URBAN DESIGN
                                                 Date: April 2, 1997
                                                 Dept. File No. 3103
                                                 C.C. File No.: 8206

   TO:       Standing Committee on Planning and Environment

   FROM:     City Manager, in consultation with the Manager of  Real Estate
             Services, on behalf of the Property Endowment Fund Board

   SUBJECT:  Southeast   Shore  of   False   Creek:  Planning/Rezoning   of
             City-owned Lands for a Residential Community


        A.   THAT  Council   receive  for   information  a  report   called
             "Creekside Landing, Southeast False Creek" dated  January 1997
             and prepared  by Stanley  Kwok Consultants  Inc., representing
             completion  of Phase I of  the Southeast Shore  of False Creek
             development contract.

        B.   THAT the City Manager  be instructed to proceed with  Phase II
             of   the  development   contract  awarded   to   Stanley  Kwok
             Consultants Inc.  and report back  on the terms  of reference,
             reporting channel, fees, and budget for this planning/rezoning

        C.   The Director of Central Area Planning be instructed to proceed
             with the Council-approved  planning process for the  Southeast
             Shore of False Creek.

        D.   The Director  of Central Area Planning be instructed to report
             back   on   the   Council-approved   Sustainable   Development
             Consultancy for the  Southeast Shore of  False Creek by  July,

        E.   THAT  Council instruct  staff that  the existing  policies and
             objectives  for  development  in  South East  False  Creek  be
             considered  only  as  a   starting  point  for  area  specific
             development guidelines,  and that  in the development  of area
             specific guidelines, Council is prepared to consider deviation
             from existing  policy to  ensure development is  both economic
             and sensitive to  other concerns which  arise in the  planning

             FURTHER  THAT  Council instruct  staff  that  the analysis  of
             sustainability of the development reflect its urban context.

        The City  Manager  notes  that  Council  could pass  B,  C  and  D,
        requiring  that  the  redevelopment proposal  comply  with existing
        guidelines,  likely at  the expense  of full  cost recovery  to the
        City, and flexibility to achieve a development which meets multiple
        objectives.  However,  should Council  not wish to  approve E,  the
        City Manager RECOMMENDS F and G below in replacement for B, C & D.

        F.   THAT   Council   not  proceed   further   with   planning  for
             redevelopment at this time.

        G.   THAT Council instruct  the Manager of Real  Estate Services to
             investigate the sale  or lease  of the False  Creek Lands  and
             report  back to  the Property  Endowment Fund  for instruction
             relative to a further report to Council.


   Appendix  A  provides a  comprehensive  review of  Council  policies and
   development objectives for the False Creek lands.


   On January 28, 1997, the Property Endowment Fund Board resolved that the
   City Manager be instructed  to report to Council outlining  the economic
   implications of  redevelopment of  the Southeast  Shore of  False Creek,
   with a recommendation to proceed to the next stage.


   This  report  comments on  the issues  related  to the  redevelopment of
   Southeast Shore of False Creek and recommends that the next phase of the
   proposed  rezoning commence.    Council is  also  asked to  confirm  its
   financial objectives for these Lands.


   A full  factual background on the  subject Lands and the  history of the
   development analysis to date is provided in Appendix B.


   Consideration  of redevelopment of the  False Creek Lands is appropriate
   at this time.  Most major industrial users have relocated away from this
   area,  or will relocate in  the near future.  The  City owns most of the
   land.  It is the last remaining industrially zoned area  adjacent to the
   Creek.   Redevelopment  here would  meet City objectives  for additional
   residential development  near the downtown, water  access, completion of
   the waterfront walkway, and additional amenities.

   The City has  assembled the False Creek lands over a considerable period
   of  time,  and at  considerable  cost.   In  part,  the  example of  the
   successful City redevelopment  of the False Creek  Lands to the west  of
   Cambie Bridge provided motivation for these acquisitions.   However, the
   environment for  development has changed significantly  since that time.
   In particular, new environmental requirements have increased the cost of
   redevelopment  of  industrial lands  significantly.    And, Council  has
   established stringent standards for park space, development of walkways,
   and level of  public amenities  in general, and  specific objectives  to
   provide a model of a sustainable community and housing for  families and
   children in south east False Creek.

