POLICY REPORT
URBAN STRUCTURE

Date: July 7, 1998
AuthorLoc.: DeMarco/Nowlan
7684/7712
CC File No. 5317

TO: Standing Committee on Planning and Environment

FROM: Director of City Plans, in consultation with the Director of Central Area Planning

SUBJECT: Accommodating High Technology Uses in Industrial Areas

RECOMMENDATION

A. THAT the Director of City Plans prepare a Public Hearing Referral Report proposing a new I-3 District Schedule which includes a new definition for high technology uses, which does not require the need for on-site manufacturing or distribution of products; permits these uses to a full 3 FSR; identifies areas well served by rapid transit for rezoning; and includes conditions for redevelopment such as development cost levies .

For CONSIDERATION

B. THAT the Director of City Plans prepare a Public Hearing Referral Report to amend the I-2 District Schedule to: add a new definition for high technology uses which does not include the need for on-site manufacturing or distribution of products; permits these uses to a full 3 FSR throughout the I-2 zones; and outlines options for conditions of development such as development cost levies and building design requirements.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of A and submits B for CONSIDERATION.

COUNCIL POLICY

Council approved the Industrial Lands Strategy in March 1995 which seeks to retain most of the city's existing industrial land base for a variety of industrial and city-serving activities.

Council approved a new district zoning schedule (I-2) in November 1996 as an implementation measure for the Industrial Lands Strategy to better accommodate the needs of contemporary industry and to ensure compatibility of industrial areas with adjoining residential areas. Approximately 1000 acres were rezoned from M-1 or M-2 to I-2. The main features of the new I-2 zone are:

a) recognizes labs, production studios, software manufacturers as bona fide industrial uses;
b) increases the amount of allowable office space from 25% to 33% of total floor space; and
c) defines computer programming as an office use.

Council approved the False Creek Flats Preliminary Concept Plan in June 1996 which identifies portions of False Creek Flats along Great Northern Way and the Trillium lands as a suitable location for a high amenity urban industrial park. This concept plan also identifies lands around the SkyTrain station and Main Street as suitable for office development.

PURPOSE AND SUMMARY

This report responds to a May 12, 1998 request from Council for staff to report back on ways to accommodate more high technological uses, such as computer programming and software development, in the city's industrial areas. Recent studies on the outlook of the BC economy highlight the importance of high technology sectors in providing new job growth. In recent years, growth in the high technology sector in BC has exceeded 20% per year. The City's challenge is to ensure that there is ample land and buildings to respond to the needs of this growing sector.

High technology industry encompasses a variety of uses. These include the design and/or manufacture of computers, electronics, telecommunications, precision engineering, robotics, biochemistry, health care and related activities. All of these users are currently accommodated in the city - some in industrial zones and some in commercial zones.

The current issue is that some high technology uses, which do not involve goods production, are seeking sites with large floor plates to facilitate flexible work stations and support services. In the city, such sites are usually only available in industrial areas. In the light industry, I-2 areas, office-type activities are limited to 1 FSR to minimize the impact on land values and maintain sites for other uses. Industrial uses are permitted the full 3 FSR. The policy issue is whether the uses permitted in light industrial areas should be broadened to accommodate a wider range of high technology activities.

This report compares the implications of:

… Maintaining the existing zoning schedules. This could result in the loss of some high technology jobs from the city. However, if the jobs locate elsewhere in the region, they contribute to the Livable Region Strategy of increasing suburban job opportunities and to overall regional growth which indirectly benefits the city.

… Amending or creating new industrial district schedules, in all or part of the industrial areas, to permit high technology product design which does not involve the manufacture or distribution of goods. This could result in some high technology firms, specializing in computer programming, which might have otherwise located elsewhere, locating or remaining in the city. The benefit to these firms is easy access to the wide variety of related businesses in the city.

This report recommends increasing opportunities for high technology businesses by creating a new use: "High technology product design which means the design, but not necessarily manufacture, of commercial products in the fields of computer software, electronics, telecommunications, precision engineering, robotics, biochemistry, health care, and related industries."

The report discusses several options for the implementation of this use term. The recommended option is the creation of a new I-3 Industrial District Schedule. The I-3 Schedule would include the new high technology use in addition to all the uses currently permitted in I-2. Several locations with good access to rapid transit services are proposed as areas for the new I-3 zoning. A second option, offered for consideration, is to amend the existing I-2 District Schedule to include the new use.

