More than two dozen units of affordable co-operative housing in Spryfield were quietly sold off last year in the midst of the city’s housing crisis.
And the government approved the sale.
New Armdale Westside Housing Co-operative Limited sold 19 properties to 3340837 Nova Scotia Limited in November 2020 for $1,220,000. The properties are mostly one- or two-unit buildings, and are scattered around the Spryfield area. Their combined assessed value for property taxation, typically much less than market value, is $3,514,800.
In 2015, according to the Housing Needs Assessment from the Housing and Homelessness Partnership, New Armdale’s portfolio was 53 units — the fifth largest co-op portfolio in the municipality at the time.
The co-op sold about half its portfolio — 27 units in total.
Wannetta Fisher with Pathways Housing, the property management company that works on behalf of New Armdale Westside and other co-ops, told the Halifax Examiner in an interview that most of the units were vacant.
“They were all in a state where they require a number of dollars to be put into them in order to make them rentable,” she said.
Fisher said the four units were occupied when the sale went through, and the continuation of those tenants’ leases was made a condition of the sale. She said the tenants were not members of the co-op.
The sale was negotiated last summer, with bids due at the end of July.
Fisher said four potential buyers, mostly contractors the co-op had worked with before, viewed the units. The co-op’s board approved the sale to 3340837 Nova Scotia Limited.
The company, owned by David Walsh, Elizabeth Walsh, Christopher Britton, and Mark Hartlin, was set up in September 2020. The numbered company is listed as the owner of another one, Spryfield Developments, set up in December 2020.
The Walshs also own Duel Properties Inc., a renovation, construction and landscaping company that operates under the name Duel Property Services, and FinishCoat Painting Ltd. Britton is an accountant and founder of Martello Wealth Advisory Inc., and Hartlin owns another painting company, Hartlin Painting and Decorating Ltd.
The Examiner asked each of the owners for interviews, but received no response.
Buyer recouping big money since the sale
Since the sale closed last year, 3340837 Nova Scotia Limited has recouped almost all of its initial investment.
The company renovated and sold a few of the properties on the open market — three three-bedroom townhouse-style condominium units. It got $292,000 for 89 Drumdonald Rd. in April 2021, $282,000 for 113 Drumdonald Rd. also in April, and $275,000 for 181 Ridgevalley Road in May.
3340837 sold two of the properties — 6 Aldergrove Dr. and 12 Sylvia Ave. — to another numbered company, 3317423 Nova Scotia Incorporated, in February 2021 for $365,000. The directors of 3317423 Nova Scotia Limited are Cory, Deborah and James Melvin. Deborah and James Melvin (better known as Jimmy Melvin Sr.) personally guaranteed the mortgage on the purchase.
One of those properties is a vacant parcel of land. The other is a duplex that appears to be occupied.
In total, 3340837 Nova Scotia Limited has recouped $1,214,000 of the initial purchase price of $1,220,000 — and it’s still holding 14 of the properties.
The company has also purchased a property next to one of the former co-ops, 29 Pine Grove Dr., for $275,000 in May 2021. And it bought another of the Ridgevalley Road condos, Unit 80, for $226,000 in March.
Government had to sign off
New Armdale Westside Housing Co-operative has a 25-year mortgage with Nova Scotia Housing Development Corporation for $3.2 million, signed in 2008, covering 40 properties, including the 19 sold. That meant the provincial government had to approve the sale.
“A cooperative housing organization with a Housing NS mortgage needs approval from the co-op membership and permission from Housing NS to sell units,” Jasmine Flemming, spokesperson for the Department of Infrastructure and Housing, wrote in an email.
Fisher said the co-op was in poor financial health. It’s the result of the merger in 2007 of five co-operatives — Armdale and District Housing Co-Operative, Cliffside Housing Co-Operative, Nudondin Housing Co-Operative, Harbour West Housing Co-Operative, and Amos Housing Co-Operative.
