32 minute read
City Agenda
The Inclusive City; the Sustainable C i ty; and the Missing Urban D e veloper
By Cem Kayatekin
Cem S. Kayatekin is a professor at the IE School of Architecture and Design in Madrid. He holds a Bachelor of Architecture from Auburn University, a Master of Architecture from Cornell University, and a Ph.D. in Architecture from the University of Oregon, completed under the tutelage of Howard Davis.
In Ju ne of 2019, New Yorkers bore witness to a rather unfamiliar historic moment. In the persistent urban struggle between real estate lobbies and tenant protection organizations, surprisingly it was the latter who found their hands raised. As a result, a substantial range of rent control and tenant protection mechanisms were set in motion throughout the city. New York City real estate recoiled. The achieved rent reforms were deemed an “investment moratorium” on projects with affordable housing components. The market for multifamily housing plummeted.
For the real estate sector, this was seemingly a death knell. And yet for housing reformers, this was a starting point. A miniscule gain in a much further reaching agenda of urban equity. With new and deeper reforms on the horizon, renewed and deeper recoils from the real estate sector can be expected. And yet, this is just one layer of the urban fabric.
Just as many cities seem to be accelerating how they are addressing issues of equity, many are also accelerating how they are addressing issues of sustainability: incentivizing, and in many cases requiring, new urban projects to be more energy efficient, more carbon neutral, more supportive of biodiversity, more active in environmental infrastructure, and so on.
Consider for instance, Toronto’s green roof bylaws; Barcelona’s urban planning measures concerning green infrastructure and biodiversity in the city; New York City’s green infrastructure grant program; the city of Frankfurt’s push to achieve passive house standards within social housing projects; to name a few.
Part of this urban environmental trajectory is of course rooted in the Paris Climate Accord. While the United States is seemingly in the process of withdrawing from this international agreement, the parallel story is that 438 mayors in the U.S. have reaffirmed that they will uphold the Paris Climate Accord in full. There are a range of other such municipal sustainability accords and networks to note: C40 Cities; the Global Covenant of Mayors; The Carbon Neutral Cities Alliance; the Climate Alliance; the Sustainable City Network, to name a few.
Many cities, in other words, are locked in. Both in terms of environmental responsibilities, and in terms of issues of equity. For such cities to hold the real estate sector to a higher level of responsibilities and accountabilities, this is not a choice. This is a contractual obligation.
This is the unusual circumstance we find ourselves in. The dominant urban development model has tended to have a singular focus, specifically from the 1970s onwards: how to craft real estate in a manner that appeals to the high-end market. Now, in the stretch of just a few years, it is being pushed to achieve a high level of fluency regarding inclusivity and sustainability. Forget luxury, it is being told.
The mold of the traditional urban devel oper does not seem to be capable of dealing with these relatively rapid changes. Its financial model seems unable to incorporate parameters of equity and environment, let alone forgo the high-end market as the core basis of profit. And yet, cities are locked in. Contractual obligations are set in motion. The circumstances seem to be calling for new mutations of the urban development model to enter the game. For novel innovative approaches to vie for the dominant positions within the domain of real estate. For more robust financial models, incorporating issues of equity and environment into their calculations, to challenge established frameworks.
Cities are locked in; change is here and on the horizon; and current sectors of real estate are recoiling in paralysis. Time for a change seems to be at hand. If the inclusive and sustainable city is the target, what is missing is the urban development model to match.
The Big “Now What ?”
Mon tréal ’s Ol ymp ic Stadium is a m on um en t, th ough to wh at is open to in terpretation . By Taylor C. Noakes
In a city
well-known for its wide variety of historically and architecturally significant buildings, Montréal’s Olympic Stadium is truly in a league of its own. Like many of the city’s protected heritage buildings and landmarks, it satisfies the conditions for long-term preservation: its style and design are unique, and culturally significant events have occurred there. It is a monument, though to what is open to interpretation.
