ADMINISTRATIVE REPORT

Date: June 12, 2002
Author/Local: Clyde Hosein/7616
Michael Flanigan/7422
Piet Rutgers/604.257.8463
RTS No. 02802
CC File No. 1611/8016
Council Date: June 25, 2002

TO:	Vancouver City Council
FROM:	The General Manager Corporate Services/Director of Finance, General Manager of Parks and Recreation, General Manager of Community Services, Director of Vancouver Public Library and Director of Real Estate Services
SUBJECT:	Proposed Joint-Use Project: #1 Kingsway

INFORMATION

This report is submitted for INFORMATION.

CITY MANAGER and
GENERAL MANAGER OF PARKS AND RECREATION COMMENTS

Integrated service delivery is an important aspect of better city government. Council approval of the site acquisition at #1 Kingsway has created an exceptional opportunity to further these objectives. Not only is this development consistent with the directions set in the 1987 Mount Pleasant Community Development Plan but it also meets the objectives of CityPlan for neighbourhood centre development and of Council for a more coordinated approach to City service delivery.

This report is submitted for the information of Council and the Park Board. Council approval of the recommendations in the accompanying report on funding allocations in the 2003 - 2005 Capital Plan will ensure this project is considered as a cornerstone in that program.

COUNCIL POLICY

1. Capital funding priorities are identified in three-year Capital Plans. These Plans are developed such that the plan can be put to the voters at the time of the triennial civic elections.

2. Joint-use projects meeting the needs and priority of the participating users are given a high priority in the development of the Capital Plan.

3. CityPlan: Directions for Vancouver (1995)
a. Accessible, Community-based Services (p. 18) ". . . recreational programs, social programs and libraries will draw on the ideas of the people who will use them, making those services widely accessible and responsive to different needs. Services will be located in neighbourhood centres where they are easy to get to . . ."

b. Neighbourhood Centre (p. 10) ". . . Neighbourhood centres, usually developed from existing shopping streets, will provide a `heart' for each neighbourhood . . ."

4. Community Development Plan for Mount Pleasant (1989) Section 2.8 Parks, Open Space and Recreation:
- Goal: to upgrade active recreation opportunities east of Main Street.

- Recommendation 2 (3): "Park Board . . . to ensure that the needs of all residents . . . (of Mount Pleasant) are being met at public and private recreation facilities, noting that a balance must be achieved which meets the needs of the people in the area."

· The strategic plan for childcare "MOVING FORWARD" Childcare: A Cornerstone of Child Development Services, approved by Council in April 2002, sets out the following: Outcome: A system of early childhood development services that are integrated with neighbourhood hubs (e.g., neighbourhood houses, schools, community centres, etc.). Strategies A1. Prioritize future development, capital and operating funds to facilitate "HUB" concept. B5. Examine feasibility and parameters for building childhood development services and facilities on public land. C2. Encourage new and/or strengthen existing multi service organizations to operate and/or administratively support a number of childcare/childhood programs in each network.

· Ongoing program improvements are to be reviewed with a view to applying the City of Vancouver's Principles of Sustainability.
PURPOSE

This report provides Council with information about a major joint-use project which the Capital Plan Staff Review Group is recommending for funding in the 2003-2005 Capital Plan. As the Capital Plan, including this project, will be referred to a public consultation process, no Council action is necessary at this time.

BACKGROUND

The 2000-2002 Capital Plan allocated $4.75 million to rebuild Mount Pleasant Community Centre.

On September 18, 2001, Council approved the purchase of the property at #1 Kingsway for a price of $3.45 million, to be funded on an interim basis by the Property Endowment Fund, with participating departments and boards to share the land cost in proportion to areas of their respective facilities. The property purchase was made specifically for the relocation and redevelopment of a combined Community Centre and Library Complex with other potential uses such as housing and retail.

The site has been purchased and demolition of the existing building is currently underway.

Council also instructed the General Manager of Parks and Recreation and the Director of Vancouver Public Library, in consultation with the Director of Real Estate Services to report back on:

- the specifics of the development concept for the site;
- the opportunities for public/private partnership in the development;
- allocation of total floor area in the approved development, tenure structure and lease terms; and
- estimated net operating costs to the City of the combined services.

A staff committee from Real Estate Services, Facility Design and Management, Vancouver Public Library, Vancouver Park Board and Housing Centre were formed to assess the feasibility of the site for multiple uses including: market and non-market housing, a community centre, branch library and a childcare facility.

