Arbutus appeal reveals deteriorating relationship with Saskatoon

SASKATOON — A heated appeal hearing involving Arbutus Properties and the City of Saskatoon on Wednesday revealed the strained relationship between the two parties which could affect the developer's investments in Saskatoon in the future.

The development appeals board heard arguments for and against lifting a holding symbol on a parcel of land Arbutus is set to construct an apartment complex on.

City council previously denied Arbutus' request to lift the hold on November 2nd.

"It's a bit puzzling to me why the city has decided to really take a heavy handed approach here," Arbutus director of planning Murray Totland said following the appeal. "We've been trying to come to some common (sense) solution."

The hold blocks any work on the building until the lot is serviced with sewer infrastructure. Arbutus is required to put in $7-million worth of sewer infrastructure, including a lift station, as part of an agreement the build the project.

Not only does the city not want a developer building on an unserviced lot, administration also pointed to more than $2.5-million in levies and fees Arbutus owes the city.

"Our view is that city council's decision was good and valid," Jodi Manastyrski, a City of Saskatoon solicitor, said after the appeal board. "The developer knew full and well what those obligations were, so we're just trying to ensure that those obligations are met."

A key component of the negotiations centres around Arbutus needing to start construction as soon as possible. Arbutus needs the proper permits from the city showing it has started construction because there's significant funding from the Canadian Mortgage and Housing Corporation (CMHC) at stake since 20 per cent of the 244-unit building is slated for affordable housing.

The original deadline to submit documents with permits to CMHC was November 30th, but documents tabled during the appeal hearing showed CMHC has extended the deadline a few months longer.

At the November 2nd council meeting, Arbutus CEO Jeff Drexel said roughly $5-million was tied to the holding symbol being removed.

Arbutus argued roughly 80 per cent of the overall lift station infrastructure construction was completed. An inspection on Tuesday showed roughly 10 to 15 per cent of the lift station itself was constructed. Arbutus maintains it has no desire to alter from existing timelines of getting the lift station complete in the next four months since it has invested roughly $5.5 million already.

"At the end of the day, the only thing we can be accused of is potentially being a little late on some development payments in the past," Totland said.

Arbutus offered to pour the concrete foundation of the building to obtain the permits before finishing service on the lot, but that was denied by the city.

"The developer's business decisions are not our main focus," Manastyrski said. "We have tried to accommodate as much as we can. We're now at a point where we can no longer accommodate. We need obligations to be met to move forward."

The city and Arbutus entered into an agreement in 2015 to develop the Rosewood area.

Documents submitted in the appeal board show a timeline of various accommodations and agreements made between the city and Arbutus since then, with late payments, alterations and re-zoning all agreed to previously.

Arbutus recently had its own engineers examine the sewer infrastructure in the area, indicating the current infrastructure has 'sufficient sewer capacity' to adequately service further development.

However the city didn't accept this reasoning since peak levels and best practice building standards weren't considered.

Drexel previously threatened to put Arbutus' plan to build a downtown grocery store on hold, as well as any further opportunities beyond current obligations. The development appeals board has up to 30 days to come to a decision before releasing it publicly.

If the appeal is denied, Arbutus can then appeal the holding symbol at the Saskatchewan Municipal Board.

"It's sure a shame that we aren't able to find a common solution here that we can both work with, because we believe there is one and we offered one, yet we were turned down on that as well," Totland said.