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Northwest B.C.’s LNG boom is already a bust for some

Heated economy drives up prices, drives out tenants
April Roy is one of the residents in Kitimat that have been evicted from apartments slated for renovation in anticipation of a economic boom from proposed LNG projects. Roy and her three children had been living in the Kuldo Apartments, but has had to move. As a result, her rent has increased significantly. Photograph by: Gordon Hoekstra , Vancouver Su

KITIMAT — In an ironic twist, April Roy moved to Kitimat five years ago from Fort McMurray to escape the high rents.

She found a three-bedroom apartment for $522, but then as a construction boom fuelled by the prospects of liquefied natural gas projects heated the local economy, the Kuldo Apartments were bought by Calgary-based Kiticorp and renovated.

She was evicted last year and had to find other accommodation.

Roy did, but at $1,200 for a cramped two-bedroom. She was only able to make the rent because she has a partner now, she said.

“That’s the only reason we managed it, or we would have been out on the streets,” she said.

The story is not a new one.

The recipe is simple: large industrial projects bring in thousands of workers and, combined with speculation, housing prices and rents are driven up.

It’s been played out in places such as Fort McMurray in northern Alberta and in Fort St. John in northeastern B.C.

The first recent wave of workers to northwest B.C. came with Rio Tinto’s $4.8-billion modernization of its aluminum smelter scheduled to be finished next year, and the $736-million Northwest Transmission Line, completed three months ago.

The next wave is meant to tap into Asia’s thirst for energy.

Petronas, Shell and Chevron, whose proposed LNG projects total more than $30 billion, would require as many as 16,000 workers.

While camps have been built to accommodate workers, some of them have spilled out into the communities, particularly when they have been given hefty living-out allowances.

In Kitimat, housing prices and rents have as much as tripled. Prices and rents are also up significantly in Terrace, the region’s service hub, and are rising in Prince Rupert as well.

In Kitimat, rental vacancy rates were 35-40 per cent three years ago, but they are now approaching zero.

While the rejuvenated housing market has meant new investments to improve the rental housing stock in northwest B.C., it has displaced hundreds of people on low and fixed incomes, say housing advocates.

Kitimat housing resource worker Paul LaGace says more low-income housing is needed from the province.

But that’s not the answer, says the B.C. Liberal government.

Let the market react to the influx of people and increasing wages, and where necessary assist people with rent subsidies where they are already living, says Natural Gas Development Ministry Rich Coleman, who has responsibility for housing.

LaGace says the so-called “renovictions” number in the hundreds.

Some renovations are legitimate, but sometimes landlords are simply using it as a ruse to get people out, slapping up a coat of paint and new carpets to charge higher rents, he said.

The problem is that with little government low income housing in Kitimat, and rising rents in Terrace and Prince Rupert, there are few options for people, said LaGace.

They have placed some people in Terrace, but sometimes they have little choice but to tell people to move to another town, perhaps trying to see if they have family elsewhere, he said.

“It’s a bad situation,” said LaGace.

In Prince Rupert, where a pair of LNG projects are proposed, the same problems are starting to emerge.

Ulf Kristiansen, with the Prince Rupert Unemployed Centre Society, said he believes a big increase in evictions is tied to an early influx of construction workers for LNG projects.

The annual allowable rent increase is about two per cent for existing tenants, but if you get a new tenant you can charge more. “Landlords are looking for any excuse to evict people so they can charge one-and-a-half times to double the rent,” he said.

At a mobile home park in Port Edward, just 10 minutes from Prince Rupert and adjacent to the proposed $11-billion Pacific Northwest LNG project led by Petronas, tenants were served eviction notices in August.

The tenants and are trying to fight the evictions.

Park resident Ken Jennings said he believes the new owners are simply trying to capitalize on the coming LNG boom at the expense of longtime park residents.

Jennings, 76, said he has no idea where he and his wife, Mary, 78, who are paying just over $200 for pad rent, will go.

“What a way to treat seniors,” he said.

Stonecliff Properties president Victoria Beattie said she bought the park as an investment.

She said she planned to fix the sewer and water system in the park, fill in empty spots with new trailers but keep some spots low rent, and potentially expand the park.

But Beattie says she has been stymied by the tenants, and has decided simply to close the park, as it will cost less than keeping it open.

In Kitimat, Kiticorp makes no apologies for its investment in the Kuldo apartments.

Nearly half of the 80 units were shuttered because it was cheaper for the previous landlord to turn off the heat and other services, given the low rents, says Kiticorp president Eli Abergel.

He also make no secret of their effort to benefit from the construction boom.

“It’s obviously inevitable that some of our tenants were displaced. But we still have some tenants paying very, very low rent that we still keep in our units. So, it’s all about balance for us,” he says.

Abergel also said that ultimately it’s the community and provincial government’s responsibility to deal with any need for low-income housing.

Chevron, which has not made a final investment decision on its Kitimat LNG project, said that displacing people on low and fixed incomes is a concern.

Rod Maier, a Chevron spokesman for the Kitimat LNG project, said the company does not want to create negative impacts in communities where it develops projects, which is why it tries to hire local as much as possible and will set up a 3,000-person worker camp if the project goes ahead.

Chevron has just completed a 600-person camp in Kitimat.

But Maier noted that sometimes the influx of workers and knowledge of living expense allowances will drive rents up on their own, noting that happened in Saint John’s, Nfld., with the development of the Hibernia offshore oil project.

Stacey Tyers, a Terrace city councillor and poverty law advocate for the Terrace and District Community Services Society, says the biggest problem is the living-out allowance provided to workers.

At $130 a day, three workers can share a house and still pocket money, but it completely prices out the average home renter, she said.

And in a service centre such as Terrace, there are many retail workers who simply can’t afford the doubling in rents for a two-bedroom place that now range from $1,200 to $1,500.

Between December and February last year, elementary schools in Terrace lost 60 children because their families couldn’t afford to live in the community, she said.

The City of Terrace has taken steps to allow secondary suits in all areas, and is also in the midst of passing bylaws to allow carriage houses, reduce lot sizes and house sizes.

But low-income housing is the first solution, said Tyers.

“We keep explaining to the provincial government that housing is actually a barrier to our economic growth because we can’t have businesses open here if their employees have nowhere to live,” said Tyers.

Coleman, who has the housing portfolio, said the province is working with northwest communities to address the issues of increasing rents.

But Coleman noted that it is a natural phenomena: any time there is economic growth, there is going to be a change in the housing market.

He noted there had been a real problem with a depressed housing market in northwest B.C. for a long time, which has meant that very little new housing has hit the market.

“We wouldn’t build social housing to fill the gap — we would actually let the market do that,” he said.

Coleman is a proponent of increasing densities, adding carriage houses and increasing basement suites.

Add to that subsidized rents for those that need it where they are living and you create a quicker, more flexible solution, he said.