Town may separate from Bayside affordable housing

·3 min read

The Town of Strathmore is looking to potentially separate from one of its affordable housing projects.

In 2010, the town supported the Affordable Housing Project by contributing $1.94 million in cash and $722,000 in land value – with some of the funds provided by a provincial grant. This project, consisting of 48 affordable two- and three-bedroom units, located at the end of Bayside Place off Thomas Dr., was discussed during town council’s regular meeting on Oct. 21.

To provide an affordable housing option for lower-income residents, the town provides second mortgages to eligible purchasers who also qualify for a conventional mortgage. Providing these second mortgages has allowed eligible residents to buy a unit at a lower cost and build equity, explained Alan Down, the town’s manager of assessment and tax, during the meeting.

The town provided 48 second mortgages to the original purchasers, with an average amount of $50,412 per mortgage, totaling $2.42 million. Currently, the amount of the outstanding mortgages is about $2.4 million, said Down. In addition to holding the mortgages, the town also currently administer the qualifying criteria, meaning they determine who is eligible to receive the second mortgage.

The real estate market for apartment-style condos in Strathmore has slowed over the past six months or so, meaning it has been hard for some property owners at Bayside Place to sell their units, said Down. Additionally, given the pandemic and the economic turmoil in the province, some owners have had to relocate elsewhere for work.

As a result, some owners have turned to getting roommates to help them meet their mortgage payments. But the terms of the second mortgages include a caveat preventing each homeowner from renting the unit unless the second mortgage is repaid.

Some current condo owners do want units in the complex to be rented out in apparent contravention of this caveat and, as a result, are calling on the town to take enforcement action, explained Down.

“There is contention,” he said.

If town administration were to confront this problem, they would need to demand formal repayment of the mortgage. If repayment was not achieved, administration would then have to commence foreclosure in the unit, an option that town councillors Tari Cockx, Melanie Corbiell and Bob Sobol said they wanted to avoid. Foreclosure would have to be started within two years of the rental of the unit, given what is referred to as the limitation defence.

The other complicating factor is there is a possibility that determining whether a roommate constitutes a renter would require legal action, potentially resulting in legal costs for the town.

After considering these complexities, town council unanimously passed a motion for administration to explore the possibility of bringing in a third party to help with the management of the development, and potentially assigning the second mortgages to them. Instead of having to foreclose on the recipients of affordable housing, town administration will be now looking into separating from the project.

Two alternative options for how the town could proceed were presented to council. The town could assign the mortgages directly to the Bayside Place Condo Board, which would then be responsible for enforcing the mortgage caveat. This could require the use of a professional condo management company, which would increase condo fees for property owners there. Determining the eligibility of potential buyers would still reside with the Town of Strathmore under this scenario.

The other option is for the town to pursue a third party to which the mortgages will be transferred. Under this scenario, the selected organization would be responsible for income qualification and enforcement of the mortgage caveat. No group has been contacted at this point.

Sean Feagan, Local Journalism Initiative Reporter, Strathmore Times