Plans for 6-storey downtown Charlottetown apartment building hit major snag

Plans to build a six-storey, $24-million apartment building in downtown Charlottetown have been abandoned, according to the project's developer.

Tim Banks, the CEO of APM Group, saidthe City of Charlottetown changed the terms of a tax incentive put in place to help build affordable housing in the city, making hisproject at 199 Grafton St.unviable.

Sixty of the 84 units would have been designated as affordable units, he said.

But exactly what "affordable" means is now in dispute.

In an interview with CBC News, Banks said that just six days before the development agreementwas due to be signed, city Chief Administrative OfficerPeter Kelly "rounded up council" and the incentive was changed.

Previously, developers could use either theCMHC definition for "affordable" with unit rents priced at 25 per cent below market rate or the provincial one, in which rents range from $794 for a bachelor apartment to just under $1,200 for a four-bedroom unit.

In November, Banks said, council "changed the 'or' to an 'and' and you have to have both to qualify.

"Unfortunately, the economics under the provincial program for the cost of developing in the downtown core just doesn't work under that program."

'It would cost about $1,200 more'

Banks said the city's tax incentive would have meant rebates on the municipal portion of the property tax bill, amounting to about $1,200 per unit. He said that would have helped offset the costs of the 217 new parking spaces set to be built as part of the development.

"It would cost about $1,200 more a unit just to pay for the capital costs of the difference between creating a parking space here versus a parking space out in East Royalty or West Royalty," Banks said during an interview in the parking lot of the Polyclinic building, where the development was supposed to be built.

"To develop in the downtown core, we have to build three levels of parking garages underground in a superstructure that [would] cost about $95,000 per space."

Banks said the provincial development program setsstandard "affordablerents" across the province, which doesn't take into account these additional costs of building in Charlottetown's core.

APM Group is spearheading the project for Morris Holdings, owned by Pat Morris.Morris Holdings owns the property where the development was beingplanned.

'I had some concern,' says mayor

Despite Banks saying the development is now unviable, Charlottetown Mayor Philip Brown said he's confident a solution can be found to get the project back on track.

Brown acknowledges the changes to the tax incentive were made while the 199 Grafton St.project was in the middle of the approval process.

"I had some concern when the policy was being changed," said Brown.

"Changes were made, and as mayor of the city, I have to respect council's decision, but I think we have to go back to the table and try to work out the kinks so that we can come to a satisfactory resolution for all parties."

Alanna Jankov, the councillor responsible for downtown Charlottetown, said shetoo hopes a compromise can be reached, given council had voted unanimously for the development in the past.

"It's a shame to see the potential of 60 affordable units with multiple areas for parkingand that level of improvement not go ahead in the downtown core," said Jankov.

'The downtown core needs it so much'

"It would be just such a shame if it doesn't go forward. The downtown core needs it so much and the majority of the residents that I've spoken to in the area, they're all very much in support of this development."

Banks said the mayor has reached out, in hopes of saving the project. He too hopes that can happen but he's not convinced.

"They changed [the tax incentive] without any discussion with us.Before the council voted on it, they didn't say, 'Well, this project was already out there and we should respect what we had negotiated in good faith.'"

Despite Banks saying the project has been shelved, it still faces an Island Regulatory and Appeals Commission appeal.That process was launched by a city resident andis scheduled to take place later this month.