   The  financial  climate  has  also  changed.    City  budgets  are  more
   difficult.  Provincial  funding to local  governments has been  reduced,
   housing  programs have  been  curtailed significantly,  and support  for
   senior government infrastructure investments is more limited.  Taxpayers
   have  made  it  clear  that   they  require  a  high  level   of  fiscal
   accountability from governments.

   This development context lead to the Council's decision that an economic
   analysis of development options for the False Creek Lands be carried out
   as a  first step in analysing redevelopment of the area.  This analysis,
   completed by Stanley  Kwok Consultants Inc.  (the "Consultant"), was  to
   include development concepts, not as a planning exercise, but to provide
   a measure of reality for the economic analysis.


   The  Consultant considered  a number  of development  concepts  based on
   existing Council objectives.   In addition, input  was solicited through
   an  informal workshop and  meetings with various  stakeholders.  Several
   concepts  were   evaluated  including   an  industrial  park,   a  mixed
   industrial/residential concept  and a number  of residential  scenarios.
   The most viable alternative was  a residential development which assumed
   a density in excess of 3.0 FSR and a built-form including towers.   This
   alternative generates  an estimated present  value return of  $8 million
   plus the current land value.  The proposed residential density is higher
   than  that approved for False Creek North  (2.8 FSR) but lower than that
   approved for City  Gate (3.76 FSR).  A copy  of the Consultant's report,
   referred to as "Creekside Landing", is on file with the City Clerk.

   The  Manager of Real  Estate Services  notes that  based on  real estate
   investment  return  considerations, a  reasonable  return  would not  be
   achieved  by  the  Consultant's  preliminary  concept.    Based  on  the
   estimated  rezoning, consultant,  infrastructure,  remediation and  land
   costs and  land of approximately $125 million, a return of $8 million is
   not  considered  adequate compensation  for  the risk  involved  in this
   development.  Alternate strategies, based only on return considerations,
   would include selling the Lands or to pursuing interim holding uses  and
   redeveloping in a more favourable environmental and/or economic climate.

   The  Consultant found it  impossible to meet  a number  of existing City
   policies  fully, even  at this marginal  level of  financial return.   A
   relatively   high  density  and  high  rise  form  were  also  required,
   challenging Council's  objectives  for  family-oriented  housing  and  a
   conventional view of a  sustainable development.  In the  development of
   these  Lands,  the City  is  facing a  situation similar  to  those that
   existed   in  Joyce-Vanness  and   Arbutus  Village,  where  significant
   relaxations  of the  full  spectrum of  requirements  were necessary  to
   create a viable development.

   A factor, not yet  considered, which would affect project  viability, is
   the assumed tenure of the Lands.  The Consultant's analysis and economic
   viability  was  based on  freehold  ownership.   Leasehold  tenure would
   likely further reduce the already marginal returns, especially given the
   availability of similar  freehold product  on the North  Shore of  False


   In making decisions at this  time, Council is setting the  framework for
   the  development planning for  the area.   It is an  appropriate time to
   confront  conflicting objectives for cost  recovery and very high levels
   of amenity,  before confirming  expectations based on  existing policies
   and objectives.

   Development in this area can bring  a number of significant benefits  to
   the City at large and to new residents on the site.  New housing will be
   consistent  with the City's objective  to increase the  number of people
   living  close to  the  downtown;  water  access  and  walkways  will  be
   provided;  new  parks will be provided; and  some subsidized housing can
   be provided.   However, these amenities cannot be provided at the levels
   required by present City policy without a very major City subsidy.

