SUPPORTS ITEM NO. 3 
                                                       P&E COMMITTEE AGENDA
                                                       APRIL 18, 1996      

                                 POLICY REPORT
                           DEVELOPMENT AND BUILDING

                                                       Date:  April 1, 1996
                                                       Dept. File No.  MG  


   TO:       Standing Committee on Planning and Environment

   FROM:     The Director of Central Area Planning and the Director of Land
             Use  and Development,  in  consultation with  the Director  of
             Cultural  Affairs, the  Director  of Legal  Services, and  the
             Director of Permits and Licenses.

   SUBJECT:  Report  Back  -  Increasing Permitted  Density  to accommodate
             Mezzanines  in Artist Studio  Buildings and  Zoning Amendments
             for Double Counting Floor Space Ratio in C-3A


   RECOMMENDATIONS

        A.   THAT as a condition  of development permit approval, covenants
             be  placed on the title  of artist studios  with double height
             spaces where there is potentially insufficient residual FSR to
             accommodate  mezzanines  and  double  counting  has  not  been
             applied, the  purpose  of  the  covenant  being  to  not  only
             forewarn the applicant that  a development and building permit
             is required (as at  present), but to more clearly  forewarn of
             inadequate residual FSR to allow for mezzanines.

        B.   THAT the Director of Land Use and Development be instructed to
             make application  to amend  the Zoning and  Development By-law
             generally  in  accordance with  Appendix  'A'  to provide  for
             double counting FSR in the C-3A District Schedule;

             FURTHER  THAT the Director of  Legal Services be instructed to
             prepare the necessary by-law;

             AND FURTHER THAT the  application and by-law be referred  to a
             Public Hearing.


   COUNCIL POLICY

   The Building By-law permits the construction of  a mezzanine in a double
   height space, with the requirement that  60% of the lower floor area not
   be covered by the mezzanine.
   On March 28, 1995, Council directed staff to:

        -  draft zoning  amendments for the  IC-3 District to  double count
           floor  space  for double  height spaces  for the  calculation of
           floor space ratio (FSR).

        -  discontinue  the  covenant  regarding   the  installation  of  a
           mezzanine for  future buildings with double  height ceilings, in
           cases where double counting is applied.

        -  retain  existing  covenants  regarding  the  installation  of  a
           mezzanine for existing buildings with double height ceilings.

        -  permit the development of  double height ceilings but encourage,
           through  guidelines,  structural  elements, sprinkler  coverage,

                                     - 2 -

           electric   services  and   other  elements  to   support  future
           mezzanines.

        -  process   permits   for   proposed   mezzanines   through  joint
           development and building permits to decrease approval time.


   SUMMARY

   Council   requested  that  staff  report  back  on  ways  of  permitting
   additional  density  to  accommodate  mezzanines  in artist  'live/work'
   studio  developments already  built  to the  maximum permitted  density.
   There are  two buildings  which lack  residual FSR  for the  addition of
   mezzanines - 1850 Lorne Street and 330 East 1st Avenue, both in the IC-3
   District  (Brewery Creek). (see Appendix 'C' for a summary of projects).
   Staff  suggest three options that  could be collectively  pursued by the
   owners of a development:

   1.   owners  purchase Heritage Bonus Density (e.g., B.C. Hydro or former
        Central Library Bonus Density) and transfer this to their site; 

   2.   density increase  with 'no strings attached'  (i.e., no requirement
        for  an on-site  facility that addresses  City objectives  or other
        public benefit); or

   3.   density  increase  conditional upon  the  provision  of an  on-site
        facility that addresses City objectives.
   The  City's legal  staff have advised  that a rezoning  initiated by the
   City  to facilitate an increase in density  on these sites would be open
   to legal  challenge.  For  this reason, the  owners will have  to choose
   which option they wish to pursue and initiate the necessary rezoning and
   permit applications or other actions (e.g., Board of Variance appeal).

