [ Housing S e c t i o n 40 j 12 ! 1,733 ! 1,691 j 2,306 j [ TOTALS 18,567 [24,362 i 27,816 [32,493 [20,976 j J CAPITAL | | j COMMITMENTS [($MILLIONS) i i [ P u b l i c Housing 251 .5 ! 235.5 j 360.8 | 403.4 i 198.9 i [ S e c t i o n 15.1 & 34 .18 j j [ Co-op & N o n - p r o f i t 102.7 [ 144.5 ! 203.4 ! 328.3 [ 220.2 [ [Rural and Native j [ [ Housing S e c t i o n 40 ! 31.6 ! 46.5 [ 59.3 [ j TOTALS 354.2 [ 380.0 ! 595.8 [ 778.2 ! 478.4 j [SUBSIDY [EXPENDITURES i i [($MILLIONS) | j [ P u b l i c Housing 34.7 ! 55.9 [ 75.0 ! 95.3 ! 129.3 i [Rent Supplement 0 ! o [ 3.1 [ 4.9 [ 7.4 [ [S e c t i o n 15.1 & 34 .18 [ [ [ Co-op & N o n - p r o f i t 0 [ 6.4 ! 13.0 ! 23.2 [ 31 . 1 j [Rural and Native j j [ Housing S e c t i o n 40 0 j 5.7 [ 5.9 [ 6.5 j 4.3 ! j TOTALS 34.7 [ 68.0 ! 97.0 j 129.9 ! 172.1 j c o n t i n u e d ... Table 1.2 continued S o c i a l Housing Program A c t i v i t y 1973 to 1982 COMMITMENTS FOR UNITS AND BEDS: P u b l i c Housing Rent Supplement S e c t i o n 15.1 & 3 4 . 1 8 Co-op & N o n - p r o f i t Sect ion 56.1 Cooperat i v e s N o n - p r o f i t Rural and Native Housing S e c t i o n 40 TOTALS 1978 1979 ! 1980 | 1981 j 1982 j 8, 185 5 ,396 ! 4 , 7 5 9 ! 1,022 ! 4 , 5 17 | 1,250 ! 4 , 2 5 5 | 734 | 2,831 j ! 1,293 j 5 ,037 i 0 i o i o i o i 287 2 , 6 7 8 ! 2 , 1 0 9 j 1 7 , 5 3 3 ! 4 , 1 72 |20 , 735 j 4 , 0 4 5 j 1 8 , 1 9 8 | 6 , 037 j j 18, 167 | 1 ,942 | 1,581 ! 1,545 j 1,352 ! 1,426 j 2 3 , 5 2 5 |27 , 004 1 32 , 219 j 2 8 , 5 8 4 j 2 8 , 3 2 8 j 2 4 4 . 5 ! 7 8 . 5 | 8 4 . 9 j 6 9 . 9 ! 6 3 . 3 | 1 5 7 . 6 i 0 ! o i o ! o i 5 7 . 3 | 4 9 . 1 'j 5 0 . 2 ! 4 2 . 9 | 4 9 . 2 j 4 5 9 . 4 j 1 27 . 6 | 135.1 ! 1 12 . 8 | 1 12 . 5 | 1 4 9 . 3 9 .2 ! 2 4 6 . 6 ! 9.1 ! 2 3 9 . 5 | 14 .8 ! 2 8 4 . 8 | 16 .2 ! 3 6 3 . 8 j j 16 .5 | 3 1 . 4 j 2 3 . 8 j 16 .7 i 12.1 j 10 .2 | 0 .5 i 0 ! 1.0 ! 1-9 ! 14 .7 ! 6 . 0 | 6 0 . 4 j 34.1 i | 1 51 . 9 | 6.2 ! 7.1 ! 8 . 5 j 2 3 . 8 ! 2 3 . 3 j 196 .6 ! 2 8 7 . 6 ! 296.1 j 4 0 3 . 3 j' 6 0 0 . 0 i CAPITAL COMMITMENTS ($MILLIONS) P u b l i c Housing S e c t i o n 15.1 & 3 4 . 1 8 Co-op & N o n - p r o f i t Rural and Native Housing S e c t i o n 40 TOTALS . SUBSIDY EXPENDITURES ($MILLIONS) P u b l i c Housing Rent Supplement S e c t i o n 15.1 & 3 4 . 18 Co-op S< N o n - p r o f i t Sect ion 56.1 Coop e r a t i v e s Non-prof i t Rural and Native Housing S e c t i o n 40 TOTALS Source: CMHC A d m i n i s t r a t i v e Data F i l e s ; CMHC Annual Reports 1973 - 1 982 ; CMHC Comprehensive S o c i a l Review 7 Table 1.3 The Number and D i s t r i b u t i o n of S e c t i o n 56.1 Cooperative Housing P r o j e c t s and U n i t s as of January 1983 PROVINCE Co-op P r o j e c t s U n i t s % D i s t r i b u t i o n ( u n i t s ) Newfoundland 28 316 1 .7 P.E.I . 5 25 . 1 Nova S c o t i a 1 06 708 3.8 New Brunswick 1 5 291 '1.6 Quebec 366 4,292 23.0 Ontar i o 1 47 6,759 36.2 Manitoba 4 1 50 .8 Saskatchewan 7 241 1 .3 A l b e r t a 1 4 849 4.5 B.C. 1 03 4,987 26.7 N.W.T. 0 0 0 Yukon 1 50 .3 CANADA 796 18,668 100.0 Source: Canadian Housing S t a t i s t i c s 1983 8 n o n - p r o f i t c o o p e r a t i v e housing on the b a s i s of the number of loans, the number of u n i t s and h o s t e l beds, and the d o l l a r value of commitments in the context of CMHC's p o r t f o l i o of s o c i a l housing a c t i v i t i e s s i n c e 1973, when e x p l i c i t NHA a s s i s t a n c e to c o n t i n u i n g c o o p e r a t i v e housing was i n i t i a t e d v i a S e c t i o n s 34.18 and 15.1. F i n a l l y , Table 1.3 i l l u s t r a t e s the t o t a l number and d i s t r i b u t i o n of commitments f o r S e c t i o n 56.1 a s s i s t a n c e to c o o p e r a t i v e s as of January 1983. (1.3) The O b j e c t i v e s of the Research The primary o b j e c t i v e of t h i s study i s to determine whether the f e d e r a l l y - a d m i n i s t e r e d Cooperative Housing Program i s an " e f f e c t i v e " means of a c h i e v i n g f e d e r a l government goals for s o c i a l housing p o l i c y . In the context of t h i s r e s e a r c h , " e f f e c t i v e n e s s " i s a m u l t i - d i m e n s i o n a l concept measured through a program p e r s p e c t i v e of e v a l u a t i o n . The program p e r s p e c t i v e e v a l u a t e s the Cooperative Program i n terms of whether the program has been implemented a c c o r d i n g to i t s s t a t e d g u i d e l i n e s , in terms of whether the program's mechanics are e f f e c t i v e i n rea c h i n g the program's o b j e c t i v e s , and i n terms of the e f f i c i e n c y with which the program c r e a t e s v a l u a b l e e f f e c t s on c o o p e r a t i v e households and on s o c i e t y . The primary source of data f o r the e v a l u a t i o n i s CMHC's n a t i o n a l survey of S e c t i o n 56.1 c o o p e r a t i v e housing u n i t s and p r o j e c t s undertaken i n the winter of 1982. The e v a l u t i o n i s t h e r e f o r e based on the op e r a t i o n of the Cooperative Program as of 1982. The "aging" of the program by almost two years has l i t t l e , i f any, e f f e c t on the value of the re s e a r c h ; a f t e r a l l , there have been no 9 fundamental changes i n the program s i n c e 1982 and the only fundamental d i f f e r e n c e with re s p e c t to the s u b s i d i z e d c o o p e r a t i v e u n i t s or occupants i s l i k e l y to be i n terms of t h e i r growth i n number. A s u b s i d i a r y o b j e c t i v e of the re s e a r c h i s the f o r m u l a t i o n of a framework which i s a p p r o p r i a t e f o r the e v a l u a t i o n of other s o c i a l housing programs. T r a d i t i o n a l methodologies f o r e v a l u a t i n g p u b l i c investment ( f o r i n s t a n c e , orthodox c o s t -b e n e f i t or c o s t - e f f e c t i v e n e s s frameworks) are of l i m i t e d value f o r the e v a l u a t i o n of housing programs that are premised on d i s t r i b u t i o n a l o b j e c t i v e s or that cause outcomes of an i n t a n g i b l e nature. T h i s study develops an e v a l u a t i v e framework which acknowledges that p u b l i c investment i s intended to pursue both a l l o c a t i v e e f f i c i e n c y and e q u i t y - r e l a t e d o b j e c t i v e s and that economic welfa r e i s dependent not only on the magnitude of n a t i o n a l wealth, but a l s o on the d i s t r i b u t i o n of that wealth. (1.4) An O r g a n i z a t i o n a l D e s c r i p t i o n Of The Research Chapter 2 of the study d e f i n e s c o o p e r a t i o n and the c o o p e r a t i v e housing tenure, p r o v i d e s an h i s t o r i c a l d e s c r i p t i o n of the c o o p e r a t i v e movement and c o o p e r a t i v e housing in Canada, d e f i n e s and d e s c r i b e s the n o n - p r o f i t c o n t i n u i n g housing c o o p e r a t i v e , and d e s c r i b e s the economics of the c o o p e r a t i v e housing s e c t o r i n r e l a t i o n to p r i v a t e housing markets. The purpose of Chapter 2 i s to pro v i d e both, background and understanding of the housing tenure which the Cooperative Housing Program a s s i s t s and promotes. 10 Chapter 3 d e s c r i b e s the e v o l u t i o n of f e d e r a l government a s s i s t a n c e to c o n t i n u i n g housing c o o p e r a t i v e s and the e f f e c t s of changing government a t t i t u d e s on the p r i o r i t y of c o o p e r a t i v e housing a s s i s t a n c e as an instrument of s o c i a l housing p o l i c y . Chapter 4 develops a framework f o r the e v a l u a t i o n of the Cooperative Housing Program through a d i s c u s s i o n of the nature and the n e c e s s i t y of t r a d i t i o n a l e v a l u a t i o n r e s e a r c h . In a d d i t i o n , the o b j e c t i v e of s o c i a l housing p o l i c y i s d e f i n e d i n terms of the r e l a t i o n s h i p between s o c i a l p o l i c y and s o c i a l housing p o l i c y . F i n a l l y , the elements of the e v a l u a t i o n are i d e n t i f i e d and the s t a t i s t i c a l and data i n d i c a t o r s used in the e v a l u a t i o n are s p e c i f i e d . Chapter 5 d e s c r i b e s the d e l i v e r y mechanism of the p o s t -1978 Cooperative Program and " o p e r a t i o n a l i z e s " the program's o b j e c t i v e s . Chapter 6 i s the program p e r s p e c t i v e of e v a l u a t i o n . Three aspects of e v a l u a t i o n are undertaken: process e v a l u a t i o n ; impact e v a l u a t i o n ; and e f f i c i e n c y e v a l u a t i o n . The purpose of the program p e r s p e c t i v e i s to assess whether the program i s implemented a c c o r d i n g to i t s g u i d e l i n e s , whether the program achieves i t s o b j e c t i v e s , and whether the program uses i t s resources i n an e f f i c i e n t manner. Chapter 7 concludes the e v a l u a t i o n by summarizing the program's outcomes in terms of the program's o b j e c t i v e s and i n terms of the o b j e c t i v e of Canadian S o c i a l Housing P o l i c y . An i n d i c a t i o n of the changes necessary to improve the program's e f f e c t i v e n e s s i s a l s o p r o v i d e d . Endnotes L e v i t a n and Wurzberg, 1979, page 9. CMHC w i l l d i r e c t l y loan funds i f p r i v a t e funds are not a v a i l a b l e i n the p r i v a t e s e c t o r at a r a t e which a c c u r a t e l y r e f l e c t s the r i s k of the mortgage. CMHC Annual Report 1981 page 12. Background Document on S o c i a l Housing CMHC, page 2. Canadian Housing S t a t i s t i c s 1982. The a s s i s t a n c e v i a c a p i t a l f i n a n c i n g i s a c t u a l l y not part of the departmental r o l e , but rather p a r t of the CMHC's f i n a n a c i a l r o l e . 12 CHAPTER 2 A DEFINITION AND EXPLANATION OF COOPERATIVE HOUSING The purpose of t h i s chapter i s to provide an understanding and an h i s t o r i c a l background of the housing tenure which the Cooperative Program promotes. S e c t i o n 1 d e f i n e s c o o p e r a t i o n i n a general context and i n the context of c o o p e r a t i v e housing. S e c t i o n 2 summarizes the nature of the c o o p e r a t i v e movement which i s r e s p o n s i b l e f o r the concept of c o o p e r a t i v e housing. S e c t i o n 3 d i s t i n g u i s h e s among the v a r i o u s forms of housing-r e l a t e d c o o p e r a t i v e o r g a n i z a t i o n , and d e s c r i b e s the c h a r a c t e r i s t i c s of the c o n t i n u i n g housing c o o p e r a t i v e and the housing s e c t o r of which i t i s p a r t . S e c t i o n 4 summarizes the b e n e f i t s and c o s t s which the l i t e r a t u r e on c o o p e r a t i v e housing g e n e r a l l y a t t r i b u t e s to the nature of the c o o p e r a t i v e e n t e r p r i s e . F i n a l l y , s e c t i o n 5 d i s c u s s e s the r o l e of c o o p e r a t i v e housing i n the Canadian housing s e c t o r . (2.1) A D e f i n i t i o n of Cooperation and Cooperative Housing Webster's D i c t i o n a r y (1980) d e f i n e s c o o p e r a t i o n "as a dynamic s o c i a l process in which mutual b e n e f i t s outweigh the disadvantages of working with o t h e r s . " Thus, c o o p e r a t i o n i s the a s s o c i a t i o n of persons f o r a common b e n e f i t : the maximization of the t o t a l w e l f a r e of the c o o p e r a t o r s . Cooperation i s present to some degree i n p r a c t i c a l l y every economic and s o c i a l a c t i v i t y i n modern s o c i e t y . I t i s not, as i s 1 3 o f t e n i m p l i e d , only a phenomenon of h i g h l y s o c i a l i z e d economies, and i t does not, as i s o f t e n i m p l i e d , c o n t r a d i c t i d e a l l i b e r a l economic o r g a n i z a t i o n ; a f t e r a l l , c o o p e r a t i o n (by d e f i n i t i o n ) does not reduce i n d i v i d u a l freedom other than in a self-imposed manner. 1 The scope of c o o p e r a t i o n can t h e o r e t i c a l l y be very narrow or very broad — the c o o p e r a t i v e model of o r g a n i z a t i o n has been used to secure access to a s p e c i f i c commodity or s e r v i c e j u s t as i t has been used to organize the m a j o r i t y of a c t i v i t i e s i n a p a r t i c u l a r community. Th e r e f o r e , the phrase " c o o p e r a t i v e housing tenure" r e f e r s to a method of a c q u i r i n g housing s e r v i c e s which i s q u i t e d i f f e r e n t from the t r a d i t i o n a l housing tenures of homeownership and r e n t a l tenancy: n e i t h e r home owners nor (market) tenants d i r e c t l y a s s o c i a t e with other households i n order to maximize t h e i r welfare when a c q u i r i n g housing s e r v i c e s , while such an a s s o c i a t i o n i s the foundation of c o o p e r a t i v e housing. (2.2) An H i s t o r i c a l D e s c r i p t i o n of the Cooperative Movement (2.2a) The Cooperative Movement Worldwide H i s t o r i c a l l y , c o o p e r a t i v e s o c i e t i e s have t h r i v e d when the p r e v a i l i n g economic and s o c i a l systems were judged by p a r t i c i p a n t s of those systems to be incapable of s u p p l y i n g the requirements of t h e i r community. In f a c t , the c o o p e r a t i v e ideology through i t s d i v e r s e a p p l i c a t i o n s has been c r e d i t e d as a s a v i o r of a g r i c u l t u r a l communities i n China, labour groups i n Great B r i t a i n and housing p r o j e c t s i n Scandinavian c o u n t r i e s . 1 4 Although c o o p e r a t i v e s have e x i s t e d i n d i f f e r e n t forms s i n c e a n c i e n t China and Babylon, and gained widespread European p o p u l a r i t y i n the years f o l l o w i n g the I n d u s t r i a l R e v o l u t i o n 2 , the most important p e r i o d of the c o o p e r a t i v e movement's o r g a n i z a t i o n was the f i r s t h a l f of the 19th cen t u r y . During t h i s p e r i o d , a number of B r i t i s h p h i l a n t h r o p i s t s j o i n e d the working c l a s s i n a c o o p e r a t i v e attempt to "remedy the i n j u s t i c e s and abuses of the t i m e " 3 , the three most noted persons being: "Robert Owen, s u c c e s s f u l i n d u s t r i a l i s t ; ... W i l l i a m Thompson, I r i s h landowner and s c h o l a r ; and Dr. W i l l i a m King, a p h y s i c i a n i n B r i g h t o n . " " While Owen and Thompson amassed r e l a t i v e l y l a r g e amounts of c a p i t a l which they d i r e c t e d towards the development of new c o o p e r a t i v e communities, King supported the concept of the small s e l f - s u p p o r t i n g c o o p e r a t i v e . I t was the 1828-1830 p u b l i c a t i o n s of King's magazine The Cooperator which f o r m a l i z e d the concepts f o r the C h a r t i s t and S o c i a l i s t movements and f o r mutual a i d through c o o p e r a t i o n . 5 The b i r t h of the modern c o o p e r a t i v e movement i s g e n e r a l l y a t t r i b u t e d to the Rochdale E q u i t a b l e Pioneers ( L a n c a s h i r e , B r i t a i n 1844), a group which was i n s p i r e d by King's p u b l i c a t i o n s . 6 While the Rochdale Pioneers operated only a modest food and hardware c o o p e r a t i v e , t h e i r r u l e s of o r g a n i z a t i o n and t h e i r emphasis on s e l f - h e l p have become the underpinnings of most c o o p e r a t i v e movements, i n c l u d i n g c o o p e r a t i v e housing. The Rochdale Pioneers' primary r u l e s were: "democratic c o n t r o l -- one man one vote; goods s o l d at p r e v a i l i n g market p r i c e s ; l i m i t e d i n t e r e s t on c a p i t a l ; d i s t r i b u t i o n of p r o f i t s ( a f t e r c o n t r i b u t i o n to reserves) to 1 5 members i n p r o p o r t i o n to purchases; p r o v i s i o n f o r r e g u l a r meetings; and education of members. 7 The success of the Rochdale Pioneers marketed the c o o p e r a t i v e ideology and form of o r g a n i z a t i o n throughout Europe; i n f a c t , "the c o - o p e r a t i v e movement grew i n t o v i r t u a l l y every s e c t o r of the economy -- food, f i n a n c e , a g r i c u l t u r e , insurance. Throughout the world a need was seen f o r an i n t e r n a t i o n a l co-o p e r a t i v e o r g a n i z a t i o n [thus] the I n t e r n a t i o n a l Co-operative A l l i a n c e (ICA) was formed in 1895 to a i d new co-op development and a s s i s t c o - o p e r a t i o n among c o - o p e r a t i v e s . " 8 With the encouragement of the ICA, the c o o p e r a t i v e movement i n c r e a s e d i n i n t e n s i t y i n the l a t t e r part of the 19th century and throughout the 20th cen t u r y , e s p e c i a l l y i n Europe and North America. With very l i t t l e m o d i f i c a t i o n , the Rochdale Pi o n e e r s ' r u l e s of o r g a n i z a t i o n have become known as the "Rochdale P r i n c i p l e s of Cooperation" and the Rochdale o b j e c t i v e of c o o p e r a t i o n and s e l f -h e l p toward a common aim f o r mutual b e n e f i t has become the premise of the modern c o o p e r a t i v e movement. The Rochdale P r i n c i p l e s of Cooperation (as l a s t r e d r a f t e d i n 1966) were adopted by the ICA as the b a s i s f o r the c o o p e r a t i v e movement and are l i s t e d i n Appendix 1. (2.2b) The Cooperative Movement i n Canada The c o o p e r a t i v e movement i n Canada began in the 1860's when B r i t i s h working-class immigrants "with c o o p e r a t i v e knowledge and enthusiasm" 9 exposed miners i n Nova S c o t i a to the concept of s e l f - h e l p c o o p e r a t i v e s . The B r i t i s h i n f l u e n c e c l o s e l y p a r a l l e l e d the Rochdale Pioneer's approach and l e d to the 1 6 c r e a t i o n of a number of small consumer c o o p e r a t i v e s . A second c o o p e r a t i v e i n f l u e n c e o r i g i n a t e d from the U n i t e d S t a t e s i n the 1870's and evolved i n Western Canada, yet t h i s i n f l u e n c e (which was d i r e c t e d mainly towards farmers, r a t h e r than urban d w e l l e r s ) was somewhat m i l i t a n t and was not founded on the Rochdale P r i n c i p l e s , but r a t h e r on a "resentment towards monopoly." 1 0 A t h i r d i n f l u e n c e i n the e v o l u t i o n of the Canadian c o o p e r a t i v e movement was the o r g a n i z a t i o n of the f i r s t s u c c e s s f u l North American c r e d i t union (or c a i s s e p o p u l a i r e ) i n L e v i s , Quebec in 1900. In the f o l l o w i n g years farmers i n western p r o v i n c e s formed a g r i c u l t u r a l c o o p e r a t i v e s f o r the purposes of buying and s e l l i n g s u p p l i e s and produce and i n 1901 the Cooperative Union of Canada was organized to represent c o o p e r a t i v e s throughout Canada and promote c o o p e r a t i o n among Canadian c o o p e r a t i v e s . Canadian experience with c o o p e r a t i v e s c o n t i n u e d throughout the f i r s t three decades of the 20th century as c o o p e r a t i v e wheatpools, farms, and mutual insurance companies were org a n i z e d throughout the country. In a d d i t i o n , a growing p o l i t i c a l f oundation i n the Canadian c o o p e r a t i v e movement l e a d to the formation of the Co-operative Commonwealth F e d e r a t i o n , the forerunner to the New Democratic P a r t y . 1 1 (2.2c) The E v o l u t i o n of the Cooperative Housing Movement in Canada Despite the growth in the Canadian c o o p e r a t i v e movement there was l i t t l e i n t e r e s t shown in the a p p l i c a t i o n of c o o p e r a t i v e o r g a n i z a t i o n to the a c q u i s i t i o n of housing s e r v i c e s before the 1960's. Although b u i l d i n g c o o p e r a t i v e s were 1 7 intr o d u c e d i n Nova S c o t i a i n 1938 and student-occupied c o n t i n u i n g c o o p e r a t i v e housing (at the U n i v e r s i t y of Toronto) was introduced i n 1936, i t was not u n t i l 1965 that c o o p e r a t i v e housing was organized f o r non-student members on a c o n t i n u i n g b a s i s . 1 2 T h i s lack of i n t e r e s t was the r e s u l t of a number of i n t e r r e l a t e d f a c t o r s : a strong p r e f e r e n c e f o r home ownership over a l t e r n a t i v e housing tenures; f e d e r a l government (housing-r e l a t e d ) expenditure p o l i c i e s which t r a d i t i o n a l l y d i r e c t e d funds towards home ownership and d i d not recognize the c o o p e r a t i v e housing s e c t o r as an a p p r o p r i a t e focus of expenditure; and a lack of encouragement and education by the c o o p e r a t i v e movement with respect to the p o s s i b i l i t i e s of the c o o p e r a t i v e form of o r g a n i z a t i o n f o r the p r o v i s i o n of housing s e r v i c e s -- i t was not u n t i l 1948 that the c o o p e r a t i v e movement f i r s t appealed to the f e d e r a l government f o r a s s i s t a n c e i n the p r o v i s i o n of c o o p e r a t i v e h o u s i n g . 1 3 (2.3) A D e f i n i t i o n of the Continuing Housing Cooperative (2.3a) A D e s c r i p t i o n of the D i f f e r e n c e s Among the Forms of Housing-Related Cooperative O r g a n i z a t i o n The term "c o o p e r a t i v e housing" i s g e n e r a l l y used i n re f e r e n c e to the housing stock or housing s e r v i c e s that r e s u l t from four d i f f e r e n t forms of h o u s i n g - r e l a t e d c o o p e r a t i v e o r g a n i z a t i o n : b u i l d i n g c o o p e r a t i v e s ; purchasing c o o p e r a t i v e s ; c o n t i n u i n g c o o p e r a t i v e s ; and b u i l d e r s ' c o o p e r a t i v e s . T h i s study e v a l u a t e s a f e d e r a l l y - a d m i n i s t e r e d housing program which s u b s i d i z e s households who are members of, and l i v e w i t h i n , one 18 of these c o o p e r a t i v e forms: the c o n t i n u i n g housing c o o p e r a t i v e . T h i s s e c t i o n b r i e f l y d e s c r i b e s the e s s e n t i a l d i f f e r e n c e s among these four forms of c o o p e r a t i v e o r g a n i z a t i o n . In the case of b u i l d i n g c o o p e r a t i v e s , a number of ( p r o s p e c t i v e ) households j o i n together i n order to c o l l e c t i v e l y b u i l d a number of houses which, upon completion, w i l l be i n d i v i d u a l l y owned. In other words, c o o p e r a t i o n among members e x i s t s s o l e l y throughout the p l a n n i n g and b u i l d i n g of the housing, but not i n it's subsequent ownership and o p e r a t i o n . The b u i l d i n g c o o p e r a t i v e has had a very l o c a l i z e d a p p l i c a t i o n i n Canada, p r i m a r i l y i n Nova S c o t i a and r u r a l p a r t s of Quebec. T h i s form of c o o p e r a t i o n i s aimed p r i m a r i l y at reducing the c o s t s of the p l a n n i n g and c o n s t r u c t i o n of housing by s u b s t i t u t i n g the work of p r i v a t e a r c h i t e c t s and c o n t r a c t o r s f o r the work of household members who w i l l e v e n t u a l l y own and l i v e i n the f i n i s h e d housing. T h i s type of o r g a n i z a t i o n a l l o w s only l i m i t e d s p e c i a l i z a t i o n of labour among c o o p e r a t i v e members and e l i m i n a t e s the p r o f i t margins which normally are i n c l u d e d i n the cost of p l a n n i n g and c o n s t r u c t i o n . B u i l d i n g c o o p e r a t i v e s are only p r a c t i c a l f o r those people who have a s t r o n g p r e f e r e n c e f o r b u i l d i n g t h e i r own home or who a s s i g n low o p p o r t u n i t y c o s t s to the time spent p l a n n i n g and b u i l d i n g ; indeed a very l i m i t e d r e l i a n c e on b u i l d i n g c o o p e r a t i v e s suggests that there are few Canadians with such c h a r a c t e r i s t i c s . 1 " In the case of purchasing c o o p e r a t i v e s , a number of households j o i n together i n the purchase of the land and b u i l d i n g m a t e r i a l s to be used f o r t h e i r housing. The purpose of 19 the purchasing c o o p e r a t i v e i s to take advantage of the p o s s i b l e economies of s c a l e i n purchases. Once c o n s t r u c t e d , the housing i s owned i n d i v i d u a l l y and the c o o p e r a t i v e i s g e n e r a l l y disbanded. In the case of a c o n t i n u i n g housing c o o p e r a t i v e , a group of households j o i n together i n order to purchase (or c o n t r a c t development) and c o o p e r a t i v e l y own t h e i r housing. Thus, the c o n t i n u i n g form of o r g a n i z a t i o n i s a means of c o o p e r a t i v e l y a c q u i r i n g both housing stock and housing s e r v i c e s -- the co o p e r a t i v e nature of the c o n t i n u i n g housing c o o p e r a t i v e e x i s t s both before and a f t e r the a c q u i r e d housing i s a v a i l a b l e to i n h a b i t . And f i n a l l y , i n the case of b u i l d e r s ' c o o p e r a t i v e s , a group of b u i l d e r s or c o n t r a c t o r s j o i n together f o r the s o l e purpose of b u i l d i n g c o n t i n u i n g housing c o o p e r a t i v e s or r e n t a l housing f o r n o n - p r o f i t housing c o r p o r a t i o n s . T h e o r e t i c a l l y , the b u i l d e r s of such a c o o p e r a t i v e earn a wage ( r a t h e r than i n c l u d i n g a margin f o r p r o f i t i n the p r i c e of c o n s t r u c t i o n ) p a i d by a c o o p e r a t i v e or n o n - p r o f i t f e d e r a t i o n or . c o u n c i l which c o l l e c t s dues from ongoing c o n t i n u i n g c o o p e r a t i v e s and non-p r o f i t housing c o r p o r a t i o n s . Although there are not any ( r e g i s t e r e d ) b u i l d e r s ' c o o p e r a t i v e s i n C a n a d a 1 5 , such o r g a n i z a t i o n s are widespread throughout the Scandinavian c o u n t r i e s and Europe. Thus, each of the four forms of c o o p e r a t i v e o r g a n i z a t i o n i n v o l v e s c o o p e r a t i o n among a group of households or b u i l d e r s f o r the purpose of a c h e i v i n g a common h o u s i n g - r e l a t e d g o a l . But the 20 goals d i f f e r c o n s i d e r a b l y among these forms of o r g a n i z a t i o n , and only i n the case of the c o n t i n u i n g housing c o o p e r a t i v e does the c o o p e r a t i v e form of o r g a n i z a t i o n remain a f t e r the pro d u c t i o n of housing stock and continue through the consumption of housing s e r v i c e s . I t i s the c o n t i n u i n g form of c o o p e r a t i v e housing o r g a n i z a t i o n that i s the focus of d i r e c t f e d e r a l government a s s i s t a n c e and i s t h e r e f o r e the focus of the remainder of t h i s study. (2.3b) The D i s t i n g u i s h i n g C h a r a c t e r i s t i c s of the Con t i n u i n g Housing Cooperative As e x p l a i n e d above, the c o n t i n u i n g housing c o o p e r a t i v e i s a means by which a group of households can c o l l e c t i v e l y a c q u i r e housing stock and housing s e r v i c e s . With the ( d e f i n i t i o n a l ) e x ception that a c o o p e r a t i v e housing p r o j e c t must c o n s i s t of at l e a s t two housing u n i t s , there i s t h e o r e t i c a l l y no r e s t r i c t i o n on the number of u n i t s or households that can comprise a p a r t i c u l a r c o o p e r a t i v e housing p r o j e c t . In a d d i t i o n , there i s t h e o r e t i c a l l y no r e s t r i c t i o n on the o r i g i n of the c o o p e r a t i v e housing stock. In other words, a c o n t i n u i n g housing c o o p e r a t i v e may a c q u i r e housing stock through any number of d i f f e r e n t methods: f o r i n s t a n c e , by purchasing newly c o n s t r u c t e d housing ( e i t h e r c o n s t r u c t e d to order, through a turnkey p r o p o s a l , or from a developer who c o n s t r u c t e d e x i s t i n g u n i t s on s p e c u l a t i o n 1 6 ) ; by purchasing and r e h a b i l i t a t i n g e x i s t i n g housing; by purchasing the housing that the c o o p e r a t i v e members p r e v i o u s l y i n h a b i t e d through p e r i o d i c tenancy or homeownership 1 7; or any combination of these methods. 21 T h i s s e c t i o n d e s c r i b e s two c h a r a c t e r i s t i c s of c o n t i n u i n g housing c o o p e r a t i v e s -- ownership and e q u i t y -- which d i s t i n g u i s h t h i s form of housing tenure from other housing tenures and, in the case of the second c h a r a c t e r i s t i c , enable d i s t i n c t i o n s to be made among d i f f e r e n t types of c o n t i n u i n g housing c o o p e r a t i v e s . ( 2 . 3 b ) i . The ownership d i s t i n c t i o n In Canada, a c o n t i n u i n g housing c o o p e r a t i v e must be i n c o r p o r a t e d under the p r o v i s i o n s of the r e l e v a n t p r o v i n c i a l C o o perative's Act and i s r e q u i r e d to have a w r i t t e n c o n s t i t u t i o n comprised of bylaws, c o o p e r a t i v e p o l i c i e s , and a r e g i s t e r a b l e name. 1 8 Through i n c o r p o r a t i o n the c o o p e r a t i v e becomes a l e g a l e n t i t y with the a b i l i t y to pursue and undertake c o n t r a c t u a l b e n e f i t s and o b l i g a t i o n s . T h i s enables the c o o p e r a t i v e group to c o l l e c t i v e l y purchase and mortgage r e a l p r o p e r t y and g i v e s the c o o p e r a t i v e s h a r e h o l d e r s u n d i v i d e d j o i n t ownership of the c o o p e r a t i v e ' s housing u n i t s and l i m i t e d l i a b i l i t y f o r the c o o p e r a t i v e ' s debts and l i a b i l i t i e s . The shareholders are g e n e r a l l y persons who l i v e w i t h i n the housing owned by the c o o p e r a t i v e c o r p o r a t i o n . Thus, c o o p e r a t i v e households (or as they are commonly c a l l e d , c o o p e r a t i v e members) do not own i n d i v i d u a l housing u n i t s , but r a t h e r they own a p r o p o r t i o n a t e share of the e n t i r e e n t e r p r i s e . Any l o s s e s which occur are the r e s p o n s i b i l i t y of the c o r p o r a t i o n and not the l i a b i l i t y of the i n d i v i d u a l household. And s i m i l a r to the t r a d i t i o n a l concept of shareholder c o n t r o l , the c o o p e r a t i v e member has a p r o p o r t i o n a t e c o n t r o l over the 22 a c t i v i t i e s of the c o o p e r a t i v e c o r p o r a t i o n (although g e n e r a l l y a c o o p e r a t i v e member cannot own more than one share or c o n t r o l more than one vote) and the member e x e r c i s e s h i s c o n t r o l by c a s t i n g h i s vote in an e l e c t i o n of the board of d i r e c t o r s . Although the c o n t i n u i n g c o o p e r a t i v e member does not have i n d i v i d u a l ownership of h i s housing u n i t he does have s e c u r i t y of tenure as long as he s a t i s f i e s the c o o p e r a t i v e ' s general maintenance requirements and pays the monthly housing charges. The word "charges" i s e s s e n t i a l l y a euphemism f o r " r e n t " used by c o o p e r a t i v e groups in an attempt to l e s s e n t h e i r a s s o c i a t i o n with the r e n t a l tenure. N e v e r t h e l e s s , the s t a t u s of the co o p e r a t i v e member can best be summarized with r e f e r e n c e to the r e l a t i o n s h i p inherent i n the r e n t a l market: the c o o p e r a t i v e member has a dual r o l e -- one as a l a n d l o r d w i t h i n the context of the c o l l e c t i v e c o o p e r a t i v e ownership, and another as a tenant w i t h i n the context of an i n d i v i d u a l household engaged i n a p e r i o d i c tenancy. ( 2 . 3 b ) i i . The e q u i t y d i s t i n c t i o n In a d d i t i o n to i t s unique ownership c h a r a c t e r i s t i c s , a p a r t i c u l a r c o n t i n u i n g c o o p e r a t i v e can be d i s t i n g u i s h e d from other forms of housing tenure, and from other forms of c o n t i n u i n g c o o p e r a t i v e s , on the b a s i s of e q u i t y c o n s i d e r a t i o n s . When a household j o i n s a c o n t i n u i n g housing c o o p e r a t i v e ( i n Canada) i t i s r e q u i r e d to make a small e q u i t y c o n t r i b u t i o n , u s u a l l y ranging from $500 to $3, 000. 1 9 The e q u i t y requirement i s g e n e r a l l y l e s s than the downpayment that i s r e q u i r e d to purchase a home of s i m i l a r value and i s i n d i r e c t c o n t r a s t to the absence 23 of e q u i t y by a tenant i n the r e n t a l market. The use to which the c o o p e r a t i v e a p p l i e s the e q u i t y c o n t r i b u t i o n s w i l l depend on the s t a t u s of a p a r t i c u l a r c o o p e r a t i v e : i f a c o o p e r a t i v e i s a r e g i s t e r e d n o n - p r o f i t c o r p o r a t i o n , i t may be able to o b t a i n 100 percent mortgage f i n a n c i n g due to the a v a i l a b i l i t y of NHA mortgage d e f a u l t insurance f o r 100 percent of the p r o j e c t ' s c a p i t a l c o s t s (NHA insurance w i l l be d i s c u s s e d i n d e t a i l i n Chapter 5) and t h e r e f o r e member e q u i t y i s a l l o c a t e d towards day-to-day working c a p i t a l ; on the other hand, i f the c o o p e r a t i v e i s not a n o n - p r o f i t o r g a n i z a t i o n or i f i t i s unable to a c q u i r e 100 percent f i n a n c i n g f o r some other reason, then member e q u i t y i s u s u a l l y used to bridge the gap between the maximum loan amount and the market value of the c o o p e r a t i v e housing stock, as i s commmon with owner e q u i t y i n the homeownership tenure. T h i s l a s t p o i n t a l l u d e s to the b a s i s of the fundamental e q u i t y d i s t i n c t i o n among p a r t i c u l a r c o n t i n u i n g housing c o o p e r a t i v e s : the treatment of changes in the value of a p a r t i c u l a r c o o p e r a t i v e stock, i n terms of i t s e f f e c t on members' e q u i t y , d i f f e r s s i g n i f i c a n t l y between c o o p e r a t i v e s that are o r g a n i z e d on a n o n - p r o f i t b a s i s and c o o p e r a t i v e s that are o r g a n i z e d on a p r o f i t b a s i s . In the case of the n o n - p r o f i t c o o p e r a t i v e c o r p o r a t i o n , an i n c r e a s e or decrease i n the value of the e q u i t y i n v e s t e d i n the c o r p o r a t i o n i s normally t r e a t e d i n one of two ways v i s - a - v i s members' share v a l u e 2 0 : in accordance with the concept of par v a l u e , a member who leaves the c o o p e r a t i v e s e l l s h i s share to the c o r p o r a t i o n f o r an amount equal to h i s o r i g i n a l c o n t r i b u t i o n ; or a l t e r n a t i v e l y , the member s e l l s h i s share f o r 24 an amount equal to h i s o r i g i n a l c o n t r i b u t i o n p l u s compensation f o r any change i n the purchasing power of that c o n t r i b u t i o n due to i n f l a t i o n . The f i r s t a l t e r n a t i v e , a c c o r d i n g to Laidlaw, i s the " u l t i m a t e i n c o o p e r a t i o n " 2 1 ; however, i t i n c r e a s e s a member's cost f o r c o o p e r a t i v e housing s e r v i c e s i n p e r i o d s of i n f l a t i o n and i s consequently not favoured by p o t e n t i a l c o o p e r a t i v e members. The second a l t e r n a t i v e recompenses c o o p e r a t i v e members f o r the e f f e c t s of i n f l a t i o n on e q u i t y c o n t r i b u t i o n s . T h i s constant d o l l a r v a l u a t i o n of e q u i t y i s c o n s i s t e n t with the t h i r d Rochdale P r i n c i p l e of c o o p e r a t i o n , the p o l i c y of the Cooperative Housing Foundation of Canada (CHF), and the q u a l i f y i n g c r i t e r i a of f e d e r a l government a s s i s t a n c e to c o n t i n u i n g c o o p e r a t i v e s . I n t e r e s t i n g l y , t h i s a l t e r n a t i v e p o t e n t i a l l y y i e l d s an i m p l i c i t p r o f i t to c o o p e r a t i v e members (which of course c o n t r a d i c t s the n o n - p r o f i t nature of such c o o p e r a t i v e s ) : i f the i n f l a t i o n - c o m p e n s a t i n g r e t u r n on the member's e q u i t y i s g r e a t e r than the a f t e r - t a x r e t u r n that c o u l d have been earned had the e q u i t y been i n v e s t e d i n the next best a l t e r n a t i v e , then the c o o p e r a t i v e member would f i n d the e q u i t y investment p r o f i t a b l e . In other words, i f r e a l r a t e s of r e t u r n on the investments a v a i l a b l e to c o o p e r a t i v e members are negative then investment in c o o p e r a t i v e housing would prove to be p r o f i t a b l e f o r those members. In the case of the c o n t i n u i n g c o o p e r a t i v e which i s not a n o n - p r o f i t c o r p o r a t i o n , the e q u i t y of c o o p e r a t i v e members i s a f f e c t e d by housing market c o n d i t i o n s and general economic c o n d i t i o n s i n e s s e n t i a l l y the same manner as i s the e q u i t y of an homeowner. Thus, when a c o o p e r a t i v e member s e l l s h i s c o o p e r a t i v e 25 share, i t i s s o l d openly on the market much l i k e a share i n a condominium p r o j e c t and the member enjoys ( s u f f e r s ) any gain ( l o s s ) i n h i s e q u i t y which accrues r e s i d u a l l y a f t e r the pro r a t a outstanding mortgage balance i s accounted f o r . Although Laidlaw suggests that such e q u i t y treatment renders a c o o p e r a t i v e c o r p o r a t i o n to be " c o o p e r a t i v e i n name o n l y " 2 2 , unless the c o o p e r a t i v e member i s a l s o f u l l y compensated f o r the amount that h i s monthly fees c o n t r i b u t e d to the r e d u c t i o n in the mortgage p r i n c i p a l then a p r o p o r t i o n of the d e p a r t i n g member's e q u i t y remains i n the c o o p e r a t i v e c o r p o r a t i o n . Because the n o n - p r o f i t form of c o o p e r a t i v e housing i s the focus of f e d e r a l government a s s i s t a n c e through the NHA and i s endorsed by the Cooperative Housing F e d e r a t i o n of Canada 2 3 (while the p r o f i t form i s n o t ) , the vast m a j o r i t y of c o n t i n u i n g c o o p e r a t i v e s i n Canada are n o n - p r o f i t c o o p e r a t i v e s . T h i s study e v a l u a t e s a f e d e r a l l y - a d m i n i s t e r e d housing program which s u b s i d i z e s households who are members of n o n - p r o f i t c o n t i n u i n g housing c o o p e r a t i v e s ; h e n c e f o r t h , the term " c o o p e r a t i v e housing" w i l l be used in r e f e r e n c e to the n o n - p r o f i t c o n t i n u i n g form of c o o p e r a t i v e housing unless e x p l i c i t l y s t a t e d otherwise. (2.3c) The N o n - P r o f i t C o n t i n u i n g Housing Cooperative and the Housing Sector The housing s e c t o r can be d e f i n e d as a aggregate of three s u b - s e c t o r s : the p r i v a t e s e c t o r , the p u b l i c s e c t o r , and what i s g e n e r a l l y r e f e r r e d to as the " t h i r d s e c t o r " . The p r i v a t e s e c t o r i s c h a r a c t e r i s t i c of a market economy of f r e e l y bought and s o l d housing stock and s e r v i c e s . The p u b l i c s e c t o r i s comprised of 26 the housing stock and s e r v i c e s that are owned and operated by the government and that are g e n e r a l l y p rovided at lower-than-market value to households who cannot presumably a f f o r d an adequate q u a l i t y and/or q u a n t i t y of housing s e r v i c e s . The t h i r d s e c t o r i s comprised of the housing stock and s e r v i c e s which are not traded f r e e l y i n the housing market (and thus supposedly not a f f e c t e d by the short run p r i c e e f f e c t s of demand and supply f o r c e s ) , yet are a l s o not owned or d i r e c t l y p r o v i d e d by government. F i g u r e 2.1 i l l u s t r a t e s the components of these sub-s e c t o r s and t h e i r a s s o c i a t i o n with one another. ( 2 . 3 c ) i The economics of housing markets The t r a d i t i o n a l stock and flow model of the housing market (by tenure submarkets) demonstrates the e f f e c t of changes i n supply and demand c o n d i t i o n s on the p r i c e of housing stock. F i g u r e 2.2 i l l u s t r a t e s the housing model i n terms of the ownership and r e n t a l submarkets. In each of the ownership and r e n t a l submarkets there i s both a stock and flow s e c t o r . The stock s e c t o r r e p r e s e n t s the demand and supply c o n d i t i o n s of the e x i s t i n g stock of r e n t a l or ownership housing u n i t s at a p a r t i c u l a r p o i n t i n time. The flow s e c t o r r e p r e s e n t s the p r i c e and supply c o n d i t i o n s of net a d d i t i o n s to the r e n t a l or homeownership stock over a p a r t i c u l a r p e r i o d of time. In both the r e n t a l and ownership submarkets the p r i c e of housing i s determined by demand i n the stock s e c t o r . 27 F i g u r e 2.1 An I l l u s t r a t i o n of the Components of the Canadian Housing Sector The Canadian Housing Sector The P r i v a t e Sector The P u b l i c Sector P u b l i c Housing The T h i r d Sector Owner Occupied Rental Tenure P r o f i t C o operative Tenure Regulated Pr i v a t e Sector (Limi ted Dividend) S i n g l e Family M u l t i -Family S i n g l e Family Dwellings Condominiums Coop e r a t i v e s Non-prof i t Cont i n u i n g Housing Cooperat i v e s B u i l d i n g B u i l d e r s and Coop e r a t i v e s Purchasing Cooperat i v e s 28 F i g u r e 2.2 The Stock and Flow Model (by t e n u r e submarket) The Ownership Submarket P a r t I S S' U n i t s of Stock P a r t I I jr. P r o f i t /'' Labour M a t e r i a l s i i Overhead h F i n a n c i n q i ! Land U n i t s of Flow P a r t I I I The R e n t a l Submarket P a r t IV S S ' U n i t s of Stock - 7 P ! 1 P r o f i t Labour ' i f M a t e r i a l s 1 1 Overhead 11 F i n a n c i n g i ! Land u ' u U n i t s of Flow 29 F i g u r e 2.3 The Stock and Flow Model And an Exogenous Change i n Demand P a r t I The Ownership Submarket P a r t I I U U' U n i t s of Stock U n i t s of Flow 30 F i g u r e 2.4 The Determination of the P r i c e of Housing S e r v i c e s in the P r i v a t e Sector and i n the T h i r d Sector Part I Part n Q u a n t i t y of Housing Quantity of Housing S e r v i c e s i n the S e r v i c e s i n the P r i v a t e Sector T h i r d Sector 31 Part I of F i g u r e 2.2 i l l u s t r a t e s the d e t e r m i n a t i o n of p r i c e i n the owner submarket. The v e r t i c a l l i n e S r e p r e s e n t s the supply of housing stock and i s assumed to be p e r f e c t l y i n e l a s t i c with re s p e c t to p r i c e i n the short run due to the lengthy p l a n n i n g and p r o d u c t i o n p e r i o d r e q u i r e d f o r new housing c o n s t r u c t i o n . 2 " The l i n e D r e p r e s e n t s demand f o r housing stock and i s assumed to be r e l a t i v e l y e l a s t i c with respect to p r i c e . The p r i c e of housing stock i n e q u i l i b r i u m i s shown at po i n t P where demand and supply i n t e r s e c t . Part II of F i g u r e 2.2 i l l u s t r a t e s the d e t e r m i n a t i o n of new c o n s t r u c t i o n i n the owner submarket. The w i l l i n g n e s s of i n v e s t o r s and b u i l d e r s to p a r t i c i p a t e i n the flow s e c t o r i s a f u n c t i o n of the p r o f i t at the margin of such a c t i v i t y . The p r o f i t i s a f u n c t i o n of the p r i c e s of the f a c t o r s of p r o d u c t i o n ( l a n d , m a t e r i a l s , overhead, labour, and f i n a n c i n g . ) As the expected p r o f i t at the margin r i s e s , i n v e s t o r s and b u i l d e r s i n c r e a s e c o n s t r u c t i o n of housing stock f o r ownership. Line MC r e p r e s e n t s the marginal cost of new c o n s t r u c t i o n faced by i n v e s t o r s and b u i l d e r s , while p o i n t P represents the p r i c e of new c o n s t r u c t i o n , which i s determined in the stock subsector. The p o i n t Q r e p r e s e n t s the l e v e l of c o n s t r u c t i o n of u n i t s f o r homeownership and i s represented by the p o i n t at which MC i n t e r s e c t s the p r i c e . Thus, i n e q u i l i b r i u m (at p o i n t A i n Part I and at p o i n t B in Part II) the p r i c e of one u n i t of housing stock i s P. An important c h a r a c t e r i s t i c of the flow s e c t o r i s that annual a d d i t i o n s to the housing stock represent only a very small p o r t i o n of the o u t s t a n d i n g s t o c k . T h i s c h a r a c t e r i s t i c i s a 32 r e s u l t of the l o n g e v i t y of the housing stock. Because of t h i s c h a r a c t e r i s t i c , the flow of new c o n s t r u c t i o n over any p a r t i c u l a r p e r i o d (point U in F i g u r e 2.2) has l i t t l e e f f e c t on p r i c e i n the short run. F i g u r e 2.2 a l s o demonstrates the e f f e c t of short run a d d i t i o n s i n the flow s e c t o r on the p r i c e of housing stock. The new c o n s t r u c t i o n causes only a marginal s h i f t (to the r i g h t ) i n the stock of housing, and thus r e s u l t s i n only a small change in p r i c e , c e t e r u s p a r i b u s . A f t e r the p a r t i c u l a r s h o r t r u n p e r i o d , the stock of housing has i n c r e a s e d to S' (S+U) and p r i c e has decreased to P'. Given these circumstances, the flow of c o n s t r u c t i o n i n the next p e r i o d w i l l decrease to p o i n t U'. P a r t s III and IV of F i g u r e 2.2 i l l u s t r a t e that the p r i c e of the outstan d i n g the stock and the p r i c e of the new c o n s t r u c t i o n flow in the r e n t a l submarket are determined i n the same manner as in the ownership submarket. While a change in the flow of c o n s t r u c t i o n has l i t t l e e f f e c t on p r i c e i n the short run, the same i s not true f o r a change i n a u n d e r l y i n g f a c t o r of demand or a change i n the marginal c o s t of c o n s t r u c t i o n . Assuming that p r i c e cannot be an independent f a c t o r ( i n other words, that p r i c e c o n t r o l s or rent c o n t r o l s are not present) f a c t o r s which a f f e c t demand and marginal c o s t can have n o t i c e a b l e e f f e c t s on the model. For in s t a n c e , demand i n both the r e n t a l and ownership submarkets may in c r e a s e because of an in c r e a s e i n net m i g r a t i o n to the housing market under c o n s i d e r a t i o n : as i l l u s t r a t e d i n F i g u r e 2.3, the demand curve i n both submarkets s h i f t s up and to the r i g h t (to D') ca u s i n g p r i c e s to r i s e . Consequently, the p r i c e and the marginal cost curve i n t e r s e c t at a p o i n t up and to the r i g h t , , 33 the p r o f i t of c o n s t r u c t i o n at the margin i n c r e a s e s , and new c o n s t r u c t i o n i s undertaken. The completions of new c o n s t r u c t i o n in the short run are, however, not s u f f i c i e n t to r e t u r n p r i c e s to t h e i r o r i g i n a l l e v e l . A l t e r n a t i v e l y , demand i n the r e n t a l submarket may in c r e a s e while there i s no change i n the t o t a l demand f o r housing stock. T h i s c o u l d be due, f o r example, to the i n t r o d u c t i o n of a government subsidy to a l l r e n t e r s . The concurrent decrease i n demand i n the ownership submarket would l e a d to decreased p r i c e s i n that submarket,. while the inc r e a s e d demand i n the r e n t a l s e c t o r would l e a d to i n c r e a s e d p r i c e s f o r r e n t a l stock. T h i s i n turn i n c r e a s e s the p r o f i t at the margin f o r r e n t a l housing p r o d u c t i o n and t h e r e f o r e the flow of r e n t a l housing i s i n c r e a s e d . There i s a l s o a p o s s i b i l i t y that the stock of ownership u n i t s may decrease due to co n v e r s i o n s to the r e n t a l tenure. On the other hand, the p r i c e of market housing i s a l s o a f f e c t e d by changes i n the marginal c o s t s of p r o d u c t i o n . For i n s t a n c e , an increase i n n e g o t i a t e d h o u r l y wage r a t e s f o r c o n s t r u c t i o n labour would s h i f t the marginal cost curve upward and to the l e f t in both submarkets. Assuming no change i n demand in e i t h e r submarket, the i n t e r s e c t i o n of marginal c o s t and p r i c e would r e s u l t i n a lower l e v e l of c o n s t r u c t i o n , yet there would be no short term e f f e c t on the market p r i c e of a u n i t of housing stock i n e i t h e r submarket. I f , however, the supply curve f o r stock i s s h i f t e d to the l e f t ( i n the long run) p r i c e s w i l l r i s e . To the extent that f a c t o r s of pro d u c t i o n are s u b s t i t u t a b l e between submarkets then i n c r e a s e s or decreases i n c o n s t r u c t i o n in one market w i l l d i r e c t l y a f f e c t the marginal cost of 34 p r o d u c t i o n i n the other. ( 2 . 