Three city-owned lots in Red Deer’s Capstone neighbourhood were approved to be sold at below-market prices by city council on Tuesday.
One of these properties has a conditional offer to purchase by developer Sorento Homes, which is proposing to construct a multi-residential apartment project on it for owner/operator High Rise Properties. A five-storey building containing about 62 suites is being discussed.
As well, council also approved below-market land pricing for two other city-owned lots next to this one in Capstone. Another local developer expressed interest in potentially building some stacked townhouses there.
City council was told on Tuesday that providing below-market pricing on some key city-owned lots was a good strategy to kick-starting more residential construction in Capstone.
Noting that the city has been working for years on a variety of strategies to attract private development, City Manager Tara Lodewyk said this investment would soon yield great returns. She added that a $15 million residential project in the riverside neighbourhood would bring in about $120,000 in municipal tax revenues.
While the Sorento land sale has not yet been finalized, city council approved selling this 2.6 acres at 5436-47th St. for $250,000 below market value as well as providing some rental subsidies. The market price for a similar-sized property was identified as being about $2 million, or $750,000 per acre.
Besides the Sorento Homes conditional offer, Cory Edinga, Capstone’s Project manager for the City of Red Deer, said a letter of intent was received by another local developer who discussed potentially building a townhouse development on two adjoining properties, also west of Carnival Cinemas.
Edinga added it’s premature to reveal more details at this point, including this other developer’s name, and what kind of discount could be applied to the price of these two lots.
Reasons for the lower-than-market prices were stated in a public notice that ran recently in the Advocate. Council heard that Red Deer has the same high inflation, supply costs and borrowing rates as other communities but local rents were the third lowest in the country, according to a recent survey
City officials acknowledged Red Deer’s still relatively low population growth. At the same time there’s a need for more local housing and rental suites as the city’s vacancy rate is near zero because no new multi-residential projects have been built in about a decade.
“To kick-start development…the City needs to help reduce the risk developers face in the current Red Deer market,” states a report to council. Administration was directed “to be creative in marketing and to be open to negotiating deals in line with what the development community is looking for.”
The city’s land and economic development manager John Sennema said other communities have used similar incentives to get development rolling.
He told council that neither members of the public nor the developer community had expressed serious reservations but raised questions, which city officials answered.
Mayor Ken Johnston and several councillors spoke about the transformative difference it would make to get more young people residing in Capstone. If hundreds more residents lived, worked, shopped and spent their leisure hours in the city’s core, this energy and activity would spill over into other areas of the city,” said Johnston. “The seeds are sprouting… our own investment will be returned 10, 20, 100-fold,” he added.
Coun. Lawrence Lee noted the city has been waiting for years for development in Capstone: “Good things come to those who wait.”
Council unanimously approved below market pricing strategy for just the three lots. (Coun. Vesna Higham was absent).Under the Municipal Government Act, Edinga said a new public notice would have to be placed to seek community feedback for discounting prices of any additional lots.
