A $230-million proposal to redevelop University Heights shopping centre has been put on “pause” because of a dispute between the developer and its Home Depot tenant.
Wesbild said it is at an impasse with Home Depot, which leases a site on the north end of the property at 3986 Shelbourne St.
Westbild, a subsidiary of Persis Holdings Ltd. of Vancouver, had been planning to revamp the 1980s-era University Heights shopping centre with close to 600 rental units, a public plaza, and extensive commercial space. A six-metre-wide pedestrian and cycling connector is proposed to link Arrow Road through to Shelbourne Street.
The roadblock emerged after Saanich council voted in August to send the proposal to a public hearing, which has not been held.
Wesbild said in a statement Wednesday that the retailer is insisting on strict compliance with a provision in its lease that restricts construction of buildings on common parking and access areas on the site. The plan envisions construction where the underground parking access off Shelbourne Street is currently located.
In return for the developer being able to go ahead with the project, Home Depot is requesting a 10,000-square-foot expansion, $5 million in compensation and other concessions, Westbild said.
Wesbild said not only would this increase costs, but the request at this stage of the process could add up to another year to the planning and approvals process.
The developer said that it has already addressed a host of Home Depot’s concerns related to how the company would operate during construction, such as traffic flow, customer parking and truck routing.
Alyssa Haw, Home Depot spokeswoman in Toronto, said in an email that the company does not typically discuss ongoing negotiations, but has been in “good faith discussions” with the developer since 2017 regarding the development, “which includes a parcel of land that they are not legally able to develop.”
The Home Depot location includes a 76,000-square-foot building constructed in 2005 and another 9,000 square feet in a covered garden area.
A September report to Saanich council from municipal staff noted that the proposed zoning for the redevelopment of the shopping centre was based on no changes to the Home Depot area. If a Home Depot addition went ahead, that would trigger a municipal requirement for Wesbild to put in additional services and other works.
Wesbild’s Victoria-based planning and construction teams have now been told to pause all their activities.
We are disappointed and we know the people of Saanich and Greater Victoria will be disappointed,” said Kevin Layden, Wesbild president and chief executive. “But we can not move forward with unreasonable requests.”
Plans had called for construction on the 6.4-acre site to begin next year and be completed in 2024. The project area is bordered by McKenzie Avenue, Shelbourne Street and Cedar Hill Road.
Issues still to be sorted out with the municipality include providing for daycare use and the possibility of installing underground utility lines.
Wesbid estimates the development would bring $410 million in economic benefit to the capital region, including 300 construction jobs and 200 permanent jobs.
Saanich Mayor Fred Haynes said it was a “great shame” to hear that Wesbild is pausing its plans.
“We have worked on this for years. It’s the second iteration. It’s been a very expensive project to bring the plans forward because it’s a significant and complex application.”
“It was going to be a very critical addition to our housing stock.”
Haynes said Saanich has heard that conditions sought by Home Depot are not financially viable to Wesbild.
“I do know that the applicant has worked for a long time to get advance agreement with Home Depot.”
A great deal of Saanich staff and council and community time was spent on this project, Haynes said.
“We just hope that if circumstances change, that the applicant will come back.”