POLICY REPORT

DEVELOPMENT AND BUILDING

TO:

Vancouver City Council

FROM:

The Woodward's Steering Committee

SUBJECT:

Woodward's Redevelopment Update - 101 West Hastings Street

 

RECOMMENDATION

A. THAT Council adopt a Process Framework for the redevelopment of Woodward's as outlined in this report ("Appendix A") that addresses:

B. THAT Council approve the Public Consultation Process in principle and instruct the Woodward's Steering Committee to implement the process as outlined ("Appendix B") and report back to Council on outcomes.

C. THAT Council approve a Woodward's project budget in the amount of $300,000; source of funds, the 2003 Supplementary Capital Budget.

CITY MANAGER'S COMMENTS

The City Manager RECOMMENDS the foregoing. This Project Framework and Public Process provide a direction for the Woodward's redevelopment that sets out a realistic timeline schedule while commensurately balancing the needs of thecommunity by providing ample opportunity for a wide range of interest groups to be involved in an open and inclusive process.

COUNCIL POLICY

On July 28, 1998, Council confirmed principles to provide general guidance to actions and planning in the Downtown Eastside, Chinatown, Gastown and Strathcona areas which included encouraging legitimate commercial activity, improving conditions at the street level, improving or replacing existing SROs ("Single Room Occupancy"), reducing crime, and helping community people to find allies and seek a common future.

The Heritage Policies and Guidelines (reaffirmed by Council in April 1991) outline a procedure to be followed in applying the heritage bonus provisions as permitted in the Downtown Official Development Plan. The Transfer of Density Policy and Procedure (amended by Council in August 2002) provide that heritage density from a "donor" site may be transferred to a "receiver" site(s). On August 1, 2002, Council approved, in principle, a property tax exemption program for upgraded buildings in the Gastown (HA-2) area. The Woodward's building is outside, but adjacent to the Gastown area.

SUMMARY

This report serves to update Council on progress to date following the purchase of the Woodward's property. A recommended Project Framework and Public Consultation Process have been drafted and are presented for Council's approval.

Bringing the Woodward's building back to life is key to the social and economic revitalization of the surrounding neighbourhoods. Woodward's continuing dereliction benefits neither the area's low-income community, property owners, or businesses and revitalization of this property is a top priority for the Vancouver Agreement. This report sets out a Project Framework and identifies a number of key issues for resolution over the coming months. Further, this report recommends that Council approve a Public Process strategy that both embraces the community interests of neighourhood residents and business owners and actively seeks to involve members of the wider community at large who desire to participate in the redevelopment of Woodward's. The Project Framework and Public Process identify key milestone dates and serve to set direction for the Project Steering Committee and Project Technical Committee through to a point in time where the requirements of a formal Request For Proposal ("RFP") can be identified and reported back to Council for approval.

BACKGROUND

The Woodward's Department Store was first established at the corner of Hastings and Abbott in 1903, and grew to occupy half of the block bounded by Hastings, Abbott, Cordova, and Cambie. During those decades Woodward's was one of Vancouver's primary retail destinations, anchoring the retail along Hastings and providing its low and modest income neighbourhood with a food floor and other household necessities. It became known city-wide for its Christmas displays and the neon "W" on the roof.

Woodward's closed its Hastings Street store in 1993 and in 1995 the property was sold to Fama Holdings. In June 1995, the Development Permit Board approved Fama's preliminary Development Application to develop a mixed-use project consisting of condominium units and commercial and retail space, subject to conditions. The residential square footage of the proposal exceeded what was permitted under the zoning, and Fama agreed to designate the heritage "C" listed building in return for a relaxation of the residential floor space regulation. The project generated substantial opposition among the low-income community as it did not include any social housing, which the City could not compel through the department approval process. Woodward's was designated a heritage building in November 1996.

Fama was not able to proceed with the development and little happened until 1996 when Premier Harcourt announced that the Province would fund 200 co-operative housing units in the building. As part of a Woodward's partnership, the City agreed to develop, with VanCity, a 50 unit project for street youth at 326 West Pender which opened in 1999. Fama and the Province were unable to conclude their negotiations, and the Province re-allocated the Woodward's Co-op funding to the Lore Krill Co-op that recently completed two buildings with a total of 2030 units at 65 West Cordova and 239127 East Georgia. Fama submitted a revised complete Development Application for 417 residential units (all condominiums) and 190,000 sq. ft. of commercial and retail space which was approved by the Development Permit Board in October 1997.

The project remained moribund for the next few years. Several developers explored the opportunity but none were able to develop a viable option. In March 2001, the Province purchased the building from Fama Holdings, with the intent of developing a 200 plus unit co-operative, a home for SFU's School for Contemporary Arts, and approximately 200,000 sq. ft. of commercial space. The Province was unable to find a partner for the commercial component, and in early 2002, the new Provincial government put the project on hold.

