Plans were made back in 2009 for three residential/hotel/office towers on Martin St., but work has still not begun. (Image courtesy City of Penticton)

Plans were made back in 2009 for three residential/hotel/office towers on Martin St., but work has still not begun. (Image courtesy City of Penticton)

Developer seeking a second three-year extension

Tower project planned in 2009

It’s been more than a decade since the Super-Valu grocery store in downtown Penticton closed its doors and was torn down in March 2006.

The site, at 450 Martin St., is a parking lot now, and the mixed-use project planned for the area, approved by Penticton city council in 2009 under a phased development agreement has yet to begin the construction that was originally expected to start by Dec. 2014.

That agreement was extended by city council in 2013, but Penticton city staff are recommending that a request to extend the agreement a second time be denied and that the owner be notified they will be in breach of the agreement if work on the first phase has not begun by Dec. 2017.

Related: Penticton council approves extension for proposed towers

The main stumbling block has been the height of the towers. The original plans called for three tall towers, 18 to 20 storeys, on top of a three-storey base with a grocery store, hotel lobby and office spaces. The development has been on hold since it was discovered Transport Canada regulations would block building the towers, which would be in the Penticton Airport flight path.

The 2013 extension was to allow time for a review of height restrictions to be done by Transport Canada. At the time, it was stated that a review would take some time to complete, but according to a report from Blake Lavern, little review has been undertaken.

“Staff have been unofficially notified that the review is a low priority for the agency and that in all likelihood if a full review were conducted, the regulations would most likely become stricter, not more lenient,” reads the report.

In a letter to the city, the developer says they have been working to resolve the outstanding matters, and that another three-year extension should allow for sufficient time to reach consensus on how to move forward, noting numerous conversations with the city and revised drawings and proposals submitted.

“All these suggestions have come at a cost and were done primarily to resolve concerns expressed by Transport Canada to the City of Penticton,” writes Hassan Hemani, of P2 Developments. “Surely no one can reasonably argue lack of effort on the part of P2 Developments over the last 33 months.”

A phased development agreement locks in zoning entitlements for a developer in exchange for negotiated benefits to the city. In this case, in exchange for additional height and density, the city received $150,000 towards the downtown plan, which was completed in 2013, along with future benefits including an additional $350,000 for affordable housing, $20,000 for public art and some other minor concessions, including LEED certification for the building as well as significant frontage and street upgrades.

If the contract were dissolved, the report says it would be expected the city would give up some or all of the benefits received.

“It is possible the developer would seek repayment of the $150,000 and undedication of the roads,” according to Laven’s report.

Council will be discussing the future of the agreement during the even portion of their Nov. 7 council meeting.