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City disappointed after Vernon housing development stalls

Watch: Stalled housing development was expected to improve housing affordability in Vernon

A countdown clock on the Highlands of East Hill website is still counting down to a move-in day that may never happen.

The development, which would have provided 173 homes on Vernon’s east side, has been “put on hold indefinitely,” according to a post on the project’s website.
In the post, Vernon Reservoir Development Ltd., one of the companies behind the development, said those who already bought in will be getting their deposits back.

Now the City of Vernon and the project’s proponents are accusing one another of stalling the development.

The project’s plan envisioned a pedestrian-friendly neighbourhood with lots of shared space for residents and single-family and multi-family homes built on small lots.

It’s a concept that appears to have been appealing to buyers. The developer said it had already done $24-million worth of pre-sales with 46 buyers before the project was halted last week.

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Real estate agent John Deak said it would have improved affordability by providing new housing stock for entry-level buyers in Vernon where, he said, the number of houses on the market is notoriously low.

READ MORE: Vernon housing project set to open, but more needed to end homelessness in area, advocates say

Deak, who acted as a buyer’s agent for one of the sales, is disappointed to see the project halted.

“It would have really helped with the whole overall market and affordability,” Deak said.

WATCH: (May 23, 2019) A look inside Vernon’s new supportive housing project

A look inside Vernon’s new supportive housing project
A look inside Vernon’s new supportive housing project

The development was planned for the former site of a reservoir on 39th Avenue that the developer was expected to purchase from the city for almost $6.5 million.

The city said that purchase agreement also includes an affordable housing prevision that required the developer to sell seven of the units in the neighbourhood at a subsidized rate.

However, those plans are now on hold along with the development, and the developer is blaming the city for plunging plan into limbo.

In a statement on the project’s website, Vernon Reservoir Development Ltd. claims that the city told the developer last Thursday that it may not be able to follow through on commitments related to permits and city-controlled costs.

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READ MORE: Vernon home construction boom could ease pressure on local rental market

The company argues this leaves them vulnerable to forced delays, increased costs and late stage requirements to change aspects of the development if they go ahead with the project.

However, the city said it is prepared to follow through with its previous agreements with the company but the developer needs to close on its purchase agreement for the city land for the project to move forward.

The city’s chief administrative officer, Will Pearce, said once the developer owns the lands, the city is “quite prepared to follow through on the balance of the development process, like [with] any other developer.”

READ MORE: Real estate survey: Vernon tops Kelowna in price per square foot costs

Pearce said the city has asked “numerous times,” but so far the developers have not provided clear confirmation that “they are prepared to cut the check and buy the lands” on August 16, the date the city said the two parties had previously agreed on.

He also stressed the city is simply treating this like any other development where the developer would typically own the property.

Pearce noting that it could create further problems for the city if a private project began on city property without the developer owning the land, and then the project fell through.

Vernon Reservoir Development Ltd. issued an apology to homeowners impacted by the stalled project and offered to meet with them directly, however a representative declined Global Okanagan’s request for an interview.

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Pearce said whether or not this project is revived is up to the developer, but the city is disappointed the project is on hold as would have filled a niche by providing more affordable single-family housing.