The recent passing of its architect, Roger Taillibert, provides a good opportunity to reassess the stadium’s history plus its form and function within Montréal’s contemporary urban environment. The stadium, in conjunction with the Montréal Tower, constitute his magnum opus, but it was the mayor at the time, Jean Drapeau, who deserves the credit for its development. It was Drapeau who pushed for the Olympics and chose Taillibert’s design. It is said the first sketch of the project was made on a cocktail napkin over lunch. The story of the stadium intertwines with that of the Games it was built for, and that’s where things begin to get complicated. The Games weren’t a failure in their own right: it’s that they cost far more than what Drapeau had initially estimated. Furthermore, the promise of subsequent long-term economic stimulus never materialized.
Montréal’s mid-century modernization during Drapeau’s 30-year reign ran concurrent with suburbanization and de-industrialization. As the stadium went up, the city was losing both people and economic activity to the suburbs and greener pastures elsewhere in Canada. The stadium became emblematic (particularly to Anglophones) of Montréal’s decline. Even though the city fared far better than comparable American cities in the Great Lakes and Eastern Seaboard regions over the same period, the Drapeau years left Montréalers with considerable debts and a herd of White Elephant mega projects.
Problems Began on The Job Site Simply put, corruption, collusion and outright fraud ran rampant throughout the stadium’s construction and undoubtedly added hundreds
of millions of dollars to the bill. Materials were registered as being “delivered” to the site and then re-directed to private development projects elsewhere in the city. A great number of apartment towers are said to have been built with concrete intended for the stadium. In addition, labour disputes resulted in slow-downs, strikes and inefficient construction. A government inquiry later revealed the involvement of organized crime; the job-site union boss would be shot dead in his car years later, likely a mob hit. The situation
was so bad there was serious discussion of postponing the Olympics until 1977. Ultimately, the provincial government would take over the project and succeed at least in completing the sports facilities in time for the Games. The tower would have to wait another 11 years before it was completed.
The stadium’s legacy is further complicated by that of the Montréal Expos, another of Drapeau’s many efforts to make Montréal a more “American” city. Though the Major League Baseball franchise had more than a few great years, attendance was never particularly strong. The optics weren’t great either; the Expos moved into an unfinished stadium without a roof, and even when there were large crowds, the stadium’s massive size meant it always tended to look half-empty. The innovative retractable roof design never worked properly either. Part of the problem is said to lie in Taillibert — more accustomed to working in France than Canada — not adequately accounting for the weight of snow and ice on the roof during winter. As the Expos entered terminal decline during the 1990s, the stadium began falling apart in spectacular ways. A massive concrete slab crashed to the ground after support beams snapped, and in another instance large sections of the roof tore and caved in. It was a miracle no one was killed in either case.
Despite these difficulties and the ultimate loss of the Expos in 2004, the stadium lives on. It is in form and function the equivalent of a de facto heritage building. Its value is intrinsic, as well as practical, but its disproportionate public cost is also difficult to justify.
Its value is intrinsic, as well as pract ic al, but i t s dis proport i onate public cost is also dif f ic ult to just if y.
Olympic Stadium, and the other installations managed by the Québec government’s Regie des installations Olympiques (RIO), aren’t preserved heritage buildings in a traditional sense, but similarly constitute an on-going cost to Québec taxpayers. The justification is that the complex serves the public while also being a work of art worth the upkeep costs. Politicians of all stripes, both municipal and provincial, simply cannot argue against it. There are too many political and professional legacies wrapped up in it, with a cost too big to be razed and redeveloped, no matter what some might pay for the site. To acknowledge the Big O was a mistake is to question the legacy of former mayor Jean Drapeau, a man many consider as a visionary city builder.
Public debt since 1977 caused by the stadium is in the $2-billion range, which includes a planned roof reconstruction or replacement estimated at $400 million. While the stadium has been paid for, it hasn’t yet paid for itself: RIO estimates peg stadium revenue on average at $20 million per year since 1977. Given these conditions, it might take 20 years before stadium-generated returns pay for the roof reconstruction.