BACKGROUND

There are currently 690 ha ( 1700 acres) of industrial land in the city. (See Appendix A). This is about 6% of the City's land area. Approximately 46,000 jobs are located on these lands. These jobs primarily include port-related and city-serving industries such as building

and machine repair/maintenance, distribution, medical labs, film studios, printers, and manufacturing and associated secondary activities including retail and office services. Vacancy rates in the city's industrial areas remain low, at under 3%.

Excluding port and water-related heavy industrial lands, there are 400 ha (1,000 acres) of industrial zoned land. In 1995, Council approved the Industrial Land Strategy to maintain opportunities for a variety of city serving activities on these lands. In 1996, Council approved a new district zoning schedule (I-2) as an implementation measure for the Industrial Lands Strategy to better accommodate the needs of contemporary industry. Many types of high technology users were given more development opportunities through this revision, such as software manufacturers, production studios, and labs.

The I-2 zone allows a maximum of 3 FSR for a wide range of industrial uses, including manufacturing, distribution, studios, labs. General office, including computer programming, is allowed in a proportion of one-third general office use to two-thirds of built industrial use (i.e. if 2 FSR industrial use is provided, then 1 FSR may be provided for general office use).

During discussions on the creation of the I-2 zone, some industry operators and representatives from the development industry asked for a higher proportion of office space to allow higher intensity use of industrial sites. As a result of these discussions the amount of allowable office space was increased from 25% to 33_% of the total floor area. However, stand alone offices are not permitted in the I-2. This proportion of office space in the I-2 zone strikes a balance between ensuring a supply of affordable industrial space while at the same time making efficient use of industrial land by allowing some flexibility to create office space for other users.

Stand alone offices are permitted in two industrial areas, the Mount Pleasant I-1 and the IC zones, both of which are well served by transit. General offices are permitted to a maximum of 1 FSR. Both locations are popular for smaller computer programming firms. However, the lots are small in these areas, and it is difficult to assemble large sites. Lately, commercial and residential uses have been out-competing industrial uses in these areas.

DISCUSSION

Recent studies on the outlook of the BC economy highlight the importance of high technology sectors in providing new job growth. In recent years, growth in the high technology sector in BC has exceeded 20% per year. High technology industry comes in a variety of uses. There is no precise definition of "high tech industry." The term usually refers

to the innovative manufacture and/or design of commercial products in the fields of computers, electronics, telecommunications, precision engineering, robotics, biochemistry, health care and related industries. All of these users are currently accommodated in the city -some in industrial zones and some in commercial zones.

In the past few months there have been inquiries from a variety of high tech users such as a high tech manufacturer of printers and a number of medical laboratories wanting to locate in the city. The existing I-2 zoning is suitable for all of these uses but they simply could not find a building to recycle or a suitable land package.

Some software developers are having difficulty finding sites in the city, especially larger companies that may have outgrown their space in Burrard Slopes or the downtown. Commercial sites are available but these are often too expensive. Some software developers have chosen to locate in business/office parks such as Crestwood in Richmond or Discovery Park in Burnaby. They make this decision based on a number of factors: cheaper land, large floor plates, ample free parking, desire to own building, not being able to find a site in the city, and locating closer to their labour force.

This loss of potential city jobs has raised the question of whether the City should take further actions to encourage the location of high technology firms. Two choices are discussed:

… keeping the existing zoning schedules, with the consequences that, on one hand, land will remain available for a variety of service uses while, on the other hand, some high technology jobs will leave or not locate in the city; or

… increasing opportunities for high technology businesses, noting that, on one hand, this will increase opportunities for a growth sector of the economy, while, on the other hand, depending upon how this is done, there may be consequences to commuting patterns, other lower value industrial uses, and to the growth of emerging regional employment centres.

There are a number of City-wide objectives to consider in evaluating the choices:

… achieving a diversified and healthy economy (CityPlan);
… discouraging commuting by car by encouraging higher employment density uses to locate in areas well served by transit (Transportation Plan); and
… keeping a stock of affordable industrial land (Industrial Lands Strategy).

