Ottawa turns down St. John's $5M plan to turn commercial space into homes

The federal government has turned down a $5-million plan from the City of St. John's to turn commercial property to residential units, according to a member of city council.

While the money would not have been limited to downtown properties, St. John's city councillor Ron Ellsworth said the proposal was part of a push to get more people living in the city's downtown area.

"If we want the downtown businesses, if we want the downtown services and programs to continue to serve, we need people living in the downtown and we have a lot of older commercial buildings that are very hard for conversion," he said in an interview with The St. John's Morning Show.

The city applied for the money through the housing accelerator fund, a Canada Mortgage and Housing Corporation (CMHC) initiative paid for by the federal government, intended to speed up housing development. The city of St. John's received $10.4 million from the fund last year, after the rejection of another previous application.

CBC News has asked the CMHC to comment on why it turned down the city's proposal.

Ellsworth said the city applied for the money in response to former federal housing minister Sean Fraser's challenge for "aggressive" ideas to tackle housing.

"This was an opportunity to do something different, something unique. And while it was well received, obviously like all of us, you have a limited amount of funding and the federal government decided other projects ranked higher and we were not successful," he said.

Ellsworth said the city wouldn't take on the task of converting commercial properties itself; rather, it would use the money to work with commercial property owners.

Downtown business association in favour

Scott Cluney, executive director of the Downtown St. John's business association, said he's all for commercial to residential conversions in the downtown area.

"One of the things that makes a strong, vibrant downtown is more people living in the downtown," he said. "The more people who live in the downtown supports the business community in the downtown."

Cluney said he doesn't necessarily believe converting commercial properties to residential units would drive commercial rent up — especially if buildings remained as mixed-use, with businesses at street level and residential units on upper floors.

Though the city wasn't successful with its proposal, Cluney said he's heard from property owners who are considering commercial to residential conversions.

"It's something that a lot of property owners have been looking at a fair bit in the past as especially as it relates to some of the older stock buildings," he said.

Some projects are already under development.

On June 3, St. John's city council advanced a proposal to convert 275 Duckworth St., a commercial property built in 1911, to residential units.

Raising the Roof, a non-profit group, is planning to turn the building into 34 affordable micro-units. Ellsworth voted in favour of the proposal.

"We're trying to encourage our diversity of housing options and this is the real first option we've had for the downtown core," he said.

The city is in Year 2 of a housing master plan, using the $10.4 million to modernize regulations and eliminate certain fees for developers. Ellsworth said the next phase for the city is working with community organizations on further housing initiatives.

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