Worth All the Cost? Canada’s largest multi-sport complex is designed primarily to do one thing: host the Summer Olympics. Its secondary function: host a professional sports franchise. It currently does neither, nor is unlikely to ever serve these functions again. Professional leagues and international sporting associations are exercising ever-greater levels of control over requisite infrastructure, most insisting on new construction. Olympic Stadium can be used for exhibition games or as an over-size venue for some professional league play, but finding a new permanent tenant is doubtful.
The stadium’s history of torn roof segments, fallen concrete beams and a failed baseball team hasn’t left it with the best reputation, and reputation, ironically, plays an important role in why Montréal and Québec will keep pumping money into the stadium for the foreseeable future. Although the reputation of the stadium’s architect is well-deserved, his design was out of step with its surroundings and ill-suited for the particularities of a Montréal’s climate. Though the stadium is iconic, it is far from being emblematic of Montréal’s architecture. It is in truth an imposition, bearing no relation to its surroundings. It shares nothing in common with the innumerable tree-lined streets of handsome red brick or grey stone duplexes and triplexes that more accurately reflect the evolution of local design and construction. So, is it a White Elephant or a particularly expensive piece of modern art that’s also useful as a sports or concert venue?
It’s worth considering there are about a million people living within a seven-kilometre radius of the stadium, so it’s a natural hub for public athletics and recreation activities. The bulk of the city’s population lives within a short bus or Metro ride from the Olympic Park complex (indeed, it’s only about a 10-minute ride by subway from the major transit hub located at Berri-UQAM station). About a quarter of the metropolitan region’s >>> 18
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four million people have more or less direct access to the RIO’s world-class fitness facilities, which include the former Olympic aquatics complex, and a variety of other venues, arenas, training centres and playing fields, all in one highly integrated public space. The stadium is also at the centre of an impressive collection of local attractions, beginning with the Montréal Tower, a 165-metre tall tower inclined at 45-degrees, the tallest in the world of its kind. The tower in turn supports the stadium’s roof; the buildings are literally inseparable.
Adjacent to the stadium is the Biodome — a living nature museum with four distinct ecosystems housed in the former Olympic velodrome — as well as the city’s planetarium and a 20,000-person capacity professional soccer stadium (you read that right: a second soccer-specific stadium was built right next to the existing tenantless stadium). Gathered around them are the city’s botanical gardens, an insectarium, a historic house museum and a large city park.
Granted some of these attractions predate 15 <<<
the stadium’s construction, and all the aforementioned could theoretically exist elsewhere and accomplish their public function. But it’s difficult to imagine half of these services and attractions existing at all without the stadium-tower complex. They anchor the whole sector. Moreover, despite the initial controversy of choosing to eliminate part of a municipal park and golf course to provide a location for the stadium, this is a relatively small loss given the sheer number of activities and their centralized location. And make no mistake, even though the stadium lacks an anchor tenant, the public still gets excellent use out of it and its related buildings.
Not Just What, But Where In this respect, one could argue Olympic Stadium was ahead of the curve in the sense that its location is surrounded by highdensity working- and middle-class neighbourhoods. Quite unlike many of the professional sports stadiums designed or built throughout North America from the 1960s through the 1990s — which tended to favour locations near highways with ample surface parking — the Big O is instead located adjacent to established neighbourhoods and connected directly to mass transit.
And yet, a peculiar complaint arose over the years suggesting the stadium was too far from the city’s central business district, and that this in turn played an important role in the downfall of the Montréal Expos. This remarkably prevalent argument tends to inform more about Montréal baseball fans than the actual location and function of the stadium within Montréal city life. Baseball is ever-so-slightly more of an ‘Anglo’ thing in Montréal, and the Englishspeaking population is predominantly located in the city’s western suburbs, far from the densely packed, predominantly Francophone neighbourhoods surrounding the stadium. This is just one of many paradoxes concerning Olympic Stadium and its legacy: it no longer meets the requirements of the major leagues, which tend to favour stadiums built in close proximity to the office towers, hotels and entertainment districts of the city centre, yet it does meet the accessibility to residential neighbourhoods and connections to mass transit also typically favoured. While Major
League Baseball in particular favours new stadium construction in which stadiums form the centrepiece to vast new urban development programs, the Big O benefits from immediate proximity to middle- and working-class neighbourhoods that have provided much of the cultural cachet of the league’s oldest stadiums, such as Boston’s iconic Fenway Park.