   This is  a  significant decision  which obviously  can only  be made  by
   Council.   Accordingly,  RECOMMENDATION E  of this report  proposes that
   Council explicitly  instruct staff  that Council  is prepared  to modify
   existing policies in  order to ensure the development is viable and will
   return all costs to  the City.  Should Council not wish  to direct staff
   that  area  specific  development  guidelines  can  vary  from  existing
   policies to ensure cost recovery, the City Manager believes that Council
   should consider  the alternatives  of marketing  the Lands  or deferring

   The  high level  of City  subsidy required  to develop  these lands  for
   residential purposes and meet  existing policies fully is certain  to be
   substantial.   Marketing the lands to a  developer who will also receive
   financial benefits from construction of the buildings may place the City
   in a better position to achieve  cost recovery while maintaining a  high
   level of amenity.  It is  also possible, however, that environmental and
   development  uncertainties  would  result   in  limited  interest  among
   purchasers.    This  can only  be  determined  by  exploring the  market
   opportunities including interim uses of the site.  RECOMMENDATIONS F and
   G  above, presented  as an  alternative for  Council, would  pursue this


   "What is a sustainable  development" is a significant question  for this
   development  proposal,  given  Council's   resolution  in  this  regard.
   Council members have recently  received a number of letters  from people
   interested  in  the concept  of a  model  sustainable development.   The
   Manager  of  Real  Estate Services  notes  that  cost  implications from
   sustainable development  have not  yet been  considered in  the economic
   analysis, as this concept remains undefined.  RECOMMENDATION D, requests
   an early  report back on  this subject so  any cost implications  can be

   The City  Manager believes that  sustainable development in  an existing
   urban environment  raises significantly  different questions than  those
   which  would apply  in a  more isolated  area.   While a  modest density
   development is  often promoted as more sustainable, there are additional
   benefits  in considering higher densities in the urban content.  Housing
   more  people creates  efficiencies which  widen the  range of  choice in
   considering  alternate  sources  of  energy  and  waste  treatment.   In
   addition, higher  densities permit  more efficient use  of services  and
   locate more people close to downtown employment where walking, biking or
   taking transit are viable options.  Multiple dwellings, including higher
   buildings,  maximize energy efficiency and  by virtue of  views a higher
   value  could add more profit  to achieve other  public and environmental
   objectives.   Too narrow a  definition of sustainability  will certainly
   impact the financial viability of the development; it may also limit the
   potential environmental benefit of urban residential development. 

   RECOMMENDATION  E above also instructs  staff to consider  the issues of
   sustainability of these Lands within its urban context.


   This report provides appropriate  recommendations for further work on  a
   development  proposal for south east  False Lands, and  the City Manager
   recommends  approval  of B,  C  and D.    The City  Manager  suggests an
   additional resolution RECOMMENDATION E, stating that Council is prepared
   to consider  modifications  of existing  policies  to ensure  full  cost

   Alternate recommendations to explore the  potential for sale or  interim
   uses with  development deferred until a more  favourable economic and/or
   environmental climate are submitted,  should Council conclude it is  not
   prepared  to  instruct  staff  to  consider  modifications  to  existing
   policies to ensure cost recovery through development.

                       *     *     *     *     *

                                                                 APPENDIX A

                               COUNCIL DIRECTION
                         (Southeast Shore False Creek)

       On June 17,  1975, Council established the Property  Endowment Fund
        Board for the purpose of managing the Property Endowment Fund, with
        the goal of generating a reasonable economic return where possible,
        and, supporting the City's public objectives. 

