ADMINISTRATIVE REPORT

                                                                                                    Jill Davidson/7670

TO:

Vancouver City Council

FROM:

The Woodward's Steering Committee

SUBJECT:

Woodward's - 101 West Hastings Street: Request for Proposals for Redevelopment

 

RECOMMENDATION

1. the Short-listed Respondents in the Non-profit Premises Category (the non-profit societies, including cultural and social groups, and other not for profit entities which wish to purchase or rent premises in the Project, including those which may not be able to pay market rates) which the City wishes the developer of the Project to consider as potential owners/tenants of purpose built amenity space in the Project, noting that potential owners/tenants of non-profit space in the Project are not limited to these Short-listed Respondents; and

CITY MANAGER'S COMMENTS

The City Manager RECOMMENDS approval of the foregoing, but notes that the RFP must indicate that the technical evaluation of the respondent submissions and Council's selection of the successful Developer submission will not, and cannot, prejudice Council in any rezoning that may be proposed. That is to say, Council must be advised that it cannot prejudge the outcome of any future rezoning application in advance of a Public Hearing.

Furthermore, Council's selection of the successful Developer submission cannot restrict or otherwise limit the development application decision making authority of the Development Permit Board or the authority and responsibilities of the subdivision Approving Officer, whatsoever. It is imperative that the distinct roles of the City as owner and the City as regulator, need to be kept separate.

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 Single Room Occupancy ("SROs"), 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. On July 29th, 2003, Council approved extending the Gastown/Chinatown Heritage Incentive Program to the Hastings Street corridor, including the Woodward's building.

On April 22, 2003, Vancouver City Council adopted a Project Framework for the redevelopment of Woodward's to evaluate potential civic and other uses for the project, to consider design options and address financial oversight and to develop an inclusive public consultation process. Council also approved the Woodward's project budget in the amount of $300,000 with the source of funds coming from the 2003 Supplementary Capital Budget.

On July 8th, 2003, Council approved the following:

On November 4th, 2003, Council further directed that the Woodward's Steering Committee release the submissions the City received pursuant to the Request for Expressions of Interest process, draft the terms and conditions for a more detailed Request for Proposal call, and report back to Council in January, 2004 with a recommended short-list of EOI respondents that should be invited to participate in the RFP.

On January 27th, 2004, Council "In Camera" defined the City's role in the redevelopment of the Woodward's site (the "Project") as that of a Participating Investor which owns and operates space in the Project.

PURPOSE

This report serves to updates Council on the evaluation by the Woodward's Steering Committee of the formalsubmissions in response to the Request for Expressions of Interest received by the City for the redevelopment of the former Woodward's site and seeks Council's approval of the Short-listed Respondents in the Developer Category and the Non-Market Housing Sponsor Category. This report also provides Council with a framework for the next stage of the Project milestone schedule - the Request for Proposals.

BACKGROUND

In March 2003, Vancouver City Council purchased the former Woodward's department store at 101 West Hastings from the Provincial government. As part of this agreement, the Province agreed to provide funding for 100 units of non-market housing. Throughout May 2003, staff conducted a number of Community Workshops and an Ideas Fair to solicit feedback from the community for redeveloping the Woodward's site. A set of Guiding Principles were developed and endorsed by Council for the project. The REOI was then issued in August 2003. The submissions received were summarized for Council's consideration in November 2003. The REOI was structured to capture the general interest of all groups wishing to participate in the future of the Woodward's site and targeted the following proponent groups:

A) Developers able and willing to develop all or some of the site and/or building;
B) Commercial and retail businesses able and willing to pay a market rent or price for space;
C) Non-Market Housing Sponsors able and willing to develop the 100 units of non-market housing allocated to Woodward's; and
D) Non-profit societies and other groups who have programs they wish considered for inclusion in the redevelopment but who may not be able to pay a market rent or price for space.

