As housing advocates fume over the decision to put the kibosh on plans for affordable housing in Whitehorse, the chair of the Yukon Chamber of Commerce has his own criticism of the Yukon government.
Rich Thompson said the decision to scrap plans for 75 affordable housing units in Whitehorse could “erode the trust” in the request for proposals process.
“You really run the risk of having businesses ask the question of whether these government RFPs are worth bidding. What does it mean if they can simply overturn them? That’s not dealing in good faith,” Thompson said.
The cancelled plans would have seen the Yukon government subsidize developers to build rental units, on the condition that rents be kept at 95 per cent of the median - currently around $900 - for at least 10 years.
The CEO of Northern Vision Development said he thought the “whole project was really well conceived.”
Brad Cathers, the minister responsible for the Yukon Housing Corporation, said the government cancelled the project after it had already been approved by the corporation’s board, after input from the private sector. Realtors and landlords had warned the government’s plan was unnecessary and would hurt landlords who don’t receive government help.
As a businessman and a landlord, Thompson said he can see both sides of the argument.
“Every time a government tries to get involved in trying to provide affordable housing, it has this potential risk because it is interfering with normal market dynamics.”
But he doesn’t agree with the doomsday scenario predicted by some.
“If you see the stats that I’ve seen on how much vacancy there is in certain areas, that would certainly suggest that there’s lots of room for new units to come into the marketplace,” he said.
“I don’t know that I would agree that it would flood and destroy the marketplace. I think it would certainly have an impact, and I think that’s what it was intended to do, was to try and increase the availability of units and therefore dampen the prices a bit.”
Northern Vision Development was offered some government money as part of the project, but turned it down before any plans were made public.
Thompson said his company was going to knock down the convention centre next to the High Country Inn and build a four-storey, 54-unit complex with a mix of affordable rentals and units set at market rates. More than 20 units would have qualified as “affordable.”
Eventually, the plan was to build a new convention centre on Main Street next to the Gold Rush Inn, he said.
The company was offered $3 million in government money to help build the rental complex. That would have covered about 20 per cent of the costs and wasn’t enough, Thompson said.
“You look at it from a return on investment standpoint… and we would have actually been underwater for the first seven years of the project.”
He said the company had been hoping for closer to a 30 or 35 per cent subsidy and so backed out of the project.
It’s a serious problem, Thompson said, when the government cancels a project like this after developers have committed time and money to come up with proposals.
“To put a bid like that in, you’re probably going to spend $15,000 to $20,000 on architectural fees, you’re going to spend $10,000 or $20,000 of your internal time, maybe more,” he said.
“I mean you can easily probably make a case that you’re spending between $30,000 and $60,000 on it if you’re putting a good project together.”
This is not the first time something like this has happened, Thompson points out.
In March of last year, the Yukon government rejected all bids to build a new F.H. Collins Secondary School, claiming the numbers came back too high.
The same problem halted plans for a new fire hall in Beaver Creek last year.
Thompson said he understands the need to be able to cancel a project if the bids come back too high.
But that wasn’t the case here, he said. The process, as laid out specifically by the government, was followed correctly.
“You have a fair and disciplined process, people spend a lot of money and a lot of time, and they win and then they are told the project is not going ahead because they are rethinking it.”
Contact Ashley Joannou at ashleyj@yukon-news.com