POLICY REPORT

URBAN STRUCTURE

Date: December 17, 1997

Author/Local: HRoth/7713

CC File No. 8002

TO:	Vancouver City Council
FROM:	Director of Community Planning, in consultation with General Manager of Engineering Services Manager of Housing Centre Director, Community Services, Social Planning Director of Legal Services Director of Finance Assistant Director, License & Property Use, Permits & Licenses
SUBJECT:	Cedar Cottage MC-1/Welwyn Street Area - Implementation of Development Cost Levies

RECOMMENDATION

A.THAT Council establish the area shown in Figure 1 as the Cedar Cottage MC-1/Welwyn Street Development Cost Levy (DCL)District.

B.THAT the levy proceeds be spent in the following proportions:

(i)9 percent for street and sidewalk improvements;

(ii)43 percent for establishing child daycare facilities; and

(iii)48 percent for replacement housing.

C.THAT the policies in Appendix A be adopted to guide administration of DCLs in this District.

D.THAT the Development Cost Levies be set at $34.98 per square metre ($3.25 per square foot) for all uses, except for child daycare space which will be set at $5.49 per square metre ($0.51 per square foot), and industrial uses which will be $21.53 per square metre ($2.00 per square foot).

E.THAT the General Manager of Engineering Services and Director of Community Planning work with area residents, business and property owners in the design and implementation of street and sidewalk improvements, to improve safety and convenience, with the source of funds to be DCLs.

GENERAL MANAGER’S COMMENTS

The General Manager of Community Services RECOMMENDS approval of A through E.

COUNCIL POLICY

In July 1990, as part of the Industrial Lands Strategy adopted by Council, Council directed that it would not consider rezonings from industrial use until planning had proceeded to the point where development cost charges can be established.

In 1992, Council adopted the Downtown South DCL By-law and related policies including the policy "that development cost levies outside Downtown South be considered as part of area-wide rezonings based on a community plan." In 1994, Council established a DCL District for Burrard Slopes, in 1995 for the Arbutus neighbourhood, and in 1996 for the Dundas-Wall and Oakridge/Langara areas.

On April 25, 1996, Council approved the "Cedar Cottage MC-1/Welwyn Street Planning Policies." These included policies directing that DCLs be pursued, and establishing DCL spending priorities.

SUMMARY

As directed by Council in 1996, staff have analysed the potential for implementing a Development Cost Levy (DCL) in the MC-1/Welwyn Street area. This area is an industrial "let-go" area, where Council approved keeping a mix of industrial, commercial and residential uses, at the existing maximum 2.5 FSR, while encouraging building design that contributes to area character and pedestrian interest. The revisions to the MC-1 District Schedule and a set of design guidelines needed to implement the policy directions were approved at Public Hearing. Council has the Charter authority to apply a DCL By-law to this area, due to anticipated demands for public benefits.

As the MC-1/Welwyn Street area redevelops, staff anticipate that approximately 700 housing units (about 1,100 new residents) will be added to the area, with new residents generating demands for public benefits. The cost of needed benefits to be funded by DCLs is approximately $4,030,000. Staff are recommending a DCL rate of $34.98/m² ($3.25/sq. ft.) for all uses except child daycare at $5.49/m² ($0.50/sq. ft.) and industrial uses at $21.53/m² ($2.00/sq. ft.). At these rates, the projected potential DCL funds amount to $3,335,000. As development anticipated in this area will contribute to the need to provide certain public benefits (capital projects) in this area, Council can enact a DCL By-law.

Of the four uses for which DCLs can be allocated under the Vancouver Charter, (replacement housing, parkland acquisition and development, establishment of child daycare facilities, and specified engineering works), staff are recommending DCLs be allocated on the following percentage basis: 9 percent to street and sidewalk improvements; 43 percent to child daycare facilities; and 48 percent to replacement housing. Council has the flexibility to re-allocate DCLs in the future if new facilities become fundable or funding priorities change.

PURPOSE

The purpose of this report is to:

·establish boundaries for a DCL District for the MC-1/Welwyn Street area;

·adopt administrative policies for DCLs;

·set DCL rates;

·establish how the levy proceeds should be allocated; and

·request the necessary by-laws be brought forward for enactment.

Upon Council's decision on these matters, the Director of Legal Services will prepare the DCL By-law for Council's approval at the time that Council enacts the revised MC-1 District Schedule for the area.

