CITY OF VANCOUVER
POLICY REPORT
URBAN STRUCTURE
Date: |
July 16, 2003 | |
Author: |
Marco D'Agostini | |
Phone No.: |
873.7716 | |
RTS No.: |
03472 | |
CC File No.: |
5051 | |
Meeting Date: |
July 29, 2003 |
TO: |
Vancouver City Council |
FROM: |
Director of Current Planning in consultation with Directors of Finance, Legal, Development, and Real Estate Services |
SUBJECT: |
Heritage Incentives for Hastings Street |
RECOMMENDATIONS
A. THAT Council approve the extension of the Gastown/Chinatown heritage incentive program, including facade improvement grants and property tax exemption and bonus density to facilitate major building upgrades to heritage buildings (listed on the Vancouver Heritage Register) located on Hastings Street between Cambie and Heatley Streets as illustrated on the map in Appendix A.
B. THAT for the purposes of calculating a residual density incentive, for heritage buildings (on Hastings Street between Cambie and Heatley Streets) completing a major building upgrade, the amount be calculated as the difference between the existing built density and 5.0 FSR.
OR instead of B
CONSIDERATION
C. THAT for the purposes of calculating a residual density incentive, for heritage buildings (on Hastings Street between Cambie and Heatley Streets) completing a major building upgrade, the amount be calculated as the difference between the existing built density and 5.5 FSR.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of A and B and submits C for CONSIDERATION as an alternative to B.
COUNCIL POLICY
On August 1, 2002, Council approved the Gastown Heritage Management Plan involving a number of tools to promote retention and upgrading of heritage buildings. This includes a five-year programme of property tax exemptions and density transfers off site for rehabilitated sites and grants to assist owners with the conservation of heritage facades. The program of façade improvement grants was also made available to Chinatown.
On November 5, 2002, Council approved extending the balance of incentives available in Gastown to heritage properties in Chinatown.
On July 10, 2003, policies and procedures for implementation of the heritage incentives for Gastown and Chinatown were approved. Also approved was that, as in Gastown, a maximum 5.5 FSR be used to calculate the residual density incentive in Chinatown.
PURPOSE
This report recommends extending the façade improvement, property tax exemption and bonus density incentives already approved for Gastown and Chinatown to heritage buildings on Hastings Street in the Downtown Eastside for a five-year period to facilitate heritage building rehabilitation and economic revitalization.
BACKGROUND
On February 25, 2003, Council requested a report on the advisability of applying incentives and bonuses along the Hastings Corridor similar to those approved for Gastown and Chinatown.
Council has supported the revitalization of Gastown and Chinatown through the heritage incentives program as well as other initiatives in partnership with senior governments through the Vancouver Agreement aimed at reviving the historic core of the city. The incentives are intended to motivate owners to rehabilitate heritage buildings thereby stimulating economic activity and providing a kick start to area wide revitalization. Extending these incentives to Hastings Street is expected to generate similar results. The section of Hastings Street between Richards Street and Gore Avenue also qualifies for the City's lease subsidy and tenant improvement programs.
DISCUSSION
Hastings Street Corridor
The "Hastings Corridor" from Cambie to Heatley Streets contains a significant collection of buildings listed on the Vancouver Heritage Register (48 in total - 34 recommended in this report, 12 in the Gastown HA-2 Zoning District, and 2 in the HA-1 Chinatown Zoning District where incentives are already available). Many of the buildings were designed by prominent architects and built from 1900-1920. It was during this period that the Hastings Corridor was the hub of commercial activity serving as the principal shopping street in the city. Upper storeys were often occupied by offices and there are numerous residential hotels dating from the era. Despite the westward move of the business district and along with it some major commercial tenants, the Hastings Corridor continued to be a viable commercial area serving the local population as well as having department stores such as Woodward's that acted as a regional destination. In recent years, the closing of Woodward's and other retailers has led to a significant increase in commercial vacancies. Making the heritage incentives available to property owners along the Hastings Corridor would encourage them to rehabilitate their heritage buildings and contribute to revitalization.
Extending the incentive program will increase the number of heritage buildings eligible and therefore will have an impact on the total amount of tax exemption required and bonus and residual density that will need to be provided. This is discussed in more detail below.
Heritage Incentive Program
The heritage incentive package consists of two separate programs: (i) the Heritage Façade Rehabilitation Program, and (ii) the Heritage Building Rehabilitation Program which are summarized as follows:
(i) Facade Rehabilitation Program
This program provides capital grants to heritage building owners who improve the exterior appearance of their buildings, with emphasis on making retail and commercial uses on the ground floor viable. Generally, work to repair, restore or enhance the building facade will be eligible. The program would cover 50% of eligible costs up to a maximum of $50,000 per principal facade. Funding of $1.5 M was approved in the 2003-2005 Capital Plan to support the first three years of the program. Additional funds, for the remaining two years of the program, will be sought in the next Capital Plan and will be subject to being approved at that time.
Section 206.2 of the Vancouver Charter authorizes Council to provide grants for heritage purposes. Each capital grant will require a 2/3 vote of Council members, and will be subject to any terms and conditions Council considers appropriate including a legal agreement to ensure appropriate use of the grant money and continued maintenance of the conserved facade.
Approval of Recommendation A would make the facade program available to heritage buildings on Hastings Street. This will result in more applications being submitted, however, no additional funds are being requested at this time. If demand exceeds the approved budget, staff will seek support from other levels of government under the Vancouver Agreement first, then report back to Council on amendments to the program.
