POLICY REPORT
DEVELOPMENT AND BUILDING
Date: May 6, 1997
Dept. File No. 3117
C.C. File: 5307-1
TO: Vancouver City Council
FROM: Manager of the Housing Centre, in consultation with
the Director of Central Area Planning
SUBJECT: CD-1 Text Amendment, 800-1100 Pacific Boulevard
(Quayside Neighbourhood, Concord Pacific Place)
Payment-in-Lieu for Non-Family Non-Market Housing
RECOMMENDATION
A. THAT Council instruct the Director of Land Use and Development
to make application to amend CD-1 By-law 7248 and the False
Creek North Official Development Plan, as set out in Appendix
A, to allow two non-family non-market sites in Quayside Area 4
(Sites 4A1 and 4D2 as identified in the Quayside Neighbourhood
Non-Market Housing Agreement dated November 1, 1993) to be
developed for market housing;
FURTHER THAT this application be referred to Public Hearing,
together with the recommendation of the Manager of the Housing
Centre to approve, subject to conditions contained in Appendix
B;
AND FURTHER THAT the Director of Legal Services prepare the
necessary by-law for consideration at Public Hearing.
B. THAT the Director of Land Use & Development be instructed to
process Development Applications as a priority for the
non-family non-market sites 4A1 and 4D2 in the Quayside
Neighbourhood for market development in advance of a public
hearing for the zoning amendments, with issuance of the
Development Permits subject to enactment following approval of
the rezoning at Public Hearing, and on condition that Concord
Pacific accept all risks and associated costs that the
rezoning may not be approved.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of A
and B.
COUNCIL POLICY
Council requires that 20% of the units in major projects be designated
for non-market housing, with a priority for core-need households, and
requires that the non-market housing sites be made available at a price
that allows the projects to be developed within the maximum budgets
established by senior government non-market housing programs. At least
half the non-market housing units must be designed and developed for
families. This policy has been relaxed for major projects where the
economic feasibility does not permit the full 20% to be achieved.
Council policy is to consider affordable housing proposals not
subsidized through senior government programs, or payment-in-lieu, for
non-market sites that were submitted for senior government funding and
did not receive it, or if there is little likelihood of funding
forthcoming.
SUMMARY
Concord Pacific is proceeding with the development of the waterfront
portion of the Quayside Neighbourhood (Area 4). The first two blocks
include two social housing sites (4A1 and 4D2) with 110 and 40
non-market non-family units respectively. They are located on
commercial or amenity podia, and the projects should be built at the
same time as the market components of the developments. It is very
unlikely that allocations of non-market units will be received for these
sites in the near and probably more distant future. Council is
presented with several options for addressing this issue:
- leave the sites undeveloped;
- switch the non-market non-family square footage for market housing
square footage elsewhere in Concord Pacific Place;
- convert the sites from non-family non-market to family non-market;
- develop the sites with 'affordable' housing developed without senior
government subsidies; or
- take payment-in-lieu that would see the sites converted to market
housing in return for a cash contribution to the City to be used for
social housing development.
Payment-in-lieu is recommended for these two sites. The payment-in-lieu
would total $1,225,000 if taken as cash for affordable housing outside
of Concord Pacific Place, or $1,612,000 if used to discount the cost of
the 88 unit non-market family project in Quayside Area 4 by 10%, which
would improve its chances of getting an allocation of units. There are
general policy issues related to payment-in-lieu which will be discussed
in a separate policy report that will be presented to Council before the
public hearing for this proposed application, should it be referred.
Concord have agreed, subject to the rezoning being considered by the end
of July, to the payment-in-lieu figures, which have been reviewed by
Real Estate Services who confirm they are appropriate. Concord has
asked that they be allowed to submit development permit applications for
the development of the two non-market sites for market housing in
advance of a decision on the rezoning at a public hearing. Staff
support this as long as Concord understands that the rezoning may not be
approved and accepts the risks and costs if it is not.
