Developer could nix downtown grocery store over spat with city

The site of a proposed downtown grocery store could remain vacant after the developer was denied a request at a city council meeting earlier this week.

City council voted 8-1 on Monday evening to reject a request from Arbutus Properties to remove what's called a holding symbol on a piece of land in Rosewood.

The hold prevents work from beginning until the lot is serviced.

Arbutus is unable to build an affordable housing apartment tower until $7 million worth of sewer infrastructure is completed.

"This delay in this project is causing Arbutus some financial harm, and there will be unintended consequences," Arbutus president Jeff Drexel said to council. "We have a cash flow that limits what we can do."

"One of those consequences is going to be Pitchfork Midtown."

A report from city administration warns against setting a precedent of weakening the holding symbol, adding it keeps developers accountable for paying to service projects, while also protecting the city from absorbing costs.

The cash flow strain on Arbutus pertains to a Nov. 30 deadline on affordable housing funding it received from the Canada Mortgage and Housing Corporation (CMHC) for the project. Drexel said the company didn't realize until about six weeks ago that $5 million was tied to the hold symbol being removed.

If Arbutus is unable to start the project by then, other projects in the area could become uncertain.

"We are not prepared to invest $6 million in a downtown grocery store if we are delayed in our affordable housing project," Drexel said. "This is causing significant issues to our cash flow and our confidence is not that strong in City Hall's decision making."

Drexel said the city isn't considering the amount of effort Arbutus has put into lowering the city's risk.

He said the company has already completed $5.5 million worth of the required sewer work, and the company's own monitoring report said the existing sewer pipes could already accommodate the new project.

However, the city said that wouldn't meet its design standards, and it wasn't looking to make an exception as administration advised to deny the request.

"There's no reason to deny this," Drexel said. "We have a clock with CMHC."

Councillor Darren Hill was the only member of council voting against the denial.

Hill pushed to give Arbutus some leeway to pour the foundation without completing the remaining service work to free up the CMHC money.

Arbutus also owes the city $2.5 million in outstanding levies and fees from Arbutus.

Mayor Charlie Clark said he wants to see the apartment tower and the downtown grocery store proceed, but he couldn't grant Arbutus its concessions and risk putting the city on the hook if the development falls through.

"This puts the city at further risk. Arbutus Properties has asked for a different set of rules than what every other developer has followed and City Council wasn't prepared to do that, given the outstanding payments and risk," Clark said.

Councillor David Kirton was disappointed in the negotiating tactics of Arbutus after council's efforts to bring a grocery store to downtown Saskatoon for two decades.

"It's too bad that Pitchfork Kitchen and Store at Midtown had to be held over our heads by the developer," he said. "The request by the developer wasn't something that city council could stomach, quite frankly, because it could have allowed all other developers to follow that path."

While Drexel didn't comment on what this request denial could mean for the relationship of Arbutus and the city moving forward, he wasn't committing to the downtown grocery store moving forward.

"I'm concerned enough with the environment that if it's delayed six months am I going to start it six months from now? I don't know. Possibly not."