3 c ) i i The economics of t h i r d s e c t o r housing The above d i s c u s s i o n has demonstrated the determinants of the p r i c e of housing stock in both the r e n t a l and ownership s e c t o r . As was i l l u s t r a t e d i n F i g u r e 2.1, n o n - p r o f i t c o n t i n u i n g c o o p e r a t i v e housing i s a primary component of the t h i r d s e c t o r . A c c o r d i n g to Laidlaw (1977), the t h i r d s e c t o r i s "the housing s e c t o r that r e p r e s e n t s the v o i c e and needs of consumers r a t h e r than the views and aims of the producers of h o u s i n g . " 2 5 T h i s s e c t i o n d e s c r i b e s the economics of housing in the t h i r d s e c t o r in r e l a t i o n to that of market housing. Laidlaw's e x c l u s i o n of a s i g n i f i c a n t r o l e f o r producers i s u n l i k e l y because, with the exception of b u i l d i n g c o o p e r a t i v e s , t h i r d s e c t o r housing o r g a n i z a t i o n s g e n e r a l l y a c q u i r e housing stock (whether i t be newly-developed housing stock, e x i s t i n g housing stock or n o n - r e s i d e n t i a l space for conversion) i n the same manner that i n v e s t o r s or owners purchase housing stock i n the r e n t a l or ownership submarkets. In other words, the p r i c e that t h i r d s e c t o r o r g a n i z a t i o n s (and s p e c i f i c a l l y c o n t i n u i n g c o o p e r a t i v e o g a n i z a t i o n s ) pay to a c q u i r e housing stock i s market-determined, and i s a f f e c t e d by the same short run demand c o n d i t i o n s and p r o d u c t i o n f a c t o r c o n d i t i o n s as market housing. On ' the other hand, Laidlaw's statement does emphasize the p r i o r i t i e s of the o r g a n i z a t i o n s w i t h i n the t h i r d s e c t o r ("the needs of consumers ... r a t h e r than producers") and does a l l u d e to the fundamental d i s t i n c t i o n between the economics of p r i v a t e s e c t o r housing and t h i r d s e c t o r housing: the t h i r d s e c t o r i s 35 most e a s i l y d i s t i n g u i s h e d from the p r i v a t e s e c t o r i n terms of the p r i c e of housing s e r v i c e s to consumers, r a t h e r than i n terms of the p r i c e of housing stock. In the t h i r d s e c t o r , the p r i c e of housing s e r v i c e s to consumers ( i n both the short and long run) i s based only on the cos t of producing those s e r v i c e s , given the i n i t i a l market-determined p r i c e of the t h i r d s e c t o r stock of housing and i n the absence of e x p l i c t government s u b s i d i e s . T h i s i s a r e s u l t of the t h i r d s e c t o r ' s n o n - p r o f i t nature. In the case of c o o p e r a t i v e housing, the p r o v i s i o n that member e q u i t y does not i n c r e a s e i n r e a l value enables a c o o p e r a t i v e (without any form of government a s s i s t a n c e ) to i n i t i a l l y set r e n t s equal to the pro r a t a share of the a m o r t i z a t i o n of c a p i t a l c o s t s and o p e r a t i n g expenses and subsequently a d j u s t r e n t s a c c o r d i n g to mortgage i n t e r e s t r a t e r e n e g o t i a t i o n s and changes i n o p e r a t i n g expenses. On the other hand, the p r i c e of housing s e r v i c e s i n the p r i v a t e s e c t o r i s , i n the short run, a f f e c t e d not only by the c o s t s of producing those s e v i c e s , but a l s o by demand and supply f a c t o r s of the market. Only i n long run e q u i l i b r i u m does the co s t of producing market housing s e r v i c e s d i r e c t l y determine t h e i r p r i c e . The important f a c t o r here i s the d e f i n i t i o n of short run. For the purpose of t h i s d i s c u s s i o n , the "short run" i s d e f i n e d as the p e r i o d over which n e i t h e r supply nor the cost of the f a c t o r s of pro d u c t i o n a d j u s t completely to account f o r changes i n demand. A v a r i a t i o n of the t r a d i t i o n a l stock and flow model can be used to demonstrate how the d e t e r m i n a t i o n of the p r i c e of c o o p e r a t i v e housing s e r v i c e s d i f f e r s from the de t e r m i n a t i o n of the p r i c e of market housing s e r v i c e s . The model of housing 36 s e r v i c e s i s o l a t e s the consumption of housing by household from the d e c i s i o n s which r e l a t e to the c o n s t r u c t i o n and purchase/investment of housing stock. "Housing s e r v i c e " i s assumed to be a homogenous commodity and i s d e f i n e d i n terms of the "amount of s e r v i c e produced by one u n i t of housing stock per u n i t of t i m e . 2 6 T h i s d e f i n i t i o n enables both the r e n t a l and ownership submarkets to be aggregated as one market f o r housing s e r v i c e s -- a c c o r d i n g to F a l l i s (1980), there may be d i f f e r e n t f i n a n c i a l i m p l i c a t i o n s to each form of tenure, but i f the c o s t s are a l i k e the u t i l i t y d e r i v e d from consuming housing as an owner and as a r e n t e r i s the same. Based on t h i s d e f i n i t i o n , F i g u r e 2.4 d i s a g g r a g a t e s the housing s e c t o r i n t o a market f o r f o r p r i v a t e s e c t o r housing s e r v i c e s and a market f o r t h i r d s ector housing s e r v i c e s ( r e p r e s e n t i n g c o o p e r a t i v e s and other n o n - p r o f i t housing s e r v i c e s . ) The assumption of a p e r f e c t l y i n e l a s t i c supply curve i s r e l a x e d , and i t i s assumed that m o n o p o l i s t i c c o m p e t i t i o n among l a n d l o r d s / i n v e s t o r s r e s u l t s i n a vacancy rate among market housing u n i t s . The b a s i s of an assumption of a p o s i t i v e short run supply e l a s t i c i t y i s that "by a c c e p t i n g vacancy l o s s e s l a n d l o r d s make l a r g e r p r o f i t s than i f they reduced rents' s u f f i c i e n t l y to achieve 100 percent o ccupancy." 2 7 It i s a l s o assumed that both the market s e c t o r and the t h i r d s e c t o r do not experience lags i n occupancy because of d e p a r t i n g households; in other words, there i s instantaneous adjustment. T h i s assumption suggests that the supply of housing s e r v i c e s in the n o n - p r o f i t s e c t o r w i l l be p e r f e c t l y p r i c e i n e l a s t i c i n the short run. The v e r t i c a l axes in F i g u r e 2.4 represent the p r i c e of housing s e r v i c e s while the h o r i z o n t a l axes represent the 37 i q u a n t i t y of housing s e r v i c e s produced per p e r i o d of time by the housing stock and the o p e r a t i o n a l inputs ( f o r inst a n c e energy and i n f r a s t r u c t u r a l s e r v i c e s . ) Two interdependent supply curves are i n c l u d e d : the occupied supply curve (S) r e l a t i n g the supply of housing to the short run e q u i l i b r i u m p r i c e of housing s e r v i c e s , and the t o t a l supply curve (St) r e l a t i n g supply to the long run e q u i l i b r i u m p r i c e of housing s e r v i c e s . 2 8 Given an exogenous i n c r e a s e i n demand f o r housing s e r v i c e s i n both s e c t o r s ( s h i f t i n g D to D'), the short term e f f e c t s d i f f e r s i g n i f i c a n t l y between the market s e c t o r and the t h i r d s e c t o r . In the market s e c t o r (Part I of F i g u r e 2.4), a p o r t i o n of the in c r e a s e w i l l be absorbed by the vacancy r a t e , e f f e c t i v e l y i n c r e a s i n g the supply of housing s e r v i c e s . If the vacancy rate f a l l s below the l e v e l d e s i r e d by l a n d l o r d s / i n v e s t o r s , the short run p r i c e of market housing s e r v i c e s w i l l r i s e . The extent of the p r i c e i n c r e a s e i s a f u n c t i o n of both the p r i c e e l a s t i c i t y of short run supply and of the demand curve f o r housing s e r v i c e s . The main p o i n t i s that the p r i c e w i l l r i s e to p o i n t P' due to such an exogenous change. The p r i c e r i s e i s r e f l e c t e d i n i n c r e a s e d p r o f i t s to l a n d l o r d s i n the short run, which i n turn w i l l l e a d to new c o n s t r u c t i o n of housing stock. The i n c r e a s e i n new c o n s t r u c t i o n w i l l l ead to an i n c r e a s e i n the average c o s t of pr o d u c t i o n i n the longer term and thus a movement back towards the e q u i l i b r i u m p r i c e . On the other hand, t h i s exogenous i n c r e a s e i n demand w i l l not a f f e c t the p r i c e of c o o p e r a t i v e (or other t h i r d s e c t o r ) housing s e r v i c e s i n the short run — the n o n - p r o f i t nature of these housing s e r v i c e s e s s e n t i a l l y c r e a t e s a p r i c e c o n t r o l on the short run p r i c e , only a l l o w i n g an 38 i n c r e a s e i n p r i c e to r e f l e c t an i n c r e a s e in a c t u a l o p e r a t i n g and f i n a n c i n g c o s t s . The p r i c e c o n t r o l i s shown in F i g u r e 2.4 at l e v e l P*. The d i f f e r e n c e i n p r i c e s f o r p r i v a t e s e c t o r and t h i r d s e c t o r housing s e r v i c e s a f t e r the exogenous i n c r e a s e in demand i s t h e r e f o r e the d i f f e r e n c e between P' and P*. In the longer run the p r i c e s w i l l of course move back towards each o t h e r . The p r i c e c o n t r o l r e s u l t s i n an excess demand f o r n o n - p r o f i t housing s e r v i c e s i n the short run. N o n - p r o f i t housing s e r v i c e s would t h e r e f o r e be r a t i o n e d on the b a s i s of p o s i t i o n s on w a i t i n g l i s t s or other entrance t e s t s . (2.4) A Summary of the B e n e f i t s and Costs Which Accrue to and are Incurred by Cooperative Members From the Nature of the Cooperative E n t e r p r i s e The b e n e f i t s which accrue to the members of n o n - p r o f i t c o n t i n u i n g c o o p e r a t i v e housing from the nature of the c o o p e r a t i v e e n t e r p r i s e have been e x t e n s i v e l y d i s c u s s e d ( f o r i n s t a n c e , see Hands 1975, Laidlaw 1977, or L i b l e t 1964.) On the other hand, there i s almost no d i s c u s s i o n i n the l i t e r a t u r e on c o o p e r a t i v e housing about the c o s t s which are i n c u r r e d by c o o p e r a t i v e members from the nature of the c o o p e r a t i v e e n t e r p r i s e (one of the few e x c e p t i o n s i s Graham 1974.) T h i s s e c t i o n summarizes these b e n e f i t s and i d e n t i f i e s the c o s t s that are p o s s i b l y i n c u r r e d by members due to the nature of the e n t e r p r i s e . (2.4a) The D i r e c t E f f e c t s The l i t e r a t u r e on c o o p e r a t i v e housing o f t e n expresses the b e n e f i t s which accrue from the nature of the c o o p e r a t i v e 39 e n t e r p r i s e i n e m o t i o n a l i s t i c and overdemonstrative terms; for in s t a n c e , "Cooperative housing can h e l p turn a n t i - s o c i a l i n d i v i d u a l s i n t o s e l f - r e s p e c t i n g , c o o p e r a t i n g members of s o c i e t y " 2 9 , or "... p a r t i c i p a t i o n [ i n c o o p e r a t i v e a f f a i r s ] enables [ c o o p e r a t i v e members] to make a r e s p o n s i b l e c o n t r i b u t i o n to t h e i r l i v i n g environment. In the process they o f t e n develop heightened awareness of t h e i r own s e l f - w o r t h and of the p o s i t i v e c o n t r i b u t i o n to t h e i r l i v i n g e n v i r o n m e n t . " 3 0 Such phraseology and the r e l i a n c e on unmeasurable i n t a n g i b l e s " l i k e "heightened awareness" do l i t t l e to s u b s t a n t i a t e many of the a l l e g e d b e n e f i t s of the c o o p e r a t i v e form of e n t e r p r i s e . In f a c t the pr i m a l r e f e r e n c e s on c o o p e r a t i v e housing ( f o r i n s t a n c e , Laidlaw 1977 or L i b l e t t 1964) do not o f f e r , nor c i t e , any evidence of the b e n e f i t s they espouse f o r c o o p e r a t i v e housing -- the b e n e f i t s g e n e r a l l y j u s t occur. While t h i s s e c t i o n does not o f f e r any evidence to s u b s t a n t i a t e the suggested b e n e f i t s , i t does provide reasons why t h e i r b l i n d acceptance i s somewhat tenuous. According to the l i t e r a t u r e on c o o p e r a t i v e housing, the primary b e n e f i t a c c r u i n g to members from the nature of the c o o p e r a t i v e e n t e r p r i s e i s the e l i m i n a t i o n of the short run f l u c t u a t i o n s i n the p r i c e of market housing s e r v i c e s . These f l u c t u a t i o n s r e s u l t because short run supply responses are g e n e r a l l y i n s u f f i c i e n t to compensate f o r short run changes in the demand f o r market housing s e r v i c e s . T h i s b e n e f i t a l l e g e d l y accrues from the constant nominal or r e a l e q u i t y p r o v i s i o n and i s a consequence of the n o n - p r o f i t nature of the co o p e r a t i v e o r g a n i z a t i o n ; indeed, t h i s b e n e f i t accrues only to n o n - p r o f i t c o o p e r a t i v e s and not to c o o p e r a t i v e s whose share values are 40 allowed to earn market-determined r e t u r n s . The e l i m i n a t i o n of market f l u c t u a t i o n s does not however- i n c l u d e p r o t e c t i o n from i n c r e a s e s i n o p e r a t i n g or mortgage i n t e r e s t expenses, as i s o f t e n i m p l i e d i n the l i t e r a t u r e . A second b e n e f i t i s repo r t e d to accrue to the c o o p e r a t i v e e n t e r p r i s e i n the form of savings in s i t e purchase, s i t e development, and c o n s t r u c t i o n cost because of o p p o r t u n i t i e s f o r economies of s c a l e . 3 1 The presence of such b e n e f i t s are of course based on the presumption that there are economies of s c a l e a v a i l a b l e i n the r e s i d e n t i a l c o n s t r u c t i o n and development i n d u s t r i e s and that c o o p e r a t i v e housing p r o j e c t s are g e n e r a l l y l a r g e enough to take advantage of such economies. Chapter 5 d i s c u s s e s the p o s s i b i l i t y of s c a l e economies being r e a l i z e d i n the development of c o n t i n u i n g c o o p e r a t i v e s i n Canada. A t h i r d b e n e f i t which accrues from the nature of the c o o p e r a t i v e e n t e r p r i s e i s the l i m i t e d l i a b i l i t y of c o o p e r a t i v e members. As d i s c u s s e d i n pa r t ( 2 . 3 b ) i . of t h i s s e c t i o n , the member's l i a b i l i t y i s l i m i t e d to h i s i n i t i a l e q u i t y investment. Although such l i m i t i n g of l i a b i l i t y i s u s u a l l y suggested to be of c o n s i d e r a b l e b e n e f i t ( f o r i n s t a n c e , see Krooth 1964 or Laidlaw 1977), i t i s r e a l l y only of moderate s i g n i f i c a n c e i n Canada -- NHA and p r i v a t e mortgage d e f a u l t insurance f o r mortgage loans with loan to value r a t i o s of up to 85 percent e s s e n t i a l l y c r e a t e non-recourse mortgages and l i m i t the l i a b i l i t y of homeowners to t h e i r e q u i t y i n v e s t m e n t . 3 2 Thus, l i m i t e d l i a b i l i t y does not provide the c o o p e r a t i v e member with any s i g n i f i c a n t b e n e f i t over homeownership, and because the 41 r e n t a l tenure imposes e s s e n t i a l l y no l i a b i l i t y on tenants, t h i s c h a r a c t e r i s t i c i s of no s i g n i f i c a n c e when comparing the b e n e f i t s of the c o o p e r a t i v e and the r e n t a l t e n u r e s . 3 3 On the other hand, a p o t e n t i a l cost accrues to members as a f u n c t i o n of the e q u i t y investment. In the case of a n o n - p r o f i t c o n t i n u i n g c o o p e r a t i v e that r e c e i v e s no a s s i s t a n c e from government, the e q u i t y investment r e q u i r e d of the i n i t i a l members w i l l normally be g r e a t e r than r e q u i r e d f o r s i m i l a r housing in the home ownership market (or i n t e r e s t r a t e s w i l l be higher f o r a given loan to value r a t i o ) , given a p a r t i c u l a r group of households. T h i s i s due to the i n h e r e n t l y higher r i s k i n v o l v e d i n l e n d i n g mortgage funds to such an e n t e r p r i s e 3 " and i s decreased only i f the c o o p e r a t i v e i s ab l e to obt a i n a high r a t i o mortgage insurance p o l i c y and perhaps some form of government a s s i s t a n c e . A survey of lende r ' s a t t i t u d e s towards i n i t i a t i n g c o o p e r a t i v e housing loans suggest that NHA insurance and some form of CMHC subsidy i s e s s e n t i a l before p r i v a t e l e n d e r s w i l l make loans to c o o p e r a t i v e g r o u p s . 3 5 Such an assessment of the c o o p e r a t i v e ' s mortgage r i s k i s not, however, conscensus; i n f a c t , the N a t i o n a l Commission on Urban Problems (Washington 1971) suggested that a b e n e f i t of the c o o p e r a t i v e form of e n t e r p r i s e i s "more favo u r a b l e terms on mortgages i n r e c o g n i t i o n of the more permanent c h a r a c t e r of c o o p e r a t i v e s . " 3 6 T h i s issue w i l l be d i s c u s s e d i n more d e t a i l i n Chapter 5. F o u r t h l y , the l i t e r a t u r e on c o o p e r a t i v e housing g e n e r a l l y suggests that r e d u c t i o n s i n u t i l i t y expenses and maintenance and r e p a i r c o s t s that accrue from c o o p e r a t i v e o r g a n i z a t i o n ( f o r 42 i n s t a n c e , see Krooth 1964, Dennis and F i s h 1972, or Laidlaw 1977.) Lower u t i l i t y c o s t s are r e p o r t e d l y achieved through the use of master u t i l i t y meters and group pressure to c o n s e r v e 3 7 ; however, there i s g e n e r a l l y no evidence o f f e r e d in the l i t e r a t u r e to s u b s t a n t i a t e t h i s . Lower maintenance and r e p a i r c o s t s are suggested to r e s u l t from s c a l e economies experienced i n l a r g e purchases of r o u t i n e maintenance s u p p l i e s and the s e l f -h e l p nature of the c o o p e r a t i v e o r g a n i z a t i o n . While the c l a i m of savings by purchasing in volume i s probably l e g i t i m a t e ( p r o v i d i n g c o o p e r a t i v e s do . not overpurchase and thus overmaintain t h e i r housing p r o j e c t s ) , the a l l e g e d r e d u c t i o n i n r e p a i r and maintenance c o s t s due to the members undertaking part of the work completely n e g l e c t s the op p o r t u n i t y cost of the members' time. While the op p o r t u n i t y c o s t of s e l f - h e l p w i l l vary c o n s i d e r a b l y among c o o p e r a t i v e p r o j e c t s , (because the c o r r e c t c o s t to a s s i g n to the time that a p a r t i c u l a r member commits i s what that member i s w i l l i n g to accept i n order to supply the t i m e 3 8 ) i t must n e v e r t h e l e s s be rec o g n i z e d . A f i f t h b e n e f i t i s re p o r t e d to accrue from lower purchasing and c l o s i n g c o s t s (on a per member b a s i s ) than experienced i n home o w n e r s h i p . 3 9 Rather than i n c u r r i n g brokerage and f i n a n c i n g fees and the t i t l e c o s t s a s s o c i a t e d with t r a n s a c t i o n s by homeowners, the c o o p e r a t i v e member g e n e r a l l y pays the c o o p e r a t i v e o r g a n i z a t i o n only a small handling charge when s e l l i n g or purchasing e q u i t y i n a c o o p e r a t i v e e n t e r p r i s e . T h i s i s of course only a b e n e f i t i n terms of i t s s u b s t i t u t a b i l i t y with home ownership; there are no e x p l i c i t p urchasing and c l o s i n g c o s t s a s s o c i a t e d with the p e r i o d i c 43 t e n a n c i e s of the r e n t a l tenure. A f i n a l often-proposed b e n e f i t a c c r u i n g from the nature of the c o o p e r a t i v e e n t e r p r i s e i s the reduced time r e q u i r e d to terminate the l e g a l o b l i g a t i o n s of the c o o p e r a t i v e tenure -- the co o p e r a t i v e member has almost i d e n t i c a l f l e x i b i l i t y to r e n t i n g while c o n c u r e n t l y having a s e c u r i t y of tenure almost equal to that of homeownership. T h i s i s i n h e r e n t l y true in the n o n - p r o f i t c o o p e r a t i v e o r g a n i z a t i o n where the o r g a n i z a t i o n guarantees to purchase the shares of d e p a r t i n g members at a predetermined p r i c e or at a p r i c e based on the o r i g i n a l share pruchase with a predetermined adjustment for i n f l a t i o n . In such a case, the co o p e r a t i v e member must only s a t i s f y the o r g a n i z a t i o n ' s requirements f o r n o t i c e of t e r m i n a t i o n , not u n l i k e that which i s common i n the p r i v a t e r e n t a l market. On the other hand, t h i s b e n e f i t i s not inherent i n the case of c o o p e r a t i v e o r g a n i z a t i o n s that permit member shares to be s o l d openly, because l i k e the homeowner, the c o o p e r a t i v e member must look to the market to f i n d a buyer. (2.4b) The I n d i r e c t E f f e c t s The l i t e r a t u r e on c o o p e r a t i v e housing g e n e r a l l y i d e n t i f i e s a number of b e n e f i t s which i n d i r e c t l y accrue to c o o p e r a t i v e members from the nature of the c o o p e r a t i v e housing tenure. While there appears to be a n o t i c e a b l e degree of agreement on the nature of these b e n e f i t s , the l i t e r a t u r e (with the exce p t i o n of S u l l i v a n 1971 and V i s c h e r and Skaburskis 1979) g e n e r a l l y o f f e r s l i t t l e or no e m p i r i c a l evidence to s u b s t a n t i a t e t h e i r occurance. T h i s s e c t i o n w i l l i d e n t i f y the most common b e n e f i t s which have 44 been a t t r i b u t e d to the c o o p e r a t i v e tenure so that they may be c o n s i d e r e d on the b a s i s of the a v a i l a b l e data i n Chapter 5 of t h i s study. Perhaps the most commonly-cited b e n e f i t o r i g i n a t e s from the a s s o c i a t i o n of the c o o p e r a t i v e tenure with a c t i v e p a r t i c i p a t i o n i n neighbourhood a c t i v i t i e s : c o o p e r a t i v e housing has a l l e g e d l y r e k i n d l e d "the s p i r i t of n e i g h b o r l i n e s s that had a l l but disappeared from many low- and middle-income areas ... [ c r e a t i n g ] ... f e e l i n g s of permanence and s o c i a b i l i t y . " " 0 More s p e c i f i c a l l y , i t i s suggested that the c o o p e r a t i v e form of housing induces a h i g h degree of i n t e r a c t i o n among c o o p e r a t i v e members which in turn g i v e s members a sense of belonging and group moral. A s s o c i a t e d with the above, i s another often-proposed advantage which accrues as a r e s u l t of the "one member, one vote" p r i n c i p l e of c o o p e r a t i v e housing. I t i s g e n e r a l l y suggested that t h i s democratic microcosm i s an optimal o r g a n i z a t i o n a l model for the d e c i s i o n making of c o o p e r a t i v e p r o j e c t s because i t puts "the p r i n c i p l e of p o l i t i c a l democracy i n t o o p e r a t i o n i n a l l human a c t i v i t i e s . " * 1 A l l e g e d l y , the b e n e f i t accrues due to the ( t h e o r e t i c a l l y ) equal d i s t r i b u t i o n of the c o n t r o l of the c o o p e r a t i v e among a l l c o o p e r a t i v e members. There i s not, however, complete agreement on whether the i n d i r e c t e f f e c t s of such a model are r e a l l y p o s i t i v e a c c o r d i n g to Graham (1974) "the most important shortcoming of v o t i n g models i s that they simply are not community-building d e v i c e s ... [because] v o t i n g i s one of the worst ways of r e s o l v i n g c o n f l i c t [and] ... i n e v i t a b l y leads to c o e r c i o n , 45 tending to destr o y communities r a t h e r than b u i l d them."" 2 T h i r d l y , i t i s o f t e n suggested that the i n d i r e c t b e n e f i t s of i n c r e a s e d p r i d e and r e s p o n s i b i l i t y f o r the housing p r o j e c t i s an i n d i r e c t r e s u l t of the c o o p e r a t i v e form of o r g a n i z a t i o n . According to the l i t e r a t u r e ( f o r i n s t a n c e , Bogardus 1958), the ownership of shares i n a c o o p e r a t i v e p r o j e c t causes occupants to achieve a sense of p r i d e and r e s p o n s i b i l i t y s i m i l a r to that which i s common among homeowners. There i s e s s e n t i a l l y two major problems with • such a p r o p o s i t i o n : f i r s t l y , there are very s i g n i f i c a n t d i f f e r e n c e s between s i n g l e f a m i l y ownership and co o p e r a t i v e ownership i n terms of e q u i t y and l i a b i l i t y ; and secondly, there i s i n s u f f i c i e n t e m p i r i c a l evidence about a t t i t u d e s toward housing tenure and the impact of housing tenure on f e e l i n g s of p r i d e , r e s p o n s i b i l i t y , or p s y c h o l o g i c a l s e c u r i t y to d i r e c t l y a t t r i b u t e such b e n e f i t s to a household's t e n u r e . " 3 A c c o r d i n g to Vernez (1971), there i s " l i t t l e e m p i r i c a l support f o r the c o n v i c t i o n that "a man who owns h i s home a c q u i r e s a new d i g n i t y .... The evidence i s mostly a n e c d o t a l , e s p e c i a l l y as i t concerns low-income f a m i l i e s . . . [ i n f a c t ] there has been no systematic o b j e c t i v e documentation ... of changes i n a t t i t u d e s , s a t i s f a c t i o n s , or a s p i r a t i o n s of low-income households""" d i r e c t l y r e s u l t i n g from a change to the homeownership tenure. A f o u r t h i n d i r e c t b e n e f i t a l l e g e d l y accrues i n the form of a development of the l e a d e r s h i p p o t e n t i a l s of c o o p e r a t i v e members. T h i s b e n e f i t a p p a r e n t l y r e s u l t s through the a c t i v e p a r t i c i p a t i o n of c o o p e r a t i v e members i n the o r g a n i z a t i o n of the c o o p e r a t i v e and i t s ongoing a c t i v i t i e s . While there i s s t a t i s t i c a l l y - a c c e p t a b l e evidence i n the l i t e r a t u r e ( f o r 46 i n s t a n c e , Andrews and B r e s l a u e r 1976) to argue that such a b e n e f i t does occur among c e r t a i n c o o p e r a t i v e households, i t has not been d e f i n i t i v e l y shown that such development would not have occu r r e d ' through some other community a c t i v i t y i f such households had not entered a c o o p e r a t i v e housing p r o j e c t . ' 5 (2.5) The Prevalence of Continuing Cooperatives in Canada Table 2.1 summarizes the d i s t r i b u t i o n of c o n t i n u i n g c o o p e r a t i v e housing p r o j e c t s and u n i t s throughout Canada as of September 1982. I t i s apparent that the c o n t i n u i n g c o o p e r a t i v e i s c e r t a i n l y not a dominant form of housing f o r Canadians -- at the end of 1982 there were 20,510 occupied c o o p e r a t i v e u n i t s i n Canada, or about .23 percent of the t o t a l housing stock. F i g u r e 2.5 a l s o demonstrates that the c o n c e n t r a t i o n of c o o p e r a t i v e housing i n O n t a r i o and Quebec r e f l e c t s the d i s t r i b u t i o n of the n a t i o n a l housing stock, while the r e l a t i v e l y high degree of c o n c e n t r a t i o n i n B r i t i s h Columbia i s somewhat u n r e p r e s e n t a t i v e . I n t e r e s t i n g l y , new c o o p e r a t i v e housing undergoing development or p l a n n i n g r e p r e s e n t s almost 70 percent of the occupied c o o p e r a t i v e stock. 47 Table 2.1 A S t a t i s t i c a l Summary of Continuing Housing C o o p e r a t i v e s i n Canada PROVINCE Occupied Planning & Under Development T o t a l s % D i s t r i b -u t i o n of Stock co-ops un i t s co-ops u n i t s co-ops u n i t s co-op Canada Nf Id. 1 2 143 5 1 46 17 289 .7 1 .8 N.S. 32 517 21 470 53 937 2.5 3.3 N.B. 4 192 3 1 1 2 7 304 .9 2.6 P.E.I . 2 1 0 1 6 3 1 6 . 1 .5 Quebec 253 6, 102 203 4,221 456 9,903 29.7 26.4 Ontar i o 93 6,857 66 5,444 159 12,301 33.4 35.6 Man i toba 1 4 1 ,281 1 60 15 1,341 6.2 4.3 Sask. 5 219 6 250 1 1 469 1 . 1 4. 1 A l b e r t a 16 1 ,042 18 831 34 1 ,873 5.1 9.2 B.C. 68 4, 147 52 3,095 120 7,242 20.3 11.9 N.W.T. 0 0 2 100 2 100 0 .3 CANADA 499 20,510 378 14,265 877 34,775 100.0 100.0 Source: Co-operative Housing Foundation and Canadian  Housing S t a t i s t i c s 1982. 48 Endnotes. 1. According to M i l t o n Friedman, Freedom to Choose 1979, the only people who should not be able to cooperate are " c h i l d r e n and madmen", s i n c e they are not r e s p o n s i b l e i n d i v i d u a l s . 2. "Craftsmen's g u i l d s of the Middle Ages and Benjamin F r a n k l i n ' s mutual f i r e insurance company (1753) are two s p e c i f i c examples i n the e v o l u t i o n of a world-wide movement"( How to Run a Housing Co-op : A Board of  D i r e c t o r ' s Manual. ) The d i r e c t i o n of the c o o p e r a t i v e movement f o l l o w i n g the I n d u s t r i a l R e v o l u t i n depended upon the needs in a p a r t i c u l a r country: "the needs to a c q u i r e goods and s e r v i c e s at a f f o r d a b l e p r i c e s ( B r i t a i n ) , the need to c o n t r o l the marketing of the product of labour ( F r a n c e ) , [and] the need to have access to money c a p i t a l (Germany)." (S. L u c i l l e Major 1978, page 6) 3. Major, L u c i l l e S. 1978, page 7. 4. Hands, John. 1975, page 15. 5. Rodgers, Evan Grant. The Co-op A l t e r n a t i v e 1977, pg. 7. 6. Hands, John. 1975, page 27. 7. Hands, John. 1975, page 18. 8. How to Run a Housing Co-op 1979, page 4. 9. Hands, John. 1975, page 19. 10. "The Curse of Poverty", Canadian Co-operator:  A Magazine of S o c i a l and Economic Progress Congress Number: V.27 No.10, October 1936.page 17 11. See L u c i l l e S. Major (1978) f o r a d i s c u s s i o n of these a c t i v i t i e s . 12. Grant, H.C. 1937, page 412. "As I see the pre-war c o - o p e r a t i v e movement in Western Canada i t i s motivated almost s o l e l y by resentment a g a i n s t monopoly ... . T h i s was a p e r i o d when m a t e r i a l resources wre e x p l o i t e d , and the str o n g e s t got the most. Farmers, however, were opposed to being e x p l o i t e d and they were determined to meet combinations of c a p i t a l with human c o - o p e r a t i o n . I doubt very much i f they new or cared about c o - o p e r a t i o n as an i d e a l and as they became more and more e f f i c i e n t i n business, they become l e s s and l e s s c o o p e r a t i v e i n s p i r i t . " 13. How to Run a Housing Co-op 1979, page 4. 49 14. For a good d i s c u s s i o n of b u i l d i n g c o o p e r a t i v e s see L u c i l l e S. Major, 1978. 15. "A m o d i f i e d v e r s i o n of a b u i l d e r s c o o p e r a t i v e e x i s t s i n Toronto -- the Labour C o u n c i l Development Foundation. Although not a c o o p e r a t i v e , i t i s a n o n - p r o f i t housing foundation i n c o r p o r a t e d to act as a promoter, developer, and b u i l d e r of n o n - p r o f i t and c o o p e r a t i v e housing. See From the Rooftops V.3 No.2 Februatry 1976 page 1. 16. T h i s i s however u n l i k e l y i n the case of c o o p e r a t i v e p r o j e c t s with a l a r g e number of housing u n i t s ( b u i l d e r s g e n e r a l l y don't b u i l d l a r g e developments on s p e c u l a t i o n ) . 17'. I t i s t h e o r e t i c a l l y p o s s i b l e that a group of homeowners c o u l d get together and form a co-op to buy a l l t h e i r housing and then l i v e i n that same housing under co-op ownership. 18. For i n s t a n c e , the B r i t i s h Columbia Cooperative Act l e g a l l y d e f i n e s and e s t a b l i s h e s the b a s i c s t r u c t u r e of a c o o p e r a t i v e and i t s d i r e c t o r s ' p o t e n t i a l a u t h o r i t y . 19. B.C. Cooperative Housing: A P r o f i l e 1981. 20. "The d e c i s i o n to which one i s adopted must be made by the members when the co-op i s f i r s t o r g a n i z e d because i t i s very d i f f i c u l t to change by-laws at a date..." ( L u c i l l e S. Major 1978 Page 90). 21. Laidlaw, Alexander. 1970, page 33. 22. I b i d . 23. CHF endorses n o n - p r o f i t c o o p e r a t i v e s because they are c o n s i s t e n t with the Rochdale P r i n c i p l e s . 24. T h i s a n a l y s i s r e l i e s h e a v i l y on the stock and flow a n a l y s i s , ( r e f e r to Economics of Real Property 1981.) 25. Laidlaw, Alexander. Housing You Can A f f o r d page 73. 26. F a l l i s , George. 1980, page 39. 27. R y d e l l , Peter C. 1981, page 3. 28. The conceptual b a s i s of t h i s a n a l y s i s i s based on R y d e l l . 29. Dennis, Michael and Susan F i s h . 1972. page 249. 30. B.C. Cooperative Housing: A P r o f i l e 1981. 31. See Krooth (1964) f o r a d i s c u s s i o n of t h i s . 50 32. However, there i s s t i l l some r i s k f o r borrowers i n the form of psychic r i s k . 33. With the exception of the l o s s of the damage d e p o s i t . 34. According to the Report on the Underwriting of  N o n - P r o f i t Housing Loans 1981, the higher r i s k r e s u l t s because of "higher loan l e v e l s , lack of f i n a n c i a l i n c e n t i v e to r e t a i n ownership (due to low e q u i t y ) , and low degree of management and development e x p e r t i s e a v a i l a b l e . " page 2. 35. Lenders A t t i t u d e s to Graduated Payment Mortgages and  S o c i a l Housing Loans 1980. 36. Dennis, Michael and Susan F i s h . 1972, page 249. 37. I b i d . 38. B e n e f i t - C o s t A n a l y s i s Guide 1979. 39. Dennis, Michael and Susan F i s h 1972, page 248. 40. S u l l i v a n , Donald G. 1969, page 15. 41. Chase, S t u a r t . 1964, page 26. 42. Graham, John. 1974, page 44. 43. Vernez, Georges and Robert K Y i n . 1976, page 858. 44. I b i d page 860. 45. In f a c t , Goodman's study of c o o p e r a t i v e housing p r o j e c t s of middle-income households i n New York C i t y (see S u l l i v a n , 1969, page 34) agrees with t h i s q u a l i f i c a t i o n . 51 CHAPTER 3 THE EVOLUTION OF THE COOPERATIVE HOUSING PROGRAM The purpose of t h i s chapter i s to e x p l a i n the e v o l u t i o n of NHA a s s i s t a n c e to c o n t i n u i n g housing c o o p e r a t i v e s and to show how t h i s e v o l u t i o n was a f f e c t e d by changes i n f e d e r a l government a t t i t u d e s toward c o o p e r a t i v e housing and s o c i a l housing p o l i c y . As i n d i c a t e d i n Chapter 2 , the members of the Canadian c o o p e r a t i v e movement demonstrated l i t t l e enthusiasm f o r a p p l y i n g the c o o p e r a t i v e form of o r g a n i z a t i o n to housing p r i o r to the 1950's. N e v e r t h e l e s s , there were numerous attempts by other i n t e r e s t groups to encourage the f e d e r a l government to reco g n i z e the b e n e f i t s of c o o p e r a t i v e housing through some form of a s s i s t a n c e . For i n s t a n c e , the a p p l i c a t i o n of c o o p e r a t i v e housing to r u r a l areas was recommended i n 1917 to the f e d e r a l l y -a d m i n i s t e r e d Commission of Co n s e r v a t i o n as a means of d e c r e a s i n g the i n c i d e n c e of "poverty and d e t e r i o r a t i o n due to s o c i a l i s o l a t i o n [because c o o p e r a t i v e housing can induce] s o c i a l i n t e r c o u r s e [which] i s one of the n e c e s s i t i e s of h e a l t h y l i f e " 1 ; the Grauer Study (1939) r e p o r t e d to the Royal Commission on D o m i n i o n - P r o v i n c i a l R e l a t i o n s that "people [ i n Scandinavian c o u n t r i e s ] are a t t r a c t e d to the c o - o p e r a t i v e apartments because they are s u p e r i o r to the others i n almost every r e s p e c t , b e s i d e s being lower i n r e n t " 2 ; and the Advisory Committee on R e c o n s t r u c t i o n (1944) ad v i s e d the f e d e r a l government that the c o o p e r a t i v e form of housing o r g a n i z a t i o n has " d i s t i n c t e d u c a t i o n a l and s o c i a l values which demand s u p p o r t " 3 and that NHA amendments should extend f i n a n c i a l a s s i s t a n c e to co-52 o p e r a t i v e o r g a n i z a t i o n s . And more s p e c i f i c a l l y , in 1944 the C u r t i s Committee "recommended that the NHA be amended to i n c l u d e s p e c i a l s e c t i o n s (under the terms r e l a t i n g both to home ownership and low-cost r e n t a l p r o j e c t s ) to extend the a v a i l a b l e f a c i l i t i e s to c o o p e r a t i v e a s s o c i a t i o n s whether urban or r u r a l . " * I t was i n these 1944 amendments that the f e d e r a l government f i r s t p r o v i d e d e x p l i c i t a s s i s t a n c e to housing c o o p e r a t i v e s . But such a s s i s t a n c e was not d i r e c t e d to c o n t i n u i n g c o o p e r a t i v e s , yet r a t h e r to b u i l d i n g c o o p e r a t i v e s -- the amendments designated c o o p e r a t i v e s to be e l i g i b l e f o r NHA d i r e c t mortgage loans provided that i n d i v i d u a l ownership p r e v a i l e d upon completion of c o n s t r u c t i o n . As a l s o i n d i c a t e d i n Chapter 2, i t was not u n t i l 1948 when members of the c o o p e r a t i v e movement f i r s t appealed to the f e d e r a l government f o r a s s i s t a n c e . At t h i s time the Cooperative Union of Canada (CUC) attempted to have the M i n i s t e r r e s p o n s i b l e fo r CMHC request Parliament f o r NHA amendments to allow c o n t i n u i n g c o o p e r a t i v e s access to the l o w - i n t e r e s t r a t e loans a v a i l a b l e to l i m i t e d d i v i d e n d companies. 5 CUC's p r o p o s i t i o n was i n i t i a l l y r e j e c t e d because " c o o p e r a t i v e s represented a form of home ownership, ... [and] i f the p r e f e r r e d l e n d i n g rate [was] made a v a i l a b l e to c o o p e r a t i v e s i t would undercut the p o l i c y of denying p r e f e r r e d d i r e c t loans to i n d i v i d u a l homeowners." 6 P e t i t i o n i n g by CUC continued i n t o the 1950's with no e f f e c t on the NHA or on m i n i s t e r i a l p o l i c y . 7 However, amendments to the NHA i n 1954 which reformed CMHC's mortgage d e f a u l t insurance scheme i n c l u d e d a p r o v i s i o n which gave c o n t i n u i n g housing c o o p e r a t i v e s e l i g i b i l i t y f o r NHA d e f a u l t insurance on mortgage 53 funds obtained from approved p r i v a t e lenders and e l i g i b i l i t y f o r r e s i d u a l d i r e c t NHA l e n d i n g . 8 Although c o n t i n u i n g housing c o o p e r a t i v e s were s t i l l not given the p r e f e r r e d s t a t u s of low r e n t a l housing agencies, the NHA d i d i m p l i c i t l y a u t h o r i z e a s s i s t a n c e to co o p e r a t i v e groups v i a the s u b s i d i e s inherent i n NHA mortgage insurance and NHA d i r e c t l e n d i n g . 9 N e v e r t h e l e s s , the 1954 amendments d i d l i t t l e to convince CMHC that c o n t i n u i n g c o o p e r a t i v e housing should be the focus of d i r e c t f e d e r a l government support -- i n 1959 CMHC refused to loan funds d i r e c t l y to the proposed 980 u n i t Willow Park c o n t i n u i n g housing c o o p e r a t i v e i n Winnipeg because CMHC a d m i n i s t r a t i o n was s t i l l u n w i l l i n g to lend mortgage funds to a c o o p e r a t i v e housing p r o j e c t where the members d i d not subsequently own the u n i t s on an i n d i v i d u a l b a s i s . 1 0 The p o l i c y of s e n i o r o f f i c i a l s at CMHC continued to support the b u i l d i n g c o o p e r a t i v e as the only form of co o p e r a t i v e o r g a n i z a t i o n d e s e r v i n g of f e d e r a l a s s i s t a n c e . In f a c t , at t h i s time CMHC co n s i d e r e d the c o n t i n u i n g c o o p e r a t i v e to be g e n e r a l l y incompatible with Canadian l i f e s t y l e s : ... the stro n g e s t c l a i m f o r a p r e f e r e n t i a l a t t i t u d e towards c o o p e r a t i v e s s p r i n g s from an e v a n g e l i c a l p o i n t of view a s s o c i a t e d with the c o o p e r a t i v e movement. The c o o p e r a t i v e movement i s based on a genuine and admirable s o c i a l i s t view that people should be able to conduct t h e i r own a f f a i r s f o r t h e i r own w e l l - b e i n g , without the element of p r i v a t e p r o f i t and without being p r e j u d i c e d by o u t s i d e economic i n t e r e s t .... To l i v e i n a c i t y neighbourhood ... people ... must maintain a p o l i t e , but somewhat withdrawn "armslength" r e l a t i o n s h i p with neighbours. These harmonious r e l a t i o n s h i p s can be e a s i l y upset when i s s u e s of a q u i t e d i f f e r e n t kind are in t r o d u c e d . Home i s a very p r i v a t e t h i n g and anything to do with one's own p r i v a t e a f f a i r s i s best kept independent and separate from the f r i e n d l y c o n t a c t s with neighbours. T h i s i s the nature of l i f e i n c i t i e s and c i t y people are wise to a v o i d g e t t i n g i n t o s i t u a t i o n s that may cause 54 disagreements, f r i c t i o n s , and entanglements with neighbours. I can't imagine anything anymore l i k e l y to je o p a r d i z e t h i s kind of s t a b i l i t y of f a m i l y l i f e than becoming i n v o l v e d i n a venture of c o o p e r a t i v e h o u s i n g . 1 1 In 1963, a f t e r s e v e r a l years of pressure by the CUC f o r inc r e a s e d f e d e r a l a s s i s t a n c e 1 2 , CMHC f i n a l l y approved a d i r e c t loan f o r a 200 u n i t Willow Park c o o p e r a t i v e at the NHA mortgage i n t e r e s t r a t e . 1 3 T h i s downsized Willow Park c o o p e r a t i v e became the f i r s t f e d e r a l l y - s u b s i d i z e d c o n t i n u i n g c o o p e r a t i v e i n Canada. In 1964, amendments to the NHA a u t h o r i z e d CMHC to d i r e c t l y loan funds to c h a r i t a b l e o r g a n i z a t i o n s or c o o p e r a t i v e a s s o c i a t i o n s f o r the c o n s t r u c t i o n of modest-cost c o o p e r a t i v e housing f o r u n i v e r s i t y students and t h e i r f a m i l i e s . The loans were provided under the 1960 p r o v i s i o n s of the NHA whereby CMHC cou l d loan up to 90 percent of the c a p i t a l value of the housing p r o j e c t at an i n t e r e s t r a t e which approximated government borrowing c o s t s and with an a m o r t i z a t i o n p e r i o d of 50 yea r s . Although such amendments recognized the c o n t i n u i n g c o o p e r a t i v e as a tenable form of housing f o r student households (which are i n h e r e n t l y more t r a n s i e n t than non-student households), no such r e c o g n i t i o n was given i n the case of the more t r a d i t i o n a l household. Amendments were a l s o made i n 1964 to S e c t i o n 15 of the NHA (which c o n t a i n e d the p r o v i s i o n s f o r l o w - i n t e r e s t loans to l i m i t e d d i v i d e n d companies) that p e r m i t t e d CMHC to make hi g h -r a t i o , l o w - i n t e r e s t r a t e , loans to n o n - p r o f i t housing a s s o c i a t i o n s f o r the purpose of c o n s t r u c t i n g r e n t a l housing f o r low-income households. And in 1966 f u r t h e r amendments to Secton 15 i n c r e a s e d the loan to value r a t i o on NHA-insured mortgages 55 f o r n o n - p r o f i t r e n t a l housing to 95 percent and introduced s i m i l a r NHA f i n a n c i n g f o r n o n - p r o f i t groups purchasing e x i s t i n g r e n t a l housing. Throughout t h i s p e r i o d the CUC pressured the f e d e r a l government to pro v i d e s i m i l a r S e c t i o n 15 a s s i s t a n c e to c o n t i n u i n g c o o p e r a t i v e s and made constant r e f e r e n c e to the N a t i o n a l Commission on Urban Problems i n the Un i t e d S t a t e s which recommended that " r e c o g n i t i o n be given to the tremendous p o t e n t i a l of c o o p e r a t i v e h o u s i n g . " 1 " F i n a l l y , i n 1969 the P r e s i d e n t of CMHC proposed a l e g i s l a t i v e change t h a t : ... the d e f i n i t i o n of a l i m i t e d d i v i d e n d company i n S e c t i o n 15 be widened so as to i n c l u d e c e r t a i n housing c o o p e r a t i v e s comprising low-income f a m i l i e s . S p e c i f i c a l l y , a housing c o o p e r a t i v e would only be e l i g i b l e under t h i s d e f i n i t i o n i f i t was a low-income c o n t i n u i n g c o o p e r a t i v e with members owning shares and having p o s s e s s i o n , but never becoming owners of the i n d i v i d u a l u n i t s . " 1 5 While the NHA was amended that year to i n c l u d e c o n t i n u i n g c o o p e r a t i v e s w i t h i n the e l i g i b l e r e c i p i e n t s of S e c t i o n 15 a s s i s t a n c e , no c o o p e r a t i v e p r o j e c t r e c e i v e d funding as a r e s u l t of these amendments. A change i n the M i n i s t e r r e s p o n s i b l e f o r CMHC app a r e n t l y caused CMHC to "completely ... [r e v e r s e ] i t s p o s i t i o n . " 1 6 Once again, the c o n f l i c t o r i g i n a t e d with the eq u i t y requirement of c o o p e r a t i v e housing and i t s fundamental i n c o n s i s t e n c y with the purpose of the S e c t i o n 15 p r e f e r r e d l o a n s . S e c t i o n 15 was intended to promote low-cost r e n t a l housing and sen i o r CMHC o f f i c i a l s s t i l l b e l i e v e d that the equ i t y requirement caused the c o o p e r a t i v e to be c l o s e r to home ownership than to the r e n t a l form of housing tenure: ... c o o p e r a t i v e s ... while r e l y i n g on the t e c h n i c a l i t y that the occupant i s a tenant, promote e n t i r e l y the concept of ownership rather than tenancy, and 56 [ c o o p e r a t i v e groups] have indeed proposed that the tenants provide the e q u i t i e s r e q u i r e d to f i n a n c e t h e i r u n i t s . We f e e l t h i s to be i n c o n s i s t e n t to the b a s i c concept of the l e g i s l a t i o n as i t i s p r e s e n t l y wr i t t e n . " 1 7 Thus, the primary reason f o r CMHC's r e f u s a l to support c o n t i n u i n g c o o p e r a t i v e s at t h i s time was a b e l i e f that households who were ab l e to own e q u i t y i n a c o o p e r a t i v e p r o j e c t were a l s o a b l e to pay f u l l economic rent and consequently d i d not deserve access to the p r e f e r r e d NHA l e n d i n g r a t e . 