PURPOSE
This report recommends that Council refer amendments to the Quayside
CD-1 and the False Creek North Official Development Plan directly to
public hearing that would allow Concord Pacific to develop 2 non-family
non-market sites in the Quayside Neighbourhood Area 4 for market housing
on condition that they provide payment-in-lieu, either in the form of
cash or a discount on the family non-market site in Quayside Area 4.
BACKGROUND
Quayside Neighbourhood
In April, 1990, Council adopted the Official Development Plan for North
False Creek (FCN ODP). It allowed the development of 8,500 units of
housing of which 20%, or 1,700 units, had to be designated for
non-market housing developed under federal and provincial subsidy
programs. At least half the non-market units were designated for
families. With the amendments to the International Village CD-1 in
1995, the total number of units was amended to 9,100, the percentage of
non-market to 18.2% (1,656 units), and the percentage of non-family
non-market units to 8.7% (769 units).
The FCN ODP established several neighbourhoods that required individual
CD-1 rezonings before redevelopment could commence. The percentage of
non-market housing varies from neighbourhood to neighbourhood, as does
the percentage of non-market housing designated for families.
The waterfront portion of the Quayside Neighbourhood, Area 4, was
allocated 1,415 units of housing of which 338 had to be non-market with
88 for families. The original Quayside CD-1 was approved in April,
1993. On February 26, 1996, Council approved a revised form of
development for Area 4, the waterfront portion of the Quayside
Neighbourhood in Concord Pacific Place. The revised CD-1 includes 4
non-market housing sites. There are 3 non-family non-market sites with
110 (4A1), 40 (4D2) and 100 (4J) units respectively and 1 family
non-market site (4H) with 88 units. The locations of the Quayside
Neighbourhood and the non-market sites are indicated on Appendix C.
Concord Pacific had not intended to begin the development of the
Quayside Neighbourhood until the Roundhouse Neighbourhood was completed.
However, the undeveloped sites in Roundhouse are to be developed with
larger, upper-end market units. With the shift in market demand to
medium-priced units, Concord decided to proceed with its Quayside
development which was targeted to smaller, lower- cost units.
On January 13, 1997, the Development Permit Board approved the first
development permit application (DE401730) for Quayside Area 4 (the
Aquarius). It covers the whole block south east of Pacific and Davie,
with the exception of the non-market site, and includes 395 market units
and 79,000 sq. ft. of commercial space. Concord Pacific will be
submitting a Development Permit Application for the next block in
Quayside, immediately east of the first, in the next couple of months.
It contains the non-market site 4D2 with a capacity of 40 non-family
units.
Major Project Non-Market Housing
When the False Creek Policies were being developed, one of the issues
addressed was the percentage of non-market or social housing to be
required. At the time new social housing was only being funded by
senior governments for core-need households; households that would have
to pay more than 30% of their gross income to rent suitable and adequate
accommodation in Vancouver. A survey of the social housing on the
City's False Creek South Shore development indicated that it was
accommodating 22% core-need households, and a survey of the region
indicated that 20% of the regional population was in core-need. Council
approved a policy that 20% of the units in the False Creek major
projects, and later in the Coal Harbour major projects, had to be built
for core-need households using senior government housing programs. The
core-need program of the day funded both family and seniors' projects,
and Council adopted the policy that at least half of the social housing
in the major projects had to be for families.
In 1993, the Federal Government withdrew its two-thirds funding for new
social housing. The Province set up the Commission on Housing Options
to review housing needs in the province and recommend appropriate
policies and programs. The Commission recommended that the Province
continue to fund new social housing, but that families have priority for
funding under the Non-Profit Rental Housing Program, and that new
non-profit projects contain a mix of market rental as well as subsidized
rental units.
On April 22, 1993, Council revised its social housing policy for the
major projects to:
- require that 20% of the units be designated for non-profit instead
of core-need housing;
- provide the flexibility to consider alternative non-market housing,
other than provincially subsidized non-profit housing, if units were
not forthcoming from the Province or unlikely to be forthcoming;and
- allow for payment-in-lieu if other options were not viable.
