A large housing development has hit a snag in Ucluelet as rising interest rates and construction costs have the four owners of Lot 16 Marine Drive in a financial bind.
The lot’s owners received rezoning approval from the town’s council in 2021 to build a new community across from the community centre and Big Beach that would include a mix of single-family units, townhouses and a 48-unit apartment building for a total of 112 new homes.
The owners promised a variety of amenities if the development was allowed to go ahead, including one housing unit granted to the district and $1,000 per each unit built, estimated at $112,000.
After a lengthy community engagement process involving several public meetings, the district presented a list of conditions, which the owners agreed to, including that the apartment building would be built in the first phase of the development.
That restrictive covenant commits the owners to obtain a building permit for the apartment building before any single family lots are sold and to substantially complete construction of the building before any single family lots are occupied.
The owners no longer believe they can afford to include the apartment building in the first phase and submitted a request, reviewed by the town’s municipal council last week, for the district to free them from that restrictive covenant and develop the single family lots first.
“Interest rates have increased significantly since their initial application and the construction costs have gone up. The owners have indicated that it’s not currently feasible to construct the rental building at the current mortgage rates,” explained the district’s director of planning Bruce Greig during the June 27 regular meeting.
Greig noted the apartment building was considered the key prize of the development at the time rezoning was granted.
“Arguably the greatest amenity was this 48 units of rental housing,” he said.
He added that council required the covenant “to ensure that what’s promised to the public and to council as part of the rezoning is actually how the development unfolds, so there’s no confusion or surprises down the road.”
The owners request included a promise that, if the district allowed them to develop the single family lots first, they would commit to obtaining a building permit for the apartment building within four years and be able to pass an inspection on a completed foundation for the building within seven years.
The owners also committed to a $500,000 security deposit that would be paid to the district if they failed to adhere to those timelines and agreed to transfer the land the apartment building is slated to be built on to the district if the timelines aren’t met.
Cody Dreger spoke on behalf of the owners. He suggested he was excited to be part of the property’s purchase in 2012 and assured the owners were not “trying to weasel out” of their 2021 rezoning agreement.
“We understand that not everyone in this room was for that rezoning and in a perfect world it would stay greenspace and nothing would happen to it. Well, density does happen, we have to move forward with that,” he said.
“From late 2021 to late 2022 we had a design approved for that apartment building. That cost hundreds of thousands of dollars to do that and it took a lot of time to do that…Saying we’re just here to get the single family (units) out and then shelve the apartment building, that’s the furthest from the truth.”
He added the group has reached out to BC Housing in hopes of receiving better interest rates and funding to help with construction costs, but that process is taking time.
“We understand that in a perfect world, the apartment building would be moving forward first but, right now, with the economic world that we live in, it’s not feasible for us,” he said.
He suggested the single family lots would still help ease Ucluelet’s current housing crisis.
“With regards to selling the lots first, we understand that some people are upset with that, but in this community what is the number one thing that needs to happen? It’s housing,” he said. “Were looking at bringing in 41—actually 40 because we’re giving the district one— single-family lots that have no Airbnb capabilities. It’s going to be owned by people from here, or it’s going to be rented to people that want to live here. So, yes, we’re not getting the apartment building right now, but we are getting 40 single family lots that will hopefully ease the pain of the pricing crunch that you guys have.”
Dreger cautioned that refusing the request to delay the apartment building could put the entire development at risk.
“We agreed to this covenant, we understand that, but just understand that we cannot afford to build this apartment right now. There’s two options, one is sell it and the only people that can afford a $25 million apartment-building-build right now is probably going to be someone that’s fairly big and doesn’t care about the community, or shelve the project,” he said.
“We’re hoping to work with you guys and try to move this forward and we’re also guaranteeing it’s going to be started within seven years. If we shelve it, we can build it in 20 years. I think this is all positive and hopefully everyone will see that too.”
Mayor Marilyn McEwen commended the owners for offering the financial commitments and timelines.
“It’s unfortunate that the apartment building won’t be built first, but I am happy to see that the owners are willing to have a time and financial commitment for the district. So, that was great, rather than just asking for the covenant to be completely removed,” she said.
After a lengthy discussion however, Ucluelet’s municipal council stood their ground and denied the owners’ request, holding steadfast to the apartment building being a top priority.
Coun. Ian Kennington was quick to oppose the request, noting the apartment building was a key reason the development was initially supported and that waiting seven years would be unacceptable.
“This whole project hinged on that,” he said. “As a development consultant myself, I saw the merits in the project and the number one merit of that is the apartment building.”
Kennington explained he had lost friends over his support of the 2021 rezoning
“I’ve lost three friends over this already, with my stance being that this apartment building trumps everything as far as what the community needs and now I find myself eating my words. So, it’s a little embarrassing,” he said.
Kennington also doubted the $500,000 deposit would be enough to keep the owners to their word.
“There’s lots this size selling for close to $600,000 in town, so to say $500,000 is going to hold somebody’s feet to the fire is ridiculous. I’m thinking more in the millions,” he said.
“I understand that the lot is also part of it, but we’ve witnessed time and time again where a developer will come in, say one thing and do another and get us into all kinds of trouble.”
He suggested letting the owners off the hook could lead to others expecting the same treatment.
“There are other large developments coming online and being proposed that we’re all aware of and, if we set the precedent that you can get your approvals from the community and then use some kind of circumstance that will arise, because there’s always some kind of circumstance that will arise financially, to get out of those commitments, I think we’re showing the larger developer community that we can be walked on,” he said, adding the apartment building’s construction costs are not likely to decrease.
“It’s only going to get more expensive. A few years down the line we can expect that the costs to construct this apartment building are going to triple. I think that’s a reasonable assumption,” he said.
Coun. Mark Maftei expressed distaste for what he labelled “excuses” by the owners.
“To call it a bait and switch would not be inaccurate. I cannot possibly see how a project that’s not viable today is going to be viable in the future,” Maftei said. “None of it sits well.”
Maftei also agreed with Kennington that the security deposit would need to be much higher and seven years was too long a timeline.
“This $500,000 to me quite frankly is a joke,” Maftei said. “The real attraction to this proposal was the apartment building. If the apartment building is the only thing that’s getting taken off the table, what we’re left with is all of the unpopular stuff that people don’t really seem to want.”
Maftei made a motion to decline the owners’ request and to maintain the restrictive covenant that the apartment building remain part of the development’s first phase, which council agreed to.
andrew.bailey@westerlynews.ca
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