Figure 1. Proposed MC-1/Welwyn Street Area DCL By-law Boundary

Figure 1 Here

BACKGROUND

In 1996, Council adopted the Cedar Cottage MC-1/Welwyn Street Planning Policies. Council has referred revised MC-1 zoning and guidelines to implement some of the policies to Public Hearing. Other future directions for the area include:

·keeping a mix of residential, industrial and commercial uses in the area;

·providing for some affordable residential units;

·meeting demands for community services and facilities; and

·improving streets and sidewalks to increase safety and comfort of pedestrians and cyclists, while enhancing the physical character of the area.

Council also directed staff to report back on DCLs to meet the needs. Staff have reviewed potential public benefit demands resulting from future redevelopment, and are recommending that a DCL By-law be adopted in concert with the zoning revisions so that DCLs may be used to fund a portion of these needs.

DISCUSSION

1. DCL By-law Boundaries

The proposed DCL boundary is shown in Figure 1. The boundary includes all of the MC-1 area, Welwyn Street from 20th to 22nd Avenues, and a small portion of Commercial Drive/Victoria Diversion.

2. DCL Rates and Potential DCLs Collectable

Staff recommend a DCL rate of $34.98/m² ($3.25/sq. ft.) for the development of all uses other than child daycare and industrial. For child daycare uses staff recommend a reduced rate of $5.49/m² ($.51/sq. ft.), consistent with the child daycare rate set for the other DCL areas, and a reduced rate of $21.53/m² ($2.00/sq. ft.) for industrial uses (manufacturing, transportation and wholesale). The industrial rate is consistent with the rate for Burrard Slopes and reflects lower public benefit demands due to fewer employees per square foot for industrial businesses.

Other areas of the City have DCL Districts, with rates ranging from $17.22/m² ($1.60/sq. ft.) to $66.52/m² ($6.18/sq. ft.). The proposed rates reflect the cost of the package of benefits for which demand is generated, and which can practically be delivered through DCLs in each area.

At the recommended rates, assuming future development at an average 2.25 FSR in the MC-1 area, and 1.2 FSR on Welwyn Street, approximately $3,335,000 is collectable at build-out (representing a 20-30 year horizon) of the developable sites in the DCL area.

3. Public Benefit Demands and Costs

Under the Vancouver Charter, DCLs can be spent on replacement housing, establishment of child daycare facilities, engineering works such as constructing, altering, expanding or replacing highway facilities, and park land acquisition and development.

It is estimated that about 1,100 new residents (about 700 housing units) will occupy the area in the next 20-30 years. It is also anticipated that the current work force of 600 will continue. The increased residential population will generate demand for increased public benefits totalling $4,030,000 as discussed below.

(a) Child Daycare Facilities

The increased residential population, combined with employment, will generate a need for additional child daycare facilities in the area. If City-standards for child daycare provision are applied to the projected population from development, there will be demand for an additional 28 child care spaces, as well as 13 out of school care spaces.

The estimated costs to meeting this need are:

Land acquisition (in the study area) Facility construction and equipment	$450,000 $1,186,000
Total	$1,636,000

However, based on typical daycare facility standards, a 24-space facility (12 infant spaces and 12 toddler spaces), with additional space for the out of school care component is recommended. The estimated cost of this 24-space child daycare facility and space for the out-of-school care is $1,430,000.

While these childcare demands and costs are the best estimates at this time, the City’s Childcare Coordinator advises that the demographics of the new resident population and the costs of providing child daycare facilities will need to be reviewed as DCL funds become available.

(b)Replacement Housing

There are currently about 60 housing units in the MC-1/Welwyn Street area. Most of these units are rental units in older two- and three-storey buildings. In addition, a number of ground floor spaces are occupied by artist live-work studios. There are also a small number of older, owner occupied single family homes. Housing staff analysed the condition, age and current density of the buildings containing residential units and found that all could be lost toredevelopment over the next 20-30 years.

The City's DCL authority allows for replacement housing when it is anticipated that, as a result of development, people will be displaced and unable to afford comparable accommodation in the area. The Council approved policies include using DCLs to provide for replacement housing.

As in other DCL areas, the replacement housing could be provided in several ways. In this area, Housing Centre staff suggest that it could be comprised of 50 percent rental units, and 50 percent funded through provincial social housing programs, with the City leasing land to a non-profit society. (There is a large City-owned works yard in the MC-1 area, which may become available for housing in the longer term.) All units will be replaced within the DCL area.