Many of the units those co-ops owned were in rough shape, and while the newly-formed co-op received some funding to fix them up, it didn’t go as far as it was supposed to.
“They had looked at different options over the last probably six, seven years on what New Armdale Westside Housing could do in order to make their position more viable in the market,” Fisher said.
The co-op had been under pressure to sell some of its units for years, and in 2020, it made a move.
“I was getting several phone calls from different organizations, you know, ‘Why are not doing anything with these?'” Fisher said.
“The board finally put forward a motion to sell those properties, and finally got the Minister to sign off on it.”
Emails obtained through Freedom of Information and shared with the Examiner show two parties emailed the government asking about the properties in May 2020.
First was Duel Properties Inc. Walsh emailed Chuck Porter, then-MLA and housing minister, expressing interest in buying “vacant co op houses in the spryfield area.”
On the same day, the president of FH Development Group — whose name was redacted but is Faisal Al-Hammadi — emailed Porter as well, touting his record of providing housing in the Spryfield area that meets the Canada Mortgage and Housing Corporation’s definition of affordability.
“I would be interested in acquiring additional properties, so that I can continue to provide high-quality, affordable housing to residents,” Al-Hammadi wrote.
“I understand there are homes which are presently boarded-up, while others are unoccupied.”
The FOI disclosure doesn’t indicate Porter replied to either email, and then in September, it shows correspondence from New Armdale Westside Housing Corporation asking for permission to sell to Duel Properties, including the company’s full submission.
“Proceeds of the sale would be applied to the outstanding mortgage balances associated with the properties. Any remaining funds would be used to pay down the mortgage on any additional property carrying a mortgage at the time of sale,” New Armdale Westside director Elizabeth Kitely and secretary Olive Harrietha wrote to Housing Nova Scotia.
“The New Armdale Westside Housing Co-operative has been struggling to maintain their units for a number of years and are unable to offer an adequate level of housing to its members and tenants. The sale of this portion of their housing stock provides the opportunity to survive in the affordable housing sector.”
Duel Properties’ proposal lists the properties and says the buyer will be 3311150 Nova Scotia Ltd., another numbered company associated with four of the five owners of 3340837 Nova Scotia Limited, everyone except Hartlin.
In listing the properties, the proposal broke them in two parts: the three condominiums on Drumdonald and Ridgevalley roads for $225,000 and the rest of the properties for $995,000, totalling the eventual sale price of $1,220,000 for all 19 properties.
The proposal indicates the buyers would “allow all existing tenants to stay for up to 1 year from the closing date at their current rental rates,” and that if any of those tenants want to end their lease early they can do so with 30 days notice.
“We propose to add unit density at all of the properties whose zoning allows for it,” the buyers wrote.
There’s no mention of affordability.
In emails discussing the sale, government staff express concern about the Housing Nova Scotia mortgage, but not the loss of affordable housing.
“I am wondering about more specifics around the expectation of payment towards HNS and outstanding mortgage,” wrote Catherine Berliner, then-associate deputy minister of Municipal Affairs and Housing.
“This letter seems really light on this front? ls this all we say or should we be outlining expectations a little clearer?”
It’s unclear whether there were any new terms drafted, but the sale eventually closed with the minister’s approval.
Why not a tender process?
At a Halifax regional council meeting last September, before the sale had closed, former councillor Stephen Adams voted against providing another year of property tax relief to the co-op. The staff report at the time listed 37 New Armdale Westside properties receiving a 25% discount on property taxes. The properties sold are still on the list posted online.
“The last time we dealt with these with the tax relief, I raised the issue with respect to some of the housing co-operatives and some of the ones in Spryfield that I had discussed with bylaw … there was no one living in them, yet they were still getting a tax break,” Adams said at the council meeting.
