Although developers can begin conditionally selling units without proper zoning in place, some say it is unfair to take deposits from would-be homeowners when the height, size and scope of the project may significantly change during the rezoning and site plan approval process.
Late last month, Markton Properties Ltd. began marketing The Artisan, located at the corner of Armstrong Street and Hamilton Avenue, across from the Parkdale Market.
Originally slated to contain 54 units, the developer says it sold approximately 30 in the first few weeks and is now planning to build 63 condominiums.
The site is presently zoned for light industrial uses, according to city records, with a maximum height of 13.5 metres – four or five storeys – and currently features a 1940s-era low-rise building that used to house the Cube Gallery.
The developer says he has filed a rezoning application, but a city spokesperson says planning staff are still waiting for several required reports before the file is activated.
When the application is officially opened, the developer could be in for a fight over the building’s height and design. The area community association is already expressing “major concerns” with the proposal and is dismayed the developer is already pre-selling units.
The head of Ottawa’s homebuilding association says homebuyers who put down a deposit could be caught in limbo for years, given the developer has yet to secure “the most basic approvals from the city.”
“This kind of practice is not what we like to see and not something we would describe as a legitimate practice, in the sense that it is highly speculative,” says John Herbert, executive director of the Greater Ottawa Home Builders’ Association.
“For us, it is a concern that consumers could be hurt on this. Their deposit could be tied up for a long, long time.”
Markton Properties principal Doug Edwards bristles at the “speculative” suggestion.
“That’s complete and utter rubbish. We’ve moved 30 of these units in three weeks. What is speculative about that?” he asks.
“The overwhelming response we’ve had both from people who have expressed interest in our units and the community at large validated this project.”
When asked what would happen if someone purchased a ninth-floor unit if the building height is ultimately capped at, for example, eight storeys, Mr. Edwards began criticizing the community opponents of the project as out to “grind personal axes.”
Mr. Edwards says Markton Properties is not a builder, but rather specializes in sales and marketing as well as “having the vision.” He says Markton has not been involved in any other projects, but purchased “hundreds” of condominiums several years ago in large blocks and resold them individually.
Records show Mr. Edwards is also involved in another development venture, Spencedale Properties Ltd. In 2008, that company asked the city to amend its official plan so it could build a new subdivision within the airport’s operational zone at 2911 Prince of Wales Dr., on the Rideau River south of Fallowfield Road.
For us, it is a concern that consumers could be hurt on this. - John Herbert, executive director, Greater Ottawa Home Builders' Association
The Ottawa Airport Authority fought the proposal because it feared residential development would result in complaints from new homeowners about planes landing and taking off that would ultimately lead to restrictions on the airport’s operations.
City council rejected the proposal, but the decision was appealed to the Ontario Municipal Board. While OMB records suggest a settlement was reached, a city spokesperson says the matter still rests with the board.
Mr. Edwards says final studies are being completed in preparation for a plan of subdivision application.
Another Spencedale project, in Renfrew, proposed turning a former school into luxury condominiums. According to a local media report, Mr. Edwards presented his plans to the Renfrew and Area Chamber of Commerce just over a year ago and said work would begin around Labour Day.
As of last week the project had yet to break ground, according to an area resident. Mr. Edwards says sales have been slower than anticipated.
Back in Ottawa, while Markton Properties opted to begin sales prior to securing municipal permits, a more well-known Ottawa developer chose to go a different route for another Hintonburg project.
Domicile Developments started marketing its eight-storey, 67-unit condominium project on Holland Avenue, just south of Wellington Street West, earlier this year. It successfully rezoned its property months earlier and averted an OMB hearing by reaching an agreement with a neighbouring landowner in February.
Pierre Crichton, a lawyer at Ogilvy Renault specializing in commercial real estate, says it is not uncommon for developers to begin pre-selling units before securing all the necessary municipal approvals.
The deposits are held in trust by a third party and most presales are contingent on a number of conditions, such as successfully rezoning the property and the developer selling a sufficient number of units to obtain financing, he says.
“A developer would likely not be committing, and should not be committing, to sell something if they are not sure they can build the development,” says Mr. Crichton.
Mr. Edwards says he is “very confident we are going to get (the rezoning) we are after.”
But the home builders’ Mr. Herbert notes his members have faced challenges securing their desired height and density allowances in recent years.
“The odds of this council, given their record, approving something a developer asks for is infinitesimally small,” he says.