       On  August 30,  1988,  Council  approved  the  False  Creek  Policy
        Broadsheets which  incorporated a number of  policies for Southeast
        False Creek including:

            Waterfront Walkway:
              A continuous public waterfront walkway should be provided;
            Residential- Location and Density: 
              The  False Creek  basin should  develop  as a  predominantly
               residential  area  to achieve  regional and  City objectives
               and recognize  the special amenity  of the basin  as a place
               to live;
              For  households with  children, the  average target  density
               should be in the range of 1 to 1.75 FSR net;
              For households  without children, the target  density should
               be an average FSR in the order of 3.0 net;
              Densities   higher   than  the   target  densities   may  be
               approvable   if   the   overall   community  design   proves
            Residential- Household and Income Mix:
              A minimum  of 20%  of the  dwelling units  to be  core-needy
               households with 50% of these for households with children;
            Parks and Public Open Space:
              Neighbourhood  parks should be provided at a minimum of 2.75
               acres per  1,000 population  in addition  to the  waterfront
            Community Facilities and Services:
              Community  facilities and  services  should be  provided for
               the  education, social,  health and  cultural  needs of  the
               resident, employee and visitor populations including  pools,
               rinks,  schools,  libraries, fire,  police and  daycare, and
               the community facilities and services  plan will look beyond
               the limits of the basin;
            Office Development and Industry:
              Offices related  to a teleport  or high-tech  industry could
               be an alternative use for Southeast False Creek;
              Except for industrial uses with an absolute necessity to  be
               in the basin, industry should not be fostered;
            Roads, Transportation and Engineering Services:
              Parking should  be provided in  accordance with  the Parking
               Bylaw   and   engineering  services   and   utilities   must
               adequately serve the development demands;
                                                        Appendix A - Page 2

            Urban Design:
              Water,  mountain  and  landmark views  should  be considered
               from residences,  public  spaces, bridges  and streets  when
               planning the basin;
              The  form of  development should  enhance  the openness  and
               presence  of the  water  and  not overwhelm  the  waterfront
              To integrate visually  and physically with  the rest of  the
              The form  and  pattern of  buildings should  respond to  the
               street grid and adjacent built areas of the city; 
              A  positive relationship  should  be achieved  with adjacent
               neighbourhoods in all respects; and 
              Accessibility for mobility  impaired in both the  public and
               private realms is a priority.

        A copy  of the False  Creek Broadsheets  is on file  with the  City

       On  October 16, 1990, Council  adopted the Clouds  of Change report
        which called for planning initiatives that:
            Bring housing and employment closer together;
            Increase housing adjacent to Vancouver's Central Area; and
            The  principles  of  energy  efficient  community   design  be
             incorporated in the planning for  the Southeast Shore of False

       On  July 26, 1990, Council identified lands, north of First Avenue,
        between  Cambie and Quebec Streets, on the Southeast Shore of False
        Creek as an area that should be released from industrial use.

       On December  3, 1991,  as part  of the  Central Area  Plan, Council
        resolved that:
            Housing  should be the predominant land use when planning  the
             Southeast Shore of False Creek; and
            The  provision  of  housing  for families  with  children  was
             identified as a priority for Southeast False Creek.

       On  November   17,  1993,  Council  approved   the  Vancouver  Arts
        Initiative  that included  a staff  review and  report back  on the
        availability and  feasibility of  developing a City-owned  site, in
        particular  on the south shore of False  Creek, as an Arts Resource

       On December 6, 1994, in connection with the Clouds of Change status
        report,  Council   resolved  that   the  Special  Office   for  the
        Environment  liaise with  Planning  and Properties  to explore  the
        potential  for utilizing City lands  in Southeast False  Creek as a
        model for sustainable development.

       On  February  22, 1995,  Council  resolved that  preservation  of a
        transportation corridor, capable of facilitating a  streetcar line,
        be  incorporated  into the  planning  program  for Southeast  False

                                                                 APPENDIX B

                            BACKGROUND INFORMATION
                         (Southeast Shore False Creek)

   Land Ownership and Tenants

   The City currently owns  approximately 43 acres of M-2  zoned industrial
   land on the Southeast Shore  of False Creek (refer to Appendix A).   The
   Lands  are held  in the  City's Property Endowment  Fund, which  has the
   objective  of producing a reasonable  return on these  assets and, where
   possible supporting the City's public objectives.  About 35 acres of the
   lands have been owned by the City since 1925,  and the remaining 8 acres
   were purchased after 1978.