1. Maintain Existing Opportunities for High Technology Activity.

Existing zoning schedules permit high technology activities to locate in the city:

a) Existing commercial zones permit a wide range of office-type computer related businesses. A "Business in Vancouver" compilation from April 1998 listed the top 22 software developers in the region. Five out of the seven companies located in the City are located in the downtown. For example:

… Seagate Software, the third largest software developer in the region , is located on the 4th floor at 1095 Pender in the downtown and they have 250 workers. They have recently made the decision to relocate to Yaletown as a result of lack of space at their present location.

… Radical Entertainment, located at 1052 Homer Street in the downtown, is a software developer for computer games. They have 225 employees.

b) The recently adopted I-2 industrial zone permits up to 3 FSR for high technology manufacturers who require production space, storage, and loading or for biomedical firms which may be handling hazardous chemicals and have special building requirements. In the I-2 zone, up to one-third of developed space can be general office use. Examples of high technology activities in I-2 areas include:

… Glenayre Electronics, with 900 employees, is located in an I-2 zone in the Grandview/Boundary Industrial area. They are manufacturers of telecommunications equipment as well as a software developer and therefore are able to locate within an industrial area (their property was rezoned from CD-1 to I-2 at their request when the new I-2 schedule was introduced).

… Quadra Logics, a medical research lab has recently purchased a portion of the Finning property.

Any land use decisions result in choices between competing uses for scarce land. The existing zoning schedules provide opportunities for high density business activities in commercial areas which can be easily served by rapid transit. A variety of lower density, production oriented businesses locate in industrial areas. Separating the two uses provides space for a balance of activities in the city. To the extent that the activities are combined, it is harder to provide adequate transit services to dispersed sites. Also higher value uses will bid up the price of land impacting other lower value industrial uses.

Should Council choose to maintain the existing zoning schedules, land will remain available for a variety of industrial and service uses which have difficulty competing in the land market with high technology activities. The down side of this action is that the city will likely continue to lose job opportunities in the high technology field. However, provided the jobs locate elsewhere in the lower mainland, the regional economy is stimulated and the Livable Region Strategy of creating complete communities throughout the region, to minimize commuting, is enhanced. Should Council prefer this option, then no action needs to be taken.

2. Increase Opportunities for High Technology Activity.

As noted, some software developers are not locating in the city due to a lack of sites where a large floor plate can be assembled at an acceptable land price. Consequently, some firms are locating in business/office parks such as Crestwood in Richmond and Discovery Park in Burnaby. The City could provide more opportunities for software developers and other high technology businesses which do not require production or distribution facilities by creating a new use term for this type of business and providing additional areas where these businesses are permitted as stand-alone uses.

A possible definition for an expanded range of high technology uses is:

"High technology product design which means the design, but not necessarily manufacture, of commercial products in the fields of computer software, electronics, telecommunications, precision engineering, robotics, biochemistry, health care, and related industries."

This definition includes uses typically defined as "high technology" which do not include on-site manufacturing or distribution activities. The term does not include more traditional office uses such as banks, legal firms, or corporate business offices. However, Council should note that the physical space in which computer-based high technology activities occur looks like more traditional office buildings. This may lead to problems of enforcement.

Should Council wish to create this new use term it could be applied to all light industry (I-2) areas or it could be permitted in selected areas (e.g. areas with good transit services). The following sections outline several options:

2.1 Amending the I-2 Schedule to permit a wider range of high technology uses; or
2.2 Creating a new high technology use term and applying it in selected areas. This could be done by rezoning some industrial areas to I-1; creating a new I-3 High Technology District Schedule; or creating high technology business parks through CD-1 zoning.

2.1 Amend the I-2 Light Industrial District Schedule to Permit a Wider Range of High Technology Uses.

Amending the I-2 District Schedule to permit a wider range of high technology uses is the option which provides the most sites for new development. The advantage of this option is that it provides an additional 850 acres where a full range of high technology activities could locate to 3 FSR. When combined with the I-1 and IC areas (where high technology uses are already permitted as stand-alone businesses) this opens up 990 acres or 60 percent of the industrial lands (the remaining 40 percent are the heavy industry Port and Fraser River industrial areas).

This would significantly increase the effective use of I-2 lands which, under existing uses, typically do not develop to the allowable 3 FSR for industrial activity. The areas involved include the I-2 portion of False Creek Flats (all except the Finning M-2 area, which could, however, choose to be included in the rezoning), all of the Grandview Highway Industrial Area, and the I-2 portion of the Fraser River-Marine Drive Industrial Area.

