All I want for Christmas is a laneway… and double the density… and part of Georgia Park:

Ron Bolin: Sept 5, 2014

Monday, August 4, was another exciting night at a Public Hearing as a battle over the “Hilton” hotel properties at 10 and 28 Front Street and its implications raged between those with dollars in their eyes and those determined to protect Georgia Park. In the end the zoning changes requested on these two lots was permitted in a 5-3 vote (i.e. it would have lost on a 4-4 tie.) ) with Councillor Greves absent

It was portrayed as a modification to the zoning of lots 10 and 28 on Front Street to extend the height of both lots to 114.3M (from 74.5M on lot 10 and 19.8M on lot 28) and extend the Floor Area Ratio of both to 12 (from 6.4 on lot 10 and 2.3 on lot 28). This more than doubled the build-able area of the hotel. To understand the FAR one can think of a box which is X wide and Y long and then imagine the box with Z floors on top. With a FAR of 12, the entire box could be covered 12 stories deep (with roughly 3.5M per story), or half the box covered by 24 stories and half with none; or one third covered by 36 stories all these solutions are equivalent (as long as the height is not exceeded). The latter figure showing one third of the area covered by 35 stories is roughly the drawing of the project presented at the public hearing. But by itself, the zoning change merely gives the parameters of the box and the picture of the hotel presented could undergo considerable changes in configuration. The hotel design itself is fluid within its 114.3M height with a FAR of 12.

It was repeated on several occasions that all that was being dealt with at the public hearing for Bylaw 4500.069 was the zoning upgrade, i.e. the increased maximum configuration of the box created by the changes, but this was belied by the drawing of the development which showed the addition of laneway land to the project which has not yet been sold to the project by the City and which the City could as easily add to Georgia Park as to the Hotel; as well as the projection of the hotel across park land to provide access to the hotel loading bay on Front Street as well as a public walkway to the water below the hotel. Both seem to be essential to the development of the hotel and it is here that the plan can go astray. Nanaimo Bylaw 735, dated May 8, 1848, dedicates Georgia Park as a Public Park which is impacted by both the loading bay access and the walkway through the hotel to the water. As such it requires that the public take part in a referendum procedure in order for the desired park land to be made available to the project.
The Referendum Process:

There are two varieties of referendum procedures: first what I would call an honest referendum procedure, and second, its “negative billing option” variation, the Alternate Approval Process (AAP). The first entails an up-front voting procedure such as will be available at virtually no cost during the November election or considerable expense later; or the AAP which requires the public, at its own expense, to collect signatures from at least 10% of those qualified to vote in an election to stop its automatic approval. ( In our last election, one electee got less than 10% and two others barely squeeked by that figure.) A true referendum procedure at any time between civic elections which will now come only every four years entails the full election panoply of election services and is estimated to cost about $100,000, which was the cost estimated to elect Councillor Greves in the 2011 by-election. The AAP effectively passes the major costs of that process on to citizens. Unless they work very hard to overcome automatic passage of the item, it will indeed automatically pass. In my estimate the cost to citizens in time and effort of defending against an AAP process effectively matches the financial cost to the city of a true referendum.

In response to a request in this regard to Mr. Swabey, I got the following on August 18:

Ron,

We are not ready to proceed with any type of approval process by the electorate for this project. The rezoning application needs to be completed first. Council would then direct staff to either carry out an Alternative Approval Process (AAP) or Referendum to allow for the use of parkland as proposed. There may be changes to the lease area form now until the completion of the rezoning process and the lease rate needs to be established prior to undertaking an electorate approval process. These issues along with the statutory rezoning timing issues make it premature to proceed with an AAP or Referendum at this time.

If a rezoning is approved and approval to use the park fails through the use of an AAP or Referendum, the applicant would have to redesign the development to stay out of the park. I assume, however, that Council support for a rezoning that proposes the use of parkland, as currently proposed, would be supported and promoted by Council as part of an AAP or Referendum.

In terms of costs, Council could also require the applicant to fund either process.

Ted

Let’s ensure that we get an honest referendum process on a matter of this importance and not the Alternate Approval Process which seemed to be promoted by some Councillors at the Public Hearing. (For the record I am prepared for either outcome as long as it comes fairly from full public participation.)

