Vancouver City Council

CITY OF VANCOUVER ADMINISTRATIVE REPORT

	Date:	January 24, 2005
	Author:	Z. Jankovic/ K.Hemmingson
	Phone No.:	6448/6077
	RTS No.:	04710
	CC File No.:	1401-78
	Meeting Date:	February 15, 2005

TO:	Vancouver City Council
FROM:	Director of Current Planning
SUBJECT:	Heritage Building Rehabilitation Program - 5 W Pender Street

RECOMMENDATION

A. THAT Council authorize the City to enter into a Heritage Revitalization Agreement for the site at 5 W. Pender Street rehabilitation, repair and replacement of the Chinese Freemasons building in perpetuity and to supplement and vary the HA-1 District Schedule of the Zoning and Development Bylaw to:

- grant a density bonus of 35,334 sq. ft. available for transfer, which includes both 922 sq.ft. of notional residual density and 4,373 sq.ft. if this project does not receive a Historic Places Initiative Grant from the Federal Government;

- limit the development of the site to the built form proposed in Development Application Number DE 408526; and

- make Sections 4.2, 4.4 and 4.6 of the HA-1 District Schedule not applicable to this heritage site as the existing heritage building cannot comply.

AND THAT Council require a covenant providing that the density bonus not be available for transfer until the rehabilitation is complete, unless the owner secures completion of the rehabilitation by a separate agreement.

B. THAT, subject to approval of RECOMMENDATION A, Council authorize two façade grants for a total of $100,000 ($50,000 for each principal façade) source of funding to be the 2003 - 2005 Capital Plan. Approval of these recommendations requires eight (8) affirmative votes.

C. THAT the agreements shall be prepared, registered and given priority to the satisfaction of the Directors of Planning and Legal Services.

D. THAT , subject to approval of RECOMMENDATION A, Council instruct the Director of Legal Services to prepare a Tax Exemption Bylaw for 5 W Pender for a property tax exemption which is not to exceed a value of $247,294 or a period of ten (10) years, which ever comes first.

E. THAT, if the Tax Exemption By-law receives the assent of electors, or is deemed approved by the electors under the Vancouver Charter, the Director of Legal Services bring forth a Tax Exemption By-law providing that:

- If issuance of an occupancy permit for the heritage rehabilitation work authorized under Development Application Number DE 408526 occurs before October 31^st, the tax exemption period for 5 W. Pender Street will begin on January 1^st of the next calendar year;

- If issuance of an Occupancy Permit for the heritage rehabilitation work authorized under Development Application Number DE 408526 occurs after October 31^st, the tax exemption period for 5 W. Pender Street will begin on January 1^st of the calendar year after the next calendar year; and

- If the owner of the property does not fulfill all requirements necessary to obtain an Occupancy Permit within sixty (60) months after the enactment date of the Tax Exemption By-law, it will have not further force or effect.

F. AND THAT Council instruct the Director of Legal Services to bring forward for enactment a by-law to authorize the Heritage Revitalization Agreement.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of the A, B, C, D, E and F

COUNCIL POLICY

Transfer of Density Policy and Procedure

Heritage Building Rehabilitation Program Policies and Procedures for Gastown, Chinatown and Hastings Corridor.

Approval of grants requires eight (8) affirmative votes.

PURPOSE

This report seeks Council's approval to enter into a Heritage Revitalization Agreement (HRA), two façade grants, property tax relief, and transferable density bonus to secure the rehabilitation and long term conservation of the "B" listed building at 5 W Pender Street.

