POLICY REPORT

URBAN STRUCTURE

Date: November 7, 1997

Dept. File No. JF

CC File No. 1755

TO: Standing Committee on Planning and Environment

FROM:Director of Central Area Planning, in consultation with Director of Finance, Manager of Housing Centre, Director of Legal Services, Director of Social Planning, and General Manager of Parks and Recreation

SUBJECT:Implementation of a Development Cost Levy By-law in Triangle West

RECOMMENDATION

A.THAT the area of Downtown Vancouver shown in Figure 1 be established as a Development Cost Levy (DCL) District and that the policies in Appendix A be adopted to guide administration of DCLs in the Triangle West neighbourhood;

B.THAT the 1997 rate for collection of Development Cost Levies (DCLs) be set at $100.75 per square metre ($9.36 per square foot) buildable, not to exceed 10 percent of the building permit value, for all uses, except those uses identified for reductions and exemptions;

C.THAT the levy proceeds be spent in proportions as follows:

(i) 53% for park acquisition and development;

(ii) 33% for replacement housing; and

(iii) 14% for daycare;

D. THAT the Triangle West DLC By-law Administration Policies (Appendix A) be amended to reflect Council’s decision in Recommendation C;

E.THAT the Director of Legal Services be instructed to prepare the necessary by-law and report back with the by-law for enactment; and,

F.THAT staff report back on a detailed public benefits strategy for the downtown area (excluding Triangle West and Downtown South), and associated funding arrangements, prior to implementation of capital projects described in this report.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services recommends approval of the foregoing.

COUNCIL POLICY

·530·The Central Area Plan, approved by City Council on December 5, 1991, designated Triangle West as a choice of use area to favour flexibility for buildings to be primarily housing or primarily offices or hotels.·530

·530·On April 24, 1997, Council at a Public Hearing gave first reading to zoning amendments for the Downtown Official Development Plan to implement choice of use zoning for Triangle West and adjacent Alberni Street sites pending a report back on a Development Cost Levy By-law.·530

·530·Since 1989, City Council has required payment of community amenity contributions (CACs) for privately-initiated, site-specific residential rezonings in the Central Area, such as Triangle West. ·530

·530·In 1992, Council adopted the Downtown South DCL By-law and related policies, including the policy "that development cost levies outside the Downtown South be considered as part of area-wide rezonings based on a community plan".·530

·530·In 1994, Council established a DCL District for Burrard Slopes; in 1995, Council established a DCL District for the Arbutus Neighbourhood; and, in 1996, Council established DCL Districts for the Oakridge/Langara and Wall Street areas.·530

SUMMARY

Council has given preliminary approval for new zoning for the area in the northwest quadrant of Downtown known as ‘Triangle West’, based upon the Central Area Plan. This zoning will allow an owner to choose between residential and non-residential uses, therefore increasing the density allowance for housing.

This report presents a preliminary public benefits strategy for the area, and a basic framework for funding public benefits required by the new resident population in Triangle West.

The recommended approach applies anticipated funds from DCLs and those already collected by CACs, in concert with the direct provision of services by developers, to ensure that new development pays its fair-share toward public benefits needed by the new population.

Analysis of infrastructure upgrades needed for water, sewer, and streets concludes that these will be achieved at the time of new construction, and as a result, they have not been included in the proposed DCL allocation. The proposed DCL boundary, which includes Triangle West and the adjacent Alberni Street sites, is shown in Figure 1.

Staff recommend a general DCL rate of $100.75/ m² ($9.36/ sq. ft.) of floorspace with a reduced rate of $5.49/ m² ($ .51/ sq. ft.) of floorspace for daycare. This could result in the collection of about $12,992,000 in DCL contributions as the area develops. The estimated cost of identified public benefit items is approximately $30,435,000, far exceeding the total funds that could be collected by DCLs. Staff also note that through past and ongoing rezonings, direct provision of amenities and CACs will result in the collection of an additional $8,000,000 of cash or on-site benefits for a total of $19,104,000, which is still well short of the $30,435,000 required. Additional funding from future Capital Plans, or other sources, will be needed to cover the costs of the identified public benefits. A future report could provide various funding options as part of a detailed Public Benefits Strategy for the Downtown.

