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Affordable housing component no longer required for Foul Bay townhouse development

Victoria council agreed to endorse lifting the requirement to ensure the project goes ahead
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An 18-unit townhouse development is planned for 902 Foul Bay Rd., where a 1911 house burned down in 2016. DARREN STONE, TIMES COLONIST

There will be no affordable-housing component in an 18-unit townhouse project planned for the 900-block of Foul Bay Road.

Victoria council agreed Thursday to endorse removing a covenant developer Aryze had with the Capital Regional District requiring four units of affordable housing in the controversial project, approved last fall, to ensure it goes ahead.

Council voted 5-3 in favour of rescinding the covenant and requiring Aryze to make a minimum donation of $60,000 to the city’s housing reserve fund.

The city was involved because the legal agreement with the CRD was secured in association with a city rezoning application, so the CRD asked Victoria council what it would support.

Even those on council voting to kill the affordable-housing component did so reluctantly.

“I don’t think anybody’s happy here, but I don’t want to see this development just wither on the vine,” said Coun. Jeremy Caradonna. “As much as I would like to see them there, our job is to deal with the realities.”

Caradonna said while it may look like a “bait and switch” — with the developer changing plans after getting council approval last fall — things have changed “drastically” since the project was approved, with rising inflation and construction costs.

That economic situation has resulted in a number of projects being shelved or revised, he said. “The reality is that the economics have just fundamentally changed.”

In an interview, principal Luke Mari said the numbers no longer supported maintaining four units as affordable at 902 Foul Bay Rd.

He also said it would be impossible to meet one councillor’s suggestion that Aryze donate $250,000 to make up for the affordable units – as it stands, the company is required to donate at least $60,000 to the city’s housing reserve fund, but has decided to donate $90,000.

“There is financial viability that’s required from the banks and $250,000 just isn’t there, the margin isn’t there,” he said. “We’ve seen construction costs go up by 50 per cent, our interest on our loan went from $350,000 on a construction loan to $1.4 million, so where are we supposed to come up with that?”

Mari noted that current regulations allow for four mansions on the half-acre site, or 30 townhouses – all of which could be built without rezoning.

“But we went back to discharge the housing agreement because what we are trying to do is stick to the existing design that was agreed upon with the community,” he said.

The development site, a corner lot bordered by Foul Bay Road, Quamichan Street and Redfern Street, has been vacant since 2016, when a 1911 house burned to the ground.

Aryze plans to construct two three-storey buildings to house the 18 units. The project requires removing 28 trees, including 17 that are protected under the city’s tree preservation bylaw. Another 14 trees would be retained, and 33 would be planted to meet the city’s two-for-one replacement ratio.

The project was controversial due to the number of units and the removal of older trees.

Coun Dave Thompson said council has to get past the idea of having affordable units in small and mid-density housing projects, given the cost of construction.

“While I’m sad about it, I think it’s better to have a number of townhouses than have a few mansions,” he said.

Coun. Chris Coleman, who voted against the motion, was concerned council could be sending a message that developers can change plans after they’re approved by citing economic hardship.

“I think that this is a legitimate request on the part of the applicant to say things have changed. But I will point out that things changed dramatically and we had some other developers complete [projects],” said Coleman, who floated the idea of the $250,000 donation. “None of us want holes left in the ground. None of us want vacant land. We all want more housing. The question for us boils down to what we expect out of those four extra units.”

Coun. Stephen Hammond, who also voted against the motion, said if council was going to discharge the covenant, there had to be reasonable compensation. “I’m not pretending to know everything, but I know dollars and I know real estate and $250,000 is not going to kill this deal, at least in my opinion,” he said.

Mayor Marianne Alto, who was on the council that approved the project in 2022, said the affordable units played a part in getting the project over the finish line, but the bottom line is the need to build housing.

“Building all housing is critical,” she said.

aduffy@timescolonist.com