One of the most controversial issues in the Banff Housing Corporation’s history has come to an end now that Banff council has backed up its earlier promise to never set price caps on existing homes.
On Monday (June 13), council – acting as BHC shareholders – directed a restrictive covenant be registered against the BHC’s head lease titles for all remaining properties built on an equity share model.
The covenant describes the intention of not putting price restrictions on existing BHC housing. The legal document can’t be lifted by future councils without a public hearing.
BHC homeowner Ladd Snowsell said the restrictive covenant gives homeowners a “level of certainty” and appears to be an “eloquent solution”.
“Subsequent councils can change policy, but they now have to take more steps in a public process if they ever wanted to lift this,” said Snowsell, who also sits on BHC’s board of directors.
“Quite frankly, there’s effectively a price cap due to the resale process; however, the resale process does allow for some appreciation based on market value.”
The restrictive covenant only applies to existing BHC housing, although there are two newer developments in the corporation’s portfolio that are subject to price restrictions.
As part of the 2009 mandate review, BHC recommended restricting the future resale of existing properties to a price restriction of a maximum of two per cent per year, compounded annually.
This immediately sparked outrage from homeowners who feared such a move would heavily affect their ability to sell their homes and was not part of the original agreement.
Following intense opposition, council promised there would be no consideration of price restrictions on existing housing, and that they would work to find the best legal means of enshrining that decision.
Councillor Stavros Karlos voted against the motion on Monday.
“It does not provide 100 per cent protection and certainty and it can be changed in the future at the whim of council,” he said. “I believe this is overkill and I’m being consistent with my past voting.”
Coun. Leslie Taylor said she understands restrictive covenants can be lifted, but said she believes it would be “considerably more than a whim” and would trigger a public hearing.
“It was not possible to work it as a forever and for all reasons, but it’s a strong statement about our intention and it’s a stronger statement than in policy,” said Taylor, who sits on the BHC’s board of directors.
Since 1993, BHC has built 173 units, of which 45 have legal suites. In addition to this, BHC has also acquired 10 already-built downtown apartment-style condominium units known as Peyto Place.
With the exception of Middle Springs 2G and Peyto Place, BHC implemented a unique sublease agreement whereby homeowners pay the total cost of construction and land, as well as operating costs related to development of the property. BHC acquires the equity difference between the costs and appraised market value of the unit.
However, Middle Springs 2G and Peyto Place were sold at 80 per cent of fair market value, and the future resale of these properties is tied to a price restriction.
