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.


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