The City of Red Deer wants to sell a large lot in Capstone for $250,000 below market value to spur downtown development and apartment building during difficult times.
Local developer, Sorrento Homes, has filed an application to develop what could be the first multi-residential building in Capstone since a new plan for the riverside area was completed in 2016.
The application — which is not yet approved by the City of Red Deer — is for a five-story building containing about 62 suites on 2.6 acres of city-owned land at 5436-47th St, west of Carnival Cinemas.
According to the land and economic development department, the market price for a similar-sized property is almost $2 million, or $750,000 per acre.
At least some suites in the proposed Sorrento Homes development would be rentals because one of the factors being considered in the discounted land price is the need for rental guarantees. Erin Stuart, general manager of development services for the City of Red Deer, said the developer is unsure, under the current economic conditions, if all of the suites can be rented at market prices so some future subsidies might be needed.
Stuart said another reason the land is being offered for a lower-than-market price is that two years ago, city council created some economic incentives to encourage residential development in the downtown, including grants for facade improvements and crime reduction measures. Among these was financing of up to $250,000 to kick-start new residential projects in at the city’s core.
Stuart said the city is lowering the land price by that amount because the Sorrento Homes residential project “aligns with our concept of encouraging multi-residential development in the downtown.”
Market considerations are also a “critical factor.” Stuart said this is not the best time for builders to invest in large new projects because of the high cost of borrowing, inflated construction prices, supply chain issues and Red Deer’s still relatively low population growth
“The Red Deer market is strained,” she explained.
However, the city’s vacancy rate is near zero because no new multi-residential projects have been built in about a decade.
If this project is green-lighted by the city, it could be completed by the end of 2024 at earliest, said Stuart, who believes all of Red Deer will benefit from having more housing available. “We have been actively recruiting developers into Capstone to create a more vibrant downtown, to draw people to the core, so that more future development can occur.” She also noted such projects help to grow the city’s tax base.
When the city yards were relocated out of the riverside neighbourhood a decade ago, 25 acres of vacant land were opened up in Capstone. Of that 25 acres, 18 acres are develop-able and the other 7 acres are reserved for parks, roads and utilities. The entire neighbourhood is 91 acres.
Under the Municipal Government Act, the city must run a notice informing the public that a land sale for below market is being considered, and such a notice ran Tuesday in the Advocate.
MGA rules state it’s possible for the public to petition against the lower-than-market land sale — but at least 10 per cent of the city’s population would have to sign before Aug. 27. Otherwise the lot sale will go ahead.
A copy of the proposed resolution can be viewed at reddeer.ca.