Sean Antrim August 3, 2011 Analysis, City Hall, Gentrification, Housing, News

Shannon Mews Rezoning Passes Despite Citizen Opposition

This week, City Council approved a massive rezoning request by developer Wall Financial Corporation for Shannon Mews in Kerrisdale. Kerrisdale is but one of many neighbourhoods forced to mobilize against unwanted development over the past two years. Before last Tuesday’s meeting a protest was held outside City Hall, organized by a group of activists from City Hall Watch and Neighbourhoods for a Sustainable Vancouver under the banner: “The Rezoning Process is Broken — Let’s start Fixing it.” Over a hundred people took part outside and eventually filled the council chambers. Many residents of other neighbourhoods joined the Shannon Mews community in solidarity, having faced similar rezonings in the recent past. Others still will be facing unwanted developments in their neighbourhoods later this year.

The July 26th, 27th, and 28th public hearings act as good examples of Vision Vancouver’s planning and consultation regime. There were two significant rezonings taking place. The first regarded a series of three high rises directly across from the Olympic Village. The developer was asking for an increase in density of 50% and a dramatic increase in height above the existing zoning. Over a dozen speakers spoke against the proposal. Most were concerned about the impact of the development on the affordability of the surrounding area, as high towers creep up False Creek into Mount Pleasant. These concerns were left almost completely unaddressed by City Council, and the rezoning was passed with only Councillor Ellen Woodsworth voting against.

The Shannon Mews rezoning also passed, by a vote of six to four, with the two COPE councillors, the lone NPA councillor and Vision Vancouver councillor George Chow voting against. Chow’s dissent comes as he, unlike other Vision Vancouver councillors, faces the threat of actual opposition in the upcoming election (Vision has no serious opposition, given that COPE has doomed itself to minority status and that the NPA will be without a single incumbent councillor candidate). Chow has decided to leave Vision and try his luck with the provincial NDP.

The proposed Shannon Mews development sits on a four hectare site on the north-west corner of Granville at West 57th avenue. The site has a rich history, with some of the structures built in 1911 and others designed by Arthur Erickson in the 1970s. Currently, there are 164 housing units on the site, all rental. After redevelopment, the number of units will increase to 706 units (down from an initially proposed 891), with only a quarter of them rental.

In order to “earn” this increased density, the developer included some heritage preservation elements and rental housing commitments in the redevelopment plan. The developer used the City’s Heritage Revitalization Initiatives and Community Amenities Contributions programs to increase the number of condos allowed on the site, thereby increasing the value of the land several-fold. Let us look at how this process works.

The corrupt core of civic politics

The number of allowable units increased almost four-fold from 200 to over 700. Assuming the average unit goes for $1M (a reasonable approximation for this posh neighbourhood) the value of potential condo sales increased from about $200M to over $700M. At a 15% profit expectation, the value of profits for Wall Financial Corp increases from $30M to over $100M! By “playing the system” in this manner, the developer increases its profits well above the already excessive market quotas. This “game” constitutes the corrupt core of civic politics. Indeed, Wall Financial Corp donated over $11,500 to Vision Vancouver before the election of 2008, and another $10,000 after the election. To the consternation of Shannon Mews organizers, Wall Financial and the City held a joint press conference last week in order to defend their agreement against the “misconceptions” of concerned citizens.

The City Planning Department does “tax” profits accrued on account of rezoning, but the “tax” comes in various forms of in kind developer “contributions,” whose values are difficult to quantify: affordable/rental housing commitments, heritage preservation commitments, and public art provisions (more rarely, cash contributions are paid). In the Shannon Mews case, the City negotiated that these “contributions” add up to an approximate value of $20M, composed of: 200 unaffordable rental units; preservation of a mansion, its coach house, three trees, and a wall; some public art to be determined; and perhaps some cash. Director of Panning Brent Toderian claims that these items are valued at $20M, and that this constitutes a 75% levy on the property value increase accrued on account of the rezoning – a tall claim, given that the rezoning surely increased Wall’s profits by an amount several times this figure of $20M.

Super-developers and the concentration of capital

A common concern voiced at the Shannon Mews public hearings is that the form and scale of development don’t fit the neighbourhood. Large developers, such as the Wall Financial Corporation, can afford to build more profitable, bigger developments. The Shannon Mews development requires significant investment capital. In Vancouver, this capital is increasingly concentrated amongst fewer large firms who can “play the game” of municipal real-estate politics. Developers with a large market capitalization outpace the smaller developers who build smaller developments. While many in Vancouver are struggling to pay rent, and are faced with the impossibility of home ownership, Wall Financial Corp made $58 million in profit last year. Bruno Wall, the company’s current president, told council on Thursday that the standard expected profit for any development he takes on is 15% of his costs (surely an underestimate).