Property owners in the area and interested parties have been notified of the recommended approach and were advised they may address Council Committee as delegations.

PURPOSE

This report recommends establishing a Development Cost Levy District to provide funding for required public amenities and replacement housing for the Triangle West area and adjacent properties along Alberni Street (Figure 1). The report also outlines a preliminary strategy for the allocation of funds.

Figure 1: Recommended DCL Area Boundary

Figure 1

Please note the following properties are included in the ‘Triangle West’ boundary:

(a)1201 West Hastings Street - site at NW corner of Bute and Hastings Street, currently vacant.

(b)701 Bute Street - L-shaped site on Alberni Street between Bute and Jervis Streets (Pacific Palisades).

(c)1000 and 1100 Blocks Alberni Street - two adjacent blocks on the south side of Alberni Street identified in the report for zoning changes in the area.

BACKGROUND

1. Planning in Triangle West

The area now called ‘Triangle West’ is located west of Bute Street and south of Coal Harbour, at the western end of the Central Business District. It has developed with a mixture of offices and apartments and, most recently, high density residential towers achieved through CD-1 rezonings. In 1990, Council endorsed a program to develop a coherent plan for Triangle West.

The 1992 "Triangle West Profile" completed the first stage of planning for the area, providing an overview of development potential in Triangle West and issues to be resolved.

In 1993, a Triangle West progress report laid out the next stages of work as follows:

1.Implement zoning changes to reflect Central Area Plan policy for‘Choice of Use’ in the area, with an emphasis on housing.

2.Develop a public amenities plan and a corresponding Development Cost Levy By-law.

3. Complete a plan for the public realm.

In 1995, Council approved the streetscape concept plan for the Triangle West neighbourhood, which established an overall public realm concept with guidelines for future development. In the absence of a DCL by-law, staff were instructed to continue to negotiateCACs as part of individual residential rezonings until zoning amendments were completed.

In April 1997, Council approved zoning changes at a Public Hearing to implement the ‘Choice of Use’ concept along with other policies for housing in the Central Business District. Enactment of this zoning is pending.

If the zoning is enacted, higher residential densities will be achievable in these areas without rezoning. Fewer rezonings are likely to occur, which will result in fewer opportunities to collect CACs.

The Alberni Street properties between Burrard and Bute Streets adjacent to the Triangle West area, are also proposed as‘Choice of Use’ sites. Residential densities are being increased here as well, with significant development potential being the result. Staff will report back to ensure the few miscellaneous isolated sites in other ‘Choice of Use’ areas will be included in the Downtown South DCL By-law. This may have an impact on the amenity requirements and the DCL for Downtown South.

2. Development Cost Levies Authority

Section 523D of the Vancouver Charter provides Council with the authority to impose DCLs where it is determined "that development anticipated to take place in an area designated by Council will contribute to the need to provide one or more capital projects in the area." These capital projects are detailed in Appendix B.

3. Community Amenity Contributions (CACs) and Development Cost Levies (DCLs)

There are some differences between CACs and DCLs. CACs may be accepted from individual CD-1 rezonings, may vary in amount, be spent where Council specifies, and be used to fund any public amenity. DCLs, on the other hand, are collected from all developments inside a designated area at set rates specified in a by-law for the area. DCLs can be spent on park land purchase and development, daycare property acquisition and facility construction, and replacement housing, all of which are anticipated needs in Triangle West. While DCLs can also be applied to constructing, altering, expanding, or replacing sewage, water, drainage, and highway facilities, the normal practice is to require individual developments to fund these services.

