POLICY REPORT

DEVELOPMENT AND BUILDING

Date: December 2, 1997

Author/Local: RWhitlock/7814

CC File No. 8017

TO: Standing Committee on Planning and Environment

FROM:Directors of Planning on behalf of Land Use and Development, in consultation with the Managers of the Housing Centre and Real Estate Services

SUBJECT: (a) Oakridge Langara Policy Statement Institutional Replacement Policy; and

(b) Proposed CD-1 Rezoning of 990 West 41st Avenue (Lubavitch Centre)

RECOMMENDATION

A.THAT the Oakridge Langara Policy Statement institutional FSR replacement policy be interpreted to allow only replacement of existing institutional floor space and no other substitution.

CONSIDERATION

B.THAT the Oakridge Langara Policy Statement institutional FSR replacement policy be interpreted to include limited provision for the development of market housing as an alternative to complete replacement of the institutional floor space, subject to the institution remaining on the subject site and providing a level of service still meaningful to the Oakridge Langara community or its client group.

If Council adopts B above, the Directors of Planning RECOMMEND

C.THAT the increased land value created by substituting market housing for replacement institutional floor space should accrue to the City in the form of a public benefit to be determined in accordance with standard CAC calculations.

If Council adopts B above, as an alternative to C, the following is submitted for CONSIDERATION

D.THAT the Lubavitch proposal for substituting market housing for replacement institutional floor space be further considered with the increased land value thereby created to be used for operating endowment forthe institution.

GENERAL MANAGER’S COMMENTS

The General Manager of Community Services RECOMMENDS approval of A.

COUNCIL POLICY

The Oakridge Langara Policy Statement (OLPS) approved by City Council on July 25, 1995. The following policy applies to existing institutional uses in area:

Increase in overall site density beyond the residential FSR outlined in Chapter 3 (‘Residential Location and Density’) may be considered in order to retain the institutional use, but only if the mixed-use proposal is shown to minimize impact on the community while providing city-desired public benefits in return.

The Oakridge Langara Public Benefit Strategy, approved by Council on June 13, 1996.

PURPOSE

The purpose of this report is to seek City Council direction regarding the Oakridge Langara Policy Statement (OLPS) institutional replacement policy. Clarification is needed in order to enable City staff to further process a rezoning application submitted on behalf of the Lubavitch Centre at West 41st Avenue and Oak Street.

SUMMARY

Before proceeding to give direction to the applicant and involving the community, it is necessary to seek Council clarification of the OLPS as it relates to existing institutional sites. The issue has been raised by a rezoning application for the Lubavitch Centre, which proposes to substitute market housing for unused replacement floor area from the existing Lubavitch Centre, with the proceeds from that market housing to be used to create an ongoing operating endowment for the Centre.

Staff do not support the requested substitution, but seek advice from Council on this issue. This advice is requested in two areas:

1.Does Council wish to interpret the OLPS so as to consider the proposed substitution approach? and if so,

2.Should the proceeds of the substitution provide City desired public benefits or should they provide institutions in the area with replacement costs and operational endowments?

Should Council choose not to consider the requested substitution, the Lubavitch Centre would be required to reduce its proposed 1.98 FSR to 1.68 FSR. Assessment of the project’s proforma at 1.68 FSR indicates that the value achieved from the rezoning and redevelopment is sufficient to cover Lubavitch’s redevelopment costs, establishment of an operating endowment for the Centre, as well as providing the city-desired public amenity contribution as required by the OLPS.

Should Council support the substitution approach, staff recommend the total increased land value accrue to the City in the form of a public benefit in keeping with the OLPS.

OLPS AND LUBAVITCH PROPOSAL

The OLPS allows for a base level of density, a bonus for the provision of city-desired public benefits and increased density for the replacement of existing institutional FSR, as a means of providing for their continued existence in the area. Staff have interpreted the wording "increased density" to mean allowing the full existing institutional floor space to be replaced.

The table on the following page sets out the provisions of the OLPS and the extent to which the Lubavitch proposal meets the Policy Statement.

Rather than reconstruct the existing Centre to its present size (0.54 FSR), Lubavitch proposes to develop a smaller centre (0.24 FSR [44% of current size]) and substitute market housing in place of the unused institutional FSR of 0.30 (56% of current size equalling 1 136 m² or 12,230 sq. ft.). The proceeds or increased land value from this approach would be used to establish an endowment fund to support its ongoing operation.

The initial application for Lubavitch sought both FSR and height in excess of OLPS parameters. The applicant has now indicated an intent to reduce both to that supported in the OLPS (with the exception of the request to substitute the institution FSR).

