SUNDRE – With progress rolling along on converting the former Parkwood Motor Inn into rental accommodations, a developer behind the project is hopeful that tenants could start moving in as early as the new year.
“Our timeline to finish the renovations is kind of end of November, maybe early December,” said Andrea Warkentin, who is also a licensed commercial and residential Realtor from Red Deer who partnered up on the project with an Edmonton-based colleague named Brenda Bastell.
Provided the stars align and there no unanticipated delays, Warkentin expressed optimism about the possibility of welcoming the first tenants as early as Jan. 1, 2025.
“Obviously, it depends on construction. But that’s kind of the estimate that we have right now,” she told the Albertan on Aug. 28 during a phone interview.
The former Parkwood Motor Inn is located on the south side of the Highway 27-Main Avenue high-load corridor through Sundre. The building is being converted into a mixed-use residential and commercial site that will include a total of 24 dwelling units – 12 bachelor units, seven one-bedroom units as well as five two-bedroom units.
“They’ll be nice and modern…everything’s pretty much new,” she said, adding windows and tubs have already been installed.
“I think that they’re going to look really nice and people will enjoy living in them.”
The main learning curve involved in the project has largely revolved around navigating provincial government bureaucracy and completing paperwork pertaining to renovating a building zoned commercial into a residential property, she said, adding that process took about six to eight weeks.
“The biggest hurdle was trying to get over the new home warranty, to get an exemption letter…that was our biggest holdup this spring in getting a building permit,” she said, adding that issue had nothing to do with the municipality.
“It’s not a common thing that we’re doing; it was about finding the correct person at the ministry office to figure out what did we actually have to do in order to get that exemption letter,” she said, referring to the provincial government’s Alberta New Home Warranty Program.
The municipality as well as building inspectors have been great to work with. And with the units all being outfitted with kitchen appliances that consume more energy, the building’s power system also needed to be upgraded in a process facilitated by FortisAlberta, she said.
Additionally, having completed plenty of preliminary investigative work prior to construction, there weren’t any unanticipated surprises discovered along the way causing delays.
“Before we bought the building, we actually had a hazmat assessment done so that we understood exactly what was in the building,” she said.
“Then we did our remediation last fall,” she said.
“We’ve basically taken it back to the studs,” she said, adding older constructions tended to include materials such as asbestos or even lead paint on plumbing.
“So that’s why we removed all the drywall,” she said, adding the process also involved conducting a clean air test.
“It’s going to have all new electrical, all new plumbing in it,” she said. “I think it’s pretty important when you’re providing housing to people that it be safe.”
Out of the 24 units, four of them will be accessible for tenants with mobility issues that meet building code for accessible housing. That means those one-bedroom units will not only have wider entryway as well as hallway doors but also step-in showers that essentially can be rolled into, she said.
“It’s basically making sure that it’s easy entry in and out of the unit, and also within the unit itself,” she said.
“Those will probably go first, because I think there’s such a demand for accessible housing, whether somebody’s got a walker or a wheelchair or whatever the case may be.”
On that note, she laughed when asked if any of the units had perhaps been spoken for and said that she’d already heard from some people who’ve asked to be informed the moment a rental becomes available.
“Once we’re further along in the construction process, then we’ll start marketing,” she said, adding that might be early in November.
“We’ve already heard from people in the community that they’re waiting for us to open.”
Federal program a “good incentive”
Communities across Canada are struggling with low to zero capacity for rental vacancies, she said, citing as a “good incentive” the federal government’s CMHC MLI Select program to encourage developers to pursue new projects.
“It’s to encourage developers and builders and investors to build multi-family housing, and they’re offering an amortization up to 50 years,” she said.
Recognizing not many might be willing to take on a 50-year commitment to pay off an apartment building, there are in some cases the option to proceed with as little as a five per cent down payment. While such situations are generally speaking more likely to be in a metro area, Warkentin said she also has an apartment building in Eckville, which is even smaller than Sundre.
“And we got 95 per cent loan-to-value on that,” she said.
“The federal government through the CMHC underwrites all those things, and basically it’s government-backed mortgages.”
The idea, she further elaborated, is to encourage developers to build new housing projects.
“Quite frankly, because the cost of construction in general has doubled from 2019 to what it is today, that’s why a lot of people stopped building multi-family properties, because it was not profitable,” she said.
So when the federal government came out with the incentive program about two years ago, “it was basically to help provide affordable housing,” she said.
For example, she said an owner who has an older apartment building from the 1970s might have 80 per cent of their units reserved for affordable housing “and the government’s actually controlling what you can charge for rent.”
Alternatively, the owner can also receive points either through providing accessible housing or even by developing green initiatives. The latter, she added, is more challenging in Alberta as the federal government has a greater emphasis on electricity as opposed to natural gas.
“And of course in Alberta, our natural gas is way cheaper than our electricity, and so it’s hard because we don’t have hydro dams,” she said, adding it’s not as “worthwhile to use some of those green initiatives in this province for that reason.”
But that still leaves open the possibility of a combined approach.
“So people will typically have a mixture. Like for us, we’ll get some of our points by providing accessible housing, we’ll get some of our points by changing over to new heating systems, new windows, new exterior doors, low-flow showers and water instruments…but we’ll also get a few points by offering some affordable housing units,” she said, adding as of the time she spoke with the Albertan that they were still waiting for an update on their application.
“When our application goes through for that program, then we’ll have an understanding of how many units we will have that will be under that affordable housing banner,” she said.
“Real estate is all about math – the math has to work. And if you’re doing what we’re doing, and trying to do it on a 20-year commercial mortgage that’s not backed by CMHC, it’s not going to cash flow. So, I wouldn’t bother doing it to begin with,” she said.
“Knowing that this program exists and you can run your math ahead of time, makes it a lot less risky for an investor like myself and Brenda to get involved in providing this type of housing and to do a conversion project like we're doing.”