1 8 On the other hand, CMHC was not w i l l i n g to recognize the c o n t i n u i n g c o o p e r a t i v e ' s resemblence to home ownership as s u f f i c i e n t reason f o r p r o v i d i n g c o o p e r a t i v e s the same access to d i r e c t l y - l o a n e d mortgage funds that had become a v a i l a b l e to homeowners -- NHA d i r e c t loans to homeowners grew at an i n c r e d i b l e r a t e i n the l a t t e r h a l f of the 1960's, but t h i s r a t e was i n no way r e f l e c t e d in a i n c r e a s e in d i r e c t loans f o r c o o p e r a t i v e housing. N e v e r t h e l e s s , the c o o p e r a t i v e housing movement d i d r e c e i v e f a v o u r a b l e support from the 1969 Report of the F e d e r a l Task Force on Housing and Urban Development: Within the framework of the present N a t i o n a l Housing Act, the Task Force b e l i e v e s there are programs and p o l i c i e s which, i f m o d i f i e d and v i g o r o u s l y pursued by CMHC, c o u l d make a more s u b s t a n t i a l c o n t r i b u t i o n toward the housing needs of middle and lower-income groups .... The Task Force wishes to lend i t s strong support and encouragement to the c o o p e r a t i v e housing movement [which] can and should be of wider b e n e f i t i n meeting the country's housing n e e d s . 1 9 As a r e s u l t of the Report of the F e d e r a l Task Force, CMHC int r o d u c e d the $200 M i l l i o n Low-Cost Housing Program i n 1970 i n order to encourage i n n o v a t i v e forms of low-cost housing f o r low-income households. E i g h t and one h a l f percent of the housing u n i t s encouraged under t h i s one-year one-time program were 57 c o n t i n u i n g c o o p e r a t i v e u n i t s . 2 0 And i n order to ensure c o o p e r a t i v e members the s e c u r i t y of tenure supposedly inherent in the c o o p e r a t i v e form of o r g a n i z a t i o n , the Cooperative Housing F o u n d a t i o n 2 1 n e g o t i a t e d with CMHC to i n c l u d e a su r c h a r g i n g system f o r these c o o p e r a t i v e u n i t s ; consequently, households whose incomes rose above CMHC's maximum a l l o w a b l e income c o u l d remain i n the c o o p e r a t i v e by paying a monthly rent surcharge. The surcharge was used to lower rents to low-income members and was a f u n c t i o n of the d i f f e r e n c e between the i n t e r e s t r a t e on NHA-insured p r i v a t e l y - i n i t i a t e d funds (the NHA rat e ) and the e f f e c t i v e i n t e r e s t r a t e given the subsidy of the $200 M i l l i o n Program. 2 2 Another consequence of the Report of the F e d e r a l Task Force was the c r e a t i o n of a P o l i c y P lanning D i v i s i o n w i t h i n CMHC which "provided a context f o r a more r a t i o n a l e study of co o p e r a t i v e ... h o u s i n g . " 2 3 The P o l i c y P lanning D i v i s i o n was r e s p o n s i b l e f o r the fo r m u l a t i o n of CMHC's Low-Income Housing Pol i c y For 1971, a s e r i e s of p o l i c y and background papers which demonstrated growing support f o r c o o p e r a t i v e housing: [Because i t pr o v i d e s a] v e h i c l e f o r the c l o s e involvement of low-income people i n s o l v i n g t h e i r own housing problems, ... c o o p e r a t i v e housing [ i s ] e s p e c i a l l y r e l e v a n t to the a c t i v i s t poor i n Canada. [ I t ] can provide ... f o r s o c i a l development i n a d d i t i o n to o f f e r i n g a means of improving p h y s i c a l c o n d i t i o n s . 2 ' While t h i s suggests that CMHC's s e n i o r a d m i n i s t r a t o r s and policy-makers were becoming more w i l l i n g to support the c o n t i n u i n g c o o p e r a t i v e , c o o p e r a t i v e households r e c e i v e d f e d e r a l a s s i s t a n c e only inasmuch as i t was i n c l u d e d w i t h i n " s p e c i a l " programs and CMHC was not w i l l i n g to make a commitment f o r 58 continuous a s s i s t a n c e . In 1973, amidst some 36 amendments to the NHA, changes were made which have proven to be of c o n s i d e r a b l e consequence to the c o o p e r a t i v e housing s e c t o r . S e c t i o n 15.1 was cr e a t e d to e x p l i c i t l y recognize c o n t i n u i n g c o o p e r a t i v e households as e l i g i b l e r e c i p i e n t s of d i r e c t NHA loans f o r the e n t i r e c a p i t a l c o s t of the c o o p e r a t i v e p r o j e c t . These funds were g e n e r a l l y loaned by CMHC at an i n t e r e s t r a t e of 1 to 2 percent below market i n t e r e s t r a t e s and were amortized over a p e r i o d of f i f t y y e a r s . In a d d i t i o n , a 10 percent f e d e r a l c a p i t a l grant was provi d e d ( v i a S e c t i o n 34.18) to c o o p e r a t i v e housing groups to reduce the r e q u i r e d mortgage to 90 percent of the p r o j e c t ' s c a p i t a l c o s t . And f i n a l l y , a $10,000 " s t a r t - u p " grant ( v i a Se c t i o n 15.1) was pr o v i d e d to a s s i s t c o o p e r a t i v e groups to prepare a housing p r o p o s a l in order to s a t i s f y the requirements of a loan a p p l i c a t i o n . These amendments pro v i d e d the c o o p e r a t i v e s e c t o r with i t s f i r s t assurance of a s s i s t a n c e on a ongoing b a s i s . T h i s a s s i s t a n c e was a v a i l a b l e both to c o o p e r a t i v e groups who purchased newly c o n s t r u c t e d housing and to c o o p e r a t i v e groups who purchased e x i s t i n g housing. While the 1973 amendments unambiguously a u t h o r i z e d f i n a n c i a l encouragement to c o n t i n u i n g c o o p e r a t i v e s , c o o p e r a t i v e groups continued to encounter s i g n i f i c a n t problems when a p p l y i n g for the a s s i s t a n c e s p e c i f i e d i n the NHA p r o v i s i o n s : While some s o c i a l development o f f i c e r s i n r e g i o n a l CMHC o f f i c e s have promoted the [ a s s i s t a n c e ] ... oth e r s , as w e l l as branch managers, have appeared to be dragging t h e i r f e e t . Those who have been anxious to promote the program have found themselves beset by a d d i t i o n a l problems i n the form of d i s p u t e s with head o f f i c e or d i f f i c u l t i e s a r i s i n g out of the lack of program follow-up a f t e r the s t a r t - u p stage was 59 p a s s e d . 2 5 The NHA a s s i s t a n c e to c o o p e r a t i v e s i n t r o d u c e d in 1973 remained e s s e n t i a l l y unchanged u n t i l 1978 amendments s i g n i f i c a n t l y a l t e r e d i t s nature. The 1978 changes r e f l e c t e d the f e d e r a l government's concern throughout the l a t t e r part of the 1970's f o r Canada's decreased r a t e of economic growth, unprecedentedly-high r a t e s of i n f l a t i o n and i n c r e a s i n g mortgage i n t e r e s t r a t e s . These f a c t o r s l e a d to f i s c a l r e s t r a i n t s on p u b l i c spending rn the housing s e c t o r and changes i n the methods of subsidy and f i n a n c i n g used f o r government housing programs. For i n s t a n c e , NHA amendments i n 1978 r e p l a c e d the f e d e r a l -p r o v i n c i a l c o s t - s h a r i n g mechanism f o r a s s i s t a n c e to s o c i a l housing with a u n i l a t e r a l f e d e r a l subsidy mechanism and s h i f t e d the source of funds for NHA mortgage f i n a n c i n g from the p u b l i c s e c t o r to p r i v a t e f i n a n c i a l i n s t i t u t i o n s . The u n i l a t e r a l mechanism was i n t r o d u c e d in order to s i m p l i f y the a s s i s t a n c e mechanism and to i n c r e a s e the a v a i l a b i l i t y of a s s i s t a n c e to s o c i a l housing. A s s i s t a n c e under the 1973 mandatory f e d e r a l / p r o v i n c i a l c o s t - s h a r i n g mechanism was g e n e r a l l y c o n s t r a i n e d by non-complying p r o v i n c i a l governments. In a d d i t i o n , s h i f t i n g the source of c a p i t a l funds from the p u b l i c to the p r i v a t e s e c t o r was aimed at r e d i r e c t i n g f e d e r a l funding from loans to s u b s i d i e s and i n c r e a s i n g the t a r g e t s of s o c i a l housing a s s i s t a n c e . Indeed, these general s h i f t s i n f e d e r a l housing p o l i c y were r e f l e c t e d i n the amendments which introduced S e c t i o n 56.1 to the NHA. S e c t i o n 56.1 a u t h o r i z e s d i f f e r e n t i a l i n t e r e s t s u b s i d i e s to n o n - p r o f i t and c o o p e r a t i v e housing p r o j e c t s to e f f e c t i v e l y reduce mortgage i n t e r e s t r a t e s to as low 60 as 2 percent. I t i s t h i s d i f f e r e n t i a l subsidy that continues to be the primary form of a s s i s t a n c e to c o o p e r a t i v e s . T h i s d i f f e r e n t i a l a s s i s t a n c e and the complementary components of the c u r r e n t Cooperative Housing Program w i l l be e x p l a i n e d i n Chapter 5. 61 ENDNOTES 1. Canada Commission of Co n s e r v a t i o n . Rural Planning and  Development : A Study of Rural C o n d i t i o n s and Problems in Canada. (Ottawa: 1917) page 56 2. Grauer, A.E. Housing : A Study Prepared f o r the Royal Commission on D o m i n i o n - P r o v i n c i a l R e l a t i o n s . (Ottawa : 1939) page 15. 3. The Advi s o r y Committee on Re c o n s t r u c t i o n : IV Housing  and Community P l a n n i n g . (Ottawa : King's P r i n t e r , March 1944) page 271. 4. Dennis, Michael and Susan F i s h . 1972, page 250. 5. I b i d page 251. 6. I b i d page 251. 7. For a good d i s c u s s i o n of why, see L u c i l l e S. Major page 50. 8. The 1954 amendments to the NHA made s i g n i f i c a n t changes to f e d e r a l government mortgage insurance: the Dominion Housing Act (1935) introduced f e d e r a l mortgage d e f a u l t insurance in Canada i n the form of a j o i n t - l o a n mechanism wherby an i n s t i t u t i o n a l lender would loan 3/4 of the t o t a l loan amount and the f e d e r a l government would d i r e c t l y lend (at a lower-than-market r a t e ) the remaining 1/4 of the t o t a l loan amount on loans with a maximum loan to value r a t i o of 80 percent; i n a d d i t i o n , the f e d e r a l government guaranteed the c a p i t a l amount loaned by the i n s t i t u t i o n . 9. Refer to Smith, L.B. (1974 and 1981) and to F a l l i s (1980) for a d i s c u s s i o n of these s u b s i d i e s . 10. Jordan, John. 1973, page 69. 11. CMHC Memorandum October 11, 1963 as quoted i n Dennis and F i s h 1972, page 250. 12. See John Jordan 1973, page 96 f o r an ex p l a n a t i o n of the nature of t h i s i n c r e a s e d p r e s s u r e . 13. For an i n t e r e s t i n g d i s c u s s i o n of the numerous d i f f i c u l t i e s e xperienced by the Willow Park Cooperative i n the s i x year p e r i o d over which i t was planned and b u i l t see : Pomerleau, Leonard. "Willow Park : A Beginning to the Family Co-op Movement i n Canada" , Cooperative Housing  J o u r n a l , V . I X I I I , No.2 , Summer 1976 pgs. 40 - 44. 14. Dennis, Michael and Susan F i s h . 1972, page 248. 15. As quoted i n Dennis and F i s h page 252 from a CMHC memorandum (P r e s i d e n t to M i n i s t e r ) February 6, 1969. 62 16. Dennis, Michael and Susan F i s h . 1972, page 253. 17. I b i d (quoted from a memorandum Sept. 24, 1969) page 253. 18. T h i s i s demonstrated i n a l e t t e r from R.K. Andras to the N a t i o n a l Labour Cooperative Committee Nov.1970 (quoted i n Dennis and F i s h page 253): "I am very h o p e f u l l that workable techniques can be developed which w i l l permit occupants to own e q u i t y i n the p r o j e c t , and when they are abl e to do so, pay f u l l y economic r e n t . " 19. The Report of the F e d e r a l Task Force on Housing  and Urban Development January 1969, page 36. 20. $200 M i l l i o n Low Cost Housing Program D i s t r i b u t i o n of U n i t s by Tenure Home ownership 38.2% Rental 29.2% Condominium 16.3% Rental/Purchase 7.8% Cooperative 8.5% TOTAL 100.0% Source: Canadian C o u n c i l on S o c i a l Development Housing Committee (1971) Where the $200 M i l l i o n Went page 49. 21. The Cooperative Housing Foundation i s a n o n - p r o f i t o r g a n i z a t i o n which p r o v i d e s a d v i s o r y , i n f o r m a t i o n a l , and o r g a n i z a t i o n a l s e r v i c e s to c o o p e r a t i v e groups. 22. Such an arrangement was'not p o s s i b l e i n p r o j e c t s f i n a n c e d under S e c t i o n 15 ; as incomes rose above CMHC's designated low income l e v e l , households were r e q u i r e d to move out. 23. Jordan, John. 1973, page 106. 24. A Low Income Housing P o l i c y f o r 1971: A l t e r n a t i v e s f o r Choice CMHC, P o l i c y Planning D i v i s i o n . (Ottawa: CMHC, 1971 ) . 25. See C h r i s t o p h e r Haire 1978 f o r an e x c e l l e n t d i s c u s s i o n of the problems encountered by c o o p e r a t i v e members with resp e c t to the 1973 amendments. 63 CHAPTER 4 THE EVALUATION METHODOLOGY The purpose of t h i s chapter i s to develop a framework f o r the e v a l u a t i o n of the Cooperative Housing Program. The framework i s developed through a review of the r e l e v a n t l i t e r a t u r e on p u b l i c p o l i c y e v a l u a t i o n . The elements of the e v a l u a t i o n are i d e n t i f i e d and t h e i r purpose i s b r i e f l y e x p l a i n e d . In a d d i t i o n , the data used i n the e v a l u a t i o n w i l l be d e s c r i b e d and t h e i r l i m i t a t i o n s w i l l be d i s c u s s e d . F i n a l l y , the c o m p a r a b i l i t y of t h i s study with CMHC's r e c e n t l y - r e l e a s e d e v a l u a t i o n of S e c t i o n 56.1 progams i s d i s c u s s e d . (4.1) The E v a l u a t i o n of S o c i a l Housing Programs The spectrum of f e d e r a l l y - a d m i n i s t e r e d housing p o l i c i e s and programs i n Canada i s c h a r a c t e r i s t i c of a number of d i f f e r e n t , and i n some cases c o n t r a d i c t o r y , o b j e c t i v e s . For in s t a n c e , the p o l i c i e s of non-taxation of imputed rents and c a p i t a l gains (on p r i n c i p a l r e s i d e n c e s ) d i s p r o p o r t i o n a t e l y s u b s i d i z e the housing consumption of homeowners with high marginal tax r a t e s , while rent supplement and p u b l i c housing programs g e n e r a l l y t a r g e t s u b s i d i e s toward lower-income households; i n a d d i t i o n , c e r t a i n s u p p l y - o r i e n t e d p o l i c i e s ( f o r in s t a n c e , the A s s i s t e d Rental Program and the M u l t i p l e U n i t R e s i d e n t i a l B u i l d i n g program) have s u b s i d i z e d not households, but r a t h e r b u i l d e r s and i n v e s t o r s of housing. The presence of 64 such s e e m i n g l y - c o n t r a d i c t o r y p o l i c i e s suggest that the o b j e c t i v e s of a given housing program or p o l i c y must be c a r e f u l l y d e f i n e d p r i o r to i t s e v a l u a t i o n . G e n e r a l l y , when a number of f e d e r a l housing p o l i c i e s or programs d i s p l a y a high degree of s i m i l a r i t y i n primary o b j e c t i v e s or t a r g e t p o p u l a t i o n s they are a d m i n i s t r a t i v e l y i n c l u d e d w i t h i n a g e n e r a l c l a s s i f i c a t i o n . T h i s has been the case with f e d e r a l l y - a d m i n i s t e r e d s o c i a l housing programs. The primary o b j e c t i v e s and t a r g e t p o p u l a t i o n of s o c i a l housing p o l i c y o r i g i n a t e i n Canadian s o c i a l p o l i c y . While the b a s i c s o c i a l r o l e of government in a p r i v a t e market economy i s to "provide a context i n which markets can f u n c t i o n w e l l " 1 , Canadian s o c i a l p o l i c y focusses "on the d i s t r i b u t i o n of income and the degree of access to b a s i c goods and s e r v i c e s open to f a m i l i e s and i n d i v i d u a l s having low incomes." 2 S o c i a l p o l i c y has focussed on the d i s t r i b u t i o n of income in order to r e d i s t r i b u t e the market's a l l o c a t i o n of income in a more e q u i t a b l e manner. Un d e r l y i n g t h i s focus i s a p r e s u p p o s i t i o n that w e l l - f u n c t i o n i n g markets pursue e q u i l i b r i u m , but not e q u i t y . S o c i a l p o l i c y has focussed on the degree of access to b a s i c goods and s e r v i c e s i n order to ensure that f a m i l i e s and i n d i v i d u a l s consume adequate amounts of the b a s i c n e c e s s i t i e s of l i f e . U n d e r l y i n g t h i s focus i s a p r e s u p p o s i t i o n that there are t h r e s h o l d l e v e l s f o r the consumption of c e r t a i n goods and s e r v i c e s which should be made by a l l people, r e g a r d l e s s of t h e i r a b i l i t y or p r e f e r e n c e s f o r such consumption. Canadian s o c i a l p o l i c y has has t r a d i t i o n a l l y been pursued 65 by means of two general mechanisms: d i r e c t cash payments and i n -kind t r a n s f e r s . The d i r e c t cash payment permits the r e c i p i e n t to a l l o c a t e the a s s i s t a n c e r e c e i v e d a c c o r d i n g to h i s own p r e f e r e n c e s and, i n any s p e c i f i c case, may or may not be used to a c q u i r e the t h r e s h o l d l e v e l of "necessary" goods or s e r v i c e s . On the other hand; the i n - k i n d t r a n s f e r p r o v i d e s the r e c i p i e n t with a s s i s t a n c e i n the form of a s p e c i f i e d amount 'of a p a r t i c u l a r good or s e r v i c e (or i n the form of a reimbursement f o r consuming a s p e c i f i e d amount of a p a r t i c u l a r good or s e r v i c e ) and p o t e n t i a l l y o v e r - r i d e s consumer p r e f e r e n c e s . 3 According to CMHC's d e f i n i t i o n of a s o c i a l housing program — a program "whereby housing i t s e l f i s b u i l t or a c q u i r e d or r e p a i r e d , f o r l e a s e or s a l e to low-income households on an income-tested b a s i s [and where] the s u b s i d i e s a t t a c h to the d w e l l i n g s themselves, and not to the occupant households"" -- f e d e r a l s o c i a l housing programs are implemented only i n terms of the i n - k i n d t r a n s f e r . T h i s t h e s i s presumes that s o c i a l housing p o l i c y i n Canada i s i n s t i t u t e d by f e d e r a l policy-makers and supported by the e l e c t o r a t e because of i t s r e l a t i o n s h i p to s o c i a l p o l i c y . In other words, housing p o l i c y i s c l a s s i f i e d as s o c i a l housing p o l i c y because i t i s intended to have a s i m i l a r t a r g e t p o p u l a t i o n and to pursue s i m i l a r o b j e c t i v e s to general Canadian s o c i a l p o l i c y . On t h i s b a s i s , the o b j e c t i v e of s o c i a l housing p o l i c y , and thus s o c i a l housing programs, i s to provide a s s i s t a n c e to households "who lack the means to buy or rent housing that p r o v i d e s them with a reasonable standard of space and q u a l i t y . . " 5 66 As i s the case with s o c i a l p o l i c y , the t a r g e t p o p u l a t i o n and o b j e c t i v e s of s o c i a l housing p o l i c y must be made o p e r a t i o n a l on the b a s i s of c e r t a i n a r b i t r a r y d e s i g n a t i o n s ( f o r i n s t a n c e , the income l e v e l which d i s t i n g u i s h e s low incomes fom moderate and higher incomes, or the standards of q u a n t i t y and q u a l i t y which d i s t i n g u i s h the t h r e s h o l d amount of housing s e r v i c e s from su b - t h r e s h o l d amounts.) Moreover, as i s the case with s o c i a l p o l i c y , s o c i a l housing p o l i c y must be d e f i n e d and assessed a c c o r d i n g to the boundaries e s t a b l i s h e d by economic p o l i c y --"even though the o b j e c t i v e of a housing p o l i c y may be s o c i a l , i t s mechanics are always economic". 6 Indeed, the e v a l u a t i o n of s o c i a l housing p o l i c y must employ c r i t e r i a which ensure resources are a l l o c a t e d i n an e f f i c i e n t and e q u i t a b l e manner, even though the goals of such p o l i c y do not g e n e r a l l y i n c l u d e the maximization of net pro d u c t i o n and consumption. (4.2) A D e f i n i t i o n of E v a l u a t i o n and a D i s c u s s i o n of the N e c e s s i t y f o r E v a l u a t i o n (4.2a) The Purpose and Hypothesis of E v a l u a t i o n According to Wholey, the t r a d i t i o n a l o b j e c t i v e of p u b l i c program e v a l u a t i o n i s to assess "the e f f e c t i v e n e s s of an ongoing program i n a c h i e v i n g i t s o b j e c t i v e s . " 7 The u n d e r l y i n g premise of t h i s statement i s that a p u b l i c program should be judged a c c o r d i n g to how w e l l i t s implementation promotes the achievement of i t s o b j e c t i v e s -- "the common e v a l u a t i o n hypothesis i s that the program i s accomplishing what i t set out to do." 8 Consequently, as Suchman i l l u s t r a t e s , "inherent i n 67 e v a l u a t i o n i s the process of a s s i g n i n g value to some o b j e c t i v e and then determining the degree of success i n o b t a i n i n g t h i s v a l u e d o b j e c t i v e . " 9 While the above d e f i n i t i o n may be s u f f i c i e n t f o r e v a l u a t i n g a program which operates w i t h i n a single-program or a s i n g l e - p o l i c y environment, i t i s not s u f f i c i e n t i n an environment where s e v e r a l programs or p o l i c i e s compete for s c a r c e r e s o u r c e s . In the l a t t e r environment, program e v a l u a t i o n must a l s o g i v e e x p l i c i t c o n s i d e r a t i o n to how e f f i c i e n t l y the program a l l o c a t e s and r e d i s t r i b u t e s economic r e s o u r c e s . T h i s i s of course c o n s i s t e n t with the u n d e r l y i n g foundation of welfare economics (that scarce resources must be a l l o c a t e d i n a manner which p r o v i d e s the g r e a t e s t amount of s o c i a l w e l fare) and the r e a l i t y that at any s p e c i f i c time there are a number of program or p o l i c y o p t i o n s a v a i l a b l e f o r a l l o c a t i n g such r e s o u r c e s . But e v a l u a t i o n can p r o v i d e more than j u s t an i n d i c a t i o n of the e f f e c t i v e n e s s or e f f i c i e n c y of a program or p o l i c y : i t can a l s o generate v a l u a b l e i n f o r m a t i o n about the r e l a t i o n s h i p s between inputs and outputs of a program; i t can be used as an instrument by p o l i t i c i a n s , p o l i c y a n a l y s t s , or the e l e c t o r a t e with which to defend or a t t a c k a p a r t i c u l a r program or p o l i c y 1 0 ; or i t can, "by i s o l a t i n g the e f f e c t s of program a c t i v i t i e s and p o i n t i n g out those a c t i v i t i e s (which are) most e f f e c t i v e i n a m e l i o r a t i n g s o c i a l problems, ... p r o v i d e i n f o r m a t i o n on wasted e f f o r t s and i n e f f e c t u a l techniques ... b u i l d i n g a body of knowledge a p p l i c a b l e to improving the techniques of i n t e r v e n t i o n . " 1 1 Indeed, the u l t i m a t e purpose of e v a l u a t i o n 68 r e s e a r c h i s to improve the q u a l i t y of i n f o r m a t i o n a v a i l a b l e for p o l i c y d e c i s i o n s i n the hope of i n c r e a s i n g the r a t i o n a l i t y of p u b l i c policymaking. (4.2b) The D i s t i n c t i o n Between E v a l u a t i o n and E v a l u a t i o n Research According to the l i t e r a t u r e on e v a l u a t i o n ( f o r i n s t a n c e , Weiss 1972, B e r n s t e i n and Freeman 1975, Rutman 1977, and Rossi and Freeman 1982), a fundamental d i s t i n c t i o n i s g e n e r a l l y made between e v a l u a t i o n and e v a l u a t i o n r e s e a r c h . While the word " e v a l u a t i o n " i s used in r e f e r e n c e to a v a r i e t y of planned and unplanned methods of judging the merit of p a r t i c u l a r phenomena or s o c i a l i n t e r v e n t i o n s , the term " e v a l u a t i o n r e s e a r c h " has been given a more p r e c i s e and unswerving d e f i n i t i o n : " e v a l u a t i o n r e s e a r c h i s , f i r s t and foremost, a process of a p p l y i n g s c i e n t i f i c procedures to accumulate r e l i a b l e and v a l i d evidence on the manner and extent to which s p e c i f i e d a c t i v i t i e s produce p a r t i c u l a r e f f e c t s or outcomes." 1 2 The foundation of e v a l u a t i o n r e s e a r c h i s the a p p l i c a t i o n of g e n e r a l l y - a c c e p t e d procedures of s c i e n t i f i c r e s e a r c h which enable the judging process to s y s t e m a t i c a l l y c o l l e c t r e l i a b l e , v a l i d , and o b j e c t i v e i n f o r m a t i o n about a p a r t i c u l a r program. While t h i s study faces c e r t a i n c o n s t r a i n t s which preclude the use of an i d e a l l y - s c i e n t i f i c design ( f o r i n s t a n c e , cost c o n s t r a i n t s on data c o l l e c t i o n and p r a c t i c a l c o n s t r a i n t s on data a n a l y s i s ) , i t does s t r i v e to be as systematic and s c i e n t i f i c as the circumstances permit. T h e r e f o r e , the e v a l u a t i o n undertaken in t h i s study i s e v a l u a t i o n r e s e a r c h , and h e n c e f o r t h the use of 69 the word " e v a l u a t i o n " i s i n r e f e r e n c e to e v a l u a t i o n r e s e a r c h u n l e s s i n d i c a t e d otherwise. (4.2c) A D i s t i n c t i o n Among Process, Impact, and E f f i c i e n c y E v a l u a t ion A review of the l i t e r a t u r e on p u b l i c p o l i c y e v a l u a t i o n (see, f o r i n s t a n c e , Nachmias 1980 or Rossi and Freeman 1982) suggests that e v a l u a t i o n s t u d i e s can g e n e r a l l y be c l a s s i f i e d as being one, or any combination, of three i n t e r r e l a t e d types: process e v a l u a t i o n ; impact e v a l u a t i o n ; and e f f i c i e n c y e v a l u a t i o n s t u d i e s . Process e v a l u a t i o n p r i m a r i l y focuses on the degree to which a s p e c i f i c program or i n t e r v e n t i o n i s (or was) implemented a c c o r d i n g to i t s s t a t e d g u i d e l i n e s . 1 3 Thus, the process e v a l u a t i o n i s concerned with whether the program has been d i r e c t e d at the s p e c i f i e d t a r g e t p o p u l a t i o n and whether the program's mechanics or d e l i v e r y system were implemented as presupposed by the program's s p e c i f i e d purpose or d e s i g n . In a d d i t i o n to having value as an a d m i n i s t r a t i v e check (to assure that a p a r t i c u l a r program d i d indeed take p l a c e as a u t h o r i z e d by i t s mandate), the process e v a l u a t i o n i s a necessary antecedant of f u r t h e r e v a l u a t i o n . Impact e v a l u a t i o n i s p r i m a r i l y concerned with i d e n t i f y i n g the t a n g i b l e outcomes of a p a r t i c u l a r program and determining the extent to which such outcomes r e s u l t i n the achievement of the program's o b j e c t i v e s . According to Wholey, impact e v a l u a t i o n should emphasize the development of r e l i a b l e and g e n e r a l i z a b l e 70 measures of program outcome in order to assess the e f f e c t i v e n e s s of a p a r t i c u l a r program in a c h i e v i n g i t s o b j e c t i v e s . 1 4 And as Nachmias acknowledges, "at the heart of impact e v a l u a t i o n r e s e a r c h i s the idea of c a u s a l i t y , the n o t i o n that a p o l i c y i s expected to produce a change in the t a r g e t p o p u l a t i o n i n the d i r e c t i o n and of the magnitude intended by p o l i c y m a k e r s . " 1 5 Thus, impact e v a l u a t i o n presumes the presence of w e l l - d e f i n e d and o p e r a t i o n a l program o b j e c t i v e s and measurable c r i t e r i a f o r determining the program's success in reaching those o b j e c t i v e s . E f f i c i e n c y e v a l u a t i o n (or as i t i s a l s o c a l l e d , c o s t -e f f e c t i v e n e s s e v a l u a t i o n ) i s p r i m a r i l y concerned with determining the r e l a t i o n s h i p between the c o s t s and e f f e c t s of a p a r t i c u l a r p u b l i c p o l i c y or program. P u b l i c p o l i c y e v a l u a t i o n g e n e r a l l y recognizes two p o t e n t i a l l y c o n f l i c t i n g c l a s s i f i c a t i o n s of e f f i c i e n c y : a l l o c a t i v e e f f i c i e n c y and d i s t r i b u t i o n a l e f f i c i e n c y . The most a l l o c a t i v e l y - e f f i c i e n t program or p o l i c y i s the one that causes the l a r g e s t i n c r e a s e i n net p r o d u c t i o n or consumption o p p o r t u n i t i e s f o r a given amount of resources expended and o p p o r t u n i t i e s foregone. The most d i s t r i b u t i o n a l l y -e f f i c i e n t program or p o l i c y i s the one which r e d i s t r i b u t e s resources among income c l a s s e s or regions i n the most e q u i t a b l e manner, given, p r e v a i l i n g d i s t r i b u t i o n s of wealth. E v a l u a t i o n s of p u b l i c i n t e r v e n t i o n are o f t e n undertaken in terms of only one of the process, impact, or e f f i c i e n c y c l a s s i f i c a t i o n s . However, e v a l u a t i o n should i d e a l l y combine a l l three c l a s s i f i c a t i o n s undertaking what B e r n s t e i n and Freeman 71 (1975) have c a l l e d comprehensive e v a l u a t i o n . T h i s t h e s i s undertakes such a comprehensive e v a l u a t i o n . (4.2d) A D i s c u s s i o n of the Design of P u b l i c P o l i c y E v a l u a t i o n ( 4 . 1 d ) i . The t r a d i t i o n a l framework f o r e v a l u a t i o n According to Weiss (1972) and Rutman (1977), the t r a d i t i o n a l e v a l u a t i o n framework i s comprised of s i x b a s i c elements: an a r t i c u l a t i o n of program g o a l s 1 6 ; an a r t i c u l a t i o n of the program components (or d e l i v e r y system); a t r a n s l a t i o n of program goals i n t o measurable i n d i c a t o r s of goal achievenment; a s p e c i f i c a t i o n of antecedent and i n t e r v e n i n g v a r i a b l e s and t h e i r a p p r o p r i a t e i n d i c a t o r s ; the c o l l e c t i o n of data to f a c i l i t a t e the measurement of i n d i c a t o r s ; and the i n v e s t i g a t i o n and measurement of program inputs and outputs. Such a framework i s , however, merely a g e n e r a l i z a t i o n of the numerous p o s s i b l e v a r i a t i o n s i n e v a l u a t i o n design -- "there i s no s i n g l e design or technique s u i t a b l e f o r every program ... [and] the s e l e c t i o n of a p p r o p r i a t e designs and techniques depends upon the accepted d e f i n i t i o n of e v a l u a t i o n , the purposes of the e v a l u a t o r , [and] the q u e s t i o n or q u e s t i o n s to be answered." 1 7 In a d d i t i o n , the design of a p a r t i c u l a r e v a l u a t i o n i s dependent on the cost and time c o n s t r a i n t s which are imposed by whoever i n i t i a t e s and whoever performs the e v a l u a t i o n . ( 4 . 2 d ) i i . A d i s t i n c t i o n among experimental, q u a s i - e x p e r i m e n t a l and non-experimental designs E v a l u a t i o n r e s e a r c h gains much of i t s c r e d i b i l i t y from i t s 72 adherence to s c i e n t i f i c and systematic r e s e a r c h methods. Consequently, the i d e a l design f o r e v a l u a t i o n i s one which employs an experimental group and a c o n t r o l group (where members of both groups are randomly chosen from the program's t a r g e t p o p u l a t i o n ) i n order to determine the changes i n the experimental group r e l a t i v e to the c o n t r o l group as a r e s u l t of the program. The purpose of random assignment i s to ensure that every member of the t a r g e t p o p u l a t i o n has an equal chance of being s e l e c t e d f o r e i t h e r the experimental group or the c o n t r o l group. The r e s u l t of random assignment i s t h a t , with the exc e p t i o n of chance f a c t o r s i n randomization, the members of the groups have s i m i l a r c h a r a c t e r i s t i c s . Any d i f f e r e n c e s between the c h a r a c t e r i s t i c s of the groups a f t e r the experimental group has been s u b j e c t e d to the program i s t h e r e f o r e the r e s u l t of the program i t s e l f , or of the chance f a c t o r s of randomization. And r e l y i n g on the p r o p e r t i e s of s t a t i s t i c a l i n f e r e n c e , the chance f a c t o r s can be accounted f o r , l e a v i n g only the program e f f e c t s . 1 8 Thus, the experimental design "assesses the e f f e c t i v e n e s s of a program by s y s t e m a t i c a l l y comparing s p e c i f i c changes i n two or more c a r e f u l l y s e l e c t e d groups: one i n which the program i s o p e r a t i n g and others i n which i t i s n o t . " 1 9 U n f o r t u n a t e l y , the experimental design i s g e n e r a l l y i m p r a c t i c a l f o r the e v a l u a t i o n of ongoing government programs because the e s s e n t i a l requirement -- the randomized assignment of people to experimental and c o n t r o l groups — i s normally not p o s s i b l e ; i n a d d i t i o n , the experimental design i s i m p r a c t i c a l when c o s t and time c o n s t r a i n t s d i c t a t e data c o l l e c t i o n or data a n a l y s i s . Because of such d i f f i c u l t i e s , e v a l u a t i o n s of 73 government programs g e n e r a l l y employ e i t h e r q u a s i - e x p e r i m e n t a l designs or non-experimental d e s i g n s . Quasi-experimental designs a l s o employ experimental and c o n t r o l groups i n order to determine the changes i n the experimental group r e s u l t i n g from the program over a p a r t i c u l a r time p e r i o d . But the qua s i - e x p e r i m e n t a l design does not use a random assignment of t a r g e t p o p u l a t i o n members to these groups and t h e r e f o r e cannot s t a t i s t i c a l l y ensure that the members of these groups have s i m i l a r c h a r a c t e r i s t i c s . Consequently, the quas i - e x p e r i m e n t a l design i s unable to provide as high a degree of i n t e r n a l v a l i d i t y ( i n the i n f e r e n c e s which can be made about the program based on changes i n the experimental group) as can the experimental design "which p r o t e c t s a g a i n s t j u s t about a l l p o s s i b l e t h r e a t s to i n t e r n a l v a l i d i t y . " 2 0 Non-experimental designs are used when i t i s impossible or i m p r a c t i c a l to use experimental and c o n t r o l groups. Because most p u b l i c e v a l u a t i o n i s of ongoing programs and i s of ex post f a c t o nature, the non-experimental design i s g e n e r a l l y used, r e g a r d l e s s of i t s inherent weakness of low i n t e r n a l v a l i d i t y . 2 1 There are e s s e n t i a l l y two d i f f e r e n t kinds of non-experimental d e s i g n s : the one-project b e f o r e - a n d - a f t e r e v a l u a t i o n and the one-p r o j e c t a f t e r - o n l y e v a l u a t i o n . 2 2 The f i r s t d esign i s a time s e r i e s design which measures a v a r i e t y of c h a r a c t e r i s t i c s of program p a r t i c i p a n t s throughout the implementation of the program. The a f t e r - o n l y design focuses on the s i t u a t i o n of program p a r t i c i p a n t s at a s i n g l e p o i n t i n the l i f e of an ongoing program 74 or at the end of a completed program. For the purpose of e v a l u a t i o n , knowing the s i t u a t i o n of program p a r t i c i p a n t s at a s p e c i f i c time a f t e r the program has s t a r t e d (or at i t s completion) i s only of value i f there i s a l s o an understanding of what the p a r t i c i p a n t s ' s i t u a t i o n would have been had they not p a r t i c i p a t e d i n the program. Consequently, the a f t e r - o n l y design r e q u i r e s judgemental c o n t r o l s or a c c u r a t e r e t r o s p e c t i v e data on r e l e v a n t p a r t i c i p a n t c h a r a c t e r i s t i c s . There are e s s e n t i a l l y two types of judgemental c o n t r o l s that can be used in t h i s design to g i v e some idea of how measured c h a r a c t e r i s t i c s (at the time of e v a l u a t i o n ) d i f f e r from c h a r a c t e r i s t i c s of n o n - p a r t i c i p a n t s : g e n e r i c c o n t r o l s and shadow c o n t r o l s . 2 3 Generic c o n t r o l s represent e x i s t i n g standards or norms such as demographic measures and t h e i r d e r i v a t i v e s 2 " , while shadow c o n t r o l s r e l y on the judgements of experts and p a r t i c i p a n t s to determine whether a p a r t i c u l a r program has had s i g n i f i c a n t e f f e c t s on program p a r t i c i p a n t s . While the use of g e n e r i c and shadow c o n t r o l s i s g e n e r a l l y necessary i n the non-experimental designs, the l i t e r a t u r e on e v a l u a t i o n suggests the need f o r c a u t i o n i n t h e i r use. For i n s t a n c e , Rossi and Freeman (1982) emphasize the need f o r "intense s c r u t i n y of whether or not the [ g e n e r i c ] c o n t r o l s in q u e s t i o n are comparable to p a r t i c i p a n t s i n every c r i t i c a l way" 2 5 and Weiss (1972) emphasizes that i n the case of shadow c o n t r o l s , "the r e t r o s p e c t i v e s e l f - r e p o r t s ... from p a r t i c i p a n t s on t h e i r s t a t u s p r i o r to the program, are not always r e l i a b l e , p a r t i c u l a r l y on a t t i t u d i n a l measures; people o f t e n d i s t o r t t h e i r r e p o r t s on the past, u s u a l l y i n the d i r e c t o n of congruence with present a t t i t u d e s . " 2 6 75 (4.3) The Framework of E v a l u a t i o n f o r the Cooperative Program T h i s s e c t i o n d e f i n e s the design and elements of e v a l u a t i o n to be used i n t h i s t h e s i s . F i g u r e 4.1 i l l u s t r a t e s the components and sequence of the general e v a l u a t i v e framework, while the purpose of these components i s d i s c u s s e d b r i e f l y below. The e v a l u a t i o n design employed in t h i s t h e s i s most c l o s e l y resembles an a f t e r - o n l y non-experimental design and employs both g e n e r i c and judgemental c o n t r o l s . The e f f e c t s of the program on p a r t i c i p a n t s are s t u d i e d at e s s e n t i a l l y one p o i n t i n time i n the midst of the ongoing program. Because s u f f i c i e n t data i s not a v a i l a b l e to assemble e i t h e r a randomized or non-randomized c o n t r o l group and because of the nature of s e l e c t i o n (program r e c i p i e n t s have not been chosen i n a randomized f a s h i o n ) , n e i t h e r the experimental design nor the quasi experimental design i s p r a c t i c a l f o r t h i s e v a l u a t i o n . In a d d i t i o n , t h i s e v a l u a t i o n determines the e f f e c t s of the Cooperative Housing Program i n i s o l a t i o n ; i t does not compare these e f f e c t s with those of other f e d e r a l l y - s u b s i d i z e d housing programs. The advantage of t h i s design i s that i t minimizes the data requirements of e v a l u a t i o n inasmuch as data i s only r e q u i r e d f o r the c h a r a c t e r i s t i c s of one program and group of r e c i p e n t s . The disadvantage of t h i s design i s i t s i n h e r e n t l y low i n t e r n a l v a l i d i t y . Step 1 of the framework i s a s p e c i f i c a t i o n of the C o o p e r a t i v e Housing Program. The purpose of part A i s to i d e n t i f y the program's l e g i s l a t i v e components and to e x p l a i n The E v a l u a t i o n Framework STEP 1 A SPECIFICATION OF THE COOPERATIVE PROGRAM a. A s p e c i f i c a t i o n of the Cooperative Program's subsidy mechanism b. An i d e n t i f i c a t i o n and o p e r a t i o n a l i z a t i o n of the Cooperative Program's o b j e c t i v e s . STEP 2 THE PROGRAM PERSPECTIVE OF EVALUATION a. The process e v a l u a t i o n b. The impact e v a l u a t i o n c. The e f f i c i e n c y e v a l u a t i o n STEP 3 RECOMMENDATIONS FOR CHANGE 77 the program's subsidy mechanism. Without an accurate d e f i n i t i o n of the program and an understanding of i t s complex subsidy mechanism, i t i s impossible to determine the r e l a t i o n s h i p between the program's inputs and outcomes. The purpose of p a r t B i s to c l e a r l y and s p e c i f i c a l l y d e f i n e the o b j e c t i v e s of the Cooperative Program -- without such d e f i n i t i o n i t i s impossible to determine the degree to which the program's o b j e c t i v e s have, or have not, been achieved. In a d d i t i o n , because the program's o b j e c t i v e s , l i k e most p u b l i c p o l i c y o b j e c t i v e s , are presented i n ambiguous and r h e t o r i c a l terms i n p u b l i c documentation, p a r t B " o p e r a t o n a l i z e s " the o b j e c t i v e s so that t h e i r achievement can be measured. Step 2 of the framework i s the program p e r s p e c t i v e of the e v a l u a t i o n . T h i s p e r s p e c t i v e e v a l u a t e s the Cooperative Program on the b a s i s of process, impact, and e f f i c i e n c y . The purpose of the process e v a l u a t i o n i s to determine the extent to which the Cooperative Program has been implemented a c c o r d i n g to i t s g u i d e l i n e s . The purpose of the impact e v a l u a t i o n i s to determine the the e f f e c t i v e n e s s of the program i n reaching i t s o b j e c t i v e s . The purpose of the e f f i c i e n c y e v a l u a t i o n i s to assess the economic and d i s t r i b u t i o n a l e f f i c i e n c y of the Cooperative Program. F i n a l l y , step 3 of the framework recommends the changes to the program's design that are necessary to make the program an e f f e c t i v e means of promoting f e d e r a l s o c i a l housing p o l i c y . 78 (4.4) A S p e c i f i c a t i o n of the S t a t i s t i c a l and Data I n d i c a t o r s  to be Used T h i s study r e l i e s upon both primary and secondary sources of data f o r the e v a l u a t i o n of the Cooperative Housing Program. The main source of primary data i s CMHC's 1981 n a t i o n a l survey of S e c t i o n 56.1 housing p r o j e c t s . T h i s survey c o l l e c t e d data from p r o j e c t managers and occupants of n o n - p r o f i t and co o p e r a t i v e housing u n i t s that were r e c e i v i n g a s s i s t a n c e v i a Se c t i o n 56.1 of the NHA. Although CMHC was u n w i l l i n g to provide d i r e c t access to the survey data, CMHC's Program E v a l u a t i o n D i v i s i o n d i d agree to perform l i m i t e d analyses of the data on c o o p e r a t i v e housing u n i t s based on s p e c i f i c r e q u e s t s . While such r e s t r i c t e d access to the data has indeed l i m i t e d the s o p h i s t i c a t i o n of t h i s study's a n a l y s e s , i t has permitted c e r t a i n i n f e r e n c e s to be drawn about the Cooperative Program. The analyses of the data r e l e v a n t to t h i s study are i n c l u d e d i n Appendix 2. I n d i v i d u a l survey q u e s t i o n s and the corresponding survey data w i l l be r e f e r r e d to throughout the study. The survey sampled 207 of a t o t a l 504 S e c t i o n 56.1 c o o p e r a t i v e p r o j e c t s and 4283 of a t o t a l 12,342 S e c t i o n 56.1 c o o p e r a t i v e housing u n i t s as of December 1981. Data was c o l l e c t e d through two d i f f e r e n t q u e s t i o n n a i r e s , one s p e c i f i c a l l y f o r c o o p e r a t i v e p r o j e c t managers and another s p e c i f i c a l l y f o r occupants of c o o p e r a t i v e p r o j e c t s . According to CMHC, 92 percent of the surveyed p r o j e c t managers and 42 percent of surveyed occupants "completed'.' the q u e s t i o n n a i r e s . 2 7 Because of the high non-response encountered i n the occupant survey, the data were 79 a d j u s t e d by.uniformly d i s t r i b u t i n g the s t a t i s t i c a l weights of the non-responding c o o p e r a t i v e members among the s t a t i s t i c a l weights of the responding members. The v a l i d i t y of such an adjustment i s based on the presumption that non-respondents do not s y s t e m a t i c a l l y d i f f e r from respondents i n terms of the measured c h a r a c t e r i s t i c s . Given the nature of the p o p u l a t i o n , the s i z e of the sample, and the response to the survey, CMHC i s co n f i d e n t that the survey meets i t s requirements of s t a t i s t i c a l r e l i a b i l i t y . While s u f f i c i e n t sample i n f o r m a t i o n c o u l d not be obtained from CMHC to independently estimate the r e l i a b i l i t y of the sample, i t i s p o s s i b l e to make some general comments about r e l i a b i l i t y based on the nature of the S e c t i o n 56.1 survey sample. Sample r e l i a b i l i t y i s a f u n c t i o n of both sampling e r r o r s and non-sampling e r r o r s . Sampling e r r o r s occur when r e p e t i t i v e sampling of a s p e c i f i c sample frame produce d i f f e r e n t s t a t i s t i c a l estimates of a p a r t i c u l a r parameter. In other words, sampling e r r o r i s measured as "the d i f f e r e n c e between the observed v a l u e s of a v a r i a b l e and the long run average of the observed values i n r e p e t i t i o n s of the measurement." 2 8 Non-sampling e r r o r s occur when the survey design or survey a d m i n i s t r a t i o n s u f f e r s from conceptual or p r o c e d u r a l e r r o r s , when the data c o l l e c t i o n s u f f e r s from e r r o r s when r e c o r d i n g or i n t e r p r e t i n g the r e p l i e s , and when the data a n a l y s e s s u f f e r from a m i s i n t e r p r e t a t i o n of the survey responses, e r r o r s i n coding and t a b u l a t i o n , or e r r o r s i n the a p p l i c a t i o n of s t a t i s t i c a l m easures. 2 9 In other words, non-sampling e r r o r s are not s p e c i f i c to any p a r t i c u l a r part of the survey r e s e a r c h and may be the 80 r e s u l t of a number of c o n d i t i o n s : f o r in s t a n c e , due to the sample's e x c l u s i o n of an i s o l a t e d segment of the p o p u l a t i o n or to non-response from such a segment; due to unclear or m i s l e a d i n g wording and improper coding of survey q u e s t i o n s ; or due to e r r o r s in judgement and r e c a l l of response. In terms of sampling e r r o r s , the primary concern about the S e c t i o n 56.1 survey o r i g i n a t e s i n the sample's non-random nature. Since CMHC d i d not have a c e n t r a l i z e d r e g i s t e r of c o o p e r a t i v e occupants (and because the co s t of co m p i l i n g one was b e l i e v e d to be e x c e s s i v e given the corresponding i n c r e a s e i n p r e c i s i o n ) i t was unable to undertake a simple random sample. CMHC's sample was c l u s t e r e d on the b a s i s of CMHC regions and s t r a t i f i e d by p r o v i n c e , p r o j e c t type ( f a m i l y , s e n i o r c i t i z e n , or s p e c i a l purpose housing) and p r o j e c t s i z e (1-15 u n i t s , 16-30 u n i t s , and g r e a t e r than 30 u n i t s . ) 3 0 While the probable margin of sampling e r r o r with a f i x e d - s i z e d sample i s g e n e r a l l y g r e a t e r with c l u s t e r sampling than with simple random sampling, the s t r a t i f i c a t i o n of the sample decreases sampling e r r o r by c o n s t r a i n i n g the sample to p r o p o r t i o n a t e l y represent subgroups of the p o p u l a t i o n , thereby reducing "the number of sample means that d e v i a t e widely from the p o p u l a t i o n . " 3 1 In a d d i t i o n , s t r a t i f i c a t i o n allows the i n v e s t i g a t i o n of c h a r a c t e r i s t i c s of p a r t i c u l a r subgroups. Computations of the r a t i o of the v a r i a n c e of the sample mean to the v a r i a n c e expected i n a simple random sample of equal s i z e was undertaken by CMHC f o r s i x of the survey's v a r i a b l e s . 