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Secondary purchaser clause stalls Rainbow

‘Against the wall at the 11th hour’, council sets up an emergency meeting for Thursday
1525rain
Councillor Tim Wake

Despite last week’s good news that construction on the Rainbow housing development should start Aug. 1 st , the waters around the future neighbourhood have turned muddy.

Several councillors are outraged that a “secondary purchaser clause” was slipped into the housing agreement and have stalled the project until an alternative deal is nailed out.

The secondary purchaser clause allows Whistler residents not on the Whistler Housing Authority (WHA) waitlist to buy a home in Rainbow if no one on the waitlist wants to buy it. Councillors worry this clause, coupled with the fact the Rainbow units are priced higher than expected, may lead to a significant percentage of the homes not going to those who most need affordable housing in Whistler.

“I think I have fought as hard as anybody has to keep this project on the rails,” said Councillor Tim Wake.

“I want to see it move forward, but I can’t see it move forward in this format because basically it is not going to meet the need it was intended to meet.”

Councillor Eckhard Zeidler, visibly livid, went as far as to call the clause “absolutely outrageous”.

“I am mad as hell, and I am not going to take it anymore,” said Zeidler.

Almost all members of council said Monday they were frustrated this news was coming to them at the “11 th hour” when their “backs were against the wall”. They referred the housing agreement bylaw back to municipal staff and called an emergency council meeting for Thursday evening (June 19 at 5:30 in municipal hall).

Councillor Bob Lorriman was the only councillor to vote against the referral. He said: “We are essentially the board of directors, we are responsible for what our staff does, and if the developer negotiated this in good faith based on that, I do not believe we can have integrity and pull the rug out from underneath them at this stage.”

Even though council first saw the secondary purchaser clause last week, it came to municipal staff almost 11 months ago from the Rainbow developers. Bob MacPherson, general manager of community life for the Resort Municipality of Whistler, said that the clause was only ready for “prime time” three weeks ago.

“We had an agreement with Rainbow about what the employee housing covenant would look like in June 2007, and then in July, they introduced a whole new concept that had several stages of potential purchasers,” explained MacPherson.

“We had some intensive discussions around that over a few months, and following that there was a lot of back and forth between Rainbow’s lawyer and our lawyer about how best to word the intent of the document. When it was ready for prime time, it went to council.”

MacPherson added: “In hindsight, it probably would have been a good conversation to have had with council some time ago.”

RMOW staff and Rainbow developers are now hurriedly hammering out a revised agreement to present to council as soon as Thursday. Timing is imperative, since delaying the project further might mean the homes will not be done before the Olympics and costs could escalate dramatically.

Bill Hayes, Rainbow’s project manager, said the new agreement will likely reflect councilors’ suggestions, including Wake’s idea to limit the total number of units that could be sold to non-WHA buyers by a fixed per cent.

“We are going to take Councillor Wake’s thoughts and ideas into account and try to work with the administration to get something that council will accept,” said Hayes.

“It will involve the ideas that council gave, but we have not gotten a final resolution yet… One thing I want to avoid is the same thing happening again, with council not being aware about something. Staff really need to make councillours aware of what is coming forward, so they are not surprised.”

MacPherson added another possibility, suggested by Lorriman, would be to only put a covenant on the first 13 single-family houses, which are slated for construction this September. That would allow time to develop an alternative agreement without jeopardizing the entire project.

Whatever the outcome, the partners in the Rainbow Joint Venture are not thrilled with the latest roadblock.

“It is driving us crazy,” exclaimed Ann Chiasson.

“They (council) are all paranoid for no reason, because there is no benefit to me, the developer, to not sell these things as fast as possible because my price is fixed.”

She added: “We are not concerned about Rainbow. We think there are enough buyers for it. This is a minor issue as far as we are concerned.”

According to Chiasson, originally the municipally was going to buy back unsold lots to ensure the success of the Rainbow project. That plan was scrapped 18 months ago, however, after it was deemed too risky. This new agreement was then developed.

To clarify their position, the partners of the Rainbow Joint Venture released a joint press release late Tuesday afternoon. Among many other points, the release stated: “The partners of the Rainbow Joint Venture are committed to delivering Single Family Lots and Duplex Lots to the individuals that have patiently waited on the WHA waitlist for years…

“There is no reason for last minute second guessing and a doomsday scenario when our buyers are locals who have been looking to Rainbow for a duplex or single family opportunity.”

Even though the Rainbow group says they are confident most of the units will sell to people on the waitlist, councillors and the WHA are more skeptical.

Marla Zucht, general manager of the WHA, said similar purchaser agreements have been seen in WHA policy before with properties like Bear Ridge and 19 Mile Creek. However, those older agreements said the developer had to try to sell to WHA buyers for 120 days before moving off the waitlist. Rainbow’s agreement does not have that time constraint.

“With Rainbow, the intention has always been that it does sell to the waitlist, so we just want to make sure that is the priority, as opposed to immediately going to a secondary qualified purchaser because we feel that is not meeting the needs of the community,” she said.

Zucht added it is hard to predict how many of the homes could potentially be passed onto non-waitlisted buyers if the current agreement was kept intact. Only 76 people on the WHA’s Rainbow waitlist are currently pre-approved to buy one of the 70 single-family home units, currently priced at $525,000 to $625,000. Those prices will also likely rise, since the final designs are not yet complete.

“We know not all those 76 will buy,” said Zucht.

“There may be a few more people who have not yet put their names on the waitlist, but if they brought the price down by $75,000, then almost another 100 people would be on that list.”

The concern only applies to the single-family homes, however, since almost 290 people qualify for the 80 duplexes, priced between $375,000 and $425,000.

The prices for both the duplexes and single family homes were announced last Tuesday at an open house for the Rainbow development held at Whistler Secondary School.

“I think what has happened here is a bit of a convergence where last Tuesday night, there was a bit of a sticker shock with council seeing how much it actually cost to deliver a single family house,” said MacPherson.

“Then, at the same time, they saw there was this notion of a secondary qualified person that may well mean these properties would not be sold to the waitlist. I think those two things happening at once is what has put so much focus on this.”

This is not the first time trouble has brewed over the Rainbow development. The first phase of housing was initially pegged for 2008, but various complications postponed the project. After bylaws to move the project forward were approved last June, little construction work began on site.

Thursday’s meeting to further discuss options at Rainbow is open to the public and will be held at the Flute Room in Municipal Hall at 5:30 p.m.