Some different reasons why Council shouldn't approve this Broadway & Birch proposal: Balancing public and private interests

Last night I watched a portion of the City of Vancouver Council Public Hearing on the Broadway and Birch project. I missed the staff report and most councillors' questions but did hear most of the speakers. As many of you know, I oppose this building because it's too big for the site from a physical planning point of view. Interestingly, in reviewing the proposal for the earlier 7.0 FSR rezoning, the staff wrote: "For sites zoned C-3A, the guidelines suggest adhering to the local C-3A height provisions for rental projects, however, an urban design review of the surrounding context is required. That was excluded from the more current staff report.

Balancing public and private interests: But since so many consider my concerns about neighbourhood fit and urban design outdated, especially for a location such as this, I would like to offer some other reasons why I don't think Council should approve this building. They relate to the project economics, and balancing public and private interests. I'll be particularly interested in Tom Davidoff's opinion on these points since he often talks about the value of development rights.

As will be seen below, if approved,this proposal will result in an additional 3.45 FSR (more than the original zoning would allow) in order to achieve 1.99 FSR of non-market rental housing. Moreover, the site value will increase approximately $4 million but the city will forego $4.8 million in Development Cost Levies 

Site area: This project has a site area of 18,762 sq.ft. (As an aside, to those who claim my concern about FSR is not really valid since it often depends on site area, this is not a small site. It's quite a large site.)  The zoning requires retail space at grade, but above there can be commercial retail or office space, or a mix of commercial and residential.

Development potential and value under original zoning: At the Broadway C-3A density of up to 3.0 FSR, this equates to a development potential of 18,762 times 3.0 which equals 56,286 sq.ft. So what is the site worth at this FSR? While opinions will vary, and I don't pretend to know the value of commercial space in this location, given a mix of condominium residential and commercial, I would guestimate the value might be in the order of $450 per sq.ft. If I multiply the development area by this value I get approximately $25.3 million. As a check, I looked at the BC Assessment data. This year, the site is valued at $30.5 million. At 3 FSR, this equates to $542 psf. This is too high a value to make a condominium project work.

Previous rental proposal: That's no doubt one of the reasons why the developer decided to look at a 100% rental project for the residential component. According to other experts, land for a market rental project is worth around $200 psf of building area. I note from the staff report that the previous rezoning had about 35,000 sq.ft. of commercial space and approximately 97,600 sq.ft. of residential space. If one valued this space at $200 psf, that equates to $19.5 million. If the commercial space is worth $400 psf, that's another $14 million for a total of $33.5 million. I should note that in 2019, the property was assessed at $36,465,000. Since the developer didn't want any controls on what rents he could charge, he agreed to pay Development Cost Levies of approximately $2.1 million.

New proposal: Now let's look at the new proposal. While there appears to be some discrepancy between the number of units in the rezoning report and staff report, the FSR is 10.52 which equates to around 197,000 sq.ft. The commercial area is reduced to around 27,500 sq.ft. and the resulting residential area is 169,821 sq.ft. 22% is reported to be non-market which equates to 37,360 sq.ft.

This equates to a non-market FSR of 1.99. In other words, there is a 3.45 FSR increase  from 7.07 to 10.52 in order to achieve 1.99 FSR of non-market housing. 

Equally importantly, before the developer was paying approximately $2 million DCLs to fund community amenities.. Now the company is seeking forgiveness of $4.8 million in DCLs.

Value under new proposed zoning: So what would the property be worth if it's rezoned at the new FSR? Well lets assume the land for the non-market rental housing has no value. The remaining 132,461 sq.ft is worth say $200 psf or $26.5 million. Add in the 27,500 sq.ft. of commercial area at $400 psf and that is an additional $11 million for a total value of $37.5 million.

In other words, by including the non-market units to justify a rezoning to 10.52, the site value increases from $33.5 million to $37.5 million and the developer avoids paying any DCLs.

Looking at it another way, we get 53 or 58 non-market units with an average area of only 600 sq.ft. of which only 22 are family units, in return for a building that is more than 3 times the originally permitted and surrounding FSR density.

I am all in favour of developers trying to make money and they should make money. But given all the legitimate concerns about the resulting building form, especially in the absence of the Broadway Corridor plan, is it really in the public interest to allow this rezoning? I don't think so. I say let's stick with the earlier rezoning.