Controversial downtown Kelowna rental highrise developer painted himself into a corner
The latest controversy around the proposed redevelopment of the former RCMP site in downtown Kelowna stems from a voluntary commitment from the developer that has now got him in a bind.
The City of Kelowna made the property available for development two years ago but each design brought back by the winning bidder has continued to attract criticism from neighbours, the public and several city councillors. The latest iteration is the most controversial yet — and it’s a mess of the developers own making.
At a July 26 city council meeting Greg Appelt, president of Appelt Properties, offered to make 10% of the project’s 259 suites affordable.
He defined that, at the time, as 30% of the median household income in Kelowna but no one on council questioned just what that meant.
“Affordable housing was not on the table (before Appelt made the offer),” Coun. Luke Stack told iNFOnews.ca this week. “Originally, what we were looking for was rental housing in the downtown core. It was actually the developer that offered the 10% affordable housing so, when he offered it, we said we’d take it. Of course.”
No rental rates were attached to the July presentation and councillors did not pick up on the fact it was based on household income and not the median rental income of those who would actually want to rent the suites.
Coun. Mohini Singh, at the time, asked what size of suites they were talking about.
She was told by the project’s architect, Jean Guy Beliveau, that two-bedroom suites would be 750-800 square feet, one-bedroom would be 550 square feet and studio suites would be 325-350 square feet.
“That (affordable units) could be two-bedroom, one-bedroom and studio?” Singh asked.
“Yes, it could,” Beliveau replied.
It was that short part of a much longer presentation that puts the outcome of the whole controversial project in question now.
HOW WE GOT HERE
The project – now named Muse – started out as a call for proposals in 2019 to build up to 13 storeys of rental housing along with amenities like a 6,000-square-foot cultural centre and an extension of the downtown Art Walk.
The contract was awarded to RISE (now Appelt Developments) in June 2020 on an 80-year lease with the option of a 19-year extension.
The cost of that lease is a mere $2.7 million but the developer is also on the hook for the $4.3 million cost of the cultural amenities for a total cost of $7 million.
Affordable housing was never anticipated as part of the contract.
“What the city was more interested in, on his initial approval, was building the Art Walk and creating a cultural centre in the downtown core,” Stack said. “There’s quite a lot of amenities that this developer has to provide to the city so we didn’t load it up with affordable housing. We felt (if we) loaded it up too heavily, it would not be economically feasible for anyone to go ahead. We had to balance different objectives.”
The original 13 storey design was so massive that, in the face of public pushback, Appelt went back to the drawing board and redesigned it as a narrower tower but almost twice as tall.
That required council’s approval and sparked further outrage from some in the community who argued the whole project should go to a new call for proposals.
READ MORE: Legacy group calls for investigation into 'bait and switch' on former RCMP site
“He offered (affordable housing) at the end as an incentive because he was asking for a height variance, among other things,” Stack said.
Council agreed but, because affordable housing was offered, councillors made it a requirement that there be an acceptable housing agreement in place before the development permit is issued.
MONDAY
That housing agreement went back to council on Monday and created the latest controversy — the promised 10% affordable housing option was now called “attainable” — at $2,050 per month.
That sparked outcries from Mayor Tom Dyas and councillors who rejected the agreement for not being affordable.
READ MORE: Kelowna councillor 'insulted' by developer's plan for attainable housing in downtown highrise
Council was also told on Monday that only studio suites – at 325-350 square feet – would be included in the “affordable" pool that Beliveau told Singh could include one and two-bedroom suites.
Appelt kept to its word — rents would be tied to 30% of the median household income in Kelowna. But, that $82,000 is based largely on two-income families. These tiny suites are only suitable for one person.
The more accurate measure is the median renter’s income of about $47,500. That would drop the rental rate to $1,180, Stack said on Monday.
“I don’t know if he deliberately was trying to mislead the public,” Singh said. “I use the term disingenuous because I don’t think there was a true genuine desire to supply affordable or attainable housing.”
That means council granted the change in height for something that, in Stack’s words, is “really not accomplishing anything.”
Now Appelt has to produce an affordable housing agreement acceptable to council and still make the project viable. And there’s a deadline.
Appelt’s contract requires construction to start within 1,074 days (almost three years) from the day the deal was completed — Feb. 10, 2021. Construction must start by mid-January 2024 or the city can buy back the contract. Fourteen months is not very long for a project of this size.
Appelt did not return repeated calls from iNFOnews.ca by publication time.
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