A planned rental increase for the Gateway Cottages, located behind the Dr. Charles L. LeGrow Health Centre, has worried seniors, their families and town councillors.
On Feb. 14 letters by Residential Services Department of Western Health were sent to current tenants advising of planned increases of $60 per month. A one-bedroom cottage will increase to $605 while a two-bedroom cottage will rent for $650. The increases will come into effect June 1.
In the letter, Western Health stated, “It has recently come to our attention that we have not been billing utility costs, in addition to the monthly rental charge. In order to correct this situation, we will be embarking on a multi-year plan to gradually implement the utility cost for current tenants.”
During the March 27 council meeting, Mayor John Spencer expressed his concern for the potential hardship these increases would have on senior tenants on fixed incomes who rent the cottages.
“I spoke to the chair of the board," noted Spencer. "Turns out to be a neighbour and just to get some history of the cottages. They’re almost 30 years old. [The] mortgage is almost paid off.”
Councillor Jim Lane even went so far as to lambaste the increase as "a cash grab."
“This is a very touchy subject hitting an extremely vulnerable segment of the population, our seniors," Spencer told The Gulf News via email. "Letters outlining rent increases to come are very intimidating since many of these people gave up their homes and now have nowhere to go.”
Kelli O’Brien responded on behalf of Western Health, also via email.
“In 2015/16, the management function for cottages was consolidated within a single position with the intent of improving and standardizing the management of cottage operations," wrote O’Brien. "As a result of this process, it was identified that Western Health had been undercharging residents.”
Although the mortgage will be paid off next year, Western Health still believes the increases are necessary to bring the Port aux Basques tenants on par with other units in the region.
“The changes [are] being implement[ed] to increase the rent to the Lower End of Market (LEM) and to have the tenants responsible for utility cost is in keeping with the requirements of the operating agreement on these cottages, and is consistent with what is happening with the cottages Western Health operates in Stephenville Crossing and Corner Brook that were funded under an operating agreement with CMHC,” O’Brien advised. “While the mortgage on the Port Aux Basques units will be fully amortized in 2019, the cottages are old and will require increased maintenance and upkeep. Some of the savings from the mortgage payments will be utilized for this.”
Spencer believes Western Health has some discretionary leeway when it comes to these increases.
“While some would argue that as of April 1, 2018 rent for a two-bedroom unit is $650 would be a reasonable expectation, my question would be... but when will the bleeding stop before Western Health feels it is getting a fair return on the units,” asked Spencer. “Coupled with this is the units will be paid off next year. Surely this gives Western Health greater flexibility in relation to future maintenance costs.”
O’Brien did advise that Western Health is aware of the financial impact on seniors that will accompany these increases, which will also impact residents of Bay St. George Cottages (Stephenville Crossing) and Interfaith Cottages (Corner Brook).
“Western Health continues to work with all stakeholders to lessen the impact of rate increases," O'Brien said. "For example, there are Newfoundland and Labrador Housing Corporation subsidies available to residents that qualify dependent upon the utility bills being registered in their own name.”
An assessment that accompanied the letter noted that operating agreement requirements for LEM rental units listed one-bedroom units at $674 per month and two-bedroom units at $749 per month. That means a $69 to $99 discrepancy remains even after the new increases go into effect. Will that mean more increases?
“The multi-year plan is reviewed annually, and a determination is made whether to continue with the rate increases as originally identified,” responded O’Brien.
Members of town council and staff are currently scheduled to meet with representatives of Western Health in mid-April.