A total of 44 submissions were received of which: 10 were from developers, 5 were from commercial/retail businesses, 13 were from non-market housing sponsors, and 16 were from non-profit and/or cultural groups. Only two categories specifically required that interested proponents must register their interest through participation in the REOI: the Developer Category and the Non-Market Housing Sponsor Category. The REOI specifically permitted any interested commercial/retail businesses or non-profit societies, cultural or social groups to make their interest known at any time.

At the "In Camera" Council meeting on January 27th, 2004, Council defined its role in the redevelopment of the Woodward's site as that of a Participating Investor which will play a major role in steering the redevelopment. This role allows the City to participate directly in the Project and allows the City to extract maximum public benefits, while commensurately minimizing project risks. Council's decision to become a Participating Investor will facilitate the delivery of the Guiding Principles set out for the Project.

THE EVALUATION PROCESS:

The REOI identified the parameters within which the City would base a decision on selecting short-listed respondents to participate in a more comprehensive RFP. An Evaluation Committee consisting of City staff was appointed by the Woodward's Steering Committee to summarize the REOI Submissions, conduct interviews with the Developer Respondents and report back issues, challenges, and requests to the Steering Committee for presentation to Council. The results of that evaluation process are summarized as follows:

Developers:

The short-listing process for the Developer Category was very difficult as the interest shown by each Respondents was genuine, creative, and passionate and every Respondent brought a unique vision to the City; each with its own strengths and challenges. The Evaluation Committee reviewed each Submission and met with representatives of each Respondent to discuss its Submission in detail and respond to questions. The following evaluation criteria as set out in the REOI was used in the evaluation process:

1. Respondent's compliance with the requirements of the REOI and particularly, the Project Guiding Principles, including:

2. Respondent's financial capability to redevelop the property;
3. Respondent's business and technical reputation;
4. Respondent's past experience with other large scale major redevelopment projects;
5. Respondent's past experience developing residential properties;
6. Respondent's past experience developing commercial/retail properties;
7. Respondent's past experience developing institutional properties;
8. Respondent's past experience developing Non-Market housing projects;
9. Respondent's urban design vision and proposed uses;
10. Respondents familiarity with the City regulatory policies and procedures;
11. Overall presentation and quality of submission; and,
12. Other supplemental information provided during the developer interviews deemed relevant by the Evaluation Committee.

Accordingly, the Woodward's Steering Committee recommends the following four (4) developers: Concert Properties Ltd., The Holborn Group, Millennium Properties Ltd., and Westbank Projects Corp./The Peterson Investment Group Inc. as the most appropriate developers to be invited to respond to the RFP for the Project.

Non-Market Housing Sponsors:

Selecting the short-listed Respondents in the Non-Market Housing Sponsor Category was completed in cooperation with BC Housing using the following evaluative criteria:

1. ability to meet requirements of REOI and compliance with the Guiding Principles;
2. housing projects operated by the Respondent;
3. housing operating expertise and management philosophy;
4. Respondent's capacity to develop the Non-Market housing;
5. Respondent's management, staffing and financial capacity;
6. community linkages and partnership capability; and,
7. Non-Market housing project proposed for Woodward's

In short, three organizations were interested who have the capacity to sponsor the full 100 Non-Market housing units. The Woodward's Steering Committee recommends, therefore, that the following Respondents in the Non-Market Housing Sponsor Category be invited to submit more detailed proposals to the City, with certain clarifications and conditions as noted below, in the RFP: Affordable Housing Society, Columbia Housing Advisory Association, and PHS Community Services Society.

It is suggested that the RFP be structured to require that submissions include housing for both families and children; a range of tenants broader than just the "hard to house"; and giving priority to Downtown Eastside residents, as these are key characteristics of the program for the Woodward's redevelopment. Further it is suggested that if the Non-Market Housing Sponsors propose a co-op, it should give priority to Downtown Eastside residents, for both the housing occupants and the Board of Directors.

Eight other Respondents expressed interest in sponsoring a portion of the 100 units, in partnership with another society. These include: Alexandra Housing Society, Access Building Association, Central City Mission Foundation, Coast Foundation Society, Entre Nous Femmes Housing Society, McLaren Housing Society of British Columbia, Red Door Housing Society, and Vancouver Resource Society. The Steering Committee further recommends that the names of these organizations be provided to the three Short-listed Respondents, so that they can consider partnerships. The final two submissions did not qualify in that they did not satisfy the evaluation criteria.