In the summer of 2002, Madison Bellevue Apartments Corporation obtained an Option to Purchase the Woodward's building from the Province and proposed to develop the project under the terms of the 1997 development permit: 417 residential units and 190,000 sq. ft. of commercial and retail space (565,000 sq. ft. of total floor area), with parking provided in the City-owned garage across Cordova, which incidently, has been recently demolished and is under new construction. This development permit has been renewed annually since it was first approved, and could be issuable once all conditions have been met.

As part of their development proposal, Madison Bellevue had asked the City to provide a heritage bonus density required for use off-site, on another Central Area property also owned by Madison Bellevue, to assist with the rehabilitation work required by the development permit (to be used within a ten (10) year time constraint), and to provide a property tax exemption in accordance with the recently approved property tax exemption policy for Gastown, as set out in the Gastown Heritage Management Plan. In return, Madison Bellevue was willing to enter into a Heritage Revitalization Agreement to rehabilitate the building, and enter into a Housing Agreement to secure the City's housing affordability objectives.

The details of these agreements are set out in a separate Council Report dated October 17, 2002, and were approved "In Principle" by Council on October 22, 2002. Specifically, City Council approved "In Principle" a heritage bonus of 100,000 sq. ft. and a 10-year exemption for any increase in property taxes, with an estimated savings in property tax of $8,400,000 over the 10 years, on the condition that Madison Bellevue enter into a Heritage Revitalization Agreement requiring the building's heritage value to be maintained, and into a Housing Agreement to require that they apply for 200 units of Residential Rehabilitation Assistance Program (RRAP) funding, that the building be operated as rental units for at least 15 years, and that at least 100 units be made available for rent supplements to accommodate deep-core need households as long as the residential units in the building were rental. Madison Bellevue's proposal did not prove to be financially feasible, and they were not able to secure the funding for the project. Madison Bellevue's option expired in late November 2002.

RECENT PURCHASE OF WOODWARD'S BY THE CITY

On January 28th, 2003, Vancouver City Council (In Camera) approved the following:

"A. THAT Council accept the Province's offer to sell Woodward's to the City at a price of $5,500,000 on terms and conditions, including provincial funding for 100 non-market housing units, outlined in the Memorandum of Understanding between the City and the Province attached as Appendix A, with funding for the purchase to be provided from the Capital Facilities Reserve pending resolution of the redevelopment and utilization of the building, and authorize the City Manager to finalize negotiations with the Province and the Director of Legal Services to execute the necessary documentation on behalf of the City;

B. THAT Council approve funding from the Capital Facilities Reserve of $500,000 for the holding costs that may be incurred in 2003, with the Director of Real Estate Services to report back on actual costs and a budget in early 2004; and

C. THAT Council instruct the Director of Real Estate Services, in consultation with the Directors of Current Planning, Facilities Design and Management and the Housing Centre to report back to City Council by the end of March 2003 with a proposed Expression of Interest that would seek developer interest in Woodward's, an evaluation of the feasibility of including a new Public Safety Building in a redeveloped Woodward's, and the results of the initial public consultation for the redevelopment of Woodward's."

On February 25, 2003, Council approved the following:

"THAT Council approve a Steering Committee for the redevelopment of Woodward's (101 West Hastings) consisting of Councillor Green (Co-Chair), the City Manager (Co-Chair), the General Manager of Community Services, the General Manager of Engineering Services, the Director of Current Planning, the Director of Real Estate Services, the Director of Facilities Design and Management and the Director of the Housing Centre."

The Director of Development Services was subsequently appointed to the Steering Committee on March 6, 2003.

STATUS OF PROPERTY

The sale successfully completed on March 12, 2003, and the City has now taken possession of the building and assumed responsibility for the operation and maintenance of the property.

STATUS OF BUILDING RECORDS

Staff have secured the records assembled by Fama Holdings and most recently by BC Housing and have stored these valuable documents in a City-owned facility has been designated as the Woodward's project office. A detailed technical review will also be performed on previous Woodward's concepts as submitted to the City by other interested applicants. Some very creative and innovative ideas have already been brought forth under different design scenarios and staff will summarize these submissions for Council's future consideration as part of the community wide evaluation process.

WOODWARD'S PROJECT FRAMEWORK

A Project Technical Team has been convened and this staff working group has created a Project Framework that identifies a number of issues to be resolved in order to guide the Woodward's development forward. Staff suggest keeping all options open at this time and such options logically range from a complete retention of the existing structure through to a total demolition of the building to make way for a new development. Each option will have a number of pros and cons that should be brought forward for community discussion and evaluation to identify potential challenges and opportunities. Key aspects are as follows:

(I) Evaluation of Potential Civic Uses/Other Uses:

The Woodward's site is a large one, and regardless of whether the existing structure is saved or not, the redevelopment will likely require a mix of uses in order to optimize space utilization. Opportunities ranging from City Hall expansion, incorporating a combination of non-market and market housing alternatives, general offices, food/restaurant opportunities and accommodating other commercial tenancies, etc. must be identified and assessed for impacts on neighourhood livability, security, employment, financial viability, complexity, post disaster and seismic requirements, impact on parking, and timing constraints.

