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Jon Stovell, CEO of Reliance Properties.Reliance Properties

The two-storey parkade is textured concrete and covered in ivy, a barnacle on the back of Arthur Erickson’s iconic MacMillan Bloedel Building at 1075 West Georgia St. in Vancouver.

More recently, the tower that overlooks the public plaza with reflecting pool, and the parkade, have been collectively renamed Arthur Erickson Place, in memory of the celebrated west coast architect.

The tapered 27-storey concrete tower, built in 1968, is known for its rows of deeply recessed windows, giving the appearance of a giant waffle. Back then, the city was undergoing an office-building boom and didn’t have the affordable housing crisis of today.

Reliance Properties, co-owners of Arthur Erickson Place, is proposing to rezone and redevelop the parkade as a 47-storey tower that would consist of one floor of retail, hotel rooms, below-market rental units and market-rate rentals.

Reliance purchased the property about four years ago along with investors Kingsett Capital and Crestpoint Real Estate Investments. It sits in the centre of the commercial downtown area, close to the Burrard SkyTrain station. Last week, when a proposal to rezone the parkade went before council, it became a symbol of an emerging struggle in Vancouver between past policies and the need for rental apartments to respond to an ultralow vacancy rate. It means council is now especially open to reviewing proposals that would otherwise have been rejected as unsuitable.

Rendering of planned development by Reliance Properties at Thurlow and Melville in Vancouver's central business district.Reliance Properties

In this case, the tension involves commercial land in the central business district. In 2009, the city created a policy to protect commercial space in the district after a series of luxury residential towers began chipping away at the area.

No residential has been built in the area in 13 years as a result of the policy. The rationale is that residential development threatens to push prices for all real estate, commercial and residential, higher and land available for commercial use would be lost. Current zoning allows for offices and hotels, recognizing that a fully functioning city needs commercial developments and the jobs that come with them, and not just a steady cycle of residential development. Thirteen per cent of the downtown peninsula is job space, according to the City of Vancouver.

Earlier this month, city staff advised council to reject the Reliance Properties application because it doesn’t meet policy objectives. There is limited residential development allowed in the central business district, and that only in cases deemed to offer significant public benefit such as heritage protection or social housing.

Reliance president Jon Stovell says he is working on a heritage conservation plan for the A-listed tower and plaza, and the below-market housing the project would provide is a public benefit. He said he believes the city policy is out of step with the times.

“That is council’s job, not to be forever bound by things that have happened in the past,” Mr. Stovell said. “They have to look at what is best for the city, and if there are old rules standing in the way of what they want, it’s their prerogative to challenge them.”

In an e-mail response, staff said there is a shortage of job space in Vancouver and many areas outside of the central business district have policies with incentives for rental housing.

Earlier this month, city staff asked council to reject a proposal for a 47-storey rental residential building with 484 homes of which 104 would have been workforce housing for essential workers at below-market rates.Reliance Properties

“If approved, the application by Reliance would be precedent setting and could lead to land speculation and the erosion of council’s land use and economy goals,” the city said.

Mr. Stovell calls the below-market-rate housing he is proposing “work force housing,” which would be suited to essential workers and would be priced at 60 per cent of market-rate rentals. In square footage, the building would be the same as the MacBlo building, he said, but in the form of a slim pencil tower. The 66 work force housing units would be geared to those earning between $39,000 and $78,000. As for the remaining market rental, the current rate for new downtown rental is around $5 per square foot, so a 500-square-foot apartment rents for $2,500 a month. But by the time of occupancy in a few years that rate would very likely be higher.

“We don’t really have an office crisis, we have a housing crisis. We should be addressing the crises we have, not the ones we think might happen in the future,” Mr. Stovell said.

“Our company alone has one million square feet of office development available for prelease right now, within three or four blocks of this site – and that’s just us.”

Former city housing director Cameron Gray says a non-residential downtown business core makes sense, and any housing allowed should be rental. But he points out there are many more residential sites than office building sites in Vancouver.

“I would say on balance keeping the downtown core restricted to commercial uses is the way to go.”

Mr. Stovell argued that the site is too small for an office tower, so office space is a moot point.

Michael Goldberg, professor emeritus of urban land economics at the University of British Columbia, spoke to council as a supporter of the project, citing the need to mix up uses.

“If you look at all residential developments in this city … they’re heavily wired, most with fibre, and have served as workspaces during COVID,” Mr. Goldberg said. “This trend started before COVID and will continue well into the future. The crystal clear distinction between job land and residential land is also not particularly useful at this point.

“Having mixed use is much more interesting, and more sustainable in the long term. Integrating jobs and residential land uses has been going on for a very long time in Vancouver.”

Council was not considering the merits of the proposal, but only whether it should move to the next step. After a vote, they decided that Reliance could either proceed to public hearing without the support of staff, or come up with a more compliant plan.

Staff wants council to stick to a 13-year-old policy that stipulates the land is marked for an office building.Reliance Properties

The fact that council is getting the chance to review non-conforming proposals is a turning point, said Mr. Stovell, who came away pleased that he still has the opportunity to make his case. He expects to be in front of council in the fall, after likely decreasing some of the market rate rental units in favour of more hotel rooms and a different business model. The current iteration is for 363 market rate rentals. Several councillors were concerned about the 72 hotel rooms he’d proposed, which would have been run by an American chain that is tech-based and does self-service check-in and check-out, with only skeletal staff. Councillors cited a lack of jobs, which is what the central business district is all about.

“What’s interesting for me from an industry perspective, is council asked a year ago to be able to see projects that were seeking to solve problems, such as amenities, housing, job space, that were breaking rules more than normal, and staff came forward with five of them, and every single one of them were advanced or given an opportunity to make amendments and come back,” Mr. Stovell said.

“It’s groundbreaking, and what I would call a power shift from council taking the reins on what is needed now for the city and not letting the past policies and bureaucracy dictate the outcome.”

Mr. Stovell sees a new effort by council to advance projects after B.C. Housing Minister David Eby publicly expressed annoyance that municipal governments weren’t expediting housing.

“Clearly, I think it’s being stimulated by the fact that municipal governments have been criticized by senior levels of government as being too bureaucratic and too obstructive to housing formation. … And now municipalities are saying to staff, ‘Hey, maybe let’s not be so rigid about all these rules and policies,’ even though they were made by past councils.

“Council is starting to pry and poke into the reason why staff are opposing things. They’re saying, ‘Maybe we don’t need to be so strict. Maybe be more imaginative.’ It’s a very interesting shift.”

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