It is further suggested that the three Short-listed Respondents in the Non-Market Housing Sponsors Category and the qualifying short-listed Developers be advised that the final selection of the Non-Market Housing Sponsor for Woodward's will be decided by the City and BC Housing, in consultation with the project Developer ultimately selected. In accordance with the City's original intent, the Short-listed Respondents Non-Market Housing Sponsors Category and the Developer Category will continue to be prohibited from creating binding partnerships between specific Sponsors and Developers, so as to ensure Council's flexibility to ultimately select the best combination for the Project.

Commercial and Retail Businesses

At this stage of the project, staff are of the opinion that the interest of all of the organizations responding under this category be forwarded to the Short-listed Developers for possible inclusion into their RFP submissions. Staff will report back to Council with recommendations for Commercial/Retail Respondents that should be included in the Project, and staff note that potential owners/tenants of commercial/retail space are not limited to the REOI Respondents that have registered interest at this time.

Non-Profit Societies, Social and Cultural Groups

City staff have continued to invite interest from groups in the community wishing to participate under this category and several more public functions have been scheduled over the coming weeks to ensure as many people as possible are aware of the Woodward's opportunity in advance of issuing the RFP. Staff in Cultural Affairs and Social Planning are analyzing all of the submissions received to date and are rationalizing both space requirements and logical user groups who could be located together to create synergies and economies of scale for their worthwhile programs. Staff in Facilities Design and Management continue to review City space requirements, operating costs, and opportunities for expansion and retraction.

The Director of Cultural Affairs, Social Planning, in conjunction with the Director of Facility Design and Management will report back to Council with recommendations for the Short-listed Respondents in the Non-profit Premises Category (the non-profit societies, including cultural and social groups, and other not for profit entities which wish to purchase or rent premises in the Project, including those which may not be able to pay market rates) which the City wishes the developer of the Project to consider as potential owners/tenants of purpose built amenity space in the Project, noting that potential owners/tenants of non-profit space in the Project are not limited to these Short-listed Respondents. Staff will also report back to Council the Short-listed Respondents in the Non-profit Premises Category which the City wishes to consider as potential owners/tenants of space in the portion of the Project to be owned by the City, together with estimated operating costs, and options for covering these costs.

THE REQUEST FOR PROPOSAL FRAMEWORK:

Given the multi-faceted complexity of the Woodward's redevelopment, crafting the terms and conditions of the RFP is challenging. Many community, economic, heritage, social, urban design, housing and other issues need to be weighed and balanced while permitting both flexibility for the Short-listed Respondents in the Developer Category to conceive and refine their RFP proposals and while providing certainty around the City process involving important urban design and zoning decisions.

Staff recommend that the drafting of the final RFP be a collaborative effort between the Short-listed Developer Respondents, BC Housing, and the City, recognizing that the City will be including mandatory requirements. Other supplementary information will also be requested from Simon Fraser University, Vancouver Community College and Army & Navy. The City will at all times exercise ultimate control over all decision making, but seeking iterative feedback from these groups will assist the City in creating a better and more comprehensive RFP package. By not proceeding arbitrarily, the City also avoids the dilemma of making decisions that could be unworkable for the key participants in the Project thereby avoiding the undesirable possibility of participants deciding not to respond to the RFP.

Staff anticipate that the RFP will be issued in late March, 2004, and will close approximately at the end of May. Public open houses will be scheduled in June and early July, 2004, in order to give the community the opportunity to review and comment on the RFP proposals. The Woodward's Steering Committee intends to recommend the selected Developer and Non-Market Housing Sponsor on July 20th, 2004. Detailed design work would be carried out over the balance of the summer.

