Collapse of affordable housing deal continues to raise questions

REGINA – The cancellation of a contract to offer 48 affordable homes in Regina’s Hawkstone subdivision continues to raise more questions.

On Monday it was revealed that a deal between the province and Deveraux Developments was scrapped following a funding disagreement, and on Tuesday the same developer unveiled 30 new subsidized homes in south Regina.

The timing was questioned since some of the south side units were completed in May.

“It had to do with weather and it had to do with putting our best foot forward. So, this date’s been set for quite awhile,” explained Jamie McDougald, chief operating officer with Deveraux Developments.

While the homes in the south are subsidized through the Capital Renting Subsidy program, the 48 units off Rochdale, were built thanks to a nearly $10 million provincial contract.

However, when Deveraux realized a change in the original plan meant an increase of $400,000 to the fixed price tag, the contract was abolished. Instead, Deveraux Developments will keep the building and rent out the units at market rate.

“In order to keep the integrity of the RFP process for our government, we chose that we couldn’t just throw extra money at it,” said Social Services Minister Donna Harpauer.

During discussions with the province, Deveraux had offered to pay for half of the overrun, meaning both sides would be responsible for another two per cent of the total price. The province refused the proposed deal.

“It’s surprising that a two per cent issue, which is a routine adjustment in a construction contract, would have been the cause of the contract being completely abandoned by the parties,” said Paul Emanuelli, general counsel at the Procurement Law Office in Toronto.

Emanuelli explained that typically both sides come to an agreement when projects incur overruns on fixed contracts: “Letting a contractor completely walk away from a deal sets an even bigger bad precedent. (It) begs the question, why weren’t they held to the contract terms?”

“To me, it just seems as though there’s more to this story,” he said.

As for why the government didn’t take the developer to court, Harpauer said that route was unnecessary: “We would risk time and dollars, quite frankly, if we did that, and also the relationship that we have with Deveraux,” said Harpauer.

Harpauer said the collapse of the Hawkstone deal is only a delay in increasing the number of affordable housing units in Regina as the province plans on putting out another request for proposal for a similar building within a few months.