Financial Considerations:

Turning to another aspect of this deal, let’s take a look at the proposed direct expenditure from and income to the City given the proposed deal with the proponent, recognizing that the matter of exemption from Development Cost Charges (DCCs) are available to any developer in the designated downtown area, and the Property Tax exemption is available to anyone who builds or remodels a hotel or motel in the city at a cost of over $2 million dollars. (See CITY OF NANAIMO BYLAW NO. 7143 REVITALIZATION TAX EXEMPTION BYLAW 2011 NO. 7143).

It must be remembered that these exemptions are not free to the taxpayers of Nanaimo. They represent real costs to the public which, if not paid by the developer, must be paid by the rest of us.

est. Cost of the DCC exemption: 2858 m^2 x12 stories x $83.66 per m^2 = $2,869,203
est. Cost of the 10 year tax exemption: $50 million x .0148975 x10 =            $7,448,750
Total est. 10 Year Cost                                                                                     = $10,317,953

 

To these generalized exemptions, there is the value of the uplift given specifically to this project by way of the rezoning of these two lots giving them a Floor Area Ratio (FAR) lift of over twice what was previously available. The Report to Council in the August 11, 2014, Council agenda lists a number of “contributions” which are associated with and necessary to the development of the project on Georgia Park land which are proposed. The largest sum discussed is circa $1.5 million for the development of hotel facilities which will be open to the public on the leased park land, i.e. the same as they would need to spend if the land belonged to them. This is not a contribution but a project necessity.

The so called Community Contribution which is required in a project such as this due to the upzoning of the property is in the form of updates to the walkway and the surrounding park land in the form of park improvements estimated to be in the range of approximately $1,187,000.

I am at a loss to estimate the value of the uplift given to the project by doubling the Floor Area Ratio (FAR) other than to suggest that approximately half of the 330 rooms in the hotel result from doubling the FAR, and thus contribute half of its assessed asset value. As I have previously set the assessed and taxable value of the project at $50 million, and now further estimate that the value of rooms to the rest of the necessary hotel infrastructure (restaurants, bars, shops, recreational facilities, etc.) at half, the uplift would generate $12.5 million, much more than the Community contribution of $1,187,000 which is proposed.

If these figures are off –and I grant that they are highly speculative given that my only sources are in the Staff Report which discusses none of these matters and I have no training in appraisal- I would not be surprised. On the other hand I am equally surprised that our City professionals do not give figures in these respects. Are we not entitled, where decisions are being made about the purchase, sale, lease or zoning changes to City properties to professional assessments of the effects of same on City costs and assets? I feel sure that those who are bringing their deals to us have looked well beyond the surface of their proposals to their deeper financial implications.

But assuming for the sake of argument that my estimates are not too far out, for the favour of accommodating this development in our community we are effectively giving up some $10,317,953 in exemptions, plus some $11,313,000 in rezoning uplift ($12.5-1.187 millions) to bring this project to Nanaimo. It strikes me that giving up $21,630,953 million is excessive.

Yet even this leaves out of the discussion the fact that, as proposed, the project has only 59 parking stalls to service 330 guest rooms plus restaurants, bars and other leisure facilities, a problem which the proponent intends to deal with “later” Or will it simply become OUR problem.

All of this leads to the conclusion that Nanaimo has been and continues to be willing to sell ourselves short and wait for developers who come here to find bargains. Instead of looking at our site and our situation and all the advantages which could make us a Great City instead of just an adequate city, we sit on our hands ready to give away our best resources and our tax dollars to attract “deals” instead of determining what we want our city to be and then going out to find those who will help us build that dream and telling those who want to change it to peddle their deals elsewhere.

Nanaimo has been a city conflicted and without a coherent plan, perhaps ever since our days as a coal town and the 1913 strike which put down our miners with an iron boot and split the town in two. It’s time we came together.

P.S. As the situation stands, Insight can gain both the laneway land which could, alternatively, be added to the park, as well as the uplift added by the zoning change bylaw, even if the project were to fail on a referendum process. This would be most unfortunate. Both these upgrades to the property should be subject, even assuming a successful referendum process, to the development of the project within a specified period of time or revert to their current condition for disposal by the City at another, perhaps more appropriate time with a project commensurate with the current zoning of 10 and 28 Front Street.
End-

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