The framework attached as Appendix "A", sets out the structure for the RFP. Although it is desirable to keep as many options open at this time as possible, the Project is at a critical juncture where important decisions have to be made. To this end, staff have identified a number of project components that make up the RFP Framework as follows:

1. The Role of the City of Vancouver in the Redevelopment:

Pursuant to Council's decision of January 27th, 2004, the City has made significant progress in defining its role in the redevelopment process as that of a Participating Investor. This role will see the City's involvement in the Project directed at a defined component of the Project. The RFP will set out the City's intent to sell the land and existing building to the Developer with an option back to the City to allow the City, as a Participating Investor, to convert the market value of the property, including all property holding and improvement costs, (collectively the "City's Investment") into ownership of a component of the Project, which component will be subdivided and built out by the Project Developer to the City's requirements, at a price which does not exceed the City's Investment, such price not to be more than the Developer's construction costs, including normal industry constructionmanagement fees. The Developer Respondents to the RFP will be encouraged, as part of the evaluation criteria, to submit the most favourable financial terms possible to the City.

Accordingly, the City will retain a medium block of space, of a size to be determined during the RFP process, to accommodate the City's commercial (office, retail, and/or service) needs or to provide locations for non-profits, cultural and/or social groups active in the Downtown Eastside, together with other such community benefits as put forth by each Developer. In addition to the City's conversion of its equity in the subject space, the City could purchase additional space in the Project at a price to be negotiated, should Council deem this to be desirable.

City staff will continue to identify specific needs and users to be accommodated in Woodward's and rationalize user requirements for the completed space. In the interest of furthering the objectives of the Vancouver Agreement, staff will continue to meet with the Federal Government to secure reciprocal space requirements and will report back to Council with opportunities, prior to Council selecting the Developer for the Project.

2. The City Objectives for the Redevelopment:

The City has identified many goals for the Project, most notably those set out in the Guiding Principles, which incorporate:

a) cultural and social objectives to include user group involvement and harness the talents, visions, and desires of people in the DTES and throughout the City;
b) meet or exceed the City's objective to incorporate Non-Market housing in the project;
c) create local employment opportunities in the construction and operation of the project;
d) be developed in a timely manner;
e) be environmentally sustainable;
f) take advantage of heritage opportunities;
g) and adopt a set of planning and urban design criteria that respects the local physical context of the neighborhood while commensurately delivering a financially viable and self-sustaining project.

The Woodward's site is a large one, and regardless of whether the entire existing structure is saved or not, the form of redevelopment emerging from the community consultation process and subsequent REOI make it evident that a wide mix of uses will be incorporated into the Project. Submissions in response to the RFP will solicit detailed proposals that incorporate a combination of Non-Market and market housing opportunities, institutional space, general offices, food/restaurant opportunities and other commercial tenancies. Simon Fraser University, Vancouver Community College and Army & Navy have all registered interest for large blocks of space and the City has received numerous requests from non-profit societies, cultural and social organizations wishing to have space in the redeveloped Woodwards.
Read Jones Christofferson ("RJC"), consulting engineers, has been engaged to review the Woodwards Building structure of the 1903/1908 building, the perimeter walls including the windows of the 1903/1908 building, the steel tower supporting the "W" sign, and areaways under the sidewalks. RJC's conclusions are summarized as follows:

(a) 1903/1908 Building:

In the 1903/1908 building the basic structure was found to be sound, minor, repairable areas of rot were found in the roof associated with active roof leaks, and at the foundations. Seismic upgrading strategies have been explored previously and found to be workable. The exact strategy and associated costs would depend on the design requirements for this building, lateral load resistance of the structure is minimal and would need to be provided by the addition of shear walls, bracing, connection to adjacent structure or a combination of measures. The brick was found to be fairly soft and water absorptive, meaning that to preserve the brick it must be kept warm to promote drying in wet weather. For this reason RJC recommends that the walls remain uninsulated and that the building is most suitable for office-commercial use rather than residential use as this is a more moisture-generating use. The windows were inspected and most of the windows above the main floor are original. Typically the sills and bottom sashes need replacement, but most of the windows are good candidates for restoration. Approximately 50% of the glass inspected was original.

