City Quietly Turns Down A $50 Million Housing Development
By Robert Thomas
The City of Moose Jaw has quietly turned down a housing development on the former site of the Moose Jaw Union Hospital.
The housing development would have seen 200 market rate housing units and retail space.
Additionally the deal would have seen the developer - The Babych Group - pay for the naming rights at the Moose Jaw Event Centre brining in $1.5 million over its ten year term.
The developer would assume the risks and expense of cleaning up any of the potential contamination at the former Union Hospital site.
The sticking point on the deal was the developer was only willing to pay $1 for the property.
A figure the developer says some within the City administration balked at so behind closed doors the deal was silently turned down.
A preliminary rendition of the proposal to Council
“We’re developers. Our idea was we were going to go in and acquire the land for a dollar,” Cal Babych with the Babych group told MJ Independent in a telephone interview.
Babych said it might appear improper to acquire the land for $1 but the development company was taking a calculated risk on potential environmental clean up costs.
“There were concerns of some contamination but we weren’t 100 percent sure if that was true or not but the reality is we were going to come in committed in constructing 200 plus units of market rental housing,” he said.
He said for the Babych Group the development opportunity was “a huge opportunity” not just for the developer but the City as well.
“There is quite a large gap in the (Moose Jaw) market so we just saw the opportunity.”
Babych said the initial proposal did not include the naming rights for the Moose Jaw Events Centre (former Mosaic Place) but developed naturally into that as part of the discussions due to his background.
Babych had an impressive career in the Western Hockey League - he played with five different WHL teams - and his dad Dave Babich and uncle Wayne Babych had lengthy NHL careers.
Something he said the City needs.
“My dad (Dave Babych) is pretty well known in the hockey community so we thought that was a really cool tie-in for our company but also it is a pretty big need for the City’s revenue sake because it has been sitting empty (without a naming sponsor for some time.”
The City has attempted to find a naming sponsor for the now temporarily named Moose Jaw Event Centre since the Mosaic Company withdrew their $150,000 sponsorship in August 2022. The City has hired a firm in an attempt to find a naming rights sponsor with so far no luck.
“We went in with that proposal as we thought that was the route to take but unfortunately I don’t think it was the whole lump of the City that didn’t like the proposal I think it was a couple of individuals who brought it down. I think it was a bit of bias on the part of a few people,” he said.
Babich said there was a misunderstanding and a divide with the City on the land and sponsorship deal.
The Babych Group saw it as one deal and the City said it was two separate agreements.
A look at the site of the proposed development on Wednesday - MJ Independent photo
Asked who was opposed to the deal he said it was people in Administration.
Asked if he would name the individuals who sunk the deal Babych declined comment.
“I don’t want to throw anybody under the bus. They’re obviously City officials. It is one of those things. I want to resubmit and have the opportunity to go after this land in the right way and I don’t want to sour the water,” he said.
Babych said he would like to resubmit as “we had some heavy, heavy hitters in the City of Moose Jaw backing our proposal. And it still wasn’t received very well which I find quite strange.”
Babych said he had no problem presenting his development proposal publicly at an open Council meeting. In fact it was what the Babych group wanted but the proposal was directed to an in camera Executive Committee instead.
“That is what we wanted to do (present the proposal publicly). I think if this was out there to the public I think the public would have a very positive perception. Which is what the City didn’t agree with me on. They thought the dollar purchase price was to hard to get around.”
“They said we have to sell that ($1 purchase price) to the residents. I said let me sell it to the residents. We should get out in front of this and get into the public eye,” Babych said, adding “that’s why I was hoping to do it at an open Council meeting.”
“It just had a negative light. I still want to resubmit it. We still have a full interest in being part of the community there. I think that is what was missed as much more to come in and do this one project.“
Still Interested In Doing Business Here
Despite the deal being denied behind closed doors Babych said his company has not given up on the Notorious City.
