After 14 of the 18 Hanson Lofts condos were sold before they were even built, the project has been cancelled.

'It's the biggest business disappointment we've ever had,' developer Reg Therrien said in an interview Tuesday afternoon.

He had planned to renovate his Peacock Sales building at 206 Hanson St. to residential/commercial condominiums. However, when bids on the project came in by the March 16 deadline, they were 55 to 60 per cent over the expected $3-million budget

'It came in way over-budget,' Therrien said.

It was a letdown to both the developer and potential condo owners. When told Hanson Lofts wasn't going ahead, reaction from purchasers ranged from 'disappointment to just didn't believe it' said Therrien.

For some, the purchase was an investment, while others were planning to move in around Christmas, when the condos were expected to be available. The two commercial units planned for the site hadn't been sold.

Those who bought the condos were given their money back with approximately three-per-cent interest. Therrien, however, won't be getting back his investment in the endeavour.

'I'm out a quarter of a million dollars,' he said.

Mayor Ernie Bourassa also called the cancellation of the project disappointing after the city and Therrien went through an extensive process for the project when it didn't meet some of the zoning requirements for the amount of amenity space required.

Amenity space means the common areas for all residents.

The city permitted the development by closing off part of its lane next to the property and selling it to Therrien for the market value of approximately $11,000.

The property was rezoned to Mixed Use Commercial 2-restricted (CM2x) from mixed use commercial.

Council voted to authorize the development permit with the conditions in an effort to encourage more people to live downtown.

The city's Official Community Plan (OCP) calls for more housing in established neighbourhoods rather than creating new subdivisions. It also calls for redevelopment of the downtown as a more mixed-use neighbourhood.

The zoning bylaw is being rewritten to reflect the initiatives from the OCP adopted in 2002.

Bourassa said Therrien seems to be experiencing a situation common to many developers over the last couple of years.

'Construction costs have escalated,' he said.

Bourassa pointed to the residential/commercial Waterfront Place development downtown by the Yukon River, which didn't go ahead a couple of years ago as planned. Hopefully, things are now coming together for those developers, Bourassa said.

High costs have an impact on how redevelopment in the city occurs, the mayor suggested.

The city is also among those forced to deal with higher construction costs as bids on building projects like the Jeux du Canada Games sports centre and the Rotary Centennial Bridge have come over-budget.

In those cases, extra funds were found with some of the extra cash for the sports centre coming from the Yukon government as well.