Developers cool to GN staff housing policy

“I don’t think that the private sector is going to run in and rescue anybody”



The Government of Nunavut is mistaken if they expect the private sector to build new rental properties in Iqaluit for GN workers fleeing the increased rents in government staff housing.

“I won’t build another building if I would have to rent to individual government employees,” said Mike Mrdjenovich, president of Nova Construction, which is completing two 29-unit apartment buildings on the Road to Nowhere. “Unless the government or some organization puts some kind of guarantee behind it, and that’s basically the way it works.”

In addition, Mrdjenovich said that the added cost of hiring staff to find tenants, track down rent cheques, and repair damaged units would push rents up by about $200 to $300 a month.

Another property developer with a long history in Iqaluit agreed.

“The government thinks that somehow the private sector is going to run to the rescue and build a bunch of residential units,” said the developer, who asked to remain anonymous. “And why would we do that if the risk factor is increasing?”

The GN is moving too quickly, the developer said, pointing out that rent increases of 15 per cent or 20 per cent each year would be illegal in other jurisdictions, such as Manitoba, where annual rent increases are capped at two per cent, or B.C., where rent increases are capped at inflation plus two per cent.

“I think it’s going to create financial hardship. I think that you’re going to see needed, experienced civil servants leave, and I don’t think that the private sector is going to run in and rescue anybody.”

Iqaluit businessman Kenn Harper had similarly strong words about the policy, which he said is only one of several similar, but failed, efforts he’s witnessed in the past.

“I don’t think they’ll succeed this time, either, or if they do it will be at the expense of losing good employees and losing the ability to get the job done,” said Harper, speaking strictly as an experienced property developer and not on behalf of Northern Property REIT.

Increased rents, Harper said, would mean less disposable income for employees, which he predicted would lead to “employee turnover, job loss, inability of the government to get things done, employee stress, business failures, malnutrition and child neglect.”

In Harper’s view, GN employees will only be able to pay the higher rents if wages increase — but if an employee’s rent goes up $800 a month, wages will have to rise $1,200 to $1,400 a month, in order for employees to get the same $800 in their pockets after taxes.

In Harper’s view, the private housing market provides few solutions for staff facing annual rent hikes. He describes house prices in Iqaluit as “unconscionable” and says private homeowners are already “mortgaged to the hilt.”

The new staff housing policy comes at a time when house prices in Iqaluit are higher than ever, according to the capital’s only realtor, John Matthews, who estimates the cost of a three-bedroom home is in the $400,000 range.

For that reason, the government’s down payment assistance program for new homeowners may not be effective.

That program offers $15,000 to first-time home buyers in Iqaluit, but Matthews points out that the program is only available to people with a family income below $125,000 (plus $6,500 per dependent) — and that’s a problem.

“To purchase a house in the $300,000 to $400,000 range, you probably need a family income more than $125,000, so that chances are, if you want to get a house, you can’t access this grant.”

In the past few months, Iqaluit’s housing market has slowed, Matthews said, with several houses for sale and few buyers.

“Part of it has to do with the time of year, part of it has to do with perhaps the (prices) vendors are asking, but part has to do with the uncertainty created by the GN policy.”

Uncertainty was a common theme among people in the property business.

Peter Balt, president of the Evaz Group, which owns properties in Iqaluit and Rankin Inlet, said he couldn’t decide just what the policy would mean.

“I haven’t got a clue how this is going to work.”

Meanwhile, private building of rental properties appears to have slowed somewhat.

Nunastar Properties chose not to comment for this article, but housing manager Don Sinclaire Chenier did say that its Creekside condominium project at White Row is “currently under review.”

Across town, Nunavut Construction Corp. plans to complete phase II of its Inuksugait Plaza development by Oct. 1, but that phase includes only 26 units, a spokesperson said. That’s less than half of the first building, which has 57 units.

Phase III and Phase IV of that development will appear according to market demand.

Share This Story

(0) Comments