Mr. Speaker, I have a return to written question asked by Ms. Lee on June 6, 2006, regarding housing cost analysis.
Comparing housing being built under the affordable housing initiative -- AHI -- to Novel housing is not a straight comparison. Novel housing will provide 830 stand-alone three or four-bedroom houses with floor plans of between 1144 square feet and 1378 square feet. Under the affordable housing initiative, the Housing Corporation will be constructing dwellings that are as little as one bedroom in a multiplex dwelling to four bedroom stand-alone homes. Similarly, the 530 dwellings targeted for AHI is an estimate of the number of dwellings to be built and may decrease should prices rise or other factors occur beyond the NWTHC's control. All analysis of the Novel proposal always assumes that all 830 homes will be built.
Financial Analysis
- Novel costs have been estimated at $206 million, not $220 million as referenced in the written question.
- With the building of 530 dwellings under the AHI over the three years, the supply of currently available developed lots in communities will be fully depleted. The AHI can draw on the existing developed lot inventories and lots that become available through the disposal of older public housing dwellings. However, the 830 dwellings under the Novel project would require the developing and budgeting of the entire 830 building lots at an additional cost of $35 million.
- When a financial commitment was made by the previous federal government, they expressed their desire to fund the Novel project at the end of the project. The cash flow impacts of back-ended federal funding and the sale of the homes results in estimated financing costs totaling $22 million. AS the money is provided up front under AHI, similar financing costs were not incurred.
- The Novel project, because of its magnitude and complexity, includes $20 million in management costs that were not accounted for under AHI. The NWTHC has recently received approval for 16 term positions. However, these new positions, their benefits and accompanying O and M are not included in the $100 million stated cost of AHI as they are part of the NWTHC's overall operating budget.
- Finally, the Novel project includes $17 million for contingency costs which is only prudent for a project of this magnitude. Contingency for unanticipated costs or price increases will be managed under AHI through the construction of fewer dwellings than the 530 estimated. There will not be an option under Novel to take less than 830 Novel dwellings once the tendering process is complete as outlined above.
- When all these factors are taken into consideration, the Novel project dwellings are 30 to 40 percent less costly than traditional stick-built dwellings under AHI with the current estimated square foot costs for Novel being $112 and for stick-build being $195.
Thank you, Mr. Speaker.