The estimated cost of the replacement housing is:

Non-market housing - 31 units	Total cost of land write-down	$682,000
Rental housing - 31 units	Total subsidy required	$1,302,000
Total - 62 units		$1,984,000

However, based on the recommended allocation of DCL funds, only about $1.6 million will be available for replacement housing. This will fund only a portion of the total units (about 50 units). Other funding sources will be needed to supplement the DCLs.

(c) Street and Sidewalk Improvements

A number of street and sidewalk improvements are needed to address pedestrian comfort and safety. The following projects are fundable by DCLs, and are recommended.

(i) Commercial Street

Commercial Street acts as a connector to the Trout Lake Community Centre, John Hendry Park, and to SkyTrain. DCLs should be made available to replace the sidewalk on both sides of Commercial Street between 18th and 22nd Avenues, while saving the existing mature trees. The trees were planted in the 1970s as part of a Neighbourhood Improvement Program and contribute to the special character of Commercial Street and the pedestrian environment. The sidewalk is severely heaved and patched and is a difficult walking surface. This safety concern will become more prominent as residential developmentproceeds, and more residents use the area.

DCLs should also be used to improve pedestrian crossings at two key intersections in the area. The 18th Avenue/Commercial Street/Commercial Drive intersection is a major pedestrian link to Trout Lake and SkyTrain. Improvements recommended include reconstructing the southwest corner to make the southern leg of the intersection meet at right angles with the Victoria Diversion. This will decrease vehicle speeds entering Commercial Street and, combined with a proposed pedestrian-actuated signal on Victoria, increase pedestrian crossing safety. A signal for this intersection has been considered as part of the annual traffic signal program for a number of years. The unusual configuration of this intersection, combined with increased use by new residents, make this a priority.

The intersection at Commercial Street and 22nd Avenue is a major link to Lord Selkirk Elementary School. Lord Selkirk is a large elementary school with over 650 children enrolled. Twenty Second Avenue acts as a local collector, with volumes of about 3,000 vehicles per day. Proposed corner bulges will improve safety by increasing visibility and reducing crossing width. The local police-school liaison officer and school principal support this proposal.

(ii)Welwyn Street

DCLs should also be used for sidewalk improvements on the east side of Welwyn Street between 20th and 22nd Avenues. The street is now very wide and without sidewalks. This street is also a school pedestrian route, and currently children walk on the grassy boulevard or down the middle of the road. The proposal is to decrease the street width from its current industrial standard to a residential standard, by moving the curb. In addition, a sidewalk, boulevard and street trees are proposed to increase safety and convenience for new residents.

Total estimated costs are:

	Total Cost	Funded by DCLs
Commercial Street Sidewalk replacement/tree retention 18th Avenue intersection improvement 22nd Avenue intersection improvement	$200,000 $ 85,000 $ 50,000	$100,000* $ 85,000 $ 50,000
Welwyn Street improvements	$ 75,000	$ 75,000
Total	$410,000	$310,000

*Capital funds have been set aside to pay half the reconstruction costs, as is standard funding practice.

While the policies identify other needed improvements (particularly beautification and traffic calming improvements around Commercial and 20th Avenue), DCLs can only be allocated to the improvements described.

(d)Park Land

The Cedar Cottage area has 2.5 ha (6.3 acres) of park per 1,000 people which is well in excess of the Park Board standard of 1.1 ha (2.75 acres) of park per 1,000 people. The MC-1 area is within two blocks of Trout Lake/John Hendry Park (both a neighbourhood and city-wide park) and Clark Park, the two largest parks in Cedar Cottage. The addition of 1,100 new residents in the study area will not reduce the local park space ratio significantly. While DCLs may legally be spent on acquisition of land for park space and development, they are not needed for this purpose.

4.Impact on Development

An analysis conducted by Real Estate Services, based on the revised MC-1 zoning and current market conditions, indicates that the proposed revisions to the MC-1 zoning will not cause land values to change in the short term because they do not significantly change the use and density permitted. As in other areas, applying DCLs may result in somewhat lower land values, lower project profits, or increased unit prices. This may result in delayed redevelopment of recently purchased properties until unit prices rise enough to cover DCL costs, but will likely not impact properties purchased several years ago, at lower prices. As there are a significant number of long-held properties in the MC-1 area, establishing DCLs would not significantly delay housing development.

