Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

The Directors of the Housing Centre and Social Planning

SUBJECT:

Crabtree/Sheway Lease Terms - 533 E. Hastings

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

The City leases sites for non-market housing for 60 years with a prepaid rent equal to 75% of freehold market value.

The relocation of Crabtree Corner was approved as a specific priority of the 1997-1999 Capital Plan.

PURPOSE

This report seeks Council approval of the terms for the lease of 533 E. Hastings and an increased capital grant to the YWCA for the relocation of Crabtree Corner and Sheway's social service facility and the development of 12 units of non-market housing for women and children at risk of Fetal Alcohol Syndrome (FAS).

BACKGROUND

On February 17, 2000, Council reserved 533 E. Hastings for the YWCA who wanted to develop a project on the site that would combine their Crabtree Corner, then located in a parking garage at Columbia and Cordova, and Sheway's social service facility, then located at 455 E. Hastings. Both facilities serve primarily aboriginal women with children: Crabtree Corner provides emergency childcare and support services for their families, and Sheway serves women and children at risk of Fetal Alcohol Syndrome. The location of the 9,150 sq. ft. site is noted on Figure 1.

Figure 1
The proposal presented to Council at that time was for a two or three storey building. The report noted that the residential capacity for the site would not be used and the site's full development potential would not be realized. It was proposed at that time that the site be leased to the YWCA for 40 years with an option to renew for a further 20 years if the City did not want to pursue redevelopment. The City was to provide a grant of $500,000 for the site from the 1997-1999 Capital Plan which had allocated $500,000 to Crabtree Corner as a special project. The $500,000 was to pay the $380,000 prepaid lease value of the site (50% of the freehold market value of $760,000 for the 40 year lease) with $120,000 to go towards construction.

At the time Council reserved the site for the YWCA, staff were encouraged to explore the possibility of adding a residential component to the project. It was expected that the YWCA would require a year to raise the additional funding for the project and that staff would report back to Council at the end of 2001.

CURRENT PROPOSAL

Following Council's reservation of the site, the YWCA explored the opportunity for adding housing to the project. Housing would be a positive addition to the project as many of the clients of Crabtree Corner and Sheway live in insecure housing. Through funding from Human Resources Development Canada's Supporting Community Planning Initiatives whichfunds projects that serve the homeless or those at risk of homelessness, and BC Housing's Homes BC program, funding was secured for 12 units of housing with the YWCA as sponsor.

The addition of housing required a redesign of the project, which is now a five storey building, and additional fundraising by the YWCA as the building is now concrete construction and more expensive to build. A Development Permit has been issued for the project and the YWCA has now raised over 70% of the required capital funding. Once it has raised 80% of the capital funding construction will commence. Construction is expected to start this Fall.

The addition of the housing component requires two changes to Council's original approval of the concept. BC Housing's funding requires a 60 year lease term. This is appropriate as the building will be concrete construction, will utilize more of the site's development capacity, and should have a development life of at least 60 years. A 60 year lease term requires a prepaid rent of $570,000 (75% of the freehold value of $760,000). As its contribution to the increased costs of the expanded project, it is recommended that the City increase its capital grant for the project from the $500,000 proposed in February 2000 to $570,000. This will allow the site to be leased at a nominal prepaid rent as was originally contemplated. The source of funds for the increase capital grant would be the Affordable Housing Fund's 2002 capital funding. A capital grant requires eight affirmative votes of Council.

The Memorandum of Understanding attached as Appendix A sets out the terms of the proposed development, including the proposed lease terms. Funding for the project is close to fully secured, and the project is ready to proceed. It is recommended that the Memorandum of Understanding be approved.

- - - - -

APPENDIX A

MEMORANDUM OF UNDERSTANDING
between
the Young Women's Christian Association (the YWCA) ,
BC Housing Management Commission (BC Housing), and
the City of Vancouver (the City)
regarding the development of 533-539 E. Hastings St.
and dated for reference May 22, 2002

This Memorandum of Understanding replaces the Memorandum of Understanding dated January 31, 2000, between the YWCA and the City. The January 31, 2000, Memorandum was written for a smaller project that did not include a residential component.

The Site

The City owns a site at 533-539 E. Hastings St. (The Site). It consists of 3 lots (Lots 23 to 25, Blk. 58, DL 196, Plan 196) and is 75 ft. by 120 ft. in size with a total area of 9,150 sq. ft. The site is zoned DEOD and has a development potential of 2 FSR (18,300 sq. ft. of building) of non-residential space and 3 FSR (27,450 sq. ft. of building) of residential space. The Site has a market value of $760,000.

The Project

The YWCA will develop the Site with a 5 storey building (the Project) consisting of 2 477 m². The lowest three floors will be occupied by social services (1 677 m²), and the top two floors by 12 residential units (800 m²).

Two social services will share the social service component. One will be the YWCA's Crabtree Corner currently located at 101 E. Cordova. It will provide emergency childcare for families in the area (12 infants and 12 preschoolers) and support programs for the families using Crabtree. The other will be Sheway which is a partnership operated by the YWCA, the Vancouver Native Health Society, the Ministry of Children and Families and the Vancouver Coastal Health Authority. Sheway serves pregnant women and their children who are at risk of Fetal Alcohol Syndrome (FAS). The ground floor will consist of space for the Crabtree Corner and Sheway programs, the second floor will consist of the childcare space and the third floor will be occupied by the administration and support functions.

