Housing Affordability Symposium: November 1 & 2

I am delighted to have been invited to make the Day Two luncheon address with Tsur Sommerville at this conference. If you are interested in learning how to develop more affordable market housing, this might be a very worthwhile event. More details at http://www.chbabc.org/uploads/files/Housing_Affordability_Symposium_Flyer_updated.pdf

To LEED or not to LEED

With all the recent talk about LEED Silver and LEED Gold (and LEED Red, which is what one Vancouver Sun reader suggested should be awarded to the Olympic Village!), I thought I would post a story I wrote for the August Issue of Municipal World, a national magazine targetted to Municipal Officials and Politicians.

In June 2008, Vancouver City Council approved a policy that could have significant impact on planning and development policies in many municipalities across Canada. Unfortunately, most of the Councillors who voted in favour of the policy did not have any real understanding of what they were doing. Furthermore, this decision could be setting us on the wrong course as we try to improve the environmental performance of buildings and communities. Let me explain.

The Council Policy proposed that:

All rezonings for buildings that meet the minimum requirements to participate in the LEED™ for New Construction (NC) program, be required to establish designs that would achieve a minimum equivalent of LEED™ Silver, with a minimum of 3 optimize energy performance points, 1 water efficiency point and 1 storm water point. Buildings that are not eligible to participate in LEED™ NC due to form of development shall achieve BuiltGreen BC Gold™ with a score of Energuide 80, or an equivalent achievement in green design.

The policy applied to any new applications for rezoning or Heritage Density Bonuses received after May 13, 2008. Staff were instructed to undertake consultation and education with the development industry, and report back to Council with recommendations to increase the requirement to LEED™ Gold and BuiltGreen BC Platinum on January 1st, 2010.

Confused? You are not alone.

To better understand what this is about, the following is a brief description of LEED, (which for some bizarre reason is often called LEEDS by those not in the planning and development business).

LEED was developed by the US Green Building Council that comprised a variety of professionals involved in the design and construction communities. It is an abbreviation for Leadership in Energy and Environmental Design. Essentially, it is an independent rating system for green buildings that began in 1998. In subsequent years LEED grew from a standard for new construction to a comprehensive system of six standards covering all aspects of the development and construction process, including renovations and entire new communities.

LEED was created to establish a common standard of measurement for green buildings, stimulate competition in their design and construction, and recognize environmental leadership in the building industry. It was also hoped to raise consumer awareness. It does this by awarding buildings a ‘Certified’, Silver, Gold, or Platinum status for buildings and communities.

The rating systems address seven major areas: Location and Planning; Sustainable Sites; Water Efficiency; Energy and Atmosphere; Materials and Resources; Indoor Environmental Quality; and Innovation and Design Process.

While LEED was developed in the United States, in recent years a Canadian version has been created and there is now a Canada Green Building Council overseeing the implementation of the program.

An important aspect of LEED is that buildings are certified by independent parties who have been accredited by the Green Building Councils. However, it is especially important to note that buildings can only be certified after they have been completed, occupied, and ‘commissioned’. It is also worth noting that the certification process can take time, and result in considerable cost as the ‘certifier’ liaises with the design and construction team, and the Canada Green Building Council.

The problem with the Vancouver Council decision is that LEED was never intended to be a zoning tool. In other words, it was never contemplated that City Councils might require LEED certification as a condition of rezoning, especially when additional density was granted. As noted one would not know if the building could be certified until well after it had been completed and occupied.

This begs the question. What happens if the building is not certified? Do the people on the top floors have to move out?

To be fair to the Vancouver officials, they tried to address this practicality by suggesting that buildings would have to be ‘LEED equivalent’. However, a new Council has now been elected and many of the officials who were involved in developing the earlier policy have moved on. The new Mayor wants Vancouver to become the Greenest City in the World and he has instructed staff to further raise the bar. Rather than require LEED equivalency, the Council is now requiring LEED Certification. Furthermore, since Vancouver recently held the Olympics, there is a desire to immediately strive for GOLD, rather than SILVER. I mean after all, who wants to come second? (ED Note: Since writing this story in May, I am told that Vancouver has agreed to change its requirement to LEED equivalency.)

