Vancouver condo developers asking to delay $52M in payments to City

Vancouver condo developers asking to delay $52 million in CACs payments to the City

Artistic renderings of the condo tower projects of 1450 West Georgia Street (left), 1157 Burarrd Street (centre), and 1640-1650 Alberni Street (right), Vancouver. (Yamamoto Architecture/Wesgroup Properties | Merrick Architecture/Prima Properties | SOM/IBI Group/Landa Global Properties/Asia Standard Americas)

Three different developers behind three separate condominium tower projects in downtown Vancouver that saw recent rezoning application approvals could be given a temporary financial reprieve.

According to a new City of Vancouver staff report, the three developers have each asked for a 12-month extension of the cash community amenity contribution (CACs) payment in exchange for the final bylaw enactment step of securing the rezoning following an approval made by Vancouver City Council.

The payment must typically be made within 24 months following City Council’s approval of the rezoning in principle.

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Two of the rezonings were approved on October 12, 2021, and one other rezoning was approved on December 9, 2021. This means the deadline for the cash payments — totalling $52.2 million — should be this week and before the end of this year, respectively.

All three projects were approved under the City’s West End Community Plan, with each project providing a high level of CACs in exchange for the permitted density enabling the high volume of market condominium units.

CACs can be provided as a cash payment to the City, an in-kind value provision to the City such as an incorporated amenity into the building development, or a combination of both methods. The CACs from these projects go towards achieving the amenities outlined in the West End Community Plan, such as childcare, new and improved community and recreational centres, improved public spaces, and affordable housing. The type and level of contribution is negotiated between the developer and City staff, which is a process that can take years as a prerequisite before the public hearing.

Instead of the requested 12-month delay, City staff are recommending that City Council approve a six-month delay, which would push the payment deadline for two projects to April 12, 2024, and one project to June 9, 2024. This would provide the developers with a total of 36 months to meet their obligations since their respective approvals.

City staff are not recommending the longer 12-month reprieve as “in an environment of significant cost escalation, the longer the delay between Council’s approval in principle and Bylaw enactment, the higher the cost to the City for the delivery of public amenities and infrastructure.” If City Council prefers to provide a 12-month reprieve, City staff recommend applying interest at a prime rate plus 2% to the outstanding CACs cash balance after the six-month extension, until the obligation is satisfied.

Usually, if the bylaw enactment has not occurred within 24 months after City Council’s rezoning approval, the approval in principle could be terminated, revoked, rescinded or reconsidered by City Council at its sole discretion. The rezoning application or a revised rezoning application could be required to return to public hearing for reconsideration, including the possibility of a revised CACs commitment.

City Council will review City staff’s recommendations and make a decision next week.

This comes at a time when there has been a slowdown in housing demand, a drastic increase in construction costs relating to equipment, materials, and labour due to inflation, and high borrowing costs for construction financing due to the heightened interest rate. This has increasingly pushed more projects into the realm of financial unviability based on their previous pro forma, especially for projects that were designed before the high cycle of inflation that began in early 2022.

These are the three projects requesting temporary financial reprieve:

1450 West Georgia Street

This is a project to build a 49-storey, mixed-use tower at 1450 West Georgia Street with a floor area of 286,000 sq ft, containing 193 condominium homes and 162 market rental units. In exchange for rezoning approval, Wesgroup Properties has committed $8.9 million in cash CACs. Yamamoto Architecture is the design firm.

The rezoning was approved in principle on October 12, 2021. The deadline is October 12, 2023. A six-month extension would push the deadline to April 12, 2024.

1450 west georgia street vancouver 2022 design

2022 revised design of 1450 West Georgia Street, Vancouver. (Yamamoto Architecture/Wesgroup Properties)

1157 Burrard Street

Prima Properties received its rezoning approval in principle for its project at 1157 Burrard Street on October 12, 2021. Therefore, the deadline is October 12, 2023, but a six-month extension would provide a reprieve until April 12, 2024.

The project calls for a 47-storey, mixed-use tower with a floor area of 289,000 sq ft, containing 289 condominium homes, ground-level retail space, a 15,800 sq ft arts and culture hub, a 37-space childcare facility, and a $10.6 million cash CACs payment. The design firm is Merrick Architecture.

Model of the tower at 1157 Burrard Street, Vancouver. (Merrick Architecture/Prima Properties)

1640-1650 Alberni Street

Landa Global Properties and Asia Standard Americas saw their rezoning approval in principle for 1640-1650 Alberni Street on December 9, 2021. With a six-month extension, this payment is due on June 9, 2024.

Their total cash CACs payment is $32.7 million. In return, they can build a 43-storey tower with 259,000 sq ft, containing 198 condominium homes and 66 secured purpose-built rental homes, with 20% of the rental housing set at below-market rents. The design firms are Skidmore, Owings & Merril, and IBI Group (now known as Arcadis).

Artistic rendering of 1640-1650 Alberni Street, Vancouver. (SOM / IBI / Landa Global Properties / Asia Standard Americas)

Artistic rendering of 1640-1650 Alberni Street, Vancouver. (SOM/IBI Group/Landa Global Properties/Asia Standard Americas)

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