SUPPORTS ITEM NO. 1 P&E COMMITTEE AGENDA NOVEMBER 28, 1996 ADMINISTRATIVE REPORT Date: November 13, 1996 Dept. File No.592 157 TO: Standing Committee on Planning & Environment FROM: General Manager of Engineering Services, in consultation with the Manager of Real Estate Services, Director of Legal Services and General Manager of Community Services SUBJECT: Areaway Encroachment - 8 West Pender Street RECOMMENDATION A. THAT the unpaid fees for the encroachments at 8 West Pender totalling $7,095, be collected and that the owner be given the choice of retaining the areaway and paying future fees or removing the areaway. CONSIDERATION B. THAT the fees for the areaway encroachment at 8 West Pender Street be reduced from the current rate to a nominal fee (noting that the overhead bay windows would still be subject to an annual fee of approximately $260), and that the fee reduction be retroactive. COMMENTS OF THE GENERAL MANAGER OF ENGINEERING SERVICES The General Manager of Engineering Services is of the opinion that the owners of all areaways should be treated equitably. The areaway at 8 West Pender Street provides extra space for private use, and to reduce its annual areaway fees would be to subsidize one property owner unfairly. If Council believes that there is justification for reducing the fees, item `B' is put forward for Council's CONSIDERATION. COUNCIL POLICY On March 11, 1986, Council approved the recommendation of the Planning and Development Committee: THAT the requested encroachments for the areaway (glass blocks and sidewalk opening) in the restoration of the Sam Kee Building, 8 West Pender Street, be approved, provided that the necessary encroachment agreements are entered into, to the satisfaction of the Director of Legal Services. On January 25, 1990, when considering a report on the revision of annual charges for street encroachments, Council approved an increase in the annual charges for several types of encroachments, including areaways, from about $.25 to $3.00 per square foot, with a minimum of $150, to be phased in over a three year period. (The minimum was subsequently reduced to $100, in September, 1992). On January 25, 1990, when considering a report on the removal of areaways to facilitate sidewalk reconstruction, Council approved a recommendation of the Planning & Development Committee (inter alia): "That where removal of an areaway is necessary to allow for local sidewalk improvements, sidewalk reconstruction, tree planting, utility installations, or for other similar reasons, the City terminate the encroachment agreement and require the property owner to abandon the areaway, with the exception of the Europe Hotel...and the Sam Kee Building ." (emphasis added) Annual fees for various types of encroachments are specified in the Encroachment By-law. However, Council does have the authority to set fees and annual charges other than as specified. PURPOSE The purpose of this report is to give Council the background on the areaway at 8 West Pender Street, related to a request from Mr. Rod Chow and Mr. Reg Chow that the annual encroachment fees be waived, and to recommend that the City continue to charge the annual encroachment fees as long as the areaway exists. BACKGROUND Mr. Jack Chow owns the Provincially designated heritage building at 8 West Pender Street which is known as the Sam Kee Building, a designated "A" category heritage building and a tourist attraction that is said to be the "narrowest building in the world". It is approximately 6 feet wide, with a basement "areaway" that extends a further 8 feet beyond the property line under the City sidewalk. The areaway comprises half of the building's total floor space. In 1986, the building was renovated and at the same time, the owner paid to have the sidewalk reconstructed with modern glass panels to simulate the old glass prisms which provided light to the areaway beneath the sidewalk. At that time, a four foot wide staircase was constructed to access the areaway through the City sidewalk reducing the sidewalk width at that point to six feet. The various encroachments onto the street allowance (areaway, sidewalk glass blocks, staircase and bay windows) became the subject of an encroachment agreement, as is normal practice, pursuant to the provisions of the Encroachment By-law. In 1990, Council approved amendments to the Encroachment By-law which increased the annual fees for some types of encroachments those where street or under-street space is alienated), and eliminated the annual fees for others (such as special sidewalk treatment, which does not adversely impact public use of the space). The annual fees for under-street areaways increased substantially, from approximately $.25 per square foot to $3.00 per square foot, phased in over a period of three years. The result for the Sam Kee Building was that there was no annual charge for the sidewalk glass blocks, but the annual fee for the areaway and access stairs increased (over a period of three years) to a total of approximately $2,400 from $226. Since late 1992, Mr. Chow has spoken with many members of staff in several departments in an effort to have the annual fees for the areaway encroachment waived. He has withheld payment of his annual encroachment fees for 1993, 1994 and 1995, for a total of $7,095. There are half a dozen letters on file from the Chows, and an equal number of responses. The Chows' position, followed by staff's response, has been that: 1. The areaway space is too narrow to be useable, and they derive no economic benefit from it. They request therefore, that the annual fees be waived. - Staff have responded that this areaway should be treated the same as other areaways (of which there are approximately 100 left in the City). 