   Staff recommend that  double counting  FSR for double  height spaces  be
   extended  to the C-3A District, as proposed  for the IC-3 District.  The
   IC-3  zoning amendments  have been  presented in  a separate  report for
   referral to public hearing.

   Staff also propose that covenants  be placed on the title  of properties
   where double counting  has not  been applied and  there is  insufficient
   residual  floor  space  ratio  (FSR)  to  accommodate  the  addition  of
   mezzanines  in all  double height  spaces.   This will  notify potential
   purchasers that there may be insufficient density to permit a mezzanine.
   With double counting provisions  applying in the C-3A and  IC-3 District
   Schedules in future,  staff expect that such  situations will be  few in
   number.

   The contents of this report were discussed with the owners of studios in
   1850 Lorne Street and 330 East 1st Avenue. There was interest  expressed
   in pursuing Board of Variance appeals and the transfer of heritage bonus
   density.

   PURPOSE

   This report outlines:

        -  options for increasing a site's permitted density to accommodate
           mezzanines in existing developments;

        -  an approach for notifying purchasers of units with double height
           ceilings and potentially insufficient residual floor space ratio
           to accommodate mezzanines; and

        -  recommendations  for  zoning  amendments  to   introduce  double

                                     - 3 -

           counting of double height spaces in the C-3A District.


   BACKGROUND

   A mezzanine  is a partial storey  constructed in a  double height space.
   Typically, because of Building  By-law limitations, the mezzanine covers
   no more  than 40%  of the  lower floor  area.   The term  "mezzanine" is
   usually  associated  with  commercial  or  institutional  buildings;  in
   residential  buildings, the  term  "loft" is  commonly  used.   In  this
   report, the term 'double height' space is used  to mean a space that has
   a  floor-to-floor height that is equivalent to at least two conventional
   storeys.
   There are  two newly constructed artist  'live/work' studio developments
   in the Brewery Creek  Enclave (IC-3) with the potential  for mezzanines,
   but not enough  residual floor space ratio (FSR)  to permit the approval
   of additional floor space to accommodate  their installation in approved
   double height spaces.  A post occupancy inspection of artist 'live/work'
   studios has identified a number of mezzanines installed in double height
   spaces, without permit approvals in the IC-3 District.

   On March 28, 1995, Council resolved:

        THAT Policy  7, as contained in  Appendix 'A' of the  Policy Report
        dated February 9,  1995, be deferred pending  a report back on  the
        feasibility  of  providing  the increased  density  to  accommodate
        mezzanines  in  existing  Artist  Live/Work  buildings  through   a
        rezoning initiated by the Director of Planning or by other means.

   The deferred policy (Policy 7) identified two ways for increasing FSR to
   accommodate mezzanines: heritage density  transfers and density  bonuses
   for secured low-cost, rental housing or non-profit cultural facilities.

   Furthermore, Council resolved:

        THAT  staff  be  requested  to  report  back  on   how  prospective
        purchasers of units in  existing artist 'live/work' buildings could
        be  better warned  with  respect to  the  issue of  mezzanines  and
        residual FSR.

   Council also resolved that double height spaces should be double counted
   for the purpose  of FSR calculation in the IC-3  District to ensure that
   there is sufficient residual FSR to accommodate future mezzanines.

   On March 8, 1995, the Board of Variance allowed an appeal granting 5,638
   square feet of additional  floor space to accommodate mezzanines  at 330
   East 1st Avenue.  Staff supported the  appeal because the calculation of
   FSR for the building's development application had initially indicated a
   permitted density similar  to that proposed by the  appellant.  Prior to
   issuance of the permit, a miscalculation of FSR was identified by staff,
   resulting in a lower permitted residual density.

