Cambie Corridor Updates

[wrenegade]

Originally Posted by jlousa

LEED Gold could be done for ~5% more, just chase the cheap points, it's also decreasing with each passing month.

True it is getting cheaper, but I don't know where you can chase the cheap points on LEED Gold, Silver perhaps.

$200per buildable sf seems quite high, I just sold one of my properties to a big developer for ~$270psf based on lot size, but on a buildable psfage it works out to only ~$70 as the FSR is 3.8.

We offered just north of $250 per buildable for a site on Cambie and were flat rejected, no counter offer. Vendor was out of his mind (thought he could get 5.0 FSR in the Cambie Village area).

At the end of the day the current owner wants to capitalize on the new value, while the city wants to be the one to capitalize. The Developer doesn't really care who gets that money, they just don't want to have to pay it twice. The easiest way is to have area set CACs that are charged on a psf basis. Perhaps $25psf on all new density at time of rezoning. Just take all the guesswork out of the process.

Agreed. CACs on a psf basis would take a lot of the guesswork out of things. It would also give the developers more freedom do build their proformas however they like. Having the city sitting over your shoulder telling you that a 15% developers premium is "generous" is BS, we shouldn't be told how much money we can or cannot make, that is for the market to decide.

Originally Posted by SFUVancouver

Fair enough. To a large degree this is a case of anecdotal evidence on my part based on what I have heard from architects who work in the city.

.

HA! Architects who work for the city? Architects in general aren't the best when it comes to figuring out what things actually cost, especially if they are the city type.

If the builder/contractor side is saying one thing and the design side is saying another then not only is there going to be disagreement but a lot of blown budgets too. Hello value engineering!

Of course so much also depends on the project and whether you are going for actual LEED Gold certification as opposed to LEED Gold equivilency, which is what the CoV rezoning still requires until March 2011, I think, when certification will be required.

Unfortunately at this point it is LEED certification. Unless you already working on a rezoning application right now it's unlikely you'll have it submitted by March 2011. If you're still trying to acquire land at this point there is no chance.

[city-dweller]

Originally Posted by awvan

The problem isn't just the CACs on the land lift. It's much more complicated than that....

Sure we can break the projects business case into its various components land purchase, permit fees, DCLs, CACs, fsr, etc (which you describe much better than I) However, the development requirements that have been in place for over a decade are not the main reason that developers in the Cambie Corridor have project viability issues. They engaged in a purchasing rush, bought too high, and now are railing at the cities cut of the project. I agree the city needs to reconsider the affect of its policies on future developments in this city and its affect on affordability, but in this situation why should the city discount their cut to cover poor purchasing decision by the developer?

But city planner Brent Toderian said realtors and homeowners are setting unrealistically high prices for their properties, making it hard for development proposals to work financially.

I couldn't find publications on LEED Gold costs here but the USGBC has a 2003 paper on LEED cost by level and Gold costs 0.3 - 5% extra cost per project (averaged). Over 7 years with growing expertise, I believe the cost to be trending downward. Note: LEED Silver can be done at/near cost of conventional construction.

The main issue here is the stagnation of development in the city. I hate it when good projects are abandoned. My stance is the city has a consistant and fair program to leverage developments for amenity values through FSR transfers and a direct cut on the projects. The sacrifice of short-term revenue to the city may cost long-term amenty, and at the same time subsidize the developments. This is okay if the value to the city is to maintain developments at the cost of amenities.

[whatnext]

Isn't LEED just another way to drive up housing costs in an already expensive city? Its not like the city owns a gas or electric utility and will be directly impacted by using conventional construction.

[city-dweller]

Thats a good question.

I mean if you can still make a better profit on conventional construction, why bother? At the same time if energy costs get higher, the owner benefits from the energy efficiencies. However, they must be willing to pay extra so developer can price in the cost these benefits. If the future owner is saving money on energy costs, isn't the higher purchase cost helping affordability in the long-run? Homeowers versus condos is a different return value. It could take many years to recieve the benefit of any savings for a homeowner. Whereas, a condo with higher energy reuqirements could benefit sooner.
The bigger return will be when energy prices go up.

Another issue is mandating LEED. If it makes business sense to do LEED why mandate it? The provincial government and the City of Vancouver have some policies for LEED Gold with new buildings. If we are going to be wasting money on pet project might as well build LEED Gold buildings But seriously, requirements for above standard projects is a shift towards best practice instead of minimum requirement. (Would have been nice if they had checked how many LEED APs there were -backlog should be finally cleared by March 2011)

LEED offers long-term savings for owners and does not have a large impact on affordability. Building a city between a mountain range, an international border and the ocean affects affordability. Using our exisiting residential areas more effectively like the Cambie Corridor through the various implementations of density and housing options, is better way to address affordability. (I totally brought it back to the thread there!)

[twoNeurons]

Am I missing something? I think developers know the meaning of supply and demand. They're experts at CREATING it.

Now that there's a little less milk and honey to go around... they want the city to subsidize their land purchase by changing the contract after the developers bought up?

It's like buying an iPhone. The phone and data plan are overpriced because there's a hefty demand. (Profit taking all around). After you get the phone someone develops an app which is super data-intensive and you buy it. You go over your limit and so you ask Rogers/Telus/Bell to decrease the cost of a more expensive data plan because you decided to download an app that used a lot of data. Aint' gonna happen.

As for LEED, it DOESN'T make short-term business sense to do LEED. It DOES make long-term sense, but people don't look at it that way.