It is important that an `anchor' use that is a regional or civic destination be identified so that the Downtown Eastside becomes more a part of the City than it has been for the past decade. The Woodward's Store was a regional attraction, and other proposals have included SFU's School of Contemporary Arts, movie complexes, a major retail store, or a `market', all of which would attract shoppers, students or others from outside the Downtown Eastside. Most importantly, the commercial or institutional uses should generate employment, involving local residents, so that there is activity on the street during the day, residential uses that generate activity when offices are closed, and consideration should be retail that provides much needed local services to the surrounding communities.

A staff working group has analysed the Vancouver Police Department's ("VPD") program requirements and has concluded that consolidating the VPD into Woodward's is not financially or operationally viable. Issues pertaining to post disaster and seismic requirements, emergency response in the event of substantial destruction, security, parking of vehicles, operating efficiencies of the department, and impact on the neighbourhood vis-a-vis other "more beneficial" uses were identified as almost insurmountable challenges.

(II) Design Options:

The ultimate design of the Woodward's redevelopment, which is in the Victory Square precinct, must be sensitive to the historic neighbourhood of Gastown, emphasize heritage value, and blend with the existing urban fabric. Staff will assess the merits of utilizing the existing Development Permit and will identify heritage preservation goals and possible development incentives. Proper community visioning must occur to ensure the ultimate project design is as widely embraced as possible. Staff shall pay particular attention to animating the Woodward's store fronts in order to bring life to the street.

There have also been proposals to redevelop portions of the site by demolishing all or parts of the building with less heritage value and maintaining key heritage facades. These options will also be explored from both a technical and financial aspect.

(III) Financial Oversight / Analysis:

Regardless of which option(s) are pursued, the financial requirements and assumptions resulting from a redeveloped Woodward's must be scrutinized. The City will need to consider what financial objectives and criteria should be used to evaluate the options.

(IV) Financing

Staff will also consider different ownership or lease options for the different uses in the building.

Detailed proforma analyses will be created and tested, achievable density and development efficiencies will be studied, and the cost/benefits arising from heritage incentives attributable to tax exemption, density bousing, grants, and parking exemptions will be evaluated. Staff will ensure that bona fide quantity surveys will be undertaken to cost out construction alternatives. All commercial lease scenarios will be structured to maximize capital value while commensurately negotiated to attract the best commercial tenants to the project.

(V) Public Consultation Process:

The public consultation process will actively involve both the general public, the Downtown Eastside residents, the development community, the heritage community, architects, non-profits, social service agencies, First Nations and others in determining the redevelopment of this important building. The process will generate ideas and proposed uses for the building that will inform and shape the parametres of the Expression Of Interest ("EOI") and the RFP. This process is not a perfunctoryformality, but rather it is an effort to ensure that the project will serve the needs of both the Downtown Eastside and the broader community. A critical objective of the public consultation process is to restore confidence that revitalization of the Downtown Eastside is underway and that this will take place in a way that will meet the needs of existing residents, while also creating opportunities for investment. The consultation process is comprised of a series of key activities and events that will now be described.

PROJECT BUDGET

Although Council has already authorized a budget of $500,000 to be used to cover the building holding costs over the next year, a separate project budget must be authorized to pay for project costs that pertain specifically to managing the Public Consultation Process and completing a detailed report on the building's structural, mechanical, and electrical systems.

It is estimated that costs of $300,000 will be incurred from the commencement of the Public Process through to the completion of the RFP stage, the source of funds to be the 2003 Supplementary Capital Budget. After the Public Consultation Process completes, the Director of Real Estate Services will report back to Council on actual costs and will present a revised project budget for 2004, if required.
CONCLUSION

Woodward's is crucial to the revitalization of the Hastings corridor west of Main and to the nearby communities of Gastown, Chinatown and Victory Square. The renovation and reuse of Woodward's has been identified as a top priority of the Vancouver Agreement. Project objectives include revitalization of the neighbourhood, some heritage preservation, a mix of uses, retail continuity and a mix of incomes to be accommodated and served.

A Project Framework and Public Consultation Process have been created that identify a number of issues to be resolved as part of the ongoing project management. Direction is sought from Council to endorse this Project Framework and Public Consultation Process in order to meet the challenges that lay ahead in moving the Woodward's redevelopment project successfully forward.

LINK TO APPENDICES A AND B

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ag20030422.htm

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© 2002 City of Vancouver