Yellowknife (Feb 19/03) - The NWT Housing Corporation (NWTHC) is making it easier for builders and developers to finance construction projects.

Borealis Holdings' John Laycock plans to build 10 houses this year. - Norm Poole/NNSL photo

The housing corporation guarantees interim financing for developers subject to certain requirements. Under the old rules, the most stringent requirement was that developers have 25 per cent of the total project cost in cash.

Now the corporation wants just 15 per cent down for rental units and 10 per cent down for homeownership units in order to guarantee bank or CMHC loans.

NWT justice minister Roger Allen, responsible for the NWTHC, said the changes were made to address the rising cost of housing.

"These changes create a more flexible program and offer improved access to financing for small companies during the construction phase of their projects."

Jeff Anderson, NWTHC chief financial officer, said the corporation currently has three projects on the books, including a 14-unit condo and a five-unit detached housing project in Yellowknife.

"We primarily help developers with projects like these who can't come up with the 25 per cent that the banks or the CMHC requires for construction financing," said Anderson.

"We have decided to reduce our requirements and assume some of that risk."

Yellowknife businessman David McPherson, a mortgage broker, and homebuilder Borealis Holdings have been lobbying for the changes for about a year. Borealis president John Laycock said under the old rules the company would have needed about $250,000 cash to secure interim financing for a four or five-home project.

"And that was just the start," said Laycock.

"You also need to put 15 per cent down on the lots, and pay your employees, subcontractors and suppliers until you can begin to draw against the homeowner's interim financing."

That 'interim draw' used to come six weeks after the start of construction, he said.

"Now we have access to funds as we go along. That's a huge difference for small companies."

Construction costs in Yellowknife -- estimated at between $130-$140 per square foot -- are among the highest in the country, he noted.

With the changes, Laycock said the firm expects to build about 10 houses in Yellowknife this year.

"We can look now at acquiring five or six lots and planning ahead. We don't have to finish one house before starting on the next."

The NWTHC recently broadened its Expanded Down Payment Assistance Program in order to handle an increasing number of applications for Yellowknife home purchases.

"We have processed 40 applications in Yellowknife alone since last summer," said Anderson.