Including Affordable Units in Cohousing in Canada

April 2021. Peterborough ON

“Affordable” homes can be either rental units or purchased. “Affordable” in government funding guides usually means less than 80% of market rate, but this is still too high for many potential applicants. A better guide is usually that the monthly cost is no more than 30% of earned income. The goal of this article is to discuss possible ways to include affordable units in a cohousing development, and how to avoid the failure we experienced. I have tried to interpret correctly the incentive programs discussed below, but it is important to verify them for your own cohousing development.

When Kawartha Commons first formed it included as part of its mission statement “to create an inclusive, diverse and caring community open to a range of financial situations that supports each of its members in choosing their own destiny”. The desire to “allow for a range of financial situations” led us to try to include some affordable units. Unfortunately, we failed to achieve this for reasons to be discussed here. Knowing what we do now might have made this goal possible, so we want to share what we’ve learned, especially as many cohousing develops want to include affordable units but very few actually achieve this. Exceptions in Canada include Quayside Village and Driftwood Village, both in N. Vancouver. Both received very significant waivers of city development fees that they used to reduce costs for several affordable units.

Reasons for including affordable units in cohousing developments

By and large, people are interested in participating in cohousing for a combination of the strongly supportive community it creates, and the desire to live more lightly on the land by sharing resources, tools, transportation, etc. One component of a strong community is its diversity—age, race, sexual orientation, financial situation—and these support each other. For example, a young family may not be able to buy a unit at market prices, so an affordable one assists children to be present, and children enrich the lives of all other residents.

Another example could be a recent immigrant family; the family can benefit from a caring community willing to help with the English language, customs, and learning about the neighbourhood; the community benefits from the cultural enrichment. Experience elsewhere, as in Quayside Village, has shown that residents of affordable units usually integrate as fully participating members of the community. Some younger parents may participate a little less at first because of family demands but make up for this as their children get older.

One big advantage to including affordable units in cohousing is that it avoids the ghettoization that can occur in large developments where all the units are affordable. Another advantage is that the management and some of the upkeep is done by the residents in most cohousing developments, which also reduces operating costs. Such advantages seem to be recognized by municipal officials and staff of the funding organizations, but this is not enough in itself to garner much funding.

Typical sources of funding

The percentages given below are based on a dwelling unit cost of $400,000, which may be a bit low for today’s housing market.

  • Some municipalities will waive development fees (fees to connect to the sewer and water mains, etc.). This is roughly $18,000 per dwelling unit in Peterborough. (4%)
  • CMHC under the National Housing Strategy (—new-construction-stream). Requires at least 5 affordable units and at least 30% of all units must be affordable. Provides long-term loans at low interest; part of the loan may be forgiven. Projects must have support from another level of government, and achieve at least a 15% reduction in energy use relative to the 2017 National Energy Code for Buildings. There is funding available at several stages of development, including seed funding.
  • FCM’s Sustainable Affordable Housing, SAH. . 30% of the units must be affordable but the funding applies to all the units. For the SAH program, FCM provides a direct grant of 10% of costs and an additional 10% in low-interest loans for construction which meets the Passive House standard or equivalent, which can reduce heating costs by about 90% or typically $1000 per year, a big reduction in household operating costs. The 10% grant roughly covers the extra construction costs required. If all the grant was applied to just the affordable units, it could make them substantially more affordable than the 80% of market rate. The grant and loan is stackable on top of other funding such as from the National Housing Strategy.

Lesson 1. You need to get some external funding to subsidize the affordable units

Most cohousing members are not in a position to subsidize heavily the affordable units, and this is not the usual primary goal of a cohousing development.

Is the most important goal more affordable housing in general or more diversity in the cohousing development? Suppose your development does not qualify for federal assistance but members are willing to donate significantly (e.g. through the municipality, where they might also get a charitable donation receipt for tax-reduction purposes). Is this a good alternative? The problem is that their donations will create more affordable housing if they donate to other organizations that do qualify for external funding.

Lesson 2. You need to know from the start of your cohousing development how many units must be affordable to satisfy the funding requirements you want to apply for, and reserve this number for that purpose

Federal agencies want a minimum number of dwelling units included for it to be worth their administrative time.

In the case of Kawartha Commons, we are planning for about a 30-unit building but already had more than 25 households in the queue for a unit before we were aware of the restrictions of funding programs for the number of affordable units. This made us ineligible for either of the above federal  funding programs, and we have not been able to find any others for which we satisfy their criteria.