|
CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
January 18, 2005 | |
Author: |
David Murphy | |
Phone No.: |
604-873-7556 | |
RTS No.: |
4817 | |
CC File No.: |
5311 | |
Meeting Date: |
February 1, 2005 |
TO: |
City Council |
FROM: |
Subdivision Approving Officer |
SUBJECT: |
Strata Title Conversion - 2226 West 12th Avenue |
RECOMMENDATION
A. THAT the application to convert the previously occupied building at 2226 West 12th Avenue (Lot G, Block 403, D.L. 526, Plan LMP53672) to strata title ownership be approved.
B. THAT the Approving Officer and Director of the Housing Centre report back on suggested changes to the City's Strata Title and Cooperative Conversion Guidelines in response to revised notice provisions in the Residential Tenancy Act and lease provisions that contractually circumvent the interests of tenants in the City's consideration of conversion applications.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of the foregoing.
COUNCIL POLICY
Council policy is reflected in the City's Strata Title and Cooperative Conversion Guidelines, which outline factors which Council will consider in reviewing applications for converting previously occupied buildings to strata title or cooperative ownership. Council approval is required specifically for all residential buildings containing six dwelling units or more.
PURPOSE
Council approval is required for an application to convert the previously occupied building at 2226 West 12th Avenue (Lot G, Block 403, D.L. 526, Plan LMP53672) to strata title ownership. A total of thirty-four residential strata lots are proposed.
BACKGROUND
The site is zoned C-7 and contains a four storey multiple dwelling building completed in 2003. The location of the site is shown below.
The building is owned by a limited company (12th Avenue Holdings Ltd.), and has been occupied by residential tenants since its completion in mid-2003. The holding company was taken over by new ownership in July, 2004, who purchased the company with the intent of converting the building to strata title ownership. Thirty units were tenanted at the time the strata application was submitted in October, 2004.
Normally, City staff mail Tenant Response Forms to tenants once an application is received. However, the owner had obtained a copy of the City's Tenant Response Form and provided copies to tenants prior to making the application, as well as posting the required notices in the building and providing tenants with prospective sale prices and management fees. Of the thirty response forms submitted, 28 tenants had no objections to the strata conversion, one was opposed and one indicated that they didn't know. The tenant who opposed had lived in the building for 10 months at the time the application was made and was in a fixed term lease that expired on November 30, 2004. She has since had her lease extended on a short term basis and is still a tenant in the building.
While a few tenants were renting on a month to month basis, most were in fixed term leases with expiry dates in late 2004, or had signed leases or extensions with the following clause:
The Tenant acknowledges that the Landlord may apply to the City of Vancouver for approval to convert the Premises by way of strata titled subdivision into lots and the Tenant does hereby covenant and agree to cooperate fully with the Landlord in pursuance of any such application and conversion, including upon request of the Landlord or the City the prompt execution and delivery of consent to such conversion required by the City or any other government authority for approval of such conversion. The Tenant further agrees that the Tenant will not oppose the Landlord's application for conversion of the Premises to strata lots.
Since the application was initially submitted, some tenants who completed Tenant Response Forms have vacated the building, and some units have been rented out to new tenants, who have signed leases with the above-noted clause or rent on a month to month basis. There are currently three vacant units in the building. Pursuant to Section 49 of the Residential Tenancy Act (2002), which pertains to landlord's use of property, a two month notice period is required to end tenancy if the landlord intends, in good faith, to convert a residential property to strata lots under the Strata Property Act.
STAFF ANALYSIS
In addition to Development Services, the City Engineer, City Building Inspector and Manager of the Housing Centre have reviewed this application.
The City Engineer has no servicing requirements for this site. The City Building Inspector reports that the previously-occupied building substantially complies with all relevant City By-laws.
The Manager of the Housing Centre has the following comments:
"The Director of the Housing Centre is prepared to support the proposed conversion of 34 units at 2226 West 12th Ave. from rental to strata title. However, the clause in the tenant agreement quoted above is a concern. The purpose of the City's Strata Title and Co-operative Conversion Guidelines is to ensure that conversions do not jeopardize the City's rental stock and also to ensure that impacts on the tenants are mitigated. The Guidelines require that 2/3 of the tenants support a conversion and, in the absence of this clause, encourages the applicant to seek tenant support by offering incentives such as discounted sale prices, allowing tenants to stay rent free, providing increased compensation for moving, or providing tenants with longer term leases at existing rents. The clause, which requires that the tenants support an application to convert, compromises the intent of the Guidelines and limits the ability of tenants to assert their interests.
The applicant purchased the building with tenant agreements, including this clause, in place. We understand the reason the project was not stratified prior to occupancy was to minimize property taxes and the cost of insurance. If an owner is prepared to enter into an agreement with the City to operate a strata building as rental, which the City has done in the past to secure rental stock, they can stratify the building and still enjoy the same savings on property taxes. The reduction in the cost of insurance would be minimal, and consequently there is no reason for such a clause. The fact is developers of new buildings should stratify prior to occupancy; otherwise they run the risk that the City will turn down an application to convert as tenant support is only one element that the City considers when presented with an application.
This is the first time that this clause has been encountered, and it is recommended that the City's Guidelines be reviewed to ensure that tenant interests are properly represented and any impacts appropriately mitigated.
If this was an older building affordable to modest income households, the Director of the Housing Centre would probably not support the application, especially now when vacancy rates in the City and Kitsilano are both 0.6%. However, the building is new and should have been stratified when it was built in 2003. Rents in the building average $995/month for bachelor units; $1,295 for the 1-bedroom units; $1,450 per month for the 1-bedroom plus den units; and $2,100/month for the 2-bedroom units. These are much higher than the average monthly rents for Kitsilano which are $796 for a bachelor, $850 for a 1-bedroom unit, and $1,211 for a 2-bedroom unit. There has been substantial turnover in the building since it was occupied, indicating that the tenants have options in the rental and ownership market."
The Approving Officer is also concerned that it could become more common practice for building owners to include a "no-opposition to strata conversion" clause in rental agreements, particularly in periods when rental availability is in short supply (i.e. vacancy rates are low) and a tenant also has few options but to sign such a lease. A lease of this nature essentially precludes a tenant from taking full advantage of the opportunities provided to consider their interests in the strata title conversion process. However, in the application under consideration the specifics justify approval of the strata title conversion. This is a recently constructed building that the original owner/developer intended to strata title, but chose to defer for financial reasons; otherwise, the building could have been strata titled prior to initial occupancy in mid-2003, without requiring any City approval. There are no tenants for whom this building has been a long term residence. In addition, all remaining tenants clearly did take occupancy with the understanding or expectation that it may not be available on a long-term basis if strata titled. Finally, strata title conversion does not necessarily mean that subsequent strata lot (condominium) purchasers would necessarily choose to discontinue market rental in favour of owner occupancy. In fact, a growing number of residential units available on the rental market are, in fact, strata title units.
CONCLUSION
Based on the foregoing, and on the applicant's compliance with the City's Strata Title and Cooperative Conversion Guidelines, the Subdivision Approving Officer supports this application.
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