CMHC won't back loan because of time limit

An Iqaluit real estate developer is caught between the Canada Mortgage and Housing Corporation and Iqaluit's lands department, and the second phase of a 24-unit apartment complex in the Road To Nowhere subdivision hangs in the balance.

Tumiit Development Corporation started construction on the second phase of the project last summer, but now faces the possibility that it won't get a $1.4 million mortgage loan needed to complete the building.

The land lease for the site requires a development to be complete before a certain date or the city gets the right to terminate the lease. That's a standard clause in Iqaluit, but Tumiit's Stu Kennedy, a former city councillor, said CMHC won't advance funds until the city waives it. Hanging in the balance is more than $900,000 owing to local contractors.

"We've always paid our bills," Kennedy told councillors last week. "My biggest concern is to pay our local creditors."

Kennedy said all 12 units of the first phase are rented and there's no problem with income, but Tumiit needs the mortgage funds from CMHC to finish work on the second phase. Part of the money would also pay $250,000 still owed to the city.

In a letter to council, Tumiit's lawyer Michael Osland said the city has been flexible in offering to extend the deadline to complete the project. Michele Bertol, the city's director of planning and lands, said she offered the company a two-year extension on the required completion date.

"Unfortunately, CMHC will be satisfied with nothing less than a waiver or proof of immediate funds," Osland wrote.

Terry Ma, CMHC's representative in Iqaluit, didn't respond to phone calls before deadline. But last week he told council there was no doubt Tumiit could finish the project before the city's deadline. Instead, the problem was getting full compliance with the CMHC's guidelines.

Meanwhile, council itself was divided on what to do about Tumiit's bind. Coun. Jim Little pledged to help the developer.

"I will do my utmost…to urge council to support you," he said.

But both Mayor Elisapee Sheutiapik and deputy mayor Al Hayward warned against making exceptions for Tumiit.

"This is a clause that shows up in a regular lease," Sheutiapik told Kennedy. "It's not out to get your group."

The city and Tumiit met to try to reach an agreement March 30, but the outcome of that meeting isn't clear. Both Kennedy and Sheutiapik would not comment on the state of negotiations.

A request for decision on the matter was on the agenda for Tuesday's engineering and planning committee of the whole, but the meeting was cancelled because not enough councillors showed up. It was to take place Thursday, past Nunatsiaq News' deadline.