   The  Lands are  leased  short-term  to a  number  of tenants,  with  the
   exception of a waterlot leased to Egmont Towing until November 2006.

   In order for comprehensive residential redevelopment to occur, it may be
   necessary to acquire  the two privately-owned  sites, namely the  Egmont
   Towing and Sauder properties.  The  City holds an option to purchase the
   Egmont site,  exercisable in 2005  at the  then market value.   If  both
   properties were assembled, the total land area would be approximately 46
   acres.  Acquisition  of the B.C.  Transit site,  located at the  eastern
   edge  of the  Lands,  is not  considered  essential to  the  development
   planning process.

   Environmental Status

   The Lands have a long  history of industrial uses including works  yard,
   incinerator,  ship building  and metal  fabrication.   In May  1993, MTR
   Consultants  Ltd.   ("MTR")  were   approved  by  Council   to  complete
   environmental  site  investigations  to characterize  the  environmental
   condition  of  the Lands  for the  purpose  of determining  the economic
   feasibility of remediation to  residential standards.  In  January 1995,
   Council  received MTR's  report which  concluded that  most of  the City
   Works Yard site was  not economic to  redevelop, but that the  remaining
   lands   likely  could   be   economically  remediated   for  residential
   development.  On May 2, 1995  and May 28, 1996, Council approved further
   environmental   investigation   work   which   is   currently  underway.
   Generally, the Lands have significant contamination that will be  costly
   to remediate, currently estimated to be  in the order of $27 million for
   residential development.

   City Works Yard

   On December 3, 1991, Council resolved that the City  Works Yard location
   be reaffirmed  until at least the  year 2003.  However,  this time table
   was  subsequently  accelerated  as,  pursuant  to  Council  approval  on
   September 28, 1993,  the City purchased  the former Burlington  Northern
   Railways lands at  Malkin Avenue, in part for the  purpose of relocating
   of the Works Yard.   Furthermore, on January 11, 1996, Council  approved
   the relocation of the aggregate handling and asphalt operation from this
   Works Yard to the Fraser River.

                                                        Appendix B - Page 2

   Planning Process

   In  May 1995, Council resolved that a development consultant be retained
   to plan and rezone the Southeast Shore of False Creek lands.  A proposal
   call  for development  consultants was  advertised in  January 1996.   A
   selection  committee, comprised of two Councillors and two senior staff,
   recommended  that  Stanley  Kwok   Consultants  Inc.  be  retained;  the
   appointment was approved by Council on  June 11, 1996.  The contract was
   for  two  years and  comprised two  phases: Phase  I  to be  an economic
   feasibility study which would be evaluated by Council before  proceeding
   to Phase II, the planning/rezoning stage.  On October  26, 1995, Council
   approved the planning  boundaries, management structure, process, timing
   and  funding  for the  preparation of  an  Overall Policy  Statement, an
   Official  Development Plan and zoning  for the Southeast  Shore of False
   Creek.  However, as the decision to plan/rezone the Lands depends on the
   Development Consultant's Phase I  feasibility study result, the approved
   planning process did  not proceed.   If Council decides to  commence the
   planning/rezoning of the Lands  as recommended in this report,  then the
   approved planning process will get underway.

   On  October 22, 1996, Council considered rezoning several areas from the
   M-1 or M-2  to I-2 which is  also an industrial zoning.   Delegations at
   public hearing requested that  the Southeast False Creek area  should be
   left M-2,  until a rezoning was done on the City Lands; Council resolved
   to retain M-2 zoning for the Southeast False Creek area.

   Other Actions

   On July, 18, 1995, Council approved  the construction of a ferry dock at
   the east end of False Creek which is now completed.

   On  May 28, 1996, Council  approved funding for  the Water Opportunities
   Advisory  Group  (commonly  called   the  "Blueways  Team")  for  public
   consultation and development  of water-use policy guidelines.  There has
   been some public discussion regarding the Southeast False Creek lands.