I read with interest in The Free Press of the intention of the City of Fernie to consider changes to the partnership agreement between the City and Veneto Place Properties Ltd.
The current agreement allows the ‘owner’ to sell to an eligible person within 10 years at a maximum sale price as set out in the covenant attached to the particular unit.
What the notice in The Free Press is missing is that within the same 10 years the ‘owner’ must give Provincial Rental Housing Corporation (PRHC) first option to purchase and PRHC can purchase the unit at a price being 90 per cent of the maximum sale price. This would represent a substantial loss to the owner within the first 10 years.
The City is proposing to waive the development costs due back to the City and the taxpayers of Fernie.
Under the current partnership agreement, if this agreement changed or altered in favor of Veneto Place Properties Ltd then the City is due 2/45ths of the development costs back. This would represent $15,029.60 per unit or $180,355.20 for the 12 units under proposal.
The City has already done such a change, which was not widely reported to the residents and taxpayers of Fernie.
In October 2012 Veneto Place Properties Ltd. applied to the City to have the partnership agreement/covenants changed on 12 units that were under consideration for purchase by Elk Valley Family Society.
At that council meeting, as reported in the minutes, there was no mention of ‘waiving’ the development costs due to the City.
There were no further meetings with regards to the application until May 16, 2013 when it became urgent that the partnership agreement be changed and a special meeting was held almost overnight where the agreements were changed in favor of Veneto Place Properties Ltd. and the City waived the development costs due back to the City and the taxpayers.
The City waived $180,355.20 due to them.
If the City also waives what is due under the current proposal, this will represent a total of $360,710.40 due back to the City from Veneto Place Properties Ltd.
Funding for the project came from BC housing, ($7 million) Columbia Basin Trust ($4.5 Million bridge finance), Fernie City ($338,000) and Parastone Developments Ltd. ($123,142 in equity).
A private owner sold the land to Parastone Developments Ltd. at a price substantially below market valve on the basis that the development would be affordable.