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         in

       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.