This Vancouver housing co-op is facing a $1M tax if it wants to renew its lease for more than 30 years

A Vancouver housing co-op is worried it may have to pay more than $1 million in tax if it wants to sign a new long-term lease — something its residents just can't afford. 

Helen's Court is located on city-owned land in the Kitsilano neighbourhood. It's home to about 100 people, who live in 44 units. Residents lease the land from the city and work together to maintain a lasting community. 

"It's affordable, stable," longtime resident David Diamond said. "The big thing is, we're a village, and I think that's rare. We all know each other, and it's self-governing, so we support each other, we take care of each other."

The original 40-year lease for Helen's Court expired last year, and they have to sign a new lease by June 1. But here's the catch: if they want to sign a lease for more than 30 years, something co-ops often prefer to do, they'll be subject to the provincial property transfer tax (PTT).

Diamond said residents were surprised to learn co-ops are subject to such a tax when they started negotiating a new lease with the city. 

"If we have to pay the tax, all kinds of things will happen," he told CBC's On The Coast host Gloria Macarenko.

Right now, rent at the co-op goes up about three per cent annually to build up reserves for maintenance. To accommodate the PTT, it would have to go up at least seven per cent for several years. 

 "We're going to make it unaffordable for some of our most vulnerable members," Diamond said.

The co-op could sign a lease for 29 years, but at the end of the lease, there'd be no guarantee the co-op would continue — it would depend on whether future city leaders saw value in supporting co-op housing. 

"We're basically throwing potentially 30 years of the co-op's existence out the window by trying to avoid the tax," Diamond said. 

According to real estate lawyer Mike Walker, the PTT was introduced in the late 80s, originally as a luxury tax on properties. 

PTT depends on the fair market value of a property. An additional two per cent is applied for residential properties over $3 million. Only registered charities are exempt from PTT, which housing co-ops are not. 

"That was meant to get high-value, single-family homes, but now it's having, I think, the pernicious effect of applying to rental buildings, housing co-ops, non-profit buildings because their values are way above $3 million," Walker said. 

Helen's Court resident Carla Pellegrini said the co-op has been in touch with the province to find a way to exclude housing co-ops from the tax, but so far, they haven't received an answer. 

"We've tried to be patient and very diplomatic, but now we're up against this deadline to sign our lease, and we have to make a choice."

LISTEN | Co-op residents worry PTT will make housing unaffordable:

On The Coast12:11Non-profit housing co-op wants exemption from B.C.'s property transfer tax

David Diamond and Carla Pellegrini, members of Helen's Court housing co-op's Lease and Finance Committee, talk to host Gloria Macarenko about why they are going public about their efforts to exempt their non-profit from more than $1 million in property transfer tax.

More co-ops will face similar issue

According to the City of Vancouver, there are 57 co-ops, which contain more than 3,700 housing units, on city land. Dozens more are situated throughout the province. 

In a statement to CBC News, the City of Vancouver said it realizes just how important housing co-ops are when it comes to offering affordable housing. While it agrees that applying PPT to co-ops erodes their affordability, it's not willing to cover that cost. However, it is supportive of lobbying the province to change the legislation. 

Walker said a lot of co-ops and non-profit housing operators will be affected by PTT in the coming years. 

"The people who put [PTT] weren't thinking about these extensions of leases," he said. "It's going to take a change to the legislation or the regulations."

But he warned the government has to make the exemption crystal clear, so that for-profit developers can't take advantage of it. 

The province didn't respond to questions asked by CBC News about how housing co-ops fit into PTT. The Ministry of Finance said it is focused on bringing down housing costs and that it's always open to conversations about new projects.