   On April  27, 1995 at a  public hearing, Council approved  a rezoning of
   272 East 4th  Avenue that  increased the site's  density to  accommodate
   mezzanines.   Council's approval was  subject to the  condition that the
   applicant convey a  low cost rental studio to  the City, as a  'quid pro
   quo' for the density increase.
   On August 9, 1995, the Board of Variance ruled in favour of an appellant
   seeking a 678 square foot increase in floor space (an increase from 2.83
   FSR  to 3.10  FSR)  to  accommodate  mezzanines  for  an  artist  studio
   development  at 1850  Lorne  Street.    The  appellant  noted  that  the
   forthcoming  artist studio  zoning  amendments proposed  FSR  exclusions
   (e.g.,  amenity space)  that  would be  approximately equivalent  to the
   variance  in  FSR being  requested. Staff  did  not support  this appeal

                                     - 4 -

   because  it presupposed  Council's  approval of  the forthcoming  zoning
   amendments.

   These forthcoming  zoning  amendments will  allow for  the exclusion  of
   storage, amenity rooms and other similar facilities from the calculation
   of   FSR.  If  approved,  they  will  likely  provide  residual  FSR  to
   accommodate  mezzanines equivalent to an average of 10% of the permitted
   density in the IC-3 District.  This would be sufficient  to provide some
   additional density for the development at 330 East 1st Avenue.  However,
   owners  of studios  in  this  development  and  1850  Lorne  Street  are
   interested in more additional FSR for mezzanines.  

   Staff  estimate that the developments  will require up  to the following
   additional  FSR to accommodate a full sized  loft in each of the 'double
   height' studios:  330 East 1st Avenue - 0.6 FSR; and 1850 Lorne Street -
   0.6 FSR.


   DISCUSSION

   Increasing On-site Density to Accommodate Mezzanines

   In considering  this issue, Planning staff believe  the following issues
   need to be considered:

        -  equity for development applicants;
        -  the public benefit of density increases;
        -  flexibility  for  owners  (e.g., allowing  for  individual  loft
           applications);
        -  implications for density increases in other districts;
        -  implications of  extending the  "Transfer of Density  Policy" to
           include the IC-3 District.

   Staff have evaluated the following  options for increasing the permitted
   density to accommodate mezzanines in existing or approved developments:

   1.   Owners  Purchase Heritage Bonus Density (e.g., B.C. Hydro or former
        Central Library Bonus Density) and transfer this to their site;

   2.   Density Increase  with 'no strings attached'  (i.e., no requirement
        for  an on-site  facility that addresses  City objectives  or other
        public benefit); and
   3.   Density  Increase  conditional upon  the  provision  of an  on-site
        facility that addresses City objectives (i.e.,  as required for 272
        East 4th Avenue).

   A detailed explanation and evaluation of the 3 Options is in Appendix B.

   In response to  Council's March  28, 1995 resolution,  legal staff  were
   asked to consider whether the  Director of Land Use and  Development can
   facilitate the necessary increases in density by initiating the required
   rezoning  applications once  owners have  arranged to  purchase heritage
   bonus  density or offered  the City an on-site  facility that meets City
   objectives.  Legal  staff  concluded  that  the  Director  of  Land  and
   Development  can only  initiate the  rezoning of a  site in  cases where
   there  is clearly a significant and extensive public benefit. A rezoning
   of a site initiated by the City in any other situation  would be open to
   legal challenge.

   Legal  staff also  indicated that  Council and  staff cannot  advise the
   owners  that they should pursue any one of  the three options.  For this
   reason, this report  advises the  owners what options  are available  to
   them. 

                                     - 5 -

   Regarding  Option  1, staff  suggest  that  when  processing a  rezoning
   application  to provide residual FSR  to accommodate mezzanines that the
   proposed FSR double counting provisions for the IC-3 District should not
   apply in the calculation.  This will benefit the applicants  by reducing
   the  amount of heritage  bonus density that  must be transferred  or the
   extent of the requirement for an on-site facility imposed as a condition
   of  a  rezoning.  Option 1  will  not  only remedy  the  deficiencies in
   residual FSR but also provide a corresponding public benefit in terms of
   supporting the City's heritage objectives. However, it will  require the
   studio owners  to work together on a rezoning application and to pay the
   fee (approximately $10,000).