“I don’t think it’s right that we give them that that break. The second part, and more concerning, is within the last two months, a number of these homes were put up for sale, but not in a public manner. A number of individuals were given priority or given the ability to do this, to bid on them and buy them all. I don’t know where that stands right now, but it should’ve been done in an open process so that anyone who was interested could have had an opportunity to buy 10, 20 or 30 or more, how many were for sale. I’m a little concerned about what’s happening with with the properties are not inhabited and their methodology behind the disposal.”
The FOI disclosure shows Adams raising these same concerns in late-July 2020, writing to Porter, the housing minister.
“I understand that these properties are for sale; yet this has not been made public,” Adams wrote. “If this is indeed the situation, do you know why? I realize that your department does not own these; however, your department certainly is a major stakeholder.”
In an interview, Adams said he knew the co-op had a mortgage with the province, so he thought the sale should follow a public process.
“I would have thought that the province wanting to maximize the return, then perhaps they should have gone out to a request for proposals or tender,” he said.
“I know a couple individuals or groups that were interested, and were never contacted that these became available.”
Fisher said the properties weren’t sold through a tender or request for proposals because they were privately, not publicly, owned.
Flemming, the provincial Department of Infrastructure and Housing spokesperson, said the process is up to the co-op.
“As the owner of the property, the co-op makes the decision about how the units are sold,” Flemming said. “That was the case when the general membership of the New Armdale Westside Co-operative approved the sale of 19 [properties] last year.”
Co-ops in a tough spot
Co-operative housing has a long history in Canada and in Nova Scotia in particular, starting with the work of the Antigonish Movement, a group of priests and academics out of St. Francis Xavier University in the early 1900s.
The federal government started providing funding for housing co-ops in the 1970s and continued until the 1990s, when funding for social programs generally dried up under the austerity-loving governments of the day. The funding never really came back, despite promises by provincial and federal governments in recent years.
It’s been a struggle then for co-ops to keep units maintained while still keeping costs low for members, leading to mergers like the one that created New Armdale Westside and leading to sales like this one in Spryfield.
While a smaller portfolio will be more manageable, New Armdale Westside will continue to struggle, Fisher suggested.
“A lot of people think that you sell off the property and it’s going to be the saving grace of your co-op. It’s not, it’s a Band-Aid,” she said.
“If you’re a struggling co-op selling your properties, it’s not going to save you. It may cut off the bleeding for a while until you can find other sources, but it won’t save you.”
Karen Brodeur is the regional manager of the Co-operative Housing Federation of Canada and president of Compass Nova Scotia Co-operative Homes Ltd., sort of a co-operative for co-operatives. She said in an email that New Armdale Westside is no longer a member of the federation, but offered some insights around what government needs to do for the co-op sector generally:
The first step in developing more co-operative housing is to first stabilize and maintain rental assistance programs. We have recommended to the province that they commit to long-term rental assistance programs for low-income households living in non-profit and co-op housing. Housing Nova Scotia has been offering either month-to-month or annual extensions. While these extensions are welcome news, their short-term nature has fostered a lot of uncertainty for low-income households. Short-term rental assistance programs also hinder the financial sustainability of co-ops, and their capacity to make long-term capital plans for repair and renewal. A long-term rental assistance program will prevent the loss of affordable homes, and empower co-op housing providers to access maintenance repairs more easily.
Second, we believe it is imperative that the province develop a non-market housing construction and acquisition program as a new component of the provincial Action Plan. This program should include two objectives: a) constructing new mixed-income co-op and not-for-profit housing; and b) supporting non-profits and co-ops to purchase existing low-rent rental properties that are for sale, in order to own and operate them as non-market housing. This program would take full advantage of the unique, mission driven approach and existing portfolio of non-market housing providers.
Brodeur said the government owns some units that used to be independent co-ops, and it should transfer those to an organization like Compass.
“As Housing Nova Scotia considers the future of its assets, the Government of Nova Scotia should prioritize non-market options that are proven to be a sound public investment by enabling long-term affordability,” Brodeur wrote.
“Building the capacity and scale of the community-housing sector, including co-ops, is critical to providing Nova Scotians with better non-market housing options now, and into the future.”