In addition to the problems of deciding what to do if the certification is not achieved, and the processing costs related to certification, there are also design and construction costs associated with achieving the desired level of certification. And there is another problem; what if some of the innovative design and construction features required to obtain the rezoning do not perform as expected?

Architects and engineers in some cities are becoming increasingly familiar with green building design and construction practices. However, this is not always the case in many communities. Furthermore, there are additional costs that are not yet truly known. A case in point is Vancouver’s Olympic Village housing which went significantly over budget, in large part, because the city wanted this to be an environmental showcase. Many features were built into these housing units that had never been tried before.

Not every project is going to be an international showcase. However every project is going to incur additional costs which need to be paid for. In the case of most commercial buildings, the person incurring the additional costs will likely realize savings in the annual operating costs to offset the capital outlay.

However, in the case of housing, especially housing for sale, the developer must recover the additional costs in the sales price. While some believe the additional cost is nominal, this is not necessarily true. From my own experience with a LEED project at Simon Fraser University, I discovered that there are often unforeseen costs that must be accounted for. For example, our engineers specified something called a heat recovery ventilation system. The idea was to capture the heat from the back of refrigerators and use it to heat the fresh air that was brought into the building. This seemed like a very innovative and clever idea, especially for a building on university owned lands.

The problem was that all the piping had to go in the corridor ceiling, thus reducing the floor to ceiling height to an unacceptable standard. Another option was to place the piping on the roof, but I worried about potential leaking from all the holes that would have to be made. In the end, the decision was made to raise the ceiling height for the top floor. Of course, when we tallied up the costs of trying to achieve LEED certification, everyone agreed that the extra piping was a cost, but not the raising of the ceiling. This illustrates the problem of properly determining the additional costs of achieving LEED certification.

I hesitate to set out what it costs to achieve the various LEED ratings. Sometimes it may only be a 2% or 5% increase, but in other cases, it can be much more. More importantly, there is no guarantee that an appropriately designed building will be certified. If the contractor has not used the specified glues, the required indoor air quality standard may not be achieved, through no fault of the owner or design team. Similarly, as we all know, heating and ventilation systems do not always work as designed.

While some of these problems can be fixed, others cannot. This becomes a major problem when a density bonus resulting in a much larger building has been granted in return for achieving LEED certification.

For this reason, I would caution any municipality that is thinking of following Vancouver’s policy of requiring LEED certification in return for a density bonus. Instead, consider imposing lower LEED requirements for all buildings, but only with a full understanding of the costs and challenges that can arise.

There is no doubt that achieving greener buildings and communities is a desirable goal. Furthermore, LEED is becoming the independent certification system in Canada for certain classes of buildings. However, in order to be more widely applied, there is a need to overhaul the certification process; it is simply too cumbersome and expensive in many cases, and achieving Gold and Platinum standards can in many instances add significantly to the cost of housing. Also, we should not ignore the concerns of some professionals that we may be moving too quickly, without a full appreciation of the unforeseen consequences of certain design and construction requirements.

To better understand this concern, just Google “leaky condos”!

How you can help finish Chuck Davis' 'Book' on the History of Metro Vancouver

orAs I noted in a previous post, Chuck Davis has an inoperable cancer and is trying to make arrangements to ensure that his current work, The History of Metropolitan Vancouver can be completed. He wants to commit his remaining days to this work, and ensure that arrangements are made to complete it after his death. A small group of people wanted to organize a Fundraising Evening to support these efforts, but Chuck is reluctant to participate....he's a very modest and shy man. However, even without a "Fundraiser" we can help in other ways.

The History of Metropolitan Vancouver is organized one year to a chapter (or one chapter to a year), and they are sponsorable: $2,000, which can be paid in three annual installments ($700, $700 and $600) or all at once. The complete list of sponsors and years is at http://www.vancouverhistory.ca/sponsors.html#list

Why not sponsor the year you were born. Or the year your father or mother was born or died. Do it on your own, or with other friends or family members.

