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Yukonomist: Better late than never

The signs of a housing crisis in the Yukon have been obvious for years. Finally, steps are taken.
The design concept for the empty lot at 5th Avenue and Rogers Street in downtown Whitehorse, as rendered by Kobayashi + Zedda Architects Limited. (Supplied/Government of Yukon)

“Better late than never” has not been the title of any of the many government press releases about the Yukon housing crisis.

But it sums up where we are now.

There is finally some evidence that measures in line with the size of the problem are not just being mused about, but actually happening. The territorial government has sold the big lot at Fifth and Rogers to private developers who plan more than 300 units on the site. And Whitehorse City Council will vote on April 22 on five major reforms to its rules on housing construction.

It takes some googling effort to get the search engine to go far enough back in time to pick up where the Whitehorse housing crisis started. The Liberal election platform in 2016 touted plans to develop housing at Fifth and Rogers. In 2018, the Yukon crisis had become noticeable enough that trendy global digital media outlet Vice did a story on yurts on the outskirts of Whitehorse without electricity or wifi renting for $600 per month.

Stories from those days now sound quaint. According to some fascinating analysis in the recent budget’s Fiscal and Economic Outlook, back in 2019 you only needed just over two average Yukon jobs to afford a single-detached home (based on industry standard affordability criteria). Now you need over 2.5 average jobs.

With a steadily growing population, the Yukon needs to boost supply of new homes. Which is why the big recent announcements are welcome.

As reported in the Yukon News, the territorial government sold the Rogers lot for $1 to a consortium of prominent local businesses: Northern Vision, Ta’an Kwäch’än Council’s Da Daghay Development Corporation, Kobayashi + Zedda Architects and Ketza Construction.

The plan is to build more than 300 units on the site with multiple high-density buildings. Currently, the maximum allowed building height is 15 to 25 metres. If this is relaxed, as is being debated in Whitehorse, then the site could house even more Yukoners.

The press release on the Rogers deal says that the lot has been “largely unused since the 1960s.” Both former Soviet central planners and New York real estate sharks would shake their heads at such well-located real estate left unused for a lifetime.

The $1 price tag for downtown real estate has raised eyebrows. The explanation for this is that the buyer must pay to decontaminate the land and build a large berm to protect residents from clay cliff slides. There is also construction cost risk, interest rate risk and — biggest of all — government risk. The consortium’s financial model will have many policy unknowns in it, from building height to expensive parking minimums to future policy spasms on rent control.

Some believe the Yukon government should have developed the site into social housing with its own money. However, recall that 300 units at, say, $500,000 each would cost $150 million. The Yukon government only has $35-48 million for housing in the capital budget for the current fiscal year, and plans to reduce this next year to $28-42 million. Private capital is needed to solve the housing crisis.

The deal was announced outside a public tender process. Back in 2020, the government asked for expressions of interest in the site. There were 28 requests for the information package and four bids. None moved forward. In March 2023, the Yukon government issued a public call for applications to purchase the lot. The government says only “one application was submitted during the lot release in spring 2023, but it did not meet the requirements of the application criteria.”

The recent government press release does not describe what changes were made to make the deal more attractive to the private sector, or what other Yukon investors had a chance to negotiate for the site in 2024.

This is far from ideal.

Now for the City of Whitehorse initiative, which in the long run could have an even bigger impact.

The proposal will reform five bylaws that have been stifling housing construction across Whitehorse for years. As described in the News, these are: “allowing the building of four units per lot, likely to take the place of four-plexes and duplexes with legal basement suites, across all of the city’s ‘urban detached’ residential zones; relaxing some rules around site coverage and setbacks in some zones where the additional units are to be allowed; allowing the construction of garden suites in more places; allowing more units to be built in some of the denser zones and relaxing some parking regulations.”

These municipal rules sound very tedious, but they have a huge impact on the economics of building more housing. Jurisdictions from New Zealand to California to Vancouver have been making similar major reforms in recent years.

Municipal zoning is considered a classroom classic by professors of political economy and democratic decision making. You tend to get decisions that are suboptimal for society overall because of the unusual structure of the pro and con voices. Suppose someone proposed more four-plexes in a neighbourhood. The people who already live there don’t need four-plexes and all live beside each other, making it easy to organize the “no” forces. As for the “yes” forces, those people don’t even know that in two years they would move into a nice four-plex in the neighbourhood and don’t show up at the city council meeting voting on the proposal.

The five bylaws have been known to be hurting housing supply for many years. Now that other jurisdictions are moving forward, this gives City Council some air cover to join the bandwagon. Furthermore, they set up a housing and land development advisory committee last year. The reforms are based on some of their recommendations, providing even more political cover for City Council at the April 22 vote.

Of course, as anyone who has done a real estate deal knows, you don’t really know you get to move in until the deal officially closes. There is still the possibility that City Council will water down the bylaw reforms, or that the Fifth and Rogers project will get mired in permitting muskeg. But hopefully in a few years young Yukoners will be looking back on these landmark moves from the windows of new apartments and four-plexes.

Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.