ADMINISTRATIVE REPORT

TO:

Standing Committee on Planning and Environment

FROM:

Director of the Housing Centre, in consultation with the Directors of Financial Planning, Real Estate Services, Legal Services, Current Planning, Heritage Conservation, Social Planning, Facilities Development, the Chief Constable, the Chief Building Official and the General Manager of Engineering Services

SUBJECT:

Mole Hill Phase II Lease Terms and Block Plan Implementation

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

On November 2, 1999, Council resolved unanimously and by the required majority:

On June 22, 2000, Council resolved unanimously and by the required majority:

PURPOSE

This report seeks Council approval of lease terms for the remaining 16 City-owned parcels to be leased to the Mole Hill Community Housing Society for the purpose of renovating and operating 168 (68 in Phase 1 and 100 in Phase II) units of non-market housing, as well as arrangements for implementing the Mole Hill block plan approved by Council on June 22, 2000. Appendix "A" is a map of the block which illustrates the plan (the "Block Plan").

BACKGROUND

The Mole Hill non-market housing project is being developed in two phases. This allows the 60 existing City tenants to remain housed on the block during renovations as well as enabling the B.C. Housing unit allocation of 168 units to be budgeted over two program years.

Phase I includes the first 10 houses. Phase II includes the remaining 16 houses plus implementation of the Block Plan. In anticipation of Phase I renovations, tenants in the 10 Phase I houses were temporarily relocated to upgraded rooms in the Phase II houses. As renovations to the Phase I houses are completed, some tenants will be moved from their temporary units in Phase II to their permanent units in Phase I. As in Phase I, the Phase II houses will be renovated in clusters of 3 or 4 adjacent houses. This will enable those tenants who have chosen a permanent unit in a Phase II house to be temporarily accommodated on the block until their Phase II unit is completed.

B.C. Housing has given preliminary project approval to the 100 units which will be contained in the16 Phase II houses. The capital budget for Phase II renovations, excluding land cost, will be $13 million. Including Phase I renovations, this brings B.C. Housing's commitment to the Mole Hill project to 168 units and a capital cost of $21 million. The cost of implementing the Block Plan will be paid for out of the Phase I and Phase II project budgets on a pro rata basis.

Since Phase II deals with implementation of the Block Plan, as well as renovation of the 16 Phase II houses, several issues other than lease terms for non-market housing must be addressed in this report:

Part of the Mole Hill Block Plan is the development of the Dr. Peter Centre to be built on City-owned Lot 1 at the south west corner of Comox and Thurlow Streets, including renovation of the City-owned house at1110 Comox adjacent to Lot 1 which will be linked to the Centre by an interior walkway. A separate report on lease terms for the Dr. Peter Centre will be forthcoming from the Director of the Housing Centre in the next six months or so, once private fund-raising is complete and construction start is imminent.

LANE TREATMENT

The Mole Hill Block Plan approved by Council in June, 2000, includes a provision whereby the traveled portion of the lane between Bute and Thurlow Streets will be reduced from 33 feet to 20 feet, thereby allowing the Society to use the outer 6.5 feet of the entire lane on both sides pursuant to the Encroachment Bylaw. The lane would be open to two-way traffic. Some form of traffic calming would be incorporated into its design to satisfy requirements of both residents and the City for ambience and safety. Use of the 6.5 foot strips (the "Encroachment Area") would be restricted to passive uses, such as landscaping, special surface treatment, and the "ends" of parking stalls immediately adjacent to City-owned parcels leased to the Society. For the Encroachment Area immediately adjacent to City-owned lots not leased to the Society or adjacent privately-owned properties, vehicular access will be guaranteed, no parking "ends" will be allowed, and concurrence on landscaping and special surface treatment will be required from the Director of Real Estate Services for City-owned parcels and from individual property owners for the privately-owned parcels. It is further understood that the special surface treatment shall also require approval of the General Manager of Engineering Services.

The encroachment agreement would allow the City access to the Encroachment Area at any time for any municipal purpose including the installation and servicing of utilities. The Society would be responsible for installing and maintaining the landscaping, special surface treatment, and parking "ends" (only allowed immediately adjacent to City-owned parcels leased to the Society), including replacing and repairing these improvements should they be damaged or destroyed through the City's priority access to the Encroachment Area.

