The Yukon government has decided not to fund three proposed affordable housing projects in Whitehorse through its Northern Housing Trust monies.

It cites a recent increase in land availability and housing supply and fears that it could negatively impact the market.

But two rural Yukon projects will receive $1.3 million in support through the initiative.

In October 2013, the Yukon Housing Corp. released a request for qualifications, asking businesses and NGOs to put forward ideas for developing affordable rental stock.

The government announced it planned to use the remaining $13 million of its Northern Housing Trust money to stimulate development of affordable rental units.

By the end of December 2013, 22 project proponents had come forward with ideas, nine of which advanced to the request for proposals (RFP) phase.

Three of those completed the RFP phase, but none will receive funding.

Mayor Dan Curtis expressed shock this afternoon about the government's decision to cancel the affordable housing project in Whitehorse.

"I'm extremely disappointed; I know my council is extremely disappointed as well,” he told the Star.

"The City of Whitehorse has done an awful lot trying to offer incentives and provide some help addressing the affordable, attainable housing in the city of Whitehorse, so yeah, it's a bit of a shocker for us,” said Curtis.

"We're going to, hopefully, next step, work with our partners to see what can be done.”

Both the Yukon Anti-Poverty Coalition and the NDP official Opposition also expressed disappointment and concern about the announcement.

"We're extremely disappointed and disillusioned by that decision,” said Charlotte Hrenchuk, a co-chair of the anti-poverty coalition.

"We were amazed to read in the press release that somehow, recent increases in land availability and housing supply in Whitehorse means that there's no need for these three projects when we know that affordability is a pressing issue for renters in Whitehorse,” she said.

The median rent has increased 18.3 per cent since 2009, she added.

Kate White, the NDP's housing critic, called the decision "another example of this government's total incompetence when it comes to dealing with the housing file.”

But a past president of the Yukon Real Estate Association has a different opinion of the government's move not to fund the affordable housing projects.

Val Smith said this morning she thinks it was an "excellent decision.”

Smith argued government interference in the housing market could have negative consequences.

She suggested it makes the most sense to wait until the Yukon Housing Action Plan is completed before earmarking the remaining Northern Housing Trust dollars.

Brad Cathers, the minister responsible for the housing corporation, explained this morning the government heard the input from the real estate association and the Yukon Residential Landlords Association that there has been a recent increase in land availability and housing supply.

The minister pointed to new lots available in Whistle Bend and other areas as well as investments by residents putting in rental suites and second dwellings for rental on their properties.

The concern from the realtors, he said, is that if the government were to subsidize new rental units at this time, it would actively discourage private development.

But White questions why the government isn't listening to Blood Ties Four Directions and the anti-poverty coalition.

Those organizations, she argued, are the real experts when it comes to Whitehorse's housing needs.

"My hope is that the two organizations, the landlords association and the realtors association team up with the NGOs and help direct government to a more targeted housing direction, that they're actually addressing the gaps right now, and there are many gaps,” White said.

Smith said the real estate association is a partner in the development of the Housing Action Plan, as are a number of realtors and bankers.

Cathers could not say yet what the remaining $11.5 million of housing trust money will go towards, saying only, "We'll announce that in due course.”

The minister did note though that the housing trust money is just one pot the government pulls from to fund housing projects. He pointed to the new seniors housing projects, which the government funded through its general revenues.

In terms of the rural projects announced today, the Carcross/Tagish Development Corp. will receive $225,026 to help meet the total cost of constructing two one-bedroom units, estimated at $450,052.

The Carmacks Development Corp., meanwhile, will receive just more than $1.1 million toward six two-bedroom units.

Construction is estimated to cost a total of $2.2 million.