As for contributions to help finish the book, any money collected goes to lawyer Christine Elliott, who is holding it in trust. Any cheque should be made out to Christine Elliott Trust Account, and, on the re: line, enter: Chuck Davis Vancouver History Project. Christine Elliott offered her services on a pro-bono basis, after hearing Chuck share his unfortunate predicament at a salon evening organized by Sam Sullivan.

Ms. Elliott’s address is: Christine Elliott Solicitor Suite No. 102-280 Nelson Street Vancouver, BC V6B 2E2

The money held in trust is for the completion of the book. The sponsorship money is separate, and goes to Chuck Davis directly. And, it will be most welcome.

One possible future expense for Chuck is a chair to carry him up and down to the bedroom/bathroom, etc. He's having to climb the stairs by himself these days, and he tells me it sets him puffing for five minutes. The cost is $3,700.

After all Chuck has done for the city, I would like to think we can help him with some sponsorship money and other donations to help complete this most important work, and make his remaining time with us as comfortable as possible.

How we can help Vancouver's Homeless

I find it extremely troubling that some of Vancouver's homeless may have to depend on Pepsi Cola to ensure they can lock up their few posessions at First United Church. Instead, I would like to think one of our city departments or the province could come up with the necessary funds. (You know where I think the money might come from!)

However, by posting this item, I hope I can encourage some of you to support this initiative...read on.

Downtown Eastside residents log in to save program

Church set up computers to allow people to vote in contest to fund storage facility for homeless

Hundreds of homeless people in Vancouver’s Downtown Eastside and others are being recruited to go online and save a key service provided by First United Church.

BILL KEAY/ PNG Terry Hector parks his cart at First United Church. More than 200 homeless people use the storage room in the church’s basement.

Computers have been set up at the Downtown Eastside church to allow voting in an online competition to provide funding for the church’s storage facility for homeless people’s possessions.

“ Staff and volunteers at First United Church are assisting hundreds of people who are homeless and living in the church with voting in an effort to win the competition and help sustain the facility,” spokesman Don Evans said in a release Wednesday.

More than 200 homeless people have been able to keep their personal possessions, in bins or shopping carts, in a large storage locker in the church’s basement since October 2009.

Lauded for giving homeless people a safe place to put their stuff while sleeping, eating and doing other daily chores, the popular program received funding from a one-year City of Vancouver grant, which runs out at the end of this month.

In an effort to help cover the $ 96,000 annual budget for staff salaries and pest control, the church entered an online contest, run by Pepsi, to fund “ great ideas.” If it gets enough votes to place first or second in its category ( food and shelter), the church could win $ 25,000.

The church has held first place for much of the contest, but as it draws to a close, First United has dropped into second position, Evans said.

People can cast online ballots every day until Oct. 31 at www.refresheverything.ca/firstunitedchurch.

“ With less than two weeks to go our lead is starting to slip away,” said Rev. Ric Matthews. “ Please help us to get back in the lead and help save this essential service.”

The church has also approached local foundations for donations to help keep the storage facility operating.

Advocates argue the program reduces theft, the spread of bedbugs and clutter on the streets, as well as providing more stability to vulnerable people.

Over 1 million visitiors on Saturday at EXPO 2010 Shanghai!

During lunch at Kaplan's Delicatessen with James Lee and Norman Tan yesterday, they mentioned that more than one million people attended the World Fair, in one day! I had to check this out. For those of you who left your World Fair visit to the last few weeks, (or who like me attended when the crowds were quite modest) here's the story, and a few photos of what one million people in one venue look like!

A whopping 1.03 million people visited the Expo last Saturday, nearly doubling previous daily attendance records, shattering Osaka's World Expo reigning daily record of 836,000, and making a few of us wonder just what exactly is the Expo's capacity anyway?

Sunday followed with a measly 750,000, which according to a memo brought to our attention by Shanghai Scrap was actually the projected attendance for Saturday as well. They were only off by, oh, let's say the population of Iceland.

