Bridge Attainable Housing: 16 third mortgages for $128,251.96

Bridge Attainable Housing Society was set up to remove one obstacle, which its receiver's reports call "the primary hurdle facing many individuals interested in homeownership: the down payment." From the spring of 2013 the society transferred 102 condominium units at 955 McPherson Place Road NE, in Calgary's Bridgeland, to households that met its program criteria, and each purchase was financed in layers. A conventional first mortgage covered up to 75% of the price, in most cases 65%. The buyer then gave the society an interest-free second mortgage for about 20%, gave McPherson Place Limited Partnership a third mortgage for about 15%, and in some cases gave the society a fourth mortgage funded through a Government of Alberta grant, per the Receiver's Fourth Report, July 13, 2026, paras. 2, 9–10. In a worked example in the receiver's first report, a unit bought for $248,840 was financed with a $0 deposit, a $156,050 first mortgage, a $56,780 society mortgage and a $36,010 McPherson mortgage, per the Receiver's First Report, May 12, 2021, para. 57. The second and third mortgages matured on March 31, 2023.

The land had been the City of Calgary's, part of the site the Calgary General Hospital once occupied, per the Affidavit of Sarah Quayle, Jan. 31, 2020, paras. 5, 13. The City sold it to the society in 2010 for $6.3 million and took no cash at closing, lending the price back interest-free to September 30, 2025 against a vendor take-back mortgage. When the units sold, that mortgage was discharged, the society took the buyers' second mortgages in its place, and it assigned their proceeds to the City as collateral security, per the Receiver's Fourth Report, July 13, 2026, paras. 4, 6, 11.

In its fourth report, dated July 13, 2026, Grant Thornton Limited, the society's receiver since February 2020, asks the Court of King's Bench of Alberta to approve a settlement with the City and McPherson that would close a question the court was first asked in 2021 and has not decided: whether the City had to be repaid in full before McPherson could keep anything from its third mortgages. The receiver would buy all but one of the third mortgages still outstanding for $128,251.96, McPherson would take the money its counsel has held in trust under a 2021 order, and the City's lawsuit would be discontinued against every defendant but the society, per the Receiver's Fourth Report, July 13, 2026, paras. 32, 34. The application is to be heard at 10:00 a.m. on July 22, on the Commercial List, before Justice R.W. Armstrong, per the Application of the Receiver, filed July 14, 2026, p. 1.

A society, a lawsuit and a consent order

The City's affidavit in support of the receivership, sworn January 31, 2020 by Sarah Quayle, its Senior Manager, Real Estate, sets out what the program was for. The first buyers would "enter a housing market to which they would otherwise not have access," then use the equity they had gained to buy in the unsubsidized market, and a restrictive covenant limited resales to similarly qualified purchasers, drawn from a list the society was to keep, per the Affidavit of Sarah Quayle, Jan. 31, 2020, para. 9. By mid-2016 the wait list was empty, and seven units were sold outside the program before the receivership, leaving 95, per the Receiver's Fourth Report, July 13, 2026, para. 13.

The City had started this action in 2016, the affidavit says, over its concerns about potential breaches by the society. Among those it lists: the society was struck from the Alberta Corporate Registry on May 2, 2019, did not provide the City with audited financial statements for 2015 through 2018 within the time the credit agreement required, and allowed the $6.3 million vendor take-back mortgage to be discharged without ensuring that unit mortgages securing the full $6.3 million were registered. The City served a demand and a notice of intention to enforce security on September 17, 2019, and the society's volunteer board consented to a receiver, per the Affidavit of Sarah Quayle, Jan. 31, 2020, paras. 37–39, 41. Justice P.R. Jeffrey granted the consent receivership order on February 14, 2020, per the Application of the Receiver, filed July 14, 2026, para. 3.

Behind the City, or behind each unit

McPherson's third mortgages ranked behind the society's seconds on each unit. The question in the receiver's first report was whether they also ranked behind the City's whole debt. Under an Inter-Creditor Agreement of September 30, 2010, McPherson is the "Subordinator", and article 2.3 reads: "Until all of the City Obligations have been fully and finally paid, satisfied, performed and discharged, no payments shall be made to the Subordinator in respect of any of the Subordinated Obligations." McPherson relied on clause 5.9 of the Credit Agreement between the City and the society, to which McPherson is not a party, as making the subordination run unit by unit. The receiver traced the uncertainty to "certain inconsistencies between the Inter-Creditor Agreement, the Participation Agreement, and the Credit Agreement," per the Receiver's First Report, May 12, 2021, paras. 38–41, 46, 48, 51.