If antiquated stadiums work for Boston or Chicago, why can’t a retro-futurist stadium be the equivalent in Montréal?
Though it was derisively called Taillbert’s Stadium (or Drapeau’s mistake), nearly 50 years later it is Montréal’s challenge and celebration. Should the city ever consider another Olympiad it could theoretically save a lot of money simply by re-using existing facilities. Perhaps the governments of Montréal and Québec will be successful at least in convincing the promoters of the Montréal Baseball Project to seriously re-evaluate their commitment to new construction, though this is doubtful. What remains is a challenge for planners and builders alike, as the province will likely insist on keeping it and finding new uses for it. The recent decision by the
THIS SPREAD From a certain angle, it looks like the mothership has landed. S p eaking of angles, the tower, at 45 degrees, is the world’s tallest inclined structure (and at 556 feet is one foot taller than the Washington M o nument). Olympic S t adium’s largest ever audience occurred on July 6, 1977 when 78,322 fans attended a P i nk Floyd concert, which beat the previous year’s 74,223 attendees for the Olympic G a mes Closing Ceremony.
Desjardins Credit Union to move nearly 2,000 of its employees into office space located in the base of Montréal Tower provides both a strong indication of what may be in store for at least parts of the site, while proposed roof reconstruction and planned World Cup games provide an indication of what future role the stadium might serve.
Whether Olympic Stadium is a success, or a failure is entirely a matter of perspective. While cities the world over may wish to take it as a cautionary tale (and the strongest possible justification for why public consultations are absolutely crucial), it is worth considering the story of the stadium’s survival as well. Those who’ve looked at the stadium as a challenge, as a series of solvable problems, have helped it survive and will doubtless find innovative future uses for it. Architects, planners and engineers, much like the citizens of Montréal and Québec, will likely have to contend with the stadium for the forceable future.
Whether it is treated as a monument or just another disposable sports venue will ultimately speak volumes about the society and culture that inherited it. Taylor C. Noakes is a writer and public historian from Montréal.
Beyond Public Subsidy
Toront o is looking at Inclusionary Zoning as a t ool t o help it s affordable housing problems, but t he way forward is anyt hing but clear. By Rhys Phill ips
Ca na dia ns te nd to smugness when comparing our social safety net to our southern neighbour. But comparatively, our support for affordable housing is weak following the gutting of social housing expenditures in the late 1990s. Only the Federal Liberal’s Canada’s National Housing Strategy issued in November 2017 finally recommitted significant funding. Beyond social housing, however, cities like Toronto and Vancouver have major challenges ensuring affordable housing for households who fall in the 30th to 60th percentiles incorporating lower middle-income workers, technicians and even professionals. Toronto’s Housing Need and Demand Analysis (May 2019) produced sobering statistics. Renters now constitute 47 per cent of households and growing, with 40 per cent struggling near the bottom 30th percentile of household incomes. As a result, 23 per cent pay a whopping 50 per cent or more of their incomes on housing while almost half pay over 30 per cent, according to the CMHC’s benchmark for affordability. (For homeowners the figures are better but still deeply troubling). Almost 20 per cent of renters also live in “unsuitable accommodation” defined as having inadequate bedrooms. Supply trends are equally problematic with limited and much less affordable purpose-built rental coming on stream and most new rental stock limited to condo towers.
The sobering reality is even vigorously funded public subsidy programs are unlikely to provide enough resources to resolve this crisis. In the United States this has been
recognized for some time through inclusionary zoning ( IZ) policies that are now being embraced by both Toronto and Vancouver.
