Debates of June 1, 2006 (day 3)

Thank you, Mr. Speaker. Mr. Speaker, my questions today are for the Minister of the Housing Corporation in regards to the latest update on the ATCO Novel housing product. Mr. Speaker, we have just got the information that the size of this project has reduced quite a bit, from 1,400 housing units to about 830.

Mr. Speaker, let me just start by saying once again that I believe that ATCO Novel is a good product. It is a clever idea. It is a company that could stand on its own. The issue here is whether or not this government and this territory and people of the Territories are getting enough advantage in getting into a contract with this government with this company. So far we have not a good enough deal, as far as I can see. I would like to know, Mr. Speaker, as I stated in my Member’s statement under Affordable Housing Strategy, the Minister plans to spend $100 million over the next three years to build 530 homes. Under the latest project on the ATCO Novel, the government is planning on spending over $200 million and yet we would only get 830. For $200 million, we should get at least 1,000. I would like to know where this great deal is that Novel is going to give us that warrants them as to be a lobbyist for them and have our own ADM when I don’t see any deal. So what is the deal? What is the advantage we are getting? Where is the beast, Mr. Speaker?

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Thank you, Ms. Lee. The honourable Minister of Housing, Mr. Krutko.

Return To Question 19-15(5): Costs Of Novel Housing Project

Thank you, Mr. Speaker. Mr. Speaker, we are talking about two different projects. The affordable housing initiative will put some 530 houses on the ground, but half of those houses that are going to be delivered are multi-configured construction. So they are going to take less land to put that many units on the ground. On the other areas that we are looking at is the Novel housing which are single dwelling units, which you are going to have to develop some 830 lots to put that many more houses on the ground. Also, with Novel, there is also going to be a project management cost associated with this major development for land and lot development which is not the case in the affordable housing project.

Again, Mr. Speaker, the price that we are looking at in which in Novel is, we are looking at putting out almost half of those units to be sold on the public market. We are hoping to recover some $40 million out of the $200 million cost. Again, we are going to have dollars coming back to this project, which is estimated at about $160 million after we recruit those costs by selling off the units. Again, Mr. Speaker, we are talking about two different projects. We are talking about two different ways of constructing our units, multi for the affordable housing units, 530 houses. The 800 units for Novel are single dwelling units where we have to develop some 830 lots. That is where the major difference in this cost is. Thank you.

Thank you, Mr. Krutko. Supplementary, Ms. Lee.

Supplementary To Question 19-15(5): Costs Of Novel Housing Project

Thank you, Mr. Speaker. Let me just get really simple on this. What I am hearing from the Minister is that instead of this government getting advantage and getting a better deal by buying these used workforce housing, we are actually paying more. The Minister is saying that we have to do what Novel wants, which is that they want individual lots instead of its restricting our options of going multi lots which could reduce costs. I would like to know why it is that we have to pay $28 million in premium for buying this Novel trailer and paying $71 million to convert, and yet we end up with less housing units for $200 million than what we would if we would have had our own plan under Affordable Housing Strategy and extend that by six years for $200 million instead of paying it to buy these used trailers and spending $200 million to convert them. Thank you, Mr. Speaker.

Thank you, Ms. Lee. Mr. Krutko.

Further Return To Question 19-15(5): Costs Of Novel Housing Project

Thank you, Mr. Speaker. Mr. Speaker, if someone can buy a home these days for $130,000, I think they got themselves a good deal. The majority of the costs associated with Novel, $77 million of that is land development costs which, again, is not associated with the affordable housing program. The biggest cost associated is land development. These lots and whatnot have to be developed in communities. We have to ensure that the infrastructure is there to handle it by way of power poles, roads and the other infrastructure it needs, but, more importantly, there is going to be a project management cost associated with this project which is not in the affordable housing program. Right now, it is administered through our office by way of tenders. There is also a $22 million financial arrangement where we have to finance at the front end to develop these lots so that when Novel does come on stream, we are ready for them. Again, there is a difference between these programs. We had a presentation to committee this morning. We have laid it out. We tried to explain it the best we can. Again, there are still some concerns out there. Again, this program is not completed. We are still in the process of evolving to a time and place where we will have to make a final decision on this and see exactly how the numbers come out and exactly what the difference is between the cost of the Affordable Housing Strategy and Novel. Right now, Novel is coming in at cheaper costs than the cost of stick-built today. Thank you.

Thank you, Mr. Krutko. I would like to remind Members on both sides of the House that the Speaker would like the…(inaudible)…Member the opportunity to ask questions today. So I will remind you to keep your supplementaries short and answers short, please. Ms. Lee.

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Supplementary To Question 19-15(5): Costs Of Novel Housing Project

Once again, Mr. Speaker, I am really trying to shorten my question. I have not heard an advantage. I think my question is very clear, Mr. Speaker. Under Affordable Housing Strategy, we are spending $100 million and it will get us 530 units. Under the Novel housing strategy, we are going to spend $220 million plus to buy used units, clean up the yard for Imperial Oil, and we are going to end up with 830. Where is the math? Mr. Minister has not answered that question. It is pretty straightforward, especially when he has a whole person working in his office doing nothing but answering these questions.

Thank you, Ms. Lee. Mr. Krutko.

Further Return To Question 19-15(5): Costs Of Novel Housing Project

Thank you, Mr. Speaker. Mr. Speaker, the difference is the affordable housing will deliver 530 units, not 530 houses. Novel will deliver 830 houses. That is the difference. Thank you.

Thank you, Mr. Krutko. Final, short supplementary, Ms. Lee.

Supplementary To Question 19-15(5): Costs Of Novel Housing Project

Mr. Speaker, I believe the difference is that we are paying for the premium to buy the cleanup of the yard for $28 million. We are paying project management costs in $20 million that we are not under the Affordable Housing Strategy. We are spending $21 million on financing and contingency. We are paying way extra under Novel than buying brand new manufactured homes or any other home. I would suggest to the Minister that he does his homework over again and this project is way far away from being done. Thank you, Mr. Speaker.