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. * * * * *