Inclusionary Zoning and how it Works Inclusionary zoning is about ensuring a percentage of units in private sector residential projects constitutes affordable rental or ownership homes for lower to lower middle-income households. Over 500 jurisdictions in the U.S. enforce IZ provisions directed at household incomes, usually in the 30th and above percentiles. Although sometimes completely free of any public subsidies, taxes as well as parking and development surcharge relief may sweeten the pot. The primary incentive, however, is an increase in zoning density. Under “voluntary” inclusionary models, the requirement is triggered when a developer seeks a density increase for a site. In “mandatory” models, such as in New York City, the city proactively upgrades zoning in targeted areas and subsequently requires any development to provide affordable housing. Units may be rental or ownership, although rental appears to be favoured (a 75/25 split in New York). As inclusionary zoning is an alternative to public subsidy, there must be an incentive for a developer to seek (or accept) density greater than the existing as-of-right zoning in exchange for affordable units. That incentive is increased land value sufficiently above the existing asof-right value to offset increased cost. A feasibility analysis determines which urban areas are developing strongly enough to support IZ
What is Incl usi on ar y Zon in g (IZ)?
• Official plan policy to require affordable housing in new developments
• Authority provided under the Planning Act and Ontario Regulation 232/18
• Used around the world: United Kingdom, Australia and about 800 IZ programs in N o rth America
Predictability for developers is a key requirement.
as well as the appropriate ratio between zoning uplift and percentage of affordable units required. Who manages the affordable units, how long to maintain a unit’s affordability and minimum threshold project size are other key issues. What was heartily voiced at a Toronto presentation last November on this topic was the need for three core requirements for success: a defensible financial assessment of viability; predictability for developers; and strong accountability mechanisms to ensure ongoing compliance.
Search for a Workable Approach Over the last three years, Ontario has been wrestling with implementing inclusionary zoning, made more complex by a significant shift in the provincial government. But if Toronto is currently marking time in a shifting regulatory haze, Vancouver appears to be out in front. Since 1998, Vancouver has required 20 per cent of land be set aside for social housing in large scale residential developments. Over the last 10 years, given the decline in senior government funding, the city also requires all new or amended community plans to require a minimum of 20 per cent of floor area to be social housing built and deeded to the city.
Based on the city’s estimate that 53 per cent of households are renters and 40 per cent of those fall within the $30,000 to $80,000 income range, Council concluded Vancouver was nowhere near generating enough supply of affordable housing. As part of its 2017 Cambie Phase III – Oakridge Town Centre Plan, inclusionary zoning provisions require 20 per cent of units in any all-rental buildings to be below market rents, affordable to households earning between $30,000 to $80,000 per year. In condos, the required percentage of social housing must be from 20 to 30 per cent. The trade-off for developers includes greater density augmented by lower parking requirements and waiver of city development cost levies. The Moderate-Income Rental Housing Pilot Program ( MIRHPP) targets 20 requested rezonings and requires 20 per cent affordable units targeted again at maximum household incomes of $80,000. Relaxation of minimum unit size and configuration requirements as well as expedited processing are added incentives. “This pilot is aimed at addressing a critical gap in the local rental housing
Who does inclusionary zoning help? Typically add resses need s of those who earn too much to be eliGI ble for social housing but not enough to afford market ren ts or sale prices
Emergencey shelters Supportive / traditional housing Long-term care Social housing
Inclusionary Zoning
Affordable rental housing Affordable home ownership Market rental housing Market home ownership
Renter households spending more than 50% of income on housing
Etobicoke North
Etobicoke Central
Etobicoke South North York West Yonge Corridor North North York East
