ADMINISTRATIVE REPORT

Date: July 9, 1999

Author/Local:R.Gates/6036

RTS No. 882
CC File No. 2608

Council: July 27, 1999

TO:	Vancouver City Council
FROM:	Director of Community Services, Social Planning
SUBJECT:	Amenity Bonusing Proposal - 377 Powell Street

RECOMMENDATION

A. THAT Council approve a density bonus of 0.40 FSR (2,428 sq.ft.) for this project (377 Powell Street - DE404082 - Zone DEOD) which was approved by the Development Permit Board at its meeting of June 28, 1999, in accordance with Section 6.8.3 of the DEOD Official Development Plan.

B. THAT the terms of the lease to St. James Community Services Society, already approved by Council, be amended to include provisions, as described in this report, restricting the sub-leasing of the bonused space to ensure that it will continue to be used as a social service centre, available at a nominal rent to a non-profit social service agency.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of A and B.

COUNCIL POLICY

The Downtown Eastside Oppenheimer District (DEOD) Official Development Plan allows for an increase in the permitted floor space ratio of a building which includes a public, social or recreational facility for which there is a demonstrated need, subject to prior approval by City Council.

Bonused amenity spaces in private developments are leased by the City and sub-leased to Vancouver-based, non-profit social service and/or cultural organizations at a nominal rent for a term of up to 20 years.
PURPOSE

The purpose of this report is to seek Council approval for an amenity bonus space for social service uses in a proposed social housing development on a City-owned site at 377 Powell Street, and approval of terms to be included in the lease of this property that will ensure that the bonused space continues to be used as a social service centre..

BACKGROUND

The subject site is located in a character area on the north side of Powell Street, one half block west of Oppenheimer Park. In November 1998 Council approved the allocation of this City-owned site to social housing, the demolition of the existing building, and a lease to St. James Community Services Society, including a general outline of the terms of the lease.

The specifics of the proposed development is a bit different from what was presented last November. The proposal is now for 31 non-market dwelling units, with a social service centre on the ground floor. The housing units will be self-contained and occupied by persons either currently homeless or at risk of becoming so.

The proposed 2,428 sq.ft. social service centre is to be located in bonus space as provided for in the DEOD ODP. At this point, it would be sub-leased to and managed by the Inter-ministerial Program, funded by the Greater Vancouver Mental Health Society, and will provide outreach services to people in the local community with mental health problems. This is not an expansion of services in the area; rather, the service is relocating from over-crowded premises less than a block away. The approved terms of the lease with St. James make no mention of sub-leasing this space as it was not part of the proposal that was approved in principle in November. Also, the current lease provides no guarantees that the space will continue to be made available as a community amenity should the GVMHS program relocate at some time in the future.

DEOD BONUS SPACE

Section 6.8.3 of the DEOD Official Development Plan deals with FSR bonuses for the provision of a social or recreational amenity, and states:

Where a need for any public, social or recreational facility has been demonstrated to the satisfaction of the Development Permit Board, the Board may authorize, for any building which includes one or more of such facilities, an increase in the permitted floor space ratio or density of a building, subject to prior approval of City Council.

On June 28, 1999, the Development Permit Board agreed with the staff recommendation that the need for social service facilities in this community warranted approval of the proposed density bonus of 0.40 FSR (2,428 sq.ft.). Consequently, staff are recommending to Council that the density bonus be approved, as proposed.

The DPB also directed that arrangements be made to secure the social service facility in exchange for the density bonus. Following is a proposal for doing so.

AMENITY BONUSING PROGRAM

Council policy provides for bonusing to secure low-cost housing and/or facilities to meet the needs for non-profit social service and cultural societies. Bonusing provides one mechanism to secure these facilities, particularly in the downtown, where real estate costs are prohibitive to either the non-profit sector or the City's operating or capital grants budgets.

Amenity bonuses previously approved by Council have generally been in conditions where a private developer owned the land and building. In order to secure the public benefit arising from the bonus, and to ensure that the public benefit would remain as long as the additional density remained, the amenity space is secured by the City through legal agreements for the life of the building and the developer is required to provide a prepaid capitalization of operating costs. The City then sub-leases the amenity space, at a nominal rent, to a Vancouver non-profit social service or cultural organization.

This proposal at 377 Powell provides an amenity bonus space in a development on City-owned land and therefore the normal methods of valuation and securing the public benefit are not applicable. Instead, staff propose that the lease terms to the housing society be revised to include provisions restricting the use and sub-leasing of the bonused space to ensure that the public benefits provided by the bonus are retained.

SUB-LEASING THE BONUSED SPACE

In keeping with the basic principles that are followed when dealing with a private development bonus space, staff are proposing that the lease for the City-owned property at 377 Powell contain the following provisions with regards to the bonus amenity space in this project:

· the bonus amenity space may only be sub-leased to a non-profit society operating a social service centre
· the social services to be provided must be compatible with the nature of the housing in this project and the immediate community, to the satisfaction of the Director of Planning in consultation with Social Planning

· the rent for the sub-lease shall not exceed $1.00 per year; however, the sub-lessee may be required to pay its share of the common operating expenses for the building, including but not limited to general maintenance costs, rent-in-lieu of taxes and a pro-rated share of the mortgage*.

* The mortgage costs, for as long as the initial mortgage is extant, may be pro-rated on the basis of the proportion the construction cost of the bonus space compared to the total construction cost (not including land cost).

CONCLUSION

The proposed bonus amenity space in the social housing development at 377 Powell meets the criteria for approval and therefore should be approved by Council. In order to secure continued use of the bonused space by a non-profit social service agency, at a reasonable cost, staff are recommending that the head lease to the society that is operating the housing contain restrictions on the sub-lease of the bonused space.

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(c) 1998 City of Vancouver