SUPPORTS ITEM NO. 2  
                                            CS&B COMMITTEE AGENDA
                                            MARCH 28, 1996       


                             POLICY REPORT
                                FINANCE   

                                            Date:  March 12, 1996


     TO:       Standing Committee on City Services and Budgets

     FROM:     Director of the Office of Cultural Affairs and the
               Manager of the Housing Centre, in consultation with
               the Director of Legal Services, the Comptroller of
               Budgets & Research and the Manager of Real Estate

     SUBJECT:  Management and Allocation Plan - Bonused Artist 
               Live/Work Studio at 272 East 4th Avenue



     RECOMMENDATION

          A.   THAT Council approve an allocation and management
               plan as detailed in this report for the bonused
               artist live/work studio #303, 272 East 4th Avenue.

          B.   THAT Council approve a three-year lease of the
               bonused artist live/work studio to the Contemporary
               Art Gallery for occupancy by a low-income artist,
               at a nominal rent ($1) and no taxes, subject to the
               terms and conditions being to the satisfaction of
               the Director of Legal Services, in consultation
               with the Director of the Office of Cultural
               Affairs, the Manager of Housing Centre and the
               Manager of Real Estate Services.

                                - OR -

     CONSIDERATION

          C.   THAT Council approve a three-year lease of the
               bonused artist live/work studio to the Contemporary
               Art Gallery for occupancy by a low-income artist,
               at a monthly rent equal to the shelter portion of
               welfare ($325) and no taxes, subject to the terms
               and conditions being to the satisfaction of the
               Director of Legal Services, in consultation with
               the Director of the Office of Cultural Affairs and
               the Manager of Housing Centre; and

               FURTHER THAT any rental revenue remaining after the
               operating costs are paid be held in the Affordable
               Housing Fund.


     GENERAL MANAGER'S COMMENTS

          The General Manager of Community Services RECOMMENDS A
          and B and puts forward alternative C for CONSIDERATION,
          noting that both B and C constitute grants and as such
          require eight affirmative votes.

     COUNCIL POLICY

     On November 17, 1993, City Council approved Vancouver Arts
     Initiative (VAI) recommendations, including a recommendation
     that the City:

        -  seek non-market solutions through zoning and
           building code provisions to address the need for
           affordable artists live/work spaces;

        -  establish awards to honour Vancouver artists; and

        -  establish the Vancouver Arts Endowment, an arms-
           length organization committed to the City's cultural
           objectives.


     On February 10, 1994, City Council approved a report,
     "Amendments to Vancouver Charter - Bill 57", which recommended
     that staff review opportunities to obtain affordable and
     special needs housing through density bonusing.

     On March 28, 1995, City Council approved Artist Live/Work
     policies including the ability to bonus FSR in exchange for
     the provision of low-income rental studios in IC-3 district. 
     Council also reconfirmed its goal to "encourage the provision
     of artists live/work studios that are legal, safe, functional,
     and where possible, affordable".

     On April 27, 1995, Council approved a rezoning application for
     272 East 4th Avenue which permitted additional density in
     exchange for conveying, at no cost to the City, one artists
     live/work unit.  As a condition of approval, Council directed
     staff to report back with a detailed management plan for the
     unit.


     PURPOSE

     This report outlines a plan for the eligibility, selection,
     management, term and funding of the occupancy of the bonused
     artist live/work studio at 272 East 4th Avenue and seeks
     Council's direction either:


        -  to lease the bonused unit to the Contemporary Art
           Gallery at a nominal rent ($1) who will award
           occupancy of the unit at no cost to an artist
           through a juried selection process based on
           financial need and artistic merit; or 

        -  to lease the unit directly to a low-income artist on
           the same basis as above but charging a monthly rent
           of $325.


     BACKGROUND

     With the approval of a rezoning proposal at 272 East 4th
     Avenue, Council secured a housing bonus, and the first bonused
     artist live/work studio.  Staff believe that this bonus
     provides a significant opportunity to combine the City's
     objectives of affordable artists housing with the objective
     identified by the Vancouver Arts Initiative of enhanced
     recognition of local artists.  Staff are therefore proposing
     to award occupancy of this bonused unit to a Vancouver artist

     whose work shows exceptional talent and who can demonstrate
     financial need.

     This recommendation to grant occupancy as an award is a one-
     time only initiative which responds to the opportunity
     established as part of the rezoning of 272 East 4th Avenue. 
     Should additional artist live/work units be secured in the
     future through housing bonuses, staff propose that they be
     treated as other social or rental housing where tenants are
     expected to pay rent.

     Staff are recommending that the award be jointly made with the
     Contemporary Art Gallery (CAG).  The CAG was established in
     1971 by the City to collect and exhibit the work of
     contemporary Vancouver artists.  Today the CAG is a separate,
     non-profit society which operates as a public gallery and
     which maintains and cares for the City's contemporary art
     collection.  Staff believe that the proposed  collaboration
     with the CAG will provide the best balance between the
     interest of the arts community and the City.