Following a request for proposals, Henriquez Partners Architects, in association with Burgess Austin Cawley & Associates, were appointed to undertake an economic feasibility study for various development options including: community centre, library, childcare, retail and market and non-market housing. In addition, the consultants were also requested to assess the economic feasibility of utilizing the adjacent lane and non-City-owned property immediately to the east of the #1 Kingsway site as part of the development scenario.

The feasibility study of development options was completed in February 2002.

DISCUSSION

Development Concept: The integrated delivery of library , daycare and community centre services in a single joint use facility at #1 Kingsway offers numerous benefits to the users of these services. The addition of a housing component contributes to meeting the City's housing objectives and serves to more fully utilize the development potential of the site.

This part of Mount Pleasant is in transition and this civic project will act as a potential catalyst in the revitalization of the Main and Broadway commercial District consistent with the City plan vision of neighbourhood centre development.

The site is strategically located relative to service demands for daycare, library and community centre in Mount Pleasant, both today and in the future when the emerging neighbourhoods of City Gate and Southeast False Creek will be fully developed adding demands for these services.

The public will experience the convenience of one stop shopping as well as the opportunity to benefit from innovative, diverse programming to be offered jointly by the three service providers. The site's visibility, combined with its excellent transit access and proximity to three cycle routes fully support City Plan and Sustainable City objectives.

The joint development of this project generates better value for the capital outlay, saves on design and project management costs and, in the long term, creates operating efficiencies.

The Site: The site is located on the southeast corner Kingsway and 7th Avenue, at Main Street, and is zoned C-3A Commercial District Schedule. It has an area of 40,708 SF and a potential buildable area of approximately 121,000 SF, subject to approval by the Development Permit Board, and a total development potential, including an amenity bonus, of 132,300 SF. Cultural and recreational uses are outright while housing is conditional. For site plan see Appendix "A."

Community Centre Renewal: The Mount Pleasant Community Centre at 16th Avenue and Ontario Street is poorly situated in relation to the area it is intended to serve. Mount Pleasant is very near Douglas Park and Riley Community Centres, such that all three centres have overlapping catchments. On the other hand, Mount Pleasant residents living east of Main Street and north of Broadway do not have easy access to their designated community centre.

Beyond the consideration of service improvements, the relocation of the community centre involves a number of supplementary benefits:

· Full community centre programming would continue without disruption during the construction period.
· A new facility can achieve a higher level of operating efficiency than an older renovated facility.
· The design of traffic flow, internal connections and programming spaces in the new facility would not be subject to the constraints of a retrofitting scenario.
· Since Mount Pleasant is a severely park-deficient neighbourhood, the Park Board intends to demolish the existing building and restore the former Mount Pleasant Community Centre site as a park.

The current Mount Pleasant Community Centre, at 29,048 SF in floor area including a 1,300 SF childcare, corresponds to a medium-sized community centre in the Vancouver context. The intended size of the community centre facility in the new complex will be approximately 31,600 SF plus a 6,800 SF childcare. This increase reflects the added demands resulting from a more central location, along with an allowance for population growth in the Mount Pleasant and East False Creek Neighbourhoods and proposed South East False Creek development.

While the new centre will be slightly larger than the existing facility, it is anticipated that there will be no increase in operating costs because of utility and operational savings inherent in the joint-use nature of the building.

Branch Library Renewal: The Mount Pleasant Branch Library currently rents space (5,985 SF) at the Kingsgate Mall at Broadway and Kingsway. The location is situated to serve the branch's current catchment area, however, the current branch has issues of size and crowding impacting on use, functionality, operations and service delivery as well as seismic upgrading issues and the issue of moving the library from leased space to a City-owned facility.

Mount Pleasant Branch is responsible for the two storefront operations, Riley Park (located in Little Mountain Neighbourhood House at 24th Avenue and Main Street) and Kensington (located at Kingsway and Knight). The Library's strategic facilities plan originally planned for an amalgamation of the Riley Park storefront with Mount Pleasant Branch, relocated ideally to 12th to 18th Avenue on Main Street to serve both communities. The new proposal for a joint library/community centre at #1 Kingsway will continue to serve Mount Pleasant community effectively but would not be situated to adequately serve the residents of Riley Park as it is outside of the Riley Park catchment area.

The Library Board therefore adjusted its Strategic Plan to be able to participate in the joint library/community centre proposal to serve the Mount Pleasant community alone. The library will therefore be bringing the redevelopment of both small storefronts to Neighbourhood Branch levels of service forward for consideration in future capital plans, as outlined in the City of Vancouver Facilities Strategic Plan.