FSR COMPONENT	OLPS	LUBAVITCH PROPOSAL
Floor Space Ratio	1.0 to 1.2 upper range dependent on the achievement of "good design"	Maximum of 1.2 proposed
Bonus FSR	0.24 FSR A further 20% increase in density for "the provision of City desired public benefits"	0.24 FSR Four units owned by the City proposed
Institutional	0.54 FSR existing An increase in overall site density beyond the above residential FSR may be considered in order to retain the institution use, "but only if the mixed-use proposal is shown to minimize impact on the community while providing City desired public benefits in return"	0.24 FSR institutional + 0.30 FSR market housing (to be substituted in place of un-used institutional FSR) Total FSR of 0.54
Total FSR Achievable	1.98	1.98

DISCUSSION

Question 1: Whether to Consider Substitution Approach?

Oakridge Langara Policy Statement (OLPS): The OLPS acknowledges the role of existing institutions in the community, making provision for increased density to accommodate their continued existence on present sites. This accommodation is dependent on the applicants being able to minimize impact on the community and provide city-desired public benefits in return.

The OLPS does not specifically anticipate un-used institutional floor space being converted for market housing use, whether or not this would be used to finance development and operation of the institution. The approach suggested by Lubavitch would broaden the original intent of the policy.

Staff believe that the conversion of an "excluded" floor space allowance to cash value is a significant precedent and inconsistent with the intent of the OLPS to accommodate existing institutions. The further request by Lubavitch to retain the increased land value is alsoinconsistent with the institutional policy which draws a direct link between the increased density and a return in "city-desired public benefits".

Balancing Public Benefit and Financial Viability: Regarding institutions, the OLPS specifically calls for a balance between increased density, minimizing impact and the provision of City desired public benefits in return. The term "City-desired public benefits" is interpreted to mean, throughout the OLPS, benefits which have been defined in the companion Public Benefit Strategy (PBS) which was adopted by Council in June 1996. These benefits include park acquisition, park development, child day care, replacement housing, greenway and street improvements.

The substitution of institutional FSR by market residential floor space to finance development and endowment of institutions for this and other institutional sites will have only a small net effect on the population/amenity balance developed in the PBS. However, turning the increased value into community amenities (through monetary or "in-kind" contributions) would be consistent with the central theme of the OLPS, augmenting population increases with a comparative increase in public benefits.

In the case of Lubavitch, allowing the residual institutional FSR to be translated into market units creates additional housing (replacing the un-used institutional floor space creates approximately 1 136 m² or 12,230 sq. ft. of additional housing [approx. 15 market housing units]) and comparable increase in population and traffic.

Lubavitch representatives argue that retention of the existing facility in the area will not be financially viable unless the additional funds from the market housing are used to pay for the costs of building and endowing the facility. Analysis of project proforma by the Real Estate Division (see later in report) indicates that there is sufficient funds at 1.68 FSR for redevelopment and an operating endowment and therefore public benefit/community amenity contributions need not be sacrificed.

Implications of Extending Institutional Policy in Oakridge Langara: There are seven institutional sites in the area where this expanded policy could directly apply (Lubavitch, St. John Ambulance, Kensington Hospital, Oakridge Baptist Church, Peretz School, Alliance Francaise & Chinese Presbyterian Church). Other larger institutional sites such as Louis Brier and the Pearson Centre have specific FSR limits set out in the Policy Statement.

Lubavitch and the cluster of institutional uses at West 45th Avenue and Cambie Street (St. John Ambulance, Peretz School, Alliance Francaise and the Chinese Presbyterian Church) are relatively isolated from nearby single-family development. Full replacement of the institutional floor space plus the residential floor area allowed under the OLPS should be attainable without significant impact on adjoining areas. Sites such as the Oakridge BaptistChurch and Kensington Hospital may face greater difficulties because they directly abut onto single family areas.

In the case of Lubavitch, staff believe that the maximum density of 1.98 FSR can be achieved because the site is bounded on the east by the Jewish Community Centre and to its immediate south by the Unity Church. The site is relatively isolated from adjoining RS-1 sites (three houses fronting Fremlin Drive to the southeast back on to the site across a City lane). Minimizing the impact of the added density has yet to be fully proven by the applicant, as the initial rezoning proposal exceeds both recommended levels of FSR and height. The applicant acknowledges that redesign is necessary. Staff believe that a good quality of development is achievable once the density and height parameters are established. Community input will be important at the next stage.

It should be pointed out that, even if all institutions were to take up this substitution approach, less than 100 units would be created in total. In view of the fact that approximately 3,500 housing units are to be created over the life of the OLPS, at maximum take-up the substituted units would represent less than 3% of the total, and would have little appreciable impact on the overall amenity of the area.