The 12 residential units are 8 studios and 4 1-bedroom units (6 per floor) that will be operated by the YWCA. The Sheway clients will have priority but not exclusive access to the residential units. The intent of the residential units is to provide transition housing for up to 2 years for women while they are pregnant and nursing.

Seven parking spaces will be provided off the lane, one for the residential component and six for the social service component.

A Development Permit (DE405510) was issued for the Project on August 22, 2001.

Capital Funding

The total cost of the project is estimated at $6,800,000. The YWCA will proceed with construction once 80% of the capital funds have been raised. YWCA will obtain the remaining 20% of the required capital funding by way of a loan. Funding has been secured from the following:

Crabtree Corner Capital Campaign

$1,597,114

Touching Lives, Building Futures Campaign

$360,150

City of Vancouver

$570,000*

BC Housing

$1,380,660**

Prov of BC Child Care Fund

$250,000

Human Resources Development Canada

$427,000

Human Resources Development Canada

$376,000

Total Capital Funds Raised (May 21/02)

$4,960,924

% of Total Capital Cost

72%

80% of Total Capital Cost

$5,440,000

Funds Needed Before Construction Begins

$479,076

* City Council allocated $500,000 on Feb.17, 2000. The $570,000 grant is subject to approval of this Memorandum of Understanding by City Council.

** BC Housing will finance its capital contribution by way of a loan, and will pay subsidies for the 12 residential units equal to the difference between the cost of operating the units and the revenue generated by the units.

BC Housing will provide the interim financing required for the Project. The capital funds raised for the Project and the BC Housing financing will be advanced proportionately based on the percentage of work in place.

Operating Funding

Crabtree Corner and Sheway are both existing operations which are being relocated. Their current funding will be maintained and enhanced. BC Housing will provide the subsidies required to fund the operation of the residential component. All other operating costs will be funded by the YWCA.

Lease Terms

The Site will be leased to the YWCA for 60 years at a nominal prepaid rent. The lease commencement date will be Project Commitment from BC Housing or 180 days after Council approves this Memorandum of Understanding.

The YWCA will be responsible for all taxes, utilities, fees and other costs associated with the Site and Project from the lease commencement date.

Once the Project is complete, the lease for the Site between the City and the YWCA will be replaced by two leases between the City and the YWCA. One lease will include only the residential component of the Project and the second lease only the social service component of the Project. This will allow BC Housing to secure its funding by a mortgage of the residential lease, and the loan required for the social service component to be secured by a mortgage of the non-residential lease, if required. The Provincial Rental Housing Corporation (PRHC) will hold an Option to Purchase the residential lease on behalf of BC Housing.

The lease of the Site will anticipate and include the terms of the two leases of the residential and non-residential components of the Project. Project Commitment from BC Housing must be obtained prior to execution of the lease of the Site.

The two leases will have the same commencement date as and their terms will be for the unexpired term of the lease of the Site. The YWCA will be responsible for all taxes, utilities, fees and other costs associated with the each of the residential and non-residential components of the Project from the lease commencement date.

Once the Project is complete but prior to occupancy, the YWCA will have the residential and non-residential components separately surveyed. The common areas (elevator, stairs, lobby, parking, mechanical rooms, etc.) that serve both the residential and the social service useswill be included in the non-residential lease. The common areas will be separately identified and measured by the survey.

Easements will secure the use of the common areas for the lessee of the residential component of the Project.

Where possible utilities will be separately provided to the residential and non-residential components of the Project and they will be separately metered.

Where it cannot be specifically determined, the leases will require that the costs of operating the common areas (lighting, cleaning, repair) and the costs of washing the windows, painting, repairing or replacing the exterior walls and the roof (not including the decks that provide the open space for the childcare) will be shared by the lessees based on the prorata share of their floor area not including the common areas (68% non-residential and 32% residential based on the approved DP) as determined by the survey. If the two leases are not separately assessed by the BC Assessment Authority, the property taxes shall be split on the same basis with each to pay based on the appropriate mill rate. Otherwise each component will be responsible for its own costs.

Except in case of mortgage or lease default, or exercise by PRHC of its Option to Purchase, the leases may not be assigned or subleased separately. Except for short term subleases to social service agencies operating from the non-residential premises, the leases may only be assigned or sub-leased to the same lessee or sublessee.

In case of disputes between the two lessees, an arbitrator dealing at arm's length with the City will be appointed by the City and his decision will be final.

Schedule

The schedule for completion of the Project is:

Approval of this Memorandum of Understanding - May 2002

Completion of 80% of Capital Fund Raising by YWCA - June 2002

Building Permit - August 2002

Select Contractor - August 2002

Project Commitment - September 2002

Start Construction - September 2002

Project Completion - October 2003

If construction has not commenced by January 1, 2005, the City may terminate the lease of the Site or any other commitments the City has made to the Project.
Once this Memorandum of Understanding is executed, it will be presented to City Council, BC Housing, and the Board of Directors of the YWCA for approval.

No legal rights or obligations will arise or be created until all the conditions have been satisfied, and all legal documentation required for the project has been fully executed on terms and conditions to the satisfaction of the City's, BC Housing's and the YWCA's Solicitors.

For the City of Vancouver For the YWCA

Cameron Gray Marion Taylor
Director, Housing Centre Acting Chief Executive Officer

date date

For BC Housing

Craig Crawford
Director of Development Services

date

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ag020611.htm

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