In addition to the operations, service and physical improvements that would result from the proposed joint library/community centre, the relocation of the branch involves a number of supplementary benefits:

· Full library service would continue without disruption during the construction phase.
· The new location would continue to serve the current branch catchment area in addition would be strategically placed to serve the projected population growth in South East False Creek.
· Library and Parks have a long history of successful partnerships for community benefit - - the benefits of a joint facility provide convenience to public of a "one stop shop" and finding our community amenities in one location and benefit to the public with the potential for more innovative and diverse programming, as well as joint promotion of activities and events.

The current Mount Pleasant Branch at 5,985 SF is well below the recommended size for a Community Branch service. The intended size of the branch library in the joint facility is 12,000 SF. This increase reflects the need to address current crowded and inadequate space to serve the library's present catchment area of approximately 32,000 people as well as allowing for the projected population growth and anticipated future use of the library facility from South East False Creek. The increase in operating costs of the larger facility will be covered by the budget for the rent the Library is currently paying, thus no additional operating funds will be needed.

Child Development Facility: The City's childcare strategic plan sets out a vision whereby childcare and child development services (e.g., parent/caregiver drop in, parenting programs, family place, etc.) are viewed as a continuum of service integral to healthy child development. Child development programs build on the foundation of childcare, and integrated into a community hub model, provide a range of services to families and children in a coordinated and accessible manner. This child development centre at #1 Kingsway will be the first purpose built child development hub. The space is based on a 49 space licenced childcare centre, however, the configuration of the space will be shaped by a community needs assessment which examines service needs. The Vancouver Public Library has expressed interest in working collaboratively with Social Planning in developing programs with the child development centre to promote early literacy. Co-location with the library provides an excellent opportunity to explore new models.

Opportunities to develop shared programming with the community centre for the purposes of out-of-school child care and/or parent/child drop in programs would also be a significant benefit to co-location.

Attention will need to be given to the elimination of 40 out-of-school child care spaces and 20 preschool spaces serving 80 children at the existing Mount Pleasant site in approximatelythree years time. Out-of-school care, in particular, needs to be located close to a school. Unless the spaces can be replaced with an alternate option such as a satellite program administered by the #1 Kingsway operator, many families with younger school aged children may register their children at another school, move, or seek other options. The Mount Pleasant Child and Youth Committee has been working with Park Board and Social Planning staff to seek alternatives. If funding were available, a satellite program would be very much in keeping with the approach approved in Council's strategic plan for children.

Retail: Planning guidelines for the area stipulate the desire to provide retail at grade. Planning has indicated its interest in the inclusion of retail at grade on the site.

The staff committee has reviewed the context for the development and are not recommending retail for the following reasons:

1. Retail space provided in a recent development immediately south of 8th Avenue on Kingsway has performed weakly or been vacant for several years indicating little or no market interest along Kingsway.
2. Retail would be better focussed along Broadway and on Main Street.
3. The design of the new development can provide for animation and interest along Kingsway in lieu of retail use.

Housing: The feasibility study undertaken by the consultant included a detailed financial analysis to determine the viability of developing housing with the remaining and unused floor area available (73,374 SF) after fulfilling the space requirements of the Library, Community Centre and Childcare.

Financial analysis was undertaken to study only the addition of the Housing component as retail was not considered appropriate (see earlier commentary in report). A number of development scenarios have been studied ranging from full optimization of the 73,374 SF to a less dense development of 55,000 SF. The rationale for considering the different project massing options was based on assumptions pertaining to Planning approval, anticipated community reaction to project scale, and overall timing issues for obtaining final development approvals.

The conclusions from this financial analysis (Figure 1 - Appendix "B") suggest the best scenario to pursue in order to maximize development efficiencies, and return on investment, is to build the largest housing component possible, and that a minimum of 55,000 SF should be considered. The staff committee will work closely with Planning in reviewing options which would optimize the development potential, particularly as the remaining potential would be taken up with new housing.

Market Rental vs. Subsidized Rental Housing: Staff analyzed opportunities to createaffordable housing in the development including fully-subsidized non-market housing, seniors housing, and subsidized rental housing. As no new allocation of social housing units are expected to be made by the provincial government other than for assisted living, the analysis focused on seniors housing and subsidized housing opportunities. The preferred alternative was to examine having the City subsidize the total cost of the Housing component to ascertain what subsidy amount that would be required to maintain a reasonable project return to the PEF and commensurately provide housing based on Core Need Income Thresholds (CNIT).

