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SOMBA K'E/YELLOWKNIFE - The city will subsidize lots for new homes in the Niven Lake subdivision, city council decided Monday night.

As per administration's recommendation to council, the first 31 lots will receive a 12 per cent subsidy, which amounts to roughly $471,000, paid for using either the city's land development fund or the general fund.

The four councillors present at the council meeting were divided about whether to partially subsidize the lots or put the full cost on the builder, which is the city's goal by the next phase of development.

Coun. Paul Falvo and Coun. David McCann supported an ammendment that would have rejected the subsidy and instead sought full cost recovery. Coun. Lydia Bardak and Coun. Mark Heyck were opposed to that amendment, and Mayor Gord Van Tighem broke the tie in favour of the subsidy.

Falvo, explaining his reasoning for proposing the amendment to council, said he had received about half a dozen e-mails from residents, including a former councillor, over the course of the day Monday.

"Every single one was in favour of full cost recovery," Falvo said.

"We've been advised all along that there's very strong demand for these lots so I don't think there's going to be trouble selling them. If they don't sell quickly enough they can always be reduced later," he proposed.

City administrator Max Hall, responding to a question from Coun. Heyck, said to his knowledge lots in all areas of the city have never been sold at full cost recovery with infrastructure costs included in the price.

"Basically every homeowner in Yellowknife has benefited from a much greater degree of 'subsidization' from the city in the development of their particular lots, so it's interesting now to see residents coming back and saying, 'no, we don't want to subsidize this at all.'"

Coun. Bardak and Mayor Van Tighem agreed with a boiling water analogy to describe the transitional move to full cost recovery.

"If you're going to put me in hot water, I'd rather the water be tepid and slowly warmed rather than getting into the boiling water right first thing," Bardak said.

Van Tighem said after the meeting he was looking at "what is best for both sides" by deciding against immediate full cost recovery.

"If you do it right away, they call it sticker shock," he said. "If the land is affordable there's a higher likelihood that the housing can be affordable." He added that the lot prices for Phase VII include other costs such as parks and trails to encourage pedestrian use by residents.

Les Rocher of Homes North, the private developer responsible for Phase VI of the Niven Lake subdivision, said at the council meeting that historically Yellowknife land prices have been kept down by separating infrastructure costs from land prices.

"All of a sudden you're saying, 'hey, we're going to lay this on the developer.' You're not laying it on the developer, you're laying it on the people," Rocher told council, emphasizing the city needs to be clear about the actual cost of the land.

Southern cities don't usually take on the role of developer, said Mike Mrdjenovich, the Edmonton-based president of Nova Builders, unless the cities can't find a private developer to complete the project.

Mrdjenovich, who has worked on developments in the North for more than 30 years, said he's "always skeptical" when municipalities or governments get involved in private development.

"I'm not in favour of them doing the development. They should give it to the private sector," Mrdjenovich said. "They cannot do it as economical as we can ... It's not their money - it's taxpayers' money. When we develop, it's our money and we watch every penny."

The city expects to save around $108,000 in realty fees selling off the first 31 lots by ballot draw, and local realtors said the decision won't affect them much.

Rod Stirling, co-owner and manager of Coldwell Banker, said the real estate company would have liked to have been involved in selling the city property, but that the city's decision won't have a large effect on business.

"It's a part of our business, but not a big part," Stirling said. "We're quite busy. We're selling the vast majority of real estate in Yellowknife."

The city plans to sell the first 31 lots in mid-September and expects to recover full lot costs by Phase VIII of the development.