BACKGROUND AND SUMMARY

In July 2003, City Council approved a Heritage Building Rehabilitation Program (HBRP) for Gastown, Chinatown, and later extended the program to the Hastings Corridor. The program will be available for a five-year period (2003 - 2008) to initiate economic activity in these historic areas. The objective is to encourage owners to rehabilitate their heritage buildings by compensating them for "shortfall costs". These costs are defined as the amount required to make a project viable when a major building upgrade is completed. The City determines the amount of each incentive through site-specific analysis and compensation is given to the owner through various tools in the following order:

· Historic Places Initiative (HPI) grants
· Façade Grant
· Property Tax Exemption
· Transferable Bonus Density

As an added incentive for preserving buildings that contribute to the distinctive character of historic Chinatown, the HBRP allows the City to authorize transfer of notional residual density off-site, as part of the bonus density allocation. It is referred to as notional density as there are no FSR regulations in Gastown or Chinatown, therefore the main factor in regulating development potential is the height limit. Based on this, Council established as part of the HBRP that "residual" density is the difference between 5.5 and the on-site FSR.

Historic Places Initiative (HPI) is a Federal Government heritage building incentive program that awards building owners 20% of the total rehabilitation costs, up to a $1,000,000 maximum, in the form of a cash grant after the work is completed. This project has been put forward for consideration; however, approval for the Federal Grant is not known at this time. The recommended HRA has been structured to allocate an equivalent value of transferable bonus density if the owner is not successful in receiving a federal grant.

DISCUSSION

Development Proposal: The applicant proposes to rehabilitate the existing heritage building in Chinatown making this the first project in Chinatown to take advantage of the incentive program. The proposal is to adaptively re-use the existing building for 11 self-contained residential units for seniors with common dining facilities and a commercial kitchen on the ground floor. A hobby room and outdoor gardens are planned on three levels of the four- storey building.

The Chinese Freemasons building at 5 W Pender is located near the centre of the Chinatown Historic Area (please see Site Map below). On behalf of the owner, Joe Y. Wai Architect has submitted a development application proposing to rehabilitate and code upgrade the heritage building in exchange for compensation through the Heritage Building Rehabilitation Program. The requested compensation package includes transferable bonus density, a property tax exemption, and a façade grant.

Figure #1: Site Map

Heritage Value: Constructed between 1906 and 1907, this building's heritage value is found both in its architecture and in its history of use. The architectural heritage value is represented by the unique treatment of its principal façades ; one of which is a typical commercial façade for the era (Carrall Street) and the other which reflects Chinatown's particular style of open balconies and generous glazing. 

The ground floor, like most ground floors in Chinatown, was used for retail space and offices, while the upper floors were used for a restaurant, by long-term tenant, the Pekin Restaurant (later the Pekin Chop Suey House). The Chee Kung Tong (sometimes called the Oriental Society), later the Chinese Freemasons, had their meeting rooms here, as well as a dormitory for Chinese males and a Chinese school.  Dr. Sun Yat Sen is reported to have stayed in the building, probably in 1911, while raising funds for his revolutionary Kuomintang party during his period of exile from China.
 
Rehabilitation Plan: The proposal includes the restoration of the brickwork including brick replacement and paint removal, consolidation of the cornice, reconstruction of the original storefront configuration which is all part of the plan to retrieve the original historic character of the facades. However, in order to improve livability, the top floor is proposed to extend into the existing (recessed) Pender Street balcony. While this compromises this heritage balcony, staff have agreed to this intervention as it is critical to the proposed use. Particular attention is given to the window configuration, where layout and members dimensions are to be consistent with original wood fenestration as depicted in the historic photos. This will make substantive contribution, not just to the proportion and legibility of the building, but to the streetscape generally.

The recommended HRA and associated covenant would ensure the rehabilitation and conservation of the building as well as commitment from the owner for on-going maintenance. The HRA will authorize bonus density to be transferred off-site.