2. They have enhanced the public realm at their cost (glass blocks in sidewalk), and should be rewarded for bringing back a significant heritage feature, which has created a tourist attraction with large economic spin-offs. - Staff have acknowledged the renovation project; and in fact the building won a City of Vancouver Heritage award in 1986. (Note: They do not pay an annual fee for the special sidewalk treatment.) 3. There was no provision in their encroachment agreement for the 1990 fee increase. - Council considered the matter of the discrepancy between by-law fees and the fees in individual agreements on November 26, 1996. It is arguable by the Chows that the precise wording of the encroachment agreement may not permit any fee increases during the term of that agreement. However, the agreement does clearly provide that it may be revoked by the City at any time, in which case the City could, among other things: (a) require that the encroachment be discontinued and the street restored at the encroaching owner's expense; or (b) require that a new agreement drawn to the City's satisfaction, be entered into in order to continue the encroachments. 4. The 1990 fee increase specifically exempted the Sam Kee Building's encroachment, which has been "incorrectly categorized". - This is a misunderstanding by the Chows. In January 1990, Council considered two reports on the same day, in one the fees for areaways were raised, and in the other (unrelated) report the Sam Kee areaway was exempted from being removed to accommodate a sidewalk reconstruction and tree planting local improvement. The Chows have mistakenly linked these two matters. DISCUSSION Given the current situation, the options are: 1. The areaway be retained and Council confirm that it requires the outstanding annual fees to be paid. The General Manager of Community Services is of the opinion that the Sam Kee Building is an important heritage resource, which has been carefully restored. The General Manager of Engineering Services believes, however, that those portions of it that extend into the street allowance should be subject to the same regulations as other similar encroachments. All areaways are a benefit to the adjacent property, and should be charged equitably. Whether or not it is rented should not be a factor. 2. Council require the areaway and access stairs in the City sidewalk be removed, at the property owner's cost, leaving the special sidewalk treatment and glass blocks (and overhead bay windows). This option would allow the Sam Kee Building to continue to be a tourist attraction as the "narrowest building in the world". It would meet Council's policy of encouraging the removal of areaways, while keeping the sidewalk safe and attractive. (Note that a report back on the Europe Hotel areaway, and areaways in general, is being prepared by staff.) This option also meets the Chows' concern that the areaway is not useable and of no economic benefit. If the areaway is removed, Council must decide whether or not to waive the outstanding unpaid fees. It is noted that the bay windows would still remain as encroachments, for which there would continue to be an annual charge of approximately $260. In addition, removal of the access stairs will constitute an exterior alteration to this heritage building, thereby requiring careful review. 3. Council permit the areaway to be retained, but the annual fees be waived or reduced. Council does have the authority to set fees and annual charges other than as specified in the Encroachment By-law. However, the General Manager of Engineering Services recommends against waiving or reducing the annual fees for any one particular encroachment, since similar representations could be made by other property owners that their encroachments be granted similar treatment. To waive the fees for this areaway would not be equitable. CONCLUSION Council policy is to charge a fee for the space created by areaways that encroach into City streets. The General Manager of Engineering Services believes that this policy is appropriate and opposes exempting any class of buildings from this fee. This report recommends that the outstanding charges be collected and that the owner be given the choice of continuing the areaway as per the existing arrangement or removing it and not paying future costs. Council could consider if they wish to waive fees, however, the Manager of Real Estate Services and the General Manager of Engineering Services recommend against this. * * * * *