The Habitat for Humanity ReStore in Abbotsford, as well as the one in Chilliwack, have now been shut down. (Tyler Olsen/Abbotsford News)

Sources question real reasons for closure of local Habitat for Humanity

National office says Upper Fraser Valley branch’s financials include ‘disturbing pattern’

In the aftermath of Habitat for Humanity’s Upper Fraser Valley (UFV) affiliate being shut down last week, some of those behind the scenes are challenging the claim that the branch was struggling financially.

Four people who spoke to The News, asking that their names not be used due to fear of repercussions, say the branch was making money and has a large amount of equity.

“It is and was a real success,” one individual said.

Meanwhile, David Morris – who was appointed acting CEO of the branch – stands by the decision, saying the affiliate had racked up at least $500,000 in debt, had exhausted its lines of credit, and had a “disturbing pattern of activity” that included a senior manager “making the unauthorized purchase of an expensive vehicle that was then portrayed as personal property.”

Morris said in addition to police involvement, he has requested a forensic audit “to determine how, when the Upper Fraser Valley organization has served no more than four local families since its inception, … it has ended up insolvent.”

The News reported last week that Habitat for Humanity Canada – which builds homes in partnership with families in need – had terminated the membership of the UFV affiliate, resulting in the closure on May 12 of the ReStore locations in Abbotsford and Chilliwack.

The UFV branch is based in Abbotsford, but also serves Chilliwack, Mission and Hope.

A total of 16 ReStore employees – 12 in Abbotsford and four in Chilliwack – are now out of work.

But several sources are questioning where the financial troubles lie. They say that the Abbotsford ReStore – which sells donated and used building materials, furniture and appliances – was the second-highest money-maker in B.C. and the fifth in Canada.

They say the location made almost $1 million profit in each of the last two years. Those profits helped to subsidize the Chilliwack store when it opened in late 2016 and was initially losing $15,000 a month until it began making a profit this year, they add.

They also say the stock from the two stores is worth about $1 million. (The merchandise from the Abbotsford store is being auctioned on Wednesday, May 30, starting at 10 a.m.)

The sources also indicate that Habitat for Humanity owns the ReStore property at 31877 South Fraser Way in Abbotsford. (They leased the Chilliwack building.) They say the site was worth $7.6 million when it was first purchased around 2015, and a generous donation from the previous owners enabled the affiliate to buy it for $5.3 million.

BC Assessment assessed the value at $5.24 million as of July 1, 2017, but the sources say an appraisal last fall valued it at $8.6 million, leaving a potential profit of more than $3 million if sold for that price.

Morris said the current actual market value is still being determined, and the property will then be listed.

“A remarkably generous donation prompted the purchase of the building a few years ago. We hope the sale will leave us with roughly the equivalent of that donation, ensuring our ability to honour the organization’s financial obligations,” he said.

Morris said he expects that the initial estimate of the UFV branch’s $500,000 debt will go “significantly higher” as the financial records are “brought into order.”

He said any remaining assets will be transferred to Habitat Canada. The Greater Vancouver affiliate, as the closest neighbouring Habitat organization, will assume the administration and responsibility for the mortgages of the two local homes built in partnership with low-income families in recent years.

But the involvement of the Greater Vancouver branch has the anonymous sources concerned about a 19-unit townhouse development in Mission that was initiated by the UFV branch and which was well underway.

That project, located on the Cedar Valley Connector, was awaiting adoption when the decision was made to terminate the UFV branch.

The sources say following adoption, they had hoped to soon begin construction, with the goal of having the first four families move in by this fall. One source said the agreement with council was that all the residents would be from Abbotsford and Mission, and 12 families had already been shortlisted for the project, although they had not yet been informed.

The development has now been transferred to the Greater Vancouver branch and will move ahead, but the sources say they are worried that the selection process will start all over, and families could be chosen from outside the Fraser Valley.

Mission Mayor Randy Hawes said he has been assured that the Vancouver chapter is “sensitive to the desire to have Mission people.”

“That would be their first aim – to make sure these units are taken by Mission citizens,” he said.

Hawes said council is not concerned about the ability of the Vancouver affiliate to complete the project, saying “these houses will be built.”

The sources surmise that the real reason for the closure of the UFV branch is because ReStore employees had joined a union – the Christian Labour Association of Canada (CLAC) – and there were fears from the national office that other stores where employees currently make less money would follow suit, resulting in higher union-wage payroll costs.

But Morris adamantly denies the claim, saying he had already been asked by the Upper Fraser Valley board of directors to step in as acting CEO just as notice was served of the employees’ interest in joining a union.

“By law, the employer was prevented from engaging in any activity that could be perceived as an attempt to influence the outcome of the union vote. A forthright presentation of the organization’s fairly dire circumstances would certainly have been viewed as such,” he said.

Morris said, after the vote to unionize was taken, he advised CLAC of the “potential termination” of the UFV affiliate and had a three-hour meeting with its representative to advise them of the situation.

“Evidently, that information wasn’t shared with the union’s new membership,” he said.

Morris said that, within 12 hours of the decision being made to terminate the branch, staff were advised and were told why it was being done and the implications.

But now, in the aftermath, the sources worry that the Fraser Valley will suffer and that people who wanted to support local builds will not be interested in supporting Habitat for Humanity without a locally based affiliate.

Jeanette Y. Martin (not one of the other four sources), who was previously the branch’s building materials coordinator and most recently the volunteer coordinator, said it’s a “sad, frustrating, angry situation.”

“Our staff believed whole-heartedly in everything they were doing … A part of my heart has been squished,” she said.

 

This property on the Cedar Valley Connector in Mission was purchased by Habitat for Humanity Upper Fraser Valley in 2016 for a multi-family housing project. The project has now been transferred to the Greater Vancouver affiiliate. (Kevin Mills/Black Press)

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