The implication of not imposing a DCL is that significant development could occur with only general tax revenues to fund the public benefits (capital projects) required by new residents. Residents would benefit from a DCL by-law, which will result in improved area amenities. A higher amenity level may also result in increased land values or ease of marketing units, with benefits to private development interests. Lastly, it should be recognized that DCL funding covers only a portion of the City costs of supplying necessary amenities for the residents. In addition, all DCL rates are subject to an annual review and a rate adjustment if warranted.

5. Recommended Allocation of DCL Proceeds

Council must decide on the proportions for spending DCL proceeds before the DCL By-lawcan be enacted. Council's decision must be expressed as a percentage of the anticipated $3,335,000 in proceeds, and may be any percentages totalling 100 percent.

In this DCL area, staff recommend that Council allocate DCL proceeds to pay for 100 percent of the costs of a child daycare facility, providing 24 daycare spaces and 13 after-school-care spaces.

Staff also recommend that Council allocate the funds required for all of the street improvements described, with the remainder available for replacement housing.

The following allocations would result:

	Funds Allocated	Percent Allocated
Street and sidewalk improvements	$ 310,000	9 percent
Child daycare facilities	$1,430,000	43 percent
Replacement housing	$1,595,000	48 percent
Total	$3,335,000	100 percent

Council should be aware that $3,335,000 is a projection of what might reasonably be generated by DCLs over the next 20-30 years. The total amount eventually collected may be higher or lower, depending on the extent and type of redevelopment. Council retains the flexibility to revise the allocations in the future, as needed, provided the funds continue to be spent on projects that are required as a result of development in the DCL area.

6. DCL By-law Authority and Administration Policies

In the MC-1/Welwyn Street area, the potential DCL funds that could be collected (estimated at $3,335,000) are less than the costs of supplying the capital projects to meet the public benefit demands caused by anticipated development (estimated at $4,030,000). In these circumstances, DCLs can be justified under Vancouver Charter authority. Staff therefore recommend that Council establish the DCL District, shown in Figure 1 on page 3. Staff also recommend adoption of the administrative policies appearing in Appendix A. The Director of Legal Services will then draft the DCL By-law according to Council's directions, and bring it forward for Council adoption at the time of zoning enactment.

7. Public Input

DCLs were discussed with area residents, property owners and business owners as part of the broader consultation process for the Cedar Cottage MC-1/Welwyn Street Planning Policies. Staff have notified residents and owners that this report will be considered by Council, and described their opportunity to address Council on this issue. It is recommended that Engineering and Planning staff consult further with the neighbourhood regarding thedesign and implementation of the street improvements.

SOCIAL IMPLICATIONS

DCL funds will be available to establish a child daycare facility which will help achieve the social objectives outlined in Council's Children's Policy and the Statement of Children's Entitlements.

PERSONNEL IMPLICATIONS

The Director of Permits and Licenses notes that this area is small, and probably does not present a large workload for staff. In addition, staff resources for administering DCLs has recently been expanded.

CONCLUSION

DCLs should be adopted to provide public benefits to meet some of the demands created by new development in the MC-1 and Welwyn Street area.

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APPENDIX A

Page 1 of 3

SUMMARY OF DCL POLICIES FOR MC-1/WELWYN STREET AREA

DEVELOPMENT LEVY DISTRICT

(a)The boundaries of the Development Cost Levy District should be as illustrated below.

Figure 1. Recommended DCL Area Boundary

Appendix A

Figure 1 HereRATES

(b)DCLs will be collected at a rate of $34.98 per square metre ($3.25 per square foot).

RATE ADJUSTMENTS

(c)Review rates annually with other Development Levy rates in the City and make rate adjustments based on this review.

APPENDIX A

Page 2 of 3

REDUCED RATES

(d)Establish a rate of $5.49 per square metre ($0.51 per square foot) for child daycare.

(e)Establish a rate of $21.53 per square metre ($2.00 per square foot) for industrial uses.

EXEMPTIONS

(f)Exempt renovations defined as "changes to an existing building not involving additional floor space."

(g)Exempt social housing defined as "housing which is built on land owned by the Federal, Provincial, or City government, cooperative housing group or non-profit society and which is in receipt of government shelter subsidy where at least 30 percent of the units are occupied by core need residents."

