Thursday, November 22, 2012
Housing co-ops and why they fail
Some important stories just don't get reported because media deems them to be not worth the trouble: too small, risky, complicated and unsexy.
So mismanagement at co-ops is constantly overlooked.
In theory, a co-op is a great idea. The government puts up the down payment on an apartment building and the rents all eventually diminish as the rest of the mortgage off. Once it's paid off, the only rent tenants need to pay is to cover taxes and maintenance.
But take the case of the co-op, pictured above, at Walkley and Cote St. Luc. It was, like other co-ops, built and funded back in the golden era when government funded the down payment of such places.
After decades as a co-op, it's still staggering under a debt that should have been paid off long ago.
Controversies, accounting questions and alleged misdoings along the line led the black ink on the ledger to turn red and administrators were forced to get another another mortgage to pay for repairs.
There were mysterious shortages of funds. Some former administrators, when confronted, simply wrote a cheque to end the squabble, others moved away and were not forced to answer difficult questions about the possible financial irregularities which were somehow not spotted by regular audits at the time.
So now the co-op is renting out apartments to new tenants at full market rate, which represents a disappointing betrayal of its mandate.
Some parents at the place are concerned with the atmosphere, which sometimes turns a blind-eye on drugs and other misbehaviour in the units.
These things are endemic because the co-op system lacks people who are sufficiently invested to care about what takes place at the facility and negligence and malfeasance sift in.
There are still many people who have benefited from living in this and other co-ops around town, enjoying with relatively cheaper rent without being on the government tit.
This should really be a golden age for these places, as the tax and maintenance fees should really make a mortgage-fee rent minuscule.
But sadly, in too many cases -- and I could cite other disasters but do not wish to get sued -- the co-op experiment has all-too-often proven that most people are too busy with their lives to act as effective part-time administrators of something as complicated as running a big apartment building and the results have, as a result, been far from ideal.