Council also reiterated its request for a special Non-Profit Rental
Housing allocation for the major projects or a program specifically
designed for the major projects. In 1994, the major project Official
Development Plans and CD-1 By-laws were amended to implement the revised
major project social housing policy.
Since revising its major project social housing policy, Council has
given approval in principle to an alternative non-market housing project
for the non-family project in the Roundhouse Neighbourhood, and a
payment-in-lieu of $1,100,000 for 140 non-family non-market units in
International Village.
Major projects outside the Downtown have been unable to provide the full
20% non-market housing. Collingwood Village is providing market rental
only, and the brewery site in the Arbutus industrial area and Tugboat
Landing on the Fraser are providing less than the 20%.
QUAYSIDE NON-MARKET HOUSING
The Quayside Non-Market Housing Agreement between the City and Concord
Pacific sets out the rights and obligations of each related to the
development of the non-market sites in the neighbourhood. Under the
agreement, Concord Pacific's obligation to submit sites to the Province
for allocations of non-market units follows the issuance of Development
Permits for adjacent market development. In the case of the 110 unit
non-family non-market housing site 4A1, in the block for which the
development permit was approved in January (the Aquarius), Concord must
submit the site to this year's non-market housing proposal call expected
to be announced by the Province later this spring. If the next block
containing the 40 unit non-family non-market site 4D2 receives a
development permit later this year, 4D2 will have to be submitted to
next year's proposal call, along with 4A1 if it is unsuccessful in
obtaining a unit allocation this year.
It is very unlikely that site 4A1 will receive an allocation of housing
units this year or that 4A1 and 4D2 will any time soon. In 1994 and
1995, 900 units of non-market housing units were made available by the
Province. In 1996 the number was reduced to 600, and it is expected
that this will be the maximum number available in 1997. As well, units
are only available for non-family projects if the non-profit sponsors
provide substantial equity so that the projects come in substantially
under the Maximum Unit Price (MUP) budgets established for the projects.
Free land or equivalent is the minimum contribution required. In 1996,
only 65 units of non-family (seniors) housing was funded in B.C. for
three projects.
The City's agreements with the major project developers require that
they make the non-market sites available to the Province at a price that
works within the MUP budgets established by the program. The developers
provide a subsidy equal to the difference between the market value for
the site and its non-market value (the land residual left over from the
MUP budget after all other costs excluding land, e.g., construction
costs, fees,etc., re subtracted). This subsidy varies from site to site
since market value varies from site to site but the MUP budgets are the
constant across the Vancouver region. The City's agreements with the
major project developers do not require that they provide sites for
free; the developers were expected to receive some value from the
non-market sites. Consequently, it is very unlikely because of the size
of the 4A1 project (110 units) and the program requirement that, as a
minimum, non-family projects be provided with free land, that site 4A1
will receive an allocation this year.
OPTIONS
There are several options the City has for the non-family non-market
sites in the major projects for which funding will not be available in
the short term, and probably not for the longer term either:
- leave the sites undeveloped;
- switch the non-market non-family square footage for market housing
square footage elsewhere in Concord Pacific Place;
- convert the sites from non-family non-market to family non-market;
- develop the sites with alternative 'affordable' housing developed
without senior government subsidies; or
- take payment-in-lieu that would see the sites converted to market
housing in return for a cash contribution to the City.
Which option is appropriate will vary from site to site depending on
circumstances unique to each. In the case of the non-market sites 4A1
and 4D2, payment-in-lieu is recommended, either as cash to be used for
affordable housing outside Concord Pacific Place or as a discount in the
cost of the Quayside Area 4 family non-market project.
