Esling Park Lodge

A life-lease is designed for those 55 and over, providing condominium living with a combination of initial investment and low rent.

  • May. 29, 2014 1:00 p.m.

by Ida Koric

Rossland News

The fate of Rossland’s Esling Park Lodge has finally been decided after much debate; the interest-free ride comes to an end.

Esling Park Lodge was conceived of during a time when the “Life Lease” structure of real estate was at the height of popularity. A life-lease is designed for those 55 and over, providing condominium living with a combination of initial investment and low rent (“maintenance fees”). Life-lease buildings are usually run by non-profit organizations so that actual costs are covered by the investor, as opposed to inflated costs that result when a developer is turning a profit.

In the case of Esling Park, investors put forward $70 – $80,000 initially, depending on the size and amenities of their suite, with a monthly maintenance fee of $600-800.

In theory, residents were intended to remain in the suites for many years, allowing the property value, and maintenance fee pool, to accrue. With Esling Park, however, some residents left only a few years into their lease, and were unable to collect their investment because of cost over-runs for the development.

Once word got out that investors were not regaining their capital, it was difficult to attract new clients, and the building remained at low capacity – leading to the financial troubles that resulted in the Society’s approaching the City of Rossland for help.

Even though the City had granted the land for the building free of charge, council at the time agreed to borrow $450,000 to lend to the project, interest free for 20 years.

Bill Profili was mayor at the time of this decision, and is the current Chair of the Seniors Housing Society. The outstanding loan is currently at $270,000 with no interest paid to date.

Profili argues that the initial loan was interest-free in perpetuity, and is asking for an extension of the current interpretation of the agreement, or for outright forgiveness of the loan.

The residence was not designed as low-income housing, but rather as high-end apartments for affluent seniors who had no such options at the time.  The building is currently a standard rental, with suites as large as 1200 square feet rented for far less than market value ($800). As a result of a loan restructuring in the year 2000, two of the suites are dedicated to low–cost housing, subsidized by BC Housing.

During recent council debates, City staff recommended an extension of interest-free status until 2039. Councillor Kathy Moore argued that tax payers should not be footing the bill for a private development, and the original agreement should be upheld, with the Society beginning to pay principal, with interest at current market levels. She went on to note that, in the past decade alone, tax-payers have lost $94,000 in potential interest payments.

Mayor Granstrom opposed the motion, stating he would prefer to see some negotiation with the Society before firm values and dates are put into place. A repayment structure would mean that rents at the properties would need to increase substantially, where current laws allow only a maximum increase of 2 per cent per year.

Leigh Harrison, a lawyer involved with the initial set-up of Esling Park Lodge, spoke to council, reminding them that the Society has known for over a decade that the interest-free ride was coming to an end, and should have adjusted rents to begin approaching market value years ago.

At the May 23 Council meeting, a presentation was made by the Rossland Senior Housing Society which led to a negotiated settlement. A recommendation was put forth that the Society be charged 2.2 per cent interest on the outstanding loan immediately, and be expected to begin payments on the principle in 2019. Council agreed with the recommendation, which gives the Society five years to increase tenant fees to a level that allows a balanced budget.

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Severe storm warning remains in effect for the Kootenays

Two special weather statements have been issued for the West Kootenay

Update: Suspect in Montrose gas station stabbing new to the area

Police say the 30-year-old suspect stabbed a Montrose gas station employee

‘I knew what he wanted’: Man recalls black bear chasing him up tree in Slocan Valley

Francis Levasseur is no stranger to the outdoors, but a recent run-in with a bear caused quite a scare

RDKB launches survey to address housing needs in the district

Communities in the district include Trail, Grand Forks, Rossland and Fruitvale

No passenger flights at West Kootenay Regional Airport until at least September

This is the third time Air Canada has announced changes to flight operations out of the airport

11 new COVID-19 cases in B.C. as top doc urges caution amid ‘encouraging’ low rates

Dr. Bonnie Henry also announced that two care home outbreaks would be declared over

Surrey mayor’s party under fire for ‘sickening’ tweet accusing northern B.C. RCMP of murder

Mayor Doug McCallum says tweet, Facebook post ‘sent out by unauthorized person’

Father’s Day Walk Run for prostate cancer will be virtual event this year throughout B.C.

The annual fundraiser for Prostate Cancer Foundation BC has brought in $2.5 million since 1999

Dr. Bonnie Henry announces official ban on overnight kids’ camps this summer

New ban comes after talking with other provincial health officials across the country, Henry says

Senior man in hospital after unprovoked wolf attack near Prince Rupert

Conservation officers are on site looking for the wolf

VIDEO: NASA astronauts blast off into space on SpaceX rocket

Marks NASA’s first human spaceflight launched from U.S. soil in nearly a decade

PHOTOS: U.S. cities brace for increasing unrest over police killing of George Floyd

Minnesota Gov. Tim Walz has fully mobilized the state’s National Guard

$200,000 Maybach impounded after ‘L’ driver caught excessively speeding in Vancouver

Meanwhile, the supervisor sat in the passenger seat, police said

Most Read