Agenda Index City of Vancouver

POLICY REPORT
DEVELOPMENT AND BUILDING

TO:

Vancouver City Council

FROM:

Director of the Housing Centre and Director of Current Planning

SUBJECT:

Development of 1299 W. Hastings and Text Amendments to Coal Harbour ODP and Harbour Green CD-1 (Bylaw No. 7681)

 

RECOMMENDATION

GENERAL MANAGER’S COMMENTS

CITY MANAGER’S COMMENTS

COUNCIL POLICY

Non-Market Housing

Council requires that 20% of the units in major projects be designated for non-market housing, with a priority for core-need households, and requires that the non-market housing sites be made available at a price that allows the projects to be developed within the maximum budgets established by senior government non-market housing programs. At least half of the non-market housing units must be designed and developed for families. The 20% policy has been relaxed for major projects where economic feasibility or other public priorities do not permit the full 20% non-market housing requirement to be achieved.

Council policy is to consider affordable housing proposals not subsidized through senior government programs, or payment-in-lieu, for non-market sites that were submitted for senior government funding and did not receive it, or if there is little likelihood of funding forthcoming. The zoning for the major projects allows Council to define non-market housing and approve such housing initiatives as circumstances require.

Development Cost Levies

The City charges Development Cost Levies (DCLs) to pay a portion of the costs of providing services to new development. DCLs are used to fund parks, childcare, street works and replacement housing. The Emerging Neighbourhood Fund finances projects that serve new development in advance of DCLs being collected.

PURPOSE AND SUMMARY

This report seeks Council approval for the development of the non-market housing site in the Harbour Green neighbourhood of Canadian Pacific’s Coal Harbour Development. The site would be developed for 284 units of non-market housing, with 113 family units to be funded under BC Housing’s Homes BC program and 171 units for singles and couples to be financed by BC Housing with $4,333,000 in equity from the City. The City’s equity would be provided by the Emerging Neighbourhoods Fund which would be reimbursed from the Triangle West DCLs allocated to replacement housing, and from the future cash flow from the singles and couples units.

The report recommends that minor amendments to the Coal Harbour ODP and to the Harbour Green CD-1 (501 Bute St.), to increase the floor space by 833 m² (8,966 sq. ft.) and reduce the required non-market housing by 8 units be referred to Public Hearing. In addition, the Coal Harbour Arts Complex Contribution Agreement would be amended so that development of the Harbour Green non-market housing site will not require a payment from Canadian Pacific for the Arts Complex.

Figure 1

Coal Harbour

BACKGROUND

In November 1990, Council adopted the Coal Harbour Official Development Plan (By-law No. 6754) for Canadian Pacific’s lands in Coal Harbour. It permits 2,097 units of housing of which 22% must be set aside for non-market housing. Twenty-five percent of all the units and half of all the non-market units must be designed for families. In addition to the base of 2,097 units, the developer is permitted to build 270 rental units.

In November 1996 Council adopted the Comprehensive Development Plan for the Harbour Green neighbourhood of the Coal Harbour development, By-law No. 7681 (CD-1 #364). It permits a maximum of 1,199 units of which 292 must be non-market housing, with at least 110 to be designed for families. A 58,556 sq. ft. site at Jervis and Hastings, defined as Sub-area 1 in the CD-1 by-law, was set aside for the Harbour Green non-market housing, as noted on Figure 1.

On December 12, 1997, Council approved the Development Cost Levy (DCL) by-law for Triangle West. The DCL was set at $9.36 per buildable sq. ft. and is expected to generate $13,000,000 of which 33% ($4,333,000) was allocated to replace the 131 units of affordable rental housing in the area.

On October 7, 1999, Council approved the 1999-2000 City/Province Non-Market Housing Partnership. It identified the non-market housing project in the Harbour Green neighbourhood of Coal Harbour as one of the projects to be funded, with the family component to be funded through Homes BC and the singles and couples components to be funded using City equity raised from the Triangle West DCLs and financing from BC Housing. It was estimated that $4,500,000 in City equity would be required for the project to be viable.

