ADMINISTRATIVE REPORT Date: June 24,1997 Dept. File No. F828 CC File: 2614-4 TO: Vancouver City Council FROM: Manager of the Housing Centre, in consultation with the Director of Legal Services SUBJECT: 932 Granville Street - The Roxy Cabaret Ltd. and Siesta Hotel Housing Agreement RECOMMENDATION A. THAT the Housing Agreement summarized in this report be approved in principle, subject to finalization to the satisfaction of the Director of Legal Services and the Manager of the Housing Centre, provided that this resolution does not create any legal rights or obligations and none arise until the agreement as authorized by by-law is signed. B. THAT the Director of Legal Services be instructed to bring forward a by-law to enter into the Housing Agreement. GENERAL MANAGER'S COMMENTS The General Manager of Community Services RECOMMENDS approval of A and B. COUNCIL POLICY On July 13, 1995 Council adopted the following motions: That the Vancouver Liquor Commission endorse the application by the Roxy Cabaret Ltd., to increase the seating to 275 seats in the Class 'C' Cabaret at 932 Granville Street, subject to a 10-year housing agreement to the satisfaction of the Manager of the Housing Centre and the Director of Legal Services and the sound separation on the ceiling of the cabaret being acceptable to the Director of Environmental Health; and That the City Clerk be instructed to not forward this endorsement to the Liquor Control and Licensing Branch until these conditions have been met; That staff be instructed to incorporate provisions in the Housing Agreement to provide for monitoring and to ensure the building is maintained in a quality manner; Further that the Housing Agreement include provisions, to the satisfaction of the Director of Legal Services, ensuring that any subsequent purchaser of the hotel, within the term of the agreement assume, in form satisfactory to the Director of Legal Services, the obligations of the owner pursuant to the Housing Agreement, and that the terms and conditions of the original agreement apply to any subsequent purchaser. On August 1, 1996 Council adopted the following: THAT Council defer approval of the Housing Agreement for 932 Granville Street recommended in the Administrative Report dated July 16, 1996, subject to the owner and the mortgage holders agreeing to priority of the Housing Agreement, and that staff report back if the subject condition cannot be met. PURPOSE This report seeks Council approval of a housing agreement for 932 Granville Street covering 64 of 75 single rooms above the street level cabaret operation. BACKGROUND The Downtown South liquor license moratorium was established on May 28, 1992. In March 1995 the owner of the Roxy Cabaret Ltd. at 932 Granville Street applied for an increase in seating from 195 seats to a maximum of 325 seats in the Class 'C' Cabaret. This application was not supported by staff and the applicant agreed to defer the application prior to its consideration by the Vancouver Liquor Commission. After discussion with staff, the application was revised to a maximum of 275 seats. The applicant offered to enter into a 10 year housing agreement guaranteeing that the hotel rooms in the Siesta Hotel, above the Roxy Cabaret, would be rented on a monthly basis at a rent affordable for people on social assistance. The applicant also proposed noise abatement work to mitigate the cabaret noise which is especially disturbing to residents immediately above. In July 1995 the Vancouver Liquor Commission and City Council endorsed the application by Roxy Cabaret Ltd. to increase the seating capacity from 195 seats to 275 seats, subject to a housing agreement and noise abatement. In August 1996 Council considered a report on the housing agreement but deferred action noting that the agreement would not have priority with the mortgage holders. During the past year staff and the applicant have revised the agreement and the owner has committed that the mortgage holders have agreed to the City s priority. DISCUSSION There has been protracted discussions between staff and the applicant on the terms of the housing agreement over the past two years. Terms of the Housing Agreement The major features of the proposed housing agreement are as follows: 1. 64 of the 75 rooms will be preserved and rented as single occupancy rooms. The remaining 11 rooms are used for staff and administrative purposes. If any of the 11 rooms become available for rental, they will be single room occupancy rooms, covered by same rent restrictions as the other rooms. On each of the 3 floors, up to two rooms may be lost should the owner renovate and expand the washroom facilities or combine rooms. Otherwise City permission is needed to reduce the number of rooms covered by the agreement. 2. Singles receiving social assistance shall have priority. 3. The rents will be $325 per month, the shelter component of welfare, and if the shelter allowance increases, the rents could increase commensurately. 4. Disputes will be deferred to arbitration. 5. The owner shall provide the City with monthly rent rolls on an annual basis or at any time requested by the City. 6. The owner agrees to maintain the Siesta Rooms in a satisfactory physical state, to conduct regular maintenance and repairs, and to ensure that the premises are kept in safe, neat and tidy conditions at all times. 7. The housing agreement is binding on all persons who acquire an interest in the property. 8. The 10 year housing agreement will be retroactive to July 1, 1997 but will not come into force until the Liquor Control and Licencing Branch gives its approval to more than 195 seats. However the City s consent to increase seating from 195 to 275 will not be given until the noise abatement work is completed to the satisfaction of the Director of Environmental Health. 9. The housing agreement has priority over mortgage holders and all other parties having an interest. This ensures the City's interest. Housing Agreement Limitations Staff have concluded an agreement which they believe meets Council objectives and protects the City's interests. However there are several issues to note: 1. The arbitration process provides some protection should a dispute arise about the terms of the agreement. There is a financial penalty if rents are excessive. However the applicant was not willing for the City to appoint a receiver in the case of default. Undoubtedly the City would make a serious assessment before initiating an arbitration. 2. The owner is participating in the Canada Mortgage and Housing Corporation (CMHC) Rooming House Rehabilitation program. Under the terms, the owner receives a forgivable loan which is used to upgrade the rooms in exchange for renting 65 rooms at $325 per month, escalating with Consumer Price Index (CPI), for 9 years starting January 1996. The housing agreement provides similar public housing benefits but is more secure in that the forgivable loan may be repaid at any time at the discretion of the owner. The Housing Agreement also gives the City direct monitoring and enforcement authority. Future Steps Following approval of this report, staff will prepare a by-law to be passed by Council. Subsequently the housing agreement will be signed by both parties and registered. The owner is currently undertaking the noise abatement. When the work has been completed to the satisfaction of the Director of Environmental Health, the City Clerk will then notify the Liquor Control and Licensing Branch of the City's support of additional seats. The owner s housing obligations become binding (retroactively to July 1, 1997) upon the Licencing Branch approving seating greater than 195. * * * * *