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CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
November 8, 2004 | |
Author: |
Nathan Edelson | |
Phone No.: |
7444 | |
RTS No.: |
04479 | |
CC File No.: |
1203 | |
Meeting Date: |
November 16, 2004 |
TO: |
Vancouver City Council |
FROM: |
General Manager of Community Services in consultation with the Directors |
SUBJECT: |
Lease and Maintenance of City-owned Capital Asset at 390 Main Street |
RECOMMENDATION
A. THAT Council direct staff to finalize a lease for 390 Main Street legally described as: Parcel Identifier 015-684-016, Amended Lot 10 (see135890 L), Block 10, District Lot 196, Plan 184 for five years commencing January 1, 2005, for a nominal rent of $10.00 per year, and on such further other terms and conditions as may be acceptable to the Director of Legal Services, in consultation with the Directors of Real Estate Services, Social Planning, Risk and Emergency Management, Facilities Design and Management and Current Planning, it being noted that no rights or obligations hereby arise or take effect pursuant to this resolution until the agreement has been executed by the Director of Legal Services on behalf of the City and the non profit society ("the Society") being incorporated by the Vancouver Agreement to help implement the Downtown Eastside Economic Revitalization Plan and Employment Strategy.
B. THAT Council authorize the allocation of $3,312 to Building Services for property insurance and annual inspections, without offset; source of funds to be 2005 Operating Budget with an ongoing increase to the annual operation budget without offset thereafter.
C. THAT 390 Main Street Capital Asset be added to the City's Structural and Physical Plant Upgrading Programs in future capital plans so that it can be considered for repairs as funds are available.
D. THAT $630,000 for phase two of capital improvements in 390 Main Street be authorized to accommodate the Centre for Business and Community Economic Development, for report back to Council for approval after tenders are received; source of funding $230,000 from the 2003 DTES Unallocated Funding Account and $400,000 from Western Economic Diversification and the Province.
E. THAT the contract for Architectural basic services be awarded to the Iredale Partnership at an estimated fee of $50,000; said fee to be based on the Architectural Institute of British Columbia tariff of fees for such work.
GENERAL MANAGER'S COMMENTS
The General Managers of Community and Corporate Services recommend approval of A, B, C, D and E.
CITY MANAGER'S COMMENTS
The City Manager recommends approval of A, B, C, D and E.
COUNCIL POLICY
In June, 1993 Council directed that City-owned properties occupied by non-profit organizations be held as assets in the Capital Fund and be charged a nominal rental rate. The lease/sublease/license of City assets below market value constitutes a grant and requires eight affirmative votes.
On July 28, 1998, Council confirmed principles to provide general guidance for Downtown Eastside actions and planning, which include encouraging legitimate commercial activity. On March 9, 2000, the City entered into the Vancouver Agreement to work with the senior governments to achieve these objectives.
In July 2003, Council approved the inclusion of all City-owned buildings occupied by social service, community or cultural tenants as Capital Assets in the City's structural and Physical Plant Upgrading Program in future Capital Plans.
PURPOSE
This report seeks Council's direction for staff to finalize lease agreements for five years with a non-profit society ("the Society") being incorporated by the Vancouver Agreement for the City-owned building located at 390 Main Street for the purpose of creating a Centre for Business and Community Economic Development. It also recommends allocation of funding for capital improvements, property insurance and annual building inspections.
BACKGROUND
The building at 390 Main Street is a significant physical landmark located on the northeast corner of Main and Hastings in the Downtown Eastside (DTES). The building was purchased and renovated by the Province to accommodate the Four Corners Community Savings Bank ("the
Bank"). The Bank operated in the community from 1996 to the spring of 2004. It was the only financial institution that focused on delivering essential banking services to the DTES low income community.
In December 2002, the City purchased 390 Main Street from the Province. This was done in part to help ensure the continuation of affordable banking services for low-income residents and in part to create a Centre for Business and Community Economic Development.
In 2003, the main floor and a portion of the basement were renovated in phase one. Funds were provided by Western Economic Diversification Canada, to re-arrange the bank layout and to provide three new offices, a shared computer training classroom space, a staff lunch room for all tenants, a relocated public washroom and a new communication closet for the new tenants engaged in community economic development initiatives. The foyer space on the main floor was also separated and secured by the installation of a new security gate so that the space could be made available to community groups for meetings or events in the evening and on weekends when the other services were closed.
The Province terminated operation of the Four Corners Bank in the spring of 2004 at a time when the Portland Hotel Society and VanCity Credit Union were able to initiate Pigeon Park Savings at 92 East Hastings to provide financial services to low income Downtown Eastside residents. While the Bank closed, community non-profit organizations have continued to offer employment and community economic development services at 390 Main Street.