“I think it’s unfair for us to punish the City of Moose Jaw for a couple of individual actions. We’ll resubmit on the same land. Not the same deal but we’ll try to make it a little bit better for the City. There is other stuff in the city that is available.”
“As I said there is an opportunity there. It’s just a matter of finding the right niche,” he said, adding “I’m not going to let one or two people dictate on behalf of the community. I don’t think that’s right. The opportunity is there and for us we’re still willing to work with the City.”
He said if not the Union Hospital site there is other land in Moose Jaw that makes sense.
“There’s potential. As we’ve done our research there before we committed this proposal we saw the reality there…there’s not many developers that are going to come in and be willing to build those kind of units.”
The project’s projected cost was $50 million.
He said the land price wasn’t much of an issue but the tax revenue the property would generate would “blow any property out of the water.”
Babych said his company had done their property tax projections for the project and it was threefold what selling the property for $1.5 million would bring in.
At their May 27, 2019 Executive Committee meeting the decision was made to sell the 6.16 acre former Union Hospital site for no less than the market value of $417,472 per acre. The option also existed to purchase and close 1.2 acres of unused or excess road right of way at the site.
The City had at least one public offer to build affordable housing units but the proposal did not come to fruition. The developer in that case said it would help with his grant money application if the City donated the land.
Babych said initially his company wanted a 100 percent property tax deferment for five years but came back and agreed to the deferred tax schedule over five years offered to developers.
Company Environmental Risk
Babych said the $1 purchase price for the Union Hospital property might seem low but his company would bear full responsibility for any potential environmental cleanup.
“We would just remediate it ourselves. And that is the thing the dollar allows us to have a bit of risk in the event we need to clean it up,” he said.
Babych said if there was contamination the Babych group would have to clean up the site.
“It (the $1 sale price) gives us that bumper in the event (there’s contamination). The hard part is if we went in and paid $1.2 million if the land is dirty and we have to clean it up then your making the land cost $2 million. At that point the land does become pretty difficult (to economically develop). That’s what I tried to express to them.”
Babych said a major problem is the difference between a bureaucracy versus the free market.
“They wanted to get it cleaned up by the Province to get that commitment but the reality is the City is more than less paying for it. I think we all know if the Provincial or City is cleaning up land it’s going to cost three or four times more than what a private entity would be able to do…it just made more sense in our eyes to go to a private entity.”
“The reality is the residents are still paying for that cleanup (as there is only one taxpayer),” he said.
Project Would Help With Moose Jaw Housing Shortage
“Coming into Moose Jaw we would have a premium product and then the sponsorship would tie things really well together. I think it will fill a huge void with the City in what they are looking for (in housing development) at the moment, Babych said.
“They need market rental housing and affordable housing but what this does is our project would alleviate the pressure on the affordable side. A lot of people we chatted with are looking for something a little bit better. And it would alleviate pressure on the market.”
“There is not anybody really lining up at their (the City’s) door to build that kind of product at the moment because construction costs have gone up…our model is we’re a build and keep so we hold for the long term,” he said, adding “that’s why the model works. That’s why in a city like this the model does work.”
Asked for a comment the City sent back an email response “The City has no comment.”
“I still want to work with the City and try to get a deal done. I think the opportunity is there…this is not just an opportunity for us but an opportunity for the City to improve,” Babych said.
The Babych Group has multi-unit residential properties developed in Calgary, Spruce Grove and Vancouver.
At the present time the company is looking at expanding its’ operations outside Calgary.
Editor’s Note - In our request to the City for comment we were asked who told us about the project.
In all honesty sitting outside an Executive Committee one day I saw people leave I didn’t recognize.
A little while later I was in Saskatoon waiting for a dear friend whose family is a major property property developer in that city.
She was running late to take me for lunch and asked if I didn’t mind to wait and look through boring reading material.
As I flipped through the trade publications I saw a face I recognized.
Next to it was a story mentioning the Babych Group.
After that it was easy I just needed to make a phone call.