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Affordable housing project hits snag

Yellowhead Community Services says entire project should be tax-exempt; town council says otherwise
8634859_web1_copy_AffordableBldgDrawing
Drawing shows the proposed design of a four-storey affordable housing apartment building that Yellowhead Community Services would like to build next to Park Drive beside Clearwater Library.

Should Yellowhead Community Services Society pay property taxes on its Employment Services office?

The society plans to locate the office on the ground floor of the proposed affordable housing apartment building to be constructed next to Clearwater Library.

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Once the office is there, YCS would like it to be property tax exempt, just as the rest of the building would be.

That question has developed into a discussion between YCS and District of Clearwater.

The society says paying the tax on the office would force it to raise rents or even terminate the project.

Information from the District, on the other hand, indicates that a survey of smaller communities similar to Clearwater found that they either don’t have affordable housing complexes or could not afford to give full exemptions.

During its regular meeting on Sept. 19, Clearwater town council voted to give first, second and third reading to a tax exemption bylaw for the affordable housing project except for that portion that would be used for commercial purposes – meaning the Employment Services office.

The tax exemption would be for 10 years to allow better certainty for getting a mortgage (usually they are for four years).

The bylaw will now go for public comment before final adoption.

The motion on the bylaw also said that Council would consider a 100 per cent exemption next year, once the project is complete.

It went on to say that Council should request a meeting with the entire YCS board to discuss the project in its entirety.

In a press release delivered to the Times before the town council meeting, YCS chair Louise Weaver stated that not getting a full 100 per cent exemption would cost the society an additional $13,000 per year.

“Despite our repeated efforts to explain how the Employment Services program was being utilized to lower the overall mortgage and unit rates, they (DOC) have forced us to raise rents by 10 – 15 per cent,” said Weaver. “We worked hard to bring down rents by putting a couple of our programs in the facility. We are now forced to raise the rents to cover the approximate $13,000 annual cost.”

According to the press release, YCS has been working on this project since 2014 and purchased the property in 2016. Funding to complete a feasibility study was requested from Canada Mortgage and Housing Association in 2015, the proposal to BC Housing was submitted in May of 2016 and the project was awarded to YCS in October 2016.

“Designs are virtually completed and we are close to applying for a building permit,” said vice-chair Joanne Stokes. “This is very late to be hearing this bad news, and troubling indeed.”

Options being considered by the Society include:

1. Raising rents to tenants to cover all costs.

2. Adding three to four more units, but this would increase rents further as the Employment Program was to be a major contributor to the mortgage.

3. Terminate the project prior to construction.

“At this stage of the project, we shouldn’t have to be considering these options,” said Weaver. “It is highly unlikely the Society will be proceeding with the second phase, which we hoped would include a daycare in the building in addition to 25 more units.”

The board has asked YCS executive director Jack Keough to review these options with the architect and construction development company and to report back to the board at its October meeting.

Response from District of Clearwater

According to information obtained from District of Clearwater, YCS is getting 91.55 per cent exemption on the lands and improvements for the affordable housing project. Only 8.45 per cent is not being exempted.

The District already has exempted several other costs connected to the affordable housing project.

For example, in 2016 town council unanimously passed two resolutions t0 support the project.

The first said that the municipality would waive 100 per cent of all development application fees for the project.

These included the water connection fee of $2,375 (connection fee only – the actual work is not estimated yet); the sewer connection fee of approximately $1,850; and the development permit fee of approximately $500. Total of the connection and development fees that were 100 per cent exempted by the District was $4,725.

In the second, council gave an 80 per cent reduction of all development cost charges for municipal services for Phase 1 of the affordable housing development.

These development cost charges for the 26-unit development amounted to: water, $1,646/unit, sub-total, $42,796; sewer, $881/unit, sub-total $22,906; roads, $1,218/unit, sub-total $31,668; and parkland, $423/unit, sub-total $10,998.

Total costs of development fees was $108,368. The 80 per cent exemption meant the District picked up $86,694.40 of that amount. YCS pays 20 per cent or $21,673.60.

The total of these exemptions was ($4,725 + $86,694.40 =) $91,419.40

The District has been covering the costs of the District’s civil engineers to work with YCS’s engineers regarding the onsite civil works. Normally this cost is paid by the developer.

According to a staff report to town council, the initial proposed exemption for property taxes was 80 per cent.

After hearing further information from Keough on the size of the commercial professional office space (2,502 sq ft), the 80 per cent exemption was increased to the recommended 91.55 per cent.

Background information

According to a backgrounder provided by YCS, the project will have 26 units. These would consist of three studio apartments, seven one-bedroom apartments, 10 two-bedroom apartments, six three-bedroom apartments.

Eighty per cent of the residents would be children 0-17, parents, and youth at risk. The other 20 per cent would be persons with disabilities and low income seniors.

YCS anticipates the project will house 75 residents in total.

Total estimated costs of the project are $7.9 million, of which construction costs will be $6.5 million. YCS will be required to service a mortgage of approximately $3.9 million.

The backgrounder goes on to say that one of the major challenges in the project was to establish affordable rents.

For example, an initial study found that projected rents for a one-bedroom apartment would be $750 per month.

The Society proposed three options to reduce the rents:

• Locating the Employment Services program on the main floor.

• Creating an internal subsidy.

• Using other Society programs to reduce the impact of the overall mortgage on the tenants.

Last November, MLA Terry Lake presented the Society with a cheque for nearly $3.6 million for the project.

“This investment will expand affordable rental housing options for seniors,” Lake said at the time. “I’m proud that because of our government’s strong fiscal management we can take action to ensure seniors are being provided with affordable options to stay in their communities.”

The YCS Employment Services office is presently located in the Riverside Adventures building next to the liquor store.

8634859_web1_AffordableHousing2781LandClearing
A grapple or excavator loads trees from the building site into a chipper. Initial land-clearing began early in the summer and then continued last week.
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A site plan shows in dark shading that portion of the building that would be occupied by the Employment Services office.