POLICY REPORT URBAN STRUCTURE Date: January 22, 1996 Dept. File No. RGL TO: Vancouver City Council FROM: Directors of Land Use and Development and Central Area Planning, in consultation with the Manager of Real Estate and the Director of Legal Services SUBJECT: Heritage Density Transfers in the Central Area RECOMMENDATIONS A. THAT the Director of Land Use and Development be instructed to make application to amend the RM-5, RM-5A, RM-5B, C-3A, C-5 and C-6 Zoning District Schedules, and the Downtown Official Development Plan, to permit the Development Permit Board to approve limited transfers of heritage floor space onto development sites in these districts, from heritage sites in these districts, as set out in Appendix A; FURTHER THAT the application be referred to a Public Hearing; AND FURTHER THAT the Director of Legal Services be instructed to prepare the necessary by-laws for the Public Hearing. B. THAT consequential amendments to the Transfer of Density Policy and Procedure, as noted in Appendix D, be presented for adoption, in principle, at the Public Hearing, to exclude certain sites from qualifying as receiver sites for heritage density transfers, and to include reference to consideration of impacts related to additional density on receiver sites. C. THAT subject to approval of A and B, staff report back on the success of the amended policies in March 1998. GENERAL MANAGER'S COMMENTS The General Manager of Community Services RECOMMENDS approval of A, B and C. COUNCIL POLICY Council's "Transfer of Density Policy and Procedure" (TDP) provides opportunities for the transfer of density from one site to another where the transfer will achieve at least one of a number of public objectives, including heritage preservation. Council's "Heritage Policies and Guidelines" state that buildings listed on the Vancouver Heritage Register have heritage significance, and that the City's long-term goal is to protect through voluntary designation as many resources on the Register as possible. A number of incentives exist to aid heritage preservation, including heritage density bonusing and the Transfer of Density Policy. SUMMARY Note: A glossary of terms used in this report is attached as Appendix B. This report recommends that Council's transfer of density policy (amended in 1993 and again in 1994) to encourage retention of heritage buildings in the Central Area, be again amended as was contemplated at that time. The change would require amendments to various zoning district regulations, and the Downtown Official Development Plan, to give the Development Permit Board the authority to approve a maximum ten percent extra density on a receiver development site in parts of the Central Area (shown on the map attached as Appendix C), where this extra density is derived from one or more heritage donor site(s) in the same parts of the Central Area. The report also recommends amending Council's transfer of density policy so that: (a) residual or bonus heritage density from a rezoned site with a Vancouver Heritage Register building in the identified area be eligible for consideration by the Development Permit Board for transferring onto a receiver site(s) within the same area, consistent with Section 595A of the Vancouver Charter; and (b) the following are excluded as potential receiver sites: i) a site already receiving a hotel density bonus; ii) a site already receiving a heritage density bonus; iii) a site containing a SRO hotel, unless the units are secured or replaced; and iv) a site zoned CD-1, unless a provision is included in the CD-1 by-law.PURPOSE This report proposes by-law and policy amendments to authorize the Development Permit Board to approve density to be transferred from sites with residual heritage density in the Central Area onto receiver development sites in the Central Area. BACKGROUND On September 2, 1993, Council amended the policy to permit the transfer of density from any heritage "donor" site in most parts of the Central Area to any "receiver" development site(s) in any of the same parts of the Central Area, regardless of the zoning on the donor and receiver sites. Despite this potential for heritage density transfers across zoning boundaries, both the donor and receiver sites must be rezoned to accomplish the density transfers, although this does not have to be done simultaneously. The rezoning of the heritage site, through which residual and/or heritage bonus density is conferred for future transfer, is an incentive to achieve the rehabilitation and designation of the building. Residual/bonus density is held (through a development limitation covenant) on the donor heritage site until approved for transfer elsewhere. At the same time, Council requested that staff report back on: (a) new legal mechanisms to give greater certainty to deferred residual heritage density on heritage donor sites; (b) amendments to the DODP and the zoning schedules within the Central Area, as shown in Appendix C, to permit increases in FSR to a maximum amount for a site or sites receiving density from a heritage donor site, without requiring rezoning of the receiver site(s). In drafting this policy, consideration should be given to the cumulative amount of residual density which could ultimately be held on heritage donor sites in the Central Area, the method of calculation of transferable density and the establishment of a review period to determine the success of the new policy; (c) a review of the issue of density in Gastown