Inflation delays low-income housing project in Sudbury

Soaring costs is causing delays in the construction of a low-income housing project on Sparks Street in Greater Sudbury.

The city bought the property in 2020 using funds from the federal government, with an eye on tearing it down and building a new complex. The plan was to convert the property on Sparks Street into 14 affordable housing units.

Money for construction was to be raised through the sale of vacant homes owned by the city.

When first approved in 2020, the budget for the project was $5.5 million. But in February of this year, a report to councillors said costs had risen to $7.3 million, largely fuelled by the COVID-19 pandemic.

While agreeing to the larger budget in February, a report headed to city council Sept. 13 recommends pausing construction after a new budget estimate came in at $9.2 million.

"Three tender packages were received with bids ranging from $8.7 million to $10 million, not including contingency costs," the report said.

"In order to proceed with the project as designed, an increase of the project budget from $7.3 million to at least $9.2 million plus contingencies would be required."

The reason is inflation is at its highest point in decades.

"The current inflationary rates are extraordinary – the highest in close to 40 years, per Statistics Canada," the report said.

"As a result, staff have chosen to cancel (the tender) at this time and proceed with an approach that can be delivered within the budget direction."

Delaying a decision will give staffers time to redesign the project to lower the costs, the report said, with the goal of having it completed by the end of 2023.

Read the full report here.