PROPOSED PROJECT

The project proposed for 1299 W. Hastings St. consists of 113 units of family housing and 171 units for singles and couples without children. The family units would occupy 116,322 sq. ft. (10 807 m2) of floor space and the singles and couples units 121,181 sq. ft. (11 258 m2) for a total floor space of 237,503 sq. ft. (22 065 m2). The family units would occupy 31 townhouses and the first 11 floors of a 30 storey tower. The units for the singles and couples units would occupy the top 19 floors of the tower.

The non-profit sponsor of the project would be Affordable Housing Non-Profit Rental Assn. or another of the Affordable Housing group of societies. They would operate both the family and the singles and couples components of the development.

LAND

Canadian Pacific Properties Inc. is the owner of the site. The City has an option to purchase the site at $30 per buildable sq. ft. inflated by CPI from Dec. 1991. The current purchase price based on the June CPI is $35.087 per buildable sq. ft. The City pays 25% of this amount and the remaining 75% is paid through the housing program under which the project is funded. Canadian Pacific has agreed to set the land price at $30/buildable sq. ft., a savings of $1,167,000 to the project. The Option to Purchase allocates 229,400 buildable sq. ft. to the site which, at $30 per buildable sq. ft. equates to $6,882,000. Canadian Pacific has agreed to fix the purchase price of the site at this amount. This is approximately half of the value of the property if it were developed for market condominiums. The purchase price of $6,882,000 is unaffected if additional floor area is approved for the non-market housing as long as the total residential floor space allowed under the Coal Harbour ODP is increased by the same amount.

The City would pay Canadian Pacific $4,398,500 upon Project Commitment from BC Housing, with BC Housing to pay $2,483,500 once the project is complete. The terms and conditions of the purchase are outlined in the Memorandum of Understanding between the City and Canadian Pacific attached as Appendix A.

The City policy is to lease non-market housing sites for 60 years to non-profit housing sponsors. The City (through the PEF) pays 25% of the land cost, as it owns the freehold interest in the site, and the non-market project pays the remaining 75% in return for the 60 year lease. In this case the City would pay $1,720,500 for the freehold interest and the non-market project would pay $5,161,500 for the leasehold interest, with the family component allocated $2,582,180 and the singles and couples component $2,579,320.

FUNDING AND PROGRAM

The funding structure largely determines the program that can be accommodated in non-market housing projects. As the funding for the family component is structured differently than the funding for the singles and couples component of the project, the housing program differs too.

a) Family Component

b) Singles and Couples Component

To ensure the project is viable requires determining the cost of the project, establishing market rents, preparing operating budgets, and projecting the cash flow. Over the past year the price of the site has been established, a market analysis undertaken, the project has been designed, a development permit approved (DE404821), and a firm construction price has been negotiated with Cougar Creek Construction (a member of the VanMaren group of companies). The interest rate will be confirmed prior to Project Commitment. These are the major variables determining the project’s viability.

1) Project Viability

2) Source of Funding

3) Use of Positive Cash Flow

4) Risk

In summary, it is feasible to develop the 171 units for singles and couples by a combination of City equity (from the Triangle West DCLs) and provincial financing. This allows the 113 units of family housing funded by BC Housing to proceed, since the two components have to be developed together. The 171 market units would be market rental for the first years of occupancy but over time internally generated subsidies should be available to allow low and modest income singles and couples to be accommodated.

A Memorandum of Understanding between BC Housing, Affordable and the City setting out the terms and conditions of the proposed development, along with the capital and operating budgets, is attached as Appendix B.

COAL HARBOUR ARTS COMPLEX

As a condition of the City’s approval of the Coal Harbour ODP in 1990, Marathon agreed to provide a site plus $7,000,000 (escalated by CPI) for an Arts Complex to be built at the north foot of Thurlow St. In 1996 Canadian Pacific Properties Inc. (who had taken over Marathon’s interest in Coal Harbour) and the City entered into the Arts Complex Contribution Agreement. The Arts Complex Contribution Agreement requires CPPI to make 4 payments of $1,750,000 each, and allows the City to withhold issuance of building permits on 6 residential lots listed in the agreement until payment is made. Once 4 payments have been made, the covenant would be removed from the remaining lots.

