The Valemount Affordable Rentals Society (VARS) is disappointed about the recent decision by Council to disallow the Permissive Tax Exemption. We are also confused about the process by which these decisions are made, and hope that we can provide more information to Council to better inform future decisions involving our organization.
Two reasons for not allowing the PTE were because VARS is running as a business, and we are renting units at market value. There also seemed to be a question as to VARS’ definition of “affordable.”
VARS is a registered non-profit organization, and as all responsible non-profits, we need to run our operations like a business to be sustainable over the long term. Non-profit organizations can, and should, make a profit, and then invest those funds back into the organization for the benefit of their clients and community. For-profit businesses keep their profits for their owners and shareholders. Many non-profit organizations in Valemount, besides receiving grant funding, also charge for goods and services, employ staff, and if they are well managed, retain some revenue in excess of their expenses. This is a good thing, and it’s how all non-profits should run in order to be sustainable.
The 8-unit building at Juniper Square is not subsidized by BC Housing. We have received support and grants from BC Housing, CBT and other organizations towards the purchase and renovation of the property, and we are grateful for this support, but we can no longer rely on BC Housing’s financial support for this project. We are now 100% responsible to pay our bills whether these units are rented or not. The 30-year Operating Agreement we signed with BC Housing states that we will provide affordable housing at or below market rates.
BC Housing and CMHC’s definition of “affordable” states, “housing is considered affordable when 30 per cent or less of your household’s gross income goes towards paying for your housing costs.” Affordable Rental rates can be found in CMHC’s annual report, but unfortunately Valemount is not listed in this report, so we found similar communities listed in the report, and did our best to establish affordable rates for our community while also being careful to ensure we can responsibly cover our expenses, which include Telus, BC Hydro, property taxes, utilities, insurance, property management services, and of course a mortgage for the land we purchased. The units at Juniper Square include utilities, hydro and wifi. We also have to build our Capital Fund for future repairs and replacements, such as wear and tear, new roofs, walkways, damage, etc. Any revenue in excess of expenses must be used to either increase the number of affordable market rent units in the development, or on costs relating directly to the development.
Rustic Luxury provides property management services which include advertising, completing legal paperwork with tenants, collecting rent, depositing payments, coordinating repairs and maintenance, coordinating inspections, viewings, move-ins, move-outs, etc. Rustic Luxury provides these services for a percentage of rental income, which is considerably less than it would cost to have a staff person do the same amount of work. We have no staff – only a few volunteers.
Last year we applied for the PTE and we were denied because we did not have sufficient financial documentation for a long enough period of time. This year, the reason for refusal was different.
We hope that Council will be able to share the specific criteria necessary for an organization to qualify for a Permissive Tax Exemption, and explain why some organizations, including another housing society, are grandfathered to allow ongoing PTE’s.
It seems that the decision-making process is somewhat subjective, and if this is the case, we hope to receive some advice on what will be considered when we submit our application again for 2021.
We are certainly grateful for the support that the Village has provided in the past, and we hope we can count on you to continue to support us in the future. We are excited about our future projects, including subsidized housing, and we believe we are providing a valuable service for the residents of Valemount.
Riette Kenkel, Korie Marshall & Judy Holmin, executive of VARS