Total attendance for Expo just reached over 65 million, finally breaking that pesky record set by Japan in 1970 and smoothing the way to the ever-important projected 70 million mark. Might make you wonder whether they are easing capacity restrictions in a push to surpass the mark.

One explanation for the surge in attendance is the somewhat short-sighted recent push to attract more visitors following disappointing National Holiday attendance, in which organizers eased ticket restrictions and allowed standard tickets to upgrade to peak-day tickets.

Control was maintained on Saturday by a constant stream of text messages updating visitors on wait times and calling their attention to pavilions with smaller lines. Metro televisions encouraged visitors to avoid attending during peak hours, and six emergency exits were opened in the afternoon to assist with the exiting crowds.

Required Reading for everyone interested in the Olympic Village

How city hall messed up Millennium Water

By adding millions of dollars to the cost unnecessarily, Vancouver created the problem that it's trying to get everyone else to solve

By Rob MacDonald, Special to the Sun October 16, 2010 4:09 AM

MILLENNIUM WATER: 'If the city thinks it can sue the developer for the balance of the land price originally owed, then the biggest construction litigation case in British Columbia's history would probably ensue,' Rob Macdonald writes.

Photograph by: Les Bazso, Vancouver Sun Files, Special to the Sun

The financial problems with the Olympic village project have not all been caused by the developers, Peter and Shahram Malek, who seem to be taking all the heat from both the media and current Vancouver councillors.

These criticisms are being levelled by people who are either unfamiliar with, or wish to ignore, all the facts surrounding the development on False Creek.

When Mayor Gregor Robertson asked me and several others to review the affairs of the Olympic village last year, I took my investigations seriously and a number of things came to light that are important to put on the table to provide some measure of historical context and balance to the discussion.

1. After the city committed to building the athletes' village for the 2010 Olympics two administrations ago, municipal staff waited too long to get the project underway. These delays created a host of costly problems, which were ultimately dealt with by the developers' company, Millennium Development Corp., to get the project completed on time.

These delays and the resulting costs were not the developers' fault, yet the city assumed they would bear the costs which were then supposed to be magically passed on to buyers.

2. The city delivered the development site with contaminated soil. Though the city would normally be responsible for cleaning up the soil on its own property, the developer was forced to pay more than $20 million to remove the contaminants. That process caused a further delay in construction of at least three months, which in turn led to higher costs because of overtime for workers.

3. The project's late start created a situation in which the development was being built at the same time as it was being designed. The city also imposed the highest possible "LEED Gold" environmental standards of design after the developer had been enticed into the deal based on the lower "LEED Silver" standard.

The rushed construction and the scope of environmental changes imposed by the city resulted in massive cost overruns that would have been impossible for any developer to control.

4. The project's late start and Olympic-related complications contributed to a transaction structure that made the project almost impossible to finance on normal lending terms. As a result, the developer had to seek out financing that bore a high interest rate that added probably another $50 million to the development. Normally, a project would be fully designed and costed out, then pre-sold to the public and financed at normal bank rates of interest, which are now about three per cent. The city threw standard development procedures out the window and the developers had to bear the extra costs.

5. With all the additional costs foisted on the developers, the project's basic hard construction cost ballooned to about $450 per square foot compared with other large-scale developments that were being built at the same time in the normal marketplace at about $300 per square foot.

The environmental and construction acceleration costs (picture men and women working 24 hours a day, seven days a week, incurring massive overtime charges) caused at least $125 million in extra costs. When one adds the additional interest that was paid because of the deal structure, the additional financial burden on the developers approaches $175 million.

6. Once the city took over the project financing, it in turn borrowed the money at an interest rate of about 2.5 per cent. Even though the city was substantially responsible for many of the project's cost overruns due to timing and environmental delays, it would not pass all the interest savings on to the developer. When I suggested to the city that this would be a fair thing to do, I was summarily rebuked.

