60-unit private student residence in Charlottetown on hold indefinitely

·4 min read

Plans to construct a 60-unit private student residence in downtown Charlottetown are on hold indefinitely, according to Blacksheep Project Management Inc., the company behind the development.

In the fall of 2019, the company announced plans to add two additional floors to the Prince Street building that houses The Guardian newspaper. The idea was to construct units that would offer a variety of housing options for students from the fall to spring, and accommodation for tourists in the summer months.

There would be various types of rooms offered at different price levels with shared amenities, like washrooms.

The private residence was going to be named Prince Hall, and construction was slated to wrap by the end of 2020.

Now, officials with Blacksheep Project Management say those plans have been put on indefinite hold — largely due to a city of Charlottetown requirement that developers either create more parking spaces, or pay a fee in lieu of doing so.

"Most students don't arrive with a vehicle and don't require parking," said Issmat Al-Akhali, president and CEO of Blacksheep Project Management.

"And then in the summer, tourists, they manage with the available commercial parking. So we hadn't thought that parking would be the issue that would derail or delay the project."

Michelle Doucette
Michelle Doucette

Unable to add parking as part of its development, which would have involved creating underground spaces, the company was faced with paying the cash-in-lieu fee — where funds collected by the city go toward improving parking infrastructure in the city.

But officials with the company said they were surprised to hear it amounts to $6,000 per unit — a total of $360,000 for the project.

Fee 'very high' says company

"We felt it was very high, and threw the project finances into a little review," said Al-Akhali, who said the project was put on hold until investors could decide whether or not it was a cost they wanted to absorb.

Jessica Doria-Brown/CBC News
Jessica Doria-Brown/CBC News

He said part of the problem with paying the fee is that, in the end they don't have any parking to offer to those who use their units — so securing any parking spots for the project would add additional costs, on top of the cash-in-lieu fee.

"So it was going to be a double charge on our bottom line that we weren't prepared for," said Al-Akhali, who said as discussions were underway on what to do about the fee, COVID-19 hit.

"And then the bottom fell out of the tourism market and the international student market," he said.

"And we kind of breathed a sigh of relief to say that, 'Wow, you know, if we had actually went on time and this amount wasn't asked by the city, we would be opening this summer to empty rooms, with loans to pay and mortgages to keep up, and then all the expenses that come with having, you know, put the money up front to open something like this.'"

Al-Akhali said the company hasn't given up on the project. But he said it'll be at least another year before student and tourist accommodations are in demand again, and in the meantime, it's hard to make a business case to build in Charlottetown — when you can execute the same project elsewhere for less.

"If you have the option of doing a development project in any city and you've got choices, you would go somewhere where there's fewer restrictions and less costs," said Al-Akhali.

Cash-in-lieu 'common practice' in North America

Officials with the city say charging a fee in lieu of parking is a common practice in North America. And they say many municipalities have rules around developments adding parking, where possible, to accommodate the extra cars those projects will bring to the area.

Jessica Doria-Brown/CBC
Jessica Doria-Brown/CBC

"Each community sets their cash-in-lieu requirement and it's usually a reflection of the land values," said Alex Forbes, Charlottetown's manager of planning and heritage.

"The valuation tends to be not an unreasonable number — if you're paying it, you may think differently. But from a land economics point of view, it's not an unbearable cost for those who need to utilize that tool to do their development."

Forbes said it's not an option developers tend to use, as the costs can add up quickly when the project involves more than a few units. But he doesn't believe the city's requirement deters development in the city — and said there isn't much that can be done to avoid it, when property values are so high in the downtown core.

"It's up to the developer as to how he wants to develop his property, and whether it's in his economic interests to either purchase those spaces or provide them," said Forbes.

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