DISCUSSION

1. Evolving Trends in Triangle West

Most of the recent developments in Triangle West have been high-density residential towers achieved through CD-1 rezoning. It is reasonable to assume this trend will continue, along with some hotel development. Therefore, analysis of projected community amenity requirements and associated costs for Triangle West were based on 75% residential and 25% commercial buildout for available sites. However, it should be noted that in the event new office or hotel development is built, it is expected that commercial development, including hotels, will create demands for public services similar to residential development and should be charged the same rate (studies on this topic are listed in Appendix C and are on file with the City Clerk).

2. Public Benefit Demands

There are about 1500 residents (1996 Census) in the Triangle West neighbourhood. Approximately 1800 additional residents are projected, based on the development potential over a 20-year period. There are currently about 6300 employees and this number is expected to increase to about 7700.

Using the City’s established standards as optimal goals, this additional population would require:

·530·1 Class ‘C’ group daycare and out-of-school care facility·530

·530·2.0 ha(5.0 ac.) of park land; i.e., 2.75 ac./1000 population and $15/ sq. ft. for park development; and·530

·530·131 units of replacement housing.·530

Note Further details on the projections and community amenity requirements are included in Appendix B.

When reviewing the requirements and related costs for Triangle West, staff considered what would be achievable, given the limited number of potential development sites in the area, and the high cost of land.

The daycare and replacement housing requirements can be achieved according to established City standards and market conditions.

Staff recognized that of the 2.0 ha (5.0 ac.) of park land required, only 0.48 ha (1.18 ac.) of park space could likely be provided. Due to the high cost of land (5.0 acres = $75 million +) and the limited number of potential sites, it would be impractical to try to secure the fullamount of park space. Instead, staff will focus on acquiring targeted sites: one larger site located south of West Georgia; and, one or two smaller sites for "mini-parks". This strategy would complement other public realm improvements in Triangle West and nearby waterfront parks planned in Coal Harbour. Park Board staff concur with this strategy.

3 Public Benefit Costs

In total, the estimated costs of the identified public benefits are as outlined in Table 1 on the next page (details in Appendix B). These costs include the estimates for the 0.48 ha (1.18 ac.) of park space that can be achieved rather than the 2.0 ha (5.0 ac.) of park space that City standards suggest.

Table 1. Service Requirement and Cost of Capital Projects

	SERVICE REQ’T	CAPITAL COST	PRO-RATA SHARE
Park land and development	0.48 ha (1.18 ac.)	$16,231,000	53%
Replacement housing	131 units	$10,128,000	33%
Daycare	1 daycare/out-of-school care facility	$ 4,076,000	14%
TOTALS		$30,435,000	100%

4. Potential DCL Funds

The only other DCL district in the downtown area is in Downtown South, where a $6.18/sq. ft. levy applies to all uses except daycare (which has a $0.51/ sq. ft.. rate). Outside Downtown, DCL districts have been established in the Arbutus, Oakridge/Langara, Burrard Slopes, and Wall Street neighbourhoods.

Each district rate differs depending on that neighbourhoods’ needs and the cost of land. For example, the current cost of land in Downtown South is about $33.00 per square foot of buildable floorspace, and the current cost of land in Triangle West is about $50.00 per square foot of buildable floorspace. Based on the higher land costs, the public benefit needs for the area, and the associated capital costs, staff have determined a DCL rate of $100.75/ m²($9.36/ sq. ft.) for all new development in Triangle West is necessary. The net effects to land values of the different rates applied to Downtown South and Triangle West respectively are about the same.

The potential DCL funds over a 20-year buildout (based on a projection of an additional 1,388,000 sq. ft. of space) are approximately $12,992,000, well below the $30,435,000 cost estimated for DCL fundable projects outlined above. These DCL fundable items are only a portion of the amenities that will be needed in the area. There are other amenities(capital projects) for which demand will be generated by Triangle West residents that currently cannot be funded by DCLs under Vancouver Charter authority, including: schools, streetscape improvements, libraries, community centre facilities, and the historic Streetcar line being planned for the downtown peninsula.