3 2 The c a l c u l a t e d values range from 3.44 to 9.86 and can be co n s i d e r e d to be r e l a t i v e l y l a r g e — the standard e r r o r s f o r 81 t h i s sample are thus 1.85 to 3.14 times what would be obtained from a simple random sample of equal s i z e , based on these v a r i a b l e s . These computations suggest that reasonably l a r g e allowances f o r sampling e r r o r should be made (at l e a s t .05) when undertaking analyses a c h i e v i n g s t a t i s t i c a l s i g n i f i c a n c e on the b a s i s of the assumptions of simple random sampling. The analyses of the S e c t i o n 56.1 survey data used i n t h i s t h e s i s have been undertaken using the S t a t i s t i c a l Package For The S o c i a l Sciences (SPSS) which does i n f a c t make assumptions on the b a s i s of simple random sampling. Analyses i n t h i s study w i l l t h e r e f o r e be based on confidence i n t e r v a l s of no grea t e r than 95 percent, i n d i c a t i n g that f o r 95 percent of samples s e l e c t e d from the sample frame, d i f f e r e n c e s between the sample estimate of a p a r t i c u l a r parameter and the a c t u a l p o p u l a t i o n parameter w i l l be l e s s than two standard e r r o r s . In terms of non-sampling e r r o r s , the primary concerns a r i s e from the wording and design of a number of q u e s t i o n s i n both the p r o j e c t manager and occupant surveys and from a coding problem with the income-related q u e s t i o n of the occupant survey. The extent to which these problems a f f e c t t h i s study's analyses w i l l be d i s c u s s e d when the s p e c i f i c q u e s t i o n s are addressed i n Chapter 6. A second source of primary data i s CMHC's a d m i n i s t r a t i v e f i l e s which c o n t a i n data on S e c t i o n 56.1 c o o p e r a t i v e s . These data are employed throughout the e v a l u a t i o n on the presumption that they a c c u r a t e l y r e f l e c t the c o s t s and c h a r a c t e r i s t i c s of the c o o p e r a t i v e housing that they r e p r e s e n t . Because CMHC's a d m i n i s t r a t i v e data f i l e s are g e n e r a l l y incomplete, the 82 a p p l i c a t i o n s of the data are i n some cases q u a l i f i e d by c e r t a i n assumpt io n s . A t h i r d source of primary data i s a c o l l e c t i o n of household c h a r a c t e r i s t i c s and p r o j e c t cost data p e r t a i n i n g to 341 c o o p e r a t i v e housing u n i t s from 6 c o o p e r a t i v e p r o j e c t s l o c a t e d i n the Vancouver Lower Mainland. The data were obtained from Columbia Housing A d v i s o r y A s s o c i a t i o n and Inner C i t y Housing S o c i e t y and are of c o o p e r a t i v e p r o j e c t s which were i n the f i n a l stages of c o m p i l i n g p r o j e c t memberships. The data are incomplete i n some r e s p e c t s and c e r t a i n assumptions have been made to enable i t s use. The main source of secondary data used i n t h i s study i s the S t a t i s t i c s Canada p u b l i c a t i o n Household F a c i l i t i e s by Income  and Other C h a r a c t e r i s t i c s 1982 (HIFE). The HIFE p u b l i c a t i o n r e l a t e s 1982 household f a c i l i t i e s and equipment data to the l e v e l of household income r e c i e v e d i n 1981. The HIFE estimates "cover v i r t u a l l y a l l p r i v a t e households i n Canada, [and] are based on a sample of approximately 35,000 h o u s e h o l d s " 3 3 ; i n a d d i t i o n , HIFE employs a number of S t a t i s t i c s Canada household surveys conducted i n the s p r i n g of 1982. The HIFE data i s used throughout the e v a l u a t i o n as a b a s i s f o r comparison of the c h a r a c t e r i s t i c s of a l l Canadian households with the c h a r a c t e r i s t i c s of S e c t i o n 56.1 c o o p e r a t i v e households. T h i s study w i l l a l s o r e l y on two a d d i t i o n a l sources of secondary data: the S t a t i s t i c s Canada p u b l i c a t i o n Income  D i s t r i b u t i o n s i n Canada (1982); the CMHC p u b l i c a t i o n Canadian  Housing S t a t i s t i c s (1982). 83 (4.5) CMHC's S e c t i o n 56.1 E v a l u a t i o n In the l a t t e r stages of the res e a r c h and composition of t h i s study CMHC r e l e a s e d the S e c t i o n 56.1 Non-Prof i t and  Cooperative Program E v a l u a t i o n . The CMHC study was undertaken by CMHC's Program E v a l u a t i o n D i v i s i o n i n c o n s u l t a t i o n with the Cooperative Housing Foundation, the Canadian C o u n c i l on S o c i a l Development, and s e v e r a l m u n i c i p a l and p r i v a t e n o n - p r o f i t o r g a n i z a t i o n s . The e v a l u a t i o n ' s data requirements were met i n part by the n a t i o n a l survey of S e c t i o n 56.1 c o o p e r a t i v e and non-p r o f i t housing u n i t s , i n pa r t by CMHC's a d m i n i s t r a t i v e data f i l e s , and i n part by data bases and ana l y s e s of previous r e s e a r c h undertaken by, and f o r , CMHC. CMHC's e v a l u a t i o n has an extremely wide scope and i n c l u d e s an assessment of the continued need f o r such programs i n a d d i t i o n to an assessment of t h e i r impacts and c o s t s . In terms of t h i s study's c o m p a r a b i l i t y with the CMHC e v a l u a t i o n , there are c e r t a i n s i m i l a r i t i e s that are unavoidable i n nature. F i r s t l y , l i k e CMHC's study the emphasis of t h i s study i s e v a l u a t i v e ; consequently, i t i s not e x t r a o r d i n a r y that both s t u d i e s have c e r t a i n s i m i l a r i t i e s in de s i g n . A f t e r a l l , there are c e r t a i n s u b s t a n t i v e i s s u e s which are i n t e g r a l elements of any meaningful e v a l u a t i o n of p u b l i c housing p o l i c y . For in s t a n c e , both s t u d i e s assess the program's e f f e c t i v e n e s s i n a c h i e v i n g i t s o b j e c t i v e s (although the d e f i n i t i o n of program o b j e c t i v e s and i n t e r p r e t a t i o n of t h e i r measureable i n d i c a t o r s d i f f e r between e v a l u a t i o n s ) and both s t u d i e s r e l y on c e r t a i n g e n e r a l l y - a c c e p t e d r u l e s and c r i t e r i a f o r e v a l u a t i o n . Secondly, t h i s study r e l i e s h e a v i l y on analyses of data from the S e c t i o n 84 56.1 survey and from CMHC a d m i n i s t r a t i v e data f i l e s , as does CMHC's e v a l u a t i o n . While t h i s does not guarantee s i m i l a r i t i e s i n data-based analyses and i n f e r e n c e s , i t does suggest t h e i r l i k l i h o o d i s f a i r l y high. N e v e r t h e l e s s , there are a l s o c e r t a i n fundamental d i f f e r e n c e s between t h i s study and CMHC'c study; i t i s these d i f f e r e n c e s that provide value to t h i s study, apart from being of the nature of "a second o p i n i o n . " The most s i g n i f i c a n t d i f f e r e n c e r e l a t e s to nature of the aggregation of S e c t i o n 56.1 program and data a n a l y s e s . T h i s study e v a l u a t e s only the Cooperat i v e Program -- the analyses are based on c o o p e r a t i v e households and c o o p e r a t i v e u n i t s o n l y . On -the other hand, CMHC'c e v a l u a t i o n i s an aggragate of a l l three S e c t i o n 56.1 programs: the P u b l i c N o n - p r o f i t , the P r i v a t e Non-p r o f i t , and the Cooperative Program. Much of CMHC's a n a l y s i s combines these three programs and s t u d i e s the o v e r a l l S e c t i o n 56.1 p o r t f o l i o . Yet due to fundamental d i f f e r e n c e s between c h a r a c t e r i s t i c s of the d e l i v e r y system of the Cooperative and N o n - p r o f i t programs, c o n c l u s i o n s based on such an aggregation of a n a l y s i s can be m i s l e a d i n g and u n r e p r e s e n t a t i v e . In s h o r t , CMHC's l e v e l of aggregation does not i n some cases p r o v i d e a p a r t i c u l a r l y a c c urate i l l u s t r a t i o n of the c h a r a c t e r i s t i c s of Se c t i o n 56.1 c o o p e r a t i v e households. In a d d i t i o n , t h i s study p r o v i d e s an in-depth e x p l a n a t i o n of the Cooperative Program's d e l i v e r y mechanism and of the nature of the housing tenure that the program a s s i s t s ; the CMHC e v a l u a t i o n only summarizes the former and doesn't deal with the l a t t e r . For these reasons, t h i s study adds to and ( i n some cases) q u a l i f i e s the study undertaken by CMHC. 86 ENDNOTES 1. Background Paper The R e l a t i o n s h i p Between S o c i a l P o l i c y  and Housing P o l i c y : A F e d e r a l P e r s p e c t i v e CMHC 1979, pg 1. 2. I b i d page 2. 3. See Krashinsky f o r a good d i s c u s s i o n of the r e l a t i v e e f f i c i e n c y of these two mechanisms 4. Background Paper The R e l a t i o n s h i p Between S o c i a l P o l i c y  and Housing P o l i c y : A F e d e r a l P e r s p e c t i v e CMHC 1979, pg 2. 5. CMHC Background Document on S o c i a l Housing 1981 6. Heung, Raymond. 1976, page 99. 7. F i e l d 1971, page 23 as quoted from Wholey. 8. Weiss, C a r o l . 1972, page 6. 9. Suchman, Edward A. 1972, page 28. 10. M o r e l l , Jonathan A. 1979, Chapter 4 "The U s e f u l l n e s s of E v a l u a t i o n " . 11. H a r t l e , Douglas G. 1974. 12. Rutman, Leonard. 1977, page 16. 13. Nachmias, David. 1979, page 4. 14. F i e l d 1971, page 24 as quoted i n F i e l d . 15. Nachmias, David. 1979, page 5. 16. According to F i s h e r (1973) page 5, a goal i s an " o b j e c t i v e , end r e s u l t , or achievement toward which e f f o r t i s d i r e c t e d " 17. F r a n k l i n , Jack and Jean H.Thrasher. 1976, page 45. 18. Imboden N. 1978, page 143. 19. I b i d page 151. 20. Weiss, C a r o l . 1972, page 67. 21. I b i d , page 74 for an ex p l a n a t i o n of why t h i s i s so. 22. I b i d , page 76. 87 23. I b i d page 75. 24. Imboden, N. 1978, page 156. 25. R o s s i , Peter H. e t ' a l . 1979, page 245. 26. Weiss, C a r o l . 1972, page 80. 27. The word "completed" i s i t a l i c i z e d because i t s d e f i n i t i o n i s unclear i n t h i s context -- the survey data i n d i c a t e s that the range of the response r a t e among retur n e d surveys v a r i e s from e i g h t percent to complete response. 28. C h u r c h i l l , G i l b e r t A. J r . 1976, page 317. 29. I b i d page 318. 30. Survey of S o c i a l Housing P r o j e c t s : Sample Design  S p e c i f i c a t i o n s 1982, page 56. 31. C h u r c h i l l , G i l b e r t A. J r . 1976, page 254. 32. Survey of S o c i a l Housing P r o j e c t s : Sample Design  Spec i f i c a t ions 1982, page 56. 33. Household F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s  1982, 1983 page 7. 88 CHAPTER 5 THE COOPERATIVE HOUSING PROGRAM: A DESCRIPTION OF THE NHA ASSISTANCE TO NON-PROFIT CONTINUING COOPERATIVE HOUSING The "Cooperative Housing Program" i s the term commonly used in r e f e r e n c e to the p r o v i s i o n s w i t h i n the NHA that provide some form of d i r e c t a s s i s t a n c e to c o n t i n u i n g c o o p e r a t i v e housing p r o j e c t s . The purpose of t h i s chapter i s to c a r e f u l l y d e s c r i b e these p r o v i s i o n s and to i l l u s t r a t e the mechanics of the system which d e l i v e r s a s s i s t a n c e to c o o p e r a t i v e s . S e c t i o n 1 d e s c r i b e s the subsidy mechanism of the Cooperative Program and p r o v i d e s a numerical example of the p o t e n t i a l magnitude of the S e c t i o n 56.1 a s s i s t a n c e . S e c t i o n 2 d e f i n e s and " o p e r a t i o n a l i z e s " the o b j e c t i v e s of the NHA a s s i s t a n c e . F i n a l l y , S e c t i o n 3 p r o v i d e s an i n d i c a t i o n of the nature of p r o v i n c i a l and m u n i c i p a l government a s s i s t a n c e to c o o p e r a t i v e housing p r o j e c t s . , (5.1) A D e s c r i p t i o n and E x p l a n a t i o n of the Post-1978  Cooperative Housing Program T h i s s e c t i o n summarizes the l e g i s l a t i v e elements of the C ooperative Housing Program and d e s c r i b e s the f e d e r a l a s s i s t a n c e mechanism that s u b s i d i z e s c o n t i n u i n g c o o p e r a t i v e s . In a d d i t i o n , the program's o b j e c t i v e s are a r t i c u l a t e d and the nature of p r o v i n c i a l and m u n i c i p a l involvement i s d i s c u s s e d . The purpose of t h i s s e c t i o n i s to provide the understanding of the Cooperative Program and i t s a s s i s t a n c e mechanism that i s necessary f o r e v a l u a t i o n . Because a d e s c r i p t i o n of the NHA 89 subsidy mechanism r e q u i r e s a l e x i c o n of i t s own, CMHC's terminology i s used in t h i s d i s c u s s i o n . Appendix 3 d e f i n e s ( i n c h r o n o l o g i c a l order) the terms which are i t a l i c i z e d i n t h e i r f i r s t usage i n t h i s s e c t i o n . (5.1a) An I d e n t i f i c a t i o n of the Elements and I n t e r f a c e s of the Cooperative Program The Cooperative Housing Program i s g e n e r a l l y d e f i n e d to be the o p e r a t i o n a l consequence of S e c t i o n 56.1 of the NHA. Although S e c t i o n 56.1 does a u t h o r i z e the most important source of c o o p e r a t i v e a s s i s t a n c e , the Cooperative Program i s r e a l l y the product of the p r o v i s i o n s w i t h i n four s e c t i o n s of the NHA. In a d d i t i o n , the Cooperative Program i n t e r f a c e s with four other f e d e r a l programs whose a u t h o r i t y a l s o o r i g i n a t e s i n the NHA. F i g u r e 5.1 i l l u s t r a t e s the elements and i n t e r f a c e s of the Cooperative Program. According to F i g u r e 5.1, the Cooperative Program i s comprised of the p r o v i s i o n s of NHA S e c t i o n s 37.1, 6, 15, and 56. 1 : NHA Sect ion 37.1 p r o v i d e s the mechanism f o r c o o p e r a t i v e groups to r e c e i v e s t a r t - u p funds to develop a housing p r o p o s a l so that a d e t a i l e d loan a p p l i c a t i o n can made. NHA S e c t i o n 6 p r o v i d e s the mechanism f o r c o o p e r a t i v e p r o j e c t s to o b t a i n NHA insurance on mortgage lo a n s . NHA S e c t i o n 15 p r o v i d e s the mechanism for CMHC to d i r e c t l y lend mortgage funds to c o o p e r a t i v e groups who are unable to secure f i n a n c i n g with approved p r i v a t e l e n d e r s . NHA Sect ion 56.1 p r o v i d e s the mechanism f o r c o o p e r a t i v e s to r e c e i v e ongoing f i n a n c i a l a s s i s t a n c e on a monthly b a s i s i n the form of a d i f f e r e n t i a l i n t e r e s t subsidy on the c o o p e r a t i v e p r o j e c t ' s mortgage. 90 FIGURE 5.1 An I l l u s t r a t i o n of the Elements and I n t e r f a c e s of the Cooperative Housing Program S e c t i o n 59 D i r e c t - I n d i a n s ] On-Reserve Program THE COOPERATIVE PROGRAM |Section Sect ion Sect ion S e c t i o n | \ | S e c t i o n | | 37. 1 6 1 5 56.1 | | . . . | 34 | J S t a r t - Insured Di r e c t Mortgage] | j RRAP | up Lending Lending Subsidy | | | Program J j Program ! | S e c t i o n 44 F e d e r a l / P r o v i n c i a l C ost-Sharing Program 91 As i s a l s o i l l u s t r a t e d i n F i g u r e 5.1, there are four NHA programs which i n t e r f a c e the Cooperative Program and form a p a r t of the environment w i t h i n which the Cooperative Program operates: NHA Sect ion 34.1 a u t h o r i z e s the R e s i d e n t i a l R e h a b i l i t a t i o n A s s i s t a n c e Program (RRAP) to provide a s s i s t a n c e to c o o p e r a t i v e groups who a c q u i r e e x i s t i n g b u i l d i n g s which r e q u i r e r e h a b i l i t a t i o n to meet CMHC standards. NHA S e c t i o n 36(g) a u t h o r i z e s the Community Resource O r g a n i z a t i o n Program (CROP) to provide a s s i s t a n c e to n o n - p r o f i t resource groups who provide t e c h n i c a l and p r o f e s s i o n a l s e r v i c e s f o r o r g a n i z a t i o n and development of c o o p e r a t i v e p r o j e c t s . NHA S e c t i o n 44 a u t h o r i z e s the F e d e r a l / P r o v i n c i a l Cost Sharing Program to p r o v i d e f o r subsidy s t a c k i n g on top of the S e c t i o n 56.1 subsidy. A d d i t i o n a l o p e r a t i n g s u b s i d i e s are shared e q u a l l y by the f e d e r a l and p r o v i n c i a l governments once the p r o v i n c i a l government c o n t r i b u t e s an amount equal to the S e c t i o n 56.1 subsidy. NHA S e c t i o n 59 a u t h o r i z e s the D i r e c t - I n d i a n s On-Reserve Program to d i r e c t l y lend f e d e r a l funds to c o o p e r a t i v e housing p r o j e c t s on Indian Reserves that meet CMHC's c o o p e r a t i v e c r i t e r i a . (5.1b) An E x p l a n a t i o n of the Program's Subsidy Mechanisms ( 5 . 1 b ) i . S e c t i o n 37.1 s t a r t - u p a s s i s t a n c e S e c t i o n 37.1 i s a " l e a d - i n program for the p r o p o s a l i n i t i a t i o n , p r o j e c t development, and [ p r o j e c t ] e x e c u t i o n . " 1 The s t a r t - u p a s s i s t a n c e i s g e n e r a l l y a l l o c a t e d on the b a s i s of the c o s t s that a p a r t i c u l a r c o o p e r a t i v e group i s expected to incur while i t i s d e v e l o p i n g the housing p r o p o s a l to the p o i n t where a loan a p p l i c a t i o n can be made, to a maximum of $75,000. The funds a c q u i r e d by the c o o p e r a t i v e group are added to the mortgage balance i f the c o o p e r a t i v e group i s s u c c e s s f u l in o b t a i n i n g 92 mortgage funds (from the p r i v a t e s e c t o r or d i r e c t l y from CMHC), and are g e n e r a l l y f o r g i v e n i f not -- a c c o r d i n g to the NHA, CMHC "may ... f o r g i v e payment by the borrower of the [ s t a r t - u p ] l o a n . " 2 The s t a r t - u p funds are a l l o c a t e d i n two stages. The f i r s t stage p r o v i d e s a maximum of $10,000 to assess the f e a s i b i l t y of the c o o p e r a t i v e p r o j e c t and to organize the c o o p e r a t i v e members. A c t i v i t i e s which q u a l i f y f o r the f i r s t a l l o c a t i o n i n c l u d e : "[the] d e t e r m i n a t i o n of demand f o r the p r o j e c t , formal i n c o r p o r a t i o n , . . . p r e p a r a t i o n of p r e l i m i n a r y drawings," 3 l o c a t i o n a l a n a l y s e s , and the purchase of p r o p e r t y o p t i o n s . In the event that a c o o p e r a t i v e r e l i e s on the o r g a n i z a t i o n a l e x p e r t i s e of a n o n - p r o f i t resource or housing group, much of the f i r s t a l l o c a t i o n w i l l be used to reimburse the resource group fo r the v a r i a b l e c o s t s i n c u r r e d . The second a l l o c a t i o n , of up to $65,000, can be used f o r such t h i n g s as the p l a n n i n g of the development, the employment of l e g a l or other p r o f e s s i o n a l help, b u i l d i n g permits and l i c e n c e c o s t s , land assembly c o s t s , or c o s t s i n c u r r e d while s e c u r i n g mortgage f i n a n c i n g . Funds are only advanced i n the second stage i f the a n a l y s i s undertaken i n the f i r s t stage demonstrates that there i s a demand and a need f o r the p r o j e c t and that the p r o j e c t i s f e a s i b l e . " ( 5 .1b)i i . The S e c t i o n 6 mortgage insurance In order to improve c o o p e r a t i v e groups' access to p r i v a t e mortgage funds, S e c t i o n 6 of the NHA i n c l u d e s a p r o v i s i o n f o r the insurance of mortgage funds advanced by approved l e n d e r s to 93 c o o p e r a t i v e housing c o r p o r a t i o n s "where a m a j o r i t y of the housing u n i t s of the p r o j e c t are occupied by members or shareholders of the co-op." 5 NHA insurance i s a v a i l a b l e f o r up to 100 percent of the "acceptable c a p i t a l c o s t s f o r le n d i n g purposes" f o r new and e x i s t i n g housing f o r c o o p e r a t i v e p r o j e c t s ( i n c l u d i n g the c o n v e r s i o n of an e x i s t i n g r e s i d e n t i a l p r o j e c t ) and f o r up to 90 percent of the a c c e p t a b l e c a p i t a l c o s t s when the c o o p e r a t i v e p r o j e c t i n v o l v e s the co n v e r s i o n of non-r e s i d e n t i a l space i n t o c o o p e r a t i v e housing. The NHA insurance i n d e m n i f i e s p r i v a t e mortgage len d e r s f o r 100 percent of the outstan d i n g loan amount i f the c o o p e r a t i v e o r g a n i z a t i o n d e f a u l t s on the mortgage. The cost to c o o p e r a t i v e s f o r NHA insurance i s a 1.5 percent premium on loans with loan to value r a t i o s g r e a t e r than 75 percent, and a 1 percent premium on loans with loan to value r a t i o s l e s s than or equal to 75 percent. ( 5 . 1 b ) i i i . S e c t i o n 15 d i r e c t l e n d i n g S e c t i o n 15 of the NHA g i v e s CMHC the a u t h o r i t y to act as a lender of l a s t r e s o r t to c o o p e r a t i v e s who are otherwise unable to o b t a i n f i n a n c i n g at an i n t e r e s t r a t e which a c c u r a t e l y r e f l e c t s the r i s k of the mortgage. S e c t i o n 15 funds are loaned at the NHA rate and are i n s u r e d under the same c r i t e r i a and terms as p r i v a t e l y i n i t i a t e d NHA-insured loans. ( 5 . 1 b ) i v . S e c t i o n 56.1 d i f f e r e n t i a l i n t e r e s t a s s i s t a n c e The S e c t i o n 56.1 subsidy mechanism prov i d e s f o r a s s i s t a n c e to c o o p e r a t i v e a s s o c i a t i o n s (as d e f i n e d i n S e c t i o n 15(2) of the NHA) and to the c o u n c i l s f o r Indian bands ( w i t h i n the meaning of 94 the Indian Act) who enter i n t o S e c t i o n 56.1 agreement with CMHC. Se c t i o n 56.1 a s s i s t a n c e i s the primary component of the Cooperative Program. I t i s a l s o the most complex and most widely misunderstood component of the program. Because of t h i s complexity and i t s r e l a t i v e importance i n the p r o v i s i o n of housing a s s i s t a n c e to c o o p e r a t i v e s , the S e c t i o n 56.1 subsidy mechanism w i l l be d e s c r i b e d c a r e f u l l y by means of e x p l a n a t i o n and example. S e c t i o n 56.1 a u t h o r i z e s a s s i s t a n c e to e l i g i b l e c o o p e r a t i v e groups when a need f o r such housing i s evident i n the proposed area and when f e d e r a l l y - a l l o c a t e d funds are a v a i l a b l e . To be e l i g i b l e , the group must be " i n c o r p o r a t e d as a n o n - p r o f i t housing c o o p e r a t i v e under p r o v i n c i a l law, and the m a j o r i t y of the occupants of the p r o j e c t [must] be members of the c o o p e r a t i v e . " 6 M a j o r i t y i s d e f i n e d i n the S e c t i o n 56.1 o p e r a t i n g agreement to be a minimum of 80 per c e n t . In terms of a need f o r c o o p e r a t i v e housing, i f the market f o r r e n t a l housing i n the community i s not e x p e r i e n c i n g an abnormally high vacancy rate among r e n t a l apartments (and i s not expected to do so i n the short run), and i f there i s not an excess of vacant c o o p e r a t i v e u n i t s , then such a need i s co n s i d e r e d to e x i s t . F i n a l l y , the a v a i l a b i l i t y of f e d e r a l funds f o r S e c t i o n 56.1 a s s i s t a n c e to c o o p e r a t i v e s i s a f u n c t i o n of the Parliamentary a l l o c a t i o n of s o c i a l housing subsidy u n i t s and the subsidy requirements of competing s o c i a l housing programs. Annual commitments to s o c i a l housing programs from the f e d e r a l government's C o n s o l i d a t e d Revenue Fund are d e f i n e d i n terms of subsidy u n i t s , r a t h e r than in s p e c i f i c d o l l a r amounts, a subsidy u n i t being a commitment to 95 fund an a d d i t i o n a l c o o p e r a t i v e housing u n i t under the c o n d i t i o n s of S e c t i o n 56.1. T h i s subsidy u n i t form of commitment began i n 1979 at a l e v e l of 30,000 u n i t s , and was i n c r e a s e d by 2500 u n i t s i n 1981 and by an a d d i t i o n a l 2721 u n i t s in 1982. Subsidy u n i t s that are not used i n the year i n which they are a l l o c a t e d are pl a c e d i n a subsidy u n i t pool and may be used i n f u t u r e years. A p o r t i o n of the annual commitments of subsidy u n i t s i s a l l o c a t e d to S e c t i o n 56.1 c o o p e r a t i v e a s s i s t a n c e i n a three step h i e r a r c h i c a l manner: f i r s t , the subsidy u n i t s are a l l o c a t e d at the n a t i o n a l l e v e l among s o c i a l housing programs and among CMHC regi o n s based on assesments of need undertaken by sen i o r a d m i n i s t r a t o r s at the CMHC n a t i o n a l o f f i c e ; second, the subsidy u n i t s are a l l o c a t e d among l o c a l areas by r e g i o n a l l e v e l a d m i n i s t r a t o r s ; and t h i r d , the subsidy u n i t s are a l l o c a t e d among p r o p s a l s f o r p a r t i c u l a r c o o p e r a t i v e p r o j e c t s by l o c a l l e v e l a d m i n i s t r a t o r s . As was i l l u s t r a t e d i n Table 1.2 of Chapter 1, the subsidy u n i t s a l l o c a t e d to c o o p e r a t i v e housing s i n c e 1979 have represented a s i g n i f i c a n t p r o p o r t i o n of the the t o t a l commitment of subsidy u n i t s . While the t o t a l number of subsidy u n i t s a v a i l a b l e f o r CMHC's s o c i a l housing program p o r t f o l i o i s determined by Parliament, CMHC does have some f l e x i b l i t y i n terms of intrabudgetary t r a n s f e r s ; i n other words, CMHC can s h i f t subsidy u n i t s (and thus p r i o r i t i e s ) from other s o c i a l housing programs to c o o p e r a t i v e a s s i s t a n c e at the d i r e c t i o n of se n i o r management. The maximum annual S e c t i o n 56.1 a s s i s t a n c e a v a i l a b l e to a p a r t i c u l a r c o o p e r a t i v e p r o j e c t i s the d i f f e r e n c e between the mortgage payment r e q u i r e d to amortize the "acceptable c a p i t a l 96 c o s t s f o r S e c t i o n 56.1 purposes" at the market-negotiated i n t e r e s t r a t e and the amount r e q u i r e d to amortize the same c a p i t a l c o s t s at 2 percent, compounded semi-annually and not i n advance. The a m o r t i z a t i o n p e r i o d i n both cases i s 35 years or the l i f e of the p r o j e c t , whichever i s l e s s . T h i s maximum a v a i l a b l e a s s i s t a n c e i s a l l o c a t e d to c o o p e r a t i v e u n i t s i n two separate, but interdependent, components: f i r s t , the "predetermined a s s i s t a n c e " which reduces the occupancy charges of a l l the u n i t s of a c o o p e r a t i v e p r o j e c t to the "lower end of the range of market r e n t s " (LEM) f o r s i m i l a r accomodation i n the area; and second, the a s s i s t a n c e a v a i l a b l e to "income-tested" occupants to reduce t h e i r occupancy charges so that they pay no more than 25 percent of t h e i r "income" in r e n t . T h e r e f o r e , the maximum a s s i s t a n c e i s f i r s t used to a s s i s t a l l c o o p e r a t i v e households, r e g a r d l e s s of income, to bridge the gap between the lower end of the range of market r e n t s and the c o o p e r a t i v e ' s "economic occupancy charge"; t h e r e a f t e r , the remaining a s s i s t a n c e forms the "subsidy p o o l " and i s used to f u r t h e r a s s i s t income-tested households so that they pay no more than 25 percent of t h e i r income or the amount s t i p u l a t e d in the "Federal Graduated Occupancy Charge S c a l e " . According to the S e c t i o n 56.1 o p e r a t i n g agreement, at l e a s t 15 percent of the u n i t s of a p a r t i c u l a r c o o p e r a t i v e p r o j e c t must be occupied by income-tested households, "provided that there are s u f f i c i e n t funds in the subsidy pool to permit the c o o p e r a t i v e to do s o . " 7 Subsidy funds which remain a f t e r a s s i s t i n g a l l income-tested househoulds are p l a c e d i n a "subsidy s u r p l u s fund" up to a maximum of $500 per c o o p e r a t i v e u n i t p l u s 97 any i n t e r e s t that accrues; beyond t h a t , any remaining a s s i s t a n c e must be returned to CMHC. The purpose of the subsidy s u r p l u s fund i s to s a t i s f y the f u t u r e subsidy requirements of income-t e s t e d members that cannot be s a t i s f i e d by a f u t u r e year's maximum annual a s s i s t a n c e . Three important o b s e r v a t i o n s can be made about the a s s i s t a n c e thus f a r : f i r s t , the maximum a v a i l a b l e a s s i s t a n c e can (and does) vary c o n s i d e r a b l y among p a r t i c u l a r c o o p e r a t i v e p r o j e c t s depending on the n e g o t i a t e d mortgage i n t e r e s t r a t e ; second, the a s s i s t a n c e to income-tested members i s a r e s i d u a l --i f the gap between economic occupancy charge and the LEM i s s u f f i c i e n t l y l a r g e , i t i s t h e o r e t i c a l l y p o s s i b l e f o r there to be no a s s i s t a n c e a v a i l a b l e f o r income-tested members; and t h i r d , while the maximum a v a i l a b l e a s s i s t a n c e i s equal to the d i f f e r e n t i a l i n t e r e s t c a l c u l a t i o n , i t i s p o s s i b l e that a p a r t i c u l a r c o o p e r a t i v e w i l l not r e q u i r e a l l of the a v a i l a b l e a s s i s t a n c e , even a f t e r the maximum a l l o c a t i o n to the subsidy s u r p l u s fund. F i g u r e 5.2 i l l u s t r a t e s the c a l c u l a t i o n of the S e c t i o n 56.1 "maximum a v a i l a b l e a s s i s t a n c e " , the economic occupancy charge, "the reduced p r i n c i p a l and i n t e r e s t payments", and the predetermined a s s i s t a n c e to a l l c o o p e r a t i v e households on a per u n i t b a s i s f o r a h y p o t h e t i c a l c o o p e r a t i v e p r o j e c t i n the f i r s t year of the a s s i s t a n c e ; i n a d d i t i o n , the r e s i d u a l amount a v a i l a b l e to income-tested households i s c a l c u l a t e d . The c a p i t a l c o s t s and o p e r a t i n g expenses are a l l o c a t e d among c o o p e r a t i v e u n i t s on a pro r a t a b a s i s a c c o r d i n g to the number of bedrooms and square footage of the p a r t i c u l a r u n i t s . While t h i s simple 98 example i s based on a c o o p e r a t i v e with homogenous u n i t s , i n an a c t u a l c o o p e r a t i v e p r o j e c t the t o t a l a v a i l a b l e a s s i s t a n c e , the o p e r a t i n g expenses, the economic occupancy charge, the LEM, the reduced p r i n c i p a l and i n t e r e s t payments, the predetermined a s s i s t a n c e , and the per u n i t c o n t r i b u t i o n to the subsidy pool w i l l vary among d i f f e r e n t s i z e s and types ( f o r i n s t a n c e , apartment versus townhouse) of u n i t s i n a p a r t i c u l a r c o o p e r a t i v e p r o j e c t . F i g u r e 5.2 i l l u s t r a t e s that each u n i t i n the c o o p e r a t i v e p r o j e c t (with a pro r a t a c a p i t a l c o s t of $75,000) r e c e i v e s predetermined a s s i s t a n c e of $270; thus, each household r e g a r d l e s s of i t s income r e c e i v e s a monthly subsidy of $270 to b r i d g e the gap between the economic charge and the LEM. Based on t h i s c a l c u l a t i o n , there i s a per u n i t r e s i d u a l of $227 a v a i l a b l e to f u r t h e r reduce the monthly occupancy charges of income-tested households. Although the a d d i t i o n a l a s s i s t a n c e i s c a l c u l a t e d on a per u n i t b a s i s , i t i s c o n s o l i d a t e d i n the subsidy pool and i s expended i n whatever amounts are neccessary and c o n s i s t e n t with the 25 percent rent-to-income g u i d e l i n e and the Graduated Occupancy Charge S c a l e . The above d i s c u s s i o n has i n t r o d u c e d and demonstrated the primary components of the S e c t i o n 56.1 subsidy mechanism. With the e x c e p t i o n of the o p e r a t i n g expenses and the LEM, and p r o v i d i n g t hat the c o o p e r a t i v e ' s mortgage i s not r e n e g o t i a t e d at a change of i n t e r e s t r a t e w i t h i n the f i r s t three years of the subsidy, the magnitude of the primary components do not change u n t i l the f o u r t h year. The o p e r a t i n g expenses, on the other 99 FIGURE 5.2 An I l l u s t r a t i o n of the C a l c u l a t i o n of the A s s i s t a n c e to Cooperative Housing P r o j e c t s v i a S e c t i o n 56.1 Assumpt ions 1. Acceptable c a p i t a l c ost per u n i t f o r S e c t i o n 56.1 purposes equals $75,000. 2. NHA-insured mortgage at 12 percent compounded semiannually, not i n advance. 3. 35 year a m o r t i z a t i o n p e r i o d 4. Operating expenses begin i n year 1 at 2 percent of c a p i t a l value on an annual b a s i s . 5. The lower end of the range of market rents f o r s i m i l a r housing i n the area i s $600. C a l c u l a t ions 1. Maximum A v a i l a b l e A s s i s t a n c e V i a S e c t i o n 56.1 a. Monthly mortgage payment at 12 percent $745 (on a c c e p t a b l e c a p i t a l c o s t s ) b. Monthly mortgage payment at 2 percent $248 (on a c c e p t a b l e c a p i t a l c o s t s ) c. Maximum A v a i l a b l e A s s i s t a n c e (a-b) $497 2. Economic Occupancy Charge a. Monthly mortgage payment at 12 percent $745 b. Monthly o p e r a t i n g expenses $125 c. Economic Occupancy Charge (a+b) $870 3. Reduced P r i n c i p a l and I n t e r e s t Payment in Year One a. Lower end of the range of market r e n t s f o r s i m i l a r housing $600 b. Approved monthly o p e r a t i n g expenses $125 c. Amount a v a i l a b l e f o r p r i n c i p a l and i n t e r e s t payments (a-b) $475 100 Fi g u r e 5.2 continued 4. Predetermined A s s i s t a n c e a. Monthly mortgage payment at 12 percent $745 b. Reduced p r i n c i p a l and i n t e r e s t payment $475 c. Predetermined a s s i s t a n c e (a-b) $270 5. A d d i t i o n a l A s s i s t a n c e f o r Income-tested Occupants a. Maximum a v a i l a b l e a s s i s t a n c e (monthly) $497 b. Predetermined a s s i s t a n c e $270 c. A d d i t i o n a l a s s i s t a n c e a v a i l a b l e to income-tested households (a-b) $227 101 hand, change a c c o r d i n g to the a c t u a l o p e r a t i n g c o s t s i n c u r r e d , while the concept of LEM i s r e p l a c e d by the c o o p e r a t i v e occupancy charge i n year two and changes as a f u n c t i o n of o p e r a t i n g expenses in year two and t h r e e . As F i g u r e 5.3 demonstrates, beginning in the f o u r t h year of the subsidy the reduced p r i n c i p a l and i n t e r e s t payment i s i n c r e a s e d by 5 percent a n n u a l l y u n t i l i t i s equal to the f u l l p r i n c i p a l and i n t e r e s t payment. I n c r e a s i n g the reduced p r i n c i p a l and i n t e r e s t payment in t h i s manner reduces the predetermined a s s i s t a n c e and i n c r e a s e s the a s s i s t a n c e a v a i l a b l e to income-tested households by the same a b s o l u t e amount. The maximum a v a i l a b l e a s s i s t a n c e i s not a f f e c t e d by the 5 percent i n c r e a s e , and unless the c o n t r a c t u a l mortgage i n t e r e s t r a t e changes, the maximum a s s i s t a n c e remains the same over the l i f e of the subsidy. Thus, the d i r e c t subsidy to the occupants of every u n i t , r e g a r d l e s s of income, i s decreased a n n u a l l y a f t e r the t h i r d year u n t i l i t s eventual t e r m i n a t i o n . While the predetermined a s s i s t a n c e i s terminated i n the t h i r t e e n t h year of the subsidy in F i g u r e 5.3, the year of t e r m i n a t i o n d i f f e r s among p a r t i c u l a r c o o p e r a t i v e p r o j e c t s as a f u n c t i o n of the r e l a t i o n s h i p between the e s t a b l i s h e d LEM i n year 1 and the economic occupancy charge, and as a f u n c t i o n of changes in c o n t r a c t u a l p r i n c i p a l and i n t e r e s t payments experienced over the l i f e of the subsidy. F i g u r e 5.3 An I l l u s t r a t i o n of the C a l c u l a t i o n of the Se c t i o n 56.1 Subsidy Throughout the Am o r t i z a t i o n P e r i o d on a Monthly and Per Unit B a s i s 1 2 3 4 5 6 7 8 9 YEAR ACTUAL MAXIMUM ECONOM OPER REDUCED PREDET OCCUP ASSIST P + I AVAILABLE OCCUP EXP P + I ASSIST CHRG AVAIL ASSIST CHRG (LEM) Y-TEST 1 $745 $497 $870 $125 $475 $270 $600 $227 2 $745 $497 $879 $134 $475 $270 $609 $227 3 $745 $497 $888 $1 43 $475 $270 $619 $227 4 $745 $497 $898 $1 53 $499 $246 $652 $251 5 $745 $497 $907 $1 64 $524 $221 $688 $276 6 $745 $497 $920 $175 $550 $1 95 $725 $302 7 $745 $497 $933 $188 $577 $1 68 $765 $329 8 $745 $497 $946 $201 $606 $1 39 $807 $358 9 $745 $497 $960 $215 $637 $1 08 $852 $389 0 $745 $497 $975 $230 $668 $77 $898 $420 1 $745 $497 $991 $246 $701 $44 $947 $453 2 $745 $497 $1 008 $263 $7 36 $9 $999 $488 3 $745 $497 $1 027 $282 $745 $0 $1 027 $497 4 $745 $497 $1 046 $301 $745 $0 $1 046 $497 5 $745 $497 $1067 $322 $745 $0 $1067 $497 • • • • • • • • No change i n amount of subsidy components except that the annual i n c r e a s e i n o p e r a t i n g expenses i s r e f l e c t e d a s i m i l a r i n c r e a s e i n the Economic Occupancy Charge and i n the Occupancy Charge to Non-tested Members 35 $745 $497 $1559 $1246 $745 $6 $1*991 $497 Assumptions : 1. Acceptable c a p i t a l c o s t s of $75,000. 2. I n t e r e s t r a t e i s 12 percent semiannually, not in advance. 3. 35 year a m o r t i z a t i o n 4. Mortgage i s r o l l e d over at 12 percent i n year 6. 5. Operating expenses begin at $125 per u n i t and in c r e a s e at 7 percent a n n u a l l y . 103 Mortgage renewal at a change i n c o n t r a c t u a l i n t e r e s t r a t e s i s i l l u s t r a t e d in F i g u r e 5.4, where the mortgage i s r o l l e d over a f t e r the f i f t h and t e n t h subsidy years at 18 and 14 percent, r e s p e c t i v e l y . F i g u r e 5.4 demonstrates that the ab s o l u t e amount of the reduced p r i n c i p a l and i n t e r e s t payment w i l l vary in r e l a t i o n to the a c t u a l mortgage and i n t e r e s t payment from a change i n mortgage i n t e r e s t r a t e s -- the reduced p r i n c i p a l and i n t e r e s t payment continues to i n c r e a s e at 5 percent a n n u a l l y u n t i l i t i s equal to the a c t u a l p r i n c i p a l and i n t e r e s t payment. F i g u r e 5.4 a l s o demonstrates "the change i n both the maximum a v a i l a b l e a s s i s t a n c e and the predetermined a s s i s t a n c e in r e l a t i o n to the change i n n e g o t i a t e d i n t e r e s t r a t e s ; in a d d i t i o n , the a c t u a l amount of a s s i s t a n c e a v a i l a b l e to income-t e s t e d households i n c r e a s e s or decreases i n r e l a t i o n to the change i n a c t u a l mortgage p r i n c i p a l and i n t e r e s t payments u n t i l i t e v e n t u a l l y equals the maximum a v a i l a b l e a s s i s t a n c e . Indeed, i t i s apparent that CMHC assumes a very l a r g e p o r t i o n of the c o o p e r a t i v e p r o j e c t ' s i n t e r e s t r a t e r i s k over the a m o r t i z a t i o n p e r i o d due to the nature of the subsidy mechanism. For i n s t a n c e , F i g u r e 5.4 demonstrates that the occupancy charge to a l l households, r e g a r d l e s s of income, i s not a f f e c t e d by the in c r e a s e i n i n t e r e s t r a t e s u n t i l the t h i r t e e n t h year of the subsidy. In years 6 through 12, the occupancy charge to a l l households i n c r e a s e s only by the 5 percent i n c r e a s e i n reduced p r i n c i p a l and i n t e r e s t payments, r e g a r d l e s s of any change in c o n t r a c t u a l mortgage i n t e r e s t r a t e s . In the t h i r t e e n t h year, the in c r e a s e i n the a c t u a l p r i n c i p a l and i n t e r e s t payments F i g u r e 5.4 An I l l u s t r a t i o n of the C a l c u l a t i o n of the S e c t i o n 56.1 Subsidy Throughout the A m o r t i z a t i o n P e r i o d on a Monthly and Per Unit B a s i s Assuming that the Mortgage i s Renewed A f t e r Year 5 and 10 at 17 Percent and 14 Percent, R e s p e c t i v e l y 1 2 3 4 5 6 7 8 9 YEAR ACTUAL MAXIMUM ECONOM OPER REDUCED PREDET OCCUP ASSIST P + I AVAILABLE OCCUP EXP P +1 ASSIST CHRG AVAIL ASSIST CHRG (LEM) Y-TEST 1 $745 $497 $870 $1 25 $475 $270 $600 $227 2 $745 $497 $879 $1 34 $475 $270 $609 $227 3 $745 $497 $888 $1 43 $475 $270 $619 $227 4 $745 $497 $898 $1 53 $499 $246 $652 $251 5 $745 $497 $909 $1 64 $524 $221 $688 $276 6 $1 077 $829 $1 252 $175 $550 $527 $725 $302 7 $1 077 $829 $1 268 $188 $577 $500 $765 $329 8 $1 077 $829 $1 278 $201 $606 $471 $807 $358 9 $1 077 $829 $1 292 $215 $637 $440 $852 $389 10 $1 077 $829 $1 307 $230 $668 $409 $898 $420 1 1 $862 $614 $1 1 08 $246 $701 $161 $947 $453 1 2 $862 $614 $1 125 $263 $736 $126 $999 $488 1 3 $862 $614 $1 1 44 $282 $773 $89 $105 $525 1 4 $862 $614 $1 1 63 $301 $81 1 $51 $1112 $563 1 5 $862 $614 $1 184 $322 $852 $0 $1174 $604 1 6 $862 $614 $1 207 $345 $862 $0 $1207 $614 17 $862 $614 $1231 $369 $862 $0 $1231 $614 • • • No change i n amount of subsidy components except that annual i n c r e a s e in o p e r a t i n g expenses i s r e f l e c t e d by a s i m i l a r i n c r e a s e i n the Economic Occupancy Charge and i n the Occupancy Charge to Non-tested Members 35 $862 $614 $2109 $1247 $862 $0 $2109 $614 F i g u r e 5.4 continued The outs t a n d i n g balance on the mortgage at the end of year 5 i s $74,027. The outs t a n d i n g balance on the mortgage at the end of year 10 i s $73,446 Assumptions : 1. Acceptable c a p i t a l c o s t s of $75,000. 2. I n t e r e s t r a t e i s 12 percent semiannually and not i n advance 3. 35 year a m o r t i z a t i o n 4. Mortgage i s renewed a f t e r year 5 and year 10 at 17% and 14% r e s p e c t i v e l y . 5. Operating expenses begin at $125 per u n i t and i n c r e a s e at 7 percent a n n u a l l y . 1 06 ( r e s u l t i n g from the in c r e a s e i n the c o n t r a c t u a l i n t e r e s t r a t e ) i s passed through to occupancy charges at an annual rate of 5 percent of the reduced p r i n c i p a l and i n t e r e s t payment u n t i l the s i x t e e n t h year when the e n t i r e monthly i n c r e a s e i n a c t u a l p r i n c i p a l and i n t e r e s t i s r e f l e c t e d i n the occupancy charges. F i g u r e 5.5 extends the h y p o t h e t i c a l example to i n c l u d e an income d i s t r i b u t i o n of c o o p e r a t i v e members. Based on the h y p o t h e t i c a l d i s t r i b u t i o n , i n the f i r s t year of the subsidy f i v e of the twelve households have gross incomes which are gr e a t e r than or equal to than 4 times the LEM (4 x $7200 = $28,800) and r e q u i r e no a d d i t i o n a l a s s i s t a n c e . T h e r e f o r e , a t o t a l of $32,688 i s a v a i l a b l e to a s s i s t seven income-tested households i n the f i r s t year. A f t e r the a d d i t i o n a l a s s i s t a n c e has been a l l o c a t e d so t h a t no household pays more than 25 percent of i t s gross income, the maximum c o n t r i b u t i o n i s made to the subsidy s u r p l u s fund and the r e s i d u a l i s retu r n e d to CMHC (at the end of the f i r s t year.) In t h i s p a r t i c u l a r example, there i s a s i g n i f i c a n t excess i n the amount r e q u i r e d to a s s i s t income-tested households. Under such circumstances, the c o o p e r a t i v e p r o j e c t c o u l d t h e o r e t i c a l l y r e p l a c e a l l of the non-tested households with f i v e income-tested households with an average income of as low as $19,670 without r e q u i r i n g a d d i t i o n a l a s s i s t a n c e above that a v a i l a b l e through S e c t i o n 56.1. However, there i s nothing in the program's g u i d e l i n e s that encourages such a s u b s t i t u t i o n . 1 07 Fig u r e 5.5 An I l l u s t r a t i o n of the A l l o c a t i o n of the A s s i s t a n c e A v a i l a b l e to Income-tested Occupants A. Assumptions: 1. Acceptable c a p i t a l c o s t s of $75,000. 2. I n t e r e s t r a t e i s 12 percent semiannually and not i n advance. 3. 35 year a m o r t i z a t i o n 4. Mortgage i s r o l l e d over at 12 percent i n year 6. 5. Operating expenses begin at $125 per u n i t and in c r e a s e at 7 percent a n n u a l l y . 6. The c o o p e r a t i v e p r o j e c t i s composed of 12 homogeneous 3 bedroom u n i t s . 7. The d i s t r i b u t i o n of the incomes of c o o p e r a t i v e members i s as f o l l o w s : household 1. $7,000 household 2. $9,000 household 3. $10,000 household 4. $12,500 household 5. $24,000 income-tested household 6. $26,000 household 7. $28,000 household 8. $28,800 household 9. $32,000 household 10. $34,000 non-tested household 11. $36,000 household 12. $40,000 B. C a l c u l a t i o n of a s s i s t a n c e to income-tested households: household 1 : maximum annual rent i s 25% of $7,000 or $1,750 maximum monthly rent = $146 monthly a d d i t i o n a l a s s i s t a n c e = $454 annual a d d i t i o n a l a s s i s t a n c e = $5,448 household 2 : maximum annual rent i s 25% of $9,000 or $2,250 maximum monthly rent = $188 monthly a d d i t i o n a l a s s i s t a n c e = $412 annual a d d i t i o n a l a s s i s t a n c e = $4,944 household 3 : maximum annual rent i s 25% of $10,000 or $2,500 maximum monthly rent = $208 monthly a d d i t i o n a l a s s i s t a n c e = $392 annual a d d i t i o n a l a s s i s t a n c e = $4,704 household 4 : maximum annual rent i s 25% of $12,500 or $3,125 maximum monthly rent = $260 monthly a d d i t i o n a l a s s i s t a n c e = $340 annual a d d i t i o n a l a s s i s t a n c e = $4,080 108 Fi g u r e 5.5 continued household 5 household 6 household 7 maximum annual rent i s 25% of $24,000 or $6,000 maximum monthly rent = $500 monthly a d d i t i o n a l a s s i s t a n c e = $100 annual a d d i t i o n a l a s s i s t a n c e = $1,200 maximum annual rent i s 25% of $26,000 or $6,500 maximum monthly rent = $542 monthly a d d i t i o n a l a s s i s t a n c e = $58 annual a d d i t i o n a l a s s i s t a n c e = $696 maximum annual rent i s 25% of $28,000 or $7,000 maximum monthly rent = $583 monthly a d d i t i o n a l a s s i s t a n c e = $17 annual a d d i t i o n a l a s s i s t a n c e = $204 T o t a l income-tested a s s i s t a n c e a v a i l a b l e f o r income-tested a s s i s t a n c e in year 1 $32,688 T o t a l income-tested a s s i s t a n c e r e q u i r e d in year 1 ($1 ,773 x 12) C o n t r i b u t i o n to subsidy s u r p l u s fund Excess funds returned to CMHC 21,276 6,000 $5,412 Based on the $11,412 s u r p l u s (the subsidy s u r p l u s a l l o c a t i o n p l u s the excess r e t u r n e d to CMHC), the c o o p e r a t i v e has $950 a v a i l a b l e per month to a s s i s t a d d i t i o n a l income-tested members should the incomes w i t h i n the d i s t r i b u t i o n change. 