One of the lots (Lot J) for which a payment towards the Arts Complex is required is the non-market housing site in the Harbour Green neighbourhood at 1299 W. Hastings. The Directors of Cultural Affairs and the Housing Centre recommend that the Arts Complex Contribution Agreement be amended to delete Lot J from the list of residential lots for which payments for the Arts Complex are required. It is not necessary to require a payment for the Arts Complex as a condition of issuing the building permit for the non-market housing site, as the restriction would apply to the 5 lots that would remain. As well, it is not customary for contributions for public amenities to be required from non-market housing for which a developer is already making a sizable contribution in terms of reduced land cost.

AMENDMENTS TO COAL HARBOUR ODP AND CD-1 BYLAW No. 7681

Amendments to the Coal Harbour Official Development Plan (CHODP) and to the Harbour Green CD-1 (Bylaw No. 7681) are required because 2- as well as 1- bedroom units are being developed for singles and couples. The original plan was that all the units for singles and couples would be 1-bedroom units. However, as the singles and couples units will rent at market rates for the initial years, the market analysis recommended that some of the singles and couples units be 2-bedroom units. The proposed mix is 38 2-bedroom units and 133 1-bedroom units. The result is 8 fewer non-market units and 833 m² (8,966 sq. ft.) more floor space in the project. This requires a decrease in the minimum percentage of non-market housing and an increase in the maximum residential floor area for the Harbour Green neighbourhood and for Coal Harbour as a whole. The floor space available for market residential uses would remain unchanged; the increase would be for the non-market housing.
The Coal Harbour ODP permits a maximum of 2,045 residential units and 218 084 m² (2,347,513 sq. ft.) of residential floor space (excluding the rental units that could be provided through a rental bonus of 0.24 FSR). Of the 2,045 units, 22% (450) must be developed for non-market housing, of which at least half must be for families. As there will be 8 fewer non-market units but up to 833 m² more floor space developed at 1299 W. Hastings than originally contemplated, the minimum percentage of non-market housing in Coal Harbour needs to be reduced to 21.61%. This would generate 442 non-market housing units. The maximum residential floor space would be increased by 833m2 to 218 917 m² (2,356,480 sq. ft.).

The CD-1 Bylaw for the Harbour Green neighbourhood in Coal Harbour (Bylaw No. 7681 -CD-1 #364), requires that 292 units of non-market housing be provided with at least 110 units for families and the remainder, up to 182 units, for singles and couples. Sub-area 1 was set aside for this non-market housing. The proposed project reduces the total to 284 units; 113 units for families and 171 units for singles and couples. It is proposed to increase the floor space allocated to this sub-area from 21 312 m² (229,408 sq. ft.) to 22 145 m² (238,375 sq. ft.).

The total number of units permitted in the Harbour Green neighbourhood will remain unchanged at 1,199 and in all of Coal Harbour at 2,045. The Harbour Green CD-1 allocated the 1,199 units between 4 sub-areas, one of which is the non-market housing site at 1299 W. Hastings. The 8 units that are no longer going to be developed at 1299 W. Hastings will be relocated to Sub-area 3.

Lastly, it is proposed to amend the parking provisions in the Harbour Green CD-1 as they do not address the parking required for a project with the housing mix proposed here. The amendment would require 1.1 parking space per unit. This would apply to the family and to the singles and couples components. A ratio of 1.1 space per unit is Council policy for family non-market housing, and it is appropriate for the singles and couples component as well since they will be rented at market rates for the initial years of the project.

The proposed amendments to the Coal Harbour ODP and to the Harbour Green CD-1 are set out in Appendix C and summarized in Table 1:

Table 1

 

Current

Proposed

# of Non-Mkt Units in ODP

450

442

# of Non-Mkt Units in CD-1

292

284

% Non-Mkt Units in ODP

22%

21.61%

% Non-Mkt Units in CD-1

24.35%

23.69%

Max res. floor space in ODP

218 084 m²

218 917 m2

Max res. floor space in CD-1

124 800 m²

125 633 m2

Max. Units in Sub-Area 1

292

284

Max. Units in Sub-Area 3

555

563

Max. Res. Floor Space in Sub-Area 1

21 312 m²

22 145 m2

- - - - -

APPENDIX A

Memorandum of Understanding
between
Canadian Pacific Properties Inc. (CPPI) and
the City of Vancouver (the City),
dated for reference January 20, 2000,

in respect of the purchase of Lot J, DL 185 and of the Public Harbour of Burrard Inlet, Plan LMP29893 (the Site), and its development for non-market housing.

