Sunday, January 29, 2012

DENSITY Part 3: Little Mountain: A challenging Situation

Last May, I wrote about the uncertaintly surrounding the Little Mountain property. My blog posting was followed by a response from Ned Jacobs, a local community activist.

Yesterday I attended the latest Open House for the proposed redevelopment and left shaking my head.

My Conflict of Interest

Before proceeding, I need to declare a real and perceived conflict of interest. I was a member of a Development Team led by a very major Vancouver development company that was shortlisted by the Provincial Government to submit a competing proposal back in 2007/2008.

We made two proposals: one under the existing zoning, which could have proceeded quite quickly with approximately 950,000 sq.ft of woodframe housing, and another assuming a rezoning. Given that higher densities generally translate into higher sales prices, we proposed a plan comprising up to 1,460,000 sq ft which included the customary allowances for storage, enclosed balconies and amenity spaces. It included buildings up to 10 storeys in height along the westerly portion of the site, as well as dedicated roads and open spaces. The plan resulted in a Gross FSR of 2.0 and a Net FSR of 2.3. (This is discussed further below.) We noted that this was considered a reasonable upper limit on development potential noting that this was a competitive Proposal Call competition and the monies received were to be used to fund other social housing projects.

When it became apparent that the Province was seeking proposals that would result in greater densities and sale proceeds, my client withdrew from the process.

We subsequently learned that Holborn was the successful bidder. While details of their proposal were never made public, knowing what we bid, and from discussions with the other short-listed bidders, we surmised that they must have offered a very large sum of money.

This was not Holborn's only active development proposal in Vancouver. They also owned the Bay Parkade property and a prominent site along West Georgia where the Ritz Carlton Hotel/Residential complex had stalled. At one point, I was introduced to the young President of the company as someone who might be able to assist with their various projects. After a short meeting, no further discussions ever took place. I mention this since a prominent Vancouver journalist once shared with me that it was being whispered that my public concerns with the Little Mountain redevelopment project were rooted in Holborn's decision not to hire me!

In reality, I do not deny that my concerns relate in part to the fact that a number of very knowledgeable, experienced development companies spent a lot of money preparing very sound proposals for this property; but we were all 'blown out of the water' by the Holborn proposal which did not seem to be going very well. Furthermore, as noted in my team's submission, this is the first major redevelopment proposal for the 'regeneration' of an older Public Housing Project in British Columbia, something I worked on while with CMHC. It is therefore very important that it ultimately be successful, in order that other such regenerations can be allowed to proceed. So far, this is not happening either.

Little Mountain: a challenging situation

I first suspected that the redevelopment of this property would be challenging during the Request for Proposals (RFP) process when proponents learned that there would be no further input from the City other than that set out in a Memorandum of Understanding (MOU) that had been approved by Council. As a result, we had no indication as to what density and building heights the City might consider appropriate, other than a general understanding that the city would consider a density above 1.45 and building heights above 4 storeys.

At this point, I would like to return to the topic of density. As noted in my February 2008 Vancouver Sun story and Bob Ransford's recent Sun WestCoast Homes story, calculating what is an acceptable density can be very difficult. Not only should one consider FSR, there is a need to look at the number of units and people per acre, number of floors, floor to ceiling heights, etc.

Furthermore, in the case of a very large site, such as Little Mountain, one must carefully consider the Gross Density, which is a measure of the amount of building over the total site, and the Net Density, which measures the size of buildings in relation to the individual development sites after excluding the area of roads and parks. This after all, is how we measure density on most individual sites around the region.The density at Bayshore: To put this in perspective, the Bayshore development along Coal Harbour between Denman and Cardero Streets, with which I was involved for many years, comprises approximately 1,100,000 sq.ft of residential on approximately 9 acres of parking lots. This equates to an overall gross density of 2.79. This development has buildings ranging in height from 3 to 25 storeys with floor to ceiling heights between 8.5 and 9 feet. (I would add that by virtue of its location on the water, separated from other developments by major streets, this site can accommodate density better than a site surrounded by existing single family and low scale buildings.)

Olympic Village Density: I am told that the Olympic Village development has a similar density, but the building forms are much lower. My personal view is that Bayshore is a very attractive and comfortable development with adequate landscaping and parks. However, I find portions of the Olympic Village, which is comprised of mid-rise buildings up to 13 storeys, too dense, especially along the narrow streets. (Again, this site is also on the water, away from existing development, and should be able to accommodate a higher density successfully.)

Gross and Net Density: In the case of Little Mountain, the current zoning is 1.45 which is the density generally associated with 3 and 4 storey apartments. (By comparison, the 4 storey mixed use developments found along arterials such as Main or Fraser or Fourth Avenue range between 2.2 and 2.5 FSR) However, this is on the individual sites. The Little Mountain property is approximately 15.2 acres and will require dedicated roads and park/community areas. Allowing for roads and the city's normal parkspace requirement of 2.75 acres parkspace/1000 people, a net density of 1.45 equates to a gross density of approximately 1.1. If a reduced amount of parkspace is required, the corresponding gross density would increase.

So what's my point? In considering what is the appropriate density for this site, one must pay close attention to both the net and gross FSR figures. One should also consider the average unit size and resulting number of people per acre, the number of storeys and also the floor to ceiling heights and the amount of dedicated and non-dedicated roads, park and open space. (Dedicated spaces are those legally transferred to the city, whereas other roads and open spaces may form part of the strata parcels.)

