Without a tax exemption, co-ops face a tough choice

It’s an overcast, rather chilly spring day, and standing on the sidewalk of a tranquil Kitsilano side street, I’m not sure exactly where to go. Luckily, walking out of Helen’s Court Housing Co-op, which I’m standing in front of uncertainly, Carla Pellegrini welcomes me warmly, inviting me into the co-op’s courtyard.      

Pellegrini and David Diamond, who are both residents at the co-op, direct me to the “Bus Stop,” a nickname for the small covered patio at one end of the complex’s courtyard. Near the other end, past the blossoming rhododendrons that line the pathway, kids are using the playground while parents sit and chat. There are also pallets of lumber, window panes, power tools, and scaffolding – the unmistakable markers of ongoing construction that somewhat mar the otherwise serene surroundings of Helen’s Court. 

Diamond, Pellegrini and I are here to talk about a $1 million tax that the co-op will soon owe the province once they sign a new long-term lease with the city. Helen’s Court was established in 1984, after the city bought the property two years early for $1.2 million and signed a 41-year lease with the co-operative. 

But it’s the new windows, specifically the greater width of their interior dividers, that Diamond has on his mind as we sit down to chat. Diamond, who’s lived there since the beginning in ‘84, is concerned the new window design will let less light in, while Pellegrini points out that the new triple-pane configuration will be far less drafty than the current ones. 

Fenestrations aside, the co-op also needs to replace part of the foundation slab between the courtyard and the underground parkade. 

“We've been saving up money proactively [since 2019, for the] $2 million slab project,” and they’ve saved just over $1 million so far, Pellegrini said, allowing the co-op to pay for half the project up front and secure a loan for the remainder. 

It’s a little peek into the coordination, compromise, and consent-building that’s required in co-op living, where everything from basic maintenance, major renovations, and overall finances are handled by its members. But it’s an illustration of the unique challenges of this sort of co-op arrangement, where members own neither the land nor the buildings, but have all the responsibilities of ownership.  

“In exchange for tenure of housing and very affordable rent, we maintain the buildings and the land,” for the City of Vancouver, Pellegrini explained. Helen’s Court is one of 57 co-ops in Vancouver that are on city-owned land.  

But a provincial tax is now poised to consume the co-op’s entire savings for the slab project. It’s a property transfer tax (PTT), which is triggered when a co-op registers a new lease with the city. Since the tax applies to the value of the land, and due all at once, Vancouver co-ops like Helen’s Court are on the hook for a big bill – just over $1 million in this case. It’s something that can pose a significant threat to a co-op’s financial health and affordability for its members. 

Sixteen co-ops (980 units) have had or will have their leases expire between 2020 and 2029, while, from 2040 to 2044, another 10 co-ops (719 units) will see their leases with the city end, and will need to pay the same tax on the “fair market value” of the property. 

Helen’s Court is home to about 100 people, with 44 units, but “​this isn't just about us,” Diamond said, adding that, “if the legislation doesn't change, this affects leasehold co-ops not just in Vancouver, but all across the province.”

“We'll have to increase rents by significant amounts. We're usually increasing rents by 2-3% a year. We'd be looking at 4-7% a year, every year for multiple years in a row, to afford [the slab project]. Yes, it is a mixed-income community, [and] some people might be able to weather that. Others definitely would not,” Pellegrini explained. 

Most co-ops on city-owned land have members with a mix of income levels, ranging from those who make under $34,000 to others who make over $130,000 a year. According to a city estimate from 2015, about 40% of co-op members earned $53,000 or less per year. 

In 2021, the city identified the PTT as a “considerable financial cost that impacts housing affordability,” as part of changing its framework for co-op housing lease renewals. The city makes it clear they will not cover the PTT, though they did agree to advocate for the province to either waive or offset the tax. 

The folks at Helen’s Court, as well as larger groups like the Co-operative Housing Federation of BC, have been campaigning for the province to change the tax rules too. There are already over 20 qualified situations which are exempt from the tax, according to the province. 

In the summer and fall of 2024, leading up to and during the provincial election campaign, Diamond and Pellegrini said they met once with Premier David Eby, and multiple times with South Granville NDP candidate Brenda Bailey (whose riding includes Helen’s Court) about the property transfer tax applying to co-ops. 

In a zoom call, Premier Eby, “told us clearly that it needed a legislative change and that it would be a priority if they got re-elected,” Diamond said, with Bailey telling him the same thing over multiple virtual and in-person conversations, which led to Bailey being invited to and attending the co-op’s 40th anniversary party. 

“I introduced her to people, and that was clearly going, ‘she's on board with [changing] the tax,’ as a not-so-hidden message, like, vote for this person,” Diamond recalled. 

Bailey was elected as the MLA for South Granville in the fall of 2024 and was appointed as Eby’s Minister of Finance. “After they got elected, it went silent,” Diamond said.  

“I feel betrayed,” Diamond said. “All the work that's gone into managing this, keeping the buildings as well-maintained as they are, [though] we've got issues. The financial situation of the co-op is really healthy. And [a lot of] people have put a lot of blood, sweat and tears into this place, and to be faced with this now feels like a betrayal.” 

When reached for comment, the BC Ministry of Finance declined Vancity Lookout’s request for an interview with Minister Bailey. 

The next day, Diamond received an email from Bailey saying, “the decision not to waive PTT has been made,” he said. 

Helen’s Court members have now engaged an outside consultant to help them determine the best path forward: either, avoid the $1 million tax by pursuing a lease that’s under 30 years, and potentially shorten the co-op’s lifespan by about 30 years, or move forward with the already approved 40-plus-20-year option and pay the tax. 

Paying the tax means the co-op would need to “increase our rents exorbitantly to afford the project that needs to happen so the courtyard doesn't cave down into the garage,” Pellegrini explained. 

“We understand that some co-ops may be reluctant to increase the housing charges for their higher-income members in order to pay the Property Transfer Tax,” according to the BC Ministry of Housing. “We recommend that co-ops consider this option to protect those paying rent geared to income. We also recommend they begin planning for such costs much earlier,” the Ministry told Vancity Lookout in lieu of an interview. 

When reached for comment, the Premier’s Office referred Vancity Lookout to the Ministry of Finance. 

On a personal level, being members of the co-op and having access to affordable housing has meant Diamond and Pellegrini are able to pursue their careers in less-than-lucrative lines of work; jobs which bring unique and often underserved contributions to the social fabric of a city.  

Diamond was the artistic and managing director of a theatre company for nearly 40 years, while Pellegrini is currently the executive director at Food Stash, a non-profit that redistributes surplus food to organizations and people around the city.

“The co-op has really enabled [me and my husband] to keep serving our community as our career, while living in a very expensive city,” Pellegrini said, explaining that she and her husband have spent their whole careers working for non-profits.    

“The theatre company and the co-op are very intertwined… the theatre company could not have existed in the early days without [the co-op],” Diamond said.