Zoning

On November 6, 1990, the City of Vancouver adopted the Coal Harbour Official Development Plan, By-law No. 6754 (CH ODP). The CH ODP as amended permits the development of a maximum of 2,097 units, and a maximum residential floor area of 222,939 m², not including 13,905 m² allocated for 270 additional market rental units.

On November 26, 1996, the City of Vancouver adopted the Comprehensive Development Plan for Phase 3 of CPPI’s Coal Harbour lands, CD-1 (364), By-law No. 7681. This CD-1 permits a maximum 1,199 dwelling units in Phase 3 and a maximum residential floor area of 124,800 m². The CD-1 requires that 292 units of non-market housing (as City Council may define or approve) be developed, with at least 110 of these units to be designed for families.

The Site

The Site is approximately 5,440 m2 (58,558 sq. ft.) in area, and is located in Phase 3 of CPPI’s Coal Harbour lands on the east side of Jervis St. between Hastings St. and Cordova St.

Option to Purchase

As a condition of the rezoning of its Coal Harbour lands, CPPI provided the City with an Option to Purchase for the Site to fulfill the rezoning requirement that at least 292 non-market units be developed in Phase 3. The Option is registered in the Land Title Office under number BK373713. The Option allows the City to purchase the site once funding for a non-market housing development on the site has been committed. The Option requires that 11,000 m² (118,403 sq. ft.) of floor area be allocated by CPPI for the family non-market housing, and requires that 10,312 m² (110,997 sq. ft.) of floor area be allocated by CPPI to the non-family non-market housing for a total of 21,312 m² (229,400 sq. ft.)

Proposed Project

The City and BC Housing have agreed in principle to jointly fund the development of non-market non-profit housing on the Site in 1999/2000.
The proposed project (the Project) would consist of 111 family units with 60% of the households receiving subsidies and 40% paying market rent, and 170 non-family units, all of whom would pay market rents initially. The family and non-family components would be developed as two components of a single project. The mix of unit types, and the total number of units, in the Project may change, but the total will not exceed 292 units.

CPPI is prepared to sell the Site to the City for the Project in fulfilment of its non-market housing obligations in Phase 3 of its Coal Harbour project.

Development Team

Affordable Housing Non-Profit Rental Assn. is the non-profit sponsor who will operate the Project. Van Maren Construction will be the contractor who will develop and build the Project for the Affordable Housing Non-Profit Rental Assn.

Price

CPPI and the City have negotiated a price of $30 per sq. ft. buildable for the Site. The price is based on a total buildable area for the site of 229,400 sq. ft. The total purchase price for the Site would be $6,882,000. It would be paid in two installments. The first installment would be paid by the City to CPPI on closing which shall be not later than 30 days after receipt of project commitment from BC Housing and would total $4,398,500. The second installment would be paid by BC Housing to CPPI on substantial completion of the project and would total $2,483,500.

Text Amendment

CD-1 (364) requires that 292 non-market housing units be developed in Phase 3 of CPPI’s Coal Harbour lands. The Project as proposed now would result in 283 non-market units on the Site. If the number of units finally proposed is less than 292, the City will refer an amendment to the text of CD-1 (364) to Public Hearing, as well as any consequential amendments to the Coal Harbour ODP. The amendment would reduce the required number of non-market units to be developed in Phase 3 to 283 or whatever number less than 292 units. The total number of units that could be developed in Phase 3 would remain at 1,199. The text amendment would increase the number of units that could be built in sub-areas 2 and 3 of Phase 3 by the difference between 292 and the number of non-market units finally proposed (under the currentproposal it would increase the number of units that could be build in sub-areas 2 and 3 of Phase 3 from 907 to 916).

