The City of Burnaby recently announced a project to replace 90 aging but spacious affordable housing rentals with a five-storey apartment building for the low income families currently housed at Cedar Place (Rez 14-27)– ten 800sf two-bedroom suites, sixty-four 1050sf three-bedrooms, and sixteen 1200sf four-bedroom units. Additionally, There is a proposal for 90 additional units of affordable seniors’ housing (Rez 15-25).

The new building for low income families  on 15th Street will be a 4-5 storey non-market rental on a 54,774 sq.ft.space.

In 2014, 1,171 Burnaby households were on the BC Housing waitlist for a unit, an increase of 282 households since 2009. That is a 31% increase in 6 years! The proposed 90 units is replacement housing, not additional housing

The new seniors’ building to be located at the comer of 18th Street and 14th Avenue is expected to be a six-storey frame apartment form.It is uncertain what the size of the space will be, but given the additional floors and smaller suite sizes required by seniors, it can be expected to be smaller than the family site.

In exchange for constructing these two buildings, BC Housing will give up about two-thirds of its land to  Ledingham McAllister and the City will rezone the property to allow for an undisclosed number of high-density market housing. BC Housing’s current property is rectangular in shape has  a total area of 2.76 hectares (6.82 acres or 296,643.3 sf.) and is nearly half a kilometer long. The current assessed value of the site is $26,609,300.

While residents I  talked to have been led to believe that the property has already been sold, there is no sales history for the last three years according to the website evaluebc. What better way to silence potential opposition by saying, “It is a done deal.”

The City website states, “If a property owner wants to use or develop his or her land in a manner that is not permitted under the present zoning, a change in the zoning classification of the property is required. This process is called rezoning. A property owner begins by submitting a rezoning application to the Planning Department.” The staff report for Rez 15-25 states, “Cedar Place is currently owned and operated by BC Housing, yet the applicant for rezononing is Ledingham McAllister Communities Ltd. If the deal is subject to a successful rezoning, what is the agreed sale price? Will it be based on the current zoning ($26,609,300), which makes the property a relative bargain, or will the price reflect the upzoning value which the City estimates is an additional $28.5 million created by the proposed rezoning of the Cedar Place site. Residents have a right to know what Ledmac has agreed to pay.

 

I wonder if taxpayers could do better.

Cedar2

Constructing an apartment building isn’t cheap, but much of the value is not in the building but in the land itself. Since BC Housing already owns the land, I wondered how much it would cost for that agency to build market and non-market housing itself. Through a bit of research, I am of the opinion that BC Housing could develop the property at the same cost as Ledmac, add more affordable housing than is proposed and profit from the judicious sale of some market housing to prospective, local homeowners.

 

Municipal Costs

According to a Fraser Institute report, Burnaby has among the lowest development charges and fastest approval times in the Lower Mainland. They estimate that the typical regulatory cost per dwelling unit in Burnaby at $17,542, 47 percent of neighbouring Vancouver’s which is estimated at $37,283. This estimate includes single family detached homes which have typically higher costs than multifamily dwellings.

A separate study by the Greater Vancouver Homebuilders’ Association entitled “Getting to Ground” compared the per unit townhouse fees and charges and found that costs vary region-wide from a low of $8,390 in White Rock and Port Moody to a high of $33,713 in Surrey. In Burnaby the estimated cost was $11652.50 based on a typical 22 unit townhouse project.

 

Building Costs

The Altus group publishes an annual construction cost guide. The values are calculated by building types that usually have underground parking (condominiums, offices and hotels). The gross livable area  averages 70% of gross floor area which includes parking garages. To illustrate, if a proposed condominium has a gross floor area of 100,000 sf and the unit costs are between $170 and $235/sf, the approximate cost is based on the gross livable area (70,000 sq. ft. x $185 – $250 = $11,900,000 – $16,450,000).

Unit costs vary depending on the cost and quality of the materials used. Basic to medium quality apartment constructions range from $185 to $250 per square foot. Townhomes, depending on form, range from $100 to $180 per square foot.

Given the above assumptions, the 90 unit affordable housing apartments ( 94,400 sf of gross living area) would cost at the most $25 million (100,000sq. ft. x $185 – 250= $18.5 million- $25 million). Similarly, a seniors residence, as proposed with 90 two-bedroom units (800sf) would cost $13.4 million to $18 million.