and Chinatown for potential inclusion in the new transfer of density policy; and (d) the success of the amended policies by March 1995. On December 8, 1994, Council again amended the Transfer of Density Policy to allow density to be transferred out of HA-1, HA-1A Districts (Chinatown).In July 1995, the Province enacted an amendment to the Vancouver Charter (Section 595A, attached as Appendix E) to allow for the establishment of a transfer of density system, as contained in this report. DISCUSSION The Problem Council's current "Transfer of Density Policy and Procedure" calls for the rezoning of both the heritage donor site and the receiver development site(s). The heritage donor site must be rezoned in order to establish the amount of residual/bonus heritage density that may not be used on the site in the future, but may be transferred away. The receiver site(s) must be rezoned to permit increases in density beyond that permitted under existing zoning. However, developers of potential receiver sites are reluctant to utilize residual/bonus heritage density because of the time, cost and risk of rezoning their own sites. If there is little interest in acquiring residual/bonus heritage density, the market value of this density is diminished and few owners of heritage sites will be able to benefit from the policy. More heritage buildings may well be lost. The Objective The objective of the proposed amendments is to make it easier for developers of potential receiver sites to utilize density from heritage donor sites by not requiring receiver sites to be rezoned if the requested resultant site density is no more than ten percent beyond the current zoning maximum. A summary of the envisaged process for receiver sites is as follows: 1. The developer of a potential receiver site makes initial arrangements to purchase density from a heritage site with surplus density already conferred through CD-1 zoning or other development limitation mechanisms, such as a covenant, established through a Heritage Revitalization Agreement. 2. The developer arranges a pre-design conference with Planning staff to determine the level of support for increased density (up to ten percent) on the proposed receiver site and any special design considerations that might apply.3. A development application is submitted (a preliminary development application may be recommended), in which the density transfer is based on a square metre for square metre basis. 4. After processing, the Development Permit Board decides on the application. 5. Development permit issuance is subject to an amendment to the covenant affecting the donor site to reduce the amount of transferable density by the amount being utilized on the receiver site. The Issues A. Legislation Section 595A of the Vancouver Charter enables Council to establish a facilitated transfer of density system for heritage preservation. The legislation allows density on a receiver site to be increased by up to ten percent of maximum density permitted under current zoning, when the density being transferred is part of a compensation package for the heritage designation of the donor site. To take advantage of this enabling legislation, amendments are needed to the Downtown District Official Development Plan and the applicable zoning district schedules in the Central Area. The recommended amendments are set out in Appendix A. B. The Cumulative Amount of Heritage Density The total amount of transferable heritage density available in the marketplace will impact its value and the interest there is in the development community to acquire it. Staff are recommending that transferring density from heritage sites be considered as one incentive for preservation, and that each rezoning application for heritage site be considered on its own merits. Care taken in considering the source of available density should keep it under control and sustain its value. Presently there exist in the affected zoning districts in the Central Area (including Central Broadway and South Granville) 265 sites with buildings listed on the Vancouver Heritage Register. Of these, 54 contain Category "A" buildings, 146 contain Category "B" buildings and 65 contain Category "C" buildings.There is no way to predict the annual projected take-up of the surplus density on receiver development sites that would occur if rezoning is no longer required. To date, there have been two heritage rezonings and residual/bonus density held in development limitation covenants. The B.C. Hydro Building had 13 935 m› (150,000 sq. ft.) established in 1994, of which 1 927.6 m› (20,750 sq. ft.) had been transferred to a site at Thurlow and Robson Streets. The former Vancouver Public Library has 18 115 m› (195,000 sq. ft.) of density available for transfer. The recent rezoning of 1202-1292 West Georgia established 1 467.2 m› (15,793 sq. ft.) of heritage bonus density related to the rehabilitation of the historic Abbott House. In 1995, Council considered a proposal for the Stanley Theatre to have 4 087.6 m› (44,000 sq. ft.) available for transfer, but this has not yet been conferred through the rezoning process. Combined, these four sites represent 35 677.2 m› (384,039 sq. ft.) of density, either approved or pending, for future transfer. The rate of take-up under a revised policy will depend on other policy changes, market conditions, and the supply of transferable density. However, if the requirement to rezone receiver sites is removed, it will be less costly to