An increase in the floor area of the building of approximately 400 m² is proposed. Any increase in floor area for the building would also require an amendment to the CH ODP and to CD-1 (364). Any increase in the floor area of the building must be additional to the maximum floor area permitted on CPPI’s Coal Harbour and Harbour Green lands. The building must be designed within the envelope permitted by the CD-1 (364) and accompanying guidelines. Any increase in the floor area will not affect the purchase price or increase CPPI’s obligations to provide public amenities in its Coal Harbour development.

The text amendment would have to be heard at Public Hearing prior to the purchase of the site, and if the text amendment is not approved the purchase would not proceed.

Arts Complex Contribution Agreement

As a condition of the rezoning of its Coal Harbour lands, CPPI agreed to contribute $7,000,000, escalated by the Consumer Price Index from May, 1993, for the development of an Arts Complex in Phase 2. The $7,000,000 is to be paid in installments prior to the development of individual lots in Phase 2 or Phase 3. The Arts Complex Contribution Agreement dated Oct. 31, 1996, for Phase 3 requires that the installments of $1,750,000, are to be paid prior to the development of the first 4 “Residential Lots”, including the Site. The Arts Complex Contribution Agreement for Phase 3 will be amended to exclude the Site from the list of Residential Lots that would trigger payment of an installment.

Servicing

CPPI will be responsible for paving the streets and installing the sidewalks and boulevards adjacent the site outside the property line at CPPI’s cost. The contractor for the Project will be responsible and will pay for any curb cuts and driveway crossings.

CPPI will provide telephone and electrical service ducts to the property line of the Site, and will provide natural gas service in the streets adjacent the Site, prior to the commencement of construction of the Project at its cost. The contractor for the Project will be responsible and will pay for connections to the telephone, electrical, and gas services.

CPPI will be responsible for providing water, and storm and sanitary sewers in the streets adjacent the Site and will provide ‘Y’ connections at its cost. The contractor will be responsible and will pay for connecting to the ‘Y’ connections, and forreplacing any of the ‘Y’ connections if the design of the Project requires that they be relocated.

Soil

CPPI has received a Certificate of Compliance from B.C.’s Ministry of Environment, Lands and Parks for the Site. It is dated Dec. 8, 1999, and a copy has been provided to the City.

CPPI will provide the City with copies of all relevant geotechnical or environmental soils reports or assessments prepared for CPPI pertaining to the Site upon approval of this Memorandum of Understanding by CPPI’s Board and by City Council.

Parking

Only parking to serve the Project will be built on the Site. At least 1 parking space per unit will be provided for the Project.

Project Design

Prior to submission for a Development Permit for the Project, CPPI will be given an opportunity to review and comment on the plans. To the extent deemed reasonable by the City, the plans will be revised to reflect CPPI’s comments.

Development Schedule

The development schedule proposed for the Project, which is subject to change, is:

MoU presented to City Council and to CPPI’s Board March 2000
Referral of Text Amendment to Public Hearing by City Council March 2000
Development Permit Application April 2000
Public Hearing for Text Amendment May 2000
Development Permit Approval June 2000
Project Commitment Aug. 2000
Construction Start Sept. 2000
Substantial Completion May 2002

If Project Commitment is not received prior to Dec. 31, 2000, CPPI may cancel the sale of the Site to the City.

Once this Memorandum of Understanding has been signed, it will be presented to Vancouver City Council and to the CPPI’s Board of Directors for approval. No legal rights or obligations shall be created or arise until a modification to the Option to Purchase pertaining to the purchase of the Site and any related legal documentation has been fully executed on terms and conditions satisfactory to the City’s and to CPPI’s solicitors.

____________________________ _________________________
Graeme A. G. Stamp Cameron Gray, Director, Housing Centre
Senior Vice President for the City of Vancouver
Marathon Developments Inc.
as agent for
Canadian Pacific Properties Inc.

_______________ _____________
Date Date

APPENDIX B

Memorandum of Understanding

between
BC Housing Management Commission (BC Housing)
the City of Vancouver (the City), and
the Affordable Housing Non-Profit Rental Association (Affordable)
dated for reference November 30, 2000,

in respect to the development of 1299 W. Hastings, Lot J, DL 185 and of the public harbour of Burrard Inlet, Plan LMP 29893, (the Site) for non-market housing.