Meanwhile, Vision Vancouver has been aggressively implementing the NPA’s EcoDensity policy, and has taken a counter-productive free-market approach to the housing crisis. Listening to councillors and developers speak in Council, the logic is that increasing the supply of housing, regardless of its affordability, will lower prices for everyone. This goes against conventional land economics. Firstly, real-estate prices are sticky, and rarely do prices decrease through an increase in supply. Instead, owners hold on to properties but let them sit empty, reaping in the increases in value. Secondly, almost all of the new housing is marketed to a very high-income buyers. It is rare to see a condominium advertised as anything but “luxury”. While significant drops in city-wide real-estate values do happen, they are rare and most often take the form of sudden crashes. In the past, governments have increased affordability through subsidization and the publicly funded construction, as market solutions don’t work. The past three years of Vancouver’s real-estate market and supply-side attempts to address affordability are evidence of this, as rents and property taxes have steadily increased.

This combination of superprofits for developers and a pro-density pro-market City Council has resulted in a glut of Le Corbusier-esque monolith developments that spur community resistance. Towers are proposed, approved or have been built in the neighbourhoods of Norquay, Mount Pleasant, the Downtown Eastside, along Cambie Street and Marine Drive, among others. Instead of spreading out the density throughout these neighbourhoods, it is being concentrated in large towers. Developers favour this strategy, whereas communities do not.

The “public consultation” system is broken

Citizens from the area around Shannon Mews were clearly frustrated by the development approval process. The “public hearing” process in particular seemed a case of “going through the motions.” Even worse, this process was subverted: instead of listening and acting on public concerns, this false ‘democratic’ process was used to justify a pre-determined outcome negotiated between planning staff and developers.

This unmeaningful consultation is becoming the order-of-the-day at City Hall, and not only in the case of rezonings. Many will remember that the by-law limiting the right to protest also passed despite unanimous opposition, including from the BC Civil Liberties Association and the Vancouver Public Space Network.

What can be done when the City ignores its citizens? When the official consultation process becomes limiting instead of empowering, other forums need to be created. To truly be heard and have an effect, one needs to be outside the concrete walls of City Hall. Addressing problems in visible, public ways can shift public debate in a ways speaking at City Hall can’t.

Vancouver has a rich history of political engagement outside our government’s restrictive consultation procedures. Very often, the most effective tactics have been direct action and taking-up-space. To provide but a few examples, it was a movement outside of City Hall that prevented the demolition of Strathcona to build a freeway. Desperately-needed social housing was attained following a significant shortage in World War II (similar to that faced now) by the occupation of the Hotel Vancouver.

Another memorable example of citizens taking direct action was All Season’s Park. In 1971, real-estate developers threatened to develop the entrance of Stanley park, just to the Northeast of Georgia at Denman. Just as today, developers had a stranglehold on municipal government. Their plan was to use City Council to open up the incredibly profitable land at Denman and Georgia to development. But people built a tent city on the park to prevent much of it from being developed. This was a time when Vancouver also faced a new “young and lively” pro-developer, centrist third major party.

A more recent example is Woodsquat, where Downtown Eastside residents and allies occupied and camped at the site to demand social and affordable housing. This action transformed the trajectory of the development more than any “delegation” to council could – more evidence of the effectiveness of bringing the struggle out-into-the-open, making it visible and public. The Woodward’s action drew attention not only to the housing crisis and all its friends (displacement, renoviction, unaffordability, gentrification, speculation), but announced that these forces will be identified and fought in the future at every turn.

9Comments

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1

Paul on August 4, 2011 at 9:16 am

Hi Sean,

I think you have some good points but you lose me when you start with phrases like “super profits.” To make the $100 million in profit, the Wall Corp. will be assuming somewhere around $600 million in costs (debt) that will need to be secured in part with corporate and personal assets as well as cash equity. For taking that risk, what do you think a reasonable return should be? Mega projects also come with mega risks and have the ability to wipe out a developer – just ask the Millennium Group.

I also think it is dangerous to assume that because a group can’t stop a specific rezoning it means the system is broken. It is sort of like running taxation through a referendum each time – ask California how well that works.

I think if more people got involved early in the process such as workshops during OCP amendments or specific neighborhood plans, you might be able to effect more change. Cities in general are moving towards Transit Oriented Developments – so if you don’t think Granville is a good transit route then argue it doesn’t need density. People assume they don’t need to involve themselves in the process until something they don’t like happens. If more people gave more generously of their time early on, I wonder if we would have to same issues.

