Another burned builder steps forward

Another builder is calling into question the housing minister's explanation for why a plan for affordable rentals in Whitehorse was cancelled.

Another builder is calling into question the housing minister’s explanation for why a plan for affordable rentals in Whitehorse was cancelled.

Patrick McLarnon was one of the builders slated to receive money from the Northern Housing Trust to build rentals.

Developers like him would have gotten federal money to help cover building costs, if they agreed to keep rents at 95 per cent the median rate for 10 years. The plan was expected to result in about 75 affordable apartments in Whitehorse.

That would have included McLarnon’s plans to build 28 apartments in Copper Ridge. He would have been given about $2 million.

The apartments were to be spread over three buildings. In total, 24 would have been one-bedroom apartments and four would have been three-bedrooms. He estimates the rents would have been $800 and $1,000 respectively.

Last month, after the Yukon Housing Corp. had already approved the project, the Yukon government pulled the plug at the last minute, following complaints by local realtors and landlords. Among the concerns expressed was that well-to-do residents would take advantage of the affordable rents, for lack of income-testing of tenants.

At the time, Housing Minister Brad Cathers asserted that developers were only willing to place an income cap on one-third of the units.

But McLarnon and other developers involved say that’s simply not true.

McLarnon says he was more than willing to put a cap on all of his units, not just one-third, and that Yukon Housing officials were well aware of that.

McLarnon insists it wouldn’t have mattered to him what a person’s income level was, since he was already getting a set rent rate.

“The government is saying ‘these greedy developers’ and he’s really villainizing us. All of us would have agreed to it.”

Developer Antonio Zedda, who was also scheduled to build apartments with government funds, has also said he would have included more units in the cap if asked.

Cathers, who declined an interview this week, had dumped on plans prepared by the housing corporation that would have added an income cap of $68,300 for one-third of the affordable units. Cathers asserted that these plans, which he says didn’t go far enough, were crafted during a “negotiation” with developers.

But McLarnon insists that’s not what happened.

Instead, he described a one-hour conversation that took place between him and representatives from Yukon Housing about two weeks before everything was cancelled.

“In that conversation these ideas were bounced off us, ‘what do you think about a $68,000 cap? What do you think about the 10-year limit?’ Those were basically ideas, those weren’t presented as ‘these are the terms we need to negotiate’ or anything like that,” he said.

The next thing McLarnon heard, the whole thing was cancelled.

Cathers was not available for an interview for this story. “We don’t want to get into an argument over how much of a negotiation it might have been,” said cabinet spokesperson Elaine Schiman. “The minister wasn’t involved in those discussions.”

As for whether or not the Yukon government was provided with complete information or if the project could have been saved with more discussions, Schiman said she couldn’t comment.

Even after all that’s happened, McLarnon’s perspective is that the project might not be dead.

“I actually don’t believe legally that this is over. I haven’t seen anything formal from the government saying, ‘No, this project’s over, here’s a formal letter saying this is the end.’ In my mind it’s not over.”

What he did receive was a four-line email from Yukon Housing’s vice president of operations, Michael Hale.

It came about half an hour before news of the cancellation went public.

The email says Hale wanted to inform McLarnon that the Yukon government would not be proceeding with Whitehorse projects. It thanks him for his “enthusiasm and contributions throughout the process.”

Considering how formal the application process was to get the government money, McLarnon said the cancellation process should be more formal than that.

“I really want to invite the government back to proceed and finish this and help the people of the Yukon out.”

The government made a mistake, he said.

“I bet (Cathers) regrets it. I think he does. I think he’s probably getting a lot of flack from the people in Whitehorse right now about this. I think this was a decision he probably wants to reverse.”

McLarnon insists that subsidizing builders to construct affordable rentals is the only way to get them built.

In order to build a multi-unit apartment building, a developer can’t just apply for an ordinary mortgage, he said. The mortgage needs to be a commercial one.

“To cover a commercial mortgage you have to meet a lot of criteria that Joe Average renting out a basement suite doesn’t,” he said.

No bank is going to cover the mortgage on an apartment building if the business plan shows that rents are going to be this low, he said.

“Without some sort of input from the government, nothing here could be financially acceptable to a bank, unless there’s a subsidy provided.

The perception that it is just large developers who are hurt by the cancellation is wrong, McLarnon said.

Right now he is the only employee of his business and he would have hired five or six other people to work on the construction.

“I had no other plans for this year. So everything I could have done this year has been stopped. And as a result I’ve got no other plans, so I won’t be employing anyone else this year.”

McLarnon wants the public to speak out about the importance of these projects.

“And tell them, this is horrible what’s happening to these projects that were supposed to provide houses to people at an affordable rate.”

Contact Ashley Joannou at

ashleyj@yukon-news.com

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