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Southeast False Creek ODP:
Uncertainty for Private Land Owners

By Bryce Margetts, Colliers International                                          February 16, 2005 

Editor's Note: On March 1, 2005, Vancouver City Council proceeded to pass the ODP, as was expected in the following article.

South East False Creek (SEFC) is poised to become the next significant area for mixed-use development in the City of Vancouver.  The area is one of the last locations available for waterfront development on the south shore of False Creek and the City of Vancouver is in the late stages of implementing its Official Development Plan (ODP) for SEFC which will serve as the basis for the development of the Olympic Village and over 7,000 residential units.

All anticipated development in SEFC is, however, subject to the City of Vancouver finalizing the ODP by its now extended deadline of March 1, 2005 and satisfying the development community's need for a degree of development cost certainty and fairness.  These unsettled issues continue to be a source of controversy in development circles and have been the focus of several recent Vancouver Sun articles and editorials which have also raised concerns on how best to utilize proceeds from the Property Endowment Fund (PEF) and that the necessary funding (mainly from the Provincial and Federal Governments) will not be assured at the time the ODP must be approved.

The area of SEFC that will be subject to the ODP is located between Main Street to the east, the Cambie Street Bridge and Wylie Street to the west, 2nd Avenue to the south and the shores of False Creek and Terminal Avenue to the north. The area consists of approximately 32 hectares (79 acres) of which approximately 20.2 hectares (50 acres) north of 1st Avenue is owned by the City of Vancouver. Private parties own approximately 12.1 hectares (29 acres) between 1st and 2nd Avenue and north to Terminal Avenue along Main Street.

I thought that it would be helpful to provide some commentary on the mix of housing that may actually be built and on potential impacts the revised ODP may have on private land owners if approved by council on March 1st, 2005.
 

What is the SEFC ODP?

SEFC is envisioned under the ODP to be a mixed-use neighbourhood on the shores of False Creek focusing primarily on a diverse mix of social and market multifamily housing (refer to http://vancouver.ca/commsvcs/southeast/).

The major land use objective of the ODP is to change the area from its current brownfield industrial use to mixed-use residential, commercial retail and office and offer community infrastructure including a community centre, school, numerous child care facilities, public open space (including three main parks, waterfront greenways / bikeways) and a non-motorized boating facility.

Approximately 63% or 3.6 million square feet (SF) of the total density approved within the ODP will be built on the private lands. 133,000 SF of the approximately 218,000 SF of commercial retail, office and light industrial expected to be constructed in the ODP area will be built on the private lands, and the remaining 85,000 SF is slated to be built within the Olympic Village which forms part of the public lands.

The City owned public land sub-areas are designed in the ODP as "1A", "2A" and "3A". The aim of the ODP is to create 1/3 affordable housing, 1/3 middle income housing, and 1/3 market housing.

The total amount of subsidized affordable and middle income housing will be approximately 1.2 million SF or 2,000 units located primarily on public lands between 1st Avenue and the shores of False Creek. Total square footage for market and non-market housing on the public lands is approximately 2.1 million SF or 2,600 to 3,000 units.

Approximately 10.46 hectares (26 acres) of park will be built with approx 10.28 hectares (25 acres) to be located within sub areas 1A, 2A and 3A on the public lands.

The chart below summarizes the allotment of density between the public and private landholders and estimates the amount of units that may be built.


How will the revised plan impact Private Land Owners?

On July 26, 2004, council approved the SEFC policy statement and recommended that further investment be made by the PEF to enhance the community amenity package. Amendments recommended by council included the following:

  • Limiting heights to low and medium rise buildings.
  • Change the mix of housing from 20% affordable / 80% market to 1/3 low income, 1/3 middle income and 1/3 market housing.
  • Increase the size of the community centre from 10,000 SF to 30,000 SF.
  • Additional child care centres.
  • Inclusion of a non-motorized boating facility.
  • Institute silver to gold LEED building standards.

As a result of revising the community amenity package, project costs have increased. 

The following factors may temporarily impact the ability of private land owners to either sell or develop their land in the short to medium term.

  1. The revised amenity package now before council identifies a contribution requirement from the private land owners of approximately $61 million in costs (See the SEFC Financial Strategy Report). The per buildable cost suggested in the financial plan for the ODP that "may" be levied against the private land owner includes: $6.00 city wide DCL, $8.00 community amenity contribution (CAC), $8.00 CAC for costs associated with the increased level of low income housing and $4.00 CAC for costs associated with the increased level of middle income housing. The total DCL/CAC of $26.00 per BSF is higher than some (most) private land owners originally anticipated and could restrict the economic viability of some projects moving forward in the near term.

  2. It is important to note that the actual amount to be levied for DCLís and CACís will be finalized for each private land owner during the rezoning process.

  3. It is not entirely clear exactly when the private lands can be rezoned. Publicly it has been said that the private lands will be rezoned immediately after the public lands are rezoned, but the rezoning is subject to the IOC's security issues and it is not clear what these will be yet.

  4. Further compatible housing strategies may be implemented on all private lands during the CD-1 rezoning process.

  5. All development will be subject to the LEED green building strategy. One opportunity for private developers in this respect is the potential eligibility for density bonuses for green initiatives and / or transfers for heritage, cultural use and other public amenity contributions. However, it is unclear whether additional density can be added to any of the sites because of the limited height restrictions now recommended in the revised ODP.

Accordingly, approval of the ODP by council on March 1, 2005 will not remove a number of uncertainties.  One solution may be for council to ensure that enough flexibility is incorporated into the approved ODP in order to alter the amenity contribution based on costs or funding changes throughout the phased project.

At this point in time (and perhaps throughout 2005), the only thing that land owners and developers seem to agree on is that most deals are on hold until the public lands are rezoned in the fall (2005) and more certainty exists on costs and rezoning for the private lands.

In Part 2 of this article, I will follow up to discuss the results of the March 1st, 2005 council meeting, including whether council made any further revisions to the ODP and what the timing might be for construction to begin at the Olympic Village site and on the private lands.

 

Bryce Margetts

Investment
Colliers Macaulay Nicolls Inc.

604.661.0818
bryce.margetts@colliers.com

Bryce specializes in brokering the acquisition and disposition of major development sites and provides related financial structuring assistance. Since 2002, Bryce has sold properties valued in aggregate in excess of $100,000,000. Prior to joining Colliers, Bryce was a commercial mortgage broker at Citifund Capital where he specialized in multi-family CMHC and conventional commercial construction and long term financing.

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