   Option  2 has  the  following advantages:  it is  less  costly and  less
   difficult for studio  owners to  obtain an increase  in permitted  floor
   space  for their building. Should they pursue Board of Variance appeals,
   owners can do  so individually rather than working  as a group. However,
   it  will set  a  precedent for  similarly  increasing density  in  other
   Districts  and  circumstances  (i.e.  rewards  exploitation   of  by-law
   provisions).  There is also no clear public benefit associated with this
   option.   In similar  Board of Variance appeals,  staff have advised the
   Board that they do not support the proposed density increase.

   Regarding  Option 3, the proposed  text amendments of  the IC-3 District
   Schedule (in  a companion report  on Artist  Studios) will allow  for an
   increase in density without  a rezoning application by the  owners. This
   option  does  provide a  clear public  benefit  (ie. the  on-site public
   facility). However, it will require that the owners work together on the
   purchase of a unit for the facility. 
   Comments from Owners

   Staff met  with owners of studios in the two buildings and discussed the
   options  available to  them. The owners  expressed interest  in pursuing
   Board of Variance appeals  and one individual, the purchase  of heritage
   bonus density.

   Covenants - Notifying Owners

   The  City has required covenants  on title to  advise prospective owners
   that  a development  permit  is required  for  a mezzanine  and  thereby
   discourage  the  installation  of   unapproved  and  potentially  unsafe
   mezzanines  where   there  is  insufficient  residual   FSR  for  future
   mezzanines.   As a condition  of development permit  approval, covenants
   have been placed on the title of units with double height ceilings, that
   do  not  yet  have mezzanines.    The  covenants  advise owners  that  a
   development permit  must be approved  prior to  installing a  mezzanine.
   This advises potential purchasers of existing units.

   Council  has directed  staff  to discontinue  this  practice for  future
   development  proposals where double  counting is applied  in the initial
   FSR calculation since there will then be sufficient floor space residual
   for future mezzanines.   Staff suggest that a  covenant, as required  in
   the past, be placed on the title of properties where double counting has
   not been applied (i.e., in districts other than IC-3) as  a condition of
   the development application.  The covenants should, however,  be amended
   to also explicitly advise  owners that there may be  insufficient FSR to
   accommodate a mezzanine. 

   Double Counting in the C-3A District

   Staff recommend that double counting of double height spaces be extended
   to the  C-3A District, as is  currently proposed for  the IC-3 District.
   Similar to the IC-3 District and the Downtown District, there  is a very
   loose fit  in the C-3A District  between the envelope, as  determined by
   setbacks and  the  permitted height,  and the  mass of  the building  at

                                     - 6 -

   maximum FSR assuming  standard floor-to-ceiling heights of 2.45  m-3.7 m
   (8 ft.-12 ft.).   This is  appropriate in the  C-3A District because  it
   allows for a  variety of  building types  and heights  depending on  the
   context of the site. The C-3A District applies to such diverse locations
   as  Central Broadway, Granville Street  between West 4th  and West 16th,
   and part of  West 8th Avenue in Fairview Slopes  and the Burrard Slopes.
   The C-3A Guidelines  call for  high rise development  in some  locations
   and, low rise development elsewhere.
   A  C-3A   development  at  1529   West  6th   Avenue,  currently   under
   construction, deleted mezzanines  on two double height floors  to ensure
   the  building would meet the FSR limits  of the zoning when the building
   was under final development permit review this past summer.  The current
   zoning  did not  allow  for  Planning staff  to  require  that there  be
   adequate residual FSR to provide for the provision of mezzanines.    For
   this  reason, staff have concluded that  it would be prudent to consider
   extending double counting to double height floor spaces in C-3A, at  the
   same  time  that  Council considers  a  similar  proposal  for the  IC-3
   District Schedule. The developer  has now purchased an abutting  site to
   provide residual FSR for mezzanines in all double height spaces.

   The proposed  double counting provision  will apply to  residential uses
   and  artist studios when the  floor-to-ceiling height exceeds  3.7 m (12
   ft.).  The  recommended C-3A text amendment  is attached in  Appendix A.
   The double counting provision  is worded similarly to that  proposed for
   the IC-3 District Schedule.