(ii) Heritage Building Rehabilitation Program
This component of the incentive program gives Council the ability to provide a property tax exemption and, if required, bonus density to owners completing a major rehabilitation of a heritage building. Eligible work includes heritage conservation work, structural and foundation repair as well as seismic upgrades and facade rehabilitation. Section 396A of the Vancouver Charter authorizes Council to pass bylaws granting property tax exemptions to heritage properties for conservation purposes.
Applications will be received for five years (2003-2008). The value of the total tax exemption an applicant will receive over a maximum of ten years will not exceed the shortfall cost associated with the capital project. Should the value of the tax exemption be less than the agreed to shortfall cost of an applicant's project, the difference may be awarded to the applicant through a density bonus.
Policies and procedures for the incentive program in Gastown and Chinatown, including the methodology for calculating the shortfall cost and incentive amounts were recently approved by Council. These will also apply to properties on Hastings Street if Council approves the recommendations in this report. Furthermore, the annual reporting on the heritage incentives program will incorporate Hastings Street as well.
Should Council support extending the incentive program as described in this report, 34 additional heritage buildings would become eligible for incentives. While it is not known how many of these sites would apply for the incentives, staff estimates 1-2 applications will be made per year.
Residual Density
In addition to meeting the shortfall cost (including developer's profit) for a viable capital project, a residual density incentive is also available to encourage smaller buildings to retain their lower scale when they are undergoing a major rehabilitation as part of the incentive program. For sites in Gastown (HA-2 Zoning District) and Chinatown (HA-1 and -1A Zoning District) there are no FSR regulations so Council approved a residual density amount that was based on the development potential as suggested by the height limit and the typical density that has been achieved by projects through the development approval process over the last decade. The amount of residual density for these two areas will be determined as the difference between the proposed density and 5.5 FSR.
Sites that are being considered in this report fall into the Downtown Eastside Oppenheimer District (DEOD) and the Downtown District (DD) sub area `C' which include density provisions. The maximum density permitted in both these areas is 5.0 FSR. Properties in the DD between Carrall and Cambie are also regulated by the Interim Policy for Victory Square approved in 1991 which established 3.0 FSR to protect the area's heritage character. Subsequently the draft Victory Square Plan proposes an FSR of 3.5.
Residual density is theoretically the difference between the built density and the maximum allowed in the zoning. In the case of Gastown and Chinatown where no maximum is outlined in the zoning, staff made a best estimate of that maximum from performance indicators. In this particular case the zoning in these two areas is crystal clear with a maximum of 5.0 FSR, therefore it is recommended that the residual density for sites along Hastings Street be set as the difference between the built form and 5.0 FSR.
If Council feels that it is more logical for the residual density to be consistent and equitable across all the historic neighbourhoods, then indeed Council could decide to increase this number to 5.5 FSR. This would also act as an additional enticement for owners along Hastings Street, where more than 30% of the storefronts are vacant, to rehabilitate their buildings. As not all buildings are expected to seek incentives, the overall incremental amount of residual density bonus is relatively small.
Program Costs
There is no funding issue for the property tax exemption component of this program. However, whenever value is exempted from the assessment roll, it does have an impact on the taxes paid by other taxpayers. Removing taxable value from the assessment roll will effectively "transfer" the taxes that would have been paid by these renovated properties to all other properties on the tax roll. While no specific modelling of these impacts has been done for either Chinatown or the expanded area proposed in this report, all other property owners will experience higher property taxes than would be the case if the exemptions were not provided. However, the rationale for providing the incentive is that without it, the renovation work, new property value and increased taxes would not be realized. With this work, new taxes will be generated after the exemptions expire that will partially compensate current taxpayers. Moreover, as more buildings are renovated, economic conditions are expected to improve, rents will rise and the level of tax exemption support necessary will be reduced.
There is no also no funding required from the City for the density bonus component of the program. However, the more buildings that apply for incentives the more density bonus will be required and the greater the impact will be on the density market. If there is a significant increase over the anticipated number of applications it could have implications on the value of transferable density. This would be of concern for all heritage buildings but even more so for those outside of Gastown, Chinatown and Hastings Corridor where density bonus for transfer is the main heritage incentive as façade grants and property tax exemptions are not available.
The Director of Current Planning is of the opinion that the density incentive is an important component in encouraging the revitalization objectives for the area and should remain available. We will keep a close eye on the "density bank" and be prepared to report back Council to ensure the ongoing viability of the density bank.
STAFFING
When approving the implementation of the heritage incentive policies and procedures, Council also approved the creation of a Project Facilitator position to focus on projects seeking heritage incentives. The facilitator will also be responsible for incentive applications for heritage buildings on the Hastings Corridor. This will result in an incremental increase in the work load which will be accommodated within the Facilitator's work program. The Director of Development Services notes that making heritage incentives available to buildings on the Hastings Corridor increases both the number of potential applications and the administrative work related to the incentive program. A critical part of the increased workload will be borne by support staff and it is possible that the additional workload will take us beyond current support staff capacity. Development Services will report back on workload issues in the first annual report to Council on program implementation.
CONCLUSION
Revitalization of the Downtown Eastside is a major civic priority. Council has approved a number of initiatives in partnership with the senior governments towards this objective including the approval and implementation of a heritage incentives program for Gastown and Chinatown. This report recommends extending the program to Hastings Street in order to encourage heritage building rehabilitation and economic activity that will contribute to overall revitalization of the Downtown Eastside. Later this year, staff intend to report on a full community revitalization program for all the Downtown Eastside, including Hastings Street and this may include further incentives for Hastings Street at that time.
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