Eager homeowners left in limbo as Nunavut gov't condo-sale plan sputters

It's been four years since this Government of Nunavut employee moved into his condo on the Road to Nowhere in Iqaluit. It was an opportunity, he thought, to own his first homeand start planning his retirement, but it hasn't gone as planned.

"I really feel like I lost control of my life," the man said.

In January 2019 he moved into the unit he thought he was going to purchase through the Government of Nunavut (GN) staff condominium program.

But four years later, the Nunavut Housing Corporation (NHC) still hasn't sold the majority of the units in the program. Tenants have been left in limbo, and the housing corporation is unable to say exactly why.

The program started in 2017 with the objective of offering government employees affordable homeownership opportunities that in return would increase staff retention and help move workers out of staff housing and into the private market.

NHC purchased 60 condo units in Iqaluit with the intention of selling those units significantly under market value to eligible participants. A points system gave preference to Inuit, people in overcrowded homes, and those who have lived in Nunavut the longest.

But for many, the opportunity that sounded too good to be true was.

"It's been running rocky since the beginning," said the Road to Nowhere occupant.

CBC spoke to five people participating in the GN staff condo program. CBC has agreed to keep their identities confidential for fear of repercussion on their or their spouse's employment or status in the condo program.

Savings of up to $200K

There are four Iqaluit buildings in the condo program: two at the back of the Plateau at 5196 and 5198 Qajisarvik Road, with 24 condo units; and two buildings on the Road to Nowhere at 4096 and 4096B Aput court, with 36 condo units.

To date, 13 condos have been sold, all on the Plateau.

Meanwhile, about a dozen people have moved into condos on the Road to Nowhere and are still waiting for purchase agreements.

"There was always a reason and justification of why the process has not been completed," said the man who moved in eagerly in 2019.

Program participants can save up to $200,000 on their condos. The least expensive condo in the program is $259,000 for a one-bedroom unit on the Road to Nowhere. The approximate market value for that unit on the first floor is $320,160, or $322,828 on the third floor, according to NHC.

To ensure participants don't buy the units for cheap and resell them for a profit, NHC put in place several conditions: the buyer can't own any other residential property; they must be an indeterminate employee; and the condo must be their principal residence for the first five years after purchasing.

If someone tries to sell their unit before the five years is up, they'll need to reimburse NHC for the difference between the sale price and the market price, meaning buyers could be on the hook for hundreds of thousands of dollars.

Tenants entered the program agreeing to these conditions. What they didn't know is that it would take years for the sale to be complete.

Without a sales agreement, they cannot get mortgages. Some participants have stopped paying condo fees, unsure whether the NHC, which controls the condo board, is even tracking them, yet fearful they could be hit with a massive bill.

Some, like the Road to Nowhere occupant, feel stuck.

"I cannot accept [anything] else, I cannot buy a house, I cannot change my job," he said.

Since he moved in back in 2019, he's had other real estate opportunities and was even offered a new job in a different Nunavut community, all of which he turned down because of the conditions associated with the condo.

"Lots of people are telling me, they're like, you should just walk away," he said. "But then I'm like, I've been in so long that I'm in the point of no return."

Mostly, he said, he wants these conditions to be retroactive to the time of the move-in date, and not the time of purchase.

'Well beyond funny'

Another resident of the Road to Nowhere said she wants the same thing. She moved into her unit in December 2019.

"I don't understand why I'm penalized because of their mistake, or them being really slow," she said.

Another Road to Nowhere resident who moved into his unit in February 2020 said at firstthe delays were almost comical, but after nearly three years, "it went well beyond funny."

He said back in December 2019 he had a handshake agreement with NHC to purchase the unit and was handed the keys.

"We don't have anything in writing, obviously, because this is Iqaluit and there's nothing in writing and the whole thing is crazy," said the resident.

He's one of the people no longer paying condo fees, "because they haven't got a clue what's going on."

"They're completely confused and I have a feeling everybody else is in the same boat."

Meanwhile, interest rates have climbed since many agreed to join the program, which means the cost of floating a mortgage is significantly higher than when they entered the program a couple of years ago.

"It's a mess," the man said. "[The program is] a load of confusion, promises, no promises and then some. A lot of bullying and confusion it's a very strange situation."