McPherson's own loan to the society, as the receiver understood it from the society's books, was $7.32 million to help finance construction, per the Receiver's First Report, May 12, 2021, para. 13; McPherson describes its third mortgages as securing "partial payment of the balance of the unpaid development fee that has been owing since completion of the building in 2013," per its Supplemental Bench Brief of McPherson, May 22, 2024, para. 41. The City's position in June 2021 was that it "is to be re-paid the entirety of the amount owing to it ($6,300,000) prior to McPherson receiving any payout of their unit mortgages," per the Brief of the City of Calgary, June 4, 2021, para. 2.

A second dispute concerned the "shared equity" itself. The receiver said it appeared the program had been marketed as the owner retaining 65% of the equity and the society and McPherson splitting 35%, while the purchase agreements' formula appeared to give McPherson a share equal to its mortgage's proportion of the price, 14.47% in the worked example. McPherson, the report said, accepted a share of gains but disagreed that it was required to reduce its mortgage when a unit lost value, per the Receiver's First Report, May 12, 2021, paras. 53, 57, 65. The City answered that the program "was designed to assist them [the unitholders] in entering into homeownership in a supported, subsidized way. That included protecting them from the full effect of any downturn in the value of their units," per the Brief of the City of Calgary, June 4, 2021, para. 16.

On June 9, 2021 the court adjourned the request for advice and direction. On July 30, 2021, on the consent of the receiver, McPherson, the City and counsel for certain unit owners, Justice C.M. Jones made an interim transactions order so owners could sell or refinance in the meantime. The society's mortgages were to be paid in full to the receiver. McPherson's counsel was to be paid the principal of McPherson's mortgage plus 35% of any increase in value (or a smaller agreed percentage) or, where a unit had lost value, the principal or any lesser amount McPherson agreed to, and was to hold all of it in trust until further order, without prejudice to either dispute, per the Receiver's Fourth Report, July 13, 2026, paras. 16–17, App. 1, paras. 3–4.

When the mortgages came due

The program was designed so that by March 31, 2023 owners would have built enough equity, by paying down their first mortgages and through appreciation, to refinance the rest. By the receiver's account in June 2023, a majority could refinance enough to repay the society's second mortgage, but "most were unable to repay any or all of the Third Mortgage." For owners who could not fully refinance, McPherson agreed to extend its third mortgages for three years at 3% a year and to reassess them on an appraisal, and the receiver offered to consider extending, case by case and for three years without interest, whatever part of a second mortgage an owner could not refinance, per the Receiver's Second Report, June 5, 2023, paras. 30, 32, 34, 36. McPherson says appraisals it paid for in early 2023 showed the units had lost approximately 15% of their 2013 value, per its Supplemental Bench Brief of McPherson, May 22, 2024, para. 18. Without the extensions, the receiver later told the court, there would have been "over 30 concurrent foreclosure proceedings," per the Receiver's Third Report, May 30, 2024, para. 46. The extensions ran to March 31, 2026, per the Receiver's Fourth Report, July 13, 2026, para. 28.

On June 16, 2023 the court approved an interim distribution, and the receiver paid the City $3,461,134, per the Receiver's Fourth Report, July 13, 2026, paras. 18, 37. The City's payout statement at the time put its principal owing at $5,952,135, per the Receiver's Second Report, June 5, 2023, para. 48.

McPherson applied in June 2023 for $500,000 of the money in trust. By its brief of May 22, 2024 the trust stood at $1,471,749.80; McPherson said it had received $386,142.84 from its third mortgages before the 2021 order, and it asked as well that the amount held be capped at $1 million, per the Supplemental Bench Brief of McPherson, May 22, 2024, paras. 1, 4, 13–14, 41. The City, opposing the cap, submitted that "significantly more than 100% of the balance of its indebtedness needs to be secured prior to any payment being made to the Applicants," and that mass foreclosures within the same building "(as could occur in 2026)" would have "a detrimental impact on the market value of all of the units," per the Brief of the City of Calgary, May 24, 2024, paras. 3, 8, 11. On June 3, 2024, with the consent of the receiver and the City, Justice Jones authorized the release of $500,000 to McPherson and ordered the balance to remain in trust pending further order or the parties' agreement, per the consent order appended to the Receiver's Fourth Report, July 13, 2026, App. 2, paras. 1–2.

