Victoria developer asks to break housing affordability deal made last summer

Contentious townhome development’s return to city hall has some council members questioning what affordability even means in this city

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The proposed 902 Foul Bay development, a subject of much spilled digital and print ink, was the main character in Thursday’s city council meeting. Referred to by Coun. Jeremy Caradonna, as a “frustrating file” he said he felt like it, through no fault of its proponent, had become a zoning and covenant “bait and switch.”

The sticking point for him and other councillors is that under a 2022 ratification of bylaws pertaining to sections of the Land Government Act and Land Title Act, developer Aryze had agreed to “ensure the availability of the certain affordable housing units” (4 units priced below-market of the 18 total). No such assurance exists in its revised version—Aryze is asking to be let out of those obligations.

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Fairfield-Gonzales site has seen years of controversy

As Capital Daily has covered, the estate in question has been vacant since a 2016 fire destroyed the 1911 heritage house that sat on the half-acre property. The previous owner, at the time of the fire, had been in the process of applying to have the heritage designation removed from the severely dilapidated, and at times squatted, home. Police arrested and held him overnight after the fire, but released him when the Crown did not bring charges of arson or any other crime.

The house was gone, but the heritage status on the 22,000 square foot lot remained. Current site developer Aryze Developments Inc. needed to apply to the city and the Heritage Advisory Panel respectively for both rezoning (from single-family) and heritage alteration permits.

What emerged from the old building’s ashes was a contentious saga in which neighbours fought against, and in some cases for, the proposed Aryze project on several fronts—parking, tree loss, traffic, affordability, trustworthiness, proper process, and more. Allegations of harassment, legal intimidation, and disinformation were exchanged.

That part of the saga, at least, ended last year when the city approved the redevelopment and the affordability agreement was made with the CRD.

And now, the project is back on council’s desk.

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Affordability increasingly incompatible with midsize projects, frustrated councillors say

In Caradonna’s eventual and reluctant support of the motion to discharge the initial agreement, he decried the city’s ability to produce affordable home ownership at all. Market, inflationary and economic realities, he argued, “no longer pencil” project ledgers to make building them sufficiently profitable  to developers.

Coun. Dave Thompson, who also reluctantly supported the request for the discharge, raised the question of what affordable housing means anymore. The provincial government defines affordable housing is 30% of household income for median income homes but the councillor questioned the actual affordability of the market price (roughly $1M) of units in the proposed project and lamented that, under existing circumstances “we can give up on the idea that we’re going to get affordable housing out of townhouses.”

Earlier approval delays meant that the proposed units were no longer eligible for the BC Housing Affordable Home Ownership Program, which would have reduced down payments on several of them by $200,000. The overshoot was a lost opportunity for first-time buyers and families, hoping to break into the housing market.

Rendering of the development during planning / proposal process. Via City of Victoria / Aryze

The Aryze 902 Foul Bay project would see an 18-unit, three-storey townhouse complex built on the site. In principal Luke Mari’s words in his 2021 letter to the City of Victoria the project would “enable a high quality, densified, compact, walkable lifestyle which is critical to solving our climate and housing crisis [sic] all while creating more livable and healthier communities.”

He didn’t say it was an affordable housing crisis.

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Project does still fit city objectives

Coun. Marg Gardiner sees the delay and change as "tak[ing] advantage of different actions being taken by both the municipal city through the missing middle housing and everything else, and a provincial government," she said. "But the reality is that was approved in September 2022. And there was a great expectation at that time, [among] the general public, that it would go forward."

The project aligns with a number of the city’s existing policies:

–its Missing Middle Housing Initiative, launched early this year, which effectively sweeps single-family residential zoning (and allows townhouses like these without the rezoning they needed last year)

–its valuation of heritage land management and principles of placemaking as they are described in the objectives of its Official Community Plan (OCP)

–its Inclusionary Housing and Community Amenity Policy.

In finer detail, the project complies with aspirations of the OCP to balance new development and heritage conservation throughout the Urban Place Designations and to consider the heritage value and special character of areas, districts, streetscapes, cultural landscapes and individual properties in local area plans and related studies.

It’s just that the affordability bit isn’t squaring.

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Council debates seeking more compensation

In an effort to make it square, arguments were made among council members about whether a condition of fiscal compensation to either the city’s housing reserve fund or the Local Amenities Fund be put on its approval to discharge the covenant and if so, how much.

On grounds that the initial proposal promised at least some affordable housing units, various council members proposed that it only approve the discharge of the covenant on the condition that the proponent make a $250,000 contribution to either the city’s housing reserve or its Local Amenities Fund.

Different amounts were bandied about.

But rather than engage in “abstract development economics on the fly,” as he called them, Coun. Caradonna asked his colleagues to consider that going beyond the $60,000 the proponent initially offered in the form of neighbourhood improvements in exchange for the discharge would likely “kill the project.”

Missing Middle housing projects under 60 units, like this one, are supposed to be more economically viable through built-in cash contributions—30% of which is meant to go to local amenities and 70% to the development of affordable housing—rather than in-project concessions. This fall the city even got rid of some of its Missing Middle affordability requirements, among other limits, in response to the lack of MM applications this year.

For Mayor Marianne Alto and councillors Marg Gardiner and Krista Loughton, that $60,000 felt like a paltry offering  in light of the project’s switch to offering no affordable housing. Making the decision to revoke the covenant without those units on the table is a bitter pill.

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Final call lies with CRD

Though the proponent’s early commitments to include them were made to the municipality, that decision isn’t the city’s to make. It can only make recommendations to the CRD to either decline or approve the proponent’s request to discharge its existing covenant and housing agreement with the CRD.  The CRD—the final decision-maker— has asked for council’s recommendation on the subject.

Ultimately, council voted on a motion  to approve the request to discharge without the additional compensatory figure—but not without some cautionary words from the mayor.

“We may expect that more requests like this may come in the  future but this [approval] is not a precedent that should be set for any upcoming applications. Those will be assessed on their merit and on existing conditions,” said Mayor Alto, adding that the resolution “does not speak to future applications or requests.”

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Correction: Please note a quote attributed to Coun. Gardiner, reflecting her comments in council's discussion about a project at 515 Foul Bay Rd during the same Nov. 16 council meeting, previously appeared in this story. Capital Daily regrets the error.