Lot shortage could mean financial hardship, says developer and real estate agent

The city’s last 11 parcels of land have been sold, and that’s going to cost the city a ton, say realtors and contractors.

The city’s last 11 parcels of land have been sold, and that’s going to cost the city a ton, say realtors and contractors.

Thursday, the names of local builders were placed into a toolbox and drawn, one by one, for the 11 lots available in Copper Ridge.

The first company drawn got first pick, and it proceeded from there.

Cor Smits of Can Cor Enterprises’ name was drawn first in the land parcel lottery and, while he is happy that he got first pick of all the available lots, he knows his win comes with a heavy price.

“In the past, up to a year ago, we were always able to buy quite a few lots to keep all the people that we work with busy and now we are down to a handful of lots and it’s a very sad state of affairs,” he said.

The result will be a housing shortage and an inflated market, Smits added.

“It’s particularly sad because this should be the last jurisdiction in North America where there is a land shortage and yet because of all the planning to get land developed it hasn’t kept pace with the demands.”

“You’re probably going to see people getting laid off here going into the fall when it is going to be driven home that there are very few lots.”

Can Cor Enterprises still has eight projects on the go, but after those projects are finished the company will have to get into custom building on lots people already own.

“It’s going to be a far cry from the way it has been in the last couple years because some of us builders were building between 50 and 30 homes a year and we’re probably going to be happy if we can build 10 or even less,” said Smits.

“So as you can imagine a number of people are going to be unemployed going into the winter probably.”

The lots in last week’s lottery sold for between $57,000 and $69,000.

There were 23 contractors entered in the draw.

Even though there are no more serviced lots available in Whitehorse, 52 country-residential lots in Whitehorse Copper will be up for lottery by late this summer.

Will the absence of urban, serviced lots in Whitehorse result in a tax increase for Whitehorse citizens? asks Mike Racz, president of the Yukon Real Estate Association.

“Let’s take a look at the fact that last year 189 units were built in Whitehorse and the amount of money that brings into the city coffers worked out to $1.1 million dollars,” said Racz.

“Now we don’t have any lots available, so where do the people of Whitehorse think this $1.1 million is going to come from this year?” he asked.

“It’s going to come from the taxpayers.”

Zoe Morrison at the city planning department confirmed that there would not be any new lots available until at least 2009.

“If there’s no lots available for this year and there’s not going to be lots available for next year, that’s $2 million that the city is going to be short and do you think that our taxes are going to stay the same? I don’t think so,” said Racz.

It hasn’t been talked about at the city in that context, said planning department manager Mike Gau.

In previous years, the money Racz mentioned has come from development cost charges (charges developers must pay depending on what type of house or building they are constructing), he said.

“Whether the short fall in development cost charges means an increase in taxes, I don’t know,” said Gau.

 “That money goes into capital infrastructure projects and it could come from somewhere else in the budget.”

Taxes come from property assessments and if there are no new lots, there are no new assessments so that means taxes don’t necessarily go up, said acting city manager, Robert Fendrick.

However, if a city goes stagnant and costs (like the costs of building supplies, gas and oil) go up, the tax base might have to be raised, but it’s all very theoretical, said Fendrick.

The lot shortage has other implications, said Racz.

Families won’t be able to upgrade or downsize their housing because so many people will be staying where they are as opposed to building a house on new property.

“What will happen is now all of a sudden they won’t have anything to buy and nowhere to move to,” he said.

People will stay put, making less secondhand housing available.

That will make it difficult for anybody new coming to the territory to find housing.

It could make it difficult to recruit new workers.

“They’ll probably end up not taking the job because there’s nowhere to live,” said Racz.

Currently the city has three projects underway that may lead to more lots available by 2009 and beyond.

The first is the lower Porter Creek bench, where Whitehorse residents will vote on the proposed green space map, May 31.

The earliest that these lots can be developed would be 2010, said Morrison.

The second city project is the possibility of development in the Arkell subdivision.

On May 31 citizens will also vote on whether they would like to see this development.

The third area up for development is Takhini North, which is currently in the public consultation phase.

Takhini North lots won’t be available until 2009, said Morrison.

With so many opportunities for public input, Racz is concerned residents will stop or delay further development in Whitehorse.

“I would tend to think that maybe all these people that like to say no to development in Arkell or the ones sitting there wondering how much green space is going to be left in the Porter Creek lower bench should look at the ramifications of their decision to say no to development that goes on,” said Racz.

“I think that people have to realize that development is not a bad thing.

“The city needs development.”

Last year, real-estate transactions totaled $146 million in Whitehorse, and a lot of money has a spinoff in the city, he said.

“There is about $30,000 with each transaction that is spent as secondary spending, whether it’s for furniture, appliances or legal frees or realtor’s fees and that’s an extra $30,000 in the community,” said Racz.

“To lose 150 to 200 lots per year, your contractors are going to suffer, your retail industry is going to suffer and everybody is going to suffer because to make up the difference the city is going to have to increase taxes.