ADMINISTRATIVE REPORT
Date: March 14, 2003
Author/Local: Cameron Gray/7207
RTS No. 03083
CC File No. 4656
Meeting: March 27, 2003
TO: |
Standing Committee on Planning & Environment |
FROM: |
The Director of the Housing Centre |
SUBJECT: |
Performing Arts Lodge - Bayshore Affordable Housing |
RECOMMENDATION
THAT Council approve the revised Performing Arts Lodge (PAL) Vancouver proposal for the Bayshore Gardens affordable housing, in particular the inclusion of twelve PAL Partner units, as outlined in this report and contained in their January 31, 2003, submission (on file with the City Clerk), noting that final approval is subject to report to Council in May or June 2003, and
FURTHER THAT no legal rights or obligations will arise or be created for the City of Vancouver, Bayshore Gardens Development Limited Partnership or PAL Vancouver until City Council gives final approval for the project and all legal documentation is prepared and fully executed on terms and conditions to the satisfaction of the City's Director of Legal Services.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of the foregoing.
COUNCIL POLICY
Council requires that 20% of the units in new neighbourhoods be designated for affordable housing, with a priority for core-need households. Council policy is to consider affordable housing proposals not subsidized through senior government programs, orpayment -in-lieu, for affordable housing 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 new neighbourhoods allows Council to approve such rental or co-operative housing initiatives and define affordability as circumstances require. [Note: On March 11, 2003, Council enacted amendments to the new neighbourhood ODPs and CD-1s that replaced "non-market housing" with "affordable housing".]
PURPOSE
This report seeks Council approval for PAL Vancouver's revised proposal for the affordable housing component in Bayshore Gardens.
BACKGROUND
Bayshore Gardens is a 980 unit development under construction north of Georgia St. between Cardero and Denman Sts. (see Figure 1). Of the 980 units, 230 must be rental and of the remaining 750, 13% (98 units if all 750 are built) must be affordable housing. To date 165 rental units and 341 condominiums have been completed, and 76 condominiums are under construction.
Figure 1
In 2001, Council considered a proposal to convert the 20% affordable housing requirement to market housing in exchange for a payment-in-lieu. There was no federal or provincial funding available for the affordable housing component, which was physically integrated into a market component then ready to proceed. Council rejected the payment-in-lieu as proposed and directed that the proposal be revised to maximize the affordable housing component and minimize any payment-in-lieu. On September 13, 2001, Council approved the current 13% affordable housing requirement in exchange for a reduction in the cost of the affordable housing component to 93% of the maximum budget allowed under the HOMES BC program then in place.
The affordable housing component consists of 84,700 sq. ft. on 6 floors within a larger project consisting of:
· underground parking to serve the Bayshore Hotel to the north as well as the retail and residential uses within the project itself,
· retail and lobbies on the ground floor,
· affordable housing on floors 2 through 7,
· a childcare centre on the south half of the 8th floor, and
· a condominium tower on floors 8 through 25 above the north half of the affordable housing component.
As with all sites set aside in the new neighbourhoods in Vancouver for affordable housing, the City holds an option to purchase the Bayshore affordable housing component. The options are usually exercised when federal or provincial funding is made available for an affordable housing project, though the City can exercise its options in the absence of senior government funding. As the Bayshore Gardens affordable housing component is physically integrated into a larger project, and must be built when construction of the larger project proceeds, the City and Bayshore Gardens agreed to work together to develop an affordable housing proposal that could proceed whether senior government funding was available or not. Bayshore Gardens agreed to advise the City one year in advance of when it wanted to begin building the larger project, which Bayshore did at the end of May 2002.
On November 7, 2002, Council considered the results of a proposal call that had been undertaken to find a non-profit sponsor for the Bayshore Gardens affordable housing, and who had the funding or the capacity to raise the funding to develop the affordable housing in the absence of senior government funding. The proposal call was undertaken in two stages; the first a call for expressions of interest and the second a request for proposals from four of the interested non-profit societies. Three non-profit societies submitted proposals:
· Water's Edge Seniors Housing Co-operative,
· The Zajac Foundation in partnership with Vancouver Resource Society, and
· PAL Vancouver.