109 T h i s d i s c u s s i o n has i l l u s t r a t e d the o p e r a t i o n of the S e c t i o n 56.1 subsidy mechanism. The d i s c u s s i o n ' s purpose was to inform, but not to e v a l u a t e . In summary, the S e c t i o n 56.1 a s s i s t a n c e d i s p l a y s c h a r a c t e r i s t i c s of both s u p p l y - s i d e and demand-side forms of a s s i s t a n c e : the predetermined a s s i s t a n c e i s d i r e c t e d towards housing u n i t s , not to p a r t i c u l a r households, and can best be c a t e g o r i z e d as a form of supply s t i m u l a t i o n ; the income-tested a s s i s t a n c e , on the other hand, i s d i r e c t e d toward s p e c i f i c households and can best be c a t a g o r i z e d as a form of demand s t i m u l a t i o n . I t i s c l e a r that both non-tested and income-t e s t e d households p o t e n t i a l l y r e c e i v e s i g n i f i c a n t s u b s i d i e s v i a t h i s mechanism. The d i r e c t subsidy to the non-tested household accrues in the form of a r e d u c t i o n i n rent from the economic occupancy charge. The d i r e c t subsidy to the t e s t e d household i n c l u d e s the above as w e l l as the f u r t h e r r e d u c t i o n i n rent to 25 percent of gross income. The a c t u a l income mix of a p a r t i c u l a r c o o p e r a t i v e may vary c o n s i d e r a b l y over the subsidy l i f e , j u s t as the income mix may vary c o n s i d e r a b l y among p r o j e c t s at any p a r t i c u l a r time. Because of such v a r i a t i o n , i t i s impossible to g e n e r a l i z e on the a c t u a l amount of a s s i s t a n c e that a l l c o o p e r a t i v e p r o j e c t s r e c e i v e other than in terms of the d i f f e r e n c e between mortgage payments at the market or n e g o t i a t e d r a t e and the payments at 2 p e r c e n t . I t can be noted however, that the a c t u a l amount of the S e c t i o n 56.1 a s s i s t a n c e i s most d i r e c t l y r e l a t e d to the approved c a p i t a l c o s t s ( f o r S e c t i o n 56.1 purposes), the r e l e v a n t MUPs, and the c o n t r a c t u a l i n t e r e s t r a t e f o r a p a r t i c u l a r c o o p e r a t i v e p r o j e c t . The i m p l i c a t i o n s of the subsidy mechanism and the p o t e n t i a l 1 10 magnitude of i t s a s s i s t a n c e w i l l be d i s c u s s e d i n Chapter 6. (5.2) The O b j e c t i v e s Of The Cooperative Program According to Suchman (1967), undertaking an e v a l u a t i o n without f i r s t c a r e f u l l y a r t i c u l a t i n g the program's o b j e c t i v e s i s not u n l i k e undertaking a r e s e a r c h p r o j e c t without f i r s t f o r m u l a t i n g i t s hypotheses -- i n e i t h e r case, there i s l i k e l y to be l i t t l e value i n the output. T h i s s e c t i o n i d e n t i f i e s and " o p e r a t i o n a l i z e s " the o b j e c t i v e s of the Cooperative Program so that t h e i r achievement can be r e l i a b l y measured in the impact e v a l u a t i o n of Chapter 6. (5.2a) An I d e n t i f i c a t i o n of the Program's O b j e c t i v e s Webster's D i c t i o n a r y (1980) d e f i n e s an o b j e c t i v e as being "something toward which e f f o r t i s d i r e c t e d . " While the g e n e r a l l y - d e f i n e d purpose of the Cooperative Program i s to a s s i s t c o o p e r a t i v e groups with the a c q u i s i t i o n of housing stock and c o o p e r a t i v e l y - o r g a n i z e d housing s e r v i c e s , the program d i r e c t s i t e f f o r t s toward e s s e n t i a l l y four separate, but interdependent, o b j e c t i v e s . These o b j e c t i v e s can be c l a s s i f i e d a c c o r d i n g to whether they are f o r m a l l y i d e n t i f i e d i n f e d e r a l documentation as program o b j e c t i v e s , or whether they are i m p l i c i t i n the program's procedures manuals or i n the design of the program's subsidy mechanism -- o b j e c t i v e s 1 through 3 are f o r m a l l y i d e n t i f i e d while o b j e c t i v e 4 i s i m p l i c i t . The f i v e o b j e c t i v e s are l i s t e d below: 111 1. "To provide modest, a f f o r d a b l e housing a p p r o p r i a t e to the needs of low and moderate income f a m i l i e s and i n d i v i d u a l s through n o n - p r o f i t c o n t i n u i n g c o o p e r a t i v e s . " 8 2. "To encourage approved p r i v a t e l e n d e r s to take more r e s p o n s i b i l t y f o r the p r o v i s i o n of c a p i t a l f o r low and moderate income housing needs and, at the same time, broaden the sources of f i n a n c i n g by a c c e p t i n g p r o j e c t s f i n a n c e d o u t s i d e the NHA."9 3. To provide housing a s s i s t a n c e to "occupants [who] have a range of incomes." 1 0 4. To i n c r e a s e the stock of p r i v a t e l y - s u p p l i e d r e n t a l housing in areas of low r e n t a l v a c a n c y . 1 1 (5.2b) An " O p e r a t i o n a l i z a t i o n " of the Program's O b j e c t i v e s Because of the p o l i t i c a l need to s a t i s f y a v a r i e t y of i n t e r e s t s , the p u b l i c l y - s t a t e d o b j e c t i v e s of government programs or p o l i c i e s are o f t e n marked with ambiguity, g e n e r a l i t y , and c o n t r a d i c t i o n . The o b j e c t i v e s i d e n t i f i e d f o r the Cooperative Program are not obvious e x c e p t i o n s . On the other hand, f o r the purpose of e v a l u a t i o n , program o b j e c t i v e s must be s p e c i f i c and measurable: s p e c i f i c , so i t i s understood p r e c i s e l y what the program i s intended to accomplish; and measurable, so that the e v a l u a t i o n can determine the degree to which the o b j e c t i v e s have been accomplished. In t h i s e v a l u a t i o n , the act of i n c r e a s i n g the s p e c i f i c i t y and m e a s u r a b i l i t y of program o b j e c t i v e s i s r e f e r r e d to as " o p e r a t i o n a l i z i n g " the o b j e c t i v e s . T h i s i s done on an i n d i v i d u a l b a s i s below. In s p i t e of the f a c t that o b j e c t i v e 1 i s d i r e c t l y quoted from the p o l i c y and procedures manual which guides the a d m i n i s t r a t i o n of the Cooperative Program, the o b j e c t i v e i s 1 1 2 worded i n a manner which renders i t c o n f u s i n g and o v e r l y g e n e r a l . I t i s conf u s i n g i n the sense that the program's mechanism does not, i n any way, i n d i c a t e that CMHC should "provide" or supply housing stock, and i t i s gene r a l i n the sense that the o b j e c t i v e does not e x p l i c i t l y s p e c i f y a t a r g e t group f o r the a s s i s t e d c o o p e r a t i v e housing (only that the housing "should be a p p r o p r i a t e to the needs of low and moderate income f a m i l i e s and i n d i v i d u a l s " ) and i n the sense that the o b j e c t i v e c o n t a i n s s e v e r a l terms whose d e f i n i t i o n s are not obvious. O b j e c t i v e 1 can be purged of i t s c o n f u s i o n by re p h r a s i n g i t a c c o r d i n g to i t s p a r t i a l d e s c r i p t i o n i n a l t e r n a t i v e CMHC p u b l i c a t i o n s : to f i n a n c i a l l y a s s i s t the p r o v i s i o n and op e r a t i o n of modest, a p p r o p r i a t e , and a f f o r d a b l e housing fo r n o n - p r o f i t c o o p e r a t i v e groups of low and moderate incomes. 1 2 T h i s r e p h r a s a l c l e a r l y e s t a b l i s h e s s e v e r a l c o n d i t i o n s of the a s s i s t a n c e : that i t i s to be f o r the p r o v i s i o n and o p e r a t i o n of "modest housing"; that i t i s to a s s i s t "members of n o n - p r o f i t c o o p e r a t i v e groups"; that i t i s to be for households with "low and moderate incomes"; and that i t i s to be " a p p r o p r i a t e " f o r , and " a f f o r d a b l e " by, low and moderate-income households. These c o n d i t i o n s are given s p e c i f i c and measurable d e f i n i t i o n s below. "Modest housing" i s most s p e c i f i c a l l y d e f i n e d by CMHC, in terms of c o s t , by the maximum u n i t p r i c e s (MUPs). The MUPs are set by CMHC branch o f f i c e s a c c o r d i n g to the housing type and number of bedrooms and i n c l u d e an allowance f o r land and a standard amount of ammenity space. MUPs d i f f e r by market area to r e f l e c t r e g i o n a l and l o c a l v a r i a t i o n s i n the co s t of housing and 1 1 3 the p r i c e of la n d . I t i s apparent that the a l l o c a t i o n f o r land i s based on a market comparison approach, while the a l l o c a t i o n f o r improvements i s based on estimated c o n s t r u c t i o n c o s t s . The MUPs represent the upper l e v e l of what CMHC designates as modest-cost housing and are ad j u s t e d twice per year or more f r e q u e n t l y i f market c o n d i t i o n s change. Indeed, a s s i s t a n c e should be d i r e c t e d towards housing u n i t s with combined land v a l u e s and pr o d u c t i o n c o s t s at or below the MUPs and towards the f a m i l i e s w i t h i n those u n i t s . "Members of c o o p e r a t i v e groups" are, a c c o r d i n g to the S e c t i o n 56.1 o p e r a t i n g agreement, households which have purchased the r e q u i r e d share c a p i t a l i n any s p e c i f i c c o o p e r a t i v e p r o j e c t . In a d d i t i o n , the c o o p e r a t i v e a s s o c i a t i o n s to which these members belong must be or g a n i z e d on a s t r i c t l y n o n - p r o f i t b a s i s . Thus, to be c o n s i s t e n t with o b j e c t i v e 1, the program's a s s i s t a n c e must be d i r e c t e d towards households who have purchased share c a p i t a l in n o n - p r o f i t c o o p e r a t i v e housing o r g a n i z a t i o n s . "Low and moderate incomes" must be d e f i n e d i n terms of s p e c i f i c income l e v e l s i n order t o be used as a c r i t e r i o n of achievement f o r o b j e c t i v e 1. U n f o r t u n a t e l y , no such s p e c i f i c a t i o n e x i s t s w i t h i n the g u i d e l i n e s of the Cooperative Program nor w i t h i n f e d e r a l p u b l i c a t i o n s r e l a t e d to s o c i a l housing p o l i c y . S p e c i f i c income l e v e l s must t h e r e f o r e be chosen on some other b a s i s . The primary o b j e c t i o n to a s s i g n i n g s p e c i f i c income l e v e l s t o designate the ranges of low-income, moderate-income, and high-income households i s the unavoidable a r b i t r a r i n e s s of such 1 1 4 d e s i g n a t i o n s . In order to m i t i g a t e a g a i n s t such a r b i t r a r i n e s s , the d e s i g n a t i o n s used are those which have gained g e n e r a l l y wide acceptance. A widely-accepted d e f i n i t i o n of low income i s provided by S t a t i s t i c s Canada and d e f i n e s low income on the b a s i s of an a p p l i c a t i o n of a matrix of income c u t - o f f v a l u e s . The low-income c u t - o f f s were determined from the 1978 Family Expenditure Survey data and updated to 1981 by the Consumer P r i c e Index and d e f i n e low-income households to be households who, on average, spend 58 percent or more of t h e i r income on food, s h e l t e r , and c l o t h i n g . The low income c u t - o f f s give c o n s i d e r a t i o n to household s i z e and the p o p u l a t i o n s i z e of the area of r e s i d e n c e . U n f o r t u n a t e l y , CMHC would not p r o v i d e income data or a n a l y s e s of such data a c c e p t a b l y d i saggregated by s i z e of area of r e s i d e n c e ; t h e r e f o r e , the low-income c u t - o f f s on a n a t i o n a l b a s i s are used. According to S t a t i s t i c s Canada's d e f i n i t i o n , these c u t - o f f s e f f e c t i v e l y represent the upper-end of the income range f o r low-income households of v a r i o u s f a m i l y s i z e s . The c u t - o f f s f o r 1981 are i l l u s t r a t e d i n Part I of Appendix 4 and w i l l be used to d e f i n e low-income households f o r the purpose of o b j e c t i v e 1. On the other hand, an o p e r a t i o n a l d e f i n i t i o n f o r "moderate income households" i s l e s s r e a d i l y a v a i l a b l e . Webster's  D i e t i o n a r y (1980) d e f i n e s moderate to be the value which tends "toward the mean amount". The mean i s o f t e n used as a l e v e l which d i s t i n g u i s h e s low and moderate incomes from higher incomes. R e l y i n g on such a usage, average household incomes are a v a i l a b l e from the Household F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s (HIFE) data i n f i v e c l a s s i f i c a t i o n s : f o r a l l 1 15 households; f o r a l l households based on households s i z e ; f o r owners with mortgages; f o r owners without mortgages; and f o r r e n t e r s . Part II of Appendix 4 i n c l u d e s the average household incomes f o r these c l a s s i f i c a t i o n s on a n a t i o n a l b a s i s . Because of the l a r g e v a r i a t i o n among these averages, i t i s necessary to giv e c o n s i d e r a t i o n to the s e l e c t i o n of the a p p r o p r i a t e average. F i r s t l y , as Appendix 4 demonstrates, the average income f o r re n t e r households i s s i g n i f i c a n t l y lower than the average income for owner households. While the c o o p e r a t i v e tenure of housing o r g a n i z a t i o n does e x h i b i t c h a r a c t e r i s t i c s of the home ownership tenure ( f o r i n s t a n c e , the e q u i t y investment), i t i s l i k e l y that c o o p e r a t i v e members g e n e r a l l y d i s p l a y income and employment c h a r a c t e r i s t i c s that are more r e p r e s e n t a t i v e of r e n t e r s than home owners on a n a t i o n a l b a s i s . T h i s presumption can be supported by the S e c t i o n 56.1 survey data which r e v e a l s that 83 percent of surveyed c o o p e r a t i v e members rented t h e i r housing u n i t s immediately p r i o r to moving i n t o the c o o p e r a t i v e p r o j e c t . 1 3 Thus, i t i s apparent that the average income f o r r e n t e r s would be a more a p p r o p r i a t e c l a s s i f i c a t i o n than an average f o r home owners. 1" Secondly, the very s i g n i f i c a n t d i f f e r e n c e s among average incomes by household s i z e suggests that the a p p r o p r i a t e income must recognize household s i z e . Indeed, the major shortcoming with the rente r c l a s s i f i c a t i o n of average household income i s i t s lack of d i f f e r e n t i a t i o n a c c o r d i n g to household s i z e . The HIFE data i s d i f f e r e n t i a t e d on t h i s b a s i s only w i t h i n the " a l l household" c l a s s i f i c a t i o n . I f i t can be assumed that the d i f f e r e n c e between the average household income f o r " a l l households" and f o r r e n t e r s i s p r o p o r t i o n a l l y 1 16 r e p r e s e n t a t i v e of the d i f f e r e n c e s between the average household income f o r " a l l households" and f o r r e n t a l households on the b a s i s of household s i z e , then the HIFE data can be a d j u s t e d so that average incomes f o r r e n t a l households are d i f f e r e n t i a t e d by household s i z e . These c a l c u l a t i o n s and the r e s u l t i n g d i s t r i b u t i o n are a l s o i l l u s t r a t e d i n Part II of Appendix 4. An a l t e r n a t i v e d e f i n i t i o n f o r "moderate income households" i s the median income v a l u e . The median i s o f t e n p r e f e r r e d to the mean because i t s measurement i s not a f f e c t e d by extreme v a l u e s . The median w i l l be used with the same c l a s s i f i c a t i o n as were suggested above fo r the average: the median household income f o r r e n t e r s on the b a s i s of household s i z e . T h i s d i s t r i b u t i o n i s a l s o c a l c u l a t e d on the b a s i s of HIFE data i n Part II of Appendix 4. As i s apparent i n Appendix 4, the median value i n a l l household s i z e s i s l e s s than the mean. The median w i l l be used as a lower estimate of the moderate income l e v e l while the mean w i l l be used as an upper estimate. "Appropriate housing" i s not s p e c i f i c a l l y d e f i n e d i n the Cooperative Program's procedures manual. For the purpose of t h i s e v a l u a t i o n , t h i s term w i l l be d e f i n e d on the b a s i s of 3 c r i t e r i a i d e n t i f i e d i n CMHC's Background Document on S o c i a l Housing 1981: adequacy; space; and s u i t a b i l i t y . "Adequacy" r e f e r s to the p h y s i c a l c o n d i t i o n s of the d w e l l i n g u n i t i n terms of i t s need f o r r e p a i r s and i n terms of i t s lack of any e s s e n t i a l f a c i l i t i e s ( f o r i n s t a n c e , the lack of s p e c i a l l y - d e s i g n e d f a c i l i t i e s f o r s e n i o r and handicapped households.) "Space" r e f e r s to the degree of crowding experienced i n p a r t i c u l a r housing u n i t s . Two g e n e r a l l y - a c c e p t e d r u l e s of crowding are whether there i s more 1 1 7 than one person per room (not i n c l u d i n g bathrooms) or whether there i s more than two persons per bedroom l i v i n g i n a p a r t i c u l a r housing u n i t . F i n a l l y , " a f f o r d a b l e housing" w i l l be d e f i n e d on the b a s i s of the a r b i t r a r y , yet w i d e l y - a p p l i e d , (gross) rent-to-income r a t i o of 25 perc e n t . The percent r a t i o i s the c r i t e r i o n used to d i s t i n g u i s h income-tested households from non-tested households and i s the i n d i c a t o r of a f f o r d a b i l i t y which i s a p p l i e d throughout CMHC's s o c i a l housing programs. Regardless of i t s wide a p p l i c a t i i o n , t h i s r u l e of thumb s u f f e r s from two s e r i o u s shortcomings: i t g i v e s no c o n s i d e r a t i o n to the d i f f e r i n g p r o p o r t i o n s of income r e q u i r e d f o r the consumption of non-housing goods and s e r v i c e s among households of d i f f e r e n t s i z e and i t g i v e s no c o n s i d e r a t i o n to v a r i a t i o n s of consumption p r e f e r e n c e s among households. These l i m i t a t i o n s must be kept i n mind when a p p l y i n g the rent-to-income r a t i o s on the b a s i s of the S e c t i o n 56.1 survey d a t a . O b j e c t i v e 2 i m p l i e s that the a s s i s t a n c e p r o v i d e d by the Cooperative Program should i n c r e a s e the a t t r a c t i v e n e s s of p r i v a t e investment i n mortgages of c o o p e r a t i v e p r o j e c t s occupied by low and moderate-income households. The r e s u l t should be an i n c r e a s e i n the a v a i l a b i l t y of mortgage funds to c o o p e r a t i v e housing o r g a n i z a t i o n s . In order to measure the extent to which o b j e c t i v e 2 has been achieved i t i s necessary to d e f i n e the e f f e c t of the Cooperati v e Program on the r i s k / r e t u r n r e l a t i o n s h i p of a p r i v a t e l y - i n i t i a t e d mortgage f o r a c o o p e r a t i v e housing p r o j e c t . The r i s k inherent i n mortgage l e n d i n g i s a f u n c t i o n of c e r t a i n 1 18 c h a r a c t e r i s t i c s of the mortgagor, the mortgaged prop e r t y , and the f i n a n c i a l c o n d i t i o n s of the mortgage loa n . According to Gau (1978), the borrower c h a r a c t e r i s t i c s are the l e v e l and s t a b i l i t y of income, the p r o p e r t y c h a r a c t e r i s t i c s are l o c a t i o n , age, and the economic c h a r a c t e r i s t i c s of the r e g i o n , and the f i n a n c i a l c h a r a c t e r i s t i c s are loan to v a l u e , term to m a t u r i t y , monthly payment and taxes, and the presence of secondary f i n a n c i n g . 1 5 The r e t u r n , on the other hand, i s a f u n c t i o n of the e f f e c t i v e i n t e r e s t r a t e at which funds can be loaned to c o o p e r a t i v e p r o j e c t s and of the l e n d e r ' s c o s t of funds. T h e r e f o r e , i t i s the e f f e c t of the program on these r i s k / r e t u r n v a r i a b l e s which must be assessed. In a d d i t i o n , i t i s necessary to determine the degree to which f e d e r a l l y - a s s i s t e d c o o p e r a t i v e p r o j e c t s have r e c e i v e d f i n a n c i n g from p r i v a t e l e n d e r s r e l a t i v e to d i r e c t CMHC f i n a n c i n g s i n c e 1979 both i n terms of p r i v a t e l y - i n i t i a t e d NHA mortgages and i n terms of c o n v e n t i o n a l mortgages. O b j e c t i v e 3 i s an e x c e l l e n t example of an unmeasurable g e n e r a l i t y . The o b j e c t i v e e x p l i c i t l y promotes a range of incomes w i t h i n c o o p e r a t i v e p r o j e c t s , yet a c c o r d i n g to the program's procedures manual, there are no income l i m i t s f o r e i t h e r i n i t i a l or c ontinued o c c u p a n c y . 1 6 In a d d i t i o n , there i s no s p e c i f i c i n d i c a t i o n of the d e s i r e d d i s t r i b u t i o n w i t h i n the income range except t h a t c o o p e r a t i v e housing should "house a p r o p o r t i o n a t e number of tenants ... [with incomes that are] ... i n s u f f i c i e n t to permit them to rent modest housing a ccomodation" 1 7 and that a minimum of 15 percent of the u n i t s i n c o o p e r a t i v e p r o j e c t s must be a l l o c a t e d to income-tested occupants. 119 In order f o r the program to be accountable f o r the p u r s u i t of t h i s o b j e c t i v e , and i n order f o r i t s achievement to be measured, more s p e c i f i c d e f i n i t i o n s of the range and d i s t r i b u t i o n of incomes are r e q u i r e d . These d e f i n i t i o n s should be a f u n c t i o n of the purpose fo r which a range and d i s t r i b u t i o n of incomes i s i n c l u d e d i n the subsidy d e s i g n . According to CMHC, the primary purpose of e s t a b l i s h i n g a range, or a mix, of incomes i s to ensure that "an undue c o n c e n t r a t i o n of e i t h e r low or higher income occupants i s avoided ... [and to help] ensure the f i n a n c i a l v i a b i l i t y of [ p a r t i c u l a r c o o p e r a t i v e ] p r o j e c t s . " 1 8 A l i t e r a l i n t e r p r e t a t i o n of the term "undue c o n c e n t r a t i o n " suggests that the d e s i r e d range and d i s t r i b u t i o n of incomes w i t h i n a p a r t i c u l a r c o o p e r a t i v e should r e f l e c t the "true nature" of the d i s t r i b u t i o n which p r e v a i l s among the p o p u l a t i o n of market h o u s e h o l d s . 1 9 In other words, i n an attempt to a v o i d the s o c i a l and p r i v a t e c o s t s that have been a s s o c i a t e d with low-income i s o l a t i o n in p u b l i c housing p r o j e c t s , CMHC s e l e c t e d a range of incomes s i m i l a r to that experienced i n market housing -- and thus e s s e n t i a l l y without upper or lower l i m i t s -- and a d i s t r i b u t i o n which conforms to that experienced i n the market, with the exce p t i o n that at l e a s t 15 percent of the households are income-tested. T h i s c o n c l u s i o n i s c o n s i s t e n t with the somewhat ambiguous c o n d i t i o n that c o o p e r a t i v e p r o j e c t s "should house a p r o p o r t i o n a t e number of tenants [with incomes that are] i n s u f f i c i e n t to permit them to rent modest housing a c c o m o d a t i o n " 2 0 In terms of ensu r i n g the f i n a n c i a l v i a b i l i t y of p a r t i c u l a r 1 20 c o o p e r a t i v e p r o j e c t s , the purpose of the ( a p p r o p r i a t e ) d i s t r i b u t i o n w i t h i n the range of incomes i s to ensure that the p r o p o r t i o n of income-tested households in a p a r t i c u l a r p r o j e c t does not grow so l a r g e that the a s s i s t a n c e a v a i l a b l e to reduce t h e i r occupancy charges (to 25 percent of t h e i r income) i s i n s u f f i c i e n t . 2 1 In a c o o p e r a t i v e where such a s s i s t a n c e i s i n s u f f i c i e n t , and where the subsidy s u r p l u s fund i s d e p l e t e d , low-income members would be unable to meet the r e q u i r e d occupancy charges without a d d i t i o n a l a s s i s t a n c e . In such a case, the f i n a n c i a l v i a b i l i t y of the c o o p e r a t i v e p r o j e c t would be threatened. Given the purpose f o r the range and d i s t r i b u t i o n of incomes, and given CMHC's general g u i d e l i n e s , i t i s presumed t h a t , i n terms of o b j e c t i v e 3, the a p p r o p r i a t e range of incomes has no upper or lower l i m i t s , and that the a p p r o p r i a t e d i s t r i b u t i o n of incomes i s that which p r e v a i l s among households i n the market, with the e x c e p t i o n that 15 percent of each c o o p e r a t i v e ' s households must be income-tested. On the b a s i s of these presumptions, i t i s apparent that the o b j e c t i v e of housing a range and a d i s t r i b u t i o n of incomes i n S e c t i o n 56.1 c o o p e r a t i v e housing i s i n marked c o n t r a d i c t i o n to the incomes d e f i n e d as a p p r o p r i a t e f o r o b j e c t i v e 1. O b j e c t i v e 4 i s i m p l i c i t i n the s u p p l y - s i d e nature of the S e c t i o n 56.1 subsidy mechanism and presumes that r e n t a l and c o o p e r a t i v e housing stock are p e r f e c t l y s u b s t i t u t a b l e i n housing markets that are e x p e r i e n c i n g low r a t e s of v a c a n c i e s . For the purpose of e v a l u a t i o n , the d e f i n i t i o n of the word " i n c r e a s e " must be made more s p e c i f i c . A ccording to Smith (1974) 121 and L i t h w i c k (1977), there g e n e r a l l y i s a s i g n i f i c a n t d i f f e r e n c e between the net and gross e f f e c t s of e i t h e r a government supply or demand-oriented housing program. For i n s t a n c e , i n the case of the Cooperative Program such o f f s e t s c o u l d occur i f : a p o r t i o n of the s u b s i d i z e d demand would have a c q u i r e d r e n t a l housing r e g a r d l e s s of the a v a i l a b i l i t y of the subsidy; i f the subsidy-induced r e a l l o c a t i o n of resources leads to i n c r e a s e s i n the c o s t s of f a c t o r s of p r o d u c t i o n , i n c r e a s e s i n the p r i c e s of "modest" r e n t a l housing stock, and a movement along the demand curve f o r other r e n t a l housing stock; or i f government borrowing in the bond market (to fi n a n c e subsidy expenditures) leads to an in c r e a s e i n c o n v e n t i o n a l mortgage r a t e s and a concomitant decrease i n the demand f o r mortgages f o r other r e n t a l housing. Consequently, f o r an " i n c r e a s e " i n the stock of p r i v a t e l y -s u p p l i e d r e n t a l housing to be a program o b j e c t i v e (and i t s achievement a c r i t e r i o n of program s u c c e s s ) , presumably " i n c r e a s e " should be i n terms of the net e f f e c t . (5.3) The Nature of P r o v i n c i a l and M u n i c i p a l A s s i s t a n c e A s s i s t a n c e to housing c o o p e r a t i v e s from p r o v i n c i a l governments has been almost non-existant s i n c e the i n t r o d u c t i o n of the u n i l a t e r a l S e c t i o n 56.1 subsidy mechanism. That a s s i s t a n c e which has been has been of an ad hoc and t r a n s i t o r y nature. In f a c t , as of December 1982, only .3 percent of a l l c o o p e r a t i v e u n i t s r e c e i v i n g S e c t i o n 56.1 a s s i s t a n c e r e c e i v e d e x p l i c i t a s s i s t a n c e from p r o v i n c i a l governments (and 86% of t h i s f i g u r e was pro v i d e d by the pro v i n c e of Quebec with the remaining p o r t i o n from Saskatchewan. As a s p e c i f i c example, i n B r i t i s h 1 22 Columbia there has not been any p r o v i n c i a l a s s i s t a n c e s p e c i f i c a l l y d i r e c t e d to c o o p e r a t i v e housing s i n c e the S o c i a l C r e d i t government r e p l a c e d the New Democratic Party in 1975 (although c o o p e r a t i v e housing members have been e l i g i b l e f o r the B.C. Home Owner's Grant.) The NDP had demonstrated c o n s i d e r a b l e support f o r c o o p e r a t i v e and n o n - p r o f i t housing through e s s e n t i a l l y f i v e d i f f e r e n t mechanisms: 1. F i n a n c i a l support f o r the establishment and op e r a t i o n of the United Housing Foundation, a n o n - p r o f i t resource group whose purpose was to promote the development of co o p e r a t i v e housing i n B.C.; 2. I n t e r i m f i n a n c i n g of c o o p e r a t i v e p r o j e c t s where the timi n g of CMHC's a s s i s t a n c e leaves c o o p e r a t i v e s t e m p o r a r i l y short of funds; 3. Extension of the p r o v i n c i a l government's Home A c q u i s i t i o n Grant of $1,000 and the annual Home Owner's Grant ... to housing developed and owned by c o o p e r a t i v e soc i e t i e s ; 4. A 10 percent mortgage r e d u c t i o n grant a p p l i e d over the f i r s t f i v e to f i f t e e n years (at the op t i o n of the p r o j e c t owner) f o r f a m i l y housing and a o n e - t h i r d c a p i t a l grant f o r s e n i o r c i t i z e n ' s housing; 5. The p r o v i s i o n of lea s e d land at a r a t e of 4 percent a year, with r e e v a l u a t i o n of the land's value every f i v e y e ars, f o r a term of 50 years, where such land i s requested on the part of the n o n - p r o f i t and c o o p e r a t i v e group." 2 2 M u n i c i p a l government a s s i s t a n c e to c o o p e r a t i v e housing v a r i e s widely among m u n i c i p a l i t i e s and i t i s d i f f i c u l t to g e n e r a l i z e ; however, as a s p e c i f i c example of mun i c i p a l a s s i s t a n c e , the C i t y of Vancouver has a s s i s t e d c o o p e r a t i v e housing by s e l l i n g or l e a s i n g land to c o o p e r a t i v e groups at l e s s than market v a l u e . Cooperative housing groups have p a i d , on average, about 33 percent below market value when a c q u i r i n g (through fee simple or lease) municipally-owned l a n d . 2 3 As of 1 23 May 1982, the C i t y of Vancouver had pr o v i d e d s i t e s f o r 16 co o p e r a t i v e housing p r o j e c t s comprising a t o t a l of 1073 u n i t s ; i n f a c t , "ninety percent of the s o c i a l housing u n i t s b u i l t i n the C i t y d u r i n g the past four years i s on land l e a s e d from the C i t y " 2 " at a c o s t , i n terms of foregone revenues and a d m i n i s t r a t i o n expenses, of more than $16 m i l l i o n d o l l a r s . 2 5 Such a r e d u c t i o n i n land c o s t s r e s u l t s i n lower economic occupancy charges and t h e o r e t i c a l l y allows a l a r g e r p r o p o r t i o n of the maximum a v a i l a b l e a s s i s t a n c e ( v i a S e c t i o n 56.1) to be r e s i d u a l l y a l l o c a t e d as a s s i s t a n c e a v a i l a b l e to income-tested members. 1 24 ENDNOTES 1. CMHC Procedures Manual: Mortgage A d m i n i s t r a t i o n f o r Se c t i o n 56.1 A s s i s t a n c e Volume 9, page 9315/5. 2. The N a t i o n a l Housing Act S e c t i o n 37.1[3 ]. 3. The S e c t i o n 37.1 S t a r t - u p Program CMHC 1981, page 3. 4. "Need" i s d e f i n e d i n s e c t i o n (5.2b)iv of t h i s study. 5. Cooperative Program S e c t i o n 56.1 G u i d e l i n e s and Procedures  Manual: Mortgage A d m i n i s t r a t i o n , page 9314/12. 6. The Cooperative Housing Program CMHC 1981, page 1. 7. S e c t i o n 56.1 Operating Agreement For A s s i s t a n c e to  No n - p r o f i t Cooperative A s s o c i a t i o n s page 4. 8. Cooperative Program S e c t i o n 56.1 G u i d e l i n e s and Procedures  Manual: S o c i a l Housing Programs, page 7614. 9. I b i d . 10. The Cooperative Housing Program CMHC 1981, page 1. 11. CMHC S e c t i o n 56.1 E v a l u a t i o n O u t l i n e 1982, page 2. 12. The Cooperative Housing Program CMHC p u b l i c a t i o n 1981, page 2. 13. From data a n a l y s i s of q u e s t i o n 7 of S e c t i o n 56.1 Occupant Survey (See Appendix I V ) . 14. R e n t e r - s p e c i f i c values were not used in the low income c u t - o f f values because of the r e l a t i v e l y high i n c i d e n c e of r e n t e r s among low-income households. 15. See Gau, G.W. "A Taxonomic Model f o r the Risk Rating of R e s i d e n t i a l Mortgages" J o u r n a l of Business, V o l 51 Oct 78. 16. Cooperative Program S e c t i o n 56.1 G u i d e l i n e s and Procedures  Manual: Mortgage A d m i n i s t r a t i o n , page 9324/8. 17. I b i d page 9324/5. 18. The Cooperative Housing Program CMHC 1981 page 2. 19. According to Webster's D i c t i o n a r y , "undue" r e f e r s to a v i o l a t i o n of something's t r u e nature. 20. CMHC Procedures Manual: Mortgage A d m i n i s t r a t i o n f o r Se c t i o n 56.1 A s s i s t a n c e Volume 9, page 9324/8. 125 21. As i t was shown in S e c t i o n (5.2b)iv of t h i s study, the a c t u a l number (or p r o p o r t i o n ) of income-tested households that a p a r t i c u l a r c o o p e r a t i v e can support i s dependent not only on the d i s t r i b u t i o n of the incomes of income-tested households, but a l s o on the r e l a t i o n s h i p between the p r o j e c t ' s economic occupancy charge and the LEM. 22. H a i r e , C h r i s t o p h e r . 1975, page 29. 23. C i t y of Vancouver Non-Market Housing Study: Who  L i v e s i n S o c i a l Housing?" 1983. 24. I b i d page XI. 25. I b i d page XI. 1 26 CHAPTER 6 THE PROGRAM PERSPECTIVE OF EVALUATION The purpose of t h i s chapter i s to evaluate the Cooperative Program on the b a s i s of process, impact, and e f f i c i e n c y . (6.1) The Process E v a l u a t i o n T h i s s e c t i o n e v a l u a t e s the Cooperative Program on the b a s i s of whether i t has been implemented a c c o r d i n g to i t s p r i n c i p a l g u i d e l i n e s . In t h i s context, there are e s s e n t i a l l y three e v a l u a t i v e q u e s t i o n s : does the program's a s s i s t a n c e reach i t s t a r g e t ; does the program's d e l i v e r y mechanism provide the l e v e l of a s s i s t a n c e that was intended by i t s d e s i g n ; and does the program's d e l i v e r y system implement the a p p r o p r i a t e c o s t c o n t r o l s ? These three i s s u e s w i l l be evaluated below. (6.1a) Does the Program's A s s i s t a n c e Reach i t s Target? The t a r g e t of the Cooperative Program's a s s i s t a n c e can be d e f i n e d on the b a s i s of three t a r g e t c l a s s i f i c a t i o n s : the income of program p a r t i c i p a n t s ; the nature of the composition of c o o p e r a t i v e households; and the nature of the housing u n i t s that the a s s i s t e d c o o p e r a t i v e households i n h a b i t . According to Rossi and Freeman (1982), there are e s s e n t i a l l y two important i s s u e s i n t a r g e t measurement: t a r g e t coverage and t a r g e t b i a s . Target coverage r e f e r s to the extent to which the program's a s s i s t a n c e 1 27 i s a l l o c a t e d to the t a r g e t c l a s s i f i c a t i o n s . Target b i a s r e f e r s to the extent to which c e r t a i n subgroups w i t h i n the s p e c i f i c t a r g e t c l a s s i f i c a t i o n s are covered to a gr e a t e r of l e s s e r extent than other subgroups. 1 ( 6 . 1 a ) i The income c l a s s i f i c a t i o n In terms of r e c i p i e n t income, Chapter 5 demonstrated that the program's o b j e c t i v e s c r e a t e a fundamental c o n f u s i o n i n the d e f i n i t i o n of the t a r g e t : o b j e c t i v e 1 d e f i n e s the t a r g e t to be low and moderate-income households while o b j e c t i v e 3 d e f i n e s the t a r g e t as the t o t a l p o p u l a t i o n of Canadian households. Obv i o u s l y , a measurement of t a r g e t coverage based on a t a r g e t which i n c l u d e s both d e f i n i t i o n s (or even j u s t the second d e f i n i t i o n ) i s meaningless; however, i f CMHC'c d e f i n i t i o n a l c o n f u s i o n can be i n t e r p r e t e d to be s p e c i f y i n g a d e s i r e d t a r g e t b i a s (of low and moderate-income households) w i t h i n i t s o v e r a l l t a r g e t (the t o t a l p o p u l a t i o n of households), then the a c t u a l t a r g e t b i a s can be compared to t h i s d e s i r e d t a r g e t b i a s . T h i s comparison i s made on the b a s i s of the survey data and the d e f i n i t i o n s of low and moderate-income households pr o v i d e d i n Chapter 5. Table 6.1 summarizes the incomes of c o o p e r a t i v e households (on a n a t i o n a l b a s i s and g i v i n g c o n s i d e r a t i o n to household s i z e ) in terms of t h e i r c l a s s i f i c a t i o n as being low, moderate, or higher-income. T h i s summary i s based on data analyses found in Table 1 of Appendix 2. I n t e r e s t i n g l y , b i a s by a p a r t i c u l a r c l a s s i s demonstrated by the higher-income c l a s s i f i c a t i o n with a range of i n c i d e n c e from 42.4 percent to 52.9 percent, depending on Table 6.1 A Summary of the Incomes of P a r t i c i p a n t s of the Cooperative Housing Program INCOME CLASSIFICATION PERCENTAGE OF COOPERATIVE HOUSEHOLDS 1 . LOW-INCOME HOUSEHOLDS Households with incomes at or below the S t a t i s t i c s Canada Low-income C u t - o f f s (on the b a s i s of household s i z e ) 24.6 2. MODERATE-INCOME HOUSEHOLDS a. Households with incomes above the Low-income C u t - o f f s and l e s s than or equal to the mean Canadian renter income based on household s i z e 33.0 b. Households with incomes above the Low-income c u t - o f f s and l e s s than or equal to the median Canadian r e n t e r income based on household s i z e 22.5 3. UPPER-INCOME HOUSEHOLDS a. Households with incomes above the mean income f o r Canadian r e n t e r s based on household s i z e 42.4 b. Households with incomes above the median income f o r Canadian r e n t e r s based on household s i z e 52.9 Source: Analyses of S e c t i o n 56.1 Cooperative Housing Occupant Survey Data and Household F a c i l i t i e s by Income and  Other C h a r a c t e r i s t i c s 1982 ( r e f e r to Appendix 2 and 4 f o r data analyses and c a l c u l a t i o n s ) 129 which d e f i n i t i o n of "moderate-income" i s used. When the low and moderate-income c l a s s i f i c a t i o n s are combined, they have a range of i n c i d e n c e from 47.1 percent to 57.6 percent. Based on these f i g u r e s , the d e l i v e r y system i s not a l l o w i n g the t a r g e t b i a s that has been i n t e r p r e t e d i n the program's d e s i g n . Further a n a l y s i s of the nature and d i s t r i b u t i o n of p a r t i c i p a n t incomes i s undertaken i n the impact e v a l u a t i o n . ( 6 . 1 a ) i i The household composition c l a s s i f i c a t i o n A c c o r d i n g to the procedures manual f o r the Cooperative Housing Program, three types of households are i d e n t i f i e d as p r i o r i t y households f o r the program's a s s i s t a n c e : f a m i l y households; s e n i o r c i t i z e n households; and s p e c i a l purpose households (which CMHC d e f i n e s as s i n g l e parent f a m i l y households or households where at l e a s t one member i s handicapped or i s a Native Indian or Eskimo.) Households comprised of only one person who i s not a sen i o r c i t i z e n , nor a handicapped person, nor a Native Indian or Eskimo as w e l l as households comprised of two or more u n r e l a t e d persons ( r e l a t i o n must be by k i n s h i p , marriage, or common law), are not i n c l u d e d w i t h i n the t a r g e t p r i o r i t y . Households are d e f i n e d as sen i o r c i t i z e n households i f at l e a s t one member of a f a m i l y i s over 60 years of age or i f someone over 60 i s l i v i n g alone, but not i f someone over 60 l i v e s with other u n r e l a t e d persons. While the program's g u i d e l i n e s do not pr o v i d e an i n d i c a t i o n of the p r o p o r t i o n of c o o p e r a t i v e u n i t s that should be occupied by p r i o r i t y groups, i t i s probably a f a i r assumption that these groups should be represented i n c o o p e r a t i v e u n i t s at 1 30 l e a s t as s t r o n g l y as t h e i r i n c i d e n c e in the p o p u l a t i o n of Canadian households. Table 6.2 summarizes the extent to which the Cooperative Program reaches i t s t a r g e t given t h i s assumption and on the b a s i s of the analyses of S e c t i o n 56.1 survey data found i n Tables 2 through 6 i n Appendix 2. While the f i g u r e s i n Table 6.2 are not mutually e x c l u s i v e , (and t h e r e f o r e households who can be c l a s s i f i e d as belonging to more than one p r i o r i t y group are double-counted) they n e v e r t h e l e s s i n d i c a t e t h a t : the p r i o r i t i e s f o r s e n i o r c i t i z e n households, handicapped households, and Native households are g e n e r a l l y not being achieved. On the other hand, the p r i o r i t i e s of s i n g l e parent households and f o r minimizing non-family and s i n g l e person household p a r t i c i p a t i o n are being achieved. ( 6 . 1 a ) i i i The housing type c l a s s i f i c a t i o n A ccording to the procedures manual f o r the Cooperative Program, i t i s intended that there be a t a r g e t b i a s ( i n terms of housing type) f o r the a l l o c a t i o n of subsidy u n i t s based on the f o l l o w i n g descending order of p r i o r i t y : newly c o n s t r u c t e d u n i t s ; e x i s t i n g housing u n i t s r e q u i r i n g r e h a b i l i t a t i o n and/or c o n v e r s i o n ; and e x i s t i n g housing f i t f o r occupancy. 2 According to Table 6.3 (which summarizes analyses from Table 7 of Appendix 2), the t a r g e t b i a s i s being reached with coverage of 67 percent, 27 percent, and 6 percent f o r new u n i t s , e x i s t i n g u n i t s r e q u i r i n g r e h a b i l i t a t i o n , and e x i s t i n g u n i t s not r e q u i r i n g r e h a b i l i t a t i o n , r e s p e c t i v e l y . However, the a l l o c a t i o n of a s s i s t a n c e with respect to the t a r g e t i s l e s s c o n s i s t e n t Table 6.2 The Incidence of P r i o r i t y Groups Among Cooperative Households and Among a l l Canadian Households HOUSEHOLD TYPE INCIDENCE AMONG COOPERATIVE UNITS (percent) INCIDENCE AMONG ALL CANADIAN HOUSEHOLDS (percent) Senior C i t i z e n Households (1 or more persons over 60 years of age i n household) 12.4 18.4 Handicapped Households (1 or more handicapped persons i n household) 5.4 8.2 S i n g l e Parent Households ( s i n g l e parent with at l e a s t 1 c h i l d l i v i n g i n household) 17.6 8.7 Native Households (at l e a s t one Native Indian or Eskimo i n household) .7 2.0 Family Households (2 or more r e l a t e d persons i n household, but not i n c l u d i n g s i n g l e parents) 61 .2 66.6 S i n g l e Person L i v i n g Alone (and u n r e l a t e d persons l i v i n g together) 21.2 24.7 Sources: S e c t i o n 56.1 Survey Data; S t a t i s t i c s Canada 1981 Census Data; Canada M i n i s t r y of Health and Welfare E s t i m a t i o n s . F i g u r e s do not add up to 100% because groups are not mutually e x c l u s i v e . 1 3 Table 6.3 The A l l o c a t i o n of Cooperative Program S e c t i o n 56.1 Subsidy U n i t s by Housing Type and by Year ( i n number of u n i t s ) Type of Un i t 1 978 1 979 1980 1981 1 982 1 983 T o t a l Newly-Cons t r u c t e d Housing U n i t s 268 629 2,676 2,493 4,490 1 ,608 12,164 E x i s t i n g Housing R e q u i r i n g R e h a b i l i t a t i o n 1 753 1 ,075 1,214 1 , 196 634 4,873 E x i s t i n g Housing Not R e q u i r i n g R e h a b i l i t a t i o n 1 91 163 303 350 129 1 ,037 Note: T h i s summary presumes that a l l e x i s t i n g housing not r e q u i r i n g r e h a b i l i t a t i o n can be represented by the c o o p e r a t i v e housing that d i d not r e c e i v e RRAP funds. Source: Analyses of CMHC A d m i n i s t r a t i v e Data 133 when the a d m i n i s t r a t i v e data i s analysed on a p r o j e c t ( r a t h e r than a u n i t ) b a s i s . According to Table 6.4, on a p r o j e c t b a s i s the b i a s i s toward e x i s t i n g housing r e q u i r i n g r e h a b i l i t a t i o n ---51 percent of the subsidy u n i t s were a l l o c a t e d to e x i s t i n g housing u n i t s r e q u i r i n g r e h a b i l i t a t i o n , while only 37 percent were a l l o c a t e d to new u n i t s (based on Table 8 of Appendix 2.) T h i s c o n t r a d i c t i o n r e s u l t s because the number of housing u n i t s per p r o j e c t d i f f e r s c o n s i d e r a b l y among p r o j e c t s . According to CMHC a d m i n i s t r a t i v e data, the average number of u n i t s per p r o j e c t i s 16 and there i s a range and standard d e v i a t i o n of 171 and 27 u n i t s , r e s p e c t i v e l y . Because of t h i s l a r g e range i n the number of u n i t s , the a p p r o p r i a t e b a s i s would most probably be the per u n i t b a s i s , i n which case the program design appears to permit the planned t a r g e t b i a s i n terms of housing type. (6.1b) Does the D e l i v e r y Mechanism Provide the A s s i s t a n c e Intended by the Program's Design? According to the g u i d e l i n e s f o r the Cooperative Program, the d e l i v e r y mechanism was designed so that income-tested households pay no more than 25 percent of t h e i r gross income on rent and so that non-tested households pay no more than the low end of the range of market re n t s i n the f i r s t year of the subsidy and no more than the LEM p l u s i n c r e a s e s i n o p e r a t i n g expenses t h e r e a f t e r . In a d d i t i o n , i t was intended that t h i s was to be accomplished without a s s i s t a n c e beyond that a v a i l a b l e v i a S e c t i o n 56.1. The extent to which the program has been c o n s i s t e n t with these g u i d e l i n e s can be assessed on the b a s i s of analyses of the n a t i o n a l survey data. The data analyses 134 Table 6.4 The A l l o c a t i o n of Cooperative Program S e c t i o n 56.1 Subsidy U n i t s by Housing Type and by Year ( i n number of p r o j e c t s ) Type of P r o j e c t 1978 1979 1980 1981 1 982 1 983 T o t a l Newly-Constructed Housing U n i t s 5 1 4 40 50 100 45 254 E x i s t i n g Housing R e q u i r i n g R e h a b i l i t a t i o n 1 38 59 82 1 1 4 57 351 E x i s t i n g Housing Not R e q u i r i n g R e h a b i l i t a t i o n 1 3 7 42 24 9 86 Note: T h i s summary presumes that a l l e x i s t i n g housing not r e q u i r i n g r e h a b i l i t a t i o n can be represented by the c o o p e r a t i v e housing that d i d not r e c e i v e RRAP funds. Source: Analyses of CMHC A d m i n i s t r a t i v e Data 1 35 concerning the p r o p o r t i o n of income-tested households should be i n t e r p r e t e d with some c a u t i o n due to the p o s s i b i l i t y of a non-sampling e r r o r i n the survey q u e s t i o n on which these p r o p o r t i o n s are based. The nature of the q u e s t i o n d i d not c l e a r l y d i s t i n g u i s h between whether a household was r e c e i v i n g r e n t - t o -income a s s i s t a n c e or paying a rent surcharge -- the q u e s t i o n asked only i f the household rent was determined on the b a s i s of i t s income. The analyses of household incomes by rent-to-income r a t i o s (Tables 9 through 11 of Appendix 2) suggest that a small p o r t i o n of households may have m i s i n t e r p r e t e d t h i s q u e s t i o n . 