Unlike Calgary or Toronto, Vancouver has a more or less fixed land mass so density in the only way to add new housing. Density, if done properly, can allow for increased services such as better transit as well as provide an affordable level of housing for some. Affordable is a relative word and is obviously area dependant. I grew up in Kerrisdale but could I afford to live there now – heck no. Does it bother me, not really because the Kerrisdale now isn’t the same Kerrsidale I grew up in. Not because of the changes in Shannon Mews but more the horrible, horrible detached homes that replaced the 1922 one I grew up in. I wonder why that doesn’t resonate more with people as those old houses represent our history.

Zoning issues can’t simply be laid at the feet of the developer – it is easy to do that but I don’t see it leading to any fixes to the system. Rather than assuming we will fix things we don’t like by protest alone, I think people need to get more involved earlier in the process.
2

Sean Antrim on August 4, 2011 at 9:55 am

Thanks Paul,
On the phrase “super-profits”. It is the developer who wanted to take on this project. There is risk in real-estate, but the Olympic Village isn’t a very good example of it. Firstly, if you look at the receivership agreement, you’ll see that it’s not Millenium that has gone bankrupt, but a front company, Millenium False Creek, which limits the amount of risk that the Maleks themselves have taken on. I also don’t think it’s a fair comparison. That project, the only real-estate development that has failed in Vancouver in recent memory, was exceptional in that it was thought of by the City as necessary Olympic infrastructure. The City ended up giving them a loan, and although they’ve had to give up some of their properties to pay back the City a portion of their debt, I think they’re still in business.

The super profits come at the expense of everybody else in Vancouver. We need to weigh the profits that are made against the taxes that are collected. 25% of the upzoning value is kept by the developer. We know that the developer is working close with the planning department, and there is no check or balance on the numbers used or on the community benefits actually contributed after construction. For now it’s all conjecture, as seen by the back-of-a-napkin math done up above.

The claims by the organizers that “the system is broken” comes after two years of struggle at City Hall. There’s more rezonings happening, and not even a compromise being made. I know that NIMBYism can be a factor, but in Vancouver, people are being priced out. These projects make the cost of living around them higher, and I think that that is why people are upset about. People are involved in the process, they’re fed up with it. Here’s but one example:
https://themainlander.com/2011/05/31/cambie-street-organizer-critiques-citys-planning-process/
Often times, the ODPs get ignored. Usually if people are following the ODP or Community Plan there’s no need for a rezoning.

This website: http://vancouvercouncilvotes.wordpress.com/ has the history of voting in council for the past few years if you’re interested.

I think there’s a balance that needs to be struck for the sort of tensions that are building up in Vancouver to be resolved. Right now, citizens are shocked when they go to a public hearing and can’t be heard. The question is whether or not their concerns are legitimate. The press over past couple of days has shown that these sentiments are perhaps starting to show up in polls. It will be interesting to see what happens next.
3

DB on August 4, 2011 at 10:01 am

“Currently, there are 164 housing units on the site, all rental. After redevelopment, the number of units will increase to 706 units (down from an initially proposed 891), with only a quarter of them rental.”

So there are now 13 more rental places than before, and an additional 530 owner units (of which some may be rented. Obviously the new units (fancy plastic Wall crap) aren’t the same as the old units (vintage Erickson in a leafy setting, possibly not cheap) and prices may be different, but on balance, an increase in supply is better for affordability than continued restrictions on supply.

It’s difficult to take the left in Vancouver seriously about claims to want to stop freeways and build a more inclusive city when nearly every single attempt to add housing supply is fought tooth and nail like this.
4

Sean Antrim on August 4, 2011 at 10:09 am

It’s hard to get exact numbers, but there seems to be a sizeable amount of luxury rental, the kind that will most likely be built into this development, that’s being left empty. Suzanne Anton said in council a couple of months ago that around 30% of new condos are rented out.

We don’t need more luxury rental, we need more purpose-built affordable rental. Owners would rather see luxury rental sit empty than rent it at an affordable rent. We do need an increase in the supply of housing, but the laws of supply and demand don’t work with real-estate for obvious reasons. It’s far from a perfectly competitive market. Prices are sticky.

Nobody is saying “don’t built”, they’re just saying “build something else”. For example, smaller developments spread out through the neighbourhood.
5

Paul on August 4, 2011 at 11:35 am

“The City ended up giving them a loan, and although they’ve had to give up some of their properties to pay back the City a portion of their debt, I think they’re still in business.”