Implications of Down-sized Institutions: Lubavitch and St. John Ambulance argue that project affordability is critical to their decisions to continue operating on their present sites. In their view, a restricted interpretation of the replacement policy to the floor space consideration could lead to decisions to leave their present sites or the city altogether. In some cases such a decision may not be as critical to the area, as services are not directly provided to local residents, but rather are of more value to the city and the region at large. St. John Ambulance is such an example.

However, many religious and cultural institutions such as Lubavitch serve members from the local area, from the city and the region. The OLPS policy to provide increased density for institutions is clearly premised on the institution continuing to operate on site and provide services to the community, whether local or city-wide. Re-location of institutions off-site would result in loss of the associated density altogether.

The more flexible interpretation of the policy may clearly result in smaller institutions. The impact of downsizing of each institution should be assessed as part of the rezoning application analysis. Both Lubavitch and St. John are now proposing smaller facilities than their existing buildings. According to Lubavitch, the reduced facility will not appreciably reduce service, but adjustments will occur as more services may be delivered on an outreach basis. St. John Ambulance would transfer provincially-based administrative services elsewhere. Applicants would need to demonstrate a level of service commensurate to that presently being provided in the community.

Staff conclude that allowing the policy to be expanded to include substitution is counter to its intent, which is a positive incentive to allow institutions to be replaced in full. Approving the substitution, as requested by Lubavitch, may have the opposite affect. Staff understand that more efficient floor plates may be able to provide the same service, but it will be difficult for staff to evaluate whether the same level of service to either the community or the client group is being provided.

City-wide Precedent Considerations: A serious question for Council is the applicability of this policy to the rest of the City. The "expanded"policy described in this report is a response to a specific policy in Oakridge Langara related to institutions. There is no similar City-wide Council policy regarding institutions except that the City no longer offers "write-downs" of City-owned lands to religious and cultural organizations. However, Council may expect that many institutions outside Oakridge Langara will translate a positive decision on Lubavitch’s request as a precedent for the rest of the city.

CONCLUSION (Question 1: Whether to Consider Substitution Approach?)

Staff believe that the answer to Question 1 should be not to allow the substitution approach. In general terms, the expanded consideration is counter to the policy’s intent, to allow existing institutions to be accommodated up to their present size, in addition to the accommodation of significant residential densities. It is a significant precedent for both Oakridge Langara and for the remainder of the city.

The proposed substitution of the un-used institutional FSR for market housing can be seen as an effective grant from the City. It is generally the policy of the City to seek the increased land value where "bonus density" is proposed. Social Planning staff note that Lubavitch would not qualify for direct City grants. The immediate community will likely prefer to see the building bulk reduced by not supporting the extended interpretation.

Analysis of Lubavitch’s specific proforma (see analysis at end of report) indicates that Lubavitch can provide for redevelopment, establish an operating endowment and contribute city-desired public amenities without the substitution. Consequently there is no basis for expanding the policy.

Question 2: Who Should Benefit From Substitution Approach?

While staff recommend that Council not allow the proposed substitution, either generally or in the case of Lubavitch (Recommendation A), if Council wishes to consider the substitution approach, there are two options:

1.Allow the residual institutional density to be replaced with market housing but requirethat all this additional FSR be treated as a bonus density and the increased land value be turned back to the City (Recommendations B and C).

This option responds to the link between density and return of community benefits as described in the OLPS. This option will provide Lubavitch with sufficient incentive to proceed and normal "developer profit"would still accrue to them (see financial analysis to follow).

2.Allow the residual institutional density to be replaced with market housing with the "increased land value" left with Lubavitch, as requested (Recommendations B and D).

Staff believe this to be the least preferred of the options, for reasons of policy intent, precedent and project proforma specifics. Returning all the value to Lubavitch, as requested, provides minimal mitigation to the community in public benefits.

Lubavitch and Financial Viability: The Manager of Real Estate Services has reviewed the economics of the development. At the recommended 1.68 FSR, Lubavitch would recover the value of the land, estimated at $3.1 million, and, in addition, achieve a development profit of $1.9 million. Assuming their replacement facility costs $150 per square foot to build, Lubavitch would end up with a new 908 m² (9,780 sq. ft.) facility and a $3.5 million operating endowment as well.

Under all options, Lubavitch would provide a city-desired public amenity to the City as required under the OLPS for the 0.24 FSR housing density increase. Under the recommended 1.68 FSR, the value of the contribution to the City is $625,000. If Lubavitch’s 1.98 FSR proposal is approved (residential density bonus increases of 0.24 and 0.30 FSR, the latter being the substituted space), a total of $1.4 million in amenity contribution would be received by the City.