The Site

The Site is approximately 5 440 m² (58,556 ft²) in area. It is located in Canadian Pacific Properties Ltd.’s (CPP) Coal Harbour Development on the east side of Jervis St. between Hastings St. and Cordova St. The City holds an Option to Purchase the Site for non-market housing registered in the Land Title Office under number BK373713.

City/CPP Memorandum of Understanding

The City and CPP have signed a Memorandum of Understanding (the City/CPP MoU) dated January 20, 2000, which is Appendix A to this Memorandum of Understanding. It sets out the price and other terms of the City’s purchase of the Site, the amendments to the zoning for the site required by the proposed development, servicing requirements and soil remediation, among other matters. The City/CPP MoU has been approved by CPP’s Board of Directors and is subject to the approval of City Council.

The terms and conditions for the purchase of the Site by the City and its subsequent development set out in the CPP/City MoU are acceptable to BC Housing and Affordable.

The Project

It is proposed that the Site be developed with 284 units of housing (the Project). The Project will consist of two components: a family component of 113 units (68 2-bedroom, 39 3-bedroom and 6 4-bedroom units) with a total floor area of 130,886 ft², and a component of 171 units serving singles and couples (133 1-bedroom units and 38 2-bedroom units) with a total floor area of 130,741 ft². The total floor space for the Project is 261,627 sq. ft. Based on the City’s Development Permit calculations, which exclude amenity space, storage, etc., the total floor space is 237,503 sq. ft.

There will be 312 underground parking spaces developed on the Site as part of the Project. One parking space will be assigned to each unit of both the family and the singles and couples components. The 28 visitor parking spaces will be shared by the two components.

The design of the Project will conform to the zoning for the site as set out in CD-1 (364), By-law No. 7681, and the design guidelines for CD-1 (364), as may be amended by City Council.

The Project will consist of 31 townhouses (wood frame construction) in two wings on either side of a 253 unit 30 storey tower (concrete construction). The family component will occupy the townhouses and the lower 11 floors of the tower, and the singles and couples component the upper 19 floors of the tower.

Sponsor

Affordable Housing Non-Profit Rental Assn. or one of the Affordable Housing Societies will be the sponsor and operator of the Project.

Developer/Builder

Cougar Creek Construction, a member of the Van Maren group of companies, will be the developer and builder of the Project.

Architect

Davidson Yuen Simpson Architects are the architects for the Project.

Cost of the Site

The Site cost is $6,882,000. The City will pay CPP $4,398,500 on Project Commitment and $2,483,500 within 90 days of substantial completion of the Project. The portion of the Site cost allocated to the family component is $3,442,907. The portion allocated to the singles and couples component is $3,439,093.

Lease and Prepaid Rent

The City will lease the Site to Affordable for a 60 year term and a prepaid lease amount of $2,483,500 which the City assigns to CPP. The lease payment will be paid by BC Housing to CPP within 90 days of substantial completion of the Project. There will be a single lease covering both the family and the singles and couples components.

Family Component

The family component of the Project will be funded through BC Housing’s Homes BC’s Non-Profit Housing Program. It will accommodate a mix of incomes (40% of the households will pay a low-end of market rent and 60% will be core-need households paying a rent equal to 30% of their gross income) and will receive on-going operating subsidies from BC Housing required to maintain this mix of incomes.

The capital cost of the family component will be 90% of the Maximum Unit Price budget allowed for the Project, as published in the Non-Profit Housing Application Guidelines 1999-2000, plus the 1% Loan Commitment Fee Charged by BC Housing. The preliminary capital cost budget for the Project is attached as Appendix B. Cougar Creek Construction has committed to building the family component of the Project at $13,524,896.

Singles and Couples Component: Capital Budget

The singles and couples component of the Project will be funded as a market rental project. The City will provide $4,333,000 in equity. This equity is in addition to the 25% ($859,773) standard discount from the freehold to leasehold for the land cost. The City’s equity will be provided by the City contributing $2,579,320, which is the portion of the lease cost for the singles and couples component (75% of the portion of the Site cost allocated to the singles and couples component), and cash equity of $1,753,680 .

