Request comes at 'critical juncture' of negotiations
Cambrian College is asking the City of Greater Sudbury for tax relief for a company that wants to purchase its residence buildings.
The college's president, Sylvia Barnard, made the request at a recent public input session for the 2013 city budget.
In January, the college's board of directors approved the sale of the residence buildings to Campus Living Centres for $24 million. Cambrian would still own the land upon which the residences are built.
Campus Living Centres, a Canadian company which, according to its website, is the largest owner and operator of student housing in Canada, has already been operating the college's residences for the last few years.
Right now, Cambrian College doesn't pay property taxes on its residence buildings, as they're considered to be government buildings, Barnard said.
Technically, once they're sold to a private company, the residences would be reassessed for how much property tax they should pay, she said.
The college is asking the city to extend grants to Campus Living Centres for 100 per cent of the taxes they'd have to pay.
The final deal between Cambrian College has not yet been signed, although Barnard said they do have an agreement in place.
When asked if Campus Living Centres could back out of the deal if the city doesn't provide property tax relief, Barnard said she can't answer the question for legal reasons.
“We're getting here into an area of contract law here,” she said. “I'm not prepared to get into that.”
However, Barnard said in a June 6 letter to City of Greater Sudbury CAO Doug Nadorozny that the request “comes at a critical juncture in the college's negotiations with CLC (Campus Living Centres).”
“Our business partner is obviously concerned about the narrow profit margins and would like some assurances about tax relief and development charge exemptions before committing to the project,” the letter said.
“Both Cambrian and CLC are cognisant of the fact that there is a cost associated with providing residence programming. And although the programming enriches the student experience, this cost must be reflected in the residence fees paid by students.”
If Campus Living Centres were to pay property taxes, it would “result in an even greater increase in residence fees, an unfair burden on students, or limit the ability of the student body to afford on-campus housing.”
While the city wouldn't normally approve budget requests until at least this fall, Barnard said she's put in a request for an expedited approval.
She said she doesn't think this should be a problem, as the city doesn't current collect any taxes from the residence buildings, and wouldn't be losing any money.
“It really is a zero impact on the budget,” Barnard said. “If they were to decide that they would put a solution in place, it doesn't change anything for them. It's not something that they have to absorb in any budget.”
Barnard said other municipalities, such as Chatham, North Bay and Orillia have entered into similar agreements with the private purchasers of post-secondary residences.
If the city doesn't approve the request, and the sale of the residences still goes through, Campus Living Centres would be forced to pass the cost of the property taxes onto students, Barnard said.
“They're not a charity, and neither are we,” she said.
“If we were a charity, we wouldn't be charging students anything for residences, would we? It's a rental agreement. When you pay rent in an apartment, part of what the landlord has included is all of the costs.”
Barnard said the college is being forced to sell its residences because the province does not provide any funding to pay for residences. The college is currently carrying about $21 million in mortgages for its 676 residence beds.
In addition, the government considers these mortgages as a debt load carried by the colleges, and doesn't recognize that this debt is offset by rent from the residences.
“So we only have a certain level of debt ratio we're allowed to incur,” Barnard said. “Residences are very expensive buildings we put up and are counted as part of your debt. It really prohibits us from being able to to build any other buildings.”
Posted by Arron Pickard