Vancouver-based developer The HUB Collection (1268628 BC Ltd) is making a second request to city council to allow a 118-unit seniors housing complex to be built at 4500 Ospika Blvd.
On Feb. 6, city council rejected changing a restrictive covenant on the land to allow the seniors housing project to move ahead. The City of Prince George sold the land to the developer in July 2020, on the condition the developer would build a 256-unit student housing complex on the 5.6-hectare lot within 24 months.Under the agreement, the City of Prince George had the right to purchase the land back for $485,000, if The Hub Collection didn’t meet its obligations under the covenant.
In a rationale letter going to city council on Monday, The HUB Collection managing partner Ashley de Grey Osborn is asking city council to reconsider its position.
“It is completely uneconomical to build the original design for student housing, given the change in the reality we live since COVID and the war in Europe. Given the drop in international students, 1404 Patricia Boulevard only managed well below 40% student occupancy, and as such has rebranded to general rental. Consequently, it is impossible to gain construction financing for a student housing project in Prince George,” de Grey Osborn wrote. “It is completely in the interest of all parties to have this site developed. But it has to be for something that reflects the new realities mentioned and fulfills a housing need that the people of Prince George need.”
The initial estimated cost for a 256-unit student housing complex when The HUB Collection started the project in 2020 was $19.5 million, de Grey Osborn wrote. By the first quarter of 2021 that cost has escalated to $31 million and is now estimated at $52 million.
The projected cost of building the proposed seniors housing complex, offering 141 independent living beds in 118 units, is $35 million.
“Our independent feasibility study conducted by CB Richard Ellis, calculated the required income level is similar to those required to live at the Elizabeth Fry Society and BC Housing offerings in Prince George,” de Grey Osborn wrote. “Based on this, we consider our project as Affordable Seniors Independent Housing.”
In a report going before city council on Monday, city director of planning and development Deanna Wasnik said that city administration supports the application as it fits within the OCP, supports the objectives of the city’s Housing Needs Report, and “Unlike previous applications on the subject property, the proposed development does not require variances to the maximum height, number of storeys or parking regulations.”
CITY COUNCIL NOT TOLD OF CHANGES TO COVENANT
On Feb. 6, Wasnik informed city council that she had already approved changes to the covenant. City council had not seen the text of the covenant until that meeting, she added.
City council was informed of a separate no-build covenant on the property, Coun. Kyle Sampson said on Feb. 6. However, city council was never provided the terms of the design and performance covenant.
“When we have a substantial land deal like this… is there an onus on administration to inform council that they’ve changed the covenant, which might have an affect on the scope of the project?” Coun. Brian Skakun asked on Feb. 6.
“There technically it’s not necessary to do so, to come back to council,” Wasnik said in response. “When the project scope changes as drastically as this has… administration deemed it appropriate to bring that back to council for consideration, not only council but the public because of all the public processes that were in place for the rezoning for the variance permits.”
According to City of Prince George emails and documents obtained by the Citizen through a Freedom of Information request, Wasnik signed off on a change to section 1.4 of the design and performance covenant on Oct. 12, 2021.
The revised covenant reads, “The Covenantor will commence construction of the Development on the Property and will have commenced pouring the foundation on or before the date that is twenty-four (24) months following the completion of the Property.”
The original version of the covenant said, “The Covenantor will comment construction on the proposed student housing project upon the Property and will have completed framing on or before 24 months following completion of purchase of the lands.”
'IT WILL ALSO NEED TO GO BACK TO COUNCIL FOR THEIR APPROVAL TO MODIFY'
In an email chain on Aug. 25, 2021, The Hub Collection managing partner Kevin Price proposed the change to the covenant on the land to city supervisor of real estate services Brenda Sieben. Sieben had worked with Price and de Grey Osborn to facilitate the sale of the land to The Hub Collection since Oct. 1, 2019.
“I have asked around and there does not seem to be any precedent for this covenant that any developers I know have come across. Therefore, it seems to be a non-starter with any Lenders that have the capacity to lend over $20 million on a project of this type,” Price wrote. “However, I think the hoops we have jumped through and the uncommon delays caused by no fault of our own, have proven that we are dedicated to this project. Many developers would have already walked away and yet we have continued to invest.”
“The City wants to ensure that the property will be built on and not flipped by a developer for profit,” Sieben responded. “In this case it is a moot point as we both know you want to develop it. However, I would need to ensure city council that it will still be built on, even without the covenant.”
In an email to Wasnik on Aug. 26, 2021, Sieben made the case for changing the covenant.
“I am seeking your approval to proceed with the modification, which the owner would be required to register,” Sieben wrote to Wasnik. “Because this was a condition of sale, it will also need to go back to Council for their approval to modify.”
In a follow up email to Price, dated Aug. 30, 2021, Sieben wrote, “I’m waiting to hear from our Senior Management if they will take the report to council for me and will I’ll keep you posted once I hear. I don’t anticipate a problem, but need their approval.”
“I think this should work for us. Please go ahead and bring it to council,” Price responded the same day.
On Sept. 27, 2021, Sieben followed up with Price again, proposing changing the wording to release the city’s option to purchase “when you can demonstrate that the foundation is being poured.”
Price responded the same day, saying “That should work for us. The option was our main concern.”
“I have the amendment to the Design and Development Covenant approved!” Sieben emailed Price on Oct. 6, 2021. “Could you please request your legal counsel to provide a modification to clause 1.4 of the covenant as set out below for my review. We can get this one registered right away and make your financers happy.”
In her email, Sieben does not say who approved the change or why it was not brought before city council as she suggested.
On Dec. 1, 2021, Price reached out to Sieben saying a further modification of the covenant would be needed to allow a seniors project to move ahead.
“I talked to Ashley yesterday. I’m working with Melissa to see what we can do to hopefully avoid going back to Council. We’ll look at the covenant once our direction has been clarified. I’ll get back to you and Ashley a.s.a.p,” Sieben wrote on Dec. 2, 2021.
CITY RELEASED RIGHT TO PURCHASE LAND BACK
A legal document signed by Wasnik dated May 3, 2022, appears to show the city releasing its option to purchase the land.
“I’ve asked for the covenant to be released, however, it stipulates that it is to be released upon pouring the foundation. My Director wants to see the cement being poured first before executing,” Sieben wrote to Price on March 18, 2022. “I’ve been keeping watch, but I don’t see that it’s been poured yet. Do you know when they might begin pouring?”
The release of the city’s option to purchase the land came 23 days before The Hub Collection informed the city it was stopping work on the project.
“I am writing to give you an update on the HUB Collection’s development at 4500 Ospika Boulevard. We halted activity last week due to escalating costs (concrete and trades),” Price wrote in an email to city staff on May 26, 2022. “Parking requirements for student housing originally required us to build underground parking and to move a parking lot over the edge of the steep incline of our property. The concrete and fill required to build this parking has made student housing unfeasible.
As of Wednesday, a poured concrete foundation could not be seen at 4500 Ospika Blvd.
A city spokesperson did not return the Citzen’s request for comment as of Friday at 5 p.m.