Sheppard Corridor
Don MillsYork Mills
York
Toronto West Toronto North
YongeSt. Clair
Bloor-Yorkville
Etobicoke Waterfront Downtown West Downtown East
Waterfront Downtown Core East York
Toronto East
Source: 2016 Census, Statistics Canada, custom request Geography: 2016 Census, Statistics Canada, market area based on Altus RealNet and CMHC market area provided by NBLC Prepared by: Toronto City Planning, Research and Information - May 2019 Scarborough North
Scarborough City Centre
Scarborough Southwest Scarborough Southeast
High: 490 to 1,625 Hhds (60 CTs, 10%)
Moderate: 190 to 480 Hhds (170 CTs, 30%)
Low: 0 to 185 Hhds (339 CTs, 60%)
Suppressed (3CTs)
Market areas (24)
market by encouraging the development of new rental units that are permanently secured at rates that match the affordability needs of local moderate income households,” says Kirsten Langan of Vancouver’s Civic Engagement and Corporate Communications Branch. Last November, Council also approved its Below-Market Rental Housing Policy for Rezonings that covers the city more broadly while excluding the Oakridge and pilot areas. In Toronto, Section 37 of The Planning Act has been used to enlist private sector developers in creating designated affordable units in the absence of funding from senior governments. For example, Richard Joy, Executive Director of the Urban Land Institute, credits ex-city Councillor and later Liberal MP Adam Vaughan, with achieving IZ using Section 37. While this January, the new Federal housing policy committed $200 million to produce 366 affordable units in Westbank Corp.’s five-tower Mirvish Village development, the big push is to move from an ad hoc Section 37 approach to a clearly legislated IZ model. This was initiated by the provincial Liberal’s Promoting Affordable Housing Act, (December 2016) and its enabling Regulation 232/18 issued in April 2018 (which just beat the June election win of Doug Ford’s Conservatives). Undeterred, Toronto forged ahead producing two required analyses to
kick-off public consultations over last summer. The first was the Housing Need and Demand Analysis referenced above, a compelling case for action. The second, and this lies at the heart of the model’s feasibility, was the Evaluation of Potential Impacts of an Inclusionary Zoning Policy in the City of Toronto completed by N. Barry Lyon Consultants ( NBLC) for the city. NBLC’s Evaluation concluded “in most high-growth test locations, the IZ policy scenarios tested were found to be feasible,” particularly in the downtown and around transit stations. Also in May, however, the Conservative government proposed Bill 108 or More Homes, More Choice Act, signed into law in June 2019.
Why does Toronto need IZ?
47%
of the city‘s house hol ds are renters
0 20 34 50 69
age of la r g es t incr ease i n r en t ers
r en t al vac ancy r ates
1.6% 1.7%1.1% 0.7%
2013 20132018 2018 Purpose -buil t rentals condo rentals
100
o n l y 2% o f h ou s i ng bui l t or app r ov ed in T o ronto in th e las t 5 y ea rs h as bee n aff o rd a b le .
Subsection 5 limits inclusionary zoning to protected major transit station areas or where the Minister of Municipal Affairs and Housing orders a “development system order.”
Perhaps the most problematic new requirement, noted already by NBLC, is the obligation to update “out of date” zoning before IZ provisions can be applied. Joy supports this requirement, saying “the problem in Ontario is that it is very difficult to ascertain [a real advantage] when most of our municipalities deliberately under-zoned most lands and are, therefore, requiring almost all developments to go through a rezoning.” In other words, owners’/developers’ formal as-of-right land value/zoning frequently does not reflect actual value, including the price paid by the developer. If revisions significantly increase value/zoning, it may limit the amount of uplifted density available to offset IZ costs. Finally, the Act requires eventual substitution of what Joy calls the now-weakened Section 37 with a Community Benefit Charges ( CBC) model. Both models reflect the idea of recovering value uplift when a municipality provides a benefit. There may emerge, therefore, a delicate competition between parks, community centres, other public amenities and affordable housing. Waiting to find out how this all plays out presents challenges to advancing the city’s required update, says Christine Ono, a Senior Planner in the City of Toronto’s Planning Division.