'It's just been so, so terrible'

All three program participants living in Road to Nowhere say the same thing: they just want to buy their condos.

A second round of applicants who have not yet moved into units agreed.

"I'm beyond frustration," said one applicant. "I have this sick feeling of being heartbroken, because this was probably our last shot of ever having home ownership in Iqaluit and it seems like it's not going to happen now. So it's just been so, so terrible."

This applicant was accepted to the program in the fall of 2021, thinking that this would be the best thing for his young family.

Just before the applications opened for the second round of condo candidates, he was offered a chance to buy a place in town from someone who was moving. The deal was good, he said, compared to most of the houses for sale in Iqaluit, because the owner wanted to sell to a local family.

But the condos for sale through the staff program were half the price of the house he was offered, so he turned it down.

"We gave it up thinking this was a better option," he said. "You know how hard I'm kicking myself right now for reneging that? I feel like I failed my family."

'We realize we have to move faster'

NHC's president and CEO Eiryn Devereaux gave several reasons for why the sales of the condos on Road to Nowhere haven't gone through, including delays related to the ransomware attack on the GN computer system in 2019, and staffing challenges due to COVID-19.

"This is the first time the corporation kind of went forward with this kind of a program," said Devereaux. "They didn't have a playbook and certainly, you know, they've had some delays and we hope to learn from that."

Devereaux said sale agreements should be going out to participants within the next month.

"We realize we've got to move faster and it really is our hope that we'll start executing more sales in the very near future," said Devereaux.

However, those participants that wanted their benefit conditions to be retroactive from the time they moved into their units are out of luck.

Devereaux said these conditions only come into place when the purchase and sale agreement has been settled.

As for those outstanding condo fees, Devereaux said when the government switched to remote work during the pandemic it made fee collection challenging.

"It wasn't an easy mechanism to have people come make monthly payments and to set up, you know, payment agreements and stuff like that," said Devereaux. "So it's certainly a period of time where there was non-payments happening. We are absolutely accepting payments now."

Tax situation unclear

Over the past year a new issue arose that will likely change the scope of the program.

The program will be taxed by The Canada Revenue Agency as an employee benefit because the discounted condos are only available to Government of Nunavut staff.

An email from NHC's senior finance officer to buyers on Sept. 26 said that the buyers would be taxed on the difference between the purchase price and the appraised value of the unit at the time of sale.

Another applicant who is looking to buy a condo on his single income said this tax is likely going to price him out.

"I can't do two down payments up front, type of thing, right? It's unaffordable on a single income," he said.

The email said the tax can be paid in the full amount all at once, or 20 per cent of it can be paid at the end of each forgiveness year, over five years. It's unclear exactly how much this will be because the total is dependent on the amount of savings in the purchase agreement.

The same email from NHC said program participants have the option to buy their condos and deal with the unknown tax implications, or leave the program altogether.

But Devereaux said the tax problem goes away if the program is opened up to the public, which it likely will.

That's because, according to Devereaux, the program has somehow been unable to find buyers for all of the units, in spite of a housing crunch in the city that draws multiple bids on nearly every housing unit available.

Devereaux said that means the corporation "would have had to think about opening up and expanding the program so we could sell those units."

Units vacant for years

MLA for Iqaluit-Manirajak, Adam Arreak Lightstone, has been a vocal critic of the program since the onset, but not just because the paperwork has taken so long.

"I think the biggest issue is the fact that a majority of those condo units have remained vacant for the last almost six years," said Arreak Lightstone.

Besides the 13 units sold on the Plateau and about a dozen people occupying the Road to Nowhere, approximately 35 condo units have been sitting empty since the onset of the program.

"Meanwhile, we're in a skyrocketing housing market, three years in a row where the rental market is at zero per cent vacancy or near zero per cent vacancy," said Arreak Lightstone.

Devereaux acknowledged the criticism, saying the vacancies show clearly how "we have to do things differently."

Nunavut's minister in charge of the housing corporation, Lorne Kusugak, said fixing the program is exactly what's happening, and the condo units will be sold.

"Unfortunately there's nothing I can do or we can do about what's happened in the past," said Kusugak. "But going forward I think that we cleaned up the agenda. We know that we're on the path to solving these issues and the frustrations are there, are real."