Councillors confident in land deal

Buyer of Terrace, B.C. land says project is delayed due to market conditions

The site of a planned housing development in the Horseshoe

In the spring of 2014, the city had to make a difficult decision and choose between five potential buyers of the property located at 3304 Kenney Ave. at the corner of Park.

In doing so, they had a couple of hopes. One was that the city could get a fair deal for the land, and they set a minimum price of $450,000 based on market value at the time. The other goal was to find a developer who would include an affordable housing component in a housing proposal.

In the end, the city sold the property to a company called Coast-to-Coast from Calgary that is backed by a financial investment firm from Quebec called ROI Investments, a deal that included $951,000 for the land and the promise of upwards of 105 apartments, 22 of those rented at an affordable rate outlined in a special bylaw created by the city.

City councillor Stacey Tyers, who was part of the council that chose the developer based on staff recommendations, said the high dollar amount and a concrete plan for an affordable housing component made Coast-to-Coast the right choice at the time.

“It definitely wasn’t an easy decision. A lot of information was weighed, but in the end the ability to get affordable units built and be able to contribute to the affordable housing fund were deciding factors, for me anyway,” said Tyers.

But now well over a year has passed, ground still hasn’t been broken at the site, and ROI says the development is delayed pending market conditions.

According to director of development services David Block “to date, they have not paid for or been issued the building permit for the first 12 unit apartment building.”

The development permit they were granted in fall of 2014 expires in fall of 2016.

Looking back at the city’s original choice, records obtained from the city show that the other interested companies bid far less upfront cash than Coast-to-Coast, who ended up paying $500,000 more than the minimum asking price for the 2.4 acre parcel of centrally located land.

One company, now defunct, was called Vancouver Sand and Gravel Inc. offered $621,000. Another numbered company from Vancouver submitted a bid under the name of president Travis GE Chen for $530,000. Yet another was an individual named Chen, I Husun who bid $601,800.

And the same numbered Vancouver company that eventually went on to buy the old Kerby property at the top of Lanfear Hill bid $600,000 on the Kenney property (several months later they would pay over $1 million for the Kerby property).

Only one company other than Coast to Coast included a defined affordable housing plan in their bid, and that was a B.C. company called Terra Housing.

Terra Housing offered  $450,000 cash plus $800,000 of in-kind donation “to be achieved by selling 15% of the gross built area on the site (12 units) to a not-for-profit housing operator at a reduced price that will enable them to rent the units within BC Housings’ rental affordability guidelines.”

Including the value of the in-kind contribution in the form of reduced price, the total value of the sale of land came to $1,250,000.

Comparing the affordable housing component of Terra to the Coast-to-Coast deal shows that on one hand Coast-to-Coast offered more units of affordable housing while Terra aimed to provide the affordable units they did propose according to BC Housing affordable guidelines and to offer some larger family units.

Tyers says that while she thinks highly of Terra Housing, their plan was by no means a certainty.

“Even if they [Terra] sell them to not-for-profits, if the not-for profits decide to rent them at market which they would have every right to do, then the in-kind contribution is for not-for-profits, not the city. Whereas with Coast-to-Coast we already knew that anything over the appraised value could be put towards an affordable housing fund.”

Though a bylaw similar to the one guiding the Coast-to-Coast affordable housing could have been created following a Terra deal, said Block.

“If Council had determined to accept Terra Housing’s proposal the City could have registered a Sec 905 housing Agreement on title to ensure the provision of the affordable units. This would have been a similar agreement as that registered with the Coast to Coast sale,” he said.

The affordable housing bylaw remains tied to the land, even if Coast to Coast sells it again—any developer must include 20 per cent of their units at 20 per cent below cost.

It would take a special act of council to dissolve the bylaw were a new owner to desire property, said Block.

“Only the City of Terrace can authorize the discharge of this agreement from title,” said Block. “In the (unlikely) event a zoning amendment was approved the Sec 905 Housing Agreement could be amended if applicable or discharged by the City.”

Tyers said she was hoping that construction of the much needed housing would have been underway by now.

“Hindsight is 20/20. We couldn’t have foreseen that they would choose not to build right away,” she said.

Founder of Terra Housing Stuart Thomas says he was disappointed that his company’s bid package wasn’t the winning one, but that he understands why, from the city’s perspective, the Coast to Coast bid seemed more attractive at the time.

And he thinks the city has something to be proud of.

“Coast made the proposal and they won, and they have purchased the land, so the city has the million bucks. Good for them, right?”

At the same time, Thomas sympathizes with Coast to Coast and ROI’s challenges getting the project off the ground. Having seen hundreds of housing construction projects through, he says that all the risk is on the front end in securing the financing and getting all the ducks in a row.

“I have every sympathy with the Coast-to-Coast people that they tried hard to win the site, they put in twice as much cash up front as we did, got it, paid the cash, good for them, good for the city, and now they are stuck with it having to realize the front end,” he said.

And despite the fact that Terra is a housing developer with decades of experience in various for-profit and not-for-profit housing projects, he said there is no guarantee that a Terrace project would have taken off.

“It’s too speculative to say, you know,” he mused. “At the very early stages, your chances of having an assumption come unglued are higher.”

As for the bylaw that sets out the affordable housing component of the Coast-to-Coast deal, the city set a certain guideline for who could acquire an apartment. An eligible tenant meant “a family having a cumulative annual income that does not exceed four times the aggregate annual permitted rent for the applicable affordable rental unit.”

Under the bylaw rules, prospective tenants of 20 per cent of the affordable units would be able to apply, but must show proof of their income.

As for the potential 12 units that Terra would have supplied through a partner not-for-profit, Thomas says the details of how the units would be priced wasn’t finalized, but that BC Housing guidelines would have dictated them, based on Canadian Mortgage and Housing Corporation data.

Thomas said Coast to Coast’s promise of housing 20 per cent below market value sounds like a good value for affordable housing.

But BC Housing guidelines show they are slightly stricter about the maximum earnings of a family, saying that “Affordable rent is defined as costing no more than 30 per cent of a household’s total gross monthly income,” whereas in the ROI agreement it’s a 25 per cent ceiling.

The city moved quickly at the end of last year to put $500,000 of the new money into a new affordable housing fund, which it wants to use for future housing project partnerships.

Thomas said that times have changed and that partnerships  with BC Housing are now the most common method.

“It used to be that there were these huge government programs, federal programs, provincial programs that were very reliable, he said of past programs for social housing.

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