Major Vancouver developer Anthem Properties has requested a delay in paying the $10 million it owes the city in community amenity contributions.
The site in question is on West Georgia Street near Bidwell Street, which was once the former Chevron gas station.
The city approved a 33-storey tower with 127 market condos in 2021. Anthem agreed to pay $26 million for community services and amenities when Vancouver’s previous council approved the rezoning. The developer paid the first $15.6 million.
Now, Anthem is asking for the remaining $10.4 million to be delayed and tied to a late stage of the building permit.
Anthem president Eric Carlson said the pandemic, the war in Ukraine creating supply chain disruption, and inflation all created hurdles for many projects in the city of Vancouver.
“Our construction financing doesn’t really kick in until the fall, and so we want to get going anyway. We have to pay fees to the city and pay for digging the hole,” he said.
“And given everything we’ve been through we just asked the city if we could defer the final instalment of 10 million bucks.”
Carlson doesn’t see the request to delay the second and final installments as a big deal and feels it’s been overstated. But real estate experts say that’s a sign of things to come and also symbolizes the economic climate we are currently in with high-interest rates and inflation.
“What I find concerning as a developer and real estate consultant is how significant the interest rates have increased over the last two years,” said property developer and real estate consultant Michael Geller in an interview with Global news.
“It has basically made too many projects not viable from a financing point of view.”
That, Geller said, could have a significant impact on the future of all development, including purpose-built rental and affordable housing.
“This is going to impact a variety of housing. We do need more affordable condominiums, we do need more rental projects,” Geller said.
Andy Yan, director of Simon Fraser University’s City Program, said the situation raises an important public policy question.
“It’s interesting to note, would these same types of courtesies be passed onto a homeowner or a renter if they were facing similar financial difficulties?” Yan asked.
Yan said the situation highlights the challenges in terms of public policy for the role of fairness.
In March, Vancouver developer Coromandel Properties said it was no longer seeking protection under the Companies’ Creditors Arrangement Act after reaching agreements with its lenders.
“The creditor protection of Coromandel really touches upon the changing development environment that the development environment that we were just two years ago has changed significantly in the face of rising interest rates,” Yan said.
Vancouver city council is slated to consider Anthem’s request at a meeting next week.
“If flexibility can be provided on timeline, that’s one consideration,” Coun. Sarah Kirby-Yung told Global News.
She added the community amenity contributions are critical for the city.
Geller is urging the public to take note and said governments need to be flexible.
“We can expect to see dozens of projects that have been approved simply not proceeding,” he said.