It will go right down to the wire but the city and St. Albert Housing Society are confident they can iron out a wrinkle that emerged Monday night in a financing deal.
Council did not give third reading to a bylaw that would have provided a guarantee for a revolving line of credit the society will use to purchase 12 new units at Big Lake Pointe for $1.4 million. The society also wants to use the line of credit to fund future affordable housing projects.
But some councillors, including Mayor Nolan Crouse, are uneasy about having a $1.4-million loan appear on the city’s books and are trying to somehow compel the society to include a “sunset clause” or an agreed date in the future at which point the city’s guarantee would expire.
“The perpetual notion of this had me concerned,” Crouse said. “I feel a lot more comfort if I know there is a possible end date.”
Crouse is also worried that in approving the guarantee, council is effectively setting a policy that would bring other not-for-profits to council chambers asking for the same treatment. The city would also be on the hook for the full value of the loan if the housing society defaulted.
But while Crouse successfully pushed through a motion amending the agreement to expire Dec. 31, 2018, David McGreer, chair of the housing society, said the amendment wouldn’t work because the bank providing the line of credit likely wouldn’t agree.
“A guarantee that has within it a clause that comes to an end at a certain date doesn’t work with any financial institution because the bank has to be able to call the loan,” McGreer said. “I’ve never seen a guarantee with an end date in it.”
McGreer said the society approved of having an end date for the city’s guarantee, but it would have to be an agreement between only the city and the society, not including the bank.
Council will now revisit the loan guarantee at a special sitting of council on June 10, following a meeting of the standing committee on finance. There is a deadline of June 12 for the housing society and city to come to an agreement, as the society must purchase the 12 units by a specific date.
McGreer was confident the two sides would be able to work something out.
“I’ll write a letter just to make clear what the society needs to make this work,” McGreer said.
The revolving line of credit now before council is very different from the comfort agreement the society first requested at the end of last year. In the several months since the original request, administration has reported the society would qualify for its own conventional mortgage without the city’s support.
Big Lake Pointe, an affordable housing development, offers both market and below-market-rate units for rent. The housing society already owns 15 units.
