Monday, January 18, 2010
Woodwards and the SFU School for Contemporary Arts
I was delighted to have the opportunity to celebrate with the Henriquez family and over 800 Vancouverites on Friday night at the community opening for Woodwards and the SFU School for Contemporary Arts, A highlight of the evening for me was standing with Kip Woodward as the big W was lit, after a couple of decades of darkness.
Much has been written, and will be written about the Woodwards development. Books will be published (BODY HEAT, a book that tells the story of the Woodwards redevelopment, edited by Robert Enright, was launched at the event) and films will be made (My friend Bob Duncan of DocTV started a documentary during the competition process that was aired on CBC's The Passionate Eye.)
Like most significant events, there will be some reconstruction of the history of the events leading up to Friday's opening. Everyone who has been involved likely has a slightly different version of the facts, as he or she tells the story. Here's my story.
I was involved with the redevelopment of Woodwards on two different occasions. My first direct involvement was in 1998 when my company was retained by the Province of British Columbia's Ministry of Employment and Investment to prepare a Redevelopment Feasibility Analysis as part of the Province's due diligence with respect to the acquisition of the property. My study was carried out in association with Strategic Development Services who reviewed the residential markets, Colliers, who reviewed the commercial markets, and Helyar who prepared a detailed cost estimate.
It is interesting to note that Fama initially paid about $18 million for the Woodwards building and adjacent parkades. It then sold the parkades to the city for about $12.5 million; however, the city subsequently discovered that the building was not as structurally sound as it had hoped and Gregory Henriquez and structural engineers were hired to prepare plans for a substantial rebuild.) Fama sold a half interest in the remaining Woodwards building to TA Developments of Malaysia for another $12.5 million.
Fama and its partner subsequently submitted a preliminary development permit (PDP) application for a mixed use development comprising retail and office uses on the lower, main and second floor, and residential uses on floors 3 to 8. After getting the PDP Fama entered into discussions with the Province and reached agreement in principle to develop approximately half of the residential space as non-profit cooperative housing a a price of $163 a square foot. However, negotiations broke down, in part since Jim Green, a consultant to the Province at the time, and others were concerned about the potential negative impacts of the project's 216 condominium units on the community. Fama subsequently submitted a revised development permit for all market housing which was approved. At this point, at Jim's urging, the Province decided to investigate the acquisition of the property.
Fama and its development partner wanted $25 million. However, based on our analysis, we valued the building and land and repairs at $9.5 million. Notwithstanding our report, the Province paid $22.5 million for the site. It was subsequently sold to the city for something in the order of $7 million.
The city then developed terms of reference for a Public/Private Partnership Proposal Call and I again became involved with the Woodwards project as an advisor to SFU on structuring a deal with the successful developer for the SFU School for Contemporary Arts. Although Millennium (yes, the Olympic Village Millennium) offered the most money in response to the RFP, its high rise tower proposal was considered much too aggressive. A very good proposal by Concert Properties was rejected in part because it was seeking a commitment from the City to allow the transfer of density to the Ritz Carlton site. As a result, the proposal by Westbank, initiated by Gregory Henriquez, with the high profile support of the Portland Hotel Society, ultimately won.
It is interesting to note that while SFU's involvement is now being highly acclaimed for the project's social and financial success, Jim Green and others initially had reservations about SFU being part of the project. The reason? It was feared that like condominiums, a university facility would gentrify the area. However, after many negotiations, a deal was finally concluded in 2007.
Many people want to take credit for obtaining the Province's financial support which ultimately allowed SFU to be a part of the project. However, as Ian Gillespie admitted on Friday night, he and Bob Rennie embarked on the highly successful marketing of the condominiums (as 'an intellectual property') without actually having a commitment from SFU. His banker didn't know that, and neither did the purchasers.
I personally believe that most of the credit should go to SFU President Michael Stevenson who from the beginning was committed to seeing SFU as part of the Woodwards project. Credit should also go to Vice-President Warren Gill, who was instrumental in creating SFU's downtown campus at Harbour Centre and who led SFU's negotiating team. I'm told that Bob Rennie also played a role, but then he had to. He had sold hundreds of condominium units to buyers who expected SFU to be part of the project (although the legal documents drafted by Westbank's brilliant real estate lawyer made no commitment regarding SFU's participation in the project.)
And of course, credit must go to the Province and Gordon Campbell because they came up with a very sizable contribution to allow this to happen.
I thought it was unfortunate that when Woodwards was being discussed on CBC's Sunday Edition yesterday, while there was much praise for the developer, SFU, and architect, there was absolutely no mention of the financial contributions from the various levels of government to the project. While I am not privy to all the capital payments, heritage density bonuses, and future subsidies, they total well into 9 figures. There is a lot of public money in this project.
Notwithstanding all this public money, at Friday night's session some concerns were expressed about whether the project will 'work'. The cause for this concern is whether the integration of the very low income, and oftentimes mentally ill and drug addicted residents and neighbours into the project will be successful. Much is being made of the fact that all of the public spaces are common spaces for everyone....and there will be a very high level of inclusiveness...Gregory must have used this word a dozen times on the CBC interview.
Many others are concerned over the potential of this project to gentrify the Downtown Eastside. Before responding, it is important to distinguish between GENTRIFICATION and REGENERATION. The former specifically refers to the expulsion of low income households by higher income households when buildings are renovated and the physical features of a neighbourhood are improved.I personally see Woodwards as a very positive regeneration force in the community. I do not think it will gentrify the area because there are already thousands of publicly funded social housing units which are not going to go away. But I do agree that the 'body heat' that will result from this project will force some people to behave themselves...to stop openly urinating and shooting up in the streets and alleys. On the other side of the ledger, it will result in much needed employment opportunities for local residents. It will also reinforce the DTES as a place for art and creativity. This is a very good thing.
So to conclude, while I have regrets about various chapters in the Woodwards story, I do hope the building will achieve the results so many people are hoping for. And congratulations to Jim Green and Gregory Henriquez, because while your vision changed over time, the project has now become a reality and its ramifications could be very significant. And congratulations to Ian Gillespie and Ben Young for taking the risks. I'm glad they have paid off!