In the W o rks Eventually, the city may or may not reconsider several key parameters given feedback from last summer’s consultations. They include:
• Scale of Development: Unlike the common U.S. standard of 10, Toronto proposed thresholds of 100 units (downtown) and 140 (other areas) that would exclude two-thirds of midrise projects. This is unlikely to change, says Sharon Hill, manager of the Strategic Initiatives, Policy & Analysis section of Toronto’s Planning Division, as the city wants more mid-rises which IZ might discourage;
• Definition and Duration of Affordable: It is probable that affordable housing will be redefined as rent that is 30 per cent of incomes for the 30 to 60 percentile households. The recommended 25-year duration will almost certainly be extended significantly;
• Number of Units/Application: The city may reconsider its original proposal requiring only 2.5 to five per cent affordable units in dedicated rental projects. Consensus suggests rates should be applied to the full project and not just the uplift component, a position endorsed by the industry, says Joy;
• Incentives: The current consultation policy provides no additional incentives or subsidization, but this may be revisited given industry input. In some cases, inclusionary zoning mixed with such sources as Open Door Program funding might be an option to achieve deep affordability housing.
Consultations re-enforced enshrining full integration of affordable units into projects such as common elevators/spaces and services. Off-site units will be allowed but payment-in-lieu is prohibited by the legislation. In addition, partnerships with non-profit agencies for implementation and administration found considerable support. In all, evidence-based IZ programing remains a committed part of Toronto’s affordable housing playbook, but Ontario’s current lack of regulatory clarity is slowing the implementation progress. Conversely Vancouver is moving ahead quickly and with more assuredness.
Due-ing It Right
Why Archit ect s Should Play a Role in t he Due Diligence Phase for Developers. By Kyl e A. Lewk owic h
A key consi derati on for investors in the development industry is the principle of due diligence. People speak of due diligence with respect to the effort made to review and understand the conditions influencing the opportunities and constraints inherent in a potential development project, be it development on bare land, to development of brownfield sites, to redevelopment of existing buildings for new uses.
This due diligence will commonly manifest in a review of the property ownership status of the building, a review of any liens or encumbrances that may be attached to the property title, environmental site assessments intended to reveal the risks associated with previous owners or uses of the property, a preliminary building inspection/walk through, and so on. Many developers, having made such a preliminary review, may believe that they have done all that they could reasonably do to assure themselves of the risks and constraints inherent in a site in which they may have an interest.
However, especially in the case of determining the opportunities and constraints of redeveloping existing buildings, architects with a specialty expertise can provide a vital service to the development community with respect to due diligence. In a recent example a developer, having purchased an existing building with main floor commercial space and upper floor residential tenants, for full conversion to commercial office purposes, was surprised to discover several unexpected constraints only after purchase. As it was revealed, due to the significant number of major changes that were required to upgrade the building to current (and minimum) building code life-safety standards, not only was the conversion from one occupancy type to a new occupancy type so expensive as to render the return-on-investment unfeasible, but it was also discovered that the existing tenants had been occupying the building for many years without the local Authority Having Jurisdiction (AHJ) ever having granted an occupancy permit for such use of the facility. The end result was ownership of a building that could not fit the pro-forma for conversion into new uses, and eviction of the existing rent-paying tenants on the order of the local building department, as the property had never been authorised for those types of tenant uses. The result: legal issues; tenant issues; building department issues; loss of revenue; diminishment of the initial investment; additional costs; and considerable stress for all involved.
In another recent instance, an owner/developer had purchased a light-duty industrial occupancy building for conversion into office and mercantile uses. After purchase, the intended conversion of the building to new uses triggered a rezoning application, which then triggered a significant increase in expensive parking requirements for the site (which the owner believed were superfluous to the concept as the new building occupants did not actually require any additional parking for their uses). In addition to the zoning/ parking issue, which was eventually resolved
at a variance hearing with a compromise where the local AHJ accepted installation of a smaller number of now unused parking spaces, the change of use from one occupancy class to another again triggered significant code-related upgrades that had been unanticipated by the owner, and which required substantial additional investment.