Council should be aware that $12.9 million is projected as a reasonable DCL total over the next 20 years. The actual amount could be slightly higher or lower, depending on the extent of redevelopment in Triangle West. The amounts available for capital projects could be higher or lower as well. The percentage allocations can be based on a simple pro-rata share as illustrated in Table 1 or on other methods decided by Council. Once decided by Council, the allocations will form the basis for the long-term expenditure of DCLs in Triangle West.

5. Other Funding - CAC’s/Capital Funds

Community Amenity Contributions currently total $5,939,150 with a potential for $8,000,000. Council has allocated $4,430,670 from the CACs collected in the "Triangle West" area to fund the City’s share of the capital cost of the Coal Harbour Community Centre, including pre-built parking for the adjacent social housing. The balance of the CACs could be applied to meet funding shortfalls for any or all of the capital projects identified above. These funds could be allocated in future when a Public Benefit Strategy for the entire downtown is completed or could be used when needed as deemed by Council. Even if Council decided to allocate all of the CACs to parks, housing, and daycare in Triangle West, there will still be shortfalls for these items. Council should therefore expect to contribute at least $13,874,000 from the future capital plans or other funding sources to supplement the external funding sources if these targets are to be met. This is consistent with the legislative requirement that the City contributes a portion of the capital costs for required public benefits.

6. Payment of Development Cost Levies

Three high-density residential projects are in various stages of the rezoning or permit process. Currently, residential projects in Triangle West contribute a CAC of $6.18/sq. ft. upon rezoning. Developments which receive building permits prior to enactment of the DCL By-law will be exempted from paying a Development Cost Levy. Projects without building permits and which will not likely receive them prior to DCL By-law enactment, will be charged DCLs and are included in the analysis in this report. Since some of these projects have already paid a CAC, Council may consider reimbursing the amount of the CAC. There are probably only one or two projects like this which may not receive building permits prior to a DCL By-law enactment. If this occurs, staff will report to Council for direction.

A person applying for a building permit may, as an alternative to paying the development cost levy at the time the building permit is issued, pay $100.00 at the time the building permit is issued and, as a condition of the issuance of the building permit, post an irrevocable and unconditional letter of credit for the balance of the amount of the development cost levy, together with an amount equal to one year’s interest thereon at a rate that is two percent above the prime rate charged by the Bank of Montreal on the day the application for the building permit is made.

7. Impact on Development

With respect to development economics, it is assumed that project profits will remain at a relatively constant level, absorbing additional cost by lowered land values or increased unit sale prices or, more probably, a mix of both.

The increase in DCLs of $3.18/ sq. ft.. above the level of CACs could have a marginal impact and result in fewer projects being undertaken while the development economics take time to adjust. For instance, commercial development of recently purchased properties may be delayed marginally until prices rise enough so that revenues would cover all, or most, of the DCL costs.

However, properties that were purchased several years ago at lower prices will not be significantly affected. In addition, it is reasonable to assume that with a limited number of development sites and a high demand for the residential units in the area, establishing DCLs at $9.36/ sq. ft.. would not delay housing development.

8. Allocations of DCL Proceeds

A detailed area-wide assessment of the public benefit needs has been done leading to the calculation of appropriate DCL rates for Triangle West. While this area can be included ina comprehensive public benefit strategy for the entire Downtown District, it is unlikely there will be any change to the projected uses and densities now allowed. In any case, Council can amend the DCL By-law in the future if required.

Before a DCL By-law can be enacted, Council is required to decide how DCL proceeds from Triangle West will be spent. Council’s decision must be expressed as a percentage of the proceeds (anticipated to be over $12.9 million) allocated to identified capital projects fundable by the levy (park land acquisition and development, replacement housing, and daycare facilities). Staff propose an option for allocation in proportion to the costs of the levy projects outlined in Table 1 on Page 8 (details of costs are in Appendix B).

Once the allocations are set, Council would still have the flexibility to change the percentages in the future. This need to re-allocate could occur if alternative funding for the capital projects became available from the federal or provincial governments, or if the cost of providing the capital projects are significantly different than estimated.