3 A c c o r d i n g to Table 6.5, over 31.2 percent of a l l (surveyed) c o o p e r a t i v e households pay more than 25 percent of t h e i r gross incomes toward r e n t . T h i s suggests that any one or combination of the f o l l o w i n g three s c e n a r i o s i s t a k i n g p l a c e i n c o o p e r a t i v e p r o j e c t s : f i r s t l y , the a s s i s t a n c e a v a i l a b l e through the S e c t i o n 56.1 d e l i v e r y mechanism has o f t e n been i n s u f f i c i e n t to keep rent-to-income r a t i o s at a maximum of 25 percent; secondly that a number of c o o p e r a t i v e p r o j e c t s are using a higher r a t i o of rent-to-income than 25 percent to q u a l i f y households f o r income- t e s t e d a s s i s t a n c e ; and t h i r d l y , that a number of c o o p e r a t i v e p r o j e c t s use income s u r c h a r g i n g to generate more a s s i s t a n c e f o r i t s lowest income households, and in doing so, charge households (with the a b i l i t y to pay) ren t s of more than 25 percent of t h e i r gross income." In terms of the f i r s t s c e n a r i o , Table 6.6 i l l u s t r a t e s that fo r 42 percent of the surveyed c o o p e r a t i v e households r e c e i v i n g income-tested a s s i s t a n c e , the d e l i v e r y mechanism does not enable 1 36 Table 6.5 Summary, of Rent-to-income R a t i o s For S e c t i o n 56.1 Cooperative Households Rent-to-Income Ra t i o (percent) R e l a t i v e Frequency For A l l Surveyed Households Cumulative Frequency For A l l Surveyed Households 0 10.0 5.1 5.1 10.1 - 20.0 43.8 48.9 20. 1 - 25.0 19.9 68.8 25. 1 - 30.0 14.1 82.9 30. 1 - 35.0 6.2 89. 1 35.1 - 40.0 3.1 92.2 40. 1 - 50.0 4.9 97. 1 50. 1 - 60.0 1.7 98.2 > 60. 0 1 .2 100.0 Source: Analyses of S e c t i o n 56.1 Survey Data ( r e f e r to Appendix 2) 1 37 r e n t s to be reduced to 25 percent of t h e i r gross income. T h i s i n f e r e n c e i s r e i n f o r c e d by survey responses i n d i c a t i n g that i n 17 percent of c o o p e r a t i v e p r o j e c t s the S e c t i o n 56.1 a s s i s t a n c e was i n s u f f i c i e n t to allow at l e a s t 50 percent of the households e l i g i b l e f o r income-tested a s s i s t a n c e to pay l e s s than lower end of market rents and that i n over 28 percent of c o o p e r a t i v e p r o j e c t s the a v a i l a b l e a s s i s t a n c e d i d not p r o v i d e as many as 25 percent of the e l i g i b l e households with any income-tested ass i s t a n c e . 5 In terms of the second s c e n a r i o , Table 6.6 i l l u s t r a t e s t h a t f o r 23 percent of c o o p e r a t i v e households r e c e i v i n g income-t e s t e d a s s i s t a n c e , the d e l i v e r y mechanism does not enable rents to be reduced to 30 percent of t h e i r gross income. Thus, even i f c o o p e r a t i v e p r o j e c t s , or the o r g a n i z a t i o n s which administer them, have implemented 30 percent rent c e i l i n g s , the S e c t i o n 56.1 d e l i v e r y mechanism i s not reducing almost 25 percent of the income-tested r e n t s to the d e s i r e d l e v e l . 6 In terms of the t h i r d s c e n a r i o , the survey responses i n d i c a t e that almost 23 percent of c o o p e r a t i v e p r o j e c t s continue to use income-surcharging even though the p r a c t i c e of s u r c h a r g i n g was e x p l i c i t l y not i n c l u d e d i n the S e c t i o n 56.1 d e s i g n . 7 However, a c c o r d i n g to CMHC o f f i c i a l s , those c o o p e r a t i v e s that do employ surchar g i n g g e n e r a l l y do not i n c r e a s e surcharged rents to more than 25% of gross income. T h i s suggests that the a b i l i t y of the S e c t i o n 56.1 mechanism to reduce income-tested r e n t s to 25 percent of gross income i s even l e s s than i n d i c a t e d by s c e n a r i o s 1 and 2 because these s c e n a r i o s 138 Table 6.6 The E f f e c t of a Change i n E l i g i b i l i t y R a t i o s E l i g i b l e Rent-to-Income Rat i o s Cooperat ive Households r e c e i v i n g income-tested a s s i s t a n c e that pay rents higher than e l i g i b i l i t y r a t i o % of Cooperative Households Who Are Paying More Than E l i g i b i l i t y R a t i o Who Do Not Receive Income-Tested A s s i s t a n c e % of Cooperative Households Who Are Paying More Than E l i g i b i l i t y R a t i o Who Are Not Sure Whether They Receive Income-Tested A s s i s t a n c e 25 % 42.0 % 19.6 % 48.2 % 30 % 23.0 % 9.9 % 34.6 % Source: Analyses of S e c t i o n 56.1 Survey Data (Appendix 2) 1 39 do not account f o r a d d i t i o n a l a s s i s t a n c e to income-tested households generated by s u r c h a r g i n g . I t i s apparent that the program's d e l i v e r y system i s not p r o v i d i n g the c o o p e r a t i v e households with the magnitude of income-tested a s s i s t a n c e that was intended. In t h i s sence, a d d i t i o n a l a s s i s t a n c e beyond S e c t i o n 56.1 i s necessary f o r as many as 23 to 42 percent of households r e c e i v i n g income-tested a s s i s t a n c e as w e l l as f o r those e l i g i b l e households ( i n the 17 percent of c o o p e r a t i v e p r o j e c t s ) who r e c e i v e no income-tested a s s i s t a n c e . (6.1c) Does the D e l i v e r y System Implement the A p p r o p r i a t e Cost C o n t r o l s ? In order to minimize the budgetary c o s t s of p r o v i d i n g a s s i s t a n c e to a given number of e l i g i b l e housing u n i t s and households, the d e l i v e r y system was to be designed to i n c l u d e c o n t r o l s which l i m i t the magnitude of the subsidy. T h i s s e c t i o n reviews whether the necessary c o s t c o n t r o l s have been implemented. As demonstrated i n Chapter 5, the magnitude of the program's a s s i s t a n c e to a s p e c i f i c c o o p e r a t i v e p r o j e c t i s dependent on four f a c t o r s : the p r o j e c t ' s c a p i t a l c o s t s ; the p r o j e c t ' s market-determined mortgage i n t e r e s t r a t e ; the p r o j e c t ' s o p e r a t i n g c o s t s ; and the income mix of c o o p e r a t i v e households. The presence, or absence, of c o n t r o l s over these four f a c t o r s w i l l be d i s c u s s e d below. In terms of c o n t r o l over c a p i t a l c o s t s , the program 140 d e l i v e r y system has implemented the concept of Maximum Unit P r i c e s which were d e f i n e d i n Chapter 5. While CMHC w i l l approve S e c t i o n 56.1 a s s i s t a n c e f o r c o o p e r a t i v e p r o j e c t s with c a p i t a l c o s t s that exceed the sum of the r e l e v e n t MUPs, CMHC imposes a form of p e n a l t y on such p r o j e c t s by r e q u i r i n g a $2 c o n t r i b u t i o n of e q u i t y (by c o o p e r a t i v e households) f o r every $1 that c a p i t a l c o s t s are above the MUPs. Acco r d i n g to CMHC's a d m i n i s t r a t i v e data, almost 95 percent of the c o o p e r a t i v e p r o j e c t s approved f o r S e c t i o n 56.1 a s s i s t a n c e between 1978 and 1982 had average per u n i t c a p i t a l c o s t s which were equal to or l e s s than the r e l e v a n t MUPs.8 Consequently, i t i s apparent that the MUPs have been an e f f e c t i v e g u i d e l i n e i n terms of p l a c i n g a c e i l i n g on c a p i t a l c o s t s . However, there are c e r t a i n i n d i c a t i o n s that the MUPs may not be e f f e c t i v e i n minimizing c a p i t a l c o s t s . In f a c t , a 1981 report on the un d e r w r i t i n g of n o n - p r o f i t s o c i a l housing loans i n d i c a t e d that c o o p e r a t i v e housing i s probably about 25 percent more expensive to b u i l d (on a cost per square meter b a s i s ) than market housing. T h i s c o n c l u s i o n i s based on b u i l d i n g c o s t s o n l y . The reasons suggested f o r higher c o s t s i n c l u d e d : the s u b s t i t u t i o n of a higher l e v e l of c a p i t a l c o s t s f o r lower o p e r a t i n g c o s t s (and s i n c e the c a p i t a l c o s t s are d i r e c t l y s u b s i d i z e d while o p e r a t i n g expenses are not, t h i s i s r a t i o n a l behavior on the part of c o o p e r a t i v e groups); a d d i t i o n a l i n t e r e s t c o s t s i n c u r r e d d u r i n g the c o n s t r u c t i o n phase because of g e n e r a l l y slower development and a lower r a t i o of eq u i t y ; and a tendancy f o r c o n t r a c t o r s and developers to push c o s t s 141 u n n e c e s s a r i l y up to the MUPs in an attempt to i n c r e a s e t o t a l p r o f i t s . 9 In a d d i t i o n , when land i s pro v i d e d by mu n i c i p a l governments or n o n - p r o f i t o r g a n i z a t i o n s at less-than-market v a l u e , and when the repor t e d cost of the land i s based on t h i s s u b s i d i z e d v a l u e , the reported c a p i t a l c o s t s (which are used f o r the purpose of conforming to the MUPs) are not an accurate i n d i c a t o r of true c a p i t a l c o s t s and can le a d to overspending on the housing component. In terms of p r o j e c t f i n a n c i n g , the subsidy design p r o v i d e s f o r l i t t l e c o n t r o l over subsidy c o s t s . The subsidy i s d i r e c t l y r e l a t e d to the market rate of i n t e r e s t and, as was i l l u s t r a t e d i n Chapter 5, leaves CMHC open to c o n s i d e r a b l e i n t e r e s t r a t e r i s k i n the e a r l y years of the subsidy. In a d d i t i o n , the design l a c k s c o n t r o l i n that i t does not pro v i d e any encouragement f o r c o o p e r a t i v e groups to o b t a i n the cheapest f i n a n c i n g -- the maximum a v a i l a b l e a s s i s t a n c e i s c a l c u l a t e d as the d i f f e r e n c e between the c o n t r a c t r a t e and the r a t e at 2 percent and thus i n c r e a s e s d i r e c t l y with i n c r e a s e s i n the market-negotiated r a t e . T h i s suggests that c o o p e r a t i v e groups may be c o n s i d e r a b l y l e s s i n t e r e s t - r a t e s e n s i t i v e than other consumers of r e s i d e n t i a l mortgage money and l e s s l i k e l y to r e s t r i c t f i n a n c i n g to p e r i o d s of r e l a t i v e l y low i n t e r e s t r a t e s . In terms of o p e r a t i n g c o s t s , the subsidy design p r o v i d e s a form of c o n t r o l by s t r u c t u r i n g the ren t s of both income-tested and non-tested households so that they i n c r e a s e to absorb any i n c r e a s e s i n o p e r a t i n g c o s t s . As F i g u r e s 5.2 through 5.4 of Chapter 5 i l l u s t r a t e d , i n c r e a s e s i n o p e r a t i n g expenses are not 142 r e f l e c t e d i n i n c r e a s e s i n maximum a v a i l a b l e a s s i s t a n c e . Such i n c r e a s e s are t h e r e f o r e d i r e c t l y absorbed by non-tested households (on a p r o - r a t a b a s i s ) i n the occupancy charge and i n d i r e c t l y absorbed by .income-tested households through a r e d u c t i o n i n the p r o - r a t a income-tested a s s i s t a n c e a v a i l a b l e to such households. U n f o r t u n a t e l y , a d m i n i s t r a t i v e data c o u l d not be o b t a i n e d from CMHC to enable a comparison of o p e r a t i n g c o s t s of s u b s i d i z e d c o o p e r a t i v e s with comparable market housing. On the other hand, analyses of the survey data provide some i n d i c a t i o n of the e f f e c t of t h i s c o s t c o n t r o l on the a t t i t u d e s of c o o p e r a t i v e members. 1 0 Almost 63 percent of the responding p r o j e c t managers i n d i c a t e d that a l l c o o p e r a t i v e households had cooperated i n attempts to reduce o p e r a t i n g c o s t s , while 29 percent i n d i c a t e d that at l e a s t h a l f of a l l c o o p e r a t i v e households cooperated i n such a manner. Conversely, over 6 percent of the surveyed p r o j e c t managers i n d i c a t e d that none of the households i n t h e i r p r o j e c t s cooperated i n attempts to reduce o p e r a t i n g c o s t s ; however, t h i s f i g u r e may be u n r e a l i s t i c a l l y high due to the f a c t that the m a j o r i t y of p r o j e c t managers a l s o i n d i c a t e d that they had not asked households to p a r t i c i p a t e i n reducing o p e r a t i n g c o s t s . In terms of income mix, a form of i n d i r e c t c o n t r o l i s a v a i l a b l e which i s indeed a n t i t h e t i c to the purpose of income-t e s t e d a s s i s t a n c e . The income mix c o n t r o l i s i n the form of the design s p e c i f c a t i o n that only 15 percent of the households w i t h i n a p a r t i c u l a r c o o p e r a t i v e p r o j e c t be income-tested. If the number of income-tested households i s maintained at the l e v e l of 15 p e r c e n t , and there i s a r e s i d u a l amount of income-tested 143 a s s i s t a n c e (beyond the amount allowed to be maintained i n the subsidy s u r p l u s fund), such excess i s returned to CMHC. Consequently, the lower the number of income-tested households and the higher the incomes of such households, the lower the magnitude of the subsidy. However, t h i s form of c o n t r o l i s c l e a r l y under the d i r e c t i o n of the n o n - p r o f i t o r g a n i z a t i o n s that a l l o c a t e c o o p e r a t i v e housing u n i t s to households on wa i t i n g l i s t s and not under the d i r e c t i o n of CMHC; thus, the income-mix s t r u c t u r e i s an i n e f f e c t i v e form of c o n t r o l over subsidy c o s t s . (6.2) The Impact E v a l u a t i o n The purpose of the impact e v a l u a t i o n i s to assess the e f f e c t i v e n e s s of the Cooperative Housing Program i n a c h i e v i n g i t s o b j e c t i v e s in terms of the c r i t e r i a and r e p h r a s a l s provided i n Chapter 5 and on the b a s i s of the CMHC S e c t i o n 56.1 a d m i n i s t r a t i v e and survey data. U n f o r t u n a t e l y , t h i s s e c t i o n has r e l i e d h e a v i l y on a data source which proved to be extremely u n r e l i a b l e ; consequently, the a n a l y s i s i n c l u d e d w i t h i n t h i s s e c t i o n i s somewhat general and i n s u f f i c i e n t at times. T h i s problem i s exacerbated f o r o b j e c t i v e s 2 and 4 where there i s a l s o a need f o r a macro-l e v e l a n a l y s i s which demands data resources that are beyond the scope of t h i s paper. O b j e c t i v e 1: To f i n a n c i a l l y a s s i s t the p r o v i s i o n and and o p e r a t i o n of modest, a p p r o p r i a t e , and a f f o r d a b l e housing f o r n o n - p r o f i t c o o p e r a t i v e groups of low and moderate incomes. 1 44 As i n d i c a t e d i n Chapter 5, c o o p e r a t i v e housing i s "modest" when combined land v a l u e s and c o n s t r u c t i o n c o s t s are at or below the r e l e v a n t MUPs. As i n d i c a t e d i n the process e v a l u a t i o n , 95 percent of the u n i t s occupied by a s s i s t e d c o o p e r a t i v e households can be c o n s i d e r e d modest. 1 1 In terms of " a p p r o p r i a t e " housing, Table 6.7 summarizes the analyses of the S e c t i o n 56.1 survey data r e l a t e d to the i d e n t i f i e d c r i t e r i a of adequacy and space. While Table 6.7 i n d i c a t e s that the general p h y s i c a l c o n d i t i o n of almost 90 percent of c o o p e r a t i v e p r o j e c t s and c o o p e r a t i v e u n i t s can be co n s i d e r e d good to e x c e l l e n t , at l e a s t 8.1 percent of a l l u n i t s are c o n s i d e r e d to be i n need of major r e p a i r , and at l e a s t 23 percent are i n need of minor r e p a i r s . 1 2 The second c r i t e r i o n of adequacy r e l a t e s to the presence or l a c k of e s s e n t i a l f a c i l i t i e s . In terms of f a c i l i t i e s which are r e q u i r e d by s e n i o r c i t i z e n and handicapped households, 4.9 percent of a l l c o o p e r a t i v e p r o j e c t s , and 6.6 percent of a l l c o o p e r a t i v e u n i t s , approved f o r S e c t i o n 56.1 a s s i s t a n c e s i n c e 1978 have been designed s p e c i f i c a l l y f o r s e n i o r c i t i z e n s , while .4 percent of a l l c o o p e r a t i v e p r o j e c t s and .6 percent of a l l u n i t s approved s i n c e 1978 have been designed s p e c i f i c a l l y f o r handicapped c i t i z e n s . 1 3 However, as Table 6.2 i l l u s t r a t e d , 12.2 percent of S e c t i o n 56.1 c o o p e r a t i v e households are c l a s s i f i e d as se n i o r c i t i z e n households, while 5.4 percent of c o o p e r a t i v e households have at l e a s t one handicapped member. In a d d i t i o n , Table 6.7 i n d i c a t e s that almost 20 percent of c o o p e r a t i v e p r o j e c t s have inadequate f a c i l i t i e s f o r s e n i o r c i t i z e n households w i t h i n the p r o j e c t , while over 3 percent of Table 6.7 A Summary of the C r i t e r i a of A p p r o p r i a t e Housing CRITERION Percent of a l l Cooperative P r o j e c t s Percent of a l l Cooperative U n i t s 1. ADEQUACY a. P h y s i c a l C o n d i t i o n s * major r e p a i r s needed 25.3 23.0 * minor r e p a i r s needed 12.3 8.1 * g e n e r a l p h y s i c a l cond-i t i o n s of housing u n i t are good to e x c e l l e n t 96.0 91 .9 * g e n e r a l p h y s i c a l cond-i t i o n s of p r o j e c t are good to e x c e l l e n t 89.7 89.5 b. E s s e n t i a l f a c i l i t i e s * Inadequate f a c i l i t i e s f o r handicapped 3.4 N/A * Inadequate f a c i l i t i e s f o r s e n i o r c i t i z e n s 19.5 N/A 2. SPACE a. Crowding * more than 2 persons per bedroom N/A .5 * more than 2 persons room N/A .5 b. Over-consumption * more bedrooms than persons N/A 15.2 Source: Analyses of S e c t i o n 56.1 Survey Data (Appendix 2) 1 46 c o o p e r a t i v e s experience such inadequacies f o r handicapped h o u s e h o l d s . 1 4 These f i g u r e s suggest that the Cooperative Program i s e x p e r i e n c i n g some d i f f i c u l t y p r o v i d i n g adequate f a c i l i t i e s to s e n i o r c i t i z e n and handicapped households. On the b a s i s of the space c r i t e r i o n of a p p r o p r i a t e n e s s , Table 6.7 i n d i c a t e s that c o o p e r a t i v e households g e n e r a l l y experience l i t t l e c r o w d i n g . 1 5 T h i s c o n c l u s i o n i s r e i n f o r c e d by occupants' s u b j e c t i v e assessment of space requirements that i n d i c a t e t h a t only 3.4 percent of a l l c o o p e r a t i v e households c o n s i d e r t h e i r a v a i l a b l e space to be inadequate. On the other hand, Table 6.7 suggests that about 15 percent of a l l c o o p e r a t i v e households are consuming more housing than c o n s i d e r e d to be necessary on the b a s i s of the g e n e r a l l y accepted r u l e s ; t h i s i s i n e f f e c t an a d d i t i o n a l form of subsidy. In terms of " a f f o r d a b l e " housing, the d e f i n i t i o n employed i s the 25 percent rent-to-income r a t i o . As Table 6.5 of s e c t i o n (6.1b) i n d i c a t e d , almost 69 percent of c o o p e r a t i v e households are consuming a f f o r d a b l e housing; i f a r a t i o of 30 percent i s used, almost 80 percent of c o o p e r a t i v e households are consuming a f f o r d a b l e housing, depending on the d e f i n i t i o n employed f o r "moderate" income. In other words, the program has only been about 70 to 80 percent e f f e c t i v e i n p r o v i d i n g a f f o r d a b l e housing. In terms of the "low and moderate income" c r i t e r i o n f o r o b j e c t i v e 1, Table 6.1 i l l u s t r a t e d that only about 47 to 58 percent of a l l c o o p e r a t i v e u n i t s are occupied by low and moderate-income households. In terms of t h i s c r i t e r i o n , the 147 program i s c l e a r l y not a c h i e v i n g o b j e c t i v e 1 . O b j e c t i v e 2: To encourage p r i v a t e l e n d e r s to i n c r e a s e t h e i r commitments of c a p i t a l f o r low and moderate income housing and to encourage c o n v e n t i o n a l mortgage l e n d i n g . While data l i m i t a t i o n s make i t impossible to a c c u r a t e l y determine the program's net e f f e c t on the d o l l a r value of p r i v a t e l y - i n i t i a t e d NHA . and c o n v e n t i o n a l f i n a n c i n g f o r c o o p e r a t i v e p r o j e c t s , Table 6.8 does i l l u s t r a t e that S e c t i o n 56.1 c o o p e r a t i v e p r o j e c t s have been almost e x c l u s i v e l y f i n a n c e d by p r i v a t e sources through NHA-insured mortgages.•On the other hand, while some c o n v e n t i o n a l f i n a n c i n g has been undertaken, t h i s i n c r e a s e has been small i n a b s o l u t e v a l u e . D i r e c t l e n d i n g by CMHC f o r c o o p e r a t i v e s has decreased from a y e a r l y average of about $46 m i l l i o n (1975 through 1978) to a $1 m i l l i o n average (1979 through 1982) s i n c e the i n t r o d u c t i o n of the S e c t i o n 56.1 subsidy mechanism. Table 6.9 summarizes these p r i v a t e l y i n i t i a t e d loans on the b a s i s of type of l e n d e r . In order to pro v i d e a b e t t e r i n d i c a t i o n of the achievement of o b j e c t i v e 2, the a f f e c t of the Cooperative Program on the r e l e v a n t loan c h a r a c t e r i s t i c s ( i d e n t i f i e d i n Chapter 5) can be reviewed. In terms of the c h a r a c t e r i s t i c s i d e n t i f i e d , the S e c t i o n 56.1 mechanism has a f f e c t e d borrower and f i n a n c i a l c h a r a c t e r i s t i c s , yet not property c h a r a c t e r i s t i c s . In terms of borrower c h a r a c t e r i s t i c s , the i n t r o d u c t i o n of a mix of incomes to the program mechanism ( r a t h e r than an emphasis on low-income households) p o t e n t i a l l y i n c r e a s e s the l e v e l and s t a b i l i t y of Table 6.8 Sources of F i n a n c i n g f o r S e c t i o n 56.1 Cooperative P r o j e c t s (by year and i n number of p r o j e c t s ) Year CMHC D i r e c t Approved P r i v a t e Convent i o n a l Lending NHA F i n a n c i n g Lending 1 978 2 1 2 0 1979 0 81 0 1 980 2 1 60 1 1981 0. 243 3 1982 0 483 N/A Sources: Canadian Housing S t a t i s t i c s and CMHC A d m i n i s t r a t i v e Data Table 6.9 P r i v a t e l y - I n i t i a t e d Loans to S e c t i o n 56.1 Cooperative P r o j e c t s 1978 - 1982 (by type of lender) C r e d i t Unions and Cooperative S o c i t i e s 24 % Tru s t Companies 56 % Loan Companies 1 1 % L i f e Insurance Companies 2 % Chart e r e d Banks 7 % 100 % Source: CMHC A d m i n i s t r a t i v e Data 1 49 income a v a i l a b l e to meet r e n t a l payments i n any p a r t i c u l a r housing p r o j e c t ; thus, the r i s k of payment a r r e a r s i s p o t e n t i a l l y r e d u c e d . 1 6 In terms of f i n a n c i a l c h a r a c t e r i s t i c s , two important v a r i a b l e s have been introduced i n the S e c t i o n 56.1 d e l i v e r y mechanism: the d i f f e r e n t i a l i n t e r e s t c o n t r i b u t i o n and NHA mortgage insurance. According to l e n d e r s , these two v a r i a b l e s are e s s e n t i a l p r e r e q u i s i t e s f o r p r i v a t e l y - i n i t i a t e d f u n d s . 1 7 As demonstrated in Chapter 5, the nature of the d i f f e r e n t i a l i n t e r e s t subsidy causes CMHC to bear most of the i n t e r e s t r a t e r i s k and a l l o w s c o o p e r a t i v e p r o j e c t s to accumulate subsidy pools which can e f f e c t i v e l y p r o t e c t a g a i n s t unexpected i n c r e a s e s i n o p e r a t i n g expenses or short term cash flow c r i s e s s u f f e r e d by p a r t i c u l a r c o o p e r a t i v e members. In a d d i t i o n , by s u b s i d i z i n g the gap between economic rent and the LEM, the d i f f e r e n t i a l i n t e r e s t c o n t r i b u t i o n reduces p o t e n t i a l a r r e a r s and d e f a u l t r i s k . N e v e r t h e l e s s , the NHA mortgage insurance i s undoubtedly the most important v a r i a b l e i n reducing r i s k to l e n d e r s and thus encouraging t h e i r commitment of funds. The NHA insurance p r o v i d e s 100 percent coverage f o r the o u t s t a n d i n g p r i n c i p a l and accrued i n t e r e s t to lenders i n the event of d e f a u l t . O b j e c t i v e 3: To provide housing a s s i s t a n c e to households who have a range of incomes. The achievement of t h i s o b j e c t i v e can be assessed through a comparison of the d i s t r i b u t i o n of incomes of c o o p e r a t i v e households with the d i s t r i b u t i o n which p r e v a i l s among a l l Canadian households. Table 6.10 i n d i c a t e s that there i s s i m i l a r 150 r e p r e s e n t a t i o n with respect to income (when no d i f f e r e n t i a t i o n i s made f o r household s i z e ) i n only 3 of the 8 income c l a s s e s --the h i g h e s t income c l a s s i s under-represented, while the middle income c l a s s e s are o v e r - r e p r e s e n t e d . Table 6.11 p r o v i d e s a second i n d i c a t i o n i n terms of income q u i n t i l e c a t a g o r i e s and again suggests an o v e r - r e p r e s e n t a t i o n i n the middle income c l a s s i f i c a t i o n s and an u n d e r - r e p r e s e n t a t i o n i n the highest q u i n t i l e . These f i g u r e s i n d i c a t e that the d i s t r i b u t i o n of incomes of c o o p e r a t i v e households does not c l o s e l y represent the d i s t r i b u t i o n of incomes of a l l Canadian households. O b j e c t i v e 4: To i n c r e a s e the stock of p r i v a t e l y s u p p l i e d r e n t a l housing in areas of low r e n t a l vacancy. As was i n d i c a t e d in Chapter 5, the " i n c r e a s e " of r e n t a l housing supply should be i n terms of the net e f f e c t . I t i s indeed p o s s i b l e that a n o n - t r i v i a l p o r t i o n of S e c t i o n 56.1 c o o p e r a t i v e u n i t s have s u b s t i t u t e d f o r the development of other r e n t a l housing (and perhaps, although l e s s l i k e l y , non-s u b s i d i z e d c o o p e r a t i v e u n i t s ) that would have been c o n s t r u c t e d i n the absence of the Cooperative Program's s u p p l y - s i d e subsidy. Moreover, the p r o d u c t i o n of s u b s i d i z e d S e c t i o n 56.1 c o o p e r a t i v e housing r e q u i r e s inputs of c a p i t a l and p r o d u c t i o n f a c t o r s ; and i t i s p o s s i b l e that the i n c r e a s e i n demand f o r these f a c t o r s would cause t h e i r p r i c e s to r i s e i n the short run, thereby o f f s e t t i n g what would have been marginal demand and again l e a d i n g to a p o s s i b l e r e d u c t i o n i n the development of p r i v a t e 151 Table 6.10 A Comparison of the D i s t r i b u t i o n of Household Incomes fo r A l l Canadian Households and S e c t i o n 56.1 Cooperative Households Annual Household Income D i s t r i b u t i o n of A l l Canadian Households D i s t r i b u t i o n of Cooperative Households Di f ference in Representat ion l e s s than $8,000 12.2 12.2 0 8,000 to 11,999 9.2 11.5 + 25% 12,000 to 15,999 8.7 11.6 + 33% 16,000 to 19,999 9.1 13.2 + 45% 20,000 to 24,999 11.6 19.7 + 70% 25,000 to 29,999 11.4 12.7 + 1 1 % 30,000 to 34,999 9.6 9.9 + 3% > 35,000 28.2 9.2 -67% Source: Analyses of S e c t i o n 56.1 Survey Data and Household  F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s 1982 Table 6.11 The D i s t r i b u t i o n of Cooperative Households On the Bas i s of 1981 Income Q u i n t i l e s Quint i l e Limi t Percentage of Cooperative Households Within Q u i n t i l e Lowest Q u i n t i l e $11,404 Second Q u i n t i l e $20,239 T h i r d Q u i n t i l e $29,013 Fou r t h Q u i n t i l e $39,893 24% 30% 27! 15% F i f t h Q u i n t i l e 4% Source: F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s 1982. 1 53 r e n t a l housing. An assessment of such s u b s t i t u t i o n s and o f f s e t s r e q u i r e s macro l e v e l data and a n a l y s e s ; however, such data are not a v a i l a b l e to t h i s study. In terms of the a l l o c a t i o n of c o o p e r a t i v e housing subsidy u n i t s i n areas of low v a c a n c i e s , there are c e r t a i n f a c t o r s which complicate assessment in terms of o b j e c t i v e 4. F i r s t l y , any i n f e r e n c e s based on the l o c a t i o n of completed u n i t s i n areas of e i t h e r low or high vacancy r a t e s cannot be made independently of the macro c o n s i d e r a t i o n s i d e n t i f i e d above. T h i s i s because the supply f u n c t i o n of p r i v a t e r e n t a l housing stock i s i n f l u e n c e d d i r e c t l y by the r e l a t i o n s h i p between a c t u a l and d e s i r e d vacancy r a t e s — when a c t u a l vacancy r a t e s f a l l below d e s i r e d r a t e s , commitments f o r new s t a r t s are made by developers who a n t i c i p a t e p r i c e i n c r e a s e s . The p o i n t i s that the s u b s t i t u t i o n of p r i v a t e l y - i n i t i a t e d r e n t a l housing by s u b s i d i z e d c o o p e r a t i v e housing development i s more l i k e l y i n areas of low vacancy simply because i t i s i n such areas that housing development i s l i k e l y to be p r o f i t a b l e . T h e r e f o r e , i n terms of t h e i r r e l a t i v e e f f e c t on v a c a n c i e s , S e c t i o n 56.1 c o o p e r a t i v e subsidy commitments may have the same net e f f e c t i n areas of e i t h e r excess or low v a c a n c i e s . A f u r t h e r c o m p l i c a t i o n a r i s e s from an abnormally-long l a g between the commitment of S e c t i o n 56.1 a s s i s t a n c e and the completion of the a s s o c i a t e d c o o p e r a t i v e housing stock. According to CMHC, only 25 percent of newly c o n s t r u c t e d c o o p e r a t i v e p r o j e c t s are completed w i t h i n 2 years of commitment, while 35 percent are not completed u n t i l 4 years a f t e r 1 54 commitment. Because vacancy r a t e s i n some areas can experience s i g n i f i c a n t v a r i a t i o n i n three to four years ( s i n c e the l a g time in market housing development i s g e n e r a l l y l e s s than three years) i t c o u l d be the case that c o o p e r a t i v e subsidy u n i t s have been committed to areas of low vacancy, while changes in vacancy r a t e s r e s u l t i n completed u n i t s i n areas of moderate or excess vacancy. Given the p o t e n t i a l f o r o f f s e t s and s u b s t i t u t i o n s and f o r the above c o m p l i c a t i o n s , a g e n e r a l assessment can be made on the b a s i s of the a v a i l a b l e data. U n f o r t u n a t e l y , only data i n terms of commitment ( r a t h e r than completions) c o u l d be obtained from CMHC. As Table 6.12 i n d i c a t e s , S e c t i o n 56.1 c o o p e r a t i v e housing stock g e n e r a l l y represents l e s s than 1 percent of housing stock on p r o v i n c i a l b a s i s . On the other hand, commitments f o r S e c t i o n 56.1 c o o p e r a t i v e u n i t s i n 1982 represented a s i g n i f i c a n t p o r t i o n of a l l 1982 r e n t a l s t a r t s , e s p e c i a l l y i n the Maritime p r o v i n c e s . In terms of a l l o c a t i n g a s s i s t a n c e i n areas of low vacancy, Table 6.13 i n d i c a t e s that between 1978 and 1981 about 39 percent of S e c t i o n 56.1 c o o p e r a t i v e commitments (on a p r o j e c t b a s i s ) were in areas with annual vacancy r a t e s above the average f o r a l l Census M e t r o p o l i t a n Areas. (6.3) The E f f i c i e n c y E v a l u a t i o n T h i s s e c t i o n e v a l u a t e s the Cooperative Program on the b a s i s of the e f f i c i e n c y with which the program uses v a l u a b l e resources and c r e a t e s v a l u a b l e outcomes. S e c t i o n (6.3a) d e f i n e s e f f i c i e n c y as a two-dimensional concept comprised of both 1 55 Table 6.12 Se c t i o n 56.1 Cooperative Housing Commitments and the Stock of P r i v a t e Rental Housing Province U n i t s of P r i v a t e Rental Stock 1 982 Commitments fo r S e c t i o n 56.1 co-op u n i t s 1978 to 1982 1978 -1 982 Commi tments fo r S e c t i o n 56.1 co-op u n i t s as a p o r t i o n of r e n t a l stock 1982 1982 S e c t i o n 56.1 commi t -ments as a p o r t i o n of 1982 r e n t a l s t a r t s O n t a r i o 1,107,570 6,759 .61% 13.79% Quebec 1,021,991 4,292 .42% 21.10% B.C. 365,851 4,989 1 .36% 21.15% A l b e r t a 295,431 849 .29% 3.10% Sask. 92,742 241 .26% 3.70% Manitoba .122,632 1 50 .26% .66% Nf Id. 29,364 316 .11% 37.00% N.S. 78,220 708 .91% 37.30% N.Bruns. 57,31 6 291 .51% 73.30% P.E.I. 9, 1 60 25 .27% 28.90% N.W.T. 3,590 50 1 .40% N/A Yukon 8,915 0 0 N/A Source: S t a t i s t i c s Canada 1981 Census Data; CMHC S t a t i s t i c s on Rental S t a r t s by Province; Canadian Housing  S t a t i s t i c s 1981 and 1982; CMHC A d m i n i s t r a t i v e Data Table 6.13 S e c t i o n 56.1 Commitments by Census M e t r o p o l i t a n Area and by Vacancy Rate ( i n number o f . p r o j e c t s ) Census Metro-p o l t a n Area 1978 1979 1980 1981 | # of pr o j . % Vac . # of pr o j . % Vac . # of proj . % Vac . # of pr o j . % Vac . Calgary 1 1 .2 0 .4 1 .4 2 .2 Edmonton 0 .8 2 1.9 2 1 . 1 3 1 . 1 H a l i fax 6 2.2 0 2.4 8 1 .2 50 .5 Hamilton 0 3.5 0 1 .8 1 1 .3 4 .7 H u l l 0 6.7 5 7.0 3 5.8 0 2.3 London 0 2.3 0 4.7 1 4. 1 1 1 .9 Montreal 0 5.5 10 4.5 21 3.4 43 1 .9 Oshawa 0 1 .6 1 4.1 0 2.4 0 0.0 Ottawa 0 1 .3 2 3.5 6 3.5 3 .6 Quebec 0 3.6 1 1 4.4 8 2.8 12 1 .8 Regi na 0 2.0 0 1 .9 0 .7 1 .5 St. Cath. 0 1 .4 0 1 .6 0 1.8 2 .8 St. Johns 0 7.7 0 .9 0 . 1 1 1 .4 Toronto 0 .8 1 2 1 .2 20 .5 22 .3 Vancouver 3 1 .4 7 .2 14 . 1 20 . 1 V i c t o r i a 0 1 . 1 1 . 1 4 . 1 5 . 1 Winn ipeg 1 3.9 0 5.0 0 5.1 1 3.5 T o t a l p r o j 11 I 51 | 89 | 170 | Avg. Vac. | 3.2 | 2.9 | 2.2 | 1.2 Sources: Canadian Housing S t a t i s t i c s and CMHC A d m i n i s t r a t i v e Data. 157 a l l o c a t i v e and d i s t r i b u t i o n a l c r i t e r i a and reviews e f f i c i e n c y -r e l a t e d e v a l u a t i o n techniques in the context of p u b l i c p o l i c y , and s p e c i f i c a l l y housing p o l i c y . S e c t i o n (6.3b) analyzes the Cooperative Program's a l l o c a t i v e e f f i c i e n c y through the a p p l i c a t i o n of a c o s t - b e n e f i t formula (with net e x t e r n a l b e n e f i t s as a r e s i d u a l ) on the b a s i s of data a c q u i r e d from 341 Vancouver Lower-mainland c o o p e r a t i v e u n i t s . S e c t i o n (6.3c) analyzes the program's d i s t r i b u t i o n a l e f f i c i e n c y on the b a s i s of both the n a t i o n a l survey data and the data from the s p e c i f i c c o o p e r a t i v e p r o j e c t s . (6.3a) A D e f i n i t i o n of E f f i c i e n c y In the context of p u b l i c p o l i c y e v a l u a t i o n , e f f i c i e n c y can be d e f i n e d as a f u n c t i o n of both a l l o c a t i v e and d i s t r i b u t i o n a l consequences. A l l o c a t i v e consequences are those outcomes of p u b l i c programs that represent changes i n pr o d u c t i o n p o s s i b i l i t i e s or consumption o p p o r t u n i t i e s . Thus, a l l o c a t i v e b e n e f i t s are those outcomes which represent o p p o r t u n i t i e s to i n c r e a s e s o c i e t y ' s p r o d u c t i o n or consumption, while a l l o c a t i v e c o s t s represent foregone o p p o r t u n i t i e s of the same nature. The most a l l o c a t i v e l y - e f f i c i e n t program i s the one which produces the l a r g e s t value of a l l o c a t i v e b e n e f i t s given some amount of o p p o r t u n i t i e s foregone. On the other hand, d i s t r i b u t i o n a l consequences (or pecuniary e f f e c t s ) are those outcomes of p u b l i c p r o j e c t s which a l t e r the d i s t r i b u t i o n of t o t a l income, yet do not a l t e r i t s amount. D i s t r i b u t i o n a l outcomes t h e r e f o r e cause c e r t a i n 158 producers or consumers to be b e t t e r o f f by making others worse o f f . These outcomes occur through changes i n the r e l a t i v e p r i c e s and values of f a c t o r s of p r o d u c t i o n and a s s e t s , as w e l l as through more d i r e c t t r a n s f e r s of income and wealth. D i s t r i b u t i o n a l e f f i c i e n c y i s g e n e r a l l y measured a c c o r d i n g to two c r i t e r i a of e q u i t y : v e r t i c a l e q u i t y and h o r i z o n t a l e q u i t y . V e r t i c a l e q u i t y i s d e f i n e d as "the measure of a program's performance i n a s s e s s i n g i t s c o s t s on those most able to pay and d i s t r i b u t i n g i t s b e n e f i t s to those i n s o r e s t n e e d " 1 8 , while h o r i z o n t a l e q u i t y i s d e f i n e d as the measure of a program's performance i n p r o v i d i n g (or i n c u r r i n g ) s i m i l a r amounts of b e n e f i t s (or c o s t s ) on persons i n s i m i l a r circumstances. The most d i s t r i b u t i o n a l l y - e f f i c e n t program i s t h e r e f o r e the one which undertakes i t s mandate i n the most v e r t i c a l l y and h o r i z o n t a l l y e q u i t a b l e manner. Regardless of the importance of d i s t r i b u t i o n a l e q u i t y , e f f i c i e n c y e v a l u a t i o n s of p u b l i c p o l i c y , and s p e c i f i c a l l y housing p o l i c y ( f o r i n s t a n c e , Smolenski 1968, De Salvo 1971, Muth 1973, or De Salvo 1975), are o f t e n undertaken only on the b a s i s of a l l o c a t i v e e f f i c i e n c y . T r a d i t i o n a l methodologies l i k e c o s t - b e n e f i t or c o s t - e f f e c t i v e n e s s a n a l y s i s presume that d i s t r i b u t i o n a l e f f i c i e n c y can be obtained through a program of c o s t l e s s t r a n s f e r payments and that p u b l i c investment should be s e l e c t e d a c c o r d i n g to a l l o c a t i v e e f f i c i e n c y alone. However, there i s an opposing l i n e of thought that d i s t r i b u t i o n a l e f f i c e n c y must be c o n s i d e r e d along with a l l o c a t i v e e f f i c i e n c y ( e s p e c i a l l y i n l i g h t of the r o l e of donor p r e f e r e n c e s ) , i n a d d i t i o n to consumer p r e f e r e n c e s , in the design of p u b l i c 159 p o l i c y . I t has been suggested ( f o r i n s t a n c e , H e t t i c h 1971) that the e q u i t y c r i t e r i o n can (and should) be i n t e g r a t e d d i r e c t l y i n t o the c o s t - b e n e f i t formula by i n c l u d i n g an e x p l i c i t p r e f e r e n c e f u n c t i o n between e q u i t y and a l l o c a t i v e e f f i c i e n c y . In t h i s manner, "the d e c i s i o n maker i s f o r c e d to make e x p l i c i t the extent to which he i s w i l l i n g to forgo e f f i c i e n c y ... f o r d i s t r i b u t i o n a l e n d s . " 1 9 The pre f e r e n c e f u n c t i o n i n v o l v e s the s p e c i f i c a t i o n of d i f f e r i n g marginal u t i l i t y values of money f o r v a r i o u s c l a s s i f i c a t i o n s of households and p o p u l a t i o n s (with r e s p e c t to income or r e g i o n a l f a c t o r s . ) While the n e c e s s i t y of a s s i g n i n g values to the r e s p e c t i v e u t i l i t y weights i s o f t e n used as an argument a g a i n s t the use of the e q u i t y a d j u s t e d c o s t -b e n e f i t formula, i t i s a d o u b t f u l l y - v a l i d concern; a f t e r a l l , the u n d e r l y i n g c r i t e r i o n of the t r a d i t i o n a l c o s t - b e n e f i t a n a l y s i s (the p o t e n t i a l Pareto improvement) presumes that the marginal u t i l i t y of income i s equal f o r a l l persons s i n c e income changes are added without d i s t i n g u i s h i n g between the income l e v e l s of ga i n e r s and l o s e r s . 2 0 While t h i s i s r e a l l y the most systematic way of d e a l i n g with the competing o b j e c t i v e s of a l l o c a t i v e and d i s t r i b u t i o n a l e f f i c e n c y , i t i s not the only way. The most o f t e n suggested a l t e r n a t i v e i s j u s t a q u a l i t a t i v e d i s c u s s i o n of the p o s s i b l e d i s t r i b u t i o n a l e f f e c t s undertaken a f t e r the e f f i c i e n c y e f f e c t s have been q u a l i f i e d . T h i s e f f i c i e n c y e v a l u a t i o n of the Cooperative Program does not however use t h i s a d j u s t e d formula, but undertakes a separate q u a n t i t a t i v e l y - b a s e d d i s t r i b u t i o n a l a n a l y s i s . T h i s s t r a t e g y i s chosen because of the nature of the a v a i l a b l e data. The S e c t i o n 1 60 56.1 c o o p e r a t i v e survey and a d m i n i s t r a t i v e data i s only a v a i l a b l e i n l i m i t e d analyzed form and on a n a t i o n a l b a s i s . Such c o n s t r a i n t s cause t h i s data source t o be u n s u i t a b l e f o r an e v a l u a t i o n of the a l l o c a t i v e e f f i c i e n c y of the Cooperative Program; the data from a small sample of Vancouver c o o p e r a t i v e housing u n i t s are used f o r t h i s . On the other hand, the survey data can be used f o r the d i s t r i b u t i o n a l analyses with some l i m i t a t i o n s . Indeed, the use of 2 separate data sources n e c e s s i t a t e s independent a l l o c a t i v e and d i s t r i b u t i o n a l a n a l y s e s . (6.3b) An A n a l y s i s of the A l l o c a t i v e E f f i c i e n c y of the Cooperative Housing Program The a s s i s t a n c e p r o v i d e d by the Cooperative Housing Program re p r e s e n t s an i n - k i n d t r a n s f e r that reduces the p r i c e per u n i t of housing s e r v i c e to p a r t i c i p a n t s below what would be charged i n the p r i v a t e market. The emphasis of the program i s c l e a r l y r e d i s t r i b u t i o n a l in the sense that i t decreases the consumption of taxpayers and i n c r e a s e s the consumption of p a r t i c i p a n t s . In t h i s context, a l l o c a t i v e e f f i c i e n c y i s p r i m a r i l y a f u n c t i o n of the manner i n which the program a f f e c t s the p a r t i c i p a n t s ' consumption of housing s e r v i c e s and the extent to which n o n - p a r t i c i p a n t s are a f f e c t e d by p r o d u c t i o n and consumption e x t e r n a l i t i e s . These e f f e c t s are eva l u a t e d by means of a framework based on t r a d i t i o n a l c o s t - b e n e f i t a n a l y s i s . The framework i n c l u d e s an a p p l i c a t i o n of consumer choice theory and employs data from 341 Vancouver lower-mainland c o o p e r a t i v e u n i t s i n order to determine the net d i r e c t b e n e f i t s that accrue to 161 c o o p e r a t i v e households because of the Cooperative Program and i n order to determine the resource c o s t s i n c u r r e d by s o c i e t y because of the Cooperative Program. 2 1 Net i n d i r e c t b e n e f i t s and net e x t e r n a l b e n e f i t s are not q u a n t i f i e d d i r e c t l y , but ra t h e r are accounted f o r as a r e s i d u a l i n the f a s h i o n developed by De Salvo (1971). The data used i s presented i n summarized form i n Appendix 5. ( 6 . 3 b ) i . D i r e c t b e n e f i t s a c c r u i n g to program p a r t i c i p a n t s Two methods have been used r e l a t i v e l y e x t e n s i v e l y to estimate the d i r e c t b e n e f i t s a c c r u i n g to r e s i d e n t s of p u b l i c housing p r o j e c t s : the "market value approach" (B i s h 1969 and F a l l i s 1980) d e f i n e s d i r e c t b e n e f i t s as the d i f f e r e n c e between the market value of housing s e r v i c e s consumed and the rent (or p r i c e ) p a i d f o r those s e r v i c e s ; while the "consumer s u r p l u s approach" d e f i n e s d i r e c t b e n e f i t s as the p r i c e e q u i v a l e n t v a r i a t i o n of consumer's s u r p l u s , or i n other words, as the amount of money that would make program p a r t i c i p a n t s as w e l l o f f without the Cooperative Program (while paying market p r i c e s f o r housing and other goods and s e r v i c e s ) as they are with the program. 2 2 Although the market value approach i s c o n c e p t u a l l y the more s t r a i g h t f o r w a r d of the two, the consumer su r p l u s approach i s t h e o r e t i c a l l y the a p p r o p r i a t e approach due to the r e d i s t r i b u t i o n a l nature of the Cooperative Program. According to F a l l i s , "the measure should r e f l e c t the income e q u i v a l e n t to the household of the program because the measurement i s to be used to a d j u s t t h e i r income ... [and] the income e q u i v a l e n t i n the 1 62 eyes of the household i s not the market value measure, but r a t h e r the cash t r a n s f e r which would leave the household j u s t as w e l l o f f i f the program were s t o p p e d . " 2 3 T h e r e f o r e , the d i r e c t b e n e f i t s of the Cooperative Program w i l l be determined on the b a s i s of the consumer s u r p l u s approach. F i g u r e 6.1 demonstrates consumer c h o i c e i n the case of t r a d i t i o n a l p u b l i c housing f o r a p a r t i c i p a t i n g household that has a c h o i c e of whether or not to p a r t i c i p a t e , but no choice in the amount or nature of the housing s e r v i c e s consumed. The l i n e B1 r e p r e s e n t s the household's budget c o n s t r a i n t before p a r t i c i p a t i o n i n the program. B1 i s d e f i n e d by the formula: 1. Y = PxX + PhH where Y r e p r e s e n t s the household's f i x e d income, Px represents the f i x e d p r i c e f o r the s e r v i c e s from a composite non-housing commodity X, and Ph r e p r e s e n t s the p r i c e of H amount of housing s e r v i c e s . 2 " Given the household's p r e f e r e n c e s f o r housing and other goods and s e r v i c e s (represented by U1 i n F i g u r e 6.1), the household maximizes i t s u t i l i t y by consuming X1 u n i t s of a l l other goods and s e r v i c e s and H1 u n i t s of housing s e r v i c e s . The amount spent on housing s e r v i c e s i n t h i s case i s PhH1. Once the household becomes a p a r t i c i p a n t i n a p u b l i c housing program, i t i s able to a c q u i r e a p r e - s p e c i f i e d amount of housing s e r v i c e s (represented by l i n e H2) at a p r i c e that i s l e s s than market value by the p r o p o r t i o n z, where 0 < z < 1. Given the f i x e d p r i c e f o r those s e r v i c e s (zPhH2), the household now faces the e f f e c t i v e budget c o n s t r a i n t i l l u s t r a t e d by B2 in 1 63 F i g u r e 6.1 Consumer Choice in the Case of P u b l i c Housing A l l Other Goods And Serv i c e s Housing S e r v i c e s Source: Based on De Salvo (1971) and F a l l i s (1981) 1 64 F i g u r e 6.1 and consumes a combination of X and H a s s o c i a t e d with s a t i s f a c t i o n of U2. The e f f e c t of the subsidy i s t h e r e f o r e to decrease the household's consumption of X (by X1 - X2) and i n c r e a s e consumption of housing s e r v i c e s from H1 to H2 and to i n c r e a s e the household's l e v e l of u t i l i t y to U2 from U1. 