…at a much different scale. The financial pressure of the OV also caused them to fail on holding the Evelyn Site in West Van – that and a waffling West Van Planning Dept. In the past few years, there have been defaults such as the Sofia – Kingsway and Clarke and Homer and Helmekin/Meadow Gardens (Richmond) – two developments and one developer. My point is that development has risk and that shouldn’t just be ignored. Also, as I said in a previous post, Banks won’t finance a project with a lesser margin because they understand how risky development inherently is and look at the margin as protection against default.

“25% of the upzoning value is kept by the developer.”

Not necessarily, it depends how and when they purchased the land. In my experience, the 25% at best is shared with the land vendor/developer and at worst, given completely to the vendor.

Bottom line, I don’t think you are wrong in some of the issues you bring up. However, I think people need to get more involved than just the public hearings if they want to effect change. However, as you point out, in Novmeber people have the best form of public hearing by voting.
6

Richard on August 4, 2011 at 1:15 pm

For the many concerns people have, “smaller developments spread out through the neighbourhood” make little sense. Assuming the same number of units are built, there would be the same or likely greater levels of traffic generated. Assuming these smaller developments are less dense, it would mean a greater loss of single family housing driving the prices for that up even more. It would also mean more construction sites leading to more disruption of people’s lives. If there are not rezonings involved, the city would also capture much less money for community improvements needed for the increased population.

If a lot of these smaller developments actually started happening, I suspect the same people would be up in arms. There was an article in the Courier of some people on the west side concerned about all the construction of bigger single family houses on their street.

One of the main issue is that there is been so little development happening in many neighbourhoods over the last 40 years that many people got used to nothing happening so now when developments happen, they seem like huge changes. I live in Kits and it is starting to feel like a museum because there has been very few changes over the last 20 years. I for one, would welcome some new developments here.
7

A Dave on August 6, 2011 at 1:04 pm

Paul, I don’t believe being involved in the process early makes a bit of difference these days. What about Mt. Pleasant? A three year community plan, 60 public meetings, a clear will for 6-8 storey developments, and then, within weeks of the plan being published, a 26 storey tower is dropped on the community. Not once was it mentioned during the community planning, and after the fact the planners admitted the negotiation had been going on in parallel. How does a citizen get involved in backroom negotiations that by nature exclude them until it is basically too late to do any other than protest?

Same with the Historic Area Height Review. After two years of public “input” resoundingly against more towers in the HA, planning keeps proposing a shifting buffet of tower sites without any consultation or relevance to the 2 year process, until finally a bunch of towers hits a sweet spot and gets approved.

These are just two examples of why residents feel the consultation process is rigged and broken.

Richard, I’m sorry but your arguments don’t hold much water. Concentrating 100 stalls of parking on one site on an arterial is going to negatively impact traffic far more than spreading them out across the neighbourhood.

6-8 storey developments (with large density increases) in Mt. Pleasant have been going in for a decade now, without any opposition. The 26 storey tower is the only one getting resistance. And walk around the area: numerous single family dwellings renovated into 3-5 strata units or adding laneways – excellent density increases within the character of single family areas, making for a more affordable buy-in. And none of the negatives you irrationally fear.

The effect of towers on affordability is obvious. Look at what Woodwards (supposed to be “an exception”) did to Gastown: rampant speculation, aided and abetted by the Planning Department willing to listen to any and all fishing expeditions. The exact same rampant speculation will be (and is already) occurring in Mt. Pleasant when the Rize breaks ground. To think otherwise is either foolish or naïve.

A key question here is: how much density do we need? Metro estimates 140,000 people by 2040, or 70,000 new units. Several different research projects show how this density can be accommodated across the City, and the conclusion flies in the face of everything the public is being told about these ad-hoc tower rezonings. Simply put: we don’t need them.
8

Bob on August 6, 2011 at 5:37 pm

Well, I guess in Vision’s defense you can say they are equally willing to screw the residents of both the East and West Side when it comes to ignoring what they want for their neighbourhoods. Not a great re-election strategy though.
9

Paul on August 8, 2011 at 1:17 pm

Dave – I agree parts of the process need work and there are some questionable decisions made by the City. I recently moved to North Vancouver and was impressed by their planning process and vision for the District. They are moving toward a select number of town centers than would contain density and be linked by transit and bike routes. The areas in between would look more like in fill product and detached neighborhoods.

I’m not sure the process itself is broken in Vancouver, rather how dependant the City has become on DCCs and CACs as significant contributors to the budget. I think part of the fix will be getting the City to wean themselves off that revenue. Then they won’t be in a position to “have” to approve so much up zoning to reach a revenue target.

Being in the development industry myself, I can tell you we aren’t all “greedy” and “evil” as we live here too – most of us live in the areas we develop.

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