The non-subsidized market rental scenario assumes that renters can pay an average of $1.48 per square foot per month for their accommodations. Smaller units in the development would command lower rents of approximately $1.35-$1.40 per square foot per month while larger units would command a proportionately higher rent of approximately $1.55-$1.70 per square foot per month. These rates are consistent with the current market and are generally believed to be conservative estimates. Rental cash flow from a possible 73,374 SF project is indicated in Figure 2 - Appendix "B."

Staff further considered Core Need Income Thresholds and what subsidy amounts would be required to deliver maximum deep CNIT housing.

The Housing Centre is of the view that not all suites should be subsidized, and perhaps 2/3 of the housing should remain market with 1/3 of the units accommodating core-need households who would pay 30 percent of their gross income on rent. Assuming the City was agreeable to providing housing subsidies on an ability to pay (at 30% of monthly income) provided the Housing capitalization rate of 6.04 percent was maintained, the City would have to "buy down" the Housing cost by approximately $1,850,000. Refer to Figure 3 - Appendix "B."

This scenario would permit the City to provide affordable housing for approximately 31 core-need households with subsidy amounts ranging from $187 to $782 per month.

The Director of the Housing Centre believes that in view of changes within BC Housing, elimination of the BC Homes program and refocus of the province's funding toward a seniors assisting living program, that the City will need to carefully assess its approach in providing housing for low-income individuals and families. Any funds available for subsidized housing may be better spent on another site where the benefits of a 60-year lease could be better exploited for a larger number of units. It is appropriate to proceed with this project as a fully market rental development and address the possibility of including some form of subsidy in 2003. At that time, the Housing Centre will bring forward a report to Council on alternatives for achieving affordable housing in the city. It may be possible with new funding mechanisms from the Province, or the Federal Government, to include an affordable housing component with this project. In the meantime, Housing Centre staff will work with other Citystaff in moving this project forward in a timely manner.

Staff also considered the merits of a Public Private Partnership and determined that to create separate ownership of the residential development, an air space parcel and strata plan would need to be incorporated into the development. The challenges of balancing the interests of a separate strata corporation with the interests of the Library, Community Centre and Childcare proved difficult and potentially problematic and a consensus was reached that it was better to have the entire project planned, developed, and managed entirely in-house by the City. Issues pertaining to the future expansion of the Community Centre and/or Library, use, open space, loading, building efficiencies, and common areas and facilities could be resolved easier by containing such issues to departments within the City.

Assessment of Purchasing Adjacent Property: An assessment was also made of purchasing the adjacent property, Lot C, Block 43, District Lot 200A, Land District 36, Plan 17398 (see Appendix A), and consolidating it with the City-owned site together with the lane segregating the properties. The architect prepared several development scenarios for this option and staff concluded the following:

1. The soil integrity of Lot C, particularly the south east corner, was problematic and would cost proportionately more money to address than development on the City site.
2. The total development potential of the combined site, including the lane would be approximately 265,587 SF. After concluding that the project mandate was really to build a new Community Centre, Library, and Childcare that would total 55,000 SF, the scale of the project would no longer be in line with the mandate. The increase in Lot C's property value that could be expected under this scenario, even if the City did not build out the full development potential of the site itself and sold the development site to a private developer, would not be worth the economic risk or delays that would be encountered.
3. Staff determined that the lane area in the middle of the consolidation was not entirely owned by the City. The lane is not entirely designated as such and is actually made up a number of separate lots. As the lane is made up of separate lots, the Land Title Office issued individual titled parcels under private ownership. Individuals own eight portions of the lane and the registrations date back to the early 1900's. To include the lane in the consolidation, the City would have to undertake a very time consuming and difficult exercise in genealogy to locate the estates of the original owners - - a process that the City was not excited to undertake. In summary, the City would not legally be able to consolidate the lane with the City site at this time.

ESTIMATE OF COSTS AND FUNDING SOURCE

On the basis of the minimum areas proposed for the various uses the estimate of costs and proposed funding source are as follows:

Functional Component	Area (sq. ft)	Cost	Funding Source
Sustainable Building Pilot Project		$175,000	2003 - 2005 Capital Plan
Mt Pleasant Community Centre	31,600	5,750,000 1,150,000 2,000,000	2000 - 2002 Capital Plan 2003 - 2005 Capital Plan SE False Creek CACs
Mt Pleasant Library	12,000	200,000 4,850,000	2000 - 2002 Capital Plan 2003 - 2005 Capital Plan
Childcare	6,800	1,050,000 1,300,000	2003 - 2005 Capital Plan City-wide DCLs
Market Rental Housing *	55,000	9,870,000	Property Endowment Fund
Total	105,400	$26,345,000

* Minimum area assumed.

