Habitat Edmonton CEO steps down amid legal battle

Habitat for Humanity Edmonton CEO Karen Stone has stepped down from her role with the charity, which has been embroiled in a months-long legal battle with 57 low-income families.

In a statement Tuesday, Habitat for Humanity Edmonton said it was time to move beyond court proceedings to resolve the dispute with the tenants, who allege the charity reneged on a promised interest-free housing plan. 

Board chair Chris Bruce said a new interim leader will be announced shortly as the charity charts "a new path to resolution" with the families. 

"We realize we did not meet the expectations of the families and we are committed to resolving this for them as fairly and quickly as possible," Bruce said. 

Stone's departure as head of the largest Habitat organization in Canada comes days after Habitat International criticized the local Edmonton society for its handling of the charged legal dispute.

In its sharp rebuke, the international Christian housing charity called on Habitat Edmonton to appoint an independent mediator to the case and stop any further action against the families. 

The families say Habitat promised them zero-interest mortgages if they performed 500 hours of what the charity calls "sweat equity" — unpaid work in lieu of down payments — and successfully completed a 12-month tenancy. 

Before the families could sign the zero-interest mortgage contract, Habitat put forward a new mortgage model. Under the new plan, the families would have to pay interest on half the mortgage, financed by a credit union.

The families say they were told to either the sign the agreement or leave their homes. 

The 57 families are pursuing a class action lawsuit for breach of contract, many saying they do not qualify for a mortgage under the new plan.

The tenants lost an injunction earlier this month to prevent the charity from evicting them as the case made its way through court. CBC News reported this week the judge who refused the injunction donated to Habitat in each of the past two years, casting doubt on the court's impartiality.

"We deeply regret the length of time this dispute has gone on without being resolved and the disappointment this has created for both the families involved and the larger Habitat community," Bruce said in his statement Tuesday.

"We agree that mediation is the best path forward and look forward to hearing back from the families' lawyer." 

He said no evictions have been planned and no families currently renting Habitat homes will be asked to leave the discussions and mediation.

Raffy Boudjikanian/CBC

When Stone took over as Habitat Edmonton CEO in 2018, she inherited a charity $27 million in debt and with no money left to sustain future construction, according to court documents. She laid off 10 per cent of the staff, restructured the organization's mortgage loans and moved into a smaller office space. 

As part of the effort to sustain the charity's finances, Habitat Edmonton changed the mortgage model for dozens of partner families, sparking the legal dispute. 

Bruce, the board chair, stood by the new mortgage model in Tuesday's statement.

The charity says the new model would ensure families pay less than 30 per cent of their income for their homes while giving them the chance to build a credit history, which could make it easier to qualify for a mortgage on the open market if they decide to sell the Habitat home.

"However, we recognize that we could have done better in communicating not only the change, but the many steps we took to make sure it was a good offer for families. We will do better in future," Bruce said. 

In recent days, several community organizations have publicly backed the families — many of whom are Black, Muslim, immigrants and people with disabilities — calling on Habitat to honour the zero-interest mortgage agreement.

"The recent actions of [Habitat Edmonton] come across as heavy handed, especially against a vulnerable segment of the population," the Alberta Muslim Public Affairs Council said in a statement Monday. 

The Edmonton chapter of Black Lives Matter, another public advocate for the families, organized a demonstration outside a Habitat Restore on Monday.