Halifax councillors won’t allow a developer to renege on a deal to provide affordable housing in a new build on the Bedford Highway.
The Halifax and West Community Council approved a development agreement for an eight-storey building at 205 Bedford Hwy. in August 2020.
To convince councillors to approve a building three storeys taller than permitted, the developer — Nectarios Stappas, James Kanellakos, and John Kanellakos’ Rockingham Station Ltd. — agreed to discount the rent on 18 of the 55 units by 30% for 15 years.
As the Halifax Examiner reported at the time, it was a unique arrangement for the municipality.
Developer backs out
But now that the project is almost done, the developer says the deal is no longer viable.
“The business model for 205 Bedford Highway Development and its 18 affordable housing units known as Rockingham Station currently under construction was created in 2016-2019 prior to COVID 19 Pandemic (March 2020 – 2022) and a significant economic downturn (2022- present),” consultant Kevin Riles wrote in a March letter to HRM.
“It is these unforeseen historic events that have resulted in building and operating eighteen affordable housing units for fifteen years economically unfeasible/financial unviable.” [emphasis in original]
The developer proposed instead to pay into HRM’s affordable housing fund based on new rules for suburban and rural areas. The amount they proposed was $174,620.81.
In a report to council’s meeting on Tuesday, planner Dean MacDougall recommended in favour of land-use bylaw amendments to enable the developer’s proposal.
Staff accept proposal, councillors don’t
“Staff advise that there is merit to the request to ensure some aspect of affordability is provided for the additional density and development rights afforded to the site,” MacDougall wrote.
Councillors rejected the recommendation.
“I’m not very happy with this because we’re losing 18 affordable apartments and they have already completed eight storeys of the building,” said Coun. Kathryn Morse, whose district includes the property.
Coun. Lindell Smith recalled that municipal staff recommended against this development originally. The community council only supported the project because of the affordable housing.
“It’s sad that the the current market might have affected this,” Smith said. “But we approved this based on the affordable housing, not because we thought the building was the best thing to be built.”
Coun. Waye Mason said the developer needs to deal with it.
“The market always changes. You’re going to have this building for 50 years, the market is going to go up, down, and sideways,” Mason said.
“They’re going to have to figure out a way to make it work.”
Coun. David Hendsbee asked municipal solicitor John Traves whether HRM can enforce the agreement.
“I don’t think that’s something I’m comfortable discussing today in public. We have granted them rights in terms of density in return for a commitment of 18 affordable units. That is the agreement,” Traves said.
Coun. Tim Outhit moved to have a discussion in camera. Afterward, council voted unanimously against the staff recommendation to allow the developer to pay cash in lieu.
The existing development agreement stands, and the developer must provide the discounted units.
Also during Tuesday’s meeting, council approved a plan to create an inclusionary zoning policy.
The Bedford Highway development is an example of what inclusionary zoning does. The municipality would require discounted units in new buildings.
As the Examiner reported on Friday, the details with HRM’s plan are still to be determined. That includes the percentage of units in each building that would be required to be discounted, and the discount.
Mason said he’d prefer a lower percentage if it means HRM can keep the units discounted in perpetuity.
The municipality will now hold public consultation sessions and hire a consultant to conduct a fiscal analysis. Planners will bring bylaw amendments to council to create the policy later this year.
It is reassuring to see politicians (citizens’ proxies) stand firm and not get taken to the cleaners, so far, by business.
If they can find $174,000 to try and make it go away, they can find a way to make it work
I tried to watch the Council session via HRM’s YouTube link but it is deemed “private”. They must be editing the video. I have come across many edited video’s. HRM should not be allowed to do this.
It is annoying. I typically assume it’s to edit out something that should’ve been in camera, but in this case: “Video of this meeting is currently unavailable due to technical difficulties.”
I find it hard to understand the developer’s logic, since rent prices have gone up significantly since the pandemic compared to market predictions before 2020. I find it even harder to understand the staff recommendation to allow the change in agreement, knowing that the needs for affordable housing are now and the new agreement would postpone the availability of new units built with that money. Something’s wrong with this picture, but I can’t put my finger on it. Luckily the councillors felt they couldn’t let this slide and keep their jobs, so we ended up with a reasonable decision.
Interest rates have nearly tripled since this building got started. While I’ve got nothing to do with the people who own this building, their debt servicing costs have probably increased faster than market rents, which have not increased nearly as much as debt servicing has.
In any case, subsidized low income units are bullshit, they are just a way for rich people to make middle class people subsidize a few apartments for poor people. My opinion is that the building in question should be nationalized, the “owners” given free job applications to Sobeys and McDonalds, and so on and so forth.