However, Lubavitch has asked that they be allowed to retain the increased land value for the unused institutional space under the 1.98 FSR scenario. If this were approved, their endowment would increase to $4.7 million.

If the recommendation that the City require payment of the full land value increase is approved, it is recommended that the benefit take the form of housing units to be given the City at no cost. At the recommended 1.68 FSR the City would receive four (4) units (public amenity required as part of bonus FSR) and at 1.98 FSR nine (9) units in total. These would be one-bedroom units which the City could assign to a non-profit housing society to rent. Given the location near transit and shopping, the likely target group would be seniors. Since the units would be free to the City, core-need seniors could be accommodated. Any net revenue earned from the units would be credited to the City’s Affordable Housing Fund. TheManager of the Housing Centre will report back to Council at the time of referral to Public Hearing on the details of the housing benefit.

City-owned Versus Lubavitch-owned Rental: As a result of a recent letter sent to some members of Council by Lubavitch, the Manager of the Housing Centre wishes to make clear the distinction between accepting City-owned strata units at no cost to the City, versus City-controlled rental units owned by Lubavitch. Market rental units generate a sizable net income. If Lubavitch owns the units and collects the rent, as they propose, they need to provide more units than if the City owns them and collects the rent. At an FSR of 1.68, Lubavitch would have to provide 14 market rental units instead of the four units they would have to give the City, and which the City would own and rent.

OVERALL CONCLUSION

The form of development for the Lubavitch project would be comparable under full institutional replacement or with substitution, as density and bulk will generally be the same, and so this is not seen to be an issue in this consideration. The applicant will need to demonstrate a good quality form of development through a revised submission.

Staff need Council’s advice on whether the substitution approach represents a reasonable extension of the Oakridge Langara Policy Statement policies related to "retention" of existing institutions. Staff believe that the policy should not be extended.

If Council does support the extended interpretation, the second question is whether the increased value is returned to Lubavitch, as requested by the applicant, or the community in the form of non-market housing, as recommended by staff. The applicant would like a decision by Council on both matters, in order that they can deal with business decisions which derive from FSR thresholds, etc.

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APPENDIX A

APPLICANT, PROPERTY, AND DEVELOPMENT PROPOSAL INFORMATION

APPLICANT AND PROPERTY INFORMATION

Street Address	990 West 41st Avenue
Legal Description	Lot 1 of Lot ‘A’, Block 1008, D.L. 526, 13567 NWD
Applicant	Central Organization for Jewish Education/Lubavitch-British Columbia
Architect	UD & D Ltd.
Planning Consultant	Jim Lehto
Property Owner	same as applicant
Developer	United Properties Ltd.

SITE STATISTICS

	GROSS	DEDICATIONS	NET
SITE AREA	3,786.5 m²	Not known at this time	-

DEVELOPMENT STATISTICS

	DEVELOPMENT PERMITTED UNDER EXISTING ZONING	PROPOSED DEVELOPMENT	RECOMMENDED DEVELOPMENT (if different than proposed)
ZONING	RS-1	CD-1	-
USES	One-Family Dwelling; Institutional; Church; School; etc.	Institutional and residential	-
DWELLING UNITS	1	82	-
MAX. FLOOR SPACE RATIO	0.60	2.16	1.68 - 1.98
MAXIMUM HEIGHT	9.2 m (30 ft.); with relaxation to 10.7 m (35 ft.)	21.64 m (71 ft.)	15.24 m (50 ft.)
MAX. NO. OF STOREYS	2 1/2	Six and four	-
PARKING SPACES	As per Parking By-law	As per Parking By-law	-

CALCULATION OF INCREASED LAND VALUE

The Manager of Real Estate Services states that at 1.98 FSR, assuming no land cost (property check indicates property owned free and clear of all financial incumbrances), normal development profit would be about $3.8 million. This would be after paying all costs of building the new Lubavitch Centre, but before any public benefits were paid to the City.

The OLPS requires provision of a public benefit for the 20% density bonus. On the base density of 1.2 FSR, the 20% bonus is equal to an FSR of 0.24. The increase in land value resulting from the 0.24 FSR density bonus is equal to approximately $626,000. This is calculated as follows:

Bonus density x site area x buildable = Value of bonus

0.24 FSR x 40,759 sq. ft. x $65/sq. ft. = $626,058

In this case the bonus would amount to four seniors strata units at no cost to the City. The remaining development profit then becomes $3.5 million.

If the City required a similar level of public benefit for the substituted 0.30 FSR of floor area, an additional five units (value of almost $800,000) would be given over to the City.

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(c) 1997 City of Vancouver