The covenant requires Milner Group to build its planned 48-unit apartment before selling single-family lots or townhomes, which it says it can’t afford to do
The developers behind a stalled residential development in the heart of Ucluelet are still hoping there’s a chance to salvage the project despite a recent Supreme Court ruling.
Cody Dreger, a spokesman for the Nanaimo-based Milner Group, which has plans for a 112-unit neighbourhood with a 48-unit, purpose-built rental apartment building, 39 single-family lots, a parcel for up to 28 townhouses and an internal road network, said the group hopes to work with the district to find a solution to the current impasse.
The apartment building is the sticking point.
The court ruled the District of Ucluelet’s restrictive covenant on the property, which requires the developer to build the 48-unit apartment building first before it can tackle any other aspect of the proposed 112-unit neighbourhood, was valid.
While the Milner Group agreed to enter the covenant, it has since argued that economic conditions have changed since the project started and building the apartment building first is no longer economically viable.
“Yes, we agreed to the covenant, but circumstances change. And when those changes make it impossible to proceed without adjustment, why block housing in a region that desperately needs it?” said Dreger, noting the company has spent $2 million on infrastructure, $200,000 on design and approvals for the apartment site and a further $500,000 on consultants.
Dreger said the group bought the property, which sits across from the Ucluelet Community Centre and Big Beach, in 2013 when it was zoned for 64 short-term rentals and 12 condos.
It then worked with the district on rezoning that ensured no short-term rental properties and paved the way for the sprawling residential project, which included a free single-family lot for the district.
The agreement also included upgrading the sewer and water mains on Matterson Road at a cost of $2 million.
Dreger said a stop-work order on the sewer and water upgrade — he said he wasn’t clear why it was imposed — seriously delayed the project while the cost of building skyrocketed. The price of borrowing soared, as did the cost of labour and construction material.
At that point, it became financially impossible to continue without selling some lots or townhomes first, Dreger said.
So the company proposed a deal that would give it four years to start the apartment building, in exchange for the opportunity to develop and sell other parts of the project.
The district wouldn’t bite, so the developers challenged the covenant in court, which eventually sided with Ucluelet.
“We’re disappointed, as it delays housing in a region where average homes sell for over $1 million,” said Dreger.
He said the company had originally planned to offer lots for $120,000, townhomes for $350,000, and rental apartments for between $1,000 and $1,500 a month.
Now those numbers have jumped significantly, to $400,000 for single-family lots, $1 million for townhomes and rents of $2,000 to $2,500 for the apartments.
“Twelve years of delays have contributed directly to the unaffordability of housing — it’s buyers and renters who pay the price,” he said.
Mayor Marilyn McEwen recently told theTimes Colonistthe district hopes the developer will be able to move ahead with the project and the 48-unit apartment building.
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