Plans were made back in 2009 for three residential/hotel/office towers on Martin St. in Penticton, but construction never began, and now city council is considering cancelling the agreement. (Image courtesy City of Penticton)

Plans were made back in 2009 for three residential/hotel/office towers on Martin St. in Penticton, but construction never began, and now city council is considering cancelling the agreement. (Image courtesy City of Penticton)

Penticton tower deal on the chopping block

After eight years with little progress, a tower complex deal in downtown Penticton may be cancelled

Penticton city council is again looking at the phased development plan agreement for 450 Martin St., but this time with an eye to cancelling the eight-year-old agreement.

In a letter dated Nov. 14, Hassan Hemani of P2 Developments offered to voluntarily cancel the agreement, which would have seen three towers built on the site, which was the location of a downtown grocery store until it was demolished in 2006. No construction has taken place; the site is a parking lot now.

Related: Developer seeking a second three-year extension

Cancelling the agreement would cost the city, as P2 Developments is requesting the city “restore us back to our original position,” including the return of entitlements negotiated as part of the deal. Specifically, that includes paying back $150,000 the developer paid to the city towards the downtown plan, which was completed in 2013.

The original plans, which council agreed to in 2009, 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.

P2 Developments was granted a three-year extension to the agreement in 2013 to allow the developer more time to work with Transport Canada on their height limitations.

Under the agreement, P2 Developments was going to build three 20-storey towers atop a three-storey base. Council agreed to the plan in 2009, as well as a three-year extension in 2013, but now the developer is dropping their request for another three-year extension.

Related: Penticton council approves extension for proposed towers

“While that is still our preference, we are aware that you will not be recommending such an extension to council,” wrote Hemani in an email sent to Anthony Haddad, the city’s director of development services. (see below)

“That said, we recognize the difficult position that both the city and we are in because of the phased development agreement’s conflict with the federal aeronautics regulations.”

While the staff report recommends agreeing to the request to return the $150,000 and removing any encumbrances from the land title, they say council should deny the request for compensation for the road dedication area or to rededicate it back to the owners.

“Once a dedication proceeds, those lands become part of the public realm. It is difficult to ‘un-do’ a road dedication,” reads the staff report. “As for compensation for the lands, again, staff do not feel this would be in the public interest. The developer entered into the agreement with the risk that the development would not proceed. If the developer did not agree to dedicate the lands, the city would not have pursued purchase of them, so to agree to purchase them now would not be in the best interest of the city and could be viewed as a gift to the developer.