The purpose of the City’s equity is to ensure an adequate debt coverage ratio for the Project. BC Housing commits to fund the project as long as a debt coverage ratio of 1.15 is achieved, based on BC Housing’s market rent appraisal and financial analysis. BC Housing may or may not fund the Project at a lower debt coverage ratio. Any of the City’s equity contribution that is not required to achieve a debt coverage ratio of 1.15 will be used to initially fund the Operating and Replacement Reserves described below.

BC Housing will provide mortgage financing for the singles and couples component as well as for the family component. BC Housing’s security will be Affordable’s leasehold interest in the Site.

The capital budget for the singles and couples component is Appendix B. Cougar Creek Construction has committed to build the non-family component of the Project for $16,998,554.

Construction Contract

There will be a single construction contract for the Project. The contract will be between Affordable and Cougar Creek Construction. BC Housing will advance fundsto Affordable as required to pay the cost of building the Project as it would for any Homes BC project. The City will pay its cash equity contribution of $1,753,680 to BC Housing upon BC Housing confirming that it has paid the first advance against the construction mortgage for the Project.

Singles and Couples Component: Operating Budget

The operating budget for the singles and couples component of the Project is attached as Appendix C. It indicates that at full occupancy, a mortgage rate of 6.5% and average monthly rents of $1.66/sq. ft., a net positive cash flow of $206,068 per year and a Debt Coverage Ratio of 1.15 will be achieved.

All of the singles and couples units will rent at market rents. The rents of these units will track rents for comparable market units in the West End based on CMHC’s annual survey of rents in Vancouver. An appraisal of rents in comparable market units in the West End will be undertaken every five years, and annually if CMHC’s survey is not available.

All of the net positive cash flow will be accumulated until the 10th anniversary of the first mortgage term for the Project. The net positive cash flow will firstly be used to fund:
· a Replacement Reserve, to be used to replace major elements of the singles and couples component of the Project on the same basis as replacement reserves funded for Homes BC projects, up to a maximum equal to one years operating cost (excluding debt service) for the singles and couples component of the Project, and
· an Operating Reserve, to be used to offset any negative cash flows experienced by the singles and couples component of the Project, up to a maximum equal to one years operating cost (excluding debt service) for the singles and couples component of the Project.
Any additional positive cash flow will be accumulated and held in trust by Affordable, and on the 10th anniversary of the first mortgage term for the Project will be applied to the outstanding balance of the mortgage for the singles and couples component.

For the remainder of the lease term, half of all positive cash flow will be paid to the City and half will be retained by Affordable. The portion of the positive cash flow retained by Affordable must be spent on non-market housing in the City of Vancouver. It may be used to pay down the mortgage for the singles and couples component of the Project, to subsidize tenants in the singles and couples component of the Project who would be paying more than 30% of their gross income on market rent, or to undertake other non-market housing projects in the City of Vancouver, as Affordable and BC Housing may decide.

At the end of the lease term, any funds accumulated or remaining in the Replacement Reserve will go to the City, and any funds accumulated or remaining in the Operating Reserves will be divided, with half going to the City and half for affordable housing in the City of Vancouver as Affordable and BC Housing decide.

BC Housing will not provide any on-going operating subsidies for the singles and couples component of the Project. The singles and couples component is to be sustained by its own revenues. If, however, the singles and couples component of the Project experiences negative cash flows that cannot be covered by the Operating Reserve, BC Housing may cover the deficit through a repayable loan to the Project. The loan will accrue interest at a compounding semi-annual rate equal to the cost of funds to BC Housing for the Project, and will become repayable when the Project starts to generate a positive cashflow. All the positive cashflow must be paid each year to BC Housing within four mouths of each fiscal year end until the loan and all accrued interest are repaid in full. Surplus cashflow will then be used to rebuild the Operating Reserve to its required level of one year’s operating cost for the singles and couples component of the Project, before any cashflow is returned to the City or Affordable. If the Project experiences negative cashflows, BC Housing reserves the right to replace Affordable with another sponsor of its choosing.

Operating Agreement

There will be a single Operating Agreement for the Project that will cover both the family and the singles and couples components. The City, Affordable and BC Housing will all be signatories of the Operating Agreement.

The Operating Agreement will require Affordable to operate the Project as would a prudent landlord.