REHABILITATION COST

In accordance with Council's Heritage Building Rehabilitation Program Policies and Procedures, staff have reviewed the applicant's shortfall costs calculation and undertaken an independent analysis. Staff have concluded that a total shortfall cost of ($2,067,896) is justified for compensation in the following manner:

	Category	Value / $		Bonus Density Implication / sq.ft.
	Total Shortfall Cost		$2,067,896.00
Federal Government Incentive	Federal Historic Places Initiative (FHPI)	$218,671.00		*4,373.42
	Shortfall Cost after FHPI (To be matched by COV)		$1,849,225.00
Heritage Building Rehabilitation Program (HBRP) Incentives	Façade Grants	$100,000.00
	Property Tax	$247,294.00
	Bonus Density (to meet the Shortfall Cost)	$1,501,931.00		30,038.62
	Shortfall Cost Compensation	$2,067,896.00
Additional Incentive	Notional Residual Density	$46,100.00		922.00
	Transferable Bonus Density			35,334.04
	Total Compensation $ (Shortfall Cost Compensation $ + Notional Residual Density $ )	**$2,113,996.00

*Should the applicant not receive the federal grant or only part of the grant applied for, the HRA is structured to compensate the owner accordingly.

**Total compensation amount exceeds the Shortfall Cost compensation amount because notional residual density is offered as an additional incentive.

Tax Exemption By-law Process: The Vancouver Charter lays out the requirements for an enabling tax exemption by-law and notification process for the public. If Council approves the recommendation to provide a property tax exemption, staff will advertise notice of the proposed by-law as required by the Charter, and state that Council may adopt the by-law after 30 days unless more than 1/20^th of electors petition Council. If 1/20^th or fewer electors petition Council within the 30 day period, the Charter deems that the electors have approved the tax exemption, and Council can proceed to enact the by-law. If more than 1/20^th of electors petition Council, then a further report will recommend to Council whether or not to seek the assent of electors and the process required to do so.

The Property Tax Exemption By-law will stipulate the terms under which the recommended property tax exemption will be provided. The By-law will provide a complete property tax exemption to the property for the period necessary to achieve the stipulated tax exemption of $247,294 after which the property will be fully taxable. Should the entire amount not be achieved in a ten (10) year period, the exemption will expire and the property will become fully taxable. If the Occupancy Permit is issued before October 31, the exemption will be effective in the taxation year immediately following. If the Occupancy Permit is issued after October 31, the exemption will be effective in the second following taxation year. Staff will provide an annual report to Council on the status of this and other exemptions approved under the program.

Inventory of Unsold Density: The balance of available heritage density on December 24, 2004 was 98,214 sq. ft. If Council were to approve the recommended HRA for 5 West Pender Street, the amount of 35,334 sq. ft.(. (34,412 sq. ft. to meet Shortfall Cost and 922 sq. ft. of notional residual density) will be added to the inventory available heritage density totalling 133,548 sq. ft. Staff support the balance as presented.

Comments from the Advisory Bodies and Notification: On July 19, 2004 the Vancouver Heritage Commission reviewed the application and supported the project in principle noting that wood is preferred over aluminium for window application and that every effort should be made to avoid intervention on recessed balconies on the 5^th floor while not sacrificing liveability.

On July 13, 2004 the Chinatown Heritage Planning Committee reviewed the application and supported the project requesting that applicant restore windows to their original configuration and encouraging the applicant to commemorate the historic association of the building with Dr. Sun Yat-Sen. The applicant has committed to this commemoration.

Following standard notification procedures, 828 surrounding property owners were notified and invited to comment on the proposal. Staff received 4 responses, all in favour, noting the added value to the neighbourhood in keeping and restoring this historic building.

CONCLUSION

As this is the first project in Chinatown seeking incentives through the Heritage Building Rehabilitation Program, there is a particular interest in successfully bringing this project to completion. The proposed façade grant, property tax exemption and transferable density bonus would compensate the owner for the shortfall cost involved in rehabilitating this "B"-listed Heritage Register Building. The recommended Heritage Revitalization Agreement and associated covenant will secure the City's interest of ensuring the building is promptly rehabilitated, seismically upgraded and maintained on an ongoing basis.

LINK TO APPENDIX A

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