Thirteen months ago, a message to the faculty was sent on my behalf as Chair of the UBC Community Planning Task Group, announcing the UBC Housing Action Plan as approved by the Board of Governors. The plan addressed –among other things– the problem of housing affordability for tenured and tenure-track UBC faculty and its impact on the university’s recruitment and retention effort of high-caliber scholars. Last week, the UBC faculty received another message, this time from the Acting Associate Vice President, Campus and Community Planning, calling for consultations on a possibly revised plan. And as anyone could have anticipated, my inbox started filling up with puzzled queries from colleagues: “What is this all about?” and “What’s really happening?” and “What do you think about this?” My task group has already been dissolved, but here are my personal comments on this new development.
First, what are the proposed changes!
The original UBC Housing Action Plan called for the development by UBC-Property Trust of up to 10% of all new housing units built on campus for faculty purchase. Sale and re-sale of these homes would be restricted to tenured and tenure-track faculty. The initial price would be no higher than 33% below market value, and re-sale values will be indexed to faculty salaries to a maximum price no higher than 33% below market value.
The UBC-PT and the administration are now proposing an alternative home ownership option which would provide zero or nominal interest second mortgage loans to approved tenured and tenure-track faculty for up to 33% of the purchase price of a home (to a maximum of $330,000) in “specified new market housing projects on campus.” Units will be purchased at market price and can be sold to anyone (including those non-affiliated to UBC) at market price.
Addendum: This new proposed option is not to be confused with the currently available $50K housing assistance program for new faculty (and a similar though uncapped one for senior administrators), which can be used towards the purchase of housing anywhere in the city. The repayment of the second mortgage under the new program is still to be determined, though will likely be similar to the Princeton model.
I guess the idea of a restricted market was too much to ask from those who oversee the UBC-PT. Still, there are some advantages to the alternate plan: Easier and quicker to implement, it offers more flexibility, possibly more choices and less dealings with the taxman. I am sure we will be hearing more about these advantages during the open houses on November 12 and 13. There will also be presentations of the draft policies guiding eligibility, distribution and repayment triggers of the available second mortgages.
It is also important to be cognizant of the drawbacks. For one, it is clear that by doing away with the restricted ownership clause, the university may be irreversibly losing the option of sheltering at least a piece of south campus from the open market in order to keep it connected to its academic mission. Will we be repeating the historical mistake of “losing” the endowment lands, or the more recent co-development blunder?
Many of our colleagues will be focused –and rightly so—on their immediate housing needs and those of their families. To them, I say that they should pay close attention to the draft policies guiding taxation, joint ownership, mortgage loan insurance, and the repayment triggers of the available second mortgages. Will the new developments take into consideration the needs and preferences of the faculty? For example, will there be enough desirable 3-bedroom suites to entice UBC families to stay at UBC?
Other issues are less obvious. Will eligible faculty feel pressured to buy into a market that was made hotter by the very same enabling scheme? (Keep in mind that this might apply to either option). Could the cost of buying only new units in designated buildings offset the advantage of “an interest-free” second mortgage? How will these second mortgages affect the assessment for affordability by the primary mortgage lender who will determine the maximum mortgage that a faculty member may hold? Will the upper limit of $330K for the second mortgage withstand the pressures of another wave of price increases in Vancouver? In other words, is the new proposal too sensitive to the market, when the whole point of the housing plan is to use UBC land endowments to help secure affordable units for faculty members by making the price less sensitive to the market?
Other colleagues will hopefully be thinking about the long-term impact of the new proposed plan and its sustainability considering that the units can eventually be sold on the open market. How will we make sure that the appropriate stock of housing for UBC faculty grows in size, scope, and scale? How to sustain it and protect it for the future generations of UBC scholars? After all, no one wants to see a worst case scenario, where a future administration halts the program after cashing back its loans from faculty members who had sold their units on the open market.
The emails I have received raise many other questions about the new option. It is important to pose these to the administration and weigh their answers. I therefore urge you to attend the meetings on November 12 or 13 and help to determine whether the new scheme is net positive or the pitfalls too deep. And if the latter, is it possible to find ways to improve it and resolve these issues?