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The program, which was first promised in 2022,听aims to fund several thousand new co-op units by 2028, whether through entirely new developments or expansions of existing co-op sites, relying on $500 million in grants as well as $1 billion in lower-interest loans to do so.听

“For more than the 30 years, the federal government 鈥� under both Conservative and Liberal governments I should add听鈥� withdrew completely from its role funding affordable housing including co-ops,”听Fraser said in an interview just before the announcement. “If you visit co-ops across Canada today, you鈥檒l notice most of them are several decades old, and that鈥檚 not a coincidence.”

Many housing advocates have long identified non-profit housing like co-ops as essential to creating lasting affordability in ever-heating rental markets.

While both ownership and rental co-ops exist in the market, Fraser says the new funding program will focus largely on rental co-op projects 鈥� which are managed by residents as a collective rather than by a landlord, with the idea that the model removes the incentive to make a profit off residents’ housing bills. In the longer term, those units typically remain more affordable.

鈥淧eople are not motivated by making a profit, but by maintaining the building and keeping rents low. That鈥檚 because the people who manage it are the residents,” Fraser said.

Building new co-ops in Toronto听has become an uphill battle, housing industry players听say, since government programs haven鈥檛 helped fund start-up costs in recent decades as robustly as听they did in eras such as the 1970s. Meanwhile, existing co-ops听have been in such demand that many have had to close their wait-lists.听

Tom Clement, executive director of the Co-operative Housing Federation of Toronto, in 2022 noted that recent efforts to build or expand co-ops have required cobbling together funding from multiple programs and governments, drawing out their timelines.

Meanwhile, Toronto-area market rents have soared beyond the reach of many households, with and Urbanation finding the average listing rent for a one-bedroom in April was $2,459 — affordable only to a household earning at least $99,000 per year, according to federal affordability standards.

The federal government says听proposals for the new funding will be prioritized for approval if they focus on individuals “most in need” 鈥� offering the example of housing for women and children, people living with disabilities, as well as Indigenous Peoples. While Fraser told the Star the federal government intends to develop a “supplementary package” to target co-op housing for Indigenous Peoples specifically within the program, he said that will come “a little bit later.”听

While some housing observers had been hoping the program allowed for some subsidized rents within the new co-op projects to assist those in the most acute housing need, Fraser says that is not the target of the new program 鈥� though he said projects being assisted by the new money could still apply for other kinds of government aid if they wanted to provide deeper affordability.听

Speaking at the Winnipeg announcement, the听Co-operative听Housing Federation of Canada’s executive director Tim Ross said their sector had been preparing for Thursday’s announcement since the initial promise two years ago.听鈥淭oday is truly a turning point,鈥� he said. 鈥淥ur sector is ready to build.鈥�

The first round of applications is set to open from July 15 to Sept. 15, with Fraser telling reporters he expects the “first awards” to roll out within 2024.听