Within the last five to 10 years, UVic lent at least $5 918 089 in interest-free home purchasing and relocation loans to more than 160 new faculty, librarians and top-level hires, according to figures obtained through the Freedom of Information (FOI) Act.
UVic’s new administrators, tenure-track or tenured professors, librarians and artists-in-residence are all eligible to apply for the loan within their first five years of hire. The loan can only be used for the purchase of a first home in Victoria.
“It’s very much a recruitment tool to attract top-notch professors from across the country or internationally,” said Kim Hart-Wensley, UVic’s associate vice-president of faculty relations and academic administration, in an interview with the Martlet. “Similarly, to attract senior administrators within the university — and again, we need to be competitive, and we need really top-notch people working here. As you know, there’s a fairly high cost of living in Victoria.”
New faculty members and librarians can be approved for a loan of up to $35 000. On the list released Feb. 25, there are 72 loans with original principals at $35 000, 80 at $25 000, one at $24 589 and one at $22 500.
For many higher-up positions, such as deans, chairs, associate vice presidents and vice presidents, the original principal amounts are much higher. Hart-Wensley said this is “to make that position competitive in order to recruit outstanding people for those particular positions.”
She said these amounts are negotiated as part of a package within an overall budget for a particular position. Though she did not provide specific figures, she said these loans are generally in the ballpark of $50 000 – $115 000. Ten high-level hires currently have loans out with original principals in that range. Another loan was originally for $200 000, and another at $225 000.
“There’s a general parameter within which there’s some flexibility depending on what it is you’re trying to get [for] that individual, and they’re looking for a home loan of $50 000, and somebody else is looking at $100 000 — but maybe what they’re looking for in terms of salary is different. That’s why I can’t really set it down in stone for you,” said Hart-Wensley.
“You’re not going to see a loan that’s $500 000 because that’s simply beyond what would be realistically budgeted for that kind of position,” she noted. The Ubyssey, the official student newspaper of the University of British Columbia (UBC), reported in January that UBC held $11.8 million in interest-free loans, some at $600 000. UBC cited the same reason for these loans as UVic does: competitive hiring.
While the loan is interest-free to the individual, Hart-Wensley said the interest is paid for through the university’s “Scholars’ Fund,” established by the Board of Governors to enhance recruitment.
Borrowers do pay tax on the amount the interest would have been — unless the university loan qualifies as a home relocation loan for that person under the Income Tax Act. To qualify, the employee must be moving within Canada more than 40 kilometres and be purchasing the home as a result of accepting the new job.
For security, UVic requires borrowers to secure a second mortgage against the property purchased, which must be registered in the Land Title Office; UVic pays for the related legal fees and registration costs. That mortgage, plus any other secured debt against the property, including the university loan, can’t exceed 95 per cent of the purchase price of the residence.
UVic’s loan term is five years, during which the principal may be repaid at any time or through instalments. Individuals can apply for a five-year renewal six months prior to the end of the term; approval is at the university’s discretion.
“You’d still have to be in the same kind of financial position [and] still be in the same first home you bought. We’d still have to make sure you have sufficient equity in your home. We wouldn’t want to renew in a situation where you’ve borrowed even more money against the house or something like that,” Hart-Wensley said.
During the renewal period, monthly payments are mandatory — at least $400 for individuals who borrowed prior to July 1, 2011, and $584 for those who borrowed on or after that date.
Hart-Wensley said UVic won’t reveal the remaining principals to protect individual privacy. “Our interpretation of the [FOI] legislation is we’re prohibited from doing that,” said Hart-Wensley, though UBC released remaining principals on its interest-free loans when it responded to the original FOI for a list of loans. Hart-Wensley did note, however, that there is now just under $5 million out in loans.
Speaking about the program’s impact, Hart-Wensley said, “[The loan] is clearly being taken up and being used. It seems to suggest that it is something of value to the university in terms of getting those top-notch people, so I think it’s a positive thing.”