Insurance Problems Frustrate
Recently, I wrote about the Homeowner Protection Act (HPA) and how it is affecting
the rehabilitation of heritage buildings in B.C. The Act, introduced to restore consumer
confidence in the new-home market after the leaky condo scandal, requires that
warranty insurance be in place before a building permit can be obtained to
construct a new home.This applies as well to a heritage building being converted
to residential use, or a single-family heritage house converted to multiple residences.
The problem arises when heritage conversions are required to meet new construction
standards to get insurance. For example, a warranty provider might insist that existing
windows must be replaced with new, or that frame walls be taken back to the
studs and rebuilt to code.The potential impact on heritage character is enormous.
Following a second meeting between the Homeowner Protection Office, warranty
companies and heritage representatives this fall, Heritage BC and others are collecting
some case histories that illustrate our concerns. Here is one from Rossland.
In 2006, developer Zac Gribble purchased the 107-year-old firehall in Rossland.
It had been sitting mostly empty for some years, and he intended to redevelop the
property.To make the project work financially he needed to create strata condominium
units on the second level and a business on the ground floor. As this was a
new residential use upstairs, he had to get warranty insurance before he could start.
Three warranty insurance firms were approached, but initially none was willing to
take on or even review the project. The developer could not even obtain a building
permit. Several stressful months went by with no progress; meanwhile debt
servicing caused a near bankruptcy.After many attempts, National Home Warranty
agreed to review the project, but required substantial and expensive engineering.
After several months, National Home Warranty did provide insurance, but required
that the interior brick be covered up to increase insulation values.This was a major
issue for several reasons, including the loss of heritage character of the interior
and related loss of market appeal and value, and the cost to do this work that the
developer had not planned on. National Home Warranty would not back down, so
the heritage brick was covered up with two-by-four stud walls and drywalled over.
The net result, says the developer, was a project half a million dollars over budget
which he feels was almost entirely due to the unnecessary bureaucratic requirements
and resulting time delays. He summed it up this way:
“If another benevolent developer approached me about restoring a heritage building into sellable condos
I would regrettably have to counsel to avoid doing so as there are so many barriers,
restrictions and impediments to doing so. In my opinion, the current HPO legislation is set up to protect
homeowners from shoddy new construction and in doing so, also impedes worthy
re-development from happening, which is a shame as there are relatively few
salvageable heritage structures left in BC.The sustainable re-purposing of
these heritage buildings in a sensitive way guarantees that these cultural treasures
remain intact. My hope is that the BC government will change the current system
to encourage sensible re-development as opposed to continuing with a system
that discourages and ultimately prevents the restoration of our heritage buildings.
A good first step would be to have designated heritage buildings exempt from HPO
in addition to relaxations of the building codes relating to insulation values and
other impediments to restoring an older structure whilst maintaining its heritage.”
Heritage BC and representatives from government and the private sector continue
to work on this issue.