(b) The Steel Tower

The steel tower was found to have some repairable deterioration mostly associated with the base. The structural review suggested it probably would meet current seismic codes once it is repaired. RJC did not review the sign and its attachment to the tower.

(c) The Areaways

The areaways have severely deteriorated concrete, currently supported by shoring, and would need to be rebuilt if retained. Based on this report, costs to preserve the building, including contingencies but not soft costs, are in the range of $1.4M. Not included are costs of restoring/rebuilding cornices and other decorative elements, maintenance repairs, new electrical & mechanical systems, and the renovations and structural upgrading required by the specific use to be proposed for the building.

Based on this analysis, staff would recommend that the RFP require the mandatory retention and restoration of the 1903/1908 building.

A clear set of Urban Design Guidelines is required to provide the Short-listed Developers direction and certainty on what form of redevelopment may be permissible. Issues pertaining to height, density, massing, parking, and other planning criteria must be identified. In drafting the Urban Design Guidelines, it is expected that a degree of flexibility will be maintained in order to allow creativity of individual Respondents and design consultants and further opportunities for the City to maximize its participation. At the same time, however, there will be specific issues where "mandatory" guidelines are prerequisites to design and the design criteria will differentiate these "must haves" from other guidelines that may be deemed as "discretionary".

The ultimate design of the Project must be sensitive to the historic neighourhood of Gastown and blend with the existing urban fabric. Although the design of the building is of paramount concern, the urban design for the immediate neighbourhood is also very important and the Urban Design Guidelines will set out planning criteria for the balance of the Cordova, Hastings, Abbott, and Cambie city block, as well as adjacent properties on the south side of Hastings Street, in anticipation of adjacent property owners commencing redevelopment projects of their own. The proposed Urban Design Guidelines will be circulated to both the Urban Design Panel and the Heritage Planning Commission for comment. The Director of Current Planning will report back to Council prior to issuance of the RFP to seek Council's formal endorsement of the Woodward's Urban Design Guidelines.

3. Commercial/Retail Respondent's Building Specifications and Program Requirements:

Staff recommend that the RFP include as much information as possible to assist the Short-listed Developers to accommodate interests expressed in the Commercial/Retail Premises Category of the REOI.

Simon Fraser University:

Although SFU made a Submission under the Non-Profit Premises Category, SFU could serve as the Project's commercial anchor. The public feedback from the REOI open houses held in the "W" room on November 24th and 29th, 2003 confirmed strong community support for SFU relocating their School for Contemporary Arts from their Burnaby campus to downtown. This would take approximately 180,000 square feet of space. Most of the Developer Respondents also believed, depending on SFU's ability to meet their respective commitments by a specified time, that SFU would be an important anchor for the Project and would have a strong influence on the overall design of the Project. SFU's presence could lead to the development of student housing, for example, and associated retailers, restaurants, and offices interested in targeting a wider collegiate and community market maybe interested in taking space in the redevelopment to cater to the hundreds of students and faculty that would have a continuous presence in the neighourhood seven days a week.

Follow-up meetings with SFU's Chancellor and Facilities Development staff confirm SFU's strong desire to be included in the Project. SFU is flexible about either owning space or negotiating a long term lease. The City has been advised by SFU that a catch-22 exists in that SFU cannot solicit required senior government funding or private sector contributions until a space program has been completed and SFU is confirmed as an anchor in the Project. It is likely that SFU will not be able to finalize its capital fundraising until after: (i) the RFP closes; (ii) the successful Developer is selected; and, (iii) agreement is reached on the business terms of SFU's involvement in the project. Only then will SFU request consent from its Board of Governors to proceed with the Project. In order to address City staff's concern about timing, SFU will agree to convene an advisory panel to negotiate the business terms of its involvement with each of the Short-listed Developers and will commence preparations for meeting with senior government finance officials as soon as possible. Accordingly, staff will request that SFU outline the technical requirements and base building specifications for their School for Contemporary Arts Program for incorporation into the RFP, together with a milestone timetable for its fundraising program.