2 5 A v a r i a t i o n of t h i s a p p l i c a t i o n of consumer c h o i c e theory to p u b l i c housing i s r e q u i r e d i n the case of the Cooperative Housing Program because c o o p e r a t i v e housing u n i t s are g e n e r a l l y a l l o c a t e d i n a manner which al l o w s the household some degree of c h o i c e i n the amount of housing s e r v i c e s consumed. P r o s p e c t i v e c o o p e r a t i v e households are g e n e r a l l y p l a c e d on w a i t i n g l i s t s compiled by the p r o v i n c i a l , m u n i c i p a l , or p r i v a t e n o n - p r o f i t housing resource groups that c o o r d i n a t e t h i r d s e c t o r a c t i v i t i e s . When a p a r t i c u l a r household i s s e l e c t e d from the l i s t , i t i s given a choice of a c c e p t i n g a p a r t i c u l a r c o o p e r a t i v e u n i t or f o r g o i n g the u n i t and remaining at the top of the w a i t i n g l i s t u n t i l a s a t i s f a c t o r y u n i t i s a v a i l a b l e . In t h i s r e s p e c t , the p r o s p e c t i v e c o o p e r a t i v e household has more c h o i c e in the amount of housing s e r v i c e s than the household d e p i c t e d i n F i g u r e 6.1 (presuming that the c o o p e r a t i v e household would e v e n t u a l l y be o f f e r e d a u n i t that was " s a t i s f a c t o r y " given some number of o p p o r t u n i t i e s f o r r e f u s a l . ) F i g u r e 6.2 r e p r e s e n t s the a p p l i c a t i o n of consumer choice theory i n the case of a p r o s p e c t i v e c o o p e r a t i v e household. L i k e the p u b l i c housing tenant, the c o o p e r a t i v e household i s o f f e r e d housing s e r v i c e s at l e s s than market value and the a c t u a l amount of subsidy i s a f u n c t i o n of the income of the p a r t i c u l a r household. Point A i n F i g u r e 6.2 represents the combination of housing and a l l other 1 65 F i g u r e 6.2 Consumer Choice i n the Case of Cooperative Housing A l l Other Goods And S e r v i c e s Housing S e r v i c e s Source: Based on De Salvo (1971) and F a l l i s (1981) .1 66 goods and s e r v i c e s that the household would choose in the absence of the program. T h i s p o i n t i s i d e n t i c a l to that of Point A i n the p r e v i o u s diagram ( f o r a household with i d e n t i c a l p r e f e r e n c e s . ) The i n c r e a s e d c h o i c e inherent i n the nature of the Cooperative Program i s demonstrated by the l i n e segment CD on the household's budget c o n s t r a i n t ( l i n e B2) a f t e r e n try i n t o the program. 2 6 The l i n e segment r e f l e c t s the household's a b i l i t y to consume any amount of housing s e r v i c e s f a l l i n g between H2 and H4 (and thus the corresponding amount of a l l other goods and s e r v i c e s f a l l i n g between amounts X2 and X4) i n accordance with the household's p r e f e r e n c e s . In t h i s case, the c o o p e r a t i v e household would choose the combination of X3 and H3 represented by p o i n t E i n F i g u r e 6.2. The household would s e l e c t t h i s combination among the p o s s i b i l i t i e s l y i n g along CD because p o i n t E l i e s on the household's highest u t i l i t y curve (U2) c r o s s i n g B2 between p o i n t s C and D. Thus, not u n l i k e the p u b l i c housing tenant, the c o o p e r a t i v e household demonstrated i n F i g u r e 6.2 experiences a gain i n u t i l i t y even though i t does not consume the optimal combination of housing and other goods and s e r v i c e s , given the new budget c o n s t r a i n t ( u t i l i t y maximization would be at p o i n t F i n F i g u r e 6.2.) Whether or not the Cooperative Program's subsidy allows p a r t i c i p a n t s to consume in a u t i l i t y maximizing manner i s of course dependent on the p r e f e r e n c e s of p a r t i c i p a n t s . I t i s c e r t a i n l y p o s s i b l e that a p a r t i c u l a r c o o p e r a t i v e household c o u l d maximize i t s u t i l i t y somewhere between p o i n t C and p o i n t D i n F i g u r e 6.2. Such a household would be i n d i f f e r e n t to the s u b s i d i e s of the Cooperative Program or an e q u i v a l e n t d i r e c t t r a n s f e r of cash. 167 F i g u r e 6.3 extends F i g u r e 6.2 to i l l u s t r a t e the d e t e r m i n a t i o n of the net d i r e c t b e n e f i t s to Cooperative Program p a r t i c i p a n t s . If the c o o p e r a t i v e household i n F i g u r e 6.2 were to maintain a l e v e l of u t i l i t y equal to U2 but pay market p r i c e s fo r the amount of housing i t consumes as a p a r t i c i p a n t (H3 i n F i g u r e 6.2), then the household would r e q u i r e the income r e f l e c t e d i n the budget l i n e B3 i n F i g u r e 6.3. B3 p a r a l l e l s B1 (the budget c o n s t r a i n t l i n e faced by the household before p a r t i c i p a t i o n ) because the p r i c e s of X and H do not change given these circumstances. I f the income r e q u i r e d by the c o o p e r a t i v e household to purchase H3 u n i t s of housing s e r v i c e at market p r i c e ( t h i s i s the income a s s o c i a t e d with p o i n t G i n F i g u r e 6.3) i s Y1 and the c o o p e r a t i v e household's a c t u a l - income i s YO, then the net d i r e c t b e n e f i t s to the c o o p e r a t i v e household i s represented by the d i f f e r e n c e between YO and Y1 or by the formula: 2. Bd = Y1 - YO where Bd r e p r e s e n t s the d i r e c t b e n e f i t s and i s equal to the income t r a n s f e r that the c o o p e r a t i v e household would r e q u i r e to be as w e l l o f f without the program as with the program, or i n other words, the consumer's s u r p l u s measure. Having d e f i n e d Bd, the gross d i r e c t b e n e f i t s to c o o p e r a t i v e households can be d e f i n e d by the formula: 3. Bg = Bd + Rc where Bg r e p r e s e n t s gross d i r e c t b e n e f i t s and Rc r e p r e s e n t s the rent (or occupancy charge) p a i d by the c o o p e r a t i v e member. Because the u t i l i t y f u n c t i o n s of c o o p e r a t i v e households are not d i r e c t l y observable, n e i t h e r Bd nor Bg can be F i g u r e 6.3 Consumer Choice in the Case of Cooperative Housing and the Determination of Net D i r e c t B e n e f i t s Housing S e r v i c e s Source: Based on De Salvo (1971) and F a l l i s (1981) 1 69 observed d i r e c t l y f o r s p e c i f i c c o o p e r a t i v e households. On the other hand, these v a r i a b l e s can be estimated on the b a s i s of a formula which presumes that the u t i l i t y f u n c t i o n s of c o o p e r a t i v e households can be represented by the Cobb-Douglas u t i l i t y f u n c t i o n and presumes a household budget c o n s t r a i n t d e f i n e d as Y=PxX+zPhH. The Cobb-Douglas u t i l i t y f u n c t i o n ( i n the context of the Cooperative Program) i s expressed as: b 1-b 4. U = H X where H repr e s e n t s the flow of c o o p e r a t i v e housing s e r v i c e s , X rep r e s e n t s a l l other goods and s e r v i c e s , and b repr e s e n t s the f r a c t i o n of the c o o p e r a t i v e household's income that was spent on rent before p a r t i c i p a t i n g i n the Cooperative Program. The f o l l o w i n g formula i s developed (with s l i g h t l y d i f f e r e n t n o t a t i o n ) by DeSalvo (1971) from the maximization of the Cobb-Douglas u t i l i t y f u n c t i o n s u b j e c t to the budget c o n s t r a i n t (formula 1): b 1-b 5. Y1 = (Rm/b) [(YO - R c ) / l - b ] where: Rm = market rent f o r the c o o p e r a t i v e u n i t Y1 = the income a s s o c i a t e d with p o i n t G i n F i g u r e 6.3 YO = a c t u a l household income b = the household's rent-to-income r a t i o before p a r t i c i p a t i n g i n the Cooperative Program Rc = the c o o p e r a t i v e occupancy charge (rent) Based on Formula 5 and an a p p l i c a t i o n of the data from the 341 c o o p e r a t i v e u n i t s and households, Formulas 2 and 3 w i l l be made o p e r a t i o n a l i n S e c t i o n ( 6 . 3 c ) i v of t h i s study. 170 ( 6 . 3 b ) i i Net e x t e r n a l b e n e f i t s a c c r u i n g to s o c i e t y I t has o f t e n been suggested that the p r o d u c t i o n of good housing ( i n terms of q u a n t i t y and q u a l i t y ) p r o v i d e s b e n e f i t s not only to the household that l i v e s w i t h i n that housing, but a l s o to those who l i v e w i t h i n c l o s e p r o x i m i t y ; i n other words, i t i s a l l e g e d that the p r o d u c t i o n of good housing has s o c i a l b e n e f i t s in excess of p r i v a t e b e n e f i t s . Although p r o d u c t i o n e x t e r n a l i t i e s may be of ,, a pecuniary nature ( r e s u l t i n g only i n i n c r e a s e d p r o p e r t y values) they are o f t e n suggested to accrue in the form of v a l u a b l e neighbourhood s p i l l o v e r e f f e c t s ( f o r i n s t a n c e , r e d u c t i o n s i n the i n c i d e n c e of neighbourhood crime and d i s e a s e , or decreases in f i r e hazards), or as c i t y w i d e and s o c i e t a l b e n e f i t s ( f o r i n s t a n c e , r e d u c t i o n s in the cost of p r o v i d i n g government s e r v i c e to low-income areas, or decreases in r a c i a l and economic s e g r e g a t i o n . ) 2 7 Moreover, i t i s o f t e n suggested that b e n e f i t s accrue i n d i r e c t l y from housing s u b s i d i e s as a r e s u l t of the i n c r e a s e d housing consumption of p a r t i c i p a n t s . Such consumption e x t e r n a l i t i e s a l l e g e d l y accrue because taxpayers p r e f e r that a c e r t a i n t h r e s h o l d l e v e l of housing i s consumed by a l l households. Under such circumstances, i n - k i n d t r a n s f e r s (or h o u s i n g - t i e d s u b s i d i e s ) i n c r e a s e the welfare of taxpayers as w e l l as that of p a r t i c i p a n t s . Due to t h e i r i n t a n g i b l e and incommensurable nature and the lack of a p p l i c a b l e data, the e f f i c i e n c y e v a l u a t i o n does not d i r e c t l y estimate the value of e x t e r n a l e f f e c t s generated by the Cooperative Housing Program. However, some idea of the minimum value of net e x t e r n a l e f f e c t s necessary to j u s t i f y the program 171 on e f f i c i e n c y grounds i s p r o v i d e d r e s i d u a l l y as the d i f f e r e n c e between the c a l c u l a t e d estimates of t o t a l resource c o s t and gross d i r e c t b e n e f i t s . While c e r t a i n l y not as d e s i r a b l e as a d i r e c t v a l u a t i o n , the r e s i d u a l v a l u a t i o n of e x t e r n a l b e n e f i t s i s n e v e r t h e l e s s u s e f u l i n e v a l u a t i o n : If the r e q u i r e d [ e x t e r n a l ] b e n e f i t s are small r e l a t i v e to resource cost or i n a b s o l u t e amount, the housing program would be very much l i k e an u n r e s t r i c t e d cash grant (equal to the tenant subsidy) and l i t t l e i n d i c a t i o n of nontenant b e n e f i t s would be r e q u i r e d to j u s t i f y the program. On the other hand, i f r e q u i r e d nontenant b e n e f i t s are l a r g e , then the j u s t i f i c a t i o n of the program may be q u e s t i o n a b l e u n l e s s some i n d i c a t i o n of nontenant b e n e f i t s i s found. In any event, the magnitude of minimum r e q u i r e d non-tenant b e n e f i t s should give policy-makers a good idea of the " p r i c e " p a i d f o r a housing program versus an u n r e s t r i c t e d cash g r a n t . 2 8 ( 6 . 3 b ) i i i The resource c o s t s of the Cooperative Program In the context of the Cooperative Program, resource c o s t s can be d e f i n e d as the value of the resources that are r e q u i r e d to produce the flow of housing s e r v i c e s from c o o p e r a t i v e housing u n i t s . 2 9 Because of a lack of d e t a i l e d i n f o r m a t i o n on c a p i t a l and o p e r a t i n g expenses among the r e l e v a n t data, t h i s e v a l u a t i o n i s unable to d i r e c t l y determine the program's resource c o s t s . However, i f i t can be assumed that c o o p e r a t i v e housing i s developed and operated as e f f i c i e n t l y as comparable market r e n t a l housing, then an estimate of resource c o s t i s the market value of c o o p e r a t i v e housing s e r v i c e s . T h i s i s based on the economic p o s t u l a t e that the market p r i c e of a u n i t of housing s e r v i c e w i l l , over the long run and given c o m p e t i t i v e c o n d i t i o n s , be equal to the average cost of i t s p r o d u c t i o n . 3 0 The reasonableness of t h i s estimate i s , of course dependent on 1 72 the e f f i c i e n c y with which c o o p e r a t i v e housing s e r v i c e s are produced. To the extent that c o o p e r a t i v e housing s e r v i c e s are not p r o v i d e d as e f f i c i e n t l y as market r e n t a l housing s e r v i c e s , the market rent value w i l l p r ovide a lowest p o s s i b l e estimate of the resource cost of the Cooperative Program. 3 1 Given the assumption that the resource c o s t s of c o o p e r a t i v e housing s e r v i c e s are equal to the market value of those s e r v i c e s , resource c o s t s can be dis a g g r e g a t e d i n t o two components: the c o n t r i b u t i o n of the c o o p e r a t i v e household (the c o o p e r a t i v e rent) and the c o n t r i b u t i o n of non-members (the s u b s i d y ) . The f o l l o w i n g formulas e x p l a i n the r e l a t i o n s h i p among market value, resource c o s t , c o o p e r a t i v e rent and c o o p e r a t i v e subsidy (given the assumption of e q u i l i b r i u m ) : 6. Cr = Rm 7. Rm = Rc + S where: Cr r e p r e s e n t s the c o s t s of resources used to produce c o o p e r a t i v e housing s e r v i c e s Rm represents the market p r i c e or rent of such s e r v i c e s Rc r e p r e s e n t s the c o n t r i b u t i o n that the program p a r t i c i p a n t s make to the t o t a l resource cost S rep r e s e n t s the c o n t r i b u t i o n that n o n - p a r t i c i p a t i n g households make to the t o t a l resource c o s t (or the d i r e c t subsidy to p a r t i c i p a n t s ) (6.3b)iv The e s t i m a t i o n of c o s t s and b e n e f i t s R e l y i n g on the theory d i s c u s s e d i n s e c t i o n s (6.3b)i through ( 6 . 3 b ) i i i , t h i s s e c t i o n estimates the value of the Cooperative Program's subsidy to p a r t i c i p a n t s , estimates the resource c o s t s of the program's subsidy to both p a r t i c i p a n t s and 1 73 n o n - p a r t i c i p a n t s , and pr o v i d e s a r e s i d u a l e s t i m a t i o n of the value of the net e x t e r n a l b e n e f i t s necessary to j u s t i f y the program on the grounds of a l l o c a t i v e e f f i c i e n c y . The data used in t h i s a n a l y s i s i s c o n t a i n e d in Appendix 5. The data was somewhat incomplete i n terms of the requirements of the d e f i n e d formulas and two s p e c i f i c assumptions have been made. F i r s t l y , s i n c e there are no market-determined rents f o r the c o o p e r a t i v e u n i t s , i t i s assumed that the market rents can be approximated by the r e l e v a n t LEMs p l u s the f i v e percent d i s c o u n t which i s g e n e r a l l y s u b t r a c t e d from CMHC's market value e s t i m a t e . 3 2 Based on t h i s assumption, the d i r e c t subsidy (S) i s represented by the d i f f e r e n c e between p a r t i c i p a n t rent and LEM. Secondly, the ren t -to-income r a t i o s c h a r a c t e r i s t i c of c o o p e r a t i v e members immediately p r i o r to p a r t i c i p a t i o n i n the program are, unknown and are assumed to be equal to the f r a c t i o n of income devoted to rent by Canadian households with s i m i l a r incomes as i n c l u d e d w i t h i n the HIFE data. On the b a s i s of formulas 1 through 7, the f o l l o w i n g formula estimates the minimum r e q u i r e d net e x t e r n a l b e n e f i t s (BEX) f o r a p a r t i c u l a r c o o p e r a t i v e u n i t 3 3 : 8. BEX = Cr - Bg BEX i s c a l c u l a t e d f o r each c o o p e r a t i v e u n i t by using SPSS to run the data f o r the 341 c o o p e r a t i v e u n i t s through the above formulas. The i n d i v i d u a l BEX values represent the value of net e x t e r n a l b e n e f i t s r e q u i r e d to j u s t i f y the Cooperative Program's a s s i s t a n c e to each u n i t on e f f i c i e n c y grounds ( i n the f i r s t year of the subsidy.) The sum of the BEX values r e p r e s e n t s the value of e x t e r n a l b e n e f i t s r e q u i r e d f o r the 6 c o o p e r a t i v e p r o j e c t s and 174 i s equal to $551,904 or $1,618 per u n i t on average. While any g e n e r a l i z a t i o n s based on t h i s BEX value must be used with c a u t i o n , an "order of magnitude" f i g u r e f o r the net e x t e r n a l b e n e f i t s r e q u i r e d to j u s t i f y the p o r t f o l i o of p r o j e c t s a s s i s t e d by the Cooperative Program on e f f i c i e n c y grounds i s c a l c u l a t e d to be about $30 m i l l i o n d o l l a r s a n n u a l l y . 3 " (6.3c) An A n a l y s i s of the D i s t r i b u t i o n a l E f f i c i e n c y of the Cooperative Housing Program In Canada, the r e d i s t r i b u t i o n of income from one economic c l a s s to another i s g e n e r a l l y b e l i e v e d to be a c c e p t a b l e i f the r e c i p i e n t c l a s s i s unable to generate an income which i s s u f f i c i e n t to maintain some minimum ac c e p t a b l e standard of l i v i n g and i f the donating c l a s s has an income or l e v e l of wealth which i s more than s u f f i c i e n t . The d e l i v e r y system of the Cooperative Housing Program r e d i s t r i b u t e s income c o l l e c t e d through g e n e r a l t a x a t i o n to households occupying c o o p e r a t i v e housing u n i t s , i n d i r e c t l y through the s u p p l y - s i d e subsidy and more d i r e c t l y through the demand-side subsidy. While f o c u s i n g s p e c i f i c a l l y on c o o p e r a t i v e housing stock and c o o p e r a t i v e housing s e r v i c e s , such a r e d i s t r i b u t i o n i s designed as an i n d i r e c t means of d e a l i n g with the income d i s p a r i t i e s that r e s u l t from a market economy -- inadequate access to the minimum acc e p t a b l e standard of housing i s c l e a r l y a m a n i f e s t a t i o n of an income shortage experienced by c e r t a i n groups of households. I t i s t h e r e f o r e reasonable to e v a l u a t e the d i s t r i b u t i o n of the Cooperative Program's a s s i s t a n c e on the b a s i s of the c r i t e r i a that are t r a d i t i o n a l l y a p p l i e d to d i s t r i b u t i o n a l mechanisms. 175 T h i s s e c t i o n e v a l u a t e s the d i s t r i b u t i o n a l e f f i c i e n c y of the Cooperative Housing Program i n terms of the v e r t i c a l and h o r i z o n t a l e q u i t y of the program's a s s i s t a n c e throughout a l l Canadian households and among program p a r t i c i p a n t s . T h i s e v a l u a t i o n r e l i e s on the data from S e c t i o n 56.1 survey of c o o p e r a t i v e households. ( 6 . 3 c ) i The d i s t r i b u t i o n of the program's a s s i s t a n c e throughout a l l Canadian households The Cooperative Housing Program, not u n l i k e t r a d i t i o n a l p u b l i c housing programs, a l l o c a t e s i t s a s s i s t a n c e i n a l o t t e r y -l i k e f a s h i o n : the small p r o p o r t i o n of households (within each income c l a s s ) who are lucky enough to gain entrance to the program r e c e i v e a l a r g e subsidy r e l a t i v e to those households i n s i m i l a r f i n a n c i a l circumstances who do not gain entrance to the program. As p r e v i o u s l y i n d i c a t e d , approximately .23 percent of a l l Canadian households occupy S e c t i o n 56.1 c o o p e r a t i v e housing u n i t s . While the l o t t e r y phenomenon i s e s p e c i a l l y n o t i c e a b l e f o r c o o p e r a t i v e households that r e c e i v e income-tested a s s i s t a n c e , i t i s l e s s so f o r households who pay the LEM (or i t s e q u i v a l e n t a f t e r year 1) because of a lower a b s o l u t e amount of a s s i s t a n c e . On the b a s i s of the income d i s t r i b u t i o n of c o o p e r a t i v e households (Table 6.10) and the income d i s t r i b u t i o n f o r a l l Canadian households, Table 6.14 i n d i c a t e s that the Cooperative Program a s s i s t s no more than .21 percent of the households i n any income c l a s s and no more than .18 percent of the households i n any of the four lowest income c l a s s e s . Table 6.15 i n d i c a t e s t h a t , when c o o p e r a t i v e households are measured a g a i n s t Canadian 176 Table 6.14 S e c t i o n 56.1 Cooperative Households as a P r o p o r t i o n of A l l Canadian Households on the Bas i s of Income 1981 Annual Household Income Relat ive Frequency of a l l 56.1 Cooperative Households Absolute Frequency of a l l 56.1 Cooperative Households Absolute Frequency of a l l Canadian Households Sect ion 56.1 Cooperative Households as a p o r t i o n of a l l households l e s s than $8,000 12.2 1 ,295 1,029,436 . 1 3 % 8,000 to 1 1 ,999 11.5 1 ,220 776,296 . 16 % 12,000 to 15,999 11.6 1 ,231 734,106 . 1 7 % 16,000 to 19,999 13.2 1 ,401 767,858 . 1 8 % 20,000 to 24,999 19.7 2,091 978,808 .21 % 25,000 to 29,999 12.7 1 ,348 961,932 . 1 4 % 30,000 to 34,999 9.9 1 ,051 810,048 . 1 3 % > 35,000 9.2 976 2,379,516 .04 % 100.0 10,613 8,438,000 Source: Analyses of S e c t i o n 56.1 Survey Data and Household  F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s 1982 Table 6.15 Se c t i o n 56.1 Cooperative Households as a P r o p o r t i o n of A l l Canadian Renter Households on the Bas i s of Income 1981 Annual Household Income Relat ive Frequency of Canadian Renter Households Absolute Frequency of Canadian Renter Households Sect ion 56.1 Cooperative Households as a p o r t i o n of a l l Canadian r e n t e r househol l e s s than $8,000 20.2 625,543 .21 8,000 to 11,999 11.5 383,997 .32 12,000 to 15,999 11.6 356,126 .35 16,000 to 19,999 13.2 362,319 .39 20,000 to 24,999 19.7 402,577 .52 25,000 to 29,999 12.7 322,062 .42 30,000 to 34,999 9.9 213,675 .49 > 35,000 9.2 430,447 .27 100.0 3,096,746 Source: Analyses of S e c t i o n 56.1 Survey Data and Household  F a c i l i t i e s by Income and Other C h a r a c t e r i s t i c s 1982 1 78 ren t e r households, the program reaches .37 percent of each income c l a s s on average and i s over - r e p r e s e n t e d i n terms of the middle income c l a s s e s . These f i g u r e s suggest that the d i s t r i b u t i o n of the Cooperative Program's a s s i s t a n c e throughout s o c i e t y does not meet the t e s t of h o r i z o n t a l e q u i t y . In terms of the c r i t e r i o n of v e r t i c a l e q u i t y , Table 6.14 i n d i c a t e s that the d i s t r i b u t i o n of the Cooperative Program's a s s i s t a n c e throughout s o c i e t y i s n o t i c e a b l y i n e f f i c i e n t when no d i s t i n c t i o n i s made f o r the income-testing s t a t u s of c o o p e r a t i v e househlds. According to t h i s d i s t r i b u t i o n , over 50 percent of a l l S e c t i o n 56.1 c o o p e r a t i v e households have incomes above the 1981 n a t i o n a l average f o r r e n t e r households ($20,625). While Table 6.10 i n d i c a t e d that S e c t i o n 56.1 c o o p e r a t i v e households are more s t r o n g l y represented i n the lower four income c l a s s e s than are a l l Canadian households (by a margin of over 9 p e r c e n t ) , t h i s i s c e r t a i n l y not the case when the standard of comparison i s a l l Canadian r e n t e r households. Table 6.15 i n d i c a t e s that almost 56 percent of Canadian rent e r households are d i s t r i b u t e d among the four lower income c l a s s e s , compared to 48.4 percent f o r S e c t i o n 56.1 c o o p e r a t i v e households. Moreover, Table 6.1 i n d i c a t e d that l e s s than 25 percent of c o o p e r a t i v e households are d e f i n e d as low income when d i s t i n g u i s h e d on the b a s i s of household s i z e . However, the two-class s t r u c t u r e of c o o p e r a t i v e households c r e a t e d by income-testing complicates the assessment of v e r t i c a l e q u i t y , s i n c e higher-income households, who do not r e c e i v e the demand-side a s s i s t a n c e , c l e a r l y r e c e i v e a smaller o v e r a l l 179 subsidy. To account f o r t h i s c o m p l i c a t i o n , the v e r t i c a l e q u i t y of the d i s t r i b u t i o n can be assessed f o r income-tested and non-t e s t e d households independently. The degree of v e r t i c a l i n e q u i t y i s c o n s i d e r a b l y l e s s pronounced when the d i s t r i b u t i o n i s d e f i n e d i n terms of only income-tested households. Table 6.16 i n d i c a t e s that over 69 percent of a l l income-tested households have incomes which l i e in the bottom h a l f of the d i s t r i b u t i o n ; on the other hand, only about 32 percent of a l l non-tested c o o p e r a t i v e households have incomes i n the bottom h a l f . C l e a r l y , the demand-side p o r t i o n of the program's subsidy i s more d i s t r i b u t i o n a l l y e f f i c i e n t than the s u p p l y - s i d e p o r t i o n . Based on the r e p r e s e n t a t i o n of moderate and higher-income households i n the d i s t r i b u t i o n of c o o p e r a t i v e households, i t i s apparent that the Cooperative Program manifests a perverse r e d i s t r i b u t i o n of income: low-income n o n - p a r t i c i p a n t households s u b s i d i z i n g moderate and higher-income c o o p e r a t i v e households through the tax system. While i t i s true that higher-income non-t e s t e d households do not r e c e i v e the p o t e n t i a l l y l a r g e demand-s i d e a s s i s t a n c e , they n e v e r t h e l e s s r e c e i v e a subsidy i n the form of the predetermined a s s i s t a n c e . ( 6 . 3 c ) i i The d i s t r i b u t i o n of the program's a s s i s t a n c e among program p a r t i c i p a n t s The nature of the income data from the S e c t i o n 56.1 survey ( i e ; i t s aggregation on a n a t i o n a l b a s i s ) s e v e r e l y l i m i t s i n f e r e n c e s about the d i s t r i b u t i o n of a s s i s t a n c e w i t h i n 180 Table 6.16 The D i s t r i b u t i o n of S e c t i o n 56.1 Cooperative Households by Income and Income-testing S t a t u s , 1981 Annual Household •I ncome Relat ive Frequency of a l l 56.1 Cooperative Households Rel a t ive Frequency of Income-Tested Households R e l a t i v e Frequency of Non-Tested Households Rel a t ive Households as Households who are unsure of t h e i r s t a t u s l e s s than $8,000 12.2 19.9 4.0 33.3 8,000 to 1 1 ,999 11.5 16.9 6.8 17.5 12,000 to 15,999 11.6 15.1 9.9 1-3.9 16,000 to 19,999 13.2 17.2 11.4 6. 1 20,000 to 24,999 19.7 17.2 28.6 16.4 25,000 to 29,999 12.7 4.6 14.2 4. 1 30,000 to 34,999 9.9 4.2 13.0 4.6 > 35,000 9.2 4.9 12.1 4. 1 100.0 100.0 100.0 100.0 Source: Analyses of S e c t i o n 56.1 Survey Data and Household  F a c i 1 i t i e s by Income and Other C h a r a c t e r i s t i c s 1982 181 c o o p e r a t i v e p r o j e c t s and among c o o p e r a t i v e households. However, a general d i a g n o s i s can be made on the b a s i s of the aggregated data and on the b a s i s of the program's d e l i v e r y mechanism. S e c t i o n (6.1b) i n d i c a t e d that f o r 42 percent of the surveyed c o o p e r a t i v e p r o j e c t s , the S e c t i o n 56.1 a s s i s t a n c e i s inadequate to reduce income-tested r e n t s to 25 percent of gross income. T h i s suggests that the amount of a s s i s t a n c e a v a i l a b l e to income-tested households can vary among p a r t i c u l a r c o o p e r a t i v e p r o j e c t s and that households in i d e n t i c a l s i t u a t i o n s i n d i f f e r e n t - p r o j e c t s are a s s i s t e d to d i f f e r e n t degrees. Such a phenomenon c l e a r l y v i o l a t e s the c r i t e r i o n of h o r i z o n t a l e q u i t y . I n t e r e s t i n g l y , the degree of h o r i z o n t a l i n e q u i t y i s a f u n c t i o n of the l e v e l s of income and a s s i s t a n c e o c c u r i n g w i t h i n i n d i v i d u a l p r o j e c t s : as the p r o p o r t i o n of income-tested households to non-tested households in a p a r t i c u l a r p r o j e c t i n c r e a s e s r e l a t i v e to the p r o p o r t i o n in a second p r o j e c t , the a s s i s t a n c e a v a i l a b l e to income-tested households in the f i r s t p r o j e c t decreases and the degree of h o r i z o n t a l i n e q u i t y i n c r e a s e s between the p r o j e c t s . A second form of h o r i z o n t a l i n e q u i t y accrues from the nature of the 25 percent income-testing r u l e : the r u l e n e g l e c t s the d i f f e r i n g p r o p o r t i o n s of income that must be a l l o c a t e d to the consumption of other goods and s e r v i c e s by households of d i f f e r e n t s i z e s . However, t h i s i n e q u i t y may be p a r t i a l l y o f f s e t because the household mortgage subsidy w i l l i n c r e a s e as household s i z e i n c r e a s e s i f the l a r g e r household occupies a l a r g e r (and more expensive) housing u n i t . 182 In a d d i t i o n , the nature of the subsidy mechanism i s h o r i z o n t a l l y i n e q u i t a b l e among non-tested households with d i f f e r e n t incomes. As the incomes of non-tested households i n c r e a s e , the households c o n t r i b u t e l e s s and l e s s of t h e i r income towards rent f o r a given l e v e l of predetermined a s s i s t a n c e . For instance', the household whose income l i e s j u s t above the income-testing c u t - o f f s f o r a p a r t i c u l a r u n i t i s t r e a t e d i n e q u i t a b l y by the program's s u p p l y - s i d e a s s i s t a n c e r e l a t i v e to a second household who earns twice the income of the f i r s t household, occupies a s i m i l a r u n i t , and pays an i d e n t i c a l r e n t . F i n a l l y , the program's d e l i v e r y mechanism i s i n e f f i c i e n t (among program p a r t i c i p a n t s ) i n the sense that lower-income households are not given p r i o r i t y f o r the e n t i r e amount of a v a i l a b l e a s s i s t a n c e . The nature of the d e l i v e r y mechanism subjugates a s s i s t a n c e to low-income households to the p o r t i o n of predetermined a s s i s t a n c e which accrues to moderate and h i g h e r -income households. T h i s c l e a r l y v i o l a t e s the p r i n c i p l e of v e r t i c a l e q u i t y . In summary, t h i s chapter has evaluated the Cooperative Progam on the b a s i s of process, impact, and e f f i c i e n c y . The process e v a l u a t i o n has demonstrated that the program's d e l i v e r y system i s inadequate in c e r t a i n r e s p e c t s : the intended t a r g e t p r i o r t i e s f o r low and moderate-income households and f o r s p e c i a l purpose groups (with the exception of s i n g l e parent f a m i l i e s ) are g e n e r a l l y not achieved; a s i g n i f i c a n t p o r t i o n of the 183 program's income-tested households do not r e c e i v e the a s s i s t a n c e that was intended in the program's design; and the program's design does not i n c l u d e e f f e c t i v e c o n t r o l s f o r m i nimizing budgetary expenditures a s s o c i a t e d with the f i n a n c i n g of c o o p e r a t i v e p r o j e c t s . The impact e v a l u a t i o n has i n d i c a t e d t h a t a s i g n i f i c a n t p o r t i o n of c o o p e r a t i v e households are over-consuming housing and that c o o p e r a t i v e housing i s not " a f f o r d a b l e " f o r 20 to 30 percent of a l l c o o p e r a t i v e households. In a d d i t i o n , the e f f i c i e n c y e v a l u a t i o n has i n d i c a t e d that the Cooperative Program must generate a very s u b s t a n t i a l d o l l a r amount of e x t e r n a l b e n e f i t s i n order to be j u s t i f i a b l e of the b a s i s of a l l o c a t i v e e f f i c i e n c y ; f i n a l l y , i t was i n d i c a t e d that the program i s both v e r t i c a l l y and h o r i z o n t a l l y i n e q u i t a b l e . 184 Endnotes 1. R o s s i , Peter H. et a l . 1979, page 131. 2. Cooperative Program S e c t i o n 56.1 G u i d e l i n e s and Procedures  Manual: S o c i a l Housing Programs page 7613/4. These p r i o r i t i e s are e s t a b l i s h e d on a n a t i o n a l b a s i s and t h e r e f o r e d i f f e r somewhat among l o c a l a reas. 3. T h i s c o n c l u s i o n i s based on the small number of households with r e l a t i v e l y high incomes and low rent-to-income r a t i o s who claimed to have re n t s determined on the b a s i s of t h e i r incomes. 4. Surcharging r e f e r s to the paying of rents that are grea t e r than the LEM by households that can a f f o r d to do so i n order to generate funds to a s s i s t income-tested households. 5. Based on data analyses i n c l u d e d i n Table #14 of Appendix 2. 6. According to CMHC o f f i c i a l s , some c o o p e r a t i v e groups do in f a c t use use r a t i o s higher than 25 percent to determine income-tested rent; 30 percent i s repor t e d to be the most common a l t e r n a t i v e . 7. The data analyses concerning s u r c h a r g i n g are i n c l u d e d i n Table 13 of Appendix 2. 8. Based on CMHC A d m i n i s t r a t i v e data. 9. Report of the Underwriting of No n - P r o f i t Housing Loans 1981, Appendix 4. 10. Based on data analyses i n c l u d e d i n Tables 16 and 17 of Appendix 2. 11. T h i s must be i n t e r p r e t e d i n l i g h t of the p o s s i b i l i t y of s u b s i d i z e d land v a l u e s not being a c c u r a t e l y represented (at market value) i n the determination of c a p i t a l c o s t s . 12. A c c o r d i n g to the S e c t i o n 56.1 survey: major r e p a i r s are needed to c o r r e c t corroded p i p e s , damaged e l e c t r i c a l w i r i n g , sagging f l o o r s , b u l g i n g w a l l s , damp w a l l s and c e i l i n g s , crumbling foundation, r o t t i n g porches and s t e p s . minor r e p a i r s are needed to c o r r e c t small c r a c k s i n i n t e r i o r w a l l s and c e i l i n g s , broken l i g h t f i x t u r e s and switches, l e a k i n g s i n k s , cracked or broken window panes, some missing s h i n g l e s or s i d i n g , some p e e l i n g p a i n t . 185 13. Based on CMHC a d m i n i s t r a t i v e data c o n t a i n e d i n Table 3b of Appendix 2. These s p e c i a l f a c i l i t i e s i n c l u d e : grab bars in bathrooms, n o - s l i p r e s i l i e n t f l o o r s , 3-foot wide doors, and lower k i t c h e n s i n k s and bathroom shelves f o r handicapped households; grab bars i n bathrooms and n o - s l i p r e s i l i e n t f l o o r s f o r se n i o r households. 14. Based on analyses i n c l u d e d i n Table 23 of Appendix 2. 15. Based on analyses i n c l u d e d i n Tables 24 to 26 of Appendix 2. 16. Acc o r d i n g to Lender A t t i t u d e s to Graduated Payment  Mortgages and S o c i a l Housing Loans 1980, mortgage len d e r s g e n e r a l l y concur that income-mixing i s an encouraging f a c t o r . 17. I b i d . 18. Solomon, Arthur P. 1974, page 89. 19. H e t t i c h , Walter. 1971, page 9. 20. B e n e f i t - C o s t A n a l y s i s Guide 1976, page 40. 21. T h i s a p p l i c a t i o n of consumer c h o i c e theory i s based d i r e c t l y on B i s h 1969, De Salvo 1971 and 1975, and F a l l i s 1980. 22. De Salvo, Joseph S. 1971, page 176. 23. F a l l i s , George. 1980, page 52 24. De Salvo, .Joseph S. 1971 page, 175. 25. I f t h i s p a r t i c u l a r household had been given freedom of c h o i c e along budget l i n e B2, i t would have chosen p o i n t A and achieved a higher l e v e l of s a t i s f a c t i o n U3 by t r a d i n g o f f some housing f o r some of the composite good X.. (De Salvo, Joseph S. 1971, page 175). 26. T h i s i s based on F a l l i s 1980, page 72. 27. Varady, David P. page 438. 28. De Salvo, Joseph S. 1971, page 184. 29. De Salvo, Joseph S. 1975. 30. De Salvo, Joseph S. 1975, page 796 31. Based on De Salvo, Joseph S. 1975, page 183. 32. Acc o r d i n g to CMHC, market a p p r a i s a l s i n Vancouver are reduced by 5% to o b t a i n the estimate of the lower end of market; t h e r e f o r e the LEMs w i l l be ad j u s t e d upwards by 5.26% to represent market v a l u e . 186 33. Based on De Salvo, Joseph S. 1971. 34. T h i s f i g u r e i s the product of the number of c o o p e r a t i v e u n i t s i n 1982 and the average per u n i t value of BEX. Such an e x t r a p o l a t i o n depends on the assumption that the values of the v a r i a b l e s employed i n the BEX c a l c u l a t i o n f o r the sample of 341 c o o p e r a t i v e s are r e p r e s e n t a t i v e of the p o p u l a t i o n of c o o p e r a t i v e u n i t s . 187 CHAPTER 7 SUMMARY AND EXTENSIONS (7.1) Summary T h i s study of the Cooperative Housing Program has been both d e s c r i p t i v e and e v a l u a t i v e i n nature: i t has d e s c r i b e d the nature of the Cooperative Housing Program and the nature of the housing tenure which the program promotes; and i t has. evaluated the e f f e c t i v e n e s s ' of the Cooperative Program i n terms of process, impact, and e f f i c i e n c y . Chapter 1 of the study d e s c r i b e d the context w i t h i n which the Cooperative Program has been implemented and ad m i n i s t e r e d . The C o o p e r a t i v e Program i s only one of many instruments of f e d e r a l government involvement i n Canada's housing s e c t o r ; however, i t i s one of the government's three main s o c i a l housing programs. Chapter 2 d e s c r i b e d the c o o p e r a t i v e housing tenure i n terms of i t s ownership and e q u i t y c h a r a c t e r i s t i c s and i d e n t i f i e d the b e n e f i t s and c o s t s that have been purported to r e s u l t from the nature of c o o p e r a t i v e e n t e r p r i s e ; i n a d d i t i o n , the economics of t h i r d s e c t o r housing was d i s t i n g u i s h e d from that of p r i v a t e market housing. I t i s apparent that c o o p e r a t i v e housing i s a d i s t i n c t form of housing tenure -- while i t has c e r t a i n c h a r a c t e r i s t i c s s i m i l a r to both the r e n t a l and ownership tenures, i t has other c h a r a c t e r i s t i c s that are c l e a r l y d i s t i n c t i v e . I t was i n d i c a t e d t hat the p r i c e of c o o p e r a t i v e housing stock i s market-determined and that c o o p e r a t i v e housing 188 s e r v i c e s have a c e r t a i n degree of independence from market-determined p r i c e s i n the short run, while i n the long run even the p r i c e of c o o p e r a t i v e housing s e r v i c e s i s determined by market f a c t o r s . Chapter 3 d e s c r i b e d the e v o l u t i o n of f e d e r a l government a s s i s t a n c e to co o p e r a t i v e housing; i t demonstrated that NHA p o l i c i e s f o r a s s i s t a n c e to c o o p e r a t i v e housing groups developed slowly and u n c e r t a i n l y over the l a s t h a l f - c e n t u r y . I t i s apparent that policy-makers and government a d m i n i s t r a t o r s have g e n e r a l l y a s s o c i a t e d c o o p e r a t i v e housing with the home ownership form of housing tenure. I t was not u n t i l 1973 that the NHA provided c o o p e r a t i v e housing with a c o n t i n u i n g form of a s s i s t a n c e . The nature of t h i s a s s i s t a n c e r e s u l t e d i n l a r g e c a p i t a l expenditures i n a time of f i s c a l r e s t r a i n t and was c o n s t r a i n e d by c e r t a i n p r o v i n c i a l governments. In 1978 the Se c t i o n 56.1 Cooperative Housing Program was in t r o d u c e d . Chapter 4 developed a framework f o r the e v a l u a t i o n of the Cooperative Program through an e x p l a n a t i o n of e v a l u a t i o n r e s e a r c h . The primary o b j e c t i v e of Canadian s o c i a l housing p o l i c y was d e f i n e d ( i n the context of s o c i a l p o l i c y ) to be the p r o v i s i o n of a s s i s t a n c e to households "who lack the means to buy or rent housing that p r o v i d e s them with a reasonable standard of space and q u a l i t y . 1 Chapter 5 provided a d e t a i l e d d e s c r i p t i o n of the subsidy mechanism of the c u r r e n t Cooperative Housing Program. I t i s c l e a r that the magnitude of the S e c t i o n 56.1 d i f f e r e n t i a l i n t e r e s t a s s i s t a n c e can vary c o n s i d e r a b l y among p a r t i c u l a r 189 c o o p e r a t i v e p r o j e c t s i n r e l a t i o n to the p r o j e c t s ' c a p i t a l c o s t s , the n e g o t i a t e d mortgage i n t e r e s t r a t e s ; and the income l e v e l s of the p r o j e c t s ' households. Such v a r i a t i o n makes i t extremely d i f f i c u l t to p r e d i c t the program's expenditure c o s t s and s u b j e c t s CMHC to c o n s i d e r a b l e r i s k and u n c e r t a i n t y i n budgetary re q u i rements. Chapter 5 a l s o demonstrated that the o b j e c t i v e s of the C ooperative Program are p o o r l y d e f i n e d , and i n some cases, c o n t r a d i c t o r y . Such c o n t r a d i c t i o n i s the b a s i s f o r the program's fundamental i n c o n s i s t e n c i e s with the o b j e c t i v e f o r s o c i a l housing p o l i c y . The program pursues an o b j e c t i v e which promotes s u b s i d i z i n g households who have a d i s t r i b u t i o n and range of incomes s i m i l a r to that found in market housing. T h i s o b j e c t i v e i s c l e a r l y i l l - c o n c e i v e d f o r a s o c i a l housing program. Even the l e s s i n c o n s i s t e n t (and c o n t r a d i c t o r y ) o b j e c t i v e of a s s i s t a n c e f o r low and moderate-income households d e f i n e s the program's t a r g e t to i n c l u d e households beyond the t a r g e t of s o c i a l housing p o l i c y . Chapter 6 i s the b a s i s of the study's e v a l u a t i o n . While the l a c k of a comprehensive and usable data base d e f i n i t e l y l i m i t e d the scope of t h i s e v a l u a t i o n , a number of i n f e r e n c e s have been made on the basis' of the a v a i l a b l e data and on the b a s i s of the nature of the subsidy mechanism. The process e v a l u a t i o n has demonstrated that the program's d e l i v e r y system i s inadequate i n c e r t a i n r e s p e c t s : the intended t a r g e t p r i o r i t i e s f o r low and moderate-income households and f o r s p e c i a l purpose groups are g e n e r a l l y not achieved; a s i g n i f i c a n t 190 p o r t i o n of the program's income-tested households do not r e c e i v e the a s s i s t a n c e that was intended i n the program's design; and the program's design does not i n c l u d e e f f e c t i v e c o n t r o l s f o r minimizing budgetary expenditures a s s o c i a t e d with the f i n a n c i n g of c o o p e r a t i v e p r o j e c t s . The impact e v a l u a t i o n has i n d i c a t e d that S e c t i o n 56.1 co o p e r a t i v e housing i s "modest" i n terms of conforming to the re l e v a n t MUPs and i s g e n e r a l l y a p p r o p r i a t e i n terms of p h y s i c a l and space c r i t e r i a , although about 15 percent of c o o p e r a t i v e households appear to be over-consuming. The e v a l u a t i o n has a l s o i n d i c a t e d that s u b s i d i z e d c o o p e r a t i v e housing i s not " a f f o r d a b l e " f o r 20 to 30 percent of a l l c o o p e r a t i v e households. Moreover, these households with c o n t i n u i n g a f f o r d a b i l i t y problems are g e n e r a l l y households with the lowest incomes households who are the most l i k e l y to be i n c l u d e d w i t h i n the t a r g e t of Canadian s o c i a l housing p o l i c y . I t was suggested that the program has encouraged p r i v a t e l y - i n i t i a t e d NHA mortgage l e n d i n g f o r c o o p e r a t i v e housing by s h i f t i n g the r i s k of payment a r r e a r s and d e f a u l t to CMHC. F i n a l l y , the program's subsidy commitments ( i n 1982) represented a very s i g n i f i c a n t p o r t i o n of 1982 p r i v a t e r e n t a l s t a r t s i n a number of p r o v i n c e s ; on t h i s b a s i s , and i g n o r i n g p o t e n t i a l o f f s e t and s u b s t i t u t i o n e f f e c t s , i t would seem that the Cooperative Program has induced an inc r e a s e i n the supply of p r i v a t e l y - d e v e l o p e d " r e n t a l " housing in a number of areas. The e f f i c i e n c y e v a l u a t i o n d e f i n e d the e f f i c i e n c y of the Cooperative Housing Program i n terms of a l l o c a t i v e and 191 d i s t r i b u t i o n a l c r i t e r i a . A l l o c a t i v e e f f i c i e n c y was analysed through an a p p l i c a t i o n of consumer choice theory to c o o p e r a t i v e housing. T h i s a p p l i c a t i o n has demonstrated, based on the sample of 341 c o o p e r a t i v e u n i t s , that an average of $1,618 per u n i t of e x t e r n a l b e n e f i t s i s r e q u i r e d i n the f i r s t year of the subsidy to j u s t i f y the Cooperative Program on the grounds of a l l o c a t i v e e f f i c i e n c y ; thus, an "order of magnitude" i n d i c a t i o n of the net e x t e r n a l b e n e f i t s f o r the e n t i r e program i s about $30 m i l l i o n f o r 1982. Based on the program's 1982 budgetary expenditures, t h i s r e p r e s e n t s the n e c e s s i t y of almost $1 of net e x t e r n a l b e n e f i t s f o r every $1 of subsidy expenditure. The d i s t r i b u t i o n a l e f f i c i e n c y of the program was analysed in terms of the program's c o n s i s t e n c y with the c r i t e r i a of h o r i z o n t a l and v e r t i c a l e q u i t y . The nature of the program's l o t t e r y - l i k e a s s i s t a n c e p r e c l u d e s h o r i z o n t a l e q u i t y throughout the n a t i o n ' s households, while the subsidy mechanism a l l o c a t e s v a r y i n g amounts of a s s i s t a n c e to households i n s i m i l a r f i n a n c i a l c i rcumstances. In a d d i t i o n , the extremely wide t a r g e t of the Cooperative Program causes the subsidy mechanism to p e r v e r s e l y r e d i s t r i b u t e income throughout the housing s e c t o r . I t has o f t e n been argued that such r e d i s t r i b u t i o n a l i n e f f i c i e n c y i s j u s t i f i e d on the b a s i s of the e x t e r n a l b e n e f i t s which accrue to s o c i e t y and low-income households from "mixing" moderate and high-income households with low-income households i n c o o p e r a t i v e housing p r o j e c t s . These b e n e f i t s are r e p o r t e d to accrue p r i m a r i l y from a r e d u c t i o n i n the welfare stigma and the g h e t t o i z a t i o n that has a l l e g e d l y r e s u l t e d in p u b l i c housing p r o j e c t s . While t h i s study has made no attempt to assess the e x i s t a n c e or value of such 192 e x t e r n a l i t i e s , i t has been suggested i n the l i t e r a t u r e that such phenomena r e s u l t from a lack of a p p r o p r i a t e management and maintenance of the p u b l i c housing stock, r a t h e r than , from the " i s o l a t i o n " of low-income households. 