The disadvantage of this option is that higher density businesses can locate on a wide variety of sites, many of which are not well served by transit and may never be located near rapid transit. This potentially increases commuting by car. Another concern is that land values would likely rise, reflecting the increased range of uses permitted in the industrial areas. This may bid out other lower value city-serving uses (one such example is the current need by BC Transit to relocate its trolley service yard). Council will recall the concerns Finning raised about the potential increase in land values with the I-2 rezoning. These concerns would likely be realized if office-type high technology activities were permitted to 3 FSR.

Impacts on other industrial uses would be reduced if new high technology uses were permitted as stand alone uses but to a lower FSR. Option 2.2.1 offers an option with reduced floor space. Another way to minimize impacts on other industrial uses would be to require all new development to be built to industrial standards (e.g. loading docks and weight bearing floors). This would provide increased flexibility for a variety of future uses.

The option of significantly increasing sites for a wide range of high technology activities is presented to Council for consideration. This is not staffs' preferred option due to the difficulty of providing transit service to all I-2 areas, the possible consequences on other city-serving activities, and potential enforcement difficulties.

Should Council wish to pursue this option, staff recommend reporting back with proposed amendments to the I-2 District Schedule to add a new definition for high technology uses which does not include the need for on-site manufacturing or distribution of products, permit these uses a full 3 FSR throughout the I-2 zones, and with options for conditions of development such as development cost levies and building design requirements.

2.2 Create a New Use Term for High Technology Uses and Apply it in Selected Areas.

The option of permitting a wider range of high technology uses in selected industrial areas has the advantage of increasing opportunities for high technology activities, making more intensive use of some city lands, and locating worker concentrations to benefit rapid transit investments. There are several ways this could be implemented:

2.2.1 Rezone some industrial areas to I-1

The I-1 District Schedule permits a wide range of stand alone General Office uses up to 1.0 FSR. The zone excludes more traditional office uses such as finance, insurance, real estate, and legal.

This alternative has the advantage of not requiring a new zoning schedule to be created. The drawback is that this zoning could result in 1 FSR stand alone high technology uses on large parcels of industrial land. This would result in the under use of industrial land potential.

2.2.2 Create a New I-3 Industrial Schedule for High Technology in Selected Areas

Another option is to create a new I-3 District Schedule which includes all the uses permitted in the I-2 Schedule and adds the new high technology use term as a use permitted to a full 3 FSR. Appropriate areas could then be identified for this new zone.

The advantage of this option is that areas can be identified for higher density development which achieve other civic objectives such as enhancing development opportunities near rapid transit stops. Appropriate sites for I-3 zoning might include parts of the False Creek Flats and industrial lands around station stops along the proposed Broadway-Lougheed transit line. The Broadway Corridor could provide over 50 ha (120 acres) of lands with

potential for I-3 zoning within walking distance of Skytrain stations. Together False Creek Flats and the Broadway Corridor would provide almost 80 ha (200 acres) or over 25% of the remaining light industrial land base. Some areas could be rezoned to I-3 immediately, based on existing rapid transit services. Other areas, such as around Broadway Rapid Transit stations, could be implemented as part of station area plans.

The disadvantage of a City-initiated I-3 zoning is that public benefits are not negotiated through the rezoning process. This could, however, be addressed through area specific development cost charges.

2.2.3 Create High Technology Business Parks through CD-1 Rezoning

Many municipalities have special zones to create "business park environments" for specific parcels of land. Generally these areas are comprehensively planned. The densities for suburban business parks are much lower than the City of Vancouver's industrial zones. They generally allow a wide range of offices. Appendix B shows some comparisons.

At present the city's industrial areas do not offer a "high tech" industry campus environment. Vancouver has the opportunity to create high technology parks while avoiding the problems of low intensity development that cannot be served by public transit. The idea of land set aside for similar types of companies is desirable for many high tech firms. Given the possible density of development and related requirements for amenities, the creation of high technology business parks is probably best accomplished on a site by site basis, through a CD-1, where amenities can be negotiated through the development process.