transfer density, and therefore should be of more interest to developers. C. How Much Density Can a Receiver Site Absorb? All affected zoning districts in the Central Area were examined to determine the potential impact of permitting heritage density transfers onto receiver sites. This work was done to establish the maximum amount of extra density that might be approved by the Development Permit Board without unduly impacting neighbouring sites. Staff conclude, and recommend, that all of the affected zoning districts in the Central Area should be amended to allow the Development Permit Board to permit a ten percent increase in the maximum allowable density to accommodate the transfer of density from heritage donor sites. This amount is proposed because: 1. the impacts on livability, shadowing and other urban design concerns resulting from a ten percent increase are manageable through the development permit process, and applications would be evaluated against existing area development guidelines regarding livability and neighbourhood character; 2. experience with the zoning in the downtown, which now permits a ten percent density increase on heritage sites, has proven to pose no major problems; and3. a ten percent increase will provide sufficient density to encourage transfers, particularly to larger development sites with 45.8 m (150 ft.) of frontage or more. For example, a ten percent increase in density for a typical 45.8 m (150 ft.) by 36.6 m (120 ft.) site, would probably result in the following changes: i) one additional storey in an office building in the central business district (two or three storeys for larger sites); or ii) two or three additional storeys in a residential tower in Downtown South; or iii) one additional storey in a residential tower in the West End; or (iv) one additional storey in a residential tower or a portion of a commercial storey on Central Broadway; or v) small increases to the area of each floor instead of or in combination with increasing the height. Applications for heritage density transfers may be refused (applicants would be advised not to apply) if the resulting development creates unacceptable shadowing of parks or shopping-oriented sidewalks, or results in massing and forms that do not reflect desired neighbourhood character. However, the risk of refusal would be small, as the major considerations will have been discussed at the pre-design conference. Should staff feel the site cannot support a density transfer, the prospective applicant will be well aware of that position, and would likely abandon the proposal before finalizing density purchase arrangements. In some areas within the downtown, hotels are eligible for a 15% density bonus. Staff recommend that sites receiving a density bonus for hotel should not be eligible for a heritage density transfer, and that sites with heritage density bonuses should not receive additional density transferred from other heritage sites. Such doubling of bonus opportunities could result in unwieldy increases in building bulk or use, resulting in negative impacts on neighbouring properties. Sites with a SROs (Single Room Occupancy hotel) would be ineligible to receive heritage density unless the existing units are retained or relocated elsewhere in the Central Area. Such transfer would otherwise precipitate the loss of this stock of accommodation.In areas where there are advisory groups (e.g. the Downtown South Redevelopment Impacts Committee) staff can involve them in evaluating development applications for density increases. Certain sites may be able to accommodate additional density increases beyond ten percent, in which case, the proposal would be dealt with through a rezoning. D. Development Cost Levies The Vancouver Charter allows Council to establish, by by-law, areas where new development is subject to development cost levies (DCLs) to pay for capital projects in that area. At present, the area of existing buildings is excluded from DCLs, but bonus density is not. There is concern about the transferable bonus density being subject to DCLs as this is accounted for by the developer in requesting a heritage bonus and increases the size of the bonus accordingly. Staff continue to investigate mechanisms to resolve this dilemma, such as, through the Heritage Revitalization Agreement. E. Monitoring Transferable heritage density would be bought and sold on the open market. Should numerous heritage site owners wish to sell density by taking advantage of the transfer of density policy but interest by the development industry in acquiring the density remains limited, there could become a surplus of residual heritage density. If so, the value of this density would be discounted due to competition. To avoid value discounting and to ensure that owners of significant heritage buildings will be encouraged to pursue the policy, staff will, when advising Council of proposals for rezoning of heritage sites to create and confer transferable density, consider the merits of the application on a case-by-case basis. Staff will also comment on the state of the marketplace in terms of existing transferable density. If it appears that the market is becoming saturated, staff may recommend that Council not support particular rezoning applications. There are different land values in the various affected zones, which impacts the value of the density transfer. For practical purposes, staff feel that it is best to deal with density on an equal basis. While