UBC is exploring a new option for supporting faculty home ownership, as current programs stall or become slightly more expensive for faculty members.
For a year, UBC has been researching a new equity sharing ownership model where the university would “co-invest” in a market-level unit — both off campus and resale units on campus — with a faculty member.
“A potential equity sharing program would be a supplement to the home ownership toolkit,” said UBC Associate Treasurer Tor Album in a written response to The Ubyssey.
Descriptions of this model indicate that it would be similar to the current Prescribed Interest Rate Loan (PIRL) program, which provides faculty members with a one-time loan to buy a home on or off campus.
The equity sharing ownership model would likely follow PIRL’s criteria and limit eligibility to full-time tenured and tenure-track faculty, as it aims at their recruitment and retention.
The model’s funding is assumed to come from the Faculty Housing Assistance Financing Endowment, which also funds PIRL. With an annual allocation of $10 million, the limited funding means there would be a cap on UBC’s investment per unit and a cap on the university’s ownership of up to 33 per cent of the unit.
Despite these similarities, it is unlikely that the equity sharing ownership model will replace the PIRL program — even as an increase in the prescribed interest rate from one per cent to two per cent has made it slightly more expensive for faculty members.
“It would most likely (at least initially) be proposed as an alternative to PIRL, meaning that faculty members may choose either a PIRL or an equity Sharing option of an equivalent amount,” Album said.
A more detailed proposal of the equity sharing ownership model will be presented to the Board of Governors in December.
“Everyone is now talking about subsidized housing … so in a way it is becoming the new normal as opposed to the exception at UBC,” said Dr. Nassif Ghoussoub, a UBC Vancouver faculty representative on the Board and chair of the Community Planning Task Group that developed HAP.
“So the situation is much more favourable now.”
But Ghoussoub also pointed out that little has changed about the progress of the Housing Action Plan policy to create a discounted on-campus home ownership program for faculty — even though that policy was adopted in 2012.
Album said UBC is still working toward mitigations for this delay, attributing it partly to a taxable benefits issue.
“UBC will not be able to avoid taxable benefits going forward given the employer-employee relationship, but aims to ‘optimize’ the taxable benefits as much as possible,” he said.
Ghoussoub noted that UBC is now requesting an advance ruling from the Canada Revenue Agency (CRA) on the tax implications for the Government Business Enterprise (GBE) proposal, even though the university previously told him that the CRA wouldn’t provide an advance ruling for the HAP policy’s tax implications.
Album responded that an advance ruling from the CRA is usually requested for a proposal that requires “complex interpretations” of tax laws like the GBE, adding that this process does not mean “an attempt to change … the laws.”
For the HAP policy, he noted that the the main question would focus on whether its structure would create a taxable benefit for faculty members, which is “relatively straight forward.”
“Thus, there has (so far) been no ‘need’ to ask the CRA for a ruling on the matter, the interpretation has been made by internal (or external) counsel,” he said.
Album also pointed to the Real Estate Development & Marketing Act under which the university would be considered a developer, potentially exposing it and its board members to “unforeseen” liability.
“Efforts will be made to see if UBC can avoid the potential liability exposure for UBC Board Members, to be in a position to develop restricted ownership opportunities on campus in the future,” he said.