Hold Sites: The 110 unit non-market site 4A1, in the first Quayside
block to be developed by Concord, is part of a comprehensive development
and is located on a two-storey commercial podium that will contain a
major food store, retail outlets, and, on the second floor, a large
restaurant. Similarly, the non-family non-market site 4D2 is part of
the comprehensive development of the next Quayside block and located on
a 1-storey podium consisting of amenity space. While other non-market
sites in the major projects are located on a podium, in most cases the
podium is a parking garage alone. These two sites are unique in
the degree of integration with commercial and other uses. Each of
these blocks should be developed as a piece. They cannot be phased
without a substantial cost premium that could be prohibitive.
Consequently, holding the two sites until units are available, most
likely for a number of years, is not feasible.
Relocate Space: Most of Concord Pacific Place is now zoned. There are
two neighbourhoods for which CD-1 By-laws are not in place, but they do
not offer easy opportunities to switch the square footage allocated to
the non-market non-family housing sites 4A1 (73,412 sq. ft.) and 4D2
(26,695 sq. ft.) with market square footage elsewhere. Area 1A (Beach
Neighbourhood West) has been the subject of preliminary design review,
and the sites that can be allocated to non-market housing already are.
As well, there is pressure to locate some of the non-market housing in
Area 1B to Area 1A which will be difficult on its own. Area 6, on
either side of the Plaza of Nations, has a limited capacity of 1,193
units of which 222 (18.6%) are non-market. It would be difficult to
switch market for non-market space in this neighbourhood because most of
the market space is in towers, 17 storeys and up, too large for
non-market non-family projects. This option would likely require mixing
the non-market and market housing within a single building which would
aggravate the problem. While this option may preserve the non-market
opportunity, most likely it only postpone the problem at the cost of
relocating the non-market housing to a more complicated and less
desirable location. Consequently, this option is not recommended.
Convert to Family: The City converted non-family non-market space to
family non-market space in Coal Harbour. There, the square footage
allocated to 80 non-family non-market units was combined with an
adjacent family site designated for 40 units to produce a single family project of 99 units, which is now under construction. Converting the
square footage set aside for the non-family units in sites 4A1 and 4D2
is not recommended however. 4A1 is a 12-storey tower on top of a podium
which is not a form suitable for families. 4D2 would be more suitable
for families, as it is a lower building, but it is also on an above
grade retail podium and not easily converted to family units. One of
the reasons there are only 88 family of the 338 non-market units in Area
4 is because housing on top of podia was not considered appropriate for
families with children.
Alternative Non-Market: Developing 'affordable' housing projects
without senior government housing subsidies is not recommended because
of the difficulty in making such projects work. Only a very limited
affordability can be achieved without senior government housing
subsidies. An unsubsidized 'affordable' housing project was approved in
principle for the Roundhouse non-family non-market site. It has proven
difficult to make the project work, after two years' effort, and it is
expected that revisions to the proposal will be reported to Council in
the near future. It would not be recommended to try to develop an
unsubsidized 'affordable' project on 4A1 or 4D2 until the Roundhouse
project is resolved.
Payment-in-Lieu: Payment-in-lieu is recommended for both non-market
sites 4A1 and 4D2. Payment-in-lieu should be considered at this time to
realize the limited opportunities available now, and probably into the
future, to develop non-market housing. The amount of payment-in-lieu is
the difference between the market and non-market land values for the
sites. Payment-in-lieu requires the support of Concord Pacific and they
have an incentive to participate now when they can realize the
construction efficiencies from building out the blocks as single pieces.
There would be a substantial cost premium to build the 4A1 and 4D2
components if construction, whether for market or non-market projects,
were to be undertaken after the commercial and market housing
construction is completed, assuming this would even be feasible.
Concord has the most incentive to provide payment-in-lieu now, as this
is when it can maximize its land value.