The settlement

The receiver, McPherson and the City negotiated "in advance of and since" the extensions' expiry over the mortgages still outstanding and the money in trust; the court, the receiver notes, has not decided the priority issue. The settlement agreement is dated July 13, 2026. McPherson would assign to the society all but one of the third mortgages still outstanding, 16 at June 12, 2026 with $498,426 outstanding on them, within 15 business days of court approval, and the receiver would pay $128,251.96 from the estate, reduced dollar for dollar by anything McPherson collects on them from June 12 to closing. The trust funds, which the receiver understands to total $2,084,209 as at July 10, 2026, would be released to McPherson, and the City's action would be partially discontinued, without costs, against all defendants except the society, per the Receiver's Fourth Report, July 13, 2026, paras. 32–34, 35(a). Nothing in the agreement is an admission, the mutual release does not release the society from the City's claims, and the agreement falls away if the court has not approved it by July 31, 2026, unless the parties agree in writing to a later date, per the executed copy appended to the Supplement to the Receiver's Fourth Report, July 21, 2026, App. 3, paras. 1–5, 7, 9–10.

Among the receiver's reasons for supporting it is the City's: "The City advises that it wishes to avoid Attainable Unit Owners with a genuine need for housing assistance losing their homes and potentially requiring assistance from another City housing program or other publicly funded resources." Held by the receiver, the purchased mortgages would be administered with the society's own until each owner sells or pays out, or until "the City is able to find a longer term solution to allow the Attainable Unit Owner to remain in the Attainable Unit outside of the Proceedings." The receiver's cash plus the society mortgages still outstanding come to approximately $2.45 million, which it says is less than the City's principal before further costs or interest, and "assuming all outstanding BAHS Mortgages are collected in full, which is unlikely given refinancing has not been possible to date." Ranking behind the seconds, and potentially the fourths absent the settlement, the third mortgages are "more at risk of incurring shortfalls on collection," which in the receiver's view makes the price reasonable, per the Receiver's Fourth Report, July 13, 2026, para. 35.

Of the 95 units that carried the society's mortgages when the receivership began, 77 have paid out, for $5,184,703 collected. Six are listed as partial extensions, with $207,007 outstanding, and seven as full extensions, with $427,679; two foreclosures left shortfalls of $70,938; three are the subject of statements of claim, with $295,810 outstanding. Net of the foreclosure shortfalls, $930,496 remains, per the Receiver's Fourth Report, July 13, 2026, para. 30. The application puts it in one sentence: "There remain a small number of Attainable Unit owners who do not wish to sell their Attainable Units and are unable to obtain refinancing," per the Application of the Receiver, filed July 14, 2026, para. 8.

A second distribution, and a struck party

At July 13, 2026 the receiver held $1,520,435, from total receipts of $5,952,876. The City advises that $2,491,001 of its principal remains outstanding and reserves the right to claim interest later. The receiver proposes to pay the City all net available funds up to that amount, including future collections on the society's mortgages and, after closing, on the purchased third mortgages, less the costs of the proceedings. It also asks for approval of fees and costs since May 1, 2023, excluding taxes, of $184,252 for the receiver and $165,429 for its counsel, Field LLP, per the Receiver's Fourth Report, July 13, 2026, paras. 37–38, 42, App. 5.

After the report was filed, the receiver discovered that New Urban Development Inc., a defendant and a party to the draft settlement, had been struck from the Alberta Corporate Registry; the search appended to the receiver's July 21 supplement shows it struck on February 2, 2018, for failure to file annual returns. The settlement was amended to remove it, and late in the afternoon of July 21 the receiver received the revised agreement executed by all the other counterparties. The receiver will sign once the court approves it, per the Supplement to the Receiver's Fourth Report, July 21, 2026, paras. 5–8, App. 1.

If the settlement is approved, the City's action would go on against a single defendant, the society, per the Supplement to the Receiver's Fourth Report, July 21, 2026, App. 3, paras. 4, 10.