The long-envisioned sustainable community of Blatchford, where an estimated 30,000 people will live in the middle of the city, is under scrutiny by at least one city councillor and condominium developers.
Homes built on the former city centre airport land will be connected to a carbon neutral district energy sharing system, at an estimated cost of $93 million for the first 10-year phase.
So far, the city has invested $24 million to build the initial infrastructure. This year, it is on the hunt for another $70 million.
During a utility committee meeting Friday, Coun. Tim Cartmell questioned the Blatchford business plan, saying he’s heard from builders that the city’s condo market is too sluggish to support such a huge development.
He’s concerned the low uptake in condo sales will slow down or prevent building at Blatchford.
He says that could block the necessary buy-in to make the utility viable.
“If land uptake is slower than anticipated in the financial model, what does that mean?” he asked during the meeting. “Ultimately my concern is that we will end up having to inject more money into the utility to make it work.”
This spring, developers started pre-selling about 45 condominiums, a small portion of what’s expected on the 530 acres.
The utility is estimated to cost $660 million over 50 years. Customer utility rates and infrastructure fees would account for $420 million with $147 million of assets contributed by the builders.
“If the financial model has issues, it ends up being the owner of the utility which is the city — which is the taxpayers — that have to fix it,” Cartmell said.
Christian Felske, director of renewable energy systems for the city, said they’re developing the utility in stages in relation to what’s being built on the land.
“If more builders come on, we have to provide more energy,” Felske said. “There’s a very nimble, very staged approach in terms of how the utility connects with the land development.”
Felske said entire cities in Europe have developed district energy systems. In Canada, Ottawa, Vancouver and the lower mainland B.C. have also developed similar systems.
Typically based on geothermal heat, district systems can also draw from sewers to generate heat and hot water, Felske said.
‘A leadership piece’
Mayor Don Iveson, a longtime supporter of Blatchford, reminded the committee members about the goals of the project.
“This is a leadership piece,” Iveson said. “So it’s natural it’s going to come with questions, some reservations, some discomfort.
“I understand that some of our builders are not familiar with it — that’s part of market transformation — you’ve got to lead. Some people are willing to try it, you show that it works, and then adoption takes off.”
The city has discussed Blatchford for years but it wasn’t until the city centre airport closed that council could move forward with construction.
The council in 2014 approved the business case for the Blatchford community and construction of the first phase started that year.
Coun. Bev Esslinger noted that council at the time agreed that developing a district energy system would cost up front but that it would make money in the long-run.
“This is a unique opportunity,” she said. “Not many cities, very few ever, have an opportunity to develop 530 to 540 acres close to their downtown core.
“We committed a long time ago not to do business as usual, to look at this opportunity and develop it differently.”
Felske said the city will be pursuing grants to make up the remaining $70 million of the initial investment and report back with options to the utility committee in November.
Cartmell said he wants to see a more detailed plan on how the city plans to fund the utility.