CALCULATING PAYMENT-IN-LIEU
If Council supports payment-in-lieu for sites 4A1 and 4D2, it is
recommended that the City reserve for itself two payment-in-lieu
options. With the first, the City would receive a payment of
$1,225,000, inflated by CPI, from Concord Pacific which the City could
request anytime after the Quayside non-market legal agreement is
amended. The second would allow the City, until the end of 1999, to
require that Concord submit the 88-unit family site 4H to the Province
for the next and subsequent proposal calls at 90% of the Maximum Unit
Price budget. This equates to a $1,612,000 discount based on the 1996
MUPs.
The principle for payment-in-lieu that was approved by Council is
simple; the payment-in-lieu is the difference between the market value
and non-market value for the site. Complexities arise in the case of
podium sites, and these will be addressed in a policy report that will
be presented to Council prior to the public hearing for this
application, assuming it is referred. The payment in lieu calculation
for sites 4A1 and 4D2 assume that social housing allocations should have
been available, and therefore the value of the sites is not discounted
for the fact they are not.
Both payment-in-lieu figures have been reviewed by Real Estate Services
who advise that they appropriately represent the difference between the
market and non-market values of the sites under the two options. The
second option generates a higher figure because it presents more of a
benefit to Concord. The project includes a 49-space daycare and the
parking for the Quayside marina. It is in Concord's interest to have
this site developed as part of the overall Quayside development with the
full range of services in place.
At 90% of the MUP budget, the project would have a much better chance at
a unit allocation than at 100% of MUP. It is a large project, and more
expensive per unit because of its concrete construction. Taking the
payment-in-lieu through a discount in the project budget may be in the
City s interest. For the major projects such as Concord Pacific
Place, the family projects are crucial to supporting the City's
objectives for families as well as low and modest income households.
In this case the project would both provide family units and the daycare
needed by families. Consequently, it is recommended that the City
reserve the right for the payment-in-lieu to be paid either in cash or
through a 10% discount in the budget for the family non-market project.
Concord has agreed to both these options. It has agreed that, at the
City's request, it will submit the 88-unit family site 4H to this year's
proposal call at 90% of MUPs. They are prepared to advance paying the
cost of the daycare if the proposal succeeds in receiving a unit
allocation, and the costs of the marina parking. They have committed to
proceeding with the project without delay if they receive the units;
this is one or two years earlier than would have been required under the
current legal agreement. They do want the obligation to submit site 4H
limited to the end of 1999 (the next two proposal calls) as the benefit
to them will diminish. This is acceptable; if a submission at 90% of
MUPs does not garner an allocation in the first couple of proposal
calls, it probably won't thereafter.
AMENDMENTS TO THE QUAYSIDE CD-1 AND THE FCN ODP
Payment-in-lieu requires amending the text of the Quayside CD-1 as well
as the FCN ODP. The Quayside CD-1 designates sites 4A1 and 4D2 for 150
units of non-family non-market housing and it must be amended to delete
this designation.
The FCN ODP requires that 18.2% of the total 9,100 units be designated
for non-market housing of which 8.7% are non-family non-market units.
The elimination of 150 Quayside - Area 4 non-family non-market units
will reduce the overall number to 16.6% (1506 units) and the non-family
non-market component to 7.1% (642 units). The non-market housing in
Area 4, the Quayside waterfront would be reduced to 13.0% (188 units)
with the non-family non-market component reduced to 6.9%(100 units).
The Quayside CD-1 By-law 7248, which covers both Area 4 and 5 with a
total of 2,588 units, must be amended to reduce the number of non-market
units from 20.7% (536 units) to 15% (388 units), and the number of
non-family non-market units from 13.5% (350 units) to 7.7% (200 units).
The number and percentage of family non-market units would not change.
The total number of units, as well as the total square footage, that
could be built in False Creek North or in Quayside would remain the
same.
PROCESSING DEVELOPMENT APPLICATIONS
Concord Pacific wishes to begin construction of the first block of
Quayside as soon as possible. If its schedule cannot be met, it would
not achieve the construction efficiencies from building out sites 4A1
and 4D2 at the same time it builds the larger projects to which these
sites are integral. If this happens, Concord would not be willing to
proceed with the payment-in-lieu in the amounts proposed.
