City of Vancouver downtown land swap questioned

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      Last summer, urbanist Stephen Bohus raised questions about a Vancouver land swap. Writing online, Bohus wondered: did taxpayers get a bad deal? More specifically, did the public lose almost $45 million in the property switch?

      After taking a look at the latest B.C. Assessment appraisals of the two downtown properties traded by the City of Vancouver and private company Brenhill Developments Limited, Bohus now believes that he wasn’t far off the mark.

      “Is it more than just a bad deal?” Bohus further asked during a January 19 phone interview with the Georgia Straight.

      In 2011, Brenhill approached city hall with a proposal to trade its property at 1077–1099 Richards Street for a city-owned plot of land at 508 Helmcken Street.

      Brenhill wanted to build a 36-storey mixed-use tower at 508 Helmcken. In order for that to happen, the site had to be rezoned. In return for the city agreeing to the exchange, Brenhill would replace the social-housing building known as Jubilee House, located at 508 Helmcken Street. It would build a new public-housing facility at 1077–1099 Richards.

      The two parties entered into a contract on January 28, 2013. In order to complete the transfer, Brenhill must finish the construction of the new social-housing facility on or before December 1, 2015. The agreement stipulated that the city property was worth $15 million and Brenhill’s was valued at $8.4 million, for a difference of $6.6 million, as estimated by the city’s real-estate department.

      On July 23, 2013, council approved Brenhill’s rezoning application for 508 Helmcken Street.

      The staff report that recommended the rezoning stated that the developer had offered a $25-million community-amenity-contribution package, with the largest component, $24 million, covering most of the $30.6-million construction cost of the new social-housing building on Richards Street. The city would kick in its $6.6-million proceeds from the exchange.

      On May 6, 2014, a local neighbourhood association filed a petition for judicial review of the actions by the city in connection with the land deal. According to the Community Association of New Yaletown, the city did not disclose details of the swap when Brenhill’s rezoning application was subject to a 2013 public hearing.

      Bohus, who doesn’t belong to CANY, lives in Mount Pleasant. He was present, however, on the fourth, and last, day of a B.C. Supreme Court hearing on the CANY petition, on August 29, 2014. That same day, Bohus, a trained landscape architect, posted a piece on the CityHallWatch blog about his estimates of the current value of the two properties.

      According to Bohus, the rezoned 508 Helmcken Street likely would be valued at $74 million and 1077–1099 Richards Street should be worth $23 million, for a difference of $51 million. In his blog post, Bohus noted that there’s a huge discrepancy, more than $44 million, between his $51-million difference and the original $6.6-million city estimate of the difference in the values of the two properties.

      This month, B.C. Assessment released its appraisal of the market value of properties across the province as of July 1, 2014. According to that, the city remains the owner of 508 Helmcken Street, which is now valued at more than $59 million. Brenhill’s Richards Street property now stands at $9.5 million. That’s a difference of almost $50 million, which is about $44 million more than the city’s former estimate.

      Neither the city nor CANY’s lawyer granted the Straight an interview about the values of the properties, a matter that is not part of the pending court case, which is a legal action about procedural fairness. The Supreme Court has yet to issue a decision.

      For his part, Bohus said in the interview that “someone has to take responsibility for this and explain it.”

      Again, he asked: “Did the city get more than just a bad deal?”

      Comments

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      10 Comments

      Rico

      Jan 21, 2015 at 7:20pm

      Interesting, that said the property was rezoned in the meantime. The correct question would be what was the value of the land without the rezoning and did the city get fair value.

      Stephen Bohus

      Jan 21, 2015 at 9:10pm

      A note for Rico:

      Part of the City's land swap deal with Brenhill Development included the rezoning of 508 Helmcken. A density of over 17 FSR was in the agreement. This was one of issues at the heart of the CANY vs. City of Vancouver trial last summer. CANY argued that the City had already decided to rezone the property prior to a Public Hearing. BC Assessment values the property at $59.4 million.

      Andrew

      Jan 22, 2015 at 1:20am

      Isn't this just a function of the market housing site receiving higher density than the non-market housing site on account of the construction partners (landowner and CoV) only being able to afford so many units? It's not a benefit. If both sites were 17 FAR they would have a similar value, but nobody could afford to put up a social housing tower of 30-odd storeys, so instead its some dozen ish stories and has a correspondingly lower land value. Unless I've really missed something that's all that seems to be happening. In this instance the land values are essentially created by the CoV rezoning decision. The argument therefore is that the City robbed itself of land value by not rezoning their own land to a higher density? What?

      Rico

      Jan 22, 2015 at 6:07am

      Stephen, I did not follow the CANY decision but it seems obvious to me that the city intended to rezone....otherwise why do the land swap?.....but I doubt they would have rezoned without the developer asking. I think the correct question is did they negotiate enough Community Amenity Contributions? 25 million for an increase of land value of 5o million seems a bit light...but I don't know enough about the cities objectives for the area or how much extra tax/cost the rezoning/new buildings will generate so it may be reasonable.

      Stephen Bohus For City Council

      Jan 22, 2015 at 8:01am

      We should nominate Stephen Bohus for city council in the next election. In the meantime I hope he attends as many of the meetings as possible. We need a good watchdog.

      M

      Jan 22, 2015 at 9:16am

      I think everybody is forgetting to realize that a social housing building is being built that costs the city no money and would costs 30M plus!!!

      Stephen Bohus

      Jan 22, 2015 at 11:16am

      The two properties in the land swap are very different. Not only is the property at the end of Emery Barnes Park bigger, this site has far fewer constraints on it, and thus much more valuable. The City's site allows for a building height of up to 320 feet, vs. the developer's site that is limited to 165 ft by a lower view cone.

      The City's site is adjacent to a park, while the block for the developer's property already has 2 towers (a condition that would preclude a third tower). A difference of a mere $6.6 million was determined by the City and was used in the land swap. The BC Assessment difference between the two sites is $49.89 million. Did the City leave a lot of money on the table in this land swap deal?

      There's been no net increase in social housing. The old Jubilee House at 508 Helmcken has 87 units, the new building across the street will also have 87 units of social housing. This information came out during the course of the CANY vs. City of Vancouver trial. The remaining 75 units in the new Jubilee House will be market rentals, another fact that was revealed at the trial.

      The target 17 FSR for the new tower was already part of the land deal swap. The City determined a CAC of $25 million. Much of the CAC, as well as the $6.6 million in the land swap deal went into building the new Jubilee House at 1077-1099 Richards. If the land swap is examined at full fair value accounting, did the City really end up losing millions?

      Development Denied

      Jan 27, 2015 at 11:08pm

      The courts ruled against this travesty of a deal, of course Vision will appeal but the real questions are:

      why did the court take so long to rule on this?
      why didn't the media give this issue the coverage it deserved pre-election?

      Albert Chin

      Jan 28, 2015 at 5:29am

      if i understand correctly the new Jubilee house with 75 units will be built with approx. $31million ($24m of CAC +$ 6.6 fr city) that's $413,000 per unit. How big ar these units? Is that good value? Assuming 1000 sq ft per unit that's $413 /sq ft construction cost ! If the units r smaller it would costs even more/ sq ft! Is the construction costs padded or what?