DISCUSSION
Lease Agreements
Real Estate Services has proposed a lease agreement with the non-profit society the Vancouver Agreement is seeking to incorporate to help coordinate implementation of the Downtown Eastside Economic Revitalization Plan and Employment Strategy. The lease would use a format similar to that approved by Council in September 2003 for non-profit tenants occupying City-owned properties. The City would lease the building to the Society for a nominal rent of $10 per year for five years. The annual market rent for the building would be $95,000; property taxes are estimated to be $25,000 per year. These would constitute an annual grant to the Society.
The Society would complete subleases with other tenants that are engaged in the economic revitalization of the Downtown Eastside. The current sublease tenants have been co-residing at 390 Main Street since 2003. They include:
· Pathways to Employment - Human Resources Social Development Canada funds Pathways to Employment to provide residents with information regarding employment, training, business development opportunities, as well as community and government services.
· Fast Track to Employment (FTE) -The Vancouver Agreement, and other sources fund FTE to provide services to help facilitate business development, job training and employment opportunities for the long-term unemployed.
· The Aboriginal Community Career Employment Service Society (ACCESS) - The Ministry of Community, Aboriginal and Women Services funds ACCESS to provide employment training, counseling, job search, support services, and workshops for the DTES Aboriginal community.
Operations and Maintenance Arrangements
It is recommended that the Society be responsible for the cost of regular maintenance, security, utilities, and janitorial services associated with the building. The City would be responsible for major structural repairs, property insurance of the building and annual inspections.
Insurance
Staff are proposing that the City assume responsibility for property insurance for the building as it does for other City-owned or leased buildings. The tenant and sub-leased tenants will be required to carry property insurance for all their own contents including any tenant improvements installed for them before, at the time of, or after they take possession of the premises. The tenants will also be required to carry adequate commercial liability insurance and/or other forms of insurance coverage that are deemed necessary by the Director of Risk and Emergency Management, at her sole discretion.
Capital Improvements
It is estimated that $630,000 in for phase two of capital improvements, excluding furniture or equipment, will be needed to provide additional offices, meeting and classroom spaces in the building to accommodate the Society and sub-tenants to help implement the Vancouver Agreement's Economic Revitalization Plan and Employment Strategy. It is recommended that these be cost shared by the City and the other VA partners. The Federal and Provincial governments have agreed to provide a total of $400,000 for this project. Staff are requesting that the City allocate $230,000 for improvements to this City-owned building. At the current market situation, it is recommended to proceed with this renovation as soon as possible to minimize the likelihood of increased costs to due the rising price of construction.
The design of the 2003 renovations (phase one) was undertaken by the Iredale Partnership. Because of their familiarity with the building and to ensure continuity of the design it is recommended that Facility Design & Management negotiate a contract with the Iredale Partnership fees to be based on the recommended tariffs of the Architectural Institute of British Columbia.
FINANCIAL IMPLICATIONS
Previous Renovation and Operation
As part of a renovation, an additional $35,000 was required to replace the existing rooftop ventilation system to bring the system to its current standard. There was also a shortfall of $50,000 in anticipated revenues. These shortfalls could not be recovered from the rent as planned, due to the closure of the Four Corners Bank which had been paying the majority of building operating costs. The Vancouver Agreement has agreed to reimburse these costs.
Insurance and Inspection Costs
The cost of insurance premiums for the building structure at a replacement cost value of $1,450,440 is budgeted for $3,012 for 2004. It will also cost $300 per year for a building inspection. The 2004 costs will be covered by the Vancouver Agreement. Recommendation B recommends that the 2005 costs be covered by City operating funds as the building will be a non-profit asset. At present, there is no premium allocated for liability insurance.
Capital Budget
Recommendation C seeks Council direction to include 390 Main Street in the City's Capital Replacement and Upgrading Programs so that it may be considered for repairs, as funds are available.
Recommendation D seeks Council approval of $230,000 from the City to renovate 390 Main Street to accommodate the Centre for Business and Community Economic Development. The source of funds is from the 2003 Downtown Eastside Unallocated Funding Account. The Federal and Provincial governments have committed to provide the rest of the funds required for the budgeted amount of the renovation in the spirit of their partnership with the City in the Vancouver Agreement.
CONCLUSION
The lease arrangements and capital improvements proposed for the City-owned building at 390 Main Street are required for the creation of a Centre for Business and Community Economic Development. This centre will be a cornerstone in implementing the Vancouver Agreement's Economic Revitalization Plan and Employment Strategy. It will also help continue to provide an economic anchor for the corner of Main and Hastings now that some of the functions of the Bank have been relocated to another facility.
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