Iqaluit's affordable housing co-operative, Hillside Housing Co-op Association Ltd., owns 20 units in Happy Valley. The non-profit has been subject to a standard, low-rate lease, but city council is now requiring the co-op to sign an equity lease, which means the monthly cost per unit will increase by almost $200 per month on average. - Casey Lessard/NNSL photo |
Housing co-op braces for hit
Iqaluit council requires lease change, triggering need for third mortgage
Casey Lessard
Northern News Services
Monday, May 11, 2015
IQALUIT
Iqaluit's Hillside Housing Co-op Association Ltd., which has been providing affordable housing since 1983, will be applying for a third mortgage after city council said the co-op has until the end of the month to change to an equity lease from a standard lease.
Until 2013, the not-for-profit organization paid a land lease cost of $230 per year. This standard lease, which created no equity in the property, expired June 30, 2013. Council agreed April 28 to increase that amount to $2,000 per year per unit - there are two units per lot - to put the co-op on an ownership path.
"It's an added financial burden," acting president Bethany Scott stated by e-mail. "We're responsible for 30-year-old buildings. As you might expect, there are major repairs on the horizon."
The co-op owns 20 two-, three-, and four-bedroom units in the east end of Happy Valley. Members pay fees (similar to rent or mortgage) based on the number of rooms, and subsidies are available for households making less than $90,000 per year.
Ahead of the 2015 valuation, the city planning department sent letters to all of those still on a standard lease, giving homeowners the chance to lock into an equity lease at the 2006 value - $341,000 for Hillside - instead of the 2015 value, which is about double.
The co-op's costs are set to increase by $40,000 per year, and the group is taking out a third mortgage as a result, Scott stated.
"About 10 years ago the co-op was in financial difficulty, but since that time we have been working together to turn that situation around," Scott stated. "We pay our bills and are very slowly building our reserve fund. However we are currently carrying two mortgages, and introducing a new equity lease will mean taking on a third mortgage. The co-op gets by, but we skate along a thin financial edge."
Facing an exponential increase in its land leasing costs, the group requested a discount of 10 to 20 per cent off the 2006 value. City planning staff did not support the discount, with city planner Melodie Simard noting that the price would be $37.50 per square metre, while Habitat for Humanity paid $65 per square metre for its most recent land lease.
Leases for affordable housing lots in the Plateau neighbourhood were triple the Hillside 2006 price, she said.
"I think the co-op fills a very valuable spot in our community, somewhere between social housing and staff housing," said councillor Stephen Mansell, who proposed a 2.5 per cent discount. "Our budgets are tight and I think we have done quite a bit to support Hillside. We don't have any policies at this time to recognize that gap they do fill. Freezing the 2006 valuations is very important. We see that 2015 would be an even bigger blow to them."
All councillors voted in favour of Mansell's motion, except for Kenny Bell, who was opposed to forcing Hillside into a lease agreement, period.
The co-op was established when Iqaluit was Frobisher Bay, NWT, and had no status as a city. The lease agreement was signed under those circumstances, and Bell warned the city needed to consult with the Government of Nunavut before trying to apply laws to a lease crafted by a different jurisdiction.
"The CTV (Cities, Towns and Villages) Act says we're not allowed to profit off the sale of land or the use of land, only to cover costs," Bell said. "We haven't borne any costs on that land, there's no reason we should be charging them."
He noted that Simard had not asked the NWT for information about development costs related to the property.
"The city's done it multiple times, but I don't think it's right," he said. "The Government of Nunavut has a policy and that policy contradicts the law."
Simard said Hillside's lease states that the rent can change at any time according to market value, something that was never done over the 30-year term.
Bell argued Simard was only providing "half the truth," and that council was "just going to rip off this organization. It's sad. You're doing a great injustice to the community if you do this."
Mayor Mary Wilman disputed Bell's argument.
"Personally, I believe the staff have brought us a good consideration," Wilman said. "I do, given the fact that we are just approving a mill rate to residential, some of whom are single parents, I think we need to be fair across the board."
The city and all Nunavut hamlets now require equity leases. There are about 16 standard leases remaining in effect in Iqaluit.
The co-op has until May 29 to sign the lease. Scott stated that the co-op would be going ahead with that agreement, noting the group accepts the decision and appreciates the time city staff and council took throughout the process.
"We are Inuit, non-Inuit, elders, toddlers, people who are employed, unemployed, and self-employed," she stated. "We are families of one and families of many. We are single moms with kids, foster parents, tradespeople, hunters, artists, students, professionals, and active community volunteers. We work for the government, private businesses, Inuit organizations, and non-profit societies. Some of us were born in Iqaluit, the Qikiqtani region or elsewhere, and we are long-term residents or newer to the city. We believe in the importance of providing sustainable non-profit housing in Iqaluit."
The third mortgage may result in an increase to monthly member fees, she stated, noting the co-op's board will discuss the situation with members at an upcoming meeting so they can decide how to proceed.
