Yellowknife city councillors will on Monday examine whether to award The Nest’s developers a tax reduction worth some $800,000 as the renovated building opens.
The Nest is a former office building that lay empty for years before Borealis Development turned it into a 72-unit housing block. Last month, the first tenants moved in.
Redeveloping the building was an expensive process and Borealis has clashed with the city over who should pay for a fire hydrant vault – a prerequisite before opening – said to cost hundreds of thousands of dollars. Ultimately, Borealis paid.
Now, Borealis is asking the city to finalize an application for a five-year tax reduction that was previously approved by City Hall in 2022, and extend that tax reduction for another five years on top.
All of that is permissible under the city’s downtown intensification incentives, rules that dangle financial carrots in front of developers in the hope they’ll build things the city wants. However, the extra five-year tax abatement needs council approval.
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The city estimates the tax involved is worth just over $103,000 per year, though that could change.
That means the tax abatement for the first five years, already approved by city staff, would be worth $517,045.
City staff recommend the tax abatement for years six to 10 should be on a gradually decreasing basis – a 100-percent abatement in year six down to a 20-percent abatement in year 10 – which would save Borealis $310,227.
In total, the tax relief over the 10 years would amount to an estimated $827,000.
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Affordable housing checkbox
As part of its discussion, council is expected to examine whether The Nest meets certain criteria to receive the incentive.
For example, a developer collecting the tax relief must make a “minimum 10-percent dedication of units to affordable housing” and must let Housing NWT or some other affordable housing agency use them, or else provide a letter in which Housing NWT declares it isn’t interested in the units.
Borealis has set aside eight of The Nest’s 72 units as affordable housing and has produced an email from Housing NWT declaring the territory’s housing agency is not interested and “does not require any one or two-bedroom units at this time.”
The city’s briefing note for council goes on to state that Borealis is instead “working with the YWCA to rent these units at affordable rates,” though YWCA NWT – asked recently by Cabin Radio about The Nest’s affordable units – said Borealis had reached out in 2022 about a potential partnership but the organization declined the offer as the facilities didn’t meet the YWCA’s needs.
How those affordable units will get to market and be distributed among Yellowknife residents remains unclear.
Even so, the city maintains Borealis is adding “much-needed rental and affordable housing” and bringing a long-vacant building back to life, thereby checking the boxes for tax relief.
In a letter to the city, Borealis suggested a 10-year period of tax relief would help it complete another project in Yellowknife, without going into detail.
“We hope that with the approval of the additional five-year extension, Borealis will be able to continue with another project that aligns with the city’s vision,” the letter stated.
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“This will not only expedite the timeline but also send a positive signal to other developers to take initiatives like these in addressing the housing shortage in Yellowknife and continue doing business in the city.”
Borealis added it has paid more than half a million dollars in property tax since acquiring the building, without any income while renovation work was carried out.
City staff, in their briefing note, agreed with the developer’s conclusions about the tax abatement.
“Approving the extension of the tax abatement would demonstrate the city’s commitment to revitalizing the downtown and may encourage other developers to undertake similar revitalization and intensification projects that align with city goals,” staff wrote.
Council will consider the subject at a Monday lunchtime meeting.