Council approved the recommendations:
"THAT Council approve PAL Vancouver as the sponsor of the Bayshore Gardens non-market housing component on condition:
· that PAL Vancouver raise $2.5 million in equity by the end of January 2003;
· that PAL Vancouver raise a total of $5 million in equity by the end of April 2003;
· that the City of Vancouver reserves the right to replace PAL Vancouver as the sponsor of the project if they have not achieved these equity targets;
· that the City of Vancouver is not expected to contribute any equity to the project, but if it chooses to the City's equity will be in addition to the equity commitments that PAL Vancouver must achieve by the end of January 2003 and the end of April 2003;
· that the Director of the Housing Centre, PAL Vancouver, and Bayshore Gardens Development Limited Partnership negotiate a Memorandum of Understanding setting out the program for the non-market housing component of Bayshore Gardens, the capital cost of the non-market housing component, payment structure, legal arrangements and the other details related to the development of the non-market housing component for report back to Council in May or June 2003;
· that the Director of the Housing Centre and PAL Vancouver negotiate a Memorandum of Understanding which will set out the terms of the Housing Agreement to be placed on title for the non-market housing component to secure the City's affordability objectives for the Bayshore Gardens affordable housing including income mix, determination of rents, the criteria for selecting residents, the services to be provided, etc., for report back to Council in May or June 2003; and
· that no legal rights or obligations will arise or be created for the City of Vancouver, Bayshore Gardens Development Limited Partnership or PAL Vancouver until City Council gives final approval for the project and all legal documentation is prepared and fully executed on terms and conditions to the satisfaction of the City's Director of Legal Services.
THAT, subject to final Council approval of the PAL Vancouver project, Council approve in principle PAL Vancouver acquiring the City's freehold interest in the Bayshore Gardens non-market housing parcel."
ORIGINAL PAL VANCOUVER PROPOSAL
Performing Arts Lodge (PAL) Vancouver is a non-profit society set up to provide affordable housing to seniors with priority to former workers in the performing arts industry (theatre, music, film, etc.). They estimate that there are 16,000 employed in the performing arts industry ranging from actors and directors to ushers and set carpenters. Work in the performing arts is often erratic and contractual, and many in the industry are without pensions or much in the way of savings. Once retired, many end up unable to afford market housing. PAL Vancouver is modelled on a 205 unit PAL project developed in Toronto. PAL Vancouver would be open to all, and would give priority to those once, or still, employed in the performing arts and who meet the criteria set out in the former HOMES BC Program.
PAL Vancouver's proposal, submitted in response to last Fall's request for proposals, was to build 111 housing units (99 1-bedroom units and 12 2-bedroom units) for independent seniors. Services would not be provided on site but would be brought in as required to meet the needs of the residents so they can age in place. Substantial amenity space would be provided, as PAL and an associated non-profit society, Supporting Cast, want to provide activities that will sustain the social and cultural life of the residents. PAL proposed to accommodate an income mix of 11 units for seniors in deep core need, 55 units for seniors in shallow core-need, 35 units at a low-end of market rent and 12 at full market.
In their proposal, PAL committed to raise the funds required to finance the project and to achieve the income mix proposed. They estimated that they would need $2.3 million in equity to ensure that the project could be financed as a market rental project, and a further $3.5 million so that rents could be reduced and PAL's income mix could be achieved. PAL Vancouver had little funding in place at the time of the proposal call but outlined an aggressive fund raising campaign using the talents and drawing power of the many successful actors and patrons of the arts that are supporting PAL. PAL believed it could raise the $2.5 million that would ensure the project's viability by the end of January 2003, and a total of $5 million by the end of April 2003.
REVISED PAL VANCOUVER PROPOSAL
The revised and original proposals are the same as regards the number and mix of units (99 1-bedroom units and 12 2-bedroom units), the total capital cost of the project ($16.2 million), the target clientele (seniors with priority to those in the performing arts), and the income mix (60% below market, 30% at the low-end of market, and 10% at full-market). The primary difference relates to the means by which PAL Vancouver has raised the necessary funds to satisfy the City's requirement that $2,500,000 million in equity, to ensure the project can be financed, be in place by the end of January 2003.
By the end of January 2003, PAL Vancouver had raised the required $2.5 required to finance the project. The letter from PAL Vancouver is attached as Appendix A. If the $2.5 million had been raised through fundraising as originally proposed, there would be no need to report to Council, and PAL would continue fundraising to achieve their affordability objectives. However, PAL only raised $664,449 through fundraising over the 3 months from November 2002 to the end of January 2003. The rest of the $2.5 million has come from their PAL Partners program. The PAL Partners program makes available the 12 2-bedroom units in the project to PAL directors, patrons and members who intend to live in the project and who agree to prepay the rent for one of the two bedroom units. As this is a significant shift in the fundraising approach, this report seeks Council approval of a revised PAL proposal, noting that Council will not grant final approval until May or June 2003 when all issues have been addressed. PAL's revised proposal is on file with the City Clerk.