certain inequities and windfall profits may result in allowing the density from donor sites to be equal in buildable area when applied to receiver sites where land values are higher or lower, it may, upon further reflection, be preferable for the market to take care of this issue rather than for staff to analyze proposals based on relative land values. Further, staff support that the use of the density on the receiver site not be aconsideration so that developers have the maximum flexibility in utilizing this incentive. Staff will monitor the flow of density with the new policy amendments and advise Council of any significant concerns raised by this density valuation approach. F. Gastown and Chinatown In 1994, Council approved the rezoning of Chinatown which included the ability to transfer density from designated sites with VHR-listed buildings. These 24 buildings have a total potential transferable area of 19 800 m› (214,000 sq. ft.). The TDP was amended to permit density to go outside of, but not into, Chinatown. At present, Gastown has no FSR, so technically there is no density to transfer. Discussions are underway about new zoning for Gastown, as part of the Gastown Land Use Plan process, including the issues of FSR and density. CONCLUSIONS Staff recommend that Council amends the Zoning and Development By-law and the Downtown ODP to eliminate the rezoning requirement for receiver development sites in the Central Area where the transfer of density from heritage sites in the Central Area is proposed. It is recommended that the Development Permit Board be empowered to permit an FSR increase of up to ten percent over the maximum otherwise permitted on receiver sites within most zones in the Central Area. * * * APPENDIX A Page 1 of 2 By-law Amendments 1. Downtown District Official Development Plan Amend Section 3, Density, by adding a new subsection 10: "Notwithstanding subsections 1, 3 and 4, the Development Permit Board may permit an increase in floor space ratio for any use where the increase results from a transfer of heritage floor space to a maximum of ten percent over the total permitted floor space ratio, except that this increase shall not apply to hotels where the floor space has already been increased pursuant to subsection 2. For the purpose of this subsection, heritage floor space means floor space on a site where the site or a building or a structure is designated by the Heritage By-law and, according to the development limitation mechanism regulating land for that site, is available to be transferred to another site and is located within areas shown as transfer of density areas for heritage preservation illustrated in the Transfer of Density Policy and Procedure adopted by Council and in effect at the time of application for relaxation under this section." 2. RM-5, RM-5A and RM-5B Add a new section 4.7.7: "The Development Permit Board may permit an increase in floor space ratio where the increase results from a transfer of heritage floor space to a maximum of ten percent over the total permitted floor space ratio, except that this increase shall not apply to any development where the floor space has already been increased resulting from the restoration of a heritage building pursuant to section 4.7.6. For the purpose of this section, heritage floor space means floor space on a site where the site or a building or a structure is designated by the Heritage By-law and, according to the development limitation mechanism regulating land for that site, is available to be transferred to another site and is located within areas shown as transfer of density areas for heritage preservation illustrated in the Transfer of Density Policy and Procedure adopted by Council and in effect at the time of application for relaxation under this section." APPENDIX A Page 2 of 2 3. C-3A Add a new section 4.7.5 "The Development Permit Board may, for sites located west of Main Street, north of 16th Avenue and east of Burrard Street permit an increase in floor space ratio where the increase results from a transfer of heritage floor space to a maximum of ten percent over the total permitted floor space ratio. For the purpose of this section, heritage floor space means floor space on a site where the site or a building or a structure is designated by the Heritage By-law and, according to the development limitation mechanism regulating land for that site, is available to be transferred to another site and is located within areas shown as transfer of density areas for heritage preservation illustrated in the Transfer of Density Policy and Procedure adopted by Council and in effect at the time of application for relaxation under this section." 