Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

Director of the Housing Centre

SUBJECT:

Amendments to the Memorandum of Understanding for the Development of 1299 W Hastings St.

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

Council requires that 20% of the units in major projects be designated for non-market housing, with a priority for core-need households. Council policy is to consider affordablehousing 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.

PURPOSE AND SUMMARY

This report seeks Council instruction to apply to amend the ODPs and CD-1s which refer to "non-market housing" to replace "non-market housing" with "affordable housing" and to eliminate any possible contravention of the by-laws by non-market housing projects which include market rent units.

Council approval is sought to amend the agreement between the City, BC Housing and Affordable for the proposed development of 284 units of "non-market" housing at 1299 W. Hastings. The amendment would set the initial rents for the 171 singles and couples units to 90% of rents for comparable market units in the area. This amendment would address a concern raised by BC Housing's solicitors regarding a possible contravention with the ODP and CD-1 for the site, in particular that a unit rented at market rents would not be a non-market unit.

If and when the amendments to the ODPs and CD-1s to eliminate any possible contravention between the by-laws and non-market housing projects that include market rental units are enacted, the rent for the 171 units for singles and couples in the 1299 W. Hastings development would be raised to market rents at the City's request.

BACKGROUND

In 1994, the ODPs and CD-1s for the major projects, such as the projects around False Creek and along Coal Harbour, were amended to provide Council with the flexibility to respond to the withdrawal of federal funding for non-market housing. Council amended the by-laws to give itself the ability to approve projects for the sites set aside for non-market housing as appropriate under the circumstances. The intent of the bylaw amendments was to allow Council to define "non-market housing" as it chose, including having a market rental component. "Non-market housing" is not a defined term in the by-laws.

In 1997, the Province amended the Vancouver Charter, along with the Local Government Act, to require that any "development plan under this section must include housing policies of the Council respecting affordable housing, rental housing and special needs housing" (Section 561(3)).

On December 12, 2000, Council approved the purchase of 1299 W. Hastings, a "non-market housing" site in the Coal Harbour development, and approved its development for 284 units of housing: 113 family units and 171 units for singles and couples, with 68 of the family units for core need households who would pay a rent based on their income, and 216 units for households able to pay market. The site would be leased to the Affordable Non-Profit Rental Housing Association for 60 years.

At the January 25, 2001, Council approved text amendments to the Coal Harbour ODP and CD-1 By-law No. 7681 for 501 Bute St. (CD-1 #364) that were required for the project to proceed. Council enacted the amendments (By-law No. 8311) on March 13, 2001.

LEGAL ISSUE

Legal opinions are required before financing can be sought from market lenders. In preparing the legal opinion for 1299 W. Hastings, BC Housing's solicitors identified a concern regarding the definition of "non-market housing" which is not defined in the Zoning and Development By-law, or in the CHODP and CD-1 for 501 Bute St. where the term appears. The issue is whether a unit rented at market rents would qualify as a non-market unit.

Many non-market housing projects include a mix of market units and units subsidized for core-need households. Several have been developed on sites set aside for non-market housing by the City's by-laws. It is possible that these may also contravene the City's by-laws.

AMENDMENTS TO THE ODPs AND CD-1s

The City believes that non-market housing projects can include market rent as well as core need units without contravening the City's by-laws. The City's partnership with BC Housing is important, however, and if their legal concerns can be addressed without compromising the City's interest they should be. Given the 1997 Charter amendments that require the City's ODPs to address "affordable housing", it is appropriate for the City to update its ODPs and related CD-1 by-laws to replace "non-market housing" with "affordable housing", and to eliminate any possible conflict between the City's by-laws and projects that include market rent units. A definition of "affordable housing" would be developed for inclusion in the by-laws that would permit market rental housing as well as housing for core need households. The by-laws need to provide Council with the ability to approve market rental projects, and projects that include both units subsidized for core-need households and units for households paying market rent.

It is recommended that Council instruct the Director of the Housing Centre to apply by the end of 2001 to amend the relevant by-laws to replace "non-market housing" with "affordable housing" and to eliminate any potential conflict with market rental housing.

1299 W. HASTINGS ST.

The non-market housing project at 1299 W. Hastings is ready to proceed. The zoning amendments have been enacted, the Development Permit is ready to be issued, and construction of the project is ready to begin.

BC Housing will provide the necessary interim financing for the project to allow it to proceed in advance of the amendments to the CHODP and the CD-1 for 501 Bute St. that would eliminate any possible contravention between the by-laws and non-market housing projects that include market rent units. However, their solicitors believe that the initial rents of the market units need to be set at 90% of market to qualify as non-market housing units until the amendments to the by-laws have been enacted.

The operating budget for the singles and couples units in the project presented in the  Dec.12, 2000, Council report was based on rents approximately 85% of what BC Housing's independent appraisal estimated would be the market rents for comparable units. At these lower rents, a positive cash flow in the first year of full occupancy of $206,000 is expected. Setting the initial rents at 90% of comparable market units should not put the positive cash flow of the project at risk. BC Housing is prepared to provide a repayable loan to the project to ensure the viability of the project if the projected positive cash flow is not achieved.

BC Housing, the City and Affordable may all share in the positive cash flow generated by the project, and all are interested in having rents at market. BC Housing and Affordable have agreed that, at the City's request, the rents for the 171 singles and couples units will be increased the from 90% to rents similar to comparable market units in the area. The City can ask that the rents be raised if and when the CHODP and the CD-1 for 501 Bute St. have been amended. These amendments should be in place well in advance of the marketing campaign for the project which will commence in late 2002. The Memorandum of Understanding agreed to by BC Housing and Affordable setting out the proposed resolution is attached as Appendix A.

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