2 The p o i n t i s that i t i s u n c e r t a i n whether such e x t e r n a l b e n e f i t s e x i s t ; on the other hand, t h i s paper i n d i c a t e s that the e x i s t a n c e of the r e d i s t r i b u t i o n a l c o s t s of such income-mixing i s much more c e r t a i n . (7.2) C o n c l u s i o n s and Recommendations f o r Change  and Future Research In c o n c l u s i o n , the Cooperative Program i s an instrument of f e d e r a l housing i n t e r v e n t i o n which i s p r i m a r i l y r a t i o n a l i z e d on the b a s i s of being a r e d i s t r i b u t i v e mechanism, and s e c o n d a r i l y on the b a s i s of being a mechanism which compensates for market i m p e r f e c t i o n s in the a l l o c a t i o n of c r e d i t and resources to the low-cost s e c t o r of the housing market. T h i s paper i n d i c a t e s that the program's r e d i s t r i b u t i v e nature cannot l e g i t i m i z e i t s e x i s t a n c e ; moreover, the compensatory r a t i o n a l e l o s e s i t s j u s t i f i c a t i o n when "low-cost" c o o p e r a t i v e housing i s occupied by other than low-income households. In other words, the Cooperative Housing Program i s not an e f f e c t i v e means of promoting Canadian f e d e r a l s o c i a l housing p o l i c y . T h i s study suggests that the Cooperative Program r e q u i r e s fundamental changes in i t s t a r g e t and subsidy mechanism. Because of the general shortage of p u b l i c funds f o r r e d i s t r i b u t i o n a l programs, s u b s i d i e s expended through the Cooperative Housing Program should be t a r g e t e d only to those households who are 1 93 w i t h i n the t a r g e t of the o v e r a l l o b j e c t i v e of s o c i a l housing p o l i c y . In order to accomplish such a r e d i r e c t i o n of subsidy funds, non-tested households must be excluded from p a r t i c i p a t i o n in the program unless the subsidy mechanism can be r e s t r u c t u r e d so that non-tested households pay rents that a c c u r a t e l y r e f l e c t the economic' cost of the u n i t s that they occupy. Even such a r e s t r u c t u r i n g i s l e s s than i d e a l , s i n c e i t i s d o u b t f u l l that r e n t s would r e f l e c t the pro r a t a a d m i n i s t r a t i v e c o s t s i n c u r r e d by CMHC through the i n c l u s i o n of such households in the program. On the other hand, the narrowing of the t a r g e t to only low-income households w i l l n e c e s s i t a t e changes in the d e l i v e r y system so that s u f f i c i e n t , a s s i s t a n c e i s a v a i l a b l e to reduce rents to a f f o r d a b l e l e v e l s . While the maximum a v a i l a b l e a s s i s t a n c e to p a r t i c u l a r p r o j e c t s would expectedly have to be i n c r e a s e d , the cost of a s s i s t i n g a p a r t i c u l a r low-income household with a given l e v e l of income w i l l not change from such a change of the subsidy mechanism; and s u r e l y , without the i n c l u s i o n of a s s i s t a n c e to middle or high-income households ( e i t h e r through the s u p p l y - s i d e or demand-side subsidy) the program's o v e r a l l cost per low-income household should decrease s i g n i f i c a n t l y . Indeed, a r e d e f i n i t i o n of the Cooperative Program's t a r g e t to i n c l u d e only low-income (or the most "neediest") households would undoubtedly invoke c r i t i c i s m about p o t e n t i a l s i m i l a r i t i e s with i l l - c o n c e i v e d p u b l i c housing programs. Such c r i t i c i s m would l i k e l y be founded on a d i r e c t e x t r a p o l a t i o n of the negative impacts of American p u b l i c housing programs to a low-income Cooperative Housing Program. Such e x t r a p o l a t i o n i s l i k e l y to be 194 u n j u s t i f i e d because of c e r t a i n d i s t i n g u i s h i n g f a c t o r s inherent i n the Cooperative Program; for i n s t a n c e , the ownership and e q u i t y c h a r a c t e r i s t i c s of c o o p e r a t i v e housing are l i k e l y to r e s u l t i n a t t i t u d i n a l d i f f e r e n c e s between c o o p e r a t i v e households and p u b l i c housing tenants, while the a d m i n i s t r a t i v e r o l e played by n o n - p r o f i t o r g a n i z a t i o n s i s l i k e l y to minimize adverse l o c a t i o n a l and o p e r a t i o n a l e f f e c t s which t r a d i t i o n a l l y have plagued American p u b l i c housing p r o j e c t s . On the other hand, an a l t e r n a t i v e to r e s t r u c t u r i n g the p r e s e n t l y - i n e f f i c i e n t Cooperative Program i s to r e p l a c e the program with a fundamentally d i f f e r e n t mechanism for p r o v i d i n g housing a s s i s t a n c e to low-income households. The o b j e c t i v e of Canadian s o c i a l housing p o l i c y (which promotes both the r e d i s t r i b u t i o n of income and an i n c r e a s e i n the consumption of housing by low-income households) suggests that the most a p p r o p r i a t e a l t e r n a t i v e mechanism would be e i t h e r a program of d i r e c t cash t r a n s f e r s or a program of h o u s i n g - t i e d allowances d i r e c t e d at households who are w i t h i n the t a r g e t of s o c i a l housing p o l i c y . The c h o i c e of the optimal instrument from these two a l t e r n a t i v e s i s dependent on whose p r e f e r e n c e f u n c t i o n s are i n c l u d e d i n the d e c i s i o n f u n c t i o n . I f only the p r e f e r e n c e s of subsidy p a r t i c i p a n t s are to be i n c l u d e d , then economic theory i n d i c a t e s that p a r t i c i p a n t s gain g r e a t e r u t i l i t y from d i r e c t cash t r a n s f e r s than through an equal d o l l a r value of housing-t i e d a s s i s t a n c e . T h i s i s because households are able to a l l o c a t e d i r e c t cash t r a n s f e r s a c c o r d i n g to t h e i r own p r e f e r e n c e s r a t h e r than a c c o r d i n g to the requirements of the program (as i s the case with h o u s i n g - t i e d a s s i s t a n c e . ) A l t e r n a t i v e l y , i f the 195 u t i l i t y f u n c t i o n s of both p a r t i c i p a t i n g households and non-p a r t i c i p a t i n g taxpayers are to be i n c l u d e d i n the d e c i s i o n f u n c t i o n , the s u p e r i o r i t y of d i r e c t t r a n s f e r s i s much l e s s c l e a r given the p r e f e r e n c e s of taxpayers fo r low-income households to consume adequate amounts of housing ( i n terms of both q u a n t i t y and q u a l i t y . ) In such a case, the optimal a l t e r n a t i v e may be a program of h o u s i n g - t i e d a s s i s t a n c e . In terms of f u t u r e r e s e a r c h , t h i s study has a l l u d e d to a number of areas where resea r c h r e l a t e d to the Cooperative Program would be v a l u a b l e : f o r i n s t a n c e , a macro-level assessment of the extent to which the program's s u p p l y - s i d e subsidy r e s u l t s i n net a d d i t i o n s to the supply of low-cost housing; an a n a l y s i s of the e f f e c t i v e n e s s of the concept of MUPs in minimizing the c a p i t a l c o s t s of s u b s i d i z e d c o o p e r a t i v e housing; a d e t e r m i n a t i o n of the r e l a t i o n s h i p between the o p e r a t i n g c o s t s of s u b s i d i z e d c o o p e r a t i v e p r o j e c t s and p r i v a t e r e n t a l housing; and a d e t e r m i n a t i o n of the nature and the magnitude of e x t e r n a l b e n e f i t s a c c r u i n g to low-income households from income-mixing i n c o o p e r a t i v e p r o j e c t s . 196 Endnotes 1. 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Open and Vol u n t a r y Membership Membership of a c o o p e r a t i v e s o c i e t y should be v o l u n t a r y and a v a i l a b l e without a r t i f i c i a l r e s t r i c t i o n or any s o c i a l , p o l i t i c a l or r e l i g i o u s d i s c r i m i n a t i o n to a l l persons who can make use of i t s s e r v i c e s and are w i l l i n g to accept the r e s p o n s i b i l i t i e s of membership. 2. Democratic C o n t r o l Cooperative s o c i e t i e s are democratic o r g a n i z a t i o n s . T h e i r a f f a i r s should be admi n i s t e r e d by persons e l e c t e d or appointed in a manner agreed by the members and accountable to them. Members of primary s o c i e t i e s should enjoy equal r i g h t s of v o t i n g (one member, one vote) and p a r t i c i p a t i o n i n d e c i s i o n s a f f e c t i n g t h e i r s o c i e t i e s . In other than primary s o c i e t i e s , the a d m i n i s t r a t i o n should be conducted on a democratic b a s i s i n a s u i t a b l e form. 3. L i m i t e d I n t e r e s t on Shares Share c a p i t a l should only r e c e i v e a s t r i c t l y l i m i t e d r a t e of i n t e r e s t , i f any. 4. Return of Surplus to Members Surplus or savings, i f any, a r i s i n g out of the o p e r a t i o n s of a s o c i e t y , belong to the members of that s o c i e t y and should be d i s t r i b u t e d i n such a manner as would a v o i d one member g a i n i n g at the expense of o t h e r s . T h i s may be done by d e c i s i o n of the member as f o l l o w s : (a) by p r o v i s i o n f o r the development of the business of the c o o p e r a t i v e ; or (b) by p r o v i s i o n of common s e r v i c e s ; or (c) by d i s t r i b u t i o n among the members i n p r o p o r t i o n to t h e i r t r a n s a c t i o n s with the s o c i e t y . 5. Cooperative Education A l l c o o p e r a t i v e s o c i e t i e s should make p r o v i s i o n f o r the education of t h e i r members, o f f i c e r s and employees and of the general p u b l i c i n the p r i n c i p l e s and techniques of c o o p e r a t i o n , both economic and democratic. 6. Cooperation among Cooperatives A l l c o o p e r a t i v e o r g a n i z a t i o n s , i n order to best serve the i n t e r e s t s of t h e i r members and t h e i r communities, should a c t i v e l y cooperate i n every p r a c t i c a l way with other c o o p e r a t i v e s at l o c a l , n a t i o n a l and i n t e r n a t i o n a l l e v e l s . Source: I n t e r n a t i o n a l Cooperative A l l i a n c e 1966 207 Appendix 2; Analyses of S e c t i o n 56.1 Survey Data D e s c r i p t i o n of Tables Table 1 ... Household income by number of persons i n household Table 1a ... E s t i m a t i o n s of number of households w i t h i n s p e c i f i c income c a t a g o r i e s (based on Table 1 and assuming that incomes are d i s t r i b u t e d evenly throughout income c a t a g o r i e s ) Table 2 ... Number of persons over 60 years of age i n c o o p e r a t i v e households Value D e f i n i t i o n s : 1.00 1 person 2.00 2 persons 3.00 3 persons 99.00 no response 0.00 0 persons Table 3 ... Number of handicapped people i n households Value D e f i n i t i o n s : 1.00 1 person 2.00 2 persons 3.00 3 persons 4.00 4 persons 99.00 no response 0.00 0 persons Table 4 ... Household composition Value D e f i n i t i o n s : 1.00 s i n g l e person l i v i n g alone 2.00 f a m i l y or married/common law couple 3.00 s i n g l e mother and at l e a s t one c h i l d 4.00 s i n g l e f a t h e r and at l e a s t one c h i l d 6.00 any other 0.00 no answer Table 5 ... Household composition by number of handicapped persons l i v i n g i n households Value D e f i n i t i o n s : Same as f o r Table 4 208 Table 6 ... Household composition by number of persons over 60 years of age l i v i n g i n households Value D e f i n i t i o n s : Same as f o r Table 4 Table 7 ... Type of c o o p e r a t i v e housing u n i t s by year of commitment Table 8 ... Type of c o o p e r a t i v e housing p r o j e c t by year of commitment Table 9 ... Household rent-to-income r a t i o by household income for income-tested households Chi square value = 1917.16553 Table 10 ... Household rent-to-income r a t i o by household income f o r non-tested households Chi square value = 2712.76636 Table 11 ... Household rent-to-income r a t i o by household income for households who are unsure of t h e i r income-tesing s t a t u s Chi square value = 300.29102 Table 12 ... D i s t r i b u t i o n of household income-testing s t a t u s Value D e f i n i t i o n s : 1.00 Household's rent i s determined on b a s i s of income 2.00 Household's rent not determined on b a s i s of income 3.00 Household i s unsure of s t a t u s 0.00 no response Table 13 ... D i s t r i b u t i o n of whether income surcharging i s used in p a r t i c u l a r c o o p e r a t i v e p r o j e c t s . Value D e f i n i t i o n s : 1.00 Surcharging used i n p r o j e c t 2.00 Surcharging not used i n p r o j e c t 0.00 no response Table 14 ... P o r t i o n of households who pay market rents and who q u a l i f y f o r income-tested a s s i s t a n c e Value D e f i n i t i o n s : 1.00 none 2.00 1/4 or l e s s 3.00 h a l f 4.00 3/4 or more 5.00 a l l 8.00 d i d not know 0.00 no answer Table 15 ... P o r t i o n of households who r e c e i v e income-t e s t e d a s s i s t a n c e , yet do not r e c e i v e s u f f i c i e n t a s s i s t a n c e to reduce re n t s to 25 percent of income. Value D e f i n i t i o n s : Same as f o r Table 14 Table 16 ... P o r t i o n of c o o p e r a t i v e households who cooper-ate i n measures to reduce o p e r a t i n g c o s t s Value D e f i n i t i o n s : 00 00 00 00 .00 8.00 0.00 Table 17 . Table 18 a l l 3/4 or more h a l f l e s s than h a l f none undef ined no answer , D i s t r i b u t i o n of whether p r o j e c t managers ask c o o p e r a t i v e households to p a r t i c i p a t e i n • reducing o p e r a t i n g c o s t s , D i s t r i b u t i o n of type of r e p a i r s needed i n c o o p e r a t i v e p r o j e c t s Value D e f i n i t i o n s : 1.00 major r e p a i r s needed 2.00 minor r e p a i r s needed 3.00 only r e g u l a r maintenance needed 0.00 no answer Table 19 ... Households' r a t i n g of general p h y s i c a l c o n d i t i o n s of a.) i n s i d e and b.) o u t s i d e of c o o p e r a t i v e u n i t s Value D e f i n i t i o n s : 1.00 e x c e l l e n t 2.00 very good 3.00 good 4.00 f a i r 5.00 poor 0.00 no answer Table 20 ... Households' assessment of t h e i r u n i t s ' need f o r r e p a i r s by t h e i r p o s s i b i l i t y of moving from the c o o p e r a t i v e p r o j e c t w i t h i n 2 years Table 21 ... P r o j e c t managers' assessments of need f o r d w e l l i n g u n i t r e p a i r s Value D e f i n i t i o n s : Same as f o r Table 18 Table 22 ... General p h y s i c a l c o n d i t i o n s of a) i n s i d e and b) o u t s i d e of c o o p e r a t i v e p r o j e c t s Value D e f i n i t i o n s : Same as f o r Table 19 Table 23 ... Number of housing u n i t s occupied by a) handi-capped and b) senior c i t i z e n households which are not s p e c i f i c a l l y designed f o r such households Value D e f i n i t i o n s : 0.00 none 1.00 one u n i t 2.00 two u n i t s 3.00 three u n i t s 4.00 four u n i t s 7.00 seven u n i t s 28.00 twenty-eight u n i t s 999.00 no answer Table 24 ... Number of people i n household by number of bedrooms i n housing u n i t c o n t r o l l i n g f o r type of household ( f a m i l y , s e n i o r , other) Table 25 ... Number of people in household by number of rooms i n housing u n i t c o n t r o l l i n g f o r type of of household ( f a m i l y , s e n i o r , other) Table 26 ... D i s t r i b u t i o n of type of housing u n i t s by year year of commitment and f o r housing p r o j e c t s by year of commitment 211 Table 1 COUNT I ROW PCT COL PCT 11 I PERSON 2 PEOPLE 3 PEOPLE 4 PEOPLE 5 E OR ftO*£ PEOPLE ROw TOTAL INCOME TOT PCT I 1 .00] t 2. 0OI 3,00] [ 4.00] 5.001 1.00 I 167 ] r 142 I 61 ] 64 ] 31 I 4-66 0-7999 I I I 36.0 ] 30.9 1 4.4 1 r 30.5 . 14.4 3.7 I I I 13.1 1 6.9 ] 1.6 1 13.8 1 6.4 ] 1.7 ] 6.6 8.1 0 . 8 I I I 12.2 ©•11999 2.00 I 103 1 23.6 J 133 30.6 I I 116 1 26.7 I 37 1 8.6 1 46 10.5 I I : 436 11.5 m 19.0 i 2.7 1 13.5 3.5 I I 13.1 l 3.1 I 3.7 ] 1.0 ] 12.0 1.2 I I 12*15999 3.00 100 1 22.5 1 18. 4 1 11 a 25. 7 r 11.5 I I I 122 I 27.6 1 13.8 J 82 7 L8.4 1 8.2 -I "v 26 5.8 6.7 7 IS fi 443 11.6 2.6 ] 3.0 I 3.2 I 2.1 1 . 0.7 7 a.oo 68 T 1 07 I 107 I t55 1 feu I 500 16-19999 13.7 1 12.6 7 1.6 T 21.4 10.8 2.8 I I I 21.4 I 12.0 I 2.8 I 30.9 J 15.4 1 u . l 7 12.7 16.6 1.7 I I 7 13.2 20-249Q9 m 5.00 83 T 11.1 7 118 15.7 I I 157 I 20.9 I 311 I «1 .5 7 81-10.8 I 7 750 19.7 15.3 T *.2 I 11.9 3.1 I I 17.7 7 a. l I 31,0 I 8.2 I 21 .2 2.1 7 7 25-29999 6.00 12 T 2.6 • T 2.3 T 101 20.8 10.2 j i . 7 12u I 25.7 7 14.0 7 192 I 39.7 I 19.2 I 5d M.2 i«.3 I T T <f84-12.7 0.3 r 2.6 I 3.3 I 5.1 I . 1 » u I 7.00 0 T 146 T 113 7 83 7 31 7 375 30-3<»999 • 0.0 I 0.0 I 0.0 T 39.4 14.9 3.9 I 1 I 30.1 7 12.7 7 3.0 I 22.2 I 8.3 I . 2.2 7 ft.3 ' 6.1 C.R 7 7 7 9.9 8.00 8 T 127 7 88 7 77 7 50 7 350 35000* 2.4 J 1.5 T 0.2 T 36.3 12.8 3.3 I I. 1 25.2. 7 9.9 7 2.3 I 22.. 0 I 7.7 7 2*0 I ia.2 13.0 1 .3 T 1 I 9.2 m TOTAL 542; i a . s ••' 989 Z6.G 889 23-4 1001 2j6.3 382 1C. 0 3803 100.0 Table 1a Es t i m a t i o n s Based on Table 1 Households with incomes below S t a t i s t i c s Canada Low-income C u t - o f f s : 1 person households 167 with incomes 2 person households 188 with incomes 3 person households 232 with incomes 4 person households 197 with incomes 5+ person households 152 with incomes $8,045 $10,614 $14,198 $16,361 $19,066 Households with incomes gr e a t e r than S t a t i s t i c s Canada Low-income C u t - o f f s , but l e s s than mean income on the b a s i s of household s i z e : 1 person households 2 person households 3 person households 4 person households 5+ person households 64 with incomes < $10,484 288 with incomes < $19,238 272 with incomes < $23,131 496 with incomes < $26,143 135 with incomes < $28,631 Households with incomes gr e a t e r than S t a t i s t i c s Canada Low-income C u t - o f f s , but l e s s than median income on the b a s i s of household s i z e : 1 person households 36 with incomes < $9,399 2 person households 226 with incomes < $16,883 3 person households 1 97 with incomes < $20,740 4 person households 334 with incomes < $2.3 ,400 5 + person households 98 with incomes < $25,214 Households with incomes above mean and median incomes are found r e s i d u a l l y on Table 1. Table 2 VALUE ABSOLUTE FREQUENCY d <9 O 49 0 ! .00 2 , 0 0 3.00 99.00 0.0 9.00 TOTAL 371 1S« U2 3710 RELATIVE FREQUENCY (PERCENT) 8,7 0,1 ADJUSTED FREQUENCY (PERCENT) CUMULATIVE AOJ FREQ CPgRCENT) to o %> w U283 t . o « 6 . 6 0 B 0 "TooTo" 64,8 6 a ,8 27 , 0 91,7 0 , ? 92, 7 7.3 MISSING 1 00 0 0 100,0 100,0 HISSING 100,0 1 00 0 0 Table 3 •4 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENT) (PERCENT) 0 0 9 OI d O <p* Qjp 0 V CP O 0 O 43 flj O 9 © Q) . s u e * . . 1.00 197 « , 6 70,6 70 , 6 2.00 28 0.7 10.0 80 , 6 3.00 a 0,1 1,5 83 , 1 U.00 u 0,1 < 1.5 83 , 6 99,00 ab l i t 16, a to 0 , 0 0.0 4003 93,5 MISSING 100,0 9 , 0 0 TOTAL 0 O 9 O O O 9 Q «283 0 , 0 100 , 0 MI 331NQ B B 8 1 C 9 Q S O *3 100,0 100,0 100,0 Table 4 2 VALUE ABSOLUTE FRf QUINC.V 1 Q W C « J W RgL&Tivr (PERCENT) » o » *» o a A0JU3TE0 CUMULATIVE FREQUENCY ADJ PRgQ (PERCENT) (PERCENT) loOO , 806 18,8 19,2 19,2 2oOQ 2570 60,0 61.2 s o , a 3*00 668 15,6 15,9 96,3 «.oo 70 1.6 1.7 97,9 6.00 87 2.0 2.1 100.0 0,0 82 1.9 *ISSING 100.0 9 n00 TOTAL 0 . e a e j 0,0 10 0,0 MISSING - 4 . 0 ^ «• W «&J 49 100,0 100,0 100,0 215 Table 5 MHCPPHM cru.iNT i »n>«i P C T ! T F UOUE. UNKNOWN ROW COL P C T I T O T A L TOT PCT I 0,0 1 1 . 00 T 2.001 3.0 0 t 9<5, 00 7 0.0 I 32 1 r o T U 7 0 r o T 36 • NO ANSWER. T 88.3 1 o.O I 11.7 T 0,0 [ 0,0 I 0 ,9 0.9 1 r o.o I 17.4 7 0 , 0 [ 0,0 I 0.8 1 r o . o i 0.1 7 0.0 [ 0,0 7 m 1 r m T 1.00 ] 636 1 r 30 I- 0 I 0 t 0 I 666 SNGL PS» Ly"G AL i 9 5 . U 1 4.6 T 0.0 I 0,0 t 0,0 I 17,5 17.6 ] r 1 8 , 3 I 0.0 I 0,0 [ 0.0 I • 1 16.7 1 O.fi 7 0.0 I O.O 1 t 0.0 7 2.00 I 225 2 1 r 80 I 16 I u r 4 7 2357 FMLY MPO OR. CttNL 1 95.6 r 3." I 0.7 I 0.2 t 0.2 I 62 .0 62.5 1 r 48 .2 7 68.6 7 100.0 [ 100 .0 7 59.2 r 2 , 1 1 0.4. I 0.1 [ 0,1 I 3,00 ] 5 6 3 r ?,b T 3 I 0 [ 0 7 602 SNHJL MTHR + GE. 1 I <?3.5 [ 5.9 I 0.6 I o.o t 0,0 7 15,8 15.6 r 21.3 i 14.0 7 0.0 t 0.0 7 14.8 r 0.9 i 0.) 7 0.0 [ 0,0 7 . , ^ < it , 00 122 r ?o i 6 I n [ 0 I 142 ALL OTHERS 1 85.6 r L4.4 I 0.0 I 0,0 [ 0.0 7 3.7 3 . a r 12 .2 I 0,0 7 0 , 0 [ 0,0 T 3.2 r O.s T 0.0 7 0.0 t 0.0 7 CDLOMKJ 'IbQit""^ . __ 20 4 a 3A03 TOTAL 9 1 . 8 4.4 0.6 o . i 0.1 100 .0 Table 6 216 NGPHH _ _ '" : " C O U N T I " ' ' ' ' " ' •" ". ' ' ' " . ROW PCT I TF NO M r Rflh COL PCT I . • TnTAl f n f ~ P c T I nTn~T 1.001 2,001 3.00T" IMPHH . . . . - . . - I - . - - — » | — — — I — m m m - « t — I 0.0 I 1% T 0 ! _ _21__I _j0_ J _36 " Kid ANSWER 1 42.6 T 0.0 I S7.« I 0,0 I 0,9 I 0.5 T 0.0 I 15.3 I 0,0 I I o.a T o.o i o.s I o.o I  m\ l j . . . . . . . . . I . . . . . . . . I 1.00 I a^O T 1«? I a I 0 I 666 8NGL P9M LVNR A L I 72.6 T 27.a I ' 0.6 I 0,0 I 17,5' I i«."3 T 61,1 I"" SIT I 0,0 "I I 12.6 ? 0.8 T 0.1 I 0,0 I 2Too I 2T70 T pa f Toj I 6 ! 2357" FMLV MRD OP CMNl I 92. J T 3.6 I 4.0 I 0,0 I 62,0 I 64.0 I 2B.2 I 76.6 I 0,0 I _ — ~"' ~ ~ j 57.f>j ?.2 I 2T7~ I 6,IT IT . I . . . . . . . . T — — - — I — — — I — — — I 3.00 ! 575 T 20 I 0 I 0 I 602 ' — S N B L MTHB * G E 1 1—<r975 T 07^  I I 576 I T57B" I 17.1 T 8,0 I 0.0 I 100,0 I I 15.1 T 0.6 I 0.0 T 0.1 I l m m ^ m m l ^ . T i W i i i i i W f ™ ^ ^ T I ^ I «,00 I 127 1 8 1 7 1 0 I 102 ALL OTHFP8 I 89.a I 5.9 I a.7 I 0,0 I 3.7 1 3TB T ?TR" 1 5 7 0 1 0,0 I I 3.3 T 0.2 I 0.2 I 0,0 I I — T.......-I COLUMN 3367" " 299 n a a 3803 TOTAL 88.5 7.9 J,5 0,1 lflO.O Table 7 l B I O i D COUNT 1 » 0 w PCT ] COL PCT ] T C f - p i r f j "'" 7 8 , n o J 7 9 . 0 0 1 8 n . n o ] [ HI.001 82.001 83.00 1 ROW TOTAL #t W K * r NEW"' t,0O ] 268 T 2.2 T 93.4- T . 1 , « I 629 I 5.2 I 29,8 I \jj L 2676 I 22.0 1 64.1 1 I [ 2493 I t 20.5 I : 61,6 I [ 131.1 I 4490 r 36.9 I 74.4 I 1608 I 13.2 I 67.5 T ... »».«.. . . ! 12164 63.9 f X 1ST 2,on ] NO RRAP 1 m' [ 1 T •0.1 T [ 0 . 3 T [ 0.0 T 91 T *.« 1 ".3 1 0,5 I 163 1 <«5.7 \ 3.9 ] 0.9 ] : 303 I 29.2 ! f 7 . 5 I r 1 . 6 1 350 I 33.« T 5.8 I i . 8 I 129 T 12.0 I 5.4 T 0.7 I 1037 5,4 E X I S T 1 .00 1 • RPAP 1 [ 1 I [ 0.0 T [ 0.3 T 1 o . b i 753 I 15.5 I 35.7 I "•'~«.o'" I 1075 1 22.1 1 25.8 1 5.6' 1 [ I [ 2«.9 I [ 30,0 I t 6.4 I 1196 I ?4.5 T 19.8 I 6.3 t 634 I 13,0 I 26.6 I 3,3 I 4873 25.6 9,00 *1ff8't'NG~ • • r 17 T t i . e . T 1 5.9 T r o . i T 636 ! . _„ .„_. . _ ._ 30.2 I 3.5 I 258 1 ""26.9""""] 6.2 1 1 .4 1 t 35 I [ 3.6 I t 0.9 I r o.2 I 1 T 0.1 I 0.0 I 0,0 T 12 I l . i " i 0.5 I 0,1 t 959 " " 570 COLUMN TOTAL 287 1.5 2109 11.1 4172 21.9 4rt45 21.3 6037 31.7 2383 12.5 19033 t o o Jo 218 CO 0> r-t O a o l e '•m • • o • o • — c * — r « v 9 • O c • — • m o ^ K » i r j o i I c. • ; • • o <y r v ' c . • a • • m\ tc i m <* iri • i • I c . • c • * • I 4 I T I C I c • • t »r »«• ^ « • • • • r» t rymc • ! t > • i r u o- o ~ • ^ - O • t S i l \ . * — IT I ft! 4 A l l 9 • • • I O r» — rst o-i i f o • j I -9- • O • • • • • <o a r-• — a • I ! • • • ,tt — — — § »#\ — — a c ^ o o — o c o o <* — nt — 9 • a 3 l i r o w © o » • • • » c © c V e s C O U N T flow PCT 10-6521 6 S 2 l - 4 « 5 94S1-125 izsoo-14 1 4 3 * 4-16 1 6 0 3 4 - 1 ? 1 7 6 0 2 - H H 5 0 0 - 2 S 2S000-34 34000 - 4 0 1 40 D0O>o2 sew C O L Per 1 oo 034- 602 100 0 0 0 ooo ooo l o o e TOTAL TOT PCT 1 1 . 0 0 £ . 0 0 5 . 0 0 4.oo 5 .60 6 . 0 0 1 7 . 0 0 8 . O O •1.00 1 0 . 0 ' ' 1 I t . 0 0 ! rmo6 1 . 0 0 1 0 0 0 0 0 1 0 3 4/ 7 0 1 23 1 37 O - I O i o'.o 0 . 0 0 . 0 o.o o.o 0 . 0 6 . 9 1 1 . 1 18.3 o . o 1 61 .6 ! 2.3 1 O . O 0.0 0 . 0 o.o o.o 0 . 0 2.2 1.3 5 . 0 0 . 0 1 6 1 . 0 ( 1 0 . 0 0 . 0 o .o 0 . 0 0 . 0 0.0 0 . 2 O . S 0 . 4 o.o i 1 .4 I 2 . 0 0 i ' r 16 21 18 24 1 7 16 210 127 SI j I 15 i 624 tO'tO ' i . 4 3 . 4 4.0 3 . 4 4 . 3 1 3.3 1 3 . 1 4 0 . 1 24 ,2 1 . 6 1 . 8 » 31.6 1 9 . M 8 . 4 9 . 9 t«?.u 19.0 1 16.3 10.6 64 .4 9 2 . 6 l o o . o 3 1 . 0 t - 1 0.3 i . l 1 ,i I . l 1 . 4 1 1 . 0 1 1 . 0 12.7 7.7 3 . 1 o.q t 3 . 0 0 i y » 4 1 sn 1 8 23 1 49 73 77 3 0 0 ' 399 10-lS I 1 . 8 1 0 , 1 1 J .S" 4 . 4 6.2 IZ .3 . 1 6 . 3 £4.5 0 .9 0 . 0 0 .0 t £4.1 1 17.5 11.4 25,7 » ? . ? l 3 2 . 3 1 6 . 4 2 . 5 J o .o 0 . 0 1 1 2 . 4 2 . 5 3.2 l . L 1.5 1 3.0 <4.<t 5 . 9 0 . 2 0.0 1 0 . 0 1 4..00 I 4 S 52 58 Jo 51 1 , 1 9 ' f 3 1 5 0 ] 0 1 0 1 3IH 2s-*e I H . M 10 .6 1 6 . 4 6 . 6 1 6 . 4 I 6 . 1 1 5 . 8 4 . 7 0 . 0 0.0 1 0.0 1 »9.0 2 0 . 2 2i*. e 2 7 . 6 3 3 . 0 4 1 . 6 1 20.S 1 26 - 4 4.3 0 . 0 1 0 .0 1 o.o i 1 . 7 3 . 2 3 . 5 1.8 3 . 1 1 1 . 2 1 2 . 8 0 . 9 0 < 0 1 0.0 1 . 0 .0 1 s . o o 3 7 23 3» 12 14 1 8 I 15 0 0 0 I 0 1 140 3 0 - 3 5 26.1 16 .5 22.0 8 . 1 10. L 1 S . I 16.5 1 O . O 0 . 0 0 . 0 1 0 . 0 1 0.3 16.5 1 1 .0 1 1 . 8 13 . 7 11.1 1 8 . 4 1 4 . 8 0 .0 C O 1 0 . 0 1 0 . 0 1 t . l • 1 . 4 1.1 0,6 o . t 1 6.3 1 0 .9 0 . 0 0 . 0 0.6 1 0 . 0 1 6 . 0 0 |8 n . 21 1 3 10 1 0 1 0 0 0 0 1 0 1 «l 3 5 - 4 0 21 .6 23.ff 20 .0 16.4 12.5 1 0 .0 0 . 0 1 0.0 0 . 0 0 .0 1 0 . 0 1 4.1 8 * 0 9 . 1 1 10, | 14.7 6.1 1 0 .0 t 0 . 0 0 .0 0 . 0 1 o . o i 0 . 0 t I 1 . 1 1 . 2 1 I . . 3 0 . 6 0 . 6 I 0 . 0 I 0 . 0 0 . 0 0 . 0 1 0 .0 1 0 .0 i ? . o o 3 4 46 17 0 0 0 1 0 0 0 1 0 1 0 I IT 4 - 0 - 5 0 3 5 . 4 n . 3 o . o 0 . 0 1 0 .0 1 0 . 0 1 0 . 0 0 .0 i 0 . 0 1 0,6 ' 5 . 9 13,5 *l.1 8 .0 o .o 0.0 1 0 . 0 o . o 0 . 0 0 . 0 1 0 . 0 1 0.0 t 1 Z.I 2 . 8 1 .0 0.0 0 .0 1 0 .0 1 0 , 0 1 0 . 0 o . o 0 . 0 1 0 .0 1 5o-<o 6 . 0 0 16 7 8 0 1 0 1 0 I 0 1 0 I 0 1 0 1 0 1 12 1 62 . 4 1 7 .e 0.0 1 0 . 0 1 0 . 0 1 0 . 0 1 0.0 I o . o i 0 . 0 I O.o t 2..S u,e 3 . 6 4 . 0 0.0 1 0.0 i 0 . 0 t 0 .0 1 0 .0 1 0 . 0 I 0 , 0 1 0,0 ' L,< o.s 0 . 3 0 . 0 1 0.0 1 0 . 0 I 0 . 0 1 0 . 0 1 0 . 0 1 0 .0 j 0 . 0 I 9 . 0 0 16 4 I 0 0 1 0 1 0 1 0 1 0 1 0 I 0 0 1 20 60.1 i 19.9 1 0 . 0 O.o i 0.0 1 0 . 0 1 0.0 1 0 . 0 1 0-0 1 0 . 0 1 0.0 ! 1.2 7.2 l i . l 1 0 . 0 1 0 . 0 1 0.0 1 0 . 0 I 0.0 1 0 . 0 I o .o i o . o :' 0 . 0 I 1.0 1 0 . 2 1 0.0 1 O.O 1 0.0 1 0 , 0 1 0 . 0 1 0 . 0 1 0 . 0 1 0 , 0. { 0.0 1 • - ' < • ?.?3 210 201 «»1 I V 1 5 1 ^ 226. 157 52 i 3 8 i*sn TOTAL I 3 . S 1 2 . 7 1Z.7 s.« 7.S S .7 11.7 8 . 3 3 , 1 2 . 3 100.0 Table 9 1 0 r. MO SOW PCT 0-6S1I *5ll-«*45 «?itS| -125 i z s o o - m 1434M - I 6 16034-17 l7602 . - t«) I43O0-2S 2 5 0 0 0 -34 3 4 o o o - ' < 0 4 0 0 0 0 - « l COL PCT 1 OD 544 034 6 0 2 300 OOO OtPO Ooo ooo TOTAL TOT PCI 1 . 0 0 Z .oo 4.00 5.00 6 . 0 0 7 . 0 0 1 8 . o o 9 . 0 0 1 0 . 0 0 1 1 . 0 0 ' 3 5 1.00 0 0 0 0 4 0 0 ' 37 3 6 46 ' ( 5 1 0 - 1 0 0 .0 0 . 0 0 .0 0.0 2.3 O.O 0 .0 ! 2 2 . 8 2 H . 6 20.1 3 o . l • 6.1 o . b 0 .0 O.O 0.0 Z.7 o . o O.O ) 5 . Z 7 . 8 »7.3 57.7 > 0 . 0 0.0 0.0 6.0 0 . 2 0 . 0 o . o 1 . 9 2 . 0 1.6 2 . S -2.00 0 0 11 4 30 10 41 .' 358 1 2 4 »45 25 1 1051 1 0 .0 0 . 0 1.0 0.% 2.9 1.0 4 .4 ' 33.«» 4 o . 3 13.8 Z.4 1 56.7 1 0 ,0 0 .0 4.M 10.6 23.0 26 .3 48.7 ' s q . z 8 6 - 9 8 Z . 7 31 . 6 < 1 0 .0 0 . 6 0 .6 O.Z 1 . 6 2.S r 19.2 2.Z..6 7 . 8 l.«* 1 3.00 1 8 ' 10 7 4 31 8 16 1 •86 11 0 8 i 2 8 6 ZO-ZS 1 2.6 $ . 6 Z . I 1 . 2 10,9 2.9 i.H I 6 4 . 3 3 . 9 0 .0 2 .9 I 15.6 1 17.9 16.1 6.1 10.6 23.8 Z I . S 15.5 I 30 .8 2 . 4 0 .0 1 0 . 6 < 0.4 0 . 6 O.M 0 .2 1.7 0.4 0 . 8 • 1 0 . 0 0.6 0 . 0 0.4 ' 4 . 0 0 4 14 Z4 IS 54 17 31 I 21 0 0 0 ' 174 25-30 Z.O 7 .8 13 . 2 8 . 2 30 .2 9 . 6 17.1 ! 1 1 . 8 0 . 0 o . o 0 . 0 1 V 7 8 . 4 Z Z . l Z1.0 4*. 3 41.2 44 .S 50 .7 3 . S 0 .0 0 . 0 0 . 0 1 1 o.z 0 . 6 1.3 0.8 2 . 9 0 . 4 1 .1 0 . 0 0 . 0 0.0 I 5 , 0 0 i 7 3 38 I t 4 3 4 ' 4 4 0 0 ' 79 50 -35 8,9 4 . Z 47.6 14.4 5 .3 3 . 6 5 .3 i 5.3 5 . 3 0 . 0 6 .0 T 4.3 16 . 7 5.Z 3 3 . 4 ] 50.4 . 3.2 7.7 4.1 i 0.7 o.<j o . o o . o r 0.4 O.Z 2 .0 ] 0 .6 0.2 0 . 2 0.2 ' 0 .2 o . z 0 . 0 0 . 0 1 6.00 4 4 (3 ) 0 0 0 3 ! 0 0 0 0 i 24 35-40 14.1 17.4 55.4 1 0 . 0 0 . 0 O .o IZ .5 I o . o o . o o . o 0 . 0 ' 1.3 6.4 6 . 5 11.8 0 . 0 0 . 0 0 .0 3 .0 i o . o 0 . 0 o . o 0 . 0 ' - O .Z 0 .2 0 . 7 ! o . o 0 . 0 0 .0 0 . 2 I 0 . 0 0 . 0 0 . 0 0 . 0 1 7 . 0 0 11 n 21 1 o 6 0 O 1 0 0 0 j 0 ' 59 m>-so Z 3 . 1 28.2 35 .0 1 0.0 13.7 o .o O.O 1 0 . 0 O.O 0 . 0 0 . 0 ' J . z 3 Z . * 26 .3 18.5 O .o 6 . Z 0 . 0 0.0 t o . o 0 .0 o . o 0 . 0 l 1 0 .7 0.9 1.1 1 0 .0 0 .4 0<0 O.O 1 o . o O.O o . o J o . o i 8 . 0 0 0 1 IS 0 1 0 1 O 1 O 1 0 1 0 ] 0 i 0 1 O 1 • 5 6 0 - 6 0 0 .0 i 100.0 0 .0 1 0.0 I 0 . 0 ! o . e i 0 . 0 i 0 . 0 I 0 . 0 1 0 .0 II 0 . 0 • 0 . 8 o . o 23 .8 1 o.o i o . o i o . e J O . O ) o . o i 0 . 0 1 0 . 0 I 0 .0 1 0 . 0 ! O . O I 0.8 I 0 .0 1 0.0 1 0 . 0 1 O . O ' 0 . 0 1 0 . 0 ! 0 . 0 ! O.O I 0 . 0 r 9 , 0 0 7 1 0 1 0 I 0 I e i 0 1 0 1 0 I 0 1 0 1 0 t 7 100.0 I 0 . 0 i 0 .0 i 0.0 1 0.0 1 0 .0 1 O.O 1 0 . 0 1 0 . 0 1 0 . 0 t 0.0 ' 0.4 16,0 i 0 . 0 1 0 . 0 l 0 . 0 1 0.0 1 0 . 0 f O.O 1 0 .0 1 0 . 0 i 0.0 1 0 . 0 1 0 . 4 1 0 . 0 1 0.0 1 o . o 1 O.O 1 0 . 0 I 0 . 0 1 O.O 1 O .O J o . o i 0 . 0 I COIAWK 42 64 115 35 132 39 100 6CZ 47« I7S 79 1855 TOTAL Z . 3 3 .4 6.1 1 . 8 7 . 1 Z . I 5 .4 3 2 . 9 2 S . 7 9 .S 4 . 3 100 .0 Table 10 w ~ .._ t o o N O T 5 U R.E. A F F P R D B 1 5 - 2 0 2 0 - 2 5 2S-30 3 0 - 3 5 3 5 - 4 0 U D - 5 0 5 0 - 6 0 60+ ROW PCT I 0 - 6 S Z 1 6 5 2 1 - S 4 5 S U 5 " i - 1 2 5 l - S o O - 1 4 1 4 5 4 4 - 1 6 1 7 6 0 2 - 1 9 1 9 3 0 0 - 2 5 2 5 0 0 0 - 3 4 5 4 0 0 0 - 4 0 ROW COU PCT t 0 0 344 03« 300 OOD 0 0 0 0 0 0 TOTAL TOT PCT i 1 . 0 0 Z . 00 3 , 0 0 4 , 0 0 ! 5 . 0 0 ! 7 . 0 0 ! 6 . 0 0 1 6 . 0 0 J 2 . 0 0 1 0 0 4 0 1 4 ' 0 ? 1 8 15 ID j 49 1 0 . 0 o . O 7 . 1 0 . 0 I 7 . 5 1 0 . 0 ! 35.8 2 9 - 6 20*1 ' 2 5 . 4 J 0 . 0 0 , 0 l b . 5 0 . 0 1 2 7 . 7 I 0 . 0 J 4 9 . 0 10O. 0 1 O O . 0 1 J 0 . 0 0 . 0 1 . 6 0 . 0 ! i , 9 1 0 . 0 !. 9 . 0 7 . 5 5 . 1 l 3 . 0 0 ] 0 7 13 & 1 4 ! 8 i 12 & 0 I 51 J 0 . 0 1 2 . 7 2 4 . 6 1 4 . 6 1 B. 1 I 1 6 . 1 ) 2 3 , 9 0 . 0 - - 0 . 0 l 2.6.4 1 0 , 0 I 2 1 . 0 5 5 . B 7 1 . 5 1 3 1 . 0 i 1 0 0 . 0 1 3 4 . 2 0 . 0 0 . 0 i J o . o I 3 . 4 6 . 5 3 . 1 J 2 . 1 4 . 3 ! 6 , 3 0 . 0 . 0 . 0 ' 1 4 10 4 0 1 4 J 0 1 8 0 0 1 27 I 1 3 . 0 3 6 . 8 1 3 . 0 0 . 0 l 1 4 . 7 0 . 0 J a z . 4 0 . 0 0 , 0 1 1 3 . 9 1 7 . 3 3 1 . 8 1 5 , 5 0 . 0 l 2.1.5 0 . 0 ! 1 6 . 8 o . O i 0 . 0 ! J 1 .& 5 , 1 1 . 8 0 . 0 1 2 . 0 ] 0 . 0 i 3 - 1 0 . 0 0 . 0 ! S . o a i 7 4 0 . 0 I 1 0 l 0 0 1 0 i 12 i 5 6 . 8 2 9 . 7 0 , 0 0 . 0 I 1 3 . 4 0 . 0 I 0 . 0 0 , 0 0 . 0 ' 6 . 1 ! 1 4 . 0 1 1 . 3 0 . 0 0 . 0 ! 1 1 , 6 0 . 0 0 . 0 0 . 0 . 0 . 0 ! 1 3 . 5 1 .8 0 . 0 0 . 0 ! 0.8 i 0 . 0 I o . o 0 . 0 0 . 0 1 6 . 0 0 1 0 4 0 3 ! 0 0 ! 0 . 0 I 0 1 7 ! 0 . 0 5 8 . 2 0 . 0 4 1 . 8 J a . o 0,6 i O . O 0 . 0 ! O . O i 3 . 7 ) 0 . 0 1 3 . 4 0 . 0 2 8 . S l O.O J 0 . 0 I 0 . 0 0 . 0 I 0 . 0 1 1 0 . 0 . 2 . 1 0 . 0 l . S 1 o . o J 0 , 0 1 0 , 0 O . o i 0 . 0 I T.GO J 14 7 3 0 ! 0 ! 0 i 0 0 .0 l 24 ) 57 .8 2 1 . 6 1 2 . 6 0 . 0 } 0 . 0 0 . 0 J 0 . 0 0 . 0 0 . 0 ! 1 2 . 2 1 2 6 . 7 e z . 6 1 3 . 2 0 . 0 J 0 . 0 0 . 0 i o . o D.O 0 . 0 ! ] 7 . 1 3 . 6 1 . 5 0 . 0 J 0 . 0 i 0 . 0 ! 0 , 0 0 . 0 1 0 . 0 i 8 . 0 0 I 7 0 0 0 1 0 0 J 0 0 0 7 J 1 0 0 . 0 o . o o . o 0 . 0 i 0 . 0 0 ,0 J O.O o . o 0 , 0 1 3 , _ J 1 4 . 7 0 . 0 0 . 0 0 . 0 J 0 . 0 1 0 , 0 1 0 . 0 0 , 0 1 0 . 0 1 1 3 . b t 0 . 0 o , o O.O ! 0 . 0 ) 0 . 0 J O . O 0 . 0 ! 0 . 0 I l . o o I 17 0 ! 0 0 1 0 0 [ 0 0 I 0 I 17 I 1 0 0 . 0 0 . 0 0 . 0 I 0 . 0 1 0 , 0 0 . 0 ! o . o 0 . 0 I 0 . 0 ! 8.7 I 3 5 . 3 O . o • o . o ; 0 . 0 I 0 , 0 0 . 0 ! o . o i o . o i 0 . 0 I i 8 . 7 0 . 0 I 0 . 0 ' 0 . 0 1 0 . 0 0 . 0 .! 0 . 0 i 0 . 0 i 0 . 0 1 COLOfUl 48 3 1 2 5 1 0 13 8 3 6 1 5 10 1 9 3 T O T A L 2 4 . 7 1 6 . 0 1 1 . 7 5 . 4 6 . 9 « 4 . 3 1 8 . 5 7 . 5 5 . 1 1 O 0 . 0 Table 11 (V) Table 12 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ALU FREQ (PERCENT) (PERCENT) (PERCENT) 1,00 1931 4 5 t " l 4•»„« 4 5,9 2.00 2069 48,3 49,2 95,2 3.00 203 4,7 a ,8 100,0 oTo 79 1,9 ~MT3TING~ ioo7o 9,00 0 0,0 MISSING 100,0 TOTAL 4283 100 ,0 100,0 1.0,0.0 Table 13 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ * ( P E R C E N T ) (PERCENT) (PERCENT) 1,00 46 22,3 22,8 22,8 2 Q00 156 75,4 77.2 100,0 0.0 5 2.3 MISSING 100,0 9,00 0 0,0 MISSING 100,0 , . f p . ( , , , < i < i , a < i s « i n a « a Q p o p o p i a a TOTAL 207 100,0 100,0 , 100,0 Table 14 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENT) (PERCENT) _____ .__ 2.00 56 27,1 28,3 67,0 3,00 15 7,3 7,7 70,7 0,00 TO «77 a~a9 7976 5,00 10 0,6 a,8 80,0 8.00 11 15,0 15.6 100,0 , ^ 100,0 ~~ 9,00 0 » 0,0 MISSING 100,0 TOTAL 207 100,0 100,0 100.0 r Table 15 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY APJ FREQ (PERCENT) (PERCENT) (PERCENT) 1 ,00 88 0l72 0 0,0 00,0 2.00 66 | l a 8 33,2 77,2 3,00 10 0,6 0,8 82,1 0,00 2 079 1,0, 8 _ 7 o 5.00 13 6,1 6,0 89,0 8,00 21 10,1 10,6 100,0 o . o oTi MISSING TooTo 9,00 0 0,0 MISSING 100,0 TOTAL 307 100,0 100,0 100,0 224 Table 16 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENTj (PERCENT) 1.00 120 58,0 62,6 62,6 2f00 « la,8 18,2 80,7 s . o o 21 10,2 11.0 91.7 a.oo 2 i . o 1.0 9277 s . o o 12 5.9 6.U 99.1 s . o o 2 0.9 0.9 100.0 0.0 15 T.J MISSING 100,0 9,00 0 0,0 MISSING 100,0 "UAL 207 100.0 100,0 i 00 , 0 Table 17 D i s t r i b u t i o n of Whether Cooperative P r o j e c t Managers Ask Coop e r a t i v e Households to P a r t i c i p a t e i n Reducing Operating Costs There were two p o s s i b l e areas of p a r t i c i p a t i o n : A. Do p r o j e c t managers ask f o r p a r t i c i p a t i o n i n reducing l i g h t i n g c o s t s ? B. Do p r o j e c t managers ask f o r p a r t i c i p a t i o n in reducing h e a t i n g c o s t s ? Survey Data Analyses: Response Rela t ive Frequency A. B. Yes 24.4 42.4 No 70.0 54.2 Don't know 5.6 3.5 Table 1.8 VALUl ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT j (PERCENT) (PERCENT) _____ ___ 12.J ~ 2.00 51 2 1 , 6 2 5 , 1 37,« 3,00 127 6 1 , a 6 2 , 6 100.0 0,0 0 l T * MISSINO lwO.O 9.00 0 0,0 MI3SIN6 100,0 TOTAL 207 100,0 100,0 100.0 Table 19 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENT) (PERCENT) i.oo oa 2T7i aTTi 2V."i 2.00 102 49,0 49,0 72.2 1.00 SO 23,9 23,9 96.0 4.00 6 " 370 370 9976" 5,00 2 1,0 1,0 100,0 O.u 0 0,0 HISSING 100,0 9790 o " o 7o" MIS SIN G 1 0 076" TOTAL 207 10 0.0 100,0 100,0 VALUE ABSOLUTE FREQUENCY RELATIVE FREQUENCY (PERCENT) AOJUSTEO FREQUENCY (PERCENT) CUMULATIVE AOJ FREQ (PERCENT) 1,00 2,00 3.00 ~4700 5,00 0.0 31 106 49 16 5 0 50,9 23,7 7.8 2.5 0,0 15,1 50.9 23.7 7,8 2.5 MISSING 15,1 66,0 89,7 97.5 100,0 1 0 0 , 0 9 . 0 0 TOTAL 0 207 0,0 100.0 MISSING 100,0 1 0 0 . 0 1 0 0 . 0 Table 20 MVFRMMP COUNT X ~ ROW PCT INO AN8WE DEFINITE PROBABLY NOT SURE PROBABLY DEFINITE ROW COL PCT IR LV HOVE HVE NOT NOV j V NOT H TOTAL TOT PCT I 0 , 0 I 1 ,001 2 , 0 0 1 3.001 i t , 0 0 1 5 , 0 0 1 DHELREP I . . - i - » — — • ! . , I . « . — . . . I . . , # — * . I — . . - • • • I 0,0 I 14 I 7 1 0 1 21 I 22 1 6 9 I 133 NO ANSWER I 1 0 , 6 I 4 , 9 I 0 , 0 I 1 5 , 7 I 1 6 , 7 I 5 2 , 0 I i . ' t I 65.6 t 4 , 2 I 0 . 0 X 3 , 7 I 1,6 I 3 , 6 I I 0.'3 I 0 . 2 I 0 . 0 I 0 . 5 I 0 . 5 I 1 .6 I  • I-* I - x-.----««! I - I — . „ - - , . I 1,00 I 0 1 27 I 27 X 37 X 135 X 123 X 349 YES MAJOR I 0 . 0 T 7,6 I 7 . 7 I 1 0 , 7 I 3 6 , 6 I 3 5 , 3 I 8 , 1 I 0 . 0 I 17 . 1 I 1 3 . 7 I 6,6 I 9,6 I 6 , 3 I I 0.0 I 0,6 I 0,6 I 0,9 I 3 ,1 I 2 , 9 J .1-.-«.--•-!--.---.»I----»-»„I. I m.ml  2 , 0 0 I 4 1 41 I 74 X 163 I 344 X 3 5 9 I 9 85 YES HINOR X 0.4 X 4 . 2 X 7 , 5 X 1 6 , 5 X 3 4 , 9 X 1 6 , 4 X 2 3 , 0 X 16.4 X 2 6 , 7 X 17 , 6 X 28,6 X ? 4 , 5 I 1 8 , 5 I I 0 . 1 I 1,0 X 1.7 X 3.6 X 6 , 6 I 6 , 4 I - I - . . - - L . - . ^ . - . I - j i* mm\ I 3 . 0 0 I • 3 X 61 I 96 I 343 I 9 0 3 I 1390 I 2 6 1 6 NO ONLY PEC MNTN I 0 . 1 I 2,9 I 3 . 4 X 1 2 , 2 I 3 2 , 1 I 49 , 3 I 65,6 I 1 5 . 9 I 5 1 , 0 I 46 , 7 X 6 0 , 9 X 64.1 X 7 1 , 6 X I 0 .1 I 1,9 I 2 . 2 I 6 ,0 X 2 1 , 1 X 3 2 . 5 X • I — I — I •--•-"•» I•••••»•• I • • • • • • • • I X I COLUMN 24 155 197 564 1404 1941 4281 TOTAL 0 , 5 3_6 4 . 6 1 3 . 2 32,6 45.1 1 0 0 . 0 CHI SQUARE • 407.94751 WITH 15 0EGREE8 OF FREEDOM SIGNIFICANCE • 0.0 Table 21 VALUE ABSOLUTE RELATIVE FREQUENCY FREQUENCY (PERCENT) ~r.OO 349~ 2.00 985 S.OO 2816 ~0T0 1S3 9.00 0 TOTAL 4285 ADJUSTED CUMULATIVE FREQUENCY ADJ FREQ (PERCENT) (PERCENT) "~«7t 87«~ a#4 23.0 23,7 32.1 65,8 67,9 ldO.0 TTi M T S Y I N G iToTo 0,0 MIS3INQ 100,0 " 100,0 ' 100,0 100,0 Table 22 230 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FREQUENCY FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENT} (PERCENT! " T 7 0 6 f2 72 2^77 2978 29. B 2,00 1554 56.1 36,a 66,2 1,00 1098 25,6 2 5 ,7 92 ,0 4,00 299 T70 7 7 a 9~976 5,00 44 1.0 1,0 100,0 0,0 17 0,4 MISSING 100,0 " 9 7 oo 6 o7o MISSING To 6 7 6 _ TOTAL 428} 100,0 100,0 106,0 VALUE ABSOLUTE RELATIVE FREQUENCY FREQUENCY (PERCENT) ADJUSTED CUMULATIVE FREQUENCY ADJ FREQ (PERCENT) (PERCENT) 1.00 1104 25.8 25,9 25.9 2.00 1624. 37,9 38,2 64.1 3,00 1078 25,2 25,a 89.5 4 . 0 0 369 8~7* eiTr 98.2 5 . 0 0 76 1,8 1,8 100,0 0 ,0 29 0,7 MISSING 100,0 ~ 9,oo 0 oTo MISSING' Too7fiT TOTAL... 4 2 6 1 __ 100 , 0 . 1 0 0 , 0 1 0 0 , 0 Table 23 231 VALUE v a ABSOLUTE FREQUENCY RELATIVE FREQUENCY (PERCENT) 0.0 i .00 2.00 T.~oT 0.00 7.00 999.00 .1.00 TOTAL 8 10 0 5 2 168 0 o © ra p o • 9 207 3.7 6,7 3,6 2 , 6 2,5 0,8 ADJUSTED FREQUENCY (PERCENT) a 0 80,8 0,0 0 0> P> a — ' V 0 1 00,0 3.7 6.7 3,6 CUMULATIVE ADJ FREQ (PERCENT) o a s <s o a <9 10.0 10,0 2.0 2.3 0,8 80,8 MISSING . . • • p a , 100,0 16,0 18.3 19,2 100,0 100.0 100,0 VALUE ABSOLUTE RELATIVE ADJUSTED CUMULATIVE FRFQUENCY. FREQUENCY FREQUENCY ADJ FREQ (PERCENT) (PERCENT) (PERCENT) 0.0 0 1,8 1,8 1,8 1.00 2 0,8 0,8 2.6 2.00 1. 0,3 0,5 3.1 28,00 2 1,0 1,0 0,0 999,00 199 96,0 96.0 100,0 1,00 0 0,0 MISSING 100,0 TOTAL 207 100,0 100,0 100,0 CN (0 ;_: e : V-= rvj CVl — r v UN. • !«0 © < -,LL) Q ;3e .© 'os • : © ,2 — : r -:«5 o • ID o o r _ -JS :* O 'O o O o o ;B ;s£ :« lu CD 1 5 iUl « 0 a: is- • & o :ar ;o -o »- ;wJ <J O 2 a- a. a-o ;* a . i-=Jr r- cO — o n e i O C | 8 o • : • B 6 I O s o <o e s i o a o o & « > < r ; r v j * • * • . - 4 — o i n •mrt O ' r * i n 3 " ^ 0 0 o;ro0 <0 o t c - < r it n . o © o o © o © l O O O i O • B . • 0-» f*1 ^  i~s ^ • «| • l —< o r j s o >^ • • • = r o - r - r J 3 » ^ y — i oo • » » oOiO © 1*1 * C — ! o r- © i © © © O i * • 8 j O 8 C : © © © © © o o • • •'. •— r - © cr- o OQ : V B B • \ v J ' 9 - c O -G' *0 CM — i ^r* • • • o ' ^ Q o o o o • • • O o o o o o a O G © o c © o • • • © o o a o e> o o © o t * - i n *<i«) • • B sj-.—> —• — Q - « 3 r-\ ( _ ) • • • (QOO 4 O © «-* >D o • • * >0 v O H v0 v O - H W * * • o o O o • • • o o © C o O O i<r o- © — i • •• • o ©, © — o o © — tow if- • • • >r0 r J r 0 fO o o o a o % • * CJ o o / A) O © * o _ _ o _ 0 . o a) a. f0 J —i a . s 6 -O O O O © © o i© _ O O * >&i© ON; i n *— ! * i© © • rvi'© O 43 CO » r O r -n j 3 -o 2 _ 3 W O V -Table 24 continued 233 NRDPOOH COUNT I Bdw pet ! i ftEoPnn Pfjw COL PCT IM TOTAL TOT PCT I 1 ,00 f 2.001 k l D u U " r n n 1.00 I 13 1 r 3 T 16 t PERSON I A l .7 r 1 8 . 3 T I 5 0 , 0 1 r 3 0 , 9 i I 36.7 r «.? I • * * 2.00 I r 7 T 20 ? PEOPLE I 68.7 r 5 3 . 3 I S 5 . 1 I 5 0 . 0 r 6 9 , 1 i I 3 6 . 7 r i COLUMN 27 i ft 3 7 TUT AL ?6.6 l oo.o C O U N l 1 «Ow PCT 1 1 bFI'ROU 2 Rp.DRhn 3 H E O P U O POW CnL PCT I M M S H S T O T A L T O T P C T I n.o T 1.00] [ ? , 0 0 I,.. 3.001 J _ _ A J " " " • .... - _ -* t.oo I 16 T ?? 1 [ 13 I 3 I 5« 1 P E R S O N I 29.6 T «1 .1 1 r ?5.7 i «!.6 I 56.7 1 10 0.0 T *>3.9 ] 1 6a,h I 16.7 1 } 16.8 T 23.3 ] r i5.« i 3.? 1 - 2.00 1 I 19 1 r o" \"" 28 2 P f O P L F I 0.0 T 67.5 ] 0.0 I 3?.5 I ?9.6 I 0.0 T «6.1 ] r o.o i 50,0 I 1 0.0 T 20,0 1 [ o.o I 9,6 I 3,oo 0 T 0 ] r o I 6 I 6 ~ 3 P E O P L E ... — o ; o " T n.o ] [ ' 0.0 " " T T O O . O I •--"b.6 0.0 I 0,0 ] f o.o I 33.3 I o.o T o.o. 1 [ 0.0 I 6. a I 0, 00 0 I 0 1 f 7 1 0 I 7 P E O P L E 0.0 J 0,0 ] 100.0 I 0,0 1 7.3 f o.o j 3 5 . r I~ ~ n;o 1 - ; ' • *.' 0.0 T.7 0,0 1 r 7.3 i 0.0 I v? .:•}.• :•• m C O L U M N u hi 26 , 18 96 T O T A L 1 6 . 8 «3.3 20.8 19,2 100,0 Table 25 'NROOM C O U N T i _ _ _ _ _ " ' Row " P C T ' I T ROO"M" ' p " ROOM9 ""'5 W ( ! p"S' a ROOMS 5 ROOM3 "fc BOOMS 7 ROOMS 8 ROOMS NO ANSwF. RQw COL PCT I R TOTAL TOT PCT I 1,OM 2 . 0 0 1 3,0<>t 4,00 1 S , 0 0 I 6.On I 7,0 0T 8,001 9,001 'HH • • • • « • • • I !»-----•-I --------T--------1--------T - - - - - - - I - - - - - - - - I I - - - - - - - - I 1,00 I ?i T 25 I 120 I 197 I 71 I 2-8 1 0 1 0 1 6 1 472 1 PERSON__ _ ! « . 6 _ T 5.3__ I a 1 , 7 _ _ I _ ] 5 ! _ 6 , 0 I d._ I 0,0 I 1 ,6_._I }2.,__ ' " ~ " I ""'77.9' T 71.* I 63.1 i 2<»,6 I 5.4 I 2.7 I 0,0 I 0.0 I 23,5 I I O.h T 0.7 I 3.3 T 5,4 I 1.9 I 0,8 I 0.0 I 0,0 I 0,2 I 2,00 I 3 T - I 62 f " 274 I 126 T 219 T 33 I 14 I 7 1 9«1 2 PEOPLF T Q > T O.u I 6.6 T 29,1 T 3-.6 T 23,3 T 3.5 I 1,5 I 0.7 T 25.7 I 11.0 T 11.1 T 3?.6 _T__4 1_,2_ T ?-.,7 I _ 2 1 , ? T A ! #.« I I * 1 i I... ...20 .9 T ' I 0.1 T 0.1 I «.7 I 7,5 I 8.9 I 6,0 I 0.9 I 0,4 I 0,2 I 3.00 I 3 T 3 1 8 I__ 160 I 3 6 3 _ I 278 I 39 I_ 17 I H...I. «?_.. 3 P E O P L E " " I 0.3 T 0 , 3 " 1 0 . 9 "I I T , ? I ~ «t,1 t " 3 i , 5 . I 4,4 I 2,6 I 1.3 I 2<M I 10.2 I 9.'4 I 4.4 I 24.1 I ?7,5 I 26,8 I 14,1 I 20.6 I 34.6 I 1 _ p. 1 T 0.1 _ I 0,2 I a,n I 9.9 I 7 ,jb I \jl I o,5 L _ _ . P 1  — I — — — — — — m — f a — — m — a — »f—— — — — — — — I — — — —•» — «•—J—— « t. —— — —T,«» — — — — - » T — — —•!••* — — — 4,00 I 0 1 O J 0 T 22 I 425 I 3*2 I J 3a I 24 I 3 1 991 4 PEOPLE I 0 . 0 T 0.0 I 0 . 0 I 2,3 I 42.9 T 38,5 I 13,S I 2,4 T 0,1 I 27,1 I 0.0 T 0,0 I 0.0 I 3,4 I 32.2' 1 36.« 1 "8,5 1 2«.7 I 10,2 I I 0 . 0 I 0,0 I 0 . 0 T n,6 I 1 1 . 6 - 1 10,4 T 3,7 I 0,7 I 0,1 I —• 5 . 0 0 ~ I " 0 j 0 * r " 0 " I f t " " j f ~ " 'i'3« ' *!"•• T29 I 71 t 29 I 4 1 377 5 OR MORE PEOPLE I 0.0 T 0,0 I 0 . 0 I 3,0 I 35.6 I 34,1 1 18.7 I 7,6 I 0,9 I 10,3 1 O."0 T 0,0 I 0.0 T 1,7 I 10.2 T 12.4 I 25.5 I 34,4 I 10.8 T I 0.0 T 0,0 I 0.0 T 0,3 T 3.7 t 3,5 1 1.9 T 0.8 I 0.1 T fPLIiMKj ?H 32 191 hho 1319 1P36 ?77 t*4 33 *663 TOTAL O . H S . P th.o 2».3 7.S 2.3 " 0,9 1'>".0 Table 25 c o n t i n u e d NR00* COUNT I RflU P C T I ? 3 P O P M S " a R O O M S R O W COL PCT I TPTH TOT PCT I 2 . 0 0 1 r s.oo] I a ,oo 1 . 0 0 I • 1 r m i [ 3 [ 1 6 1 PERSON I 2 2 . 6 1 r 5 9 . 1 i 1«.3 I - « a , 9 I 1 r < J A , 2 i 1 3 0 . 9 I 1 0 . 2 1 r ? 6 . 6 i f 8 . 2 2 . 0 0 I I ] r i o ] 1 7 I 2 0 ? P E O P L E I 1 U . 9 1 r M . * 1 r 3 3 . j T _«S.1 I « « .' 7 ] f s i , » r 6 9 , 1 r ~ " " 8 . 2 1 f ~ _ 8 . V I I 1 H . 0 COLUMN 7 2 0 1 0 37 "TfJTAX"- " 5 * 7 1 2 6 . ~ 6 ~ " ~ m o . o Table 25 c o n t i n u e d COUNT POW PCT COL PCT 1 ROOM ? ROOMS 3 ROOKS it ROOMS 5 ROOMS 6 ROOMS Rnw T O T A L TOT PCT 1 1 , OOT 2,00J 3.001 a.ooi 5.001 6.001 T » a • • l.on 1 16 I 3 1 r i o I 19 1 7 I 0 I 5a 1 PERSON 29.6 T 5.9 ] [ 17.7 I ltt.7 I 12.1 I 0.0 I 56.7 2 PEOPLE • ] 100.0 T 16. ft T - -O.'O T 0.0 T 50.0 1 3.<J 1 [ 60,0 I t 10.1 I 65.5 I 19.7 I a o, 6 1 , 6.9 I 0.0 1 0,0 I 3 1 11.3 1 50,0 1 f 6 T f 22.7 I f «0.0 I 6 I 22.7 'I 22.3 I 6 I ?1.7 I 37.ft I 6 I 21.7 J 50.0 I 26 29.6 m | 3.00 ] 0.0 T 0 T 0.0 "T I 0.0 T [ 0.0 J 3.« 1 o ] f 6.7 T r o T 6.7 I 0 I 6,4 I 0 I 6,« I 6 I 6 0,0 ] 0.0 ] 0.0 ] t 0.0 i [ 0.0 I r o.o i 0.0 I 0.0 1 0.0 I 0.0 I 0.0 I 0,0 I. 100.0 I 50.0 I b.ti I U PEOPLE m ] a. oo l 0 T O.'O T 0 ] 0,0 1 r o i I 0.0 I tt I 50,0 I a I 50.0 I 0 I 0.0 I 7 7.3 m ' t 0.0 T 0.0 T 0,0 ] 0,0 1 [ O.O I [ 0.0 1 12.2 I 3.7 I 21.7 I 1.7 I 0,0 1 0,0 I COLUMN TOTAL 16 16.ft 6 6.7 1 6 16.B 29 3 0 , 0 16 16.9 12 12,6 96 100.0 i i - n —• -O -47 CT K \ r - i • i n o a A . • »-o • c ir> r - O a 0 0 a o- O tr- ** o 8 a 6 a > o e • 8 i a b a C O (V. a o o- a o o c O 8 - 3 C JJ 1- O o **\ 8 l / % o » "1 8 Q- o s a a a a m mac a> • • 1 C L a c& « • ~ a * i o « a * 9 - © a c e o o O o a I*"I ( \ J ft» a — g f \ j ft a a s a 0 o a a i a 4 0 a 0 I 0 f U —• «f> 4 - O a •a o if & a LT> o o O 0 a I V a >C • a • a « o o o a a a a o a r - a a « • at * $ * — — i / \ a o*> o a O —-« Q i w o r v i a O O a O -t a en a o a 0 a J a 8 a * a 4 a c a ' i a o a *r a/> a a I \ J i c a o o o o J O O O ^ l f l o O o O a i n r " •»» A a a • a o - a o a a a a a C O * a a • * a a ^- . 1 ( S 3 a kC< P - a « W & a o O © a A . a D r > - a-4 O O O 1 0 -g » * * A ) 8 0 a a a A J j a 0 6 a a * o • a a o D a a s o a a - J D i& a o o o a O ^ f i U r t <\j a Q a f - a a • a » * » a a o a a a a a 1 T » a o a a r - » CD 0 ( O ^ A j O a * \ J « J k f i <•-• a <3 O o J r » — O O O » -^a P O I V i 0 " a a a c i n u a a a a a e » 0 ! 0 a o a ! A a a o a t If* 8- C C O a o o O O a O v » i * ) 0 ^ r O a - l a <r Or a S i " a a 4 K l • o O a a a a a r - o o a 0 -a «0 o - » * \ a a^ t -o LO ON a o o o a —- i O o t D M O I a —, p - a fja>* a a 8 t a D a A 1 » a » o a *- a c a I a a a o o o O O a a r - p - o US' a o o a o a o o a o 1 - I f * a C O ' • • • a a a . a a » a a • a a • • • ft «© • 9 * 0 w « O a a © © 0 O Q , Q a O O o o O O 1 r u ^ s o g 0 a 0 a a a • a B • a a a 6 ft a a a »- ¥• &- a u . a o o U . o o ft. a. 0 o o o o o c <: a a • o — ' a *- a 3 » -D a" _ l >~ e a * a _ J O P c a U J O a -&- 6 C J I k u a . U to a 05 -> • ; _ i O c ; i. a>—• 0-» < ^ U J C O Z 2 X in u U J •-• •—4 GO X C 2 T « Q - a • — . . . . i . 1 . . . . . . . Table 26 c o n t i n u e d COL PCT TOT PCT SSr-FAMILY 0 — e n a o c » » •a a M 0 i * 0 v J «s tp B —» ta 0 0 a 1.on I i a T 69 t 126 I 1 78 I 216 ' [ 101 T 70S I 2.0 T f W .9 I " 2 5 . " 3 " r 3 0 , 7 ' [ 50,3 T 9 1.5 I loo.o T * 6 . 3 r 9a,o i 9 S . 7 I <? n . c ] [ 50,2 I I 1 T 16." T 28.1 -1 r 1 3 j l I 2 , O n 8ENI0P tx, n o HANDI+8PEC PU»P 5,00 ~*TYn> PROJECTS 9 , 0 0 MISSING ROW TOTAL 78.HOT 7 9 . 0 0 0 0 . 0 0 , 0 0 . n 2 1 . 1 1 0 . 0 1 , n 0 T 0 . 0 T 0 . 0 T ( D . O T i P a a t i V v t i J< 0 T_ 0 . 0 "1 0 . 0 T 0 . 0 r 0 T 0 O .o 0 . 0 0 . 0 9.1 2.5 0,3 1 80,00 ' m m m O t 1 " . 5 0.7 0 .1 1 0 , 0 T 5 0 . 0 I 5 0 , 0 I 0_. 0 I 0 , 0 7 0 , 0 I 0 . 3 0 . 0 T 1 . 3 I 0 . 7 T " n , " n I 0 . 0 I 0 , 0 0 . 0 T G,l I 0 . 1 I n , 0 I 0 . 0 I O . O C O L U M N 1 U 6 0 1 3 4 i ^ 0 2 3 9 1 1 2 7 6 9 T O T A L 1 . 0 1 0 . A 1 7 . 4 2 « . 7 3 1 . 1 14,6 1 0 0 . ' 0 81.001 82,00 I O fS «» O t * I 1 8 . 2 2.1 0.5 1 3 1 5 . 8 I 2 1 . 1 I 3 " . 2 I 7 , 9 I ( 1 , 9 «.5" I " « . 2 T 5 . a r 2 . 7 " T 0 , 8 r 1 . 0 I 1 . 7 I 0 , 4 1 0 "i I ~ ~ 3 T 0 ~ ~ " l " 3 0.0 T 0 . 0 T 1 0 0 . 0 : 0 , 0 T 0 . li 0 . 0 I 0 . 0 T 5 . 3 ! 0 , 0 T 0 . 0 I 0 , 0 I 0 . 4 I 0,0 1 3 1 . 8 2.9 0.9 0 8 3 , 0 0 . «* O 1 3 > ss O ta O 9 * 8 36,4 7,1 1.0 38 _22_ ' 2 . 9 ' ro 0 0 239 Appendix 3: A D e f i n i t i o n of S e c t i o n 56.1 Subsidy Terms 1. Acceptable C a p i t a l Costs For Lending Purposes The l e s s e r o f : a. The a p p r a i s e d v a l u e , p l u s up to 10 % where necessary b. The a c t u a l c a p i t a l cost 2. Acceptable C a p i t a l Costs For S e c t i o n 56.1 Purposes The sum of Maximum Uni t P r i c e s f o r any p r o j e c t 3. Predetermined A s s i s t a n c e The amount of S e c t i o n 56.1 a s s i s t a n c e r e q u i r e d to bridge the gap between the reduced p r i n c i p a l and i n t e r e s t payment and the f u l l i n t e r e s t payment. 4. Lower End of the Range of Market Rent The occupancy charge e q u i v a l e n t to the lower end of the range of market re n t s charged on the p r i v a t e market f o r s i m i l a r accomodation in the same area. 5. Income-tested Occupants Those occupants who r e c e i v e d i r e c t monthly a s s i s t a n c e to reduce re n t s because t h e i r gross incomes are l e s s than 4 times the LEM rent i n year one, oroccupancy charge t h e r e a f t e r , and whose incomes are s u b j e c t to annual review. 6. Income Includes earnings from any source other than s o c i a l a s s i s t a n c e payments f o r s i n g l e parent f a m i l i e s . 7. Economic Occupancy Charge The breakeven occupancy charge for the s h e l t e r component of the p r o j e c t r e q u i r e d to o f f s e t the t o t a l o p e r a t i n g c o s t s i n c l u d i n g contingency, r e s e r v e s , and the f u l l s h e l t e r a m o r t i z a t i o n c o s t s before any a s s i s t a n c e other than C a p i t a l g r a n t s . 240 8. Subsidy Pool The S e c t i o n 56.1 a s s i s t a n c e a v a i l a b l e f o r income-tested households a f t e r s u f f i c i e n t beyond the a s s i s t a n c e which bri d g e s the gap between LEM and the economic occupancy charge. 9. F e d e r a l Graduated Occupancy Charge Scale A graduated rent-to-income s c a l e based on income ranging from 16.7% at the lower end of the s c a l e to 25% at the upper end. 10. Maximum A v a i l a b l e A s s i s t a n c e Refer to F i g u r e 5.2 11. Reduced P r i n c i p a l and I n t e r e s t Payments Refer to F i g u r e 5.2 Source: Cooperative Program S e c t i o n 56.1 G u i d e l i n e s and  Procedures Manual: Mortgage A d m i n i s t r a t i o n 1978 241 Appendix 4 PART-I: S t a t i s t i c s Canada 1981 Low Income C u t - o f f s S i z e of f a m i l y u n i t Low-Income C u t - o f f 1 person $ 8,045 2 persons 10,614 3 persons 14,198 4 persons 16,361 5 persons 19,066 6 persons 20,823 7 + persons 22,919 Source: S t a t i s t i c s Canada PART I I : 1981 Average And Median Incomes For Owners and Renters a. Average Incomes by tenure Owned Housing (avg) $31,434 with mortgage 34,996 without mortgage 27,150 Rented Housing 20,625 A l l Canadian households $27,471 Source: Household F a c i l i t i e s by Income and Other  C h a r a c t e r i s t i c s b. Average and Median Incomes For Renters by Household S i z e (1981 ) Household S i z e Average Income Median Income 1 person $10,484 $ 9,399 2 persons 19,238 16,583 3 persons 23,131 20,740 4 persons 26,143 23,100 5+ persons 28,631 25,214 Source: E s t i m a t i o n s based on HIFE data 

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