4. C-5 and C-6 Add a new section 4.7.5: "The Development Permit Board may permit an increase in floor space ratio where the increase results from a transfer of heritage floor space to a maximum of ten percent over the total permitted floor space ratio, except that this increase shall not apply to hotels where the floor space has already been increased pursuant to section 4.7.1.2. For the purpose of this section, heritage floor space means floor space on a site where the site or a building or a structure is designated by the Heritage By-law and, according to the development limitation mechanism regulating land for that site, is available to be transferred to another site and is located within areas shown as transfer of density areas for heritage preservation illustrated in the Transfer of Density Policy and Procedure adopted by Council and in effect at the time of application for relaxation under this section." APPENDIX B Page 1 of 2 Glossary of Terms Heritage Building: a building having heritage significance and listed on the Council-adopted Vancouver Heritage Register under one of the following: Category "A" - building of primary heritage significance; Category "B" - building of individual heritage importance; or Category "C" - building of heritage character. Heritage Site: a site containing a heritage building. Designated Heritage Building: a building designated by Council under the Heritage By-law prohibiting alteration or demolition without Council's prior approval. Density: allowable floor space ratio (floor area in relation to site area). Development Limitation Covenant/Mechanism: a legal agreement which identifies the amount of density which is attributed to the donor site, but which cannot be built on the site; in essence, the amount of density available for transfer. Transfer of Density Policy: a policy of Council to consider rezoning applications proposing to transfer density from one site to another site or sites when such transfers achieve certain prescribed public objectives. Heritage Density Bonus: a density bonus given in exchange for preserving a heritage building. Heritage Density Transfer: usable density from a heritage site that is transferred to another site. Residual Heritage Density: allowable density on a site, over and above the density of the existing heritage building, some of which may be used on that site or may, all or in part, be transferred to another site (may include a heritage density bonus). Heritage Revitalization Agreement (HRA): as provided in the Vancouver Charter, Section 592, where Council and the owner of a heritage property may agree to a wide range of resources, including density increase (having held a Public Hearing on the matter). Deferred Residual Heritage Density: residual heritage density that is held on a heritage site through the use of a development limitation covenant. APPENDIX B Page 2 of 2 Heritage Donor Site: a site with residual heritage density that may be transferred to a receiver development site or sites. Receiver Development (or Receiver) Site: a site where residual heritage density from a heritage donor site is used. SRO (Single Room Occupancy) Hotel: generally consists of one room, rented out on a weekly or monthly basis, sometimes containing cooking facilities but usually no private bathroom. APPENDIX C Transfer of Density Areas for Heritage Preservation - approved by Council December 1994 APPENDIX D Page 1 of 4 Transfer of Density Policy and Procedure D R A F T Adopted by City Council January 25, 1983 Amended September 11, 1984, July 7, 1987, July 30, 1991 and September 2, 1993 and December 8, 1994 Rezoning applications which involve the transfer of density from one site to another site will be considered, provided that such a transfer will assist in achieving one or more of the following public objectives: (1) To preserve heritage buildings or site, listed on the Vancouver Heritage Register, particularly where it is demonstrated that residual and/or bonus density required for the buildings' rehabilitation cannot be used on the heritage site; (2) To create desirable public open space or park land; (3) To facilitate development in areas with mixed use zoning; (4) To achieve and improved urban design; (5) To help implement Council-approved view protection policy in Downtown South; (6) To help protect existing Single Room Occupancy Stock in Downtown South; and provided further, that the following limitations are respected: (a) Except for heritage sites as defined in (b), the sites are not separated by a zoning boundary or use, density or height district boundary in an Official Development Plan, unless the sites involved are both within the same block; or the donor site is in the 800- 1200 blocks of Granville Street and the recipient site is in Downtown South. (b) Transfer of density may be considered from for approval by the Development Permit Board involving heritage sites located within and between the various zones of the Central Area including: Downtown District ODP, RM-5, RM-5A, RM-5B, C-5, C-6, HA-1, HA-1A and CD-1, and those portions of C-3A located west of Main Street, north of 16th Avenue, and east of Burrard Street, except that no heritage density may be transferred onto sites located in the HA-1 and HA-1A Districts. APPENDIX D Page 2 of 4 D R A F T (c) If the objective to be served is (4) urban design, the sites are within the same block or separated only by a single street; (d) The aggregate development potential for the sites remains unchanged by the transfer; (e) The aggregate development potential for any specific use remains unchanged by the transfer; (f) No bonuses for public, social or recreational facilities are transferred; (g) Except for transfers involving heritage sites, no more than two sites are involved in any transfer and a site is not involved in more than one transfer; (h) The proposal has been demonstrated to further the intent of Council's policies and regulations for the area; (i) Heritage bonuses may be transferred if Council has previously decided under its heritage bonus policy that all or part of the bonus density cannot be used on the heritage site without undue impact on the character and context of the preserved building, or without an unacceptable impact on surrounding properties. The