RESIDENTIAL PARKING

The Mole Hill Block Plan approved by Council in June, 2000, proposed 32 parking stalls for residential purposes located in clusters behind the City-owned parcels leased to the Society along both sides of the lane south of Comox Street between Bute and Thurlow Streets. After considering the appropriate balance between vehicular parking stalls and other important lane amenities, such as community gardens, recycling depots, workshops and toolsheds, as well as the overall need for open landscaped areas, the Director of Current Planning is of theopinion that the 28 parking stalls now proposed, four less than originally planned, meets the intent of the Block Plan approved by Council. The Director of Current Planning made this decision in the knowledge that, in addition to the 28 stalls to be provided by the Mole Hill housing project, five stalls are planned for behind the City-owned Watson House, 1125 Pendrell Street, and a further 14 stalls are proposed for the underground parking garage below the new Dr. Peter Centre to be built on Lot 1. If not required by the City for its needs, two of the five stalls planned behind Watson House would be made available to the Society.

The 28 parking stalls serving residents of the Mole Hill housing project are located partially in the rear yard and partially in the Encroachment Area immediately adjacent to the City-owned parcels leased to the Society. The General Manager of Engineering Services advises that because the "ends" of parking stalls are located in the Encroachment Area, and the Encroachment Area could be removed from the Society's control in the event a higher priority municipal requirement emerges at some time in the future, such as the need for a wider utility corridor in the lane, provision of the 28 residential parking stalls cannot be a requirement of the development permit. The Director of Planning is prepared to relax the residential parking requirement even to zero in accordance with the hardship provisions of the Zoning and Development Bylaw, because the project involves renovation of a City heritage resource, provided that the residential parking requirement is made an obligation of the Society in the Phase II Lease. Mole Hill residents will be eligible to make use of West End resident permit parking spaces on local streets and lanes upon purchase of the annual decal.

It is proposed that the Society's obligation to provide the 28 residential parking stalls be incorporated into the lease and linked to the availability of the Encroachment Area immediately adjacent to the City-owned parcels leased to the Society. The lease would include a provision which allows the General Manager of Engineering Services access to the Encroachment Area for any municipal purpose at any time during the 60-year term of the lease. In the event the General Manager exercises his option to use the Encroachment Area on a permanent basis, thereby making it physically impossible for the Society to maintain the 28 parking stalls, the parking obligation of the Society shall be reduced accordingly. In this manner, the General Manager of Engineering Services ultimately controls whether the Encroachment Area shall be used for residential parking, local utilities or other municipal purposes.

Further, as long as the City does not require all five parking stalls for its own use, it is proposed that the Society, using funds from the Mole Hill housing project budget, pay the cost of installing five parking stalls at the rear of the City-owned Watson House at 1125 Pendrell which will not be leased to the Society. It is currently anticipated that three of the stalls would be required for City use. In return for the Society paying the cost of installing and maintaining the five parking stalls, the Director of Real Estate Services would assign thetwo stalls currently considered surplus to the City's needs to the Society for the use of Mole Hill residents at nominal rent on a month-to-month basis. However, this arrangement would require the Director of Real Estate Services to apply to the General Manager of Engineering Services for permission to use the Encroachment Area immediately adjacent to the rear of 1125 Pendrell Street for the "ends" of parking stalls and be subject to the Encroachment Area not being permanently required by the General Manager of Engineering Services for any other municipal purpose.

On a final note, of the 28 parking stalls set aside for exclusive use of Mole Hill residents, 4 stalls will be reserved for the Co-operative Auto Network (CAN) which is a city-wide co-operative that encourages residents not to own vehicles and provides a pool of 40 vehicles accessed by 600 members throughout the city to be used on a time-shared basis. The Society is about to embark on a partnership with CAN in order to reduce the number of vehicles owned by Mole Hill residents and promote the use of time-shared vehicles by its residents. In this manner, it is hoped that the need for on-site vehicular parking will be reduced and the impact of parking relaxations ameliorated.

CHILDCARE CENTRE

The Block Plan approved by Council in June, 2000, proposes that a permanent location on the block be found for the 23 space YMCA portable childcare facility temporarily occupying the City-owned parcel at 1130-32 Comox Street. The Block Plan proposes that the childcare facility be relocated to renovated quarters in the ground, main and a portion of the second floor of the City-owned house at 1164 Comox. This house was chosen because it has generous side and rear yards for the outdoor play space which must be provided adjacent to the childcare centre.