Building height along Main Street: Other factors that I consider important include the height of buildings along the flanking streets, and the location of taller buildings within the site. This will influence how the density feels for passers by and surrounding neighbours. Personally, I question the appropriateness of the proposal for an 8 storey building along Main Street. Rather, I would argue that 4 or 5 storeys should be the maximum height permitted at this time. The final decision should consider the height of the ground floor and the extent of terracing of upper floors. ( I believe the 'Capers Development' at 2211 West 4th Avenue is an example of what could fit along this portion of the street.)

Building design and materials also affect sense of density: While this can be very subjective, I believe the neighbourhood 'fit' can also be influenced by building design and exterior materials. For example, buildings that are terraced or stepped back are often much more acceptable than buildings with flat facades. Similarly buildings with lighter colour materials often feel less imposing that those of say red brick, especially if there is little red brick in the neighbourhood. The site setbacks and landscaping can also impact how a project 'feels' for surrounding residents and passers by. In this case, while I don't know if the materials have been finalized, I would question what appear to be large buildings with significant amounts of darker brick.

Public sector conflicts of interest: Just as I declared my conflicts of interest, I think it is also important to examine the Province and City's conflicts of interest.

To start with, the higher the approved density, the more the developer can likely pay for the site. I say likely since higher densities may result in concrete rather than wood frame construction, which can increase the cost of social housing and market units. It should also be noted that mid-rise concrete construction of between 6 and 10 storeys is generally more expensive than a tower with a more repetitive building form.

Initially the Province was going to receive all proceeds from the sale of this property. These monies were to pay for new social housing, including replacement units on site, and projects on the14 City-owned sites. I now understand that the City is going to share in the proceeds from the land sale. Therefore, one may well question whether it is willing to accept densities that are higher than if it wasn't a direct beneficiary. (I know everyone in the City administration will deny this, of course, but...)

The situation is further complicated by the arrangements in place with respect to the on-site replacement social housing. Our 2008 proposal offered serviced sites to the Province at no cost, but we would not be financially responsible for the construction of the units. However at the Open House, it was noted that Holborn has offered to pay for the social housing units. I find this surprising, since the cost of building 234 units is likely in the order of $45M to $65M. Remember 252 social housing units at Olympic Village cost $110M (excluding any land cost.)

Project economics: At the Open House, there were panels illustrating financial analyses undertaken by Coriolis, a real estate economics consulting firm, on behalf of the city. They indicated a value of $60 to 65 million under the existing zoning and a rezoned value of approximately $95 to $100 million (based on the current scheme). While this seems somewhat low when considering the value per square foot of multi-family development sites around the city, one needs to know the estimated cost of providing the streets and park spaces to City standards, and other Community Amenity Contributions that may have to be paid.

For example, a major project such as this would normally require the developer to build a child day care facility. The cost is estimated at $8.8M to $10M for a 69 child facility. Yes, that's what the City estimates a facility meeting municipal and provincial standards would cost. (Now you know why very few new childcare facilities are being built in Vancouver, but that's another story.)

Province and Holborn should disclose the terms of this deal: In the past, a private developer would not normally be expected to disclose confidential business terms of a real estate transaction. However, in recent years, when an applicant seeks a rezoning, it has become customary for municipalities to request copies of Purchase and Sale agreements and other financial information, along with independent appraisals, to assess the economics of a project and the Community Amenity Contributions that will be payable.

In this instance, it would appear that the very high density being sought is in large part attributable to the financial aspects of the project. This of course is unfortunate. As the Director of Planning often points out, "first we determine an appropriate density, and then we look at the financial consequences of it." In this case, notwithstanding the benefits of higher density development, I don't think there are many planners and architects who would argue in favour of net densities much in excess of 2.0 FSR for this site in what is essentially a very low density neighbourhood. Yes, it is going to change over time. But as Arthur Erickson was fond of arguing, change should happen buildings should relate to the old, even though one knows bigger buildings may come along over time.

(As one of Vancouver's most prominent architects reminded me last night, we often enjoy looking at old photos of Vancouver when the Sylvia Hotel and Marine Building were the largest buildings on the horizon. Yes, today they are dwarfed by surrounding developments; but it was important that the changes occur incrementally.)

In this case, given how much the development seems to be driven by money, which will be spent on other social housing, I believe it is important for the Province and Holborn to make public the terms of their deal. Is there a base price that must be paid, regardless of the density achieved? What, if any is the additional payment tied to density? What are the financial implications of Holborn's deal with the Province with respect to the social housing units? Is interest accruing on outstanding payments? Is there an escape clause in the agreement? What are the other payment terms?

I would like to think that if the community and City knew the deal, we might all be in a better position to assess just how much more density can be justified, given other pubic interests.

In conclusion, as I wrote before, I still worry whether the Province and City are going to get the money that has been amount which was sufficient to out-bid many experienced and knowledgeable Vancouver developers. I also worry about the community fit; and I worry about the implications of this project for other rezonings around the city.

(In this regard, one might say to me "don't worry!" If the city approves something well in excess of 2 FSR, it might be easier to get 1.0 to 1.5 in other single family neigbhourhoods!)

So with all that being said, I will therefore watch with interest the next chapters in this very fascinating story.


Joe Just Joe said...

Michael, not getting a job with Holborn was a good thing. Anyways thanks for the write up, looking forward to see how this one unfolds.

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