   Although the C-3A District  Schedule includes considerable discretion in
   height and FSR, the context  of development proposals is not  so complex
   as  commonly occurs in the Downtown District (DD). While double counting
   is a more explicit and limiting approach, it is recommended for C-3A but
   may not be recommended for the DD because  of different circumstances in
   the DD.


   CONCLUSION

   Two artist 'live/work'  studio developments have been built  with double
   height spaces  but lacking  sufficient residual  FSR to accommodate  the
   addition  of mezzanines. Last year, Council indicated an interest in how
   the City could assist  the owners of studios lacking  sufficient density
   to  install  a mezzanine.  Although legal  staff  have advised  that the
   Director  of Land Use and Development cannot facilitate the increases in
   density by making the necessary  rezoning applications, this report does
   include other  options that the  owners can pursue.  In the interest  of
   minimizing  the number of future developments  that will lack sufficient
   residual FSR, the report recommends the  referral to public hearing of a
   text amendment for  of the  C-3A District Schedule  that will  introduce
   double counting for double height spaces. Covenants are also recommended
   to  notify purchasers  of future  projects that  a development  may have
   insufficient FSR for the addition of mezzanines.




                           *     *     *     *     *
                                                                 APPENDIX A

                                Text Amendment
                            C-3A District Schedule



   -       amend  section 4.7.2  of  the C-3A  District Schedule  as follows
           (new text is in italics):

                                     - 7 -

   "4.7.2  The  following  shall be  included  in  the computation  of floor
           space ratio:

           (a)  all floors  of all buildings  including accessory buildings,
                both  above and below  ground level,  to be  measured to the
                extreme outer limits of the building.

           (b)  in the case of  dwelling uses, Artist Studios - Class A  and
                Artist Studio  - Class B, where the distance from a floor to
                the floor above or where there is no  floor above to the top
                of  the roof rafters  or deck  exceeds 3.7  m, an additional
                amount equal to the area of the floor  area below the excess
                height except  the additional amount shall not be counted in
                the case  of undeveloped floor  areas beneath roof  elements
                which  the  Director   of  Planning  considers  to  be   for
                decorative  purposes and  to  which  there is  no  means  of
                access  other  than   a  hatch,   residential  lobbies   and
                mechanical penthouses."

                                                                 APPENDIX B
                                                                PAGE 1 OF 3


   Option 1
   Purchase  Heritage Bonus Density (e.g. from B.C. Hydro or Former Library
   Bonus Density) Necessary to Provide Floor Space Increase Required

           Process:

           -    owners  arrange to purchase  heritage bonus density, subject
                to rezoning.
           -    the  owners file a  rezoning application  for their site and
                building to permit transfer of this additional FSR.
           -    Council  amends, for  this  special case  the  "Transfer  of
                Density Policy  for Heritage" to  permit transfers from  the
                Downtown District, West  End and Central Broadway to the IC-
                3 District.
           -    subsequent to rezoning approval, individual  owners may make
                permit applications, as and when mezzanines desired.
           -    density for the  purpose of calculating the required  amount
                of residual FSR would  assume that the  site's permitted FSR
                is 3.0 rather than 2.5 as  proposed in the forthcoming  IC-3
                zoning amendments.
           Pros

           -    provides a public benefit.
           -    heritage  bonus density  is readily  available for  purchase
                and transfer

           Cons

           -    establishes  a   precedent  for   transferring  density   to
                industrial-commercial Districts.
           -    requires a  group  of  owners to  act together  to  purchase
                heritage bonus density and make applications.
           -    preparing  rezoning  application  will   be  expensive   for
                property owners ($10 000 or more for rezoning fee).
                                                                 APPENDIX B
                                                                PAGE 2 OF 3
   Option 2
   Density Increases Without a Requirement for a Public Benefit

           Process:

                                     - 8 -

           -    the owners initiate rezoning of  their site and  building to
                permit  a  higher  density to  accommodate  the addition  of
                mezzanines.
           -    owners subsequently make  permit applications,  as and  when
                mezzanines desired.
           -    As an  alternative to  rezoning, density could  be increased
                through successful appeals to the Board of Variance.  
           Pros

           -    less cost to owners (i.e. only rezoning application fee).
           -    individuals  can initiate  Board of  Variance appeals rather
                than acting as a group.

