Was developer’s 1% interest loan from BC Housing too sweet a deal?
BC Housing defends complicated social housing deals with private developers, but NDP MLA doesn’t buy it
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BC Housing has released documents related to two multi-million deals between the social housing agency and private developers, but the NDP MLA who asked for the information says the documents do not show that the public got good value out of the arrangements.
The deals involved prominent donors to the BC Liberals: Wall Financial in one case, and condo marketer Bob Rennie in the other.
“On both of these deals, the core principle to me that seems to have been violated is that there needs to be something additional that the public is getting that wouldn’t otherwise have been done,” Eby said, such as additional units or deeper affordability.
In a March 28 technical briefing to reporters, BC Housing indicated that the agency’s involvement in both deals resulted or will result in social housing delivered at a relatively low cost, and BC Housing lent its expertise in building low-income housing to the projects.
The briefing was on background and not for attribution, something else Eby finds curious:
“Nobody is willing to go on the record to defend these deals — why doesn’t the CFO of BC Housing (Dan Maxwell) or (housing minister) Rich Coleman go on the record?”
The two deals were both complex transactions in which BC Housing provided very low-interest construction loans (BC Housing charges around one per cent interest on all its construction loans, which are normally made to non-profit organizations to build social housing.)
In the case of 288 E. Hastings St., Wall Financial assembled four lots on East Hastings Street. Wall went to BC Housing with an offer: BC Housing would buy the land for $6 million, Wall would be hired as the construction and development manager for around $1.5 million, and at the end of construction, BC Housing would sell a 50 per cent portion of the market rental units back to Wall, an arrangement BC Housing says will lower the overall cost of the project. BC Housing’s low-interest financing also makes the units cheaper to build.
BC Housing provided a $39 million construction loan to the project, which includes 35 welfare-rate units, 60 income-tested units rented at around $800 a month, and 68 market units rented at between $1,242-$1,972 a month. BC Housing got involved in the deal because the city’s 60 per cent social housing, 40 per cent market housing requirement for the Downtown Eastside makes it difficult for for-profit developers to make projects financially feasible.
Eby doesn’t agree: Wall had already gotten a very good deal on the land because of the restrictive zoning, he said, and so building less-profitable low-income housing was “built into the price.”
The other deal involves a land swap in Yaletown between Brenhill Developments and the City of Vancouver. As part of the swap, Brenhill was obligated to build a social housing building before taking possession of land at 508 Helmcken St. where it planned to build a market condo tower.
BC Housing provided a $39 million construction loan for this project as well at just under one per cent interest, and also extended the loan for a six-month period after the new social housing building, New Jubilee House, was built. The bridge financing, also at the low one per cent interest rate, covered the developer as the company looked for another market financer as condo presales began and progressed (the loan was fully paid back at the end of January).
As security for that bridge loan, BC Housing held a $39 million mortgage on the condo tower site and asked for regular updates on condo presales.
Condo marketer Bob Rennie, who has both donated to and fundraised for the BC Liberals, was on the board of BC Housing at the time of the deal. He is also the marketer for the Brenhill condo project. Documents provided by BC Housing show he did recuse himself from the meeting where the financing was discussed.
But the minutes also show that Rennie was on the BC Housing board’s capital committee, and the minutes for that particular committee have not been provided, Eby said. He also noted that the minutes say that Rennie “brought forward (the financing proposal) for the board’s review and approval.”