Work is proceeding on the design and costing of the new Mole Hill childcare centre for 1164 Comox, but has not yet been completed. Appendix "B" shows the floor plans and outdoor play area for the centre which is currently estimated to cost about $650,000, plus $27,500 for equipment and furnishings. The lease rent would be nominal.

Discussions to date with the YMCA, the Mole Hill Community Housing Society, B.C. Housing and the City on funding the new childcare centre have identified the following sources of funding:

The YMCA which operates the existing 23 space portable childcare facility at 1130-32 Comox, and would operate the new 25 space permanent childcare centre at 1164 Comox, is committed to raising $110,000 over the next five years through its own independent funding-raising campaign. In addition, the YMCA is in the process of applying to the Provincial Ministry of Social Development and Economic Security (MSDES) for a $167,500 Childcare Facilities and Equipment Grant.

The Director of Social Planning has requested that $400,000 be included in the 2001 Capital Budget for the new Mole Hill childcare centre at 1164 Comox. This would come from the City-owned Facilities component of the 2000-2002 Capital Plan Community Services Budget. In addition, B.C. Housing may agree to fund $50,000 of the capital cost of the new childcare centre as part of related residential amenity space for the housing project.

To allow the daycare relocation to proceed in advance of the YMCA's fund raising and approval of the MSDES Facilities and Equipment Grant, the Mole Hill Society has offered to include the amount of the childcare shortfall in the housing project mortgage, provided that the YMCA undertakes to pay back the Society within 5 years of the date of issuance of the occupancy permit for the new childcare centre being issued by the City.

Phase II Lease terms include an option for the City to sublease from the Society, the ground, main and a portion of the second floor of the house at 1164 Comox, for the term of the Phase II Lease less a day at nominal rent for the purpose of developing and operating a 25 space licensed childcare centre. In addition, the City would have an easement to use as much of the outdoor space adjacent to the ground floor of the house as required to meet Provincial licensing requirements.

The Directors of Facilities Development and Financial Planning note that design and costing of the new Childcare Centre have not been completed and financial arrangements among the funding partners remain to be consummated. They recommend that once design, costing and funding arrangements are finalized, the Director of Social Planning report back to Council for approval of the financial plan, budget, and sources of funding, within 180 days of Council approval of this report. It is expected that the design and costing for the new childcare location will be completed during the summer with a report to Council early in the Fall.

MID-BLOCK WALKWAY

Providing a permanent location for the Mole Hill childcare centre will allow removal of the existing portable facility from 1130-32 Comox Street and completion of the mid-block walkway approved in the June, 2000 Block Plan. Linking the lane to Pendrell and ComoxStreets, and providing easy assess from Pendrell Street to Nelson Park, the walkway is a 15-foot public right-of-way which passes through Parcel "G" on Pendrell Street, across the lane between Pendrell and Comox Streets, and through Parcel "F"on Comox Street. The location of the walkway is shown on the Block Plan which is Appendix "A".

It is proposed that the Phase II Lease include an obligation for the Society to include 1130-32 Comox Street (Parcel "F") in the Phase II Lease, by amendment, subject to removal of the existing portable facility from Parcel "F"at any time during the 60-year term of the lease. Further, the Phase II Lease will require the Society to install and maintain the landscaping and special surface treatment proposed for Parcel "F" as well as grant the City a statutory right-of-way over Parcel "F" and Parcel "G". Parcel "G" was leased to the Society in the Phase I Lease. It is understood that the statutory right-of-way shall be registered on freehold title and have priority over the Society's leasehold interest.

The June, 2000 Block Plan noted the potential safety and security problem that a public walkway through and into the block may give rise to: "If experience suggests the need for stepped-up security, the Comox and Pendrell Street entrances to the walkway could be gated and, if necessary, the gates locked. However, the initial proposal is to have the entrances ungated" (Page 11). It is recommended that a provision be included in the statutory right-of-way for the walkway for the Society to seek Council approval to install gates if safety or security does become a problem.

