Downtown Eastside Economic Revitalization: Lease Subsidy for Clothes Encounters Laundry/Cafe

ADMINISTRATIVE REPORT

Date: May 05, 2000
Author/Local: J. Barr (632-9668)

N.Edelson (7444) RTS No.: 01479

CC File No. 8104

Council: May 16, 2000

TO: Vancouver City Council

FROM: Vancouver Economic Development Commission and Director of Current Planning, in consultation with the Manager of Real Estate Services

SUBJECT: Downtown Eastside Economic Revitalization: Lease Subsidy for Clothes Encounters Laundry/Café

RECOMMENDATION

THAT Council pursuant to section 206 (1) (a) of the Vancouver Charter, approve a grant of up to a maximum of $72,000 being made to Clothes Encounters, a coin laundry/café, payable over a period of 3 years by way of a lease subsidy, subject to the conditions outlined in this report;

AND THAT the funds be allocated in advance of Council's approval of the 2000 Capital Budget.

CITY MANAGER'S COMMENTS

The City Manager supports the recommendation.

COUNCIL POLICY

On March 16, 2000, Council approved the Downtown Eastside Lease-Subsidy Program (the "Program"), with the Program being managed by the Vancouver Economic Development Commission (VEDC) in consultation with Real Estate Services, Planning and representatives from the community.

PURPOSE

Subject to the City entering into a contract with the VEDC to the satisfaction of the Directorof Legal Services for the administration and management of the Lease Subsidy Program approved by Council on March 16, 2000, this report seeks Council's approval of a grant payable as a lease subsidy being made to Common Concerns, a registered charity, for the operation of a coin laundry/café called Clothes Encounters. Upon approval by Council, Common Concerns will be provided with a letter of intent stating that subject to all the start-up conditions being met, Common Concerns will receive reimbursement for a portion of its lease costs in accordance with the conditions of the Program and all the terms and conditions set out in the contract between the City and the VEDC for the administration of the Program. The actual reimbursement of a portion of Clothes Encounters monthly lease costs, up to the maximum percentage and amounts stipulated in the Program conditions, will occur only after it is ascertained by the VEDC that all conditions required for business startup have been met and subject to Clothes Encounters continuing to satisfy the conditions for receipt of a lease subsidy throughout the three year time period. It is critical that Common Concerns be able to show financial institutions and other potential sources of financing that Clothes Encounters will receive a grant from the City payable as a lease subsidy when all required conditions are met.

BACKGROUND

In July of 1998, Council confirmed that encouraging legitimate commercial activity, reducing crime, improving housing and involving the community are key principles for City actions and planning in the Downtown Eastside. In November of that year Council approved "A Program of Strategic Actions for the Downtown Eastside". One objective of the program is to bring legitimate businesses back to the storefronts of Hastings Street between Gore and Cambie. As part of this work, on March 16, 2000, Council approved the Lease Subsidy and Tenants Assistance Pilot Programs to encourage locally-based businesses to commence operations in the area. Funding for this initiative has been allocated from the Downtown Eastside funding in the 2000 - 2002 Capital Plan. Council approved this allocation when it considered the Lease Subsidy Program at a cost of $150,000 with funding in advance of the 2000 Capital Budget.

An enterprise development proposal discussed as early as April 1999 was for Clothes Encounters, a coin laundry/café. The concept was presented by Common Concerns, a community-based non-profit society and registered charity. Since then, Common Concerns has worked intensively with experts from the industry, community volunteers, Designers for Social Responsibility, Real Estate Services and VEDC staff and volunteers to develop a business plan, and to identify potential sites and detailed storefront design. The Council report of March 16, 2000 on the "Pilot Programs" included a specific reference to Clothes Encounters which provided that "VEDC staff has concluded that this project is viable and should be considered for a Lease-Subsidy as quickly as possible. As a result, this proposal may be brought forward for consideration in advance of other applications".

DISCUSSION

A primary objective of the Lease Subsidy Program is that the benefits arising from enterprises supported by the Program be consistent with community needs. It is to help ensure that objective is met that a Business Review Committee is being established by the VEDC to provide advice on the Program and to determine whether a particular business proposal meets the Program's criteria. However, in consideration of the community support already demonstrated for Clothes Encounters, the VEDC and City staff recommend that this application for a grant pursuant to the Lease Subsidy Program be brought forward for Council's consideration in advance of the Business Review Committee being established by the VEDC, but otherwise in accordance with the conditions of the Program..

Prior to the release of any grant monies to Common Concerns under the Program, it will be verified by the VEDC that the proposed laundry/café meets the Program criteria in that it will be a street-level, storefront operation on Hastings Street between Cambie and Gore; it will be operated by a local non-profit organization which is a registered charity; it will employ local people; it will serve a market not fully served by its nearest private sector competitors, (eg. the Abbott Street Laundry); and, it will serve a need not presently being fully served by other market or non-profit enterprises, including that of local residential establishments. Clothes Encounters already has a contract to launder bedding for housing operated by the Portland Hotel Society. The café is not considered to be in competition with any of the existing cafés as it is intended primarily for customers using the coin laundry, there will be no hot food preparation on site, it will have minimum service, i.e., sandwiches, coffee, etc., and it will have only 16 seats.

The VEDC is satisfied that if the required funding can be secured, this enterprise should be self-sustaining within the three-year period that grant monies are provided by the City by way of a lease subsidy. In addition to the Program conditions listed above, the following conditions must also be met prior to the release of grant monies:

1. that Real Estate Services has reviewed the lease agreement and finds it satisfactory;
2. that all required City inspections have been performed;
3. that a business license has been issued;
4. that the required financing is in place;
5. and that a contract satisfactory to the Director of Legal Services has been entered into by the City and the VEDC for administration of the Program.

When all these conditions have been met the VEDC and City staff will inform Council of that fact and the exact amount of the lease subsidy, not to exceed $72,000 that will be required from the City.

FINANCIAL IMPLICATIONS

The exact cost to the City will depend on the lease costs of the facility secured by Common Concerns for the operation of Clothes Encounters. The maximum grant Clothes Encounters will qualify for is 75% of the monthly lease costs up to a maximum of $3,000/month in year one of operation, 50% of the monthly lease costs up to a maximum of $2,000/month in year two and 25% of the monthly lease costs up to a maximum of $1,000 in year three. This constitutes a maximum City commitment of $72,000 over a three-year period. Subject to the contract being entered into between the City and the VEDC, then upon verification by the VEDC that all permits are secured and start-up financing is in place, the grant monies approved by Council for a lease subsidy for those months until the end of the current calendar year will be transferred to the VEDC by the City for distribution to Clothes Encounters in accordance with the terms of the contract. The VEDC will reimburse Clothes Encounters on a monthly basis, subject to Clothes Encounters providing evidence that its monthly lease payment has been made and that it continues to comply with the Program's operating conditions. Should Clothes Encounters cease to operate during the period of the lease subsidy, any unused funds already transferred to the VEDC will be returned by the VEDC to the City.

CONCLUSION

Clothes Encounters is the first locally based enterprise to apply for a grant from the City under the Lease Subsidy Program for an amount up to $72,000 over a three-year period. If this request is approved, it will help enable this laundry/café to secure needed financing and bring a legitimate business and much needed service back to Hastings Street. As the first project of this pilot program, its progress will be carefully monitored and reported to Council.

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