The unit rates for the building type are an average range only for that particular type of building. The unit rates assume that a level, open site exists with no restrictions from adjoining properties. It is assumed that stable soil conditions prevail. Average-quality finishes (unless otherwise stated), both to the exterior and interior, are also assumed.

The unit costs outlined cover construction costs only. In all commercial developments, the project budget must also include development or “soft” costs. These would include architectural, special design and engineering fees, insurance and bond costs, l interest charges and lender’s fees, permits and development charges, rezoning costs, and other municipal fees and levies.

Cedar Place Redevlopment Map

So How Much?

The city development charges for 180 units are estimated to be $2.1 million. I estimate the cost of the entire project to be, at most $45 million and would retain all of the public land and most of the existing homes, which are old but structurally sound.

According to the City’s press release, the City’s proposed contribution is approximately $8.5 million through the density bonus program,” and “the resulting value of the provincial investment is approximately $47 million.”  That works out to a cost of $55.5 million and a loss of two- thirds of public land to the developer.

How much did LedMac pay the Province for this chunk of prime real estate? How much of the provincial investment of $47 million is new money and how much is from the net sale of public land?

 

Where is the federal government  in this enterprise?

Justin Trudeau promised new money for infrastructure, yet there is no federal involvement in this social housing plan. Did our two MPs drop the ball on this?

 

Similarly, where is Metro Vancouver?

At Christmastime, Metro announced that it had purchased Metrotower 3 at Metrotown for $205 million.  Additionally, improvements at the new location is currently budgeted at $28 Million. This is slightly less than the planned upgrades to the office space at the current location since the new building will not require demolition or staff relocation prior to office upgrades. The annual household impact of this gift to itself is expected to be $5 – $6 per household per year from 2018 to 2031. Metro plans to recover part of the cost by selling off the old publicly owned 29 – 32 years old buildings. They are assessed at  $82.5 million. If Metro Vancouver can find $ 150 million for new offices, certainly they could have found money for new affordable housing the private sector cannot provide.

Could the market component of this plan be developed by the City, BC Housing or the federal government?

Many would scoff at the idea of government building homes for the marketplace, but why not? A developer in my neighbourhood  recently constructed three stacked multi-family buildings on two  single -family lots. The combined assessed values of the 34 strata properties was $15.8 million, making the average value per unit $464,000. This calculation is close to the GVRB estimate for December 2015

Conservatively, the developer paid $3 million for the properties. based on the  construction cost guide, I estimate the cost of each building to be between $2.22 to $3 million to construct in 2015. (12,000sf livable floor area x $185-250/sf= $2.22- $3 million)

Then we have the municipal costs. In Burnaby the estimated cost per unit is $11652.50 or $400,000 for the project. The average construction cost per unit for these units using materials of basic or moderate quality would be between $207,600 to $276,500.

The bottom line is this. BC Housing and taxpayers could get a better deal than the one they are getting. The Province and City could save $10.5 million by organizing the project and offset the cost through the sale of selected new homes to consumers and funding from the federal and regional governments.

McAllister Developments donated $10,000 to the Mayor’s political party in 2014. An amendment to the BCA’s financial disclosure documents indicates McAllister Developments contributed an additional $5,000 to the BCA in 2013

McAllister donated $69,900 to the BC Liberals in 2013/2014

McAllister Donations

http://www.altusgroup.com/media/4099/costguide_2015_web.pdf

https://www.fraserinstitute.org/sites/default/files/residential-land-use-regulation-in-BCs-lower-mainland-rev.pdf

http://www.refbc.com/sites/default/files/G2G_Report2014_FINAL.pdf

http://evaluebc.bcassessment.ca/Property.aspx

 

Additional Calculations

4277 Sardis Street   Land Assessment    2016    $1,350,000

      2015    $1,095,000

4255    Strata Assessments   34 homes in three buildings

17x2br ( 700sf) – $325,000- 360,000

17x3br (1400sf) – $550,000- 622,000 total assessed value

2015  $15,779,000

All homes purchased above assessed value.

 

Estimated floor area (17*700sf)+ (17*1400sf)= 35,700sf  

Each building would be approximately 12,000sf

 

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