Avoidable Problems In each case, the new owners were surprised to encounter significant costs and impediments to the profitable use of their new buildings, even though they had completed, in their estimation, sufficient “due diligence” prior to acquisition of the property.
In the case of an institutional investor, with access to a significant portfolio of past projects and experience, or with sufficient capital to invest in professional architectural and engineering expertise, these examples may seem to be a case, albeit an extreme one, of “buyer beware.” However, especially for the small-scale investor, this flaw in the due diligence process can be the difference between success and significant financial loss.
So, what can be done to protect oneself from such additional building-related occupancy surprises ahead of time? The case can be made that architects can play an important role in assuring that additional due diligence concerns can be answered and addressed, which can allow for greater confidence that the prospective real estate development proposition will find success.
Architects, especially those with a specialization in the development field, can be of significant benefit to prospective developers, either large scale or small scale, by providing a reasonable, often fixed-fee service, in reviewing the existing building’s code deficiencies with respect to change of occupancy or use. This service is related to the work typically provided in order to obtain a detailed facility condition report of an existing building but can be tailored to the proposed intended re-use. The degree of changes needed to convert a building from one occupancy type to another is highly dependent on both the occupancy classification of the existing building, but also on the intended use of the building in the future. In some cases, the proposed changes may be so profound the developer would be urged to revise their plans to minimize needed changes, reconsider the change of use proposition, or even be suggested that a different building might be more appropriate for the intended use.
In the case of review of the existing occupancies of the building, many jurisdictions have publicly searchable records of occupancy. While the information is generally available to anyone with a computer, it is not readily available unless one already knows that it exists and how to find it. Architects already working in this industry will be knowledgeable about such sources and can provide reporting to the owner of the implications of the information revealed in the research.
Architects can provide a re as on ab le, often fixed-fee service, in reviewing the existing building’s code deficiencies.
The benefit for prospective building owners in engaging an architect for this type of due diligence research is that the developer can proceed with greater understanding of the inherent constraints of their project. The result could improve the potential return-on-investment by identifying additional impediments, constraints, and opportunities, long ahead of time.
Investors undertake the due diligence process largely on the principle that knowing the constraints of a project will allow for the owner to plan to mitigate those constraints. Eliminating the potential for future profit-draining surprises is the purpose of the due-diligence exercise, so it stands to reason that owners should consider engaging an architect for specially-focused architectural services, just as they do lawyers, environmental assessment engineers, and so on in the due diligence phase, for the purpose of clarifying the opportunities and constraints inherent in their redevelopment projects. Kyle A. Lewkowich, MAA , MRAI C, is an architect and Senior Project Leader with the Government of Manitoba, as well as a principal at Magpie Architecture and Design. This article was written with contributions by Jason Robbins, MAA , MRAI C, principal, JC Robbins Architecture.
Faria Ahmed appointed Associate Publisher of Canadian Architect and Building magazines
iQ Business Media, publisher of Canadian Architect, Canadian Interiors and Building magazines, is pleased to announce the appointment of Faria Ahmed to the position of Associate Publisher of Canadian Architect and Building , effective January 1. A 7-year veteran with the iQ Business Media, Built Environment Group, Faria has been instrumental in the growth and success of all the multiplatform brands that she works on. In addition to her new role on Canadian Architect and Building, Faria is also account manager on Canadian Interiors and Supply Professional magazines. Faria will continue to service all her current customers on all titles. Throughout her career spanning more than 20 years in media sales and business development across a variety of platforms, Faria has earned an outstanding reputation for delivering highly effective integrated marketing communications solutions for her customers. Faria has established herself as a knowledgeable, passionate, and well-liked personality in all corners of Canada’s built environment. For more information, please contact: Faria Ahmed fahmed@canadianarchitect.com 416.441.2085 x106
COMING THIS FALL! Preorder now from your favourite bookseller! CANADIAN MODERN ARCHITECTURE NOW AVAILABLE
—PHYLLIS LAMBERT, FOUNDING DIRECTOR EMERITUS, CANADIAN CENTRE FOR ARCHITECTURE
