It is hiring season at UBC and my inbox was feeling it. “Housing is proving a major factor in our current recruitment round. What is the status of the housing action plan,” wrote a department head. Similar queries were coming from many units currently engaged in competitive recruitment of the best and the brightest. Well, I have good news. The Board of Governors has just approved an improved version of the housing assistance program that was voted in September 2012. And the provost’s office has shifted into high gear in order to accommodate the current recruitment effort.
Why is it an improved version? Because a new option was added in order to facilitate on-campus home ownership/leasing for tenured and tenure-track faculty members. The remainder of the plan, in particular the part pertaining to rental opportunities, remains the same. The Board of Governors has indeed directed the Administration and the UBC Properties Trust (UBCPT) to commence a pilot program for up to 150 units and/or loans over three years to support the implementation of Policy 1 of the Housing Action Plan. The approved faculty can now exercise two options:
They can either choose the previously approved option of purchasing into the “Restricted Resale and Capped Appreciation project.” The first such buildings will be on Lot 45. It will go ahead if and only if there is demand for at least 80% of the units in that development.
The Board added another option: The “Restricted Faculty Second Mortgage Loan Program,” which is applicable to purchase units in various current and upcoming projects on UBC’s Vancouver campus as identified by UBCPT as part of the program.
The Board also directed the Administration and UBCPT to include an option for several large (approximately 1500+ sq. ft.) units within any Restricted Resale Capped Appreciation Project (where sufficient demand exists). The UBCPT will also encourage third-party developers of market projects to provide larger three-bedroom units or to accommodate requests to aggregate smaller units into larger ones (approximately 1500+ sq. ft.) at the presale stage, subject to receiving committed faculty demand for these units.
Now, a few cautionary items:
- Not every faculty member is eligible for this program. These two options are meant to address retention and recruitment challenges. The Board has also approved a set of policies dealing with the eligibility, allocation, and occupancy, which will guide implementation of both faculty home ownership program options.
- And here is a very important piece of information. Unlike traditional real estate transactions, both options will very likely entail an assessment of potential taxable benefits. While the tax implications surrounding option #2 are relatively well understood, this is not entirely the case for option #1.
The Board has therefore directed the Administration to fully explain the financial implications for both programs in detail. Given that the financial and tax situation of each faculty member will be different, the program participants will be encouraged to seek independent financial and tax advice, and will be required to confirm in writing that they have done so.
Is this plan the best that the Board could offer for the faculty? I say yes, once one considers the constraints under which we are operating.
We could have of course asked that the Restricted Faculty Second Mortgage Loan program be applicable to purchase any residential property on the UBC campus or University Endowment. But this would create a serious cash flow problem for UBCPT.
We could have asked that at time of sale in option #2, UBCPT simply gets its mortgage back instead of receiving 33% of any appreciation. But this would have made the assistance program less sustainable and unfair for future generations of faculty.
I would however like to see UBCPT be proactive in developing policies to minimize the taxable benefit to faculty participants in the Restricted Resale Capped Appreciation project. After all, I don’t see how anyone by any stretch of the imagination could fail to understand that the value of a property under such restrictions could not be equivalent to similar ones on the open market.
In any case, this plan is a huge step forward for UBC. Kudos to the Board of Governors and to the Administration for removing what I believe is the last barrier preventing UBC from becoming one of the top 10 public universities in the world. Now that Stephen Toope is stepping down from the presidency, we can start contemplating what his legacy for UBC will be. This bold initiative will undoubtedly be a defining part of his.