The Operating Agreement will require that all costs to operate the Project be allocated between the family and the singles and couples components on the basis of the square footage of floor space allocated to each component by the Development Permit, except for costs related to the parking garage which will be allocated on the basis of the number of parking stalls assigned to each component.

The Operating Agreement will require Affordable to provide BC Housing and the City with its projected annual operating budgets for the family and for the singles and couples components of the Project by the end of each fiscal year. Approval of the projected annual budgets by BC Housing will be required on the same basis as required by the Homes BC program for non-market housing. The City’s approval will not be required for the projected annual operating budgets. The Operating Agreement will require Affordable to submit audited statements for each component of the Project to BC Housing and the City within four months of the end of each fiscal year settingout in detail all costs and all revenues. The City’s portion of any net positive cash flow for the singles and couples component will be paid by Affordable to the City when the audited statements are delivered to the City.

Tenant Selection

The City’s equity contribution for the singles and couples component of the Project is being generated by development cost levies from new development in Triangle West (the area of the downtown Vancouver directly south of the Site). The purpose of these funds is to provide replacement housing for any of the unstratified rental housing in Triangle West that may be lost to redevelopment or conversion to condominiums.

Affordable will give priority in the non-family component of the project to tenants in the unstratified buildings in Triangle West that may be displaced by redevelopment or by strata conversion to condominiums.

Schedule

The development schedule proposed for the Project is:

Development Permit Dec. 2000
Report to Council Dec. 2000
Public Hearing Jan. 2001
Project Commitment Feb. 2000
Construction Start Feb. 2001
Substantial Completion Nov. 2002

If construction of the project does not commence by May 2001, the City may cancel the project.

Once this Memorandum of Understanding has been signed, it will be presented to Vancouver City Council, to Affordable’s Board of Directors, and BC Housing’s Development Committee for approval. No legal rights or obligations shall be created or arise until all legal documentation has been fully executed on terms and conditions satisfactory to the solicitors for the City, Affordable and BC Housing.

Bob Nicklin Craig Crawford
For Affordable Housing Non-Profit Rental Assn. For BC Housing

___________________________ ___________________________
________________ ________________
date date

Cameron Gray
For the City of Vancouver

_________________________

_____________
date

APPENDIX C
Page 1 of 3

PROPOSED CHANGES to CD-1 By-law No. 7681 - 501 Bute (CD-1#364)

3 USES

5 FLOOR AREA AND DENSITY

5.1 Table 1

5.5 Table 2 - Maximum floor Area Total (in square metres)

5.7 Table 3 - Maximum Number of Dwelling Units

APPENDIX C
Page 2 of 3

8 PARKING

APPENDIX C
Page 3 of 3

PROPOSED CHANGES TO THE COAL HARBOUR ODP (By-law No. 6754)

3.2 Uses

3.2.1 Residential - Amend 1st sentence of 2nd paragraph as follows:

Figure 4B Residential Densities

R:\CC\REPORTS\COUNCIL\2000\001212\P2.WPD

Conditions of Enactment

THAT, prior to enactment of the CD-1 By-law, the Coal Harbour Arts Complex Contribution Agreement be amended and such other arrangements made as may be necessary to the satisfaction of the Director of Legal Services and the Director of Cultural Affairs to delete 1299 W. Hastings (Lot J, DL 185 and of the Public Harbour of Burrard Inlet, Plan LMP 29893) from the list of Residential Lots for which installments of $1,750,000 (escalated by CPI) for the Arts Complex must be made by Canadian Pacific Properties Inc.

THAT, prior to enactment of the CD-1 By-law, the Social Housing Agreement for Phase 3 of Coal Harbour be amended and such other arrangements made as may be necessary to the satisfaction of the Director of Legal Services and the Director of the Housing Centre to increase the floor space allocated to Lot J, DL 185 and of the Pulbic Harbour of Burrard Inlet, Plan LMP 29893 by 8,966 sq. ft. and to amend the terms for the payment of the purchase price for the site and such other terms as required by the Memorandum of Understanding between Canadian Pacific Properties Inc. and the City of Vancouver dated January 20, 2000.

* * * * *


ag001212.htm


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