following procedure is to be followed in applying the density transfer policy: (1) For transfers to achieve heritage objectives: (i) Heritage features to be preserved on the donor site shall be defined by the Director of Planning or the Development Permit Board on the advice of the Vancouver Heritage Commission. (ii) Category A building on the Vancouver Heritage Register will be automatically eligible for consideration; Category B and C- listed VHR buildings will first have to be approved by Council; A and B category Recent Landmarks will also be considered if approved by Council for listing on the VHR; (iii) (ii) Residual (and bonus) density may be held on a heritage donor site through the use of a development limitation covenant which shall be amended as density is disbursed and ultimately discharged when all density is transferred; APPENDIX D Page 3 of 4 D R A F T (iv) (iii) Preference will be given to proposals which use heritage buildings for cultural, social, recreational and educational uses, especially when that use is historically associated with the building; and (v) (iv) For any site located within the HA-1 District, where a development application is submitted to establish density available for transfer to another site, Council approval for the creation of the transferable density will be required as a condition of development permit issuance, although rezoning of the donor site is not required. (v) Within the Central Area as defined in (b) above, the following steps (2) to (8) involve the rezoning of the heritage donor site only; the receiver site is approved by the Development Permit Board; (vi) Density on receiver sites shall be sensitive to the impact of additional density on shadowing, floor plate shape and size, height and view corridors; and (vii) The following shall be excluded as receiver sites within the Central Area [as defined in (b)]; - sites already receiving a 15% hotel bonus; - sites already receiving a heritage density bonus; - sites containing a single room occupancy (SRO) hotel, unless arrangements are made to secure or replace units; and - sites zoned CD-1, unless a provision is included in the CD-1 by-law. (2) Developer reviews his proposals with the Director of Planning. (3) Developer makes formal application for rezoning with appropriate supporting material to indicate details of and rationale for the proposal and analysis of relevant impacts. The Director of Planning may require that the developer concurrently file a preliminary development permit application. (4) Director of Planning coordinates staff review of proposal in consultation with Engineering, Social Planning, Park Board staff as required, including whatever public review process he deems appropriate to the specific proposal, and may include consideration of a preliminary development permit application by the Development Permit Board and the Urban Design Panel. APPENDIX D Page 4 of 4 D R A F T (5) Council considers the proposal and staff review at Public Hearing and gives decision. (6) Appropriate legal agreements are drawn up according to recommendations in staff review of proposal. (7) Council enacts by-law. (8) Development permit application process is followed as in CD-1 development sites. APPENDIX E Excerpt from the Vancouver Charter, Section 595 A 1953 VANCOUVER CHARTER CHAP. 55 Transfer of increased density provided as compensation for heritage designation 595A (1) In relation to extra density provided as compensation under section 595, the Council may establish a heritage density increase transfer system in accordance with this section. (2) For the purposes of this section, a zoning by-law may provide that the density otherwise permitted for a site within the zone is increased if (a) the extra density is transferred to the site from a designated heritage property in relation to which it was received as compensation, and (b) the transfer to the particular site and the amount of density increase on that site are approved by the Development Permit Board established under Section 565A (d). (3) A by-law referred to in subsection (2) must establish the maximum density increase that may be permitted by the Development Permit Board, subject to the limit that the maximum established must not be greater than 10% of the otherwise applicable density for the site to which the extra density is transferred. (4) Before considering an application for approval of a density transfer under this section, the Development Permit Board must consider the views of persons who consider themselves affected by the proposed density increase for the site to which the extra density is to be transferred and, for these purposes, must publish a notice in at least 2 consecutive issues of a daily newspaper published or circulating in the city stating (a) the site to which the extra density is to be transferred and the designated heritage property to which it relates, (b) the extent of density increase that is proposed for the site to which the extra density is to be transferred, and (c) the manner in which persons affected by the proposed density increase for the site to which the extra density is to be transferred may make their views known to the Development Permit Board. (5) Before a density transfer is permitted under this section, a covenant in favour of the city that the extra density will not be used on the designated heritage property must be registered under section 215 of the Land Title Act against the designated heritage property.