COMMUNITY POLICING CENTRE

The Davie Street community policing centre (CPC) presently occupies about 300 square feet of space on the main floor of the City-owned house at 1122 Bute Street which will be leased to the Society as part of the Mole Hill housing project. About three years ago, the Director of Real Estate Services granted the Davie Street Community Police Centre Society (the "CPC Society") a month-to-month occupancy at nominal rent in return for the public safety benefits to Mole Hill residents and houses as well as to the broader residential neighbourhood and business community surrounding the block. However, this arrangement was only meant for the short-term, until the Mole Hill houses were permanently upgraded for long-term residential use.

After being located at the front of the main floor of the house at 1122 Bute Street for over three years, the prospect of relocating to the rear of the ground floor of the house at 1113 Thurlow, is not viewed with enthusiasm by either the CPC Society or the Vancouver Police. At its present location, the Davie Street CPC has been one of the most effective CPC's in the city.

The economics of the Mole Hill housing project require that the main floor of the house at 1122 Bute Street, now occupied by the CPC, be used for residential units in order to ensure that the housing project can operate on a breakeven basis in the longer term. In addition to operating expenses, the Society, with the assistance of B.C. Housing, will be required to service an approximately $21 million mortgage (excluding land cost which has been forgiven) over the next 35 years. B.C. Housing has made their commitment to the Mole Hill project based on the understanding that there will be no less than 168 housing units in the project. Eliminating one or possibly two units from the main floor of the house at 1122 Bute Street, in order to allow the CPC to stay where it is, could seriously undermine the fragile economics on which the long-term viability of the project is based.

It is recommended that once renovations to the Mole Hill houses are completed, the CPC be relocated in 250 square feet of office space at the rear of the ground floor of the house at 1113 Thurlow Street which will be included in the Phase II Lease to the Society.
The space would be subleased to the CPC Society on terms satisfactory to the City, the (Mole Hill) Society and the CPC Society. The CPC Society would be responsible for raising the funds to renovate, finish and furnish the space to meet its requirements. It is currently estimated that the cost of renovating the office space would be in the order of $26,000. Finishing and furnishing the space would be extra and also at the CPC Society's expense. Ground rent and soft-costs would be forgiven by the Society.

To this end, the terms of the Phase II Lease will include an option for the City to sublease the 250 square feet on the ground floor of the house at 1113 Thurlow Street, as generally outlined on the floor plan contained in Appendix "C" , to the CPC Society for this purpose. This is on condition that satisfactory arrangements between the City, the Society and the CPC Society can be consummated within 180 days of Council approving this report. If not, the City will surrender the option or sublease, and the space will be used for whatever residential ancillary use the Society deems appropriate.

The new location at 1113 Thurlow may not be as good as the old one at 1122 Bute from the CPC's perspective, but it will provide them with long term security that they do not currently enjoy. With appropriate signage and design, the new location can be made to function well. The Chief Constable feels that the issues around the location of the CPC can be resolved within the time frame anticipated in the report.

HERITAGE DESIGNATION

The Alternative Compliance Methods for Heritage Buildings, Section 10.4 of the Vancouver Building Bylaw, have been extensively used to assist with the rehabilitation of the Phase I Mole Hill heritage houses. Section 10.4 will also be applied to Phase II work. The Bylaw limits the use of these provision to legally protected heritage buildings. Accordingly, theChief Building Official would normally make designation a condition of issuing a Building Permit which employs Section 10.4. However, the public approval process involved in heritage designation and associated compensation is time-consuming. Undertaking this public approval process now would cause significant delays in gaining occupancy of the Phase I houses which is necessary to relocate existing long-term City tenants from the Phase II houses which are about to be renovated. It is proposed therefore that Council instruct the Director of Real Estate Services, in consultation with the Director of Current Planning, to apply for heritage designation of the 26 City-owned houses leased to the Society (Phase I and Phase II) within 180 days of the date of issuance of the City's occupancy permit for the last of the houses to be renovated on the block. In this manner, the heritage conditions will be met, albeit at a later date, and completion of the housing project will not be delayed.