           Cons

           -    inequitable  to other  property  owners and  developers  who
                have 'played by the  rules' (e.g.  rezoning of 272 East  4th
                Avenue).
           -    no  public benefit such  as a non-profit cultural amenity or
                low cost rental studios.
           -    sets precedent  for similarly  increasing  density in  other
                Districts and circumstances (i.e.,  rewards exploitation  of
                by-law provisions).
           -    in  similar circumstances, staff have  not supported density
                increases without a requirement for a public benefit.
   Option 3
   Density Bonus  and the provision of  an on-site facility (e.g.  low cost
   rental   studio  or   non-profit  cultural  facility)   reflecting  City
   Objectives (Proposed  Policy 7  Per Council  Report  on Mezzanine  Dated
   February 9, 1995).

           Process:

           -    City initiates text amendment  of the IC-3 District Schedule
                to  permit the  relaxation of  FSR  (floor space  ratio)  to
                accommodate  the addition  of mezzanines  in cases  where  a
                public  exaction such as affordable rental unit(s) or a non-
                profit cultural facility is provided.
           -    subsequent  to   text  amendment   approval,  owners  submit
                development and building permit applications.
           -    A real estate  analysis by  staff determines the 'value'  of
                the  increased density  and  ensures  the rental  unit(s) or
                cultural facility has an equivalent 'value'.
           -    The owners  convey to  the City the rental  unit(s) or space
                for cultural facility.
           -    density  for the purpose  of bonus  computation would assume
                that the  site's permitted  FSR is  3.0 rather  than 2.5  as
                proposed in the forthcoming IC-3 zoning amendments.

                                                                 APPENDIX B
                                                                PAGE 3 OF 3

           Pros

           -    provides a  public benefit  in exchange  for an  increase in
                FSR beyond the maximum of 3.0 currently permitted.

           Cons

           -    requires  a group of  owners to  act together  to purchase a
                studio(s)  for either rental  or cultural  facility and make
                applications.

           -    requires more City staff  time to negotiate legal agreements

                                     - 9 -

                for securing the facility
                                                  .

              -     preparing rezoning  application will  be expensive  for property owners
                    ( $ 1 0   0 0 0   o r   m o r e    f o r   r e z o n i n g    f e e ) .

                                                                               APPENDIX 'C'
                                                                                Page 1 of 1

                         Projects Requiring Residual FSR for Mezzanines


      Projects                  Activity                  Status
      330 East 1st Avenue       -Board of Variance        -requires an additional
      (IC-3)                    (March 8, 1995)           0.3 (approx) FSR to
                                approved 5,638 square     provide full sized
                                feet of additional        lofts for all double
                                floor space               height studios
                                -staff supported the
                                appeal because staff
                                had miscalculated FSR
                                and prior to issuance
                                of permit, reduced the
                                permitted floor space
                                by 5,638 square feet

      272 East 4th Avenue       -Council approved         -no further action
      (IC-3)                    (April 27, 1995) a        required
                                rezoning to increase
                                the site's density to
                                accommodate mezzanines

      1850 Lorne Street         -Board of Variance        -requires an additional
      (IC-3)                    (August 9, 1995)          0.3 (approx.) FSR to
                                approved 678 square       provide full sized
                                feet to accommodate       lofts for all double
                                mezzanines                height studios
                                -this floor space is
                                equivalent to the
                                amount that would be
                                excluded under the
                                forthcoming artist
                                studio zoning
                                amendments
      1529 West 6th             -developer purchased      -no further action
      (C-3A)                    abutting property to      required
                                provide residual FSR
                                for mezzanines