Vancouver developers seek deadline extensions for downtown towers

Progress has stalled on downtown Vancouver residential highrises, totalling 900 homes, as developers ask city hall for deadline extensions.

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Progress has stalled on three large downtown residential highrises — totalling more than 900 new homes and $52 million in payments to city hall — with developers asking council to extend deadlines on the projects.

Industry officials say the projects, which received rezoning approval two years ago but have not moved ahead, illustrate today’s challenging market.

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With governments aligned on the need to dramatically boost housing construction, such delays show how market reality can clash with political hopes and promises.

On Tuesday, Vancouver council will consider the deadline extension requests from developers behind three projects approved in 2021:

• A 49-storey tower at 1450 West Georgia St. from Wesgroup Properties, with 193 condos and 162 market rentals.

• A 47-storey tower at 1157 Burrard St. from Merrick Architecture and Prima Properties with 289 condos and commercial, child care and cultural space.

• A 43-storey tower at 1650 Alberni St. from Landa Global Properties with 198 condos and 66 rentals.

VANCOUVER, BC - October 12, 2023 - 1450 West Georgia Street in Vancouver, B.C., October 12, 2023. (Arlen Redekop / Postmedia staff photo) (Story by Dan Fumano) [PNG Merlin Archive]
The approved 49-storey tower at 1450 West Georgia St. would include 193 condos and 162 market rentals. Photo by Arlen Redekop /PNG

After city council approves a rezoning, the developer has to meet several conditions before the zoning bylaw is finalized. Typically, these include an agreement with the city for providing utilities and paying the community-amenity-contribution fee to the city.

The three downtown projects are subject to a 24-month deadline. If the conditions are not met, including the fee payment within 24 months, the rezoning approval could be revoked.

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Now, with that deadline looming, council has two options. The first, which city staff recommend, is a six-month extension. The second is a 12-month extension, with the city charging interest (at prime plus two per cent) after six months on the unpaid community amenity contribution.

The value of amenity contributions diminish over time because of inflation, a staff report says. “The longer the delay … the higher the cost to the city for the delivery of public amenities and infrastructure.”

The contributions are negotiated between city hall and developers who want rezoning to build larger buildings. The $52 million owing for these three downtown projects would be spent on things like parks, child care, transportation, and affordable housing.

VANCOUVER, BC - October 12, 2023 - 1640-1650 Alberni Street in Vancouver, B.C., October 12, 2023. (Arlen Redekop / Postmedia staff photo) (Story by Dan Fumano) [PNG Merlin Archive]
The approved 43-storey tower at 1650 Alberni St. would include 198 condos and 66 rentals. Photo by Arlen Redekop /PNG

Wesgroup’s project requires payment of $8.9 million, Prima’s requires $10.6 million, and Landa’s $32.7 million.

Landa’s Alberni property currently has a 66-unit apartment building. A Landa spokesperson said the company is “moving forward with this project, with sales not expected to start until next fall.”

Prima and Merrick did not reply to questions about the project at Burrard and Davie, which was a gas station and has been a community garden for more than a decade.

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Wesgroup’s Georgia property is already home to 162 rental apartments. Tenants living there might be happy about the delays, but the redevelopment represents a significant cash payment for the city and adds 193 homes to the existing 162.

Wesgroup president Beau Jarvis said his company was working toward bylaw enactment for most of the past two years, and the project could have already begun construction if not for slow city processes.

In recent weeks, Jarvis said, it has become apparent the Georgia project is not financially viable.

“People will say: ‘The developer is not moving forward because of the market, it has nothing to do with the city process.’ But it’s both. Because the city process slowed us down to the point where we couldn’t meet the market window,” Jarvis said.

Jarvis said rising interest rates and construction costs mean today’s market is starkly different than when Wesgroup received rezoning approval in 2021, Jarvis said.

Jarvis said he still hopes to build the project when the market makes it viable. But if council chooses staff’s proposal to charge interest on the unpaid fees, Wesgroup would likely give up on it, he said.

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Wesgroup would “let the rezoning just lapse,” he said, rather than have to borrow money to pay the community amenity contribution now or having to pay interest on the unpaid fee.

“We’re not holding on to land for fun. We’re trying to build new housings. … But we’re not launching a project that’s not economically viable, so we’re prepared to stand down,” Jarvis said. “We’ll continue to operate the (existing) rental building and be good landlords.”

In June, when Anthem Properties got council’s permission to defer a $10 million community amenity contribution for a West Georgia condo tower, Vancouver real estate consultant Michael Geller predicted it could be a sign of things to come.

The three requests going to council this week are similar to Anthem’s earlier deferral, Geller said, but these are more significant, representing many more homes and a lot more money.

“The city should not ignore the possibility that if they don’t agree to the deferrals as requested, given the changes in market conditions in recent years, one or more of these developers might decide not to proceed with the rezonings as previously proposed,” Geller said. “If so, such significant CAC payments would not be collected at all. I think this is a legitimate consideration.”

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It’s safe to say many other residential developments are similarly delayed, Geller said.

“I don’t have an exact number … but there’s a lot on the back-burner.”

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