Yellowknife councillors look to spur housing development with new incentives

The City of Yellowknife is in the process of updating its bylaw that gives incentives to develop in the territory's capital, but one developer says obstacles to building won't be solved with tax breaks.

In a governance and priorities committee meeting at city hall Monday, Yellowknife's planning and development director, Charlsey White, presented on the city's current development incentives to set context for the decisions to come. 

White said the current bylaw offers exemptions for property taxes on new residential buildings. In Yellowknife's downtown, owners are fully exempt from paying taxes for five years. For developments around Old Airport Road the tax break is 100 per cent in the first year, and then the discount declines by 20 per cent per year for four years, with owners only paying the full property tax once the first five years are up.

But developer Milan Mrdjenovich says the administrative process is actually what holds back Yellowknife development. 

"It's tough, I'm not gonna lie," he said. "Like, you can count on two hands how many people are building up north privately."

Mrdjenovich said he wasn't aware of city incentives, and doesn't benefit from any municipal tax breaks. Still, he said months-long wait times and lengthy back-and-forths pose a bigger challenge to development. 

Mrdjenovich said he's been waiting seven months for one development permit. He acknowledged that this summer's wildfires and too few staff are likely to blame, but he said it creates major barriers to building. 

High demand, low vacancy

"Everybody's short staffed right now, I get it, but at the same time I have a small window to try to get foundations, steel framing, water, sewer, everything in and sealed up before the winter hits," he said.

"So if I'm not approved and in the ground by April 1st, then, that's gonna be a long haul. Then I'll have to wait till next year."

Coun. Rob Warburton, himself a developer in town, said the issue of development incentives is completely separate from permitting delays. 

He agreed that permitting delays can be frustrating and said it's an issue council is aware of and has asked city administration to bring forward suggestions on. While it may not be possible to make processes faster, he said there should be better communication so developers know what they can expect. 

"Timelines need to be more certain because that's what developers need. It's not necessarily quicker — that is part of it, but it's also just a certainty knowing that if you put in a permit, the certainty of the time, because if it's going to take a month or going to take eight months, that's a very different equation if you're trying to invest money and build a building," he said.

Warburton said the development incentives are aimed at addressing Yellowknife's need for housing units. 

"We're in a housing crisis and we need to incentivize more housing," he said. "Demand is very high, vacancy is very low."

According to a report from the Canada Mortgage and Housing Corporation (CMHC) published in 2022, vacancy rates in Yellowknife's rental market "tumbled" to around 2 per cent in 2021. That's down from 3.6 per cent in 2020 and 4.1 per cent in 2019, according to the CMHC.

City staff to propose changes

City staff will be coming forward with proposals for updating the development incentives and plan to bring those to a city meeting by early March, White said.

But for Mrdjenovich, it could be too late. He has three developments underway but once they're done, he says he doesn't plan to continue building in the North.

"The juice isn't worth the squeeze any more," he said.

Asked about Mrdjenovich's concerns, a spokesperson for the City of Yellowknife said in an email that it couldn't speak to specific circumstances and that each application and permit is different and reviewed individually.

The spokesperson said decisions on permits depend on the complexity of a proposed development, its location, zoning requirements, required variances, supporting documents, negotiating a development agreement and that all development permits involve considerable communication between the city and a developer.