It is worthwhile to also note that when the city now says that the developer owes more than $560 million in debt including accrued interest, you have to remember that what the city owes to its own lenders is probably $30 million less than that, because the city's incurred rate of interest is much less than the developer is being forced to pay the city.

7. The developer had to endure a host of issues associated with the Winter Games, which affected more than just the costs. For instance, the sales program had to be essentially halted for security reasons just when a world of customers had come to visit. And, of course, during that time the city's interest clock kept ticking.

8. Some people at city hall have been saying things about the development that have substantially damaged the project's salability and brand reputation -- something that no sensible lender would do.

Peter and Shahram Malek did an incredible job getting this project delivered on time for the Olympics after facing every possible obstacle. To wholly blame them for the project's financial difficulties is neither right nor fair.

So what is the real financial condition of this project? The value of the market condos after paying sales commissions, marketing costs and further interest charges is about $500 million. In addition, the extra residential rental tower and the commercial space in the project are together worth about $70 million, so the total net asset value is about $570 million.

The city now owes about $530 million on its debt, so the surplus of about $40 million could be applied to the remaining purchase price for the land on which the developer purportedly still owes the city $170 million.

If the city works with the developer and does no further harm to the project, now called Millennium Water, the city will pay off its debt and receive another $40 million attributable toward the land sale, which would be a positive outcome. Though the city would receive about $130 million less than the original land sales price, it will get about what it deserves, given its costly conduct.

Unfortunately, the developer is facing a loss of all its equity investment of about $60 million, and though the city now wants the Maleks to kick in more money, that would be plainly foolish.

If the city thinks it can sue the developer for the balance of the land price originally owed, then the biggest construction litigation case in British Columbia's history would probably ensue. That would only enrich the lawyers, damage the project further and dredge up so much toxic mud that city hall would be shaken right off its murky foundations.

Of course, the mayor realizes that this all could become politically explosive and he is understandably trying to distance himself and his political colleagues from any culpability. However, if a major legal battle ensues then it will be impossible to avoid all the flying mud, particularly when city officials have said things that have damaged the project's reputation and sales.

City staff and council should take the advice of experienced real estate professionals, such as the very capable Bob Rennie, and get all inexperienced hands off the tiller. The litigation lawyers should be kept away from the deal.

Millennium Water is one of the finest environmentally conscious projects ever built. It is located in a beautiful spot in one of the world's greatest cities. It will prove to be tremendous success in the long-run. All it needs is experienced calm hands to guide it through the selling stage. Peter and Shahram Malek are decent, award-winning developers. They deserve to be treated with respect and handed a silver medal for delivering the project on time for the Olympics despite all the difficulties they faced.

Rob Macdonald is president of Macdonald Development Corp. and a director of the Urban Development Institute.

© Copyright (c) The Vancouver Sun

West Vancouver Bowling Green Homes Update

In September, I was pleased to finalize an agreement with Bowling Green Townhomes Ltd to partner in an innovative housing proposal in West Vancouver. If approved by West Vancouver Council, this proposal will result in 9 smaller homes on three single family lots in the 2000 Block Esquimalt Ave. These are not townhouses...rather there are three duplexes and three carriage homes, each with two bedrooms and private outdoor spaces. Given the home designs and proximity to Marine Drive, Community Centres, churches, shops and the bowling greens, Bowling Green is for those ready to downsize, but not downgrade!

While I had hoped that that this proposal would go before Council later this month, the need for the District to process administrative changes to its Zoning Bylaws will delay our application until later in the year. However, we are using the time to fine tune the plans and address some of the concerns we have heard from neighbours.

It is now expected that our application will go to Council in late November or early December. As soon as dates are confirmed I will let everyone know. In the meanwhile here are the current plans, and images of smaller homes that I have seen elsewhere that are inspiring our designs.

If you agree that West Vancouver needs more housing choices for longstanding residents ready to downsize, but not ready or wanting to move into an apartment, please let the Mayor and Council in West Vancouver hear your thoughts. You can write to them at mayorandcouncil@westvancouver.ca