Government action sparks scramble for alternative funding
Wendy Mclellan
Province
Tony Gioventu, executive director of the Condominium Homeowners’ Association, foresees a major crisis. Photograph by: Jon Murray file, The Province
The B.C. government’s abrupt decision to cancel interest-free loans for owners of leaky condos has left thousands of people without the financing to fix their homes.
Housing Minister Rich Coleman announced the end of the reconstruction-loan program on Friday, just before the B.C. Day long weekend. The program was cancelled the same day.
“This is going to be a huge crisis for people who haven’t had their buildings repaired yet,” said Tony Gioventu, executive director of the Condominium Homeowners Association.
“We’re scrambling right now to find some kind of alternative funding for strata corporations, any option so people aren’t risking their homes.”
The government’s reconstruction program was set up in 1998 as part of a Homeowner Protection Office. The program provided interest-free loans to owners of poorly constructed strata units so they could have their homes repaired.
It was a loan of last resort — to qualify, condo owners had to have been turned down by a financial institution.
Owners repaid the loan based on their financial capability — seniors could defer principal payments until the property was sold.
The government paid for the program through a $750 fee charged on every new residential unit, and even though loans will no longer be granted, the fee will continue to be charged “for some time” to pay administration costs and loan interest on outstanding balances.
In the press release announcing the end of the loan program, Coleman said the slowdown in residential construction has reduced the amount collected for the reconstruction program. He said the province has approved more than $670 million in loans through the program and has helped more than 16,000 people repair their leaking homes.
But the province has thousands more strata units still to be fixed. The government program covers condos built between 1982 and 1999 and according to a 2007 report prepared for the Home Protection Office, about 42,000 strata apartment units with “major problems” remained unrepaired as of Sept. 30, 2007 — and that doesn’t include leaky townhouses and row houses.
About 160,000 strata units were built during this period and the report estimates about 20 per cent had been repaired.
The report also says the demand for the loans would grow as the cost of repairs continues to increase as more concrete buildings show signs of leaking.
Gioventu said homeowners will face foreclosure if they can’t pay the special levies required to repair leaking buildings.
“There was no warning about an end date — that’s what’s really difficult,” Gioventu said yesterday.
John Grasty, co-founder of the Consumer Advocacy and Support for Homeowners Society, said the government knows the leaky-condo problem isn’t over and cancelling the loan program will devastate people.
“They had the report two years ago and they didn’t put plans in place to make sure the program was sustainable — somebody dropped the ball,” Grasty said.
“The cost of repairs is three times what it was 10 years ago. I have no doubt there will be thousands of bankruptcies and foreclosures.”
Facing an $81,000 bill to repair her apartment in Sidney, Gwen Bell couldn’t contain her tears as she explained the disaster looming for her and the other homeowners in the building.
“We’ve all had many, many sleepless nights,” said Bell, 66. “If I can’t get the loan, I don’t know what I’ll do. You can’t sell it like this.”
Bell said the 14-unit apartment building was assessed more than a year ago, but the engineer’s report and cost estimate of about $1.3 million arrived just a couple of weeks ago. The strata council was waiting for some of the owners to return from holidays to pass the special assessment needed to pay for repairs. The paperwork that would allow owners to apply for the no-interest loans was to be mailed in the next few days.
Bell said only two unit owners still work and a couple of owners are in their 90s. Owners will each have to pay $80,000 to $100,000 to rebuild the outside walls of the wood-frame building.
Bell is hoping a protest rally outside the legislature Aug. 25 will bring attention to the plight of leaky-condo owners and convince the government to reinstate the loan program.
“This is so scary,” she said. “I paid off my apartment when I retired and I never dreamed this would happen. We’re like a family here.”
Coleman was unavailable yesterday, according to a ministry spokesman.
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