A5 ADMINISTRATIVE REPORT Date: February 4, 1997 Dept. File No. F621 TO: Vancouver City Council FROM: Manager of the Housing Centre SUBJECT: Lease Terms for 20 West Hastings Street RECOMMENDATION THAT Council approve a lease for the New Portland Hotel project (Lot K, BLK. 29 DL 541 Group 1, Plan LMP22692) at 20 West Hastings Street to the Portland Hotel Society on the following terms and conditions: 1. a term of 60 years; 2. at a prepaid lease rent of $356,250, due and payable on or before 90 days from issuance of occupancy permit; 3. commencement date being the earlier of the date of signing of the lease by all parties or 120 days from the date of Council approval of the lease terms; 4. the City may cancel the lease if construction has not commenced within 12 months of the date of commencement of the lease; 5. permitted uses in this non-market project include sleeping rooms with bathrooms, administration offices, communal kitchens, lounges, residential amenities, and a cafeteria which may be available to the public as well as the residents; 6. occupancy shall be restricted to core need, hard-to-house singles and couples, with priority to persons or couples where at least one person has a serious mental, health, substance abuse problem, or other similar problem; and 7. Such further and other terms as are acceptable to the Manager of the Housing Centre and the Director of Legal Services, it being noted that no legal obligation shall arise until execution of the lease. - 2 - GENERAL MANAGER'S COMMENTS The General Manager of Community Services RECOMMENDS approval of the foregoing. COUNCIL POLICY It is City policy to purchase privately-owned land for non-market housing development and lease it to non-profit sponsors for 60 years at a prepaid rent, equal to 75% of market value. It is also Council policy to maintain and expand housing opportunities for low and moderate income households. The City provides grants for non-market housing projects through the Affordable Housing Fund where conditions require a grant to ensure project viability. PURPOSE This report seeks Council s approval of proposed lease terms for the non-market housing project at 20 West Hastings Street (see Appendix A). BACKGROUND At its November 5, 1996 meeting, Council approved a $300,000 reduction in the prepaid lease rent for the 72-unit New Portland Hotel project at 20 West Hastings via a grant from the Affordable Housing Fund. The grant was approved to compensate for both the presence of an underground basement on the site and a property encroachment to the west. The City had acquired this site in 1994 for $875,000 for a non-market housing development for Downtown Eastside single men and women having mental, health and/or substance abuse problems. The normal lease value, at 75% of market value, would be $656,250. The lease will be drafted using the BCHMC approved standard lease charge terms, varied as herein set out. The lease must be signed within 120 days following Council approval not the normal 90-day period, because of multiple funding sources that need to be co-ordinated and a customized operating agreement needs to be prepared. Receipt of the grant was conditional upon BC Housing agreeing to: 1) a prepaid lease amount of $356,250, 2) granting of an additional 14 more units for this project for a total of 86 studio and one-bed units and, 3) their acceptance that the City s share of the purchase price for the Coal Harbour Co-op would be determined by the social housing agreement between the City and Marathon Realty. All three conditions have now been satisfied and the lease for the project should now be prepared. STATUS OF PROJECT A Development Permit was approved July 1996 for 72 units. Conditional approval for development of the additional 14 units, resulting in two extra floors, has been received and a revised Development Application will be submitted shortly. Construction start is slated for June 1997. * * * * *