     DISCUSSION

     Eligibility

     Professional artists currently working in the City of
     Vancouver would be eligible to apply for the occupancy award. 
     While the award is intended to recognize artistic excellence,
     it will only be available to artists who can demonstrate
     financial need, as described below, to the satisfaction of the
     Manager of the Housing Centre. 

     As this unit is located in IC-3 district, only professional
     artists involved in the production of art as defined in the
     City's Zoning and Development By-Law would be considered
     eligible.  Priority would be given to artists requiring Artist
     Live/Work Studio - Class B, which means the use of the
     premises for the production of art  involving toxic or
     hazardous materials or processes, or the creation of art using
     electronically amplified sound.


     Selection Process

     Interested artists would be required to submit documentation,
     including demonstration of financial need, examples of past
     artistic works, professional references, and a statement of
     intent indicating how the work produced during the residency
     would benefit the artist and the community.

     The City's Housing Centre staff will pre-qualify candidates
     with respect to financial need using the core-need housing
     criteria ($26,000 - 1995).  Many Vancouver artists would
     qualify using this criteria alone.  The National Cultural
     Labour Force Survey (1993) estimated an average income of
     $8,800 per year for visual artists and $12,800 per year for
     musicians and dancers.  Staff are therefore proposing that
     once candidates meet the financial means test, a jury of peers
     would judge applications on the basis of artistic merit. 
     Staff from the Office of Cultural Affairs and the Contemporary
     Art Gallery would administer the jury process.


     Management

     As the City cannot make an award to an individual, staff are
     recommending that the unit be leased to the Contemporary Art
     Gallery (CAG) for a term of three years and that the CAG
     administer and manage the award in consultation with the City
     through the Office of Cultural Affairs and the Housing Centre.


     Terms

     Occupancy of the unit to the selected artist would be for a
     non-renewable three year maximum period.  The selected artist
     would be required to enter into an agreement with the CAG in
     the case of an award, or directly with the City which would
     address issues of term, repairs, insurance, and liability and
     rent if applicable.

     The tenant will be required to pay for hydro, cable, telephone
     and any other user-related costs.

     Staff believe that a three-year term is long enough to be of
     practical value to an artist and at the same time renews the
     benefit throughout the arts community every three years.

     At the end of the three-year term, the City may wish to renew
     the lease with the CAG, or if the Vancouver Arts Endowment
     (VAE), recommended by the Vancouver Arts Initiative has been
     established, staff would then report to Council with a
     proposal to lease the unit to the VAE.


     FINANCIAL IMPLICATIONS

     The unit at 272 East 4th Avenue was secured at no cost to the
     City as a condition of a rezoning.  The unit has been finished
     and fitted-up to the satisfaction of the Manager of the
     Housing Centre.  Staff do not anticipate any additional
     capital costs associated with the unit.

     Staff have reviewed potential annual operating expenses which
     are estimated as follows:

        Strata fees - residual funds of approximately $2,861 were
        secured from the developer as part of the bonus
        calculation.  These funds are currently being held by the
        City and are to be used to pay the Unit's strata fees which
        at the estimated rate of $59 per month should cover
        approximately 4 years.  Once the developer's allowance for
        the strata fees is exhausted, the City, or its designate,
        would be responsible for strata fees.

        Repairs - anticipated expenses for minor ongoing repairs,
        as well as extraordinary strata assessments.

        Taxes - have not been included as the City owns the unit.

        Management Costs - management costs of the unit are
        expected to be minimal and are therefore proposed to be
        absorbed within the current budgets of the Office of
        Cultural Affairs, the Housing Centre and Real Estate
        Services.


     CONSIDERATION OPTION

     Staff recommend that the City treat this first bonused unit as
     an award and lease the unit to the Contemporary Art Gallery

     for  occupancy by a low-income artist, at a nominal rent ($1
     per year).

     Alternatively, the unit could be leased to the CAG and rented
     to a low-income artist, using a similar selection process as
     the full award option, but charging the recipient a monthly
     rent.  In this case, staff recommend the rent be set at the
     shelter portion of welfare ($325 per month) to ensure
     affordability for low-income artists.  This approach is more
     consistent with the City's practice of charging rent in City-
     owned housing.

     Real Estate, Housing Centre and Cultural Affairs staff support
     the no rent option, recognizing that this is an award noting
     that this is a one time opportunity involving a single live/
     work unit.

     Housing Centre staff estimate that, based on comparable units
     in neighbouring developments, the market rental potential of
     the unit over three years to be approximately $22,000.  The
     value of the award (Recommendation B) would be $22,000.  The
     value of Recommendation C would be $10,000 over three years.

     Should Council select the option with rent, staff recommend
     that the rental funds received by the City remaining after the
     occupancy costs are paid be held in the Affordable Housing
     Fund.


     CONCLUSION

     The development at 272 East 4th Avenue is now complete and
     staff are proposing, with Council's approval of this report,
     to put into place a process which will award the unit as soon
     as possible.

     The awarding of occupancy of the City's first bonused artist
     live/work studio contributes to the City's objectives to
     address affordable artists accommodation through non-market
     solutions and also enables the City to recognize, through the
     award, the contribution of Vancouver artists to the City.


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