After completion of Phase II of the Mole Hill housing project, Real Estate Services is prepared to recommend Council designate all 26 City-owned houses leased to the Society under Schedule "A" of the Heritage Bylaw. It will also recommend that the floor space on the site be limited to that taken up by existing houses and ancillary buildings on each property at that time, estimated to be in the order of 1.0 FSR per lot. In return, Real Estate Services will recommend that the difference between the current RM-5B density allowed (1.5 FSR outright and up to 2.75 FSR on conditional approval) and the FSR required by existing buildings, would be available for transfer and sale by the City. The City would entertain requests from private property owners on the Mole Hill block for similar consideration. The estimated amount of floor space, a method for achieving and managing the transfer, and a process for dealing with private property owners will be the subject of a report back from Real Estate Services.

UTILITY RIGHTS-OF-WAY

In planning new electrical service for the renovated houses, B.C. Hydro has advised the City that it requires two statutory rights-of-way(SRW's). One right-of-way is proposed over a portion of the land along the westerly boundary of the City-owned parcel at 1173 Pendrell to allow B.C. Hydro to service the privately-owned house at 1116 Bute Street. The second right-of-way is proposed over a portion of the land at the north easterly corner of the City-owned parcel at 1103 Pendrell Street to allow Hydro to service the privately-owned house at 1101 Thurlow. The location, size and configuration of the proposed SRW's are as generally outlined in Appendix "D" which contains a map of each of the lots involved.

The SRW's, to be registered on freehold title and have priority over the Society's leasehold interest, shall be held by the City, and to the satisfaction of the Director of Legal Services and the General Manager of Engineering Services. In return, the City would grant a subsidiary SRW, a permit or a license to B.C. Hydro. This would enable the City to grant additional subsidiary SRW's, permits or licenses to other utility companies which mayrequire access to these privately-owned houses in the future. In the final analysis, however, these arrangements must be acceptable to B.C. Hydro.

PHASE II LEASE TERMS

The 16 Phase II houses include 4 houses on Comox Street (1154, 1160, 1164 and 1170 Comox), 2 houses on Bute Street (1110 and 1122 Bute Street), 3 houses on Thurlow Street (1107, 1113 and 1119 Thurlow), and 7 houses on Pendrell Street (1103, 1147, 1157, 1159, 1163, 1169 and 1173 Pendrell Street).

Should Council approve the City's share of the funding for the new Mole Hill childcare centre, a portion of the house at 1164 Comox will be subleased to the City (and in turn subsubleased to the YMCA) for the new childcare centre, and upon removal of the existing portable child care facility,1130-32 Comox will be leased to the Society for completion of the mid-block walkway.

Standard Charge Terms ST941002 registered in the Land Title Office on January 7, 1994 contain the general lease terms for non-market housing projects where the City owns the land and B.C. Housing provides the subsidy. Only those lease terms unique to a particular project are put forward for Council approval as project details become clear and construction start approaches.

Council has already approved in principle a 60-year lease of the Mole Hill lands to the Society at nominal rent. Additional terms and conditions proposed for Phase II include:

· The lease to commence within 180 days of the date of Council approval of this report or such later date as may be approved by the City Manager;

· The lease may be cancelled unilaterally by the City should construction not have begun within 12 months of the date of commencement of the lease;

· Since the Mole Hill houses are a City heritage resource, the houses are to be renovated and maintained in accordance with terms and conditions which would normally be included in a Heritage Revitalization Agreement, but which in this case will be incorporated into the lease to the satisfaction of the Director of Current Planning;

· The lease to include the authority for the Society, pursuant to the Encroachment Bylaw, to use for the whole length of the block the outer 6.5 feet on each side of the lane at no annual fee. Such use to be restricted to landscaping and special surface treatment for the whole length of the block and parking immediately adjacent to theCity-leased lots. For those portions of the Encroachment Area immediately adjacent to City-owned lots not leased to the Society and adjacent to privately-owned lots, the Society shall require concurrence of the individual owners on proposed landscaping and special surface treatment, vehicular access to the lots shall be guaranteed, and no "ends" of parking stalls shall be permitted.

· The lease to include an obligation whereby the Society provides a minimum of 28 residential parking stalls located partially in the rear yards of the City-owned lots leased to the Society and partially in the Encroachment Area immediately adjacent to the Society's leased lots, provided that the encroachment is not required permanently for any municipal purpose, in which case the parking requirement shall be reduced accordingly.