Under the PAL Partners program the prepaid rent of the 2-bedroom units is set at market value. The PAL Partner pays this as a lump sum in return for the ability to live in the units until they die or move out. The prepaid rent is repaid by PAL at that time; if the prepaid rent for the unit was $260,000 then $260,000 is repaid; there is no adjustment for inflation or change in market value. The units would be rental units; they could not be bought and sold. PAL would select the PAL Partners as they would select any tenant, and act as landlord for the PAL Partner residents as they would for the rest of the tenants.
PAL has pre-rented 7 of the PAL Partner units and raised $1,840,000, with funds held in trust. In addition, they have fundraised $664,449 in cash and pledges, for a total of $2,504,449. This is sufficient to support the financing required for the project. PAL expects all 12 of the PAL Partner units to be pre-rented by the end of April 2003. This will generate a total of $3,144,000, and mean that only $191,000 of the cash raised by PAL Partners is needed for financing and $473,000 can be applied to PAL's affordability objectives. If all the PAL Partner units are pre-rented, PAL would need a total of $2,301,633 in cash to achieve the affordability, and so, with the cash they have fundraised to date, PAL would need to fundraise $1,828,633 more.
DISCUSSION
PAL has succeeded in raising the necessary equity to achieve financing for the project through their PAL Partners program, but they will not be able to rely on it to raise the funds needed to achieve their affordability objectives. PAL Vancouver is a charity operating under the aegis of PAL Canada, and 90% of the units in the project must be made available at less than full market rents. PAL has initiated a fund raising campaign consisting of special performances and events, contributions from unions, and both small and large donations, as outlined in their revised proposal. Fundraising over the holiday season proved to be difficult, though they did generate interest among a broad band of supporters, and PAL didnot get their fundraising fully underway until January 2003. PAL believes that it will be able to raise the equity required to achieve their affordability objectives through the program outlined in their revised proposal by the end of April, and have an on-going fundraising program in place to achieve their desired affordability.
When Council approved PAL Vancouver as the sponsor of the Bayshore Gardens affordable housing component, it was noted that theirs was the most ambitious of the proposals received. Council was prepared to provide PAL with the opportunity to prove itself. PAL has raised over $600,000 in donations and pledges ($200,000/month), but it has yet to prove that it can raise sufficient funds through traditional fundraising to achieve affordability. Most of the current funding has come from their PAL Partners program which cannot generate all the funding needed to achieve their affordability objectives, although it does generate the funding needed for financing the project.
Affordability is key to the success of the project, both for PAL, whose purpose is to accommodate low and modest income seniors who worked in the performing arts, and for the City, whose purpose in requiring affordable housing in new neighbourhoods is to provide opportunities for those who could not afford to live in them otherwise. It is incumbent upon PAL Vancouver and the performing arts community in the City to generate the funds necessary to deliver affordability. PAL Vancouver's program remains ambitious and they will need to work very hard to achieve those ambitions. The total equity that PAL must raise, from all sources, to achieve its overall program is $5,450,000 under their revised proposal.
It is recommended that Council approve PAL Vancouver's revised proposal, which includes 12 PAL Partners units and a fundraising requirement of $5,000,000 by the end of April 2003.
Final approval from Council is contingent on PAL Vancouver raising the funds necessary to achieve affordability and on resolution of any other issues. If Council approves PAL's revised proposal, there will be a report back in May or June 2003 with a Memorandum of Understanding that will set out the development relationship between PAL, Bayshore Gardens and the City (total project cost, payment schedules, etc.) and a Memorandum of Understanding between the City and PAL setting out the affordability requirements.
CONCLUSION
PAL Vancouver has raised the $2.5 million in equity required to satisfy Council's requirement set in November 2002 when PAL was selected as the sponsor for the affordable housing in Bayshore Gardens. They have raised $1,850,000 of the funds through pre-renting 12 of the units to PAL Partners and $650,000 through traditional fundraising. The PAL Partners was not part of PAL's original proposal, and Council approval is sought for a revised proposal from PAL that includes PAL Partners. PAL still has to raise $2,500,000 toachieve their affordability commitment, and will have to do that through traditional fundraising. Final approval from Council is subject to report back in May or June 2003 once all issues have been addressed and the detailed arrangements for the development have been worked out.
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