The first three phases of the Niven Lake subdivision -- a total of 65 houses -- sold out this summer. This fall, the city asked developers for proposals on the next three phases.

Only one developer, Homes North, applied to build mobile homes which would require the city to change the zoning. Councillors rejected the proposal at a committee meeting Monday.

Now the city may develop phases four through six itself. The average lot price in the first three phases was $72,615, with individual price tags ranging from $57,000 to $89,000.

Land fund in the red

The city is still $1.5 million in the red after borrowing $3.1 million in 2000 to develop the first three phases. The city hopes to recoup the rest once all the lots are sold.

"The city hasn't lost any money with regards to Niven Lake. Not yet," said city finance director Robert Charpentier. "Unfortunately with subdivisions like this you never know if you made money until the last lot is developed and sold."

At the heart of the matter is the question of whether the city should develop land at all.

Supporters of the idea say the city must make land available for citizens, and can do it more cheaply because it doesn't need a profit.

Those who think it's a bad idea say a municipality has too much red tape to allow agile decision-making.

"Private enterprise is more efficient," said Coun. Alan Woytuik.

"I would rather have seen the private sector doing it, but we went out for RFPs and didn't get any favourable responses so I think the city has to go ahead and do it."

If the city does develop more lots in Niven Lake, local developer Ray De Corby warns they will do so under close scrutiny.

"With (cost overruns on) the arena and everything, we know that they're not the idyllic developers," he said, adding that the city does have an obligation to free up land.

"The whole community is going to be watching them like a hawk because they screwed up the last time," he said.

So is the city setting itself up to be burned again, especially if private developers turned down the land?

Mayor Gord Van Tighem doesn't think so.

"A year ago now we identified that there was going to be a significant need for housing. Nothing has changed."

That matches the assessment made of Yellowknife Real Estate Association president Kay Da Corte.

"One hundred lots ... will not alleviate the total demand," she said.

But developer Tony Chang said the parcels of land are so big that businesses couldn't sell houses quickly enough to make money.

"If the city says we only need 10 (houses) but we're going to do 90, then the taxpayers in Yellowknife are the ones who are going to pay for and subsidize it."