City government contributes to land and housing shortage

By NUNATSIAQ NEWS

The article “Iqaluit’s Capital Plan in Disarray,” published in the July 16, 2004 edition of Nunatsiaq News speaks to a serious problem faced by the citizens of Iqaluit, and indeed Nunavut.

While there are a number of issues raised in this article,

I would like to respond to comments presented by Deputy Mayor Wilson, related to housing shortages and the shortfall in anticipated tax revenue created by scaring off the city’s biggest developer, referring to Northern Property Real Estate Investment Inc.

The article portrays Iqaluit’s budget shortfall being, in part, related to the fact that a major developer over the years has not initiated any large scale new development since the city council turned down a proposed 48-unit building two years ago. He also implies that “companies aren’t building as much as the previous council thought they would because they want to maintain a housing shortage, which keeps rents high and their profits large.”

At the same time, Mr. Wilson, who sat on the previous council, did not mention the fact that another developer in this territory, NCC Development Limited, is in the process of completing Phase One of a major development in Iqaluit on behalf of the Nunavut Investment Group Inc., a wholly owned beneficiary company with its head office facilities located in Iqaluit.

Phase One of Inuksugait Plaza will provide an additional 57 residential units and approximately 16,000 square feet of commercial space to the Iqaluit shortage by October of this year, and, in total will accommodate 105 residential units and approximately 60,000 square feet of commercial space, when completed. Mr. Wilson did not mention the tax revenue that will be generated for the city from this private development.

The Nunavut Investment Group Inc. undertook this initiative at a time when the city was concentrating on improving the standards by which future development would occur and went through an extensive process of presentation to and consultation with administration, committee and council in order to move forward with our contemplated development.

The city required approximately $80,000 as a non-refundable payment in order to present our planned development to the city. Additionally the city required a number of off-site improvements and have insisted on approximately $450,000 in performance security to ensure we build in accordance with our development agreement.

As an organization with a belief that we can contribute to the long-term success of Nunavut, we believe the process we encountered, while demanding, was a step in the right direction to ensuring consistency in decision-making by the city so that all developers and builders become comfortable with the process required to move forward on any initiatives they choose to pursue.

One of the major factors in development and construction is risk management. Private lenders ascertain and build in risk in providing loans. Developers and contractors ascertain and build in risk when developing project feasibility analysis, so consistency and equity in city decisions are fundamental to understanding and thereby minimizing risk, which, ultimately is a major factor in determining cost when contemplating investment opportunities.

While Mr. Wilson implies that developers want to maintain a housing shortage to keep rents high, he does not recognize that rents are directly related to both cost and demand. In both cases, the city plays a part as the ultimate land developer, establishing the criteria for independent development initiatives with its policies and jurisdictional requirements, and further controls the availability of land as the primary developer of new parcels of land.

Another factor that has likely contributed to the implied housing shortage is the timing and method by which the city provides and distributes land. As with large development initiatives, independent homeowners are faced with the high cost of construction in Iqaluit. While direct costs are tied to the industry within Nunavut, southern Canada and indeed world markets, the indirect cost associated with availability of land contributes to the problem.

The city has not been able to develop or distribute land in a timely manner, which would allow those residents who wish to build a home in Iqaluit an opportunity to make the timing of their decision more reflective of their schedule, versus the uncertainty of knowing when land may be available, if at all.

In closing, this industry has many factors that contribute to the cost associated with rents, and the city must acknowledge its responsibility in delivering consistent decisions and fulfilling its mandate to provide land in a timely manner. It should not be painting a picture that developers do not wish to build affordably, without examining the impact its policies and consistency in decisions have on independent development initiatives.

Finally, I would ask that Mr. Wilson not paint a picture of all developers with the same brush. We are willing participants in meeting the challenges of this industry to promote the interest of our shareholders, in a manner that fosters partnerships with municipalities and senior levels of governments.

We are here for the long-term and we would ask Deputy Mayor Wilson to recognize our willingness to step up to the plate and contribute to solving the shortage of the housing availability in Iqaluit.

Johnny Mike
President
Nunavut Investment Group Inc.
Iqaluit

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