Given the significant space requirements of SFU and the financial certainty that would be afforded to the redevelopment from a $30 to $35 Million dollar injection, the Woodward's Steering Committee recommends that the RFP Framework be structured to include two options: one submission to incorporate SFU and one that does not. This structure will permit the City to pursue a promising outcome with SFU, while commensurately ensuring that other viable options are put forward by the Short-listed Developers in the event that SFU is not able to secure its required capital funding.

Other Anchor Tenants:

Vancouver Community College and Army & Navy will be requested to further outline the specific technical requirements of their programs including base building and construction specifications. By structuring the RFP as a "two option" proposal, both VCC and Army & Navy would be afforded a mutually exclusive opportunity to be included in the Short-listed Developer Submissions, provided that such base building and construction specifications were manageable and desirable to the Short-listed Developers for inclusion in their respective submissions.

4. Financial Oversight:

In accordance with the Project Framework adopted by Council in April 2003, comprehensive proforma analyses will be created and tested, achievable density and development efficiencies as outlined in the Urban Design Guidelines will be studied, and the cost/benefits arising from any heritage incentives for tax exemption, density bonusing, grants, and parking exemptions will be evaluated. Staff will ensure that bona fide quantity surveys will be undertaken to cost out the construction alternatives put forward. It is extremely important that the development economics of the Project are viable, but that the City's requirements of a "community bundle of goods" is fair and balanced.

5. Provision for Further Community Consultation:

The public consultation process will actively involve 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 site. The process will solicit comments on the ideas and proposed uses for the site arising from the RFP which, in conjunction with the other evaluative criteria, will be used to help inform Council's ultimate decision. This process is not a formality, but rather it is an effort to ensure that Council receives a broad range of information before making decisions that are financially viable regarding the needs of both the Downtown Eastside and the broader community. A critical objective of the public consultation process is to affirm 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 in the larger community.

6. Evaluative Criteria and Evaluation Committee:

The Woodward's Steering Committee will summarize the responses to the RFP for Council and make recommendations that it considers to be in the City's best interest. A Woodward's Steering Sub-Committee will be appointed to serve as the RFP Evaluation Committee and this Evaluation Committee will liaise with the Urban Design Panel and Vancouver Heritage Commission in addressing key urban design issues and heritage objectives for the Project as well as conduct proforma analysis and evaluate technical issues as they arise.

The RFP will stipulate the Evaluation Criteria to be used by both the Woodward's Steering Committee in making a recommendation, and by Council in making its final decision in selecting the Developer for the Project. The key decision criteria will include, but shall not be limited to, the following:

The RFP will identify those items that are mandatory, preferable, and/or optional requirements.

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 Woodward's Steering Committee recommends that: (a) Concert Properties Ltd., The Holborn Group, Millennium Properties Ltd., and Westbank Projects Corp./The Peterson Investment Group Inc. be the Short-listed Respondents in the Developer Category; and (b) that Affordable Housing Society, Columbia Housing Advisory Association, and PHS Community Services Society be the Short-listed Respondents in the Non-Market Housing Sponsor Category; and that each of these Respondents be invited to respond to the RFP.

A detailed Request for Proposal Framework has been set out to guide this next important piece of work forward and is attached as Appendix "A". Staff anticipate that the Request For Proposal will be issued in late March 2004, and would close approximately in late May. Public open houses will be scheduled in June and early July 2004, in order to give the community the opportunity to review and comment on the RFP proposals. The Woodward's Steering Committee intend to recommend the selected Developer and Non-Market Housing Sponsor on July 20th, 2004. Detailed design work would then be carried out over the balance of the summer.

The renovation and reuse of Woodward's has been identified as a top priority of the Vancouver Agreement. The City is well on its way of achieving its objectives of revitalization of the neighbourhood, encouraging heritage conservation, securing a mix of project uses, providing Non-Market housing, ensuring street-front retail continuity and accommodating a mix of incomes and the City is ready to undertake the next phase of the project - the RFP stage.

All REOI Respondents in all categories have been advised of staff's recommendations.

* * * * *

ag20040224.htm

Comments or questions? Send us e-mail at info@city.vancouver.bc.ca
© 2002 City of Vancouver