The lands identified in the False Creek Flats Concept Plan as suitable for high amenity urban industrial parks offer an ideal location near rapid transit. These lands include the Trillium lands, north of the railway station, the City lands south of Terminal Avenue, and lands along Great Northern Highway, including the adjacent BNR lands. If a new high technology CD-1 zoning is developed for parts of False Creek Flats, approximately 28 ha (70 acres) could be rezoned, giving several years supply of high technology space. The proximity of rapid transit is an asset for these areas which could attain a relatively high employment density and will avoid the high car-dependence problems experienced in suburban business parks. The development of these

areas could create a critical mass of similar types of firms and an "urban campus" atmosphere. A companion report recommends a dedicated team-approach to work together with Finning to realize a planned high technology park on their lands.

The disadvantage of creating individual CD-1s is that it is a time consuming process and does not provide opportunities for smaller high tech firms to immediately identify sites.

Creating an I-3 High Technology District Schedule does not preclude applications for CD-1 High Technology Business Parks on large sites in single ownership.

After balancing:

… the choice between retaining land for industrial and city-serving activities and providing more sites for a wide range of high technology activities, and
… the advantages of blending a mix of uses with possible enforcement difficulties,

staff recommend pursuing the idea of creating a new I-3 District Schedule to encourage a broad range of high technology activities in areas easily served by rapid transit.

There has not been sufficient time to prepare a draft zoning schedule and identify areas for rezoning. Consequently, if Council wishes to pursue this option, staff recommend a report back (Recommendation A). The report would propose a new I-3 District Schedule which:

… includes a new definition for high technology uses, which does not require the need for on-site manufacturing or distribution of products;
… permits these uses to a full 3 FSR;
… identifies areas well served by rapid transit for rezoning; and
… includes conditions for redevelopment such as development cost levies.
.
Assuming any public process associated with creating the I-3 District Schedule occurs as part of the Public Hearing process, staff can report back with a referral report by October.

CONCLUSION

Creating a new I-3 Industrial Schedule for a wide range of high technology activities and rezoning sites near rapid transit for this new zone meets a variety of city objectives. It promotes a diverse economy. It provides a development opportunity not currently available for large lot industrial areas in the city while at the same time protecting some industrial space for a broad spectrum of industrial users. An I-3 zone provides opportunities for high technology activities to occur in areas with multiple ownership.

The I-3 alternative could provide opportunities for more intense development in parts of False Creek Flats and near rapid transit stops in the Broadway-Grandview corridor and possibly parts of Marine Drive industrial areas when rapid transit to Richmond is implemented. Together, False Creek Flats and the Broadway corridor could add over 80 ha (200 acres) of lands with immediate potential for I-3 zoning. These initiatives could result in almost 25% of the light industrial land base devoted to a broad range of high technology uses.

Creating an I-3 schedule does not preclude comprehensive development of selected large sites in single ownership. A companion report recommends a dedicated team-approach to work together with Finning to realize a planned high technology park on their lands.

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APPENDIX A
Page 1 of 2

MAP

ATTACHMENTS TO THIS DOCUMENT THAT DO NOT HAVE ELECTRONIC COPY ARE AVAILABLE ON FILE IN THE CITY CLERK'S OFFICE

APPENDIX A

Page 2 of 2

The stock of remaining industrial land in the City is as follows:

Industrial Zoning	No of hectares(acres)
M-2 heavy industrial- mostly port back-up , river frontage, and rail	202 (500)
I-2 light industry(excluding approximately 150 lands occupied by non-industrial uses, ie highway frontages on Marine/Grandview, but including railway lands in False Creek Flats)	344 (850)
I-1 Mount Pleasant	40 (100)
IC Burrard Slopes/Brewery Creek ( many commercial and housing sites)	16 (40)
Total	602 (1490)

APPENDIX B

Business Park Zoning in Selected Municipalities
City	Zone	Permitted Uses	Max FSR	Max Site Cover	Max Height
Richmond	I3 - Business Park Industrial	Light Industry	1.0	50%	40 ft
		Office
		Workshops
		Business Services
Surrey	IB - Business Park	Light Industry	0.75	45%	40 ft
		Office
		General Service
Burnaby	M8-Advanced Tech Research	Scientific or Tech Research	1.0-1.2	50%	50-60 ft
		Business Offices
Vancouver	I-2 Light Industry	Light industry	3.0		60-100ft
		Studios	3.0		60-100ft
		Laboratories	3.0		60-100ft
		General Office , excluding finance, insurance, legal in combination with other industry uses	1.0		60-100ft

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(c) 1998 City of Vancouver