Families could lose homes after injunction against Habitat Edmonton dismissed

Several low-income families living in a Habitat for Humanity Edmonton development are looking for new homes after an Alberta court dismissed their injunction request in an ongoing dispute with the charity.

Habitat Edmonton can force the families from their homes as early as July 31 if they refuse to sign a new housing agreement after the Court of Queen's Bench dismissed the families' injunction application earlier this month. 

The 57 families named in the application asked the court to stop any removal orders while they pursued a class action lawsuit, alleging Habitat broke and misrepresented the terms of their housing agreement. 

"We thought that Habitat was an organization that gave hope, or realized dreams or took family from poverty," said Adja Barry, one of the applicants. "We didn't imagine the organization like this." 

Habitat Edmonton had originally offered zero-interest mortgages to the low-income families if they volunteered 500 hours of work with the charity — mostly toward building the home — and successfully completed a year-long tenancy agreement. Many of the families are recent immigrants. Others are on income support caring for children with disabilities or are single parents with serious health issues. 

The charity, saddled with millions of dollars in debt, is now asking those families to sign on to a different housing scheme. Under the new agreement, half the mortgage would be financed by a credit union and the other half would remain interest-free. 

"We're relieved. I would not say we're happy with the road that we've been on," said Habitat Edmonton board chair Chris Bruce. "We still hope that this will give us an opportunity to have individual discussions with each of the families to find a way to move forward." 

'We are lost' 

Barry said she's devastated by the decision. Under the new agreement, she estimates the interest would amount to $17,000 over five years — and she's not sure whether the bank would approve her application, a concern shared by the rest of the families. 

"We are lost," Barry said in an interview Sunday. "Right now we're spinning because all of us here have a kid. The primary thing is thinking about the well-being of our kids." 

When Barry and her family moved into their home in 2018, she considered it a godsend. The home has a backyard and her three daughters can romp around in the basement without disturbing neighbours. There were parks nearby and a community full of other Habitat partner-families.

Now, less than two years later, she is preparing her daughters to potentially move to another neighbourhood and another school, in a rental unit that won't provide any equity or help build her family's credit rating.

"It's unbelievable. You can't even imagine that an organization that cares about the well-being of families can do that to families," Barry said. "We hope this will give us an opportunity to have individual discussions with each of the families to find a way to move forward." 

Habitat could fail if injunction granted, judge says

In dismissing the application, Justice James Neilson found that the risks posed to Habitat Edmonton by an injunction outweighed any risks raised by the partner families. 

When Habitat Edmonton CEO Karen Stone took over in 2018, she inherited a charity $27 million in debt and no money left to build homes, according to the decision. 

As part of its financial restructuring, Habitat says it moved facilities, cut staff and bundled its mortgage loans with a new bank to get reduced lending rates. The charity also started to negotiate the new mortgage model with partner families.

It's about individual families and individual families and individual capacity and individual opportunities for them.- Chris Bruce, Habitat for Humanity Edmonton board chair

If the partner families refuse to sign the new mortgage models, Habitat estimates it will lose out on nearly $7.5 million in first mortgage receipts, which it could use to service debt and put toward new construction. The court found there was a real possibility that Habitat Edmonton would fail if the injunction was granted, leaving a total 450 partner families potentially without support and 110 people unemployed. 

"Our focus has always been on trying to find the best possible solution for all the families involved, including the rest of the families that Habitat has a relationship with and in such a way that we can sustain the organization and serve even more families into the future," said Bruce, the Habitat board chair.

Bruce said the charity will now look to work with each family to finalize an agreement. Habitat says it will try to devise a model that would ensure a family does not spend more than roughly 25 per cent of their income on housing.

"It's about individual families and individual capacity and individual opportunities for them," he said. 

Avnish Nanda, lawyer for the partner families, said his clients will now determine their next steps about a possible class action lawsuit. He says several families are looking into social housing options but coming up against long wait lists exacerbated by the COVID-19 pandemic. 

He said the families had effectively become a sacrifice in Habitat's efforts to restructure its finances. 

"We're talking about people whose dreams have been crushed," he said.