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A major Vancouver housing co-op is facing a half-million-dollar debt that is forcing it to significantly raise rents and offer fewer subsidized units to low-income people.

And the board that manages the 200-unit Lore Krill Co-op, which includes two buildings in the city’s Gastown and Chinatown neighbourhoods, is blaming a mix of inadequate funding and flawed agreements with the provincial government that set out how rents are calculated.

“The last thing we need is for people who need housing to be forced to move out because they can’t afford the rent,” said Coco Culbertson, the treasurer of Lore Krill’s board.

The Krill has seen high maintenance costs, and the board argues the province’s housing agency, BC Housing, does not provide fair compensation.

“We have two huge co-ops in the middle of the Downtown Eastside. Our mailbox is broken into every week. It just costs us more to run this,” Ms. Culbertson said.

The co-op has been forced not only to raise the rents, but it is also slowly reducing the number of subsidized apartments in the building from 80 per cent to 60 per cent.

For one resident, Kelly Moorhead, a former legal secretary now living on disability because of her multiple sclerosis, that situation means the rent on the prized one-bedroom she just moved into after waiting for four years might jump from $975 to $1,350 a month.

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Kelly Moorhead on the patio at the Lore Krill Co-op in Vancouver.BEN NELMS/The Globe and Mail

“I’m just getting settled in and that’s a big hike,” Ms. Moorhead said.

The Krill’s increased maintenance costs are compounded by how rental rates in the building are calculated.

The Krill is one of a small number of co-ops in the province whose agreement under the Homes BC program, created in the late 1990s by the NDP government, requires the co-op to ensure that the rents charged for its unsubsidized apartments correspond to rental rates among private developments in the area.

Almost all social housing built since the 1970s operates on a model of mixed subsidies and incomes. The poorest residents pay welfare-level rates for their apartments. Low-income but somewhat better-off residents get a subsidy that ensures they spend no more than 30 per cent of their income on rent. And some people pay rates that are labelled “low end of market” – no subsidy, but with rents geared to reflect the cheaper apartments in their neighbourhood.

In Vancouver’s Chinatown, Gastown and Downtown Eastside, those market rates have soared recently, creating a situation where Krill residents in the non-subsidized apartments were asked to pay a big increase four years ago and are facing another one now.

“This was a program designed in the late nineties, but it doesn’t work now,” said Thom Armstrong, executive director of the Co-operative Housing Federation of B.C. “Thirty years ago, the market rate was a great measure. Now, everyone agrees that the market has spiralled out of control. So ‘market rate’ is just not a reliable measure any more.”

Mr. Armstrong, whose organization is part of a consortium now building hundreds of units of housing through a community land-trust model in Vancouver, said he has learned not to accept that kind of provision in any new buildings.

BC Housing’s vice-president of operations, Craig Crawford, said the Krill’s operation costs exceed that of any other co-op, something that he and co-op management are going to discuss in coming meetings.

As for changes to the rental agreement, Mr. Crawford said it’s something that’s been brought up from time to time but BC Housing doesn’t have any immediate plans to change it.

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