Accounts will be established for contribution to daycare, housing and parks. This will ensure that each type of amenity receives it’s fair share of DCL proceeds. There will be flexibility to "borrow" from different accounts to fund amenities which can be acquired earlier; however, staff recommend these actions require Council approval.

SOCIAL IMPLICATIONS

If Council chooses to establish a DCL District in Triangle West, it will aid in the provision of parks, daycare, and replacement housing, coordinated as much as possible with residential growth. Alternatively, except for CAC’s, these amenities await funding through existing capital programs, in competition with many other longer outstanding demands throughout the City.

PERSONNEL IMPLICATIONS

There will be no additional staffing requirements.

PUBLIC COMMENTS

A newsletter has been sent to all property and business owners within Triangle West about this report. Any correspondence will be placed on file at City Clerk’s and people who may wish to address Council directly on the proposal have been informed they can do so in writing or as a delegation at committee.

CONCLUSION

In Triangle West, the costs of the capital projects for required public benefits caused by the anticipated development far exceed the potential DCL funds. In these circumstances, DCLs can be justified under Vancouver Charter authority.

The Director of Central Area Planning is of the opinion that with DCLs, employees and residents would benefit from improved area amenities. As well, a higher amenity level could arguably benefit market interests as land values increase and it becomes easier to market residential or commercial floorspace.

Staff therefore recommend that Council establish the area as a DCL District and instruct staff to complete implementation in the normal manner.

* * * * *

APPENDIX A

SUMMARY OF DCL POLICIES FOR TRIANGLE WEST

DEVELOPMENT LEVY DISTRICT

(a) The boundaries of the Development Cost Levy District should be as illustrated below.

Figure 1. Recommended DCL Area Boundary

RATES

(b) DCLs will be collected at a rate of $100.75/ m² ( $9.36/ sq. ft..).

RATE ADJUSTMENTS

(c) Review rates annually with other Development Levy rates in the City and make rate adjustments based on this review.

REDUCED RATES

(d) Establish a rate of $5.49/ m² ( $0.51/ sq. ft..) for daycare.

EXEMPTIONS

(e)Exempt renovations defined as "changes to an existing building not involving additional floor space", except in cases where the renovations involve the conversion of non-residential use to residential use.

(f)Exempt social housing defined as "housing which is built on land owned by the Federal, Provincial, or City government, cooperative housing group or non-profit society and which is in receipt of government shelter subsidy where at least 30% of the units are occupied by core need residents".

(g)Exempt buildings which will contain three or fewer dwelling units which are put to no use other than residential.

(h)Exempt churches which have tax-exempt status.

SECURING PAYMENT

(h)Permit payment of DCLs by instalment, with $100 due prior to issuance of a building permit, the remainder due upon issuance of an occupancy permit, to be secured by an irrevocable letter of credit.

SPENDING OF PROCEEDS

(i)Require that DCL proceeds be spent within the levy district so that they benefit levied projects directly or indirectly.

RECONCILING DCLs WITH ON-SITE PROVISION OF PROJECTS

(j)Where capital projects funded by DCLs are provided on-site as part of a rezoning or development application, this should be on prior approval of City Council and should not be in lieu of payment of DCLs.

(k)Where DCL contributions are provided "in-kind" on-site, and funded in whole or in part by the application or owner of the site, the City will reimburse the applicant or owner for the cost out of the DCLs paid.

(l)In rezonings where CACs are negotiated, in-cash or in-kind, these will not be reimbursable against DCL contributions. However, in rezonings that have occurred prior to enactment of this by-law, projects that provide both CACs and DCLs will have the CACs reimbursed.

APPENDIX B

TRIANGLE WEST AREA

PRELIMINARY PUBLIC BENEFIT REQUIREMENTS AND COSTS

Note: Planning, architectural, engineering, legal costs, and interest on debt incurred have not been included in cost estimates.