· The lease to include the provision that, should the Society undertake to install and maintain the five parking stalls located behind the City-owned lot at1125 Pendrell Street not to be leased to the Society, as indicated in the revised block plan (Appendix "A"), two of these parking stalls shall be assigned to the Society on a month-to-month basis at nominal rent for the use of Mole Hill residents, provided that the City does not require the stall(s) for its own use. This provision is subject to the General Manager of Engineering Services authorizing the Director of Real Estate Services to use the Encroachment Area immediately adjacent to the City-owned lot at 1125 Pendrell Street for the "ends" of parking stalls.

· The lease to include an option for the City to sublease that portion of the house at 1164 Comox Street outlined in bold on the drawings contained in Appendix "B" for a childcare centre at nominal rent for the term of the Phase II Lease less a day. The option to include an easement over the lands adjoining the ground floor of the house for as much land as the centre may require to meet Provincial licensing requirements.

· The lease to include an obligation whereby the Society includes the City-owned lot at 1130-32 Comox in the Phase II Lease, subject to the portable childcare facility now occupying this lot being removed at no cost to the Society, including the obligation that the Society install and maintain the landscaping and special surface treatment generally described in the block plan (Appendix "A") at the Society's cost, and grant the City a 15-foot wide statutory right-of-way (SRW) over Parcel "F" and Parcel "G" (included in the Phase I Lease) within 90 days of the Society's lease of Parcel "F" being registered in the Land Title Office (LTO). It is understood that the SRW will be registered on freehold title and have priority over the Society's leasehold interest.

· The lease to include an option for the City to sublease that portion of the ground floor of the house at 1113 Thurlow Street outlined in bold on the drawing contained in Appendix "C" to the Davie Street Community Police Centre Society (the "CPC Society") for a community policing centre (CPC) at nominal rent and at no cost to the City or the Society, subject to the City, the Society and the CPC Society reaching mutual agreement on the terms and conditions of the sublease within 180 days of Council approval of this report. This is on the understanding that the CPC Society be responsible for paying the cost of renovating, finishing and furnishing the space.

PROJECT STATUS

The first three Phase I houses should be ready for occupancy in July. The second cluster of 3 houses in August, and the third cluster of 4 houses in September. As the Phase I houses become available, existing City tenants who have chosen permanent units in the Phase I houses will be moved to their completed units. Those existing City tenants who have chosen a permanent unit in the Phase II houses will continue to live in their temporary upgraded unit in the Phase II houses, until their permanent unit in the Phase II houses has been completed.

The first cluster of 3 Phase II houses are vacant and preliminary work will begin in the next few weeks under City license agreements. Existing City tenants in the second cluster of 4 Phase II houses were given notice to vacate March 31st. They will be temporarily relocated to other Phase II houses which will be renovated later.

The Director of Planning issued the prior-to letter for Phase II development permit on  March 6th. The building permit application was submitted in the last week in March and is now being processed on a priority basis. The construction manager is working up his final capital cost estimate for the Phase II renovations and will be meeting with the Society and B.C. Housing to negotiate finalization of the contract in the next few weeks.

It is estimated that if the work on Phase II proceeds at the same pace as Phase I, the last cluster of Phase II houses would be occupied in the Spring of 2002, although implementation of block plan details will probably take another few months beyond that time.

The Dr. Peter Centre has received its prior-to letter for development permit and is proceeding to working drawings as the final weeks of the fund-raising campaign draw to a close. It is expected that construction will commence in the Fall of this year.

CONCLUSION

Phase II of the Mole Hill housing project will result in the renovation of 16 City-owned houses containing 100 dwelling units. Including Phase I, this will bring the total number of renovated City-owned houses to 26 and the total number of dwelling units to 168. Sixty (60) of these units will house the City's long-term tenants on the block. The remaining 108 units will house a mix of low-income tenants and low-end-of market renters.

Phase II, also includes provision of a 25 childcare centre in the ground, main and second floors of the house at 1164 Comox, should Council approve the City's share of the capital funding for the centre and sufficient additional funding can be secured from other financial partners. As well, the Davie Street community policing centre (CPC) now temporarily located in a portion of the main floor of the City-owned house at 1122 Bute, may be relocated to a longer term location at the rear of the ground floor of 1113 Thurlow, provided mutual agreement can be reached between the City, the Society and the CPC Society on the terms and conditions of lease.

NOTE FROM CLERK: Appendices A-D not available in electronic form - on file in the Office of the City Clerk.

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