Housing bonanza hits a snag in booming Kirkland Lake – by Nick Stewart

Established in 1980, Northern Ontario Business  provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. This article is from the March, 2011 issue.

Low assessments, high development costs pose major challenges

The explosive need for new homes in Kirkland Lake is being thwarted by low assessment values and expensive infrastructure improvements. After years of wishing for opportunities to grow its dwindling population, the City of Kirkland Lake is struggling to accommodate the thousands of people soon to be pounding on its doors.

With low assessment values and limited finances, the municipality largely lacks the resources it needs to build out the infrastructure that has suddenly become necessary to house a strong influx of mining workers. Estimates provided by the city indicate that 2,000 full-time production workers will be in place by 2013, with an additional 1,500 needed through development and construction of new projects.

“It’s really ironic, because 10 years ago, we were sitting at a table with the senior levels of government and saying, ‘We’re dying, we need your help,’ and we were told there were no programs in place to help us,” said Wilfred Hass, the city’s economic development officer.

“Now, 10 years later, we’re saying, ‘We’re choking on our own success. Can’t you help us?’ and again we’re being told there are no programs in place. We just can’t win here.”

With seven mines operating through the heart of the city in the 1960s, Kirkland Lake once had a population of 25,000 with the infrastructure to match.

As gold prices crashed and its population sank to less than 10,000, so too did property assessments and therefore the amount of tax the municipality could collect.

Even though the city has begun to climb back to some hint of its former glory, the Municipal Prop­erty

Assessment Corporation (MPAC) has yet to update its assessment on many buildings in the area. This has left Kirkland Lake with a great need to boost its infrastructure and very few dollars with which to do it.

It’s also created a major hindrance for new housing development. Existing homes being assessed at $30,000 are actually selling for $80,000, said Hass, placing the taxation burden on new homes.

This is a distinct problem for the community as it suddenly finds itself as the central northeastern Ontario nexus for a flurry of high-profile gold mining projects. Collectively, the region’s high-profile mining projects will introduce a very immediate need for housing to the tune of 100 new homes a year for the next six years, according to a study completed by CRG Consulting last summer.

This includes Kirkland Lake Gold, which in the coming years is looking to grow its staff from nearly 600 to 1,000, with more than 500 contractors.

In a September 2010 letter to the municipality, the company’s president and CEO Brian Hinchcliffe stated, “we are facing a housing crisis as we try to expand our company.”

Another company looking to make use of is Armistice Resources, whose president and CEO Todd Morgan knows the housing pressure all too well. Not only is he seeking 100 staff for the company’s McGarry Mine by the end of the year, but he also serves as a Kirkland Lake city councillor who struggles with the very same situation from a community perspective.

“The economy in Kirkland Lake is firing on all cylinders and we haven’t seen anything like this since the early days of the community, but can we take advantage of it?” asked Morgan. “We really need the senior levels of government to step up to

the plate and help us to build out the infrastructure we need to capitalize on this. It’s a little bit of a stretch for our existing tax base to build that out based on our current assessment, and it’s a serious stressor right now, trying to staff out all these projects.”

The municipality could afford to service as many as 10 lots per year, a far cry from the 100 homes needed annually, said Morgan.

Some developers have shown great interest in building in Kirkland Lake, such as Sudbury’s Dalron, which is looking to establish seven houses and some townhouses. However, the high cost of servicing and developing land in the city is also stifling development.

Further compounding the problem is that Statistics Canada’s 2006 figures show the city to have a population of 8,600, a number that fails to reflect the growth it’s seen in recent years, said Hass. This prevents potential developers from approaching financial institutions with accurate information to help their case for loans.

In response, the community is developing a series of planning initiatives to reduce red tape and identify specific areas of the city that would be optimal for development. However, the onus to help user the community ultimately lies with the provincial and federal governments, said Hass.

“If we don’t have some assistance, we’re not going to be able to realize the full potential of this boom, or to translate this boom into something that will keep Kirkland Lake prosperous and growing well after it ends.”