Assumptions:

·530·redevelopment densities are based on a 6.0 FSR which is max. allowable FSR under DD zoning ( existing and proposed choice of use )·530

·530·all sites could redevelop, except for those containing relatively new, high-density residential or commercial buildings, heritage buildings, or good condition, older high-density buildings; that is, buildings which have an FSR of 4.0 or greater·530

·530·while heritage buildings will presumably remain, their development potential isincluded in the build-out estimates ( the difference between existing heritage floor area and 6.0 FSR)·530

·530·potential heritage bonuses are not included·530

·530·developments under construction or in the rezoning/DA process are not included·530

(I)Total Additional Potential Population

Total development potential: 1,388,042 sq. ft.

Residential potential at 75% build-out: 1,041,032 sq. ft..

Commercial potential at 25% build-out: 347,011 sq. ft..

The development potential figure translates into about 1,041 residential units. This is based on an average of 850 sq. ft. per unit and includes an efficiency allowance of 15%.

Based on 1986 and 1991 Census data which provides an average estimate of 1.75 for average no. people/unit, there is a potential for an additional 1822 residents in the area. Combined with existing population estimates, the total residential population would be approximately 3322 residents assuming 100% buildout as residential.

Estimated number of children aged 0-18 years is 182 (assume 10% of total new residents).

Estimated number of children aged 0-5 years is 61 (_ of total children).

Estimated number of children aged 6-12 years is 61 (_ of total children).

Estimated number of children aged 13-18 years is 61 (_ of total children).

(II) Community Amenity Requirements

(a) Childcare

(i) Daycare ( Residential)

- 61 pre-schoolers

x.68 labour participation

x.72 daycare participation

= 30 daycare spaces

(ii) Daycare (Commercial)

-347,011 sq. ft.. commercial space

-1 daycare space required for every 23,400 sq. ft.. of commercial space

-347,011 ÷ 23,400 = 15 daycare spaces

-45 spaces = 4600 sq. ft.. indoor daycare space and 5600 sq. ft.. outdoor space

total = 10,200.00 sq. ft.. daycare site with facility

= 1 Class ‘C’ daycare facility

(b) Park and Public Open Space and Park Development

-5.0 acres required (1822 x 2.75 ac./1000 people)

(c) Replacement Housing

-131 rental units would qualify as ‘replacement housing’(number of units in which displaced residents will not be able to afford comparable accommodation in the area)

(III) Community Amenity Costs

(a) Daycare Facility

- land and facility = $4,076,000.00

Daycare Total: $4,076,000.00

(b) Park and Public Open Space (based on achievable target)

-1.18 acres x $300.00/ sq. ft.. = $15,458,000.00 (land)

-1.18 acres x $15.00/ sq. ft.. = $773,000.00 (park development)

Park Total: $16,231,000.00

(c) Replacement Housing

-131 units

- market rent = $1218

- existing rent = 767

subsidy (451)

- $451 x 131 x 12 months = $708,972/year

- 708,972 @ 7% capital rate = Housing Total: $10,128,000.00

TOTAL COSTS: $30,435,000.00

(IV) Funding For Amenities

(a) Funds collected through CACs

to date = $5,939,150.00

Potential funds through CACs = $8,000,000.00

Minus funds allocated to

Coal Harbour Community Centre = $4,431,000.00 Future CAC Total: $ 3,569,000.00

(b) Potential funds through DCLs = $12,992,000.00

@ $100.75/ m² ($9.36/ sq. ft..)

Future DCL Total: $12,992,000.00

TOTAL CONTRIBUTIONS: $16,561,000.00

(V) Funding Shortfall

$13,874,000.00

APPENDIX C

REFERENCES:

City of Vancouver, Planning Department. (1993) Park User Survey. Vancouver: City of Vancouver.

City of Vancouver, Planning Department. (1997) Hotels-Background to a Public Amenities Strategy in the Downtown Areas.

Vancouver: City of Vancouver.

Tully, Barbara. (1991) Development Cost Levies: An Analysis of Park Levies on Commercial Floorspace(In the City of Vancouver). Vancouver: City of Vancouver.

* * * * *

(c) 1997 City of Vancouver