PROJECT IMPLEMENTATION

This project if approved will be implemented under the City's standard procedure for joint-use projects. A working committee comprising representatives from Parks, Library, Facility Development, Real Estate Services, Childcare and the Housing Centre under the management of the Director, Facility Design & Management will be created to implement the project. The process will also include an opportunity for stakeholder groups to participate. An architect with the experience in the components of the project being proposed will be selected from an open expression of interest call and consultants will be selected as required once funding has been approved. High level issues will be reported through a steering committee comprising the General Manager Corporate Services, General Manager, Parks, Deputy City Manager, and Director of Vancouver Public Library.

Design will be organized so as to maximize cost savings that typically are realized in such joint-use projects from sharing of services and common areas where appropriate and Green Building design principles will be incorporated in the project as a pilot project to ascertain life cycle costs.

CONCLUSIONS

The City-owned #1 Kingsway site, with a total developed potential of approximately 132,300 SF is ideal to accommodate a Branch Library (12,000 SF), Community Centre (31,650 SF), Childcare (6,577 SF indoor and 6,512 SF outdoor), and housing (73,374 SF). From the study Staff concluded that:

· The return on purchasing the neighbouring site and investing in a consolidated site comprising the City site, neighbouring non-City-owned site and the lane did not justify the risk involved, thus the City should limit its development to its own site. Also the lane between the two sites will add complications to consolidating two sites since the City does not own the entire lane.

· Any funds available for subsidized housing would be better spent on another site where the benefits of a 60-year lease could be better exploited for a larger number of people.

· As no new allocation of social housing units are expected consideration of social housing is not feasible at this time.

· Until the permissible height and FSR are determined at the development permit stage, the Director of Real Estate Services has set the minimum acceptable market housing development at 55,000 SF with a desire to maximize development at 73,400 SF.

· The likelihood of retail space fronting Kingsway being economically viable would be minimal at best, given experiences on an adjacent site; the design of the library and community centre can provide for the necessary interaction with the sidewalk.

· Strata titled property built over civic space may lead to future difficulties when changes to the civic spaces are proposed, thus the City should maintain ownership of the total development.

· Economies of scale in the allocation of costs, particularly land costs, will be realized in a larger joint-use civic project.

· Should a City-subsidized housing component be considered, $2.0 million grant will be required in order to provide a reasonable return (6.04%) on PEF investment.

- - - -

Appendix A - Map

Figure 1 - Housing Massing Options

Figure 2 - Rental Cash Flow for 73,374 SF Project

Gross income to the City from the market housing component based on this scenario would be approximately $1,150,000, representing an annual return of 6.04%.

Figure 3 - Grant Amount to Subsidize Cost of Housing at 30% of Monthly Rent

- Assumed Rent Payable

Unit Type	CNIT	Deep CNIT (CNIT × 0.7)	Rent Payable (30% of income/monthly
Bach	$25,000	$17,500	$437.50
1 bdrm	$28,500	$19,950	$498.75
2 bdrm	$35,000	$24,500	$612.50
3 bdrm	$41,000	$28,700	$717.50
4+ bdrm	$45,000	$31,500	$787.50

(CNIT = Core Need Income Threshold)

- Grant Amount

Total Annual Subsidy Required:			$167,430
Req'd Gross Income for stabilized NOI			$981,870
Req'd NOI to keep return of		6.04%	$654,318
Net Housing Cost:			$10,833,890
Total Housing Cost:			$12,681,302
Total Construction Buy Down Required:			$1,847,412
- Rent Subsidy:
			(All units designed to Market Size standards - (ie: non-MUP))				Tenant can afford			Req'd Monthly Subsidy
		Unit Size	No. Mkt Units	# Subsidized Units	$ Month per Mkt Unit	$ Month per Mkt sq.ft.	$ Month per Sub Unit	$ Month per Sub sq.ft.	Net Floor Area	per suite
Bachelor		445	7	4	$625	$1.40	$437.50	$0.98	4,895	$187.50
One Bedroom		560	16	8	$750	$1.34	$498.75	$0.89	13,440	$251.25
One Bedroom/Den		650	0	0	$900	$1.38	$555.63	$0.85	0	$344.38
Two Bedroom		775	31	15	$1,150	$1.48	$612.50	$0.79	35,650	$537.50
Two Bedroom/Den		840	0	0	$1,300	$1.55	$665.00	$0.79	0	$635.00
Three Bedroom		882	8	4	$1,500	$1.70	$717.50	$0.81	10,584	$782.50
Total	93		62	31					64,569

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