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September 30, 1998
(Municipal and Provincial Affairs)

The following is being distributed at the request of the Newfoundland and Labrador Housing Corporation:

NLHC announces decision to withdraw from residential land development

Newfoundland and Labrador Housing Corporation (NLHC) has received approval from government to proceed with recommendations to remove itself from current land development activities in the province. This new approach will see the corporation either sell remaining developed residential lots directly through real estate agents or transfer these along with banked land to the municipalities with NLHC sharing in future land sales revenues on a 50/50 per cent partnering basis. The announcement was made today by Art Reid, minister responsible for housing.

"With respect to Southlands, the corporation will invest approximately $12.4 million, over the next 10 years, to finance construction of Southlands Boulevard and other required infrastructure that will open phases two through eight. This will allow for some 412 acres to be sold as block land for private sector development of over 2,000 residential building lots," Mr. Reid added. "The remaining 135 residential lots in phase one will continue to be sold directly through NLHC and real estate agents. The corporation will retain the right to reassess its role in the future residential development of Southlands over the next three years, based on market conditions."

In recent years, as the corporation requirement as a land developer has peaked, NLHC's approach to residential development has changed, and the corporation has moved more towards the sale of block land versus direct development of residential lots. This has allowed the private sector to play a more prominent role in the industry.

Overall, this approach is consistent with recommendations put forward in a brief by the St. John's Board of Trade and the Eastern Newfoundland Home Builders Association following the public consultation process. Their concerns and interests factored very highly into government's decision on this matter.

"This decision is a result of extensive consultations with a wide range of industry stakeholders. The implications of the strategy and the concerns of all interested parties have been carefully examined and considered," said Mr. Reid. "NLHC's continued involvement in land development could pose competition for the private sector, and government feels strongly that it should avoid entering into any such activities. However, I can assure everyone involved that NLHC will divest of its land holding assets in an orderly and financially prudent manner."

NLHC recognizes the implications "dumping" land on the open market in St. John's could cause and, therefore, will not rush this process. The procedures being put in place to facilitate this change in the corporation's approach to land development in Southlands are being phased in over time. Government will monitor the market and pursue solutions to any future problems that may arise because of this strategy. One concern being addressed is that of the small builders, who are dependent on NLHC for their supply of economically priced buildings lots. However, the corporation will stipulate that developers must offer 25 per cent of developed building lots available to individual purchasers or builders/contractors, on a first-come, first-served basis, at fair market value.

Commenting on the announcement, Dave Elliott, President of the Eastern Newfoundland Home Builders Association said: "We commend NLHC and government for their response to the recommendations put forward by the industry. We are quite pleased to see that government has developed a provision which ensures that the needs of individual homebuilders and small contractors will be addressed. This is also a very significant decision which means government will no longer be competing with the private sector, and consequently, opens an endless range of opportunities for the business community."

Southlands is located south and east of two interchanges on Pitts Memorial Drive at Ruby Line and Ruth Avenue. Upon its completion it will consist of 1,000 acres and can accommodate 4,300 individual dwellings units (houses and apartments). Expected to be developed over a 15-20 year period, Southlands will have an estimated population of about 16,500. To date approximately 87 residential lots have been sold in this subdivision.

Today's announcement marks a turning point in NLHC's history. This new approach will enable the corporation to refocus its efforts and commitment on its primary mandate which is the provision of affordable, quality housing for those in need throughout this province. An announcement regarding the divestiture of remaining industrial/commercial property is anticipated within the next week.

Media contact: Jenny Bowring, Corporate Communications Division, NLHC, (709) 724-3055.

1998 09 30                                               2:45 p.m.