Construction may soon continue on an affordable housing project and a grocery store project in Saskatoon after they were put on hold due to a city and developer dispute.
An appeal to a Saskatoon city council decision was brought forward to the Saskatoon Development Appeal Board from Arbutus Properties Ltd., which resulted in success for the developer.
The appeal was brought forward after the city refused to lift a holding symbol in November 2022 on an affordable housing project that Arbutus said is forcing a delay on both the housing project and the downtown Pitchfork market project.
A record of the decision from the appeal board was released, giving a detailed summary of both the Arbutus standpoint and the city’s.
The appeal said Arbutus and the city entered into an agreement in 2015 for the Vancouver-based development company to build a temporary lift station and force main for sewer services in the area.
It noted that the lift station is currently being developed with a completion date by the end of the first quarter in 2023.
The appeal claimed that existing sewer capacity in the area met servicing requirements, and the lift station would create excess capacity. The city said the sewer was at capacity currently.
When that 2015 agreement was made, a letter of credit (a letter from a bank guaranteeing a payment from the buyer to the seller will arrive on time in the correct amount) wasn’t required, but the appeal said the city recently required a $2.047-million letter of credit from the developer, saying it was needed for final design approval.
Arbutus offered a bond instead.
The city said the agreement allows for the city manager to add reasonable conditions, and the city considered the letter of credit reasonable.
The appeal added that the city also required all development levies for the land to be paid before the holding symbol could be lifted, and that construction couldn’t begin on the land until it was lifted.
Arbutus said the first phase of the affordable housing project was completed, with the Canada Mortgage and Housing Corporation (CMHC) giving the green light to the developer to begin on the second phase, which would require construction on the land.
The developer said it asked the city for permission to build a foundation on the land, with the goal that it would be completed at the same time as the lift station, but said the city denied that request, which put the CMHC’s funding agreement at risk, directly putting the whole project at risk as well.
The city said it didn’t want the Phase 2 building to be built and occupied without servicing, saying occupancy permits only deal with safety, not water and sewer, and that was why the holding symbol was in place.
A list of risks was given by the city in the event the holding symbol was removed, which included outstanding levies, further circumstances like supply chain demand, going against city policy, the building getting built and occupied without services, and ensuring fair and consistent practices so other developers will not expect similar decisions.
The city also clarified that the entire housing project wasn’t affordable housing, only what is required by CMHC for funding, which is about 20 per cent of the 244-unit building.
It added that the city has a housing incentive program to help develop affordable housing, and that Arbutus hasn’t applied for those initiatives.
The board reviewed the information presented by both parties and checked to see if the appeal passed the three bars of entitlement, with the decision made that the appeal grant doesn’t give special privilege, doesn’t relax the zoning bylaw, and doesn’t interfere with neighbouring properties.
The appeal was granted, and the board directed that the holding symbol be lifted and that Arbutus pay the outstanding levies.
It noted that the matter regarding the letter of credit would be discussed between the city and Arbutus.