Following discussions with Concord and their architect, staff anticipate
minor changes to the form of development approved in principle for the
previous rezoning. These minor changes can appropriately be addressed
during the development permit process prior to final Council approval of
the detailed form of development for each portion of the project.
Concord Pacific wishes to submit applications for the development of
sites 4A1 and 4D2 for market housing in advance of the public hearing to
consider the payment-in-lieu proposal. Normally development
applications are not processed until after a rezoning is approved.
However, to accommodate Concord's schedule it is reasonable to process
this rezoning application and the development applications in parallel
as long as all risks are Concord's. The Development Permits would not
be issued unless the rezoning is approved and enacted, and Concord
Pacific must understand that it may not be, and must accept the risks
and associated costs if it is not.
CONCLUSION
It is recommended that Council instruct the Director of Land Use and
Development to make application to amend the Quayside CD-1 and False
Creek North ODP to allow payment-in-lieu for two of the non-family
non-market housing sites in Quayside - Area 4. The rezonings would be
subject to an amendment to the Quayside non-market legal agreement to
oblige Concord to provide $1,225,000 as payment-in-lieu or to develop
the 88 unit family non-market project in Quayside - Area 4 at a maximum
cost 90% of the MUP budget allowed under the Non-Profit Rental Housing
Program, a subsidy equal to $1,612,000 based on 1996 MUPs. The legal
agreement will also oblige Concord to submit an application for a 1997
allocation of non-profit units for the family site if the City wishes.
This is a year or two earlier than would have been expected under
Concord's current schedule for Quayside.
It is recommended the application be referred directly to Public Hearing
so as not to delay Concord's development and to ensure the zoning is in
place, if it is approved, by the time the Province announces the 1997
Non-Profit Rental Housing allocations later in the year. It is also
recommended that Development Applications be processed for the
development of the two non-family non-market sites for market housing
in advance of the public hearing to take advantage of the construction
efficiencies of building these sites at the same time as the larger
projects of which they are a part. The Development Permits would be
issued only if the rezoning is approved, and Concord Pacific must accept
all the risks and associated costs if it is not.
* * * * *
APPENDIX A
PROPOSED CHANGES TO THE FALSE CREEK NORTH ODP (Figure 4)
Current Proposed
False Creek North
-non-market non-family 8.7% 7.1%
-non-market family 9.5% 9.5%
-market non-family 66.3% 67.9%
-market family 15.5% 15.5%
Area 4 (Quayside)
-non-market non-family 17.3% 6.9%
-non-market family 6.1% 6.1%
-market non-family 68.3% 78.7%
-market family 8.3% 8.3%
PROPOSED CD-1 CHANGES - 800-1100 PACIFIC BOULEVARD
(CD-1 Bylaw No. 7248)
Section 4 (Uses)
(a)(iii) a minimum of 350 200 units shall be provided through government
funded programs targeted to core-need households or such non-market
housing programs or initiatives as City Council may generally define or
specifically approve from time to time, but need not be designed
consistent with clause (i)* above.
*(Clause (i) requires the units to be designed for families).
APPENDIX B
THAT, prior to enactment of the CD-1 By-law, the registered owner amend
the Quayside Neighbourhood Non-Market Housing Agreement, and make such
other arrangements as may be necessary to the satisfaction of the
Director of Legal Services and the Manager of the Housing Centre to:
a) provide the City with a payment-in-lieu equal to $1,225,000
inflated by CPI; or
b) develop the family non-market site in Quayside Area 4,
Site 4H, at 90% of the Maximum Unit Budget allowed for the family
non-market projects, and to pursue funding for the family project in
1997;
with the City having the right to require a) or b) until December 31,
1999, at which time, if a conditional non-market unit allocation has not
been received for site 4H, Concord Pacific will provide the City with
the payment-in-lieu pursuant to a).