(h)Exempt buildings which will contain three or fewer residential units from paying Development Levies.

(i)Exempt churches exempt from taxation.

SECURING PAYMENT

(j)Permit payment of DCLs by instalment, with $100 due prior to issuance of a building permit, the remainder due upon issuance of an occupancy permit, to be secured by an irrevocable letter of credit.

SPENDING OF PROCEEDS

(k)Require that DCL proceeds be spent within the levy district so that they benefit levied projects directly or indirectly.

(l)Spend the DCL proceeds in the following proportions:

(i)9 percent for street and sidewalk improvements:

(ii)43 percent for child daycare facilities; and

(iii)48 percent for replacement housing.

APPENDIX A

Page 3 of 3

RECONCILING DCLS WITH ON-SITE PROVISION OF PROJECTS

(m)Where capital projects funded by DCLs are provided on-site as part of a rezoning or development application, this should be on prior approval of City Council and should not be in lieu of payment of DCLs.

(n)Where contributions by DCLs are approved by Council to be provided "in-kind" on-site, and funded in whole or in part by the applicant or owner of the site, the City will reimburse the applicant or owner for the approved cost out of the DCLs paid.

APPENDIX B

Page 1 of 3

PUBLIC BENEFIT NEED PROJECTIONS FOR DCL AREA

MC-1

Assume average build-out at 2.25 FSR (1.5 FSR residential, 0.75 FSR other)

700 units* @ 1.4 ppu = 970 residents

309,000 sq. ft. commercial space

* non-family housing; 900 sq. ft. (gross) per unit

Welwyn Street

Assume average build-out at 1.2 FSR (all residential)

42 units @ 3.7 ppu = 155 residents

Public Benefit Requirements and Costs
(a)	Childcare
	(i)	Daycare Requirements
		·42 family housing units ·1 space per 114 residents in non-family housing (970 residents) ·1 space per 23,400 sq. ft. commercial space (309,000 sq. ft.)	6 spaces 9 spaces 13 spaces
		·Total	28 spaces
	(ii)	Out-of-School Care/Family Care Requirements
		·out-of-school care = 13 spaces ·13 children x 45 sq. ft./child (indoor space) = ·office space required = ·storage space required = ·meeting space required =	585 sq. ft. 100 sq. ft. 135 sq. ft. 165 sq. ft.
		·Total	985 sq. ft.
		24-space child care centre	3,918 sq. ft.
		·Total (indoor space)	4,900 sq. ft.
		2,700 sq. ft. outdoor space required
		·Total site area required	7,500 sq. ft.

APPENDIX B

Page 2 of 3

	(iii)	Costs
		·Child Daycare -7,500 sq. ft. land area x $60/sq. ft. land cost -24-space daycare facility - 3,918 sq. ft. x $200/sq. ft. construction and equipment cost Total cost of a 24-space daycare facility Cost per space ($1,233,600 ÷ 24 spaces) = $51,400 Total daycare cost ($51,400 x 28 spaces)	$ 450,000 $ 783,600 $1,233,600 $1,439,200
		·Out-of-School Care/Family Care -985 sq. ft. x $200/sq. ft. construction and equipment cost	$ 197,000
		Total Cost	$1,636,200
(b)	Replacement Housing
	(i)	Replacement Housing Requirements = 62 units (number of units in which displaced residents will not be able to afford comparable accommodation in the area)
	(ii)	Replacement Housing Costs Non-market Housing $22,000/unit x 31 units =	$ 682,000
		Rental Housing $42,000/unit x 31 units =	$1,302,000
		Total	$1,984,000
		Note: Provincial non-market housing funding is available for half the units, and the City provides a land lease at 50 percent market value. The remaining units are developed as low-end of market rental housing with the City subsidizing the difference between economic rent and market rent.
(c)	Street and Sidewalk Improvements
	Commercial Street
	(i)	Sidewalk replacement/tree retention	$200,000
	(ii)	18th Avenue intersection improvements	$ 85,000
	(iii)	22nd Avenue intersection improvements	$ 50,000

APPENDIX B

Page 3 of 3

	Welwyn Street
	(iv)	Curb re-alignment, install sidewalk and boulevard	$ 75,000
		Total	$410,000
Total Costs
	Childcare Replacement housing Street and sidewalk improvements		$1,636,000 $1,984,000 $ 410,000
			$4,030,000

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(c) 1997 City of Vancouver