If you bought a VW Diesel car, you pay a premium for the engine. However, over the life of the car, you'd save on fuel (especially as fuel goes up). However, because it may take 5-6 years to break even, people think to themselves... do I REALLY want to pay the premium? Of course, if start accounting for increased diesel prices... and the higher resale value and it may work out pretty well... but for most, they won't think that way.

[whatnext]

Good points city-dweller. I'd argue that the sorry sales performance of the OV shows the public isn't interested to pay extra for LEED. And as two-Neurons says, the buying public doesn't necessarily take that long term view (especially first time buyers).

I find rumblings that the CoV is going to force LEED on single family construction and renovation troubling. Though they may have the right to mandate low-flush toilets etc due to their ownership of the sewer and water infrastructure, they have no business telling me what I think is reasonable to pay BC Hydro or Terasen (but that's a rant for a different thread!).

[cornholio]

Originally Posted by twoNeurons

Am I missing something? I think developers know the meaning of supply and demand. They're experts at CREATING it.

Now that there's a little less milk and honey to go around... they want the city to subsidize their land purchase by changing the contract after the developers bought up?

It's like buying an iPhone. The phone and data plan are overpriced because there's a hefty demand. (Profit taking all around). After you get the phone someone develops an app which is super data-intensive and you buy it. You go over your limit and so you ask Rogers/Telus/Bell to decrease the cost of a more expensive data plan because you decided to download an app that used a lot of data. Aint' gonna happen.

As for LEED, it DOESN'T make short-term business sense to do LEED. It DOES make long-term sense, but people don't look at it that way.

If you bought a VW Diesel car, you pay a premium for the engine. However, over the life of the car, you'd save on fuel (especially as fuel goes up). However, because it may take 5-6 years to break even, people think to themselves... do I REALLY want to pay the premium? Of course, if start accounting for increased diesel prices... and the higher resale value and it may work out pretty well... but for most, they won't think that way.

Opportunity cost needs to be factored in to your equation.

Things aren't as simple as you think, for example the opportunity cost of that VW diesel car can be much higher then the difference in resale value and savings on fuel.

[racc]

Originally Posted by whatnext

Good points city-dweller. I'd argue that the sorry sales performance of the OV shows the public isn't interested to pay extra for LEED.

That is a real stretch. The real problem is that the bottom has fallen out of the market for high-end real estate. In Whistler, for example, I heard on the news last night that the prices have dropped by fifty percent. Unfortunately, the developer and the last council took a gamble on moving the development upscale and lost big time. This move also delayed the starting of construction which pushed up costs.

[whatnext]

Originally Posted by racc

That is a real stretch. The real problem is that the bottom has fallen out of the market for high-end real estate. In Whistler, for example, I heard on the news last night that the prices have dropped by fifty percent. Unfortunately, the developer and the last council took a gamble on moving the development upscale and lost big time. This move also delayed the starting of construction which pushed up costs.

Really? The bottom has fallen out of high end real estate?:

Luxury home market booming in Metro Vancouver
River Green condos set record sale prices
Kerrisdale 80′s home sells way over asking

[wrenegade]

Whistler is not Vancouver. The Olympic Village is a special case and I don't think it can be examined in a traditional way.

The great majority of buyers will not pay for LEED, especially the first time homebuyer. Having the city mandate LEED construction for all projects drive up the cost of all new housing. Pretty irresponsible if you ask me. As city-dweller mentioned, if there was a market for it, many developers would be out there doing it on their own accord. Not many are. Dockside Green in Victoria was a disaster. However, Adera's "Green" project on Burnaby Mountain has seemed to do quite well in the marketplace (in addition to winning a UDI award). But that is about the only one I know of.

[racc]

Originally Posted by whatnext

Really? The bottom has fallen out of high end real estate?:

Luxury home market booming in Metro Vancouver
River Green condos set record sale prices
Kerrisdale 80′s home sells way over asking

The price per square foot for the Olympic Village is much higher than River Green. If (when) the prices are lowered, one would expect it to sell as well.

[racc]

Originally Posted by awvan

The great majority of buyers will not pay for LEED, especially the first time homebuyer. Having the city mandate LEED construction for all projects drive up the cost of all new housing. Pretty irresponsible if you ask me. As city-dweller mentioned, if there was a market for it, many developers would be out there doing it on their own accord. Not many are. Dockside Green in Victoria was a disaster. However, Adera's "Green" project on Burnaby Mountain has seemed to do quite well in the marketplace (in addition to winning a UDI award). But that is about the only one I know of.

And the majority of drivers won't pay much extra for technology that makes cars more efficient and less polluting. That is why, like more energy efficient buildings, it has to be mandated by government. When everyone has to do it, the cost goes down as expertise is gained and due to economies of scale.

[golog]

What are the costs for a new development?

Land, construction, city fees, developer's profit,

Any one of those can rise, and the sales price remain constant if the other costs decline.

With that said, I would be far more interested in the LEED-relevant information being provided in a standard document to all potential buyers

Detailing expected consumption and costs for heating, cooling, water, electricity, maintenance, etc...

Spend $100 more in construction to save $100 per year in utilities costs?
Comparison shopping units in different buildings at the same price, and one will pay only 90% of the others' heating & cooling?
We just need to make it easy for sensible decisions to happen

Was it this summer or last that we had a heatwave? I know someone who installed geothermal heat exchange in their house -- not only was it going to save enough money to pay for itself, they enjoyed comfort with ease while everyone with the same old house and an A/C unit tacked on had to avoid the hot parts of the house.
Present it properly and developers will want to seek out solutions, and customers will be asking for them.

[whatnext]

Originally Posted by racc

And the majority of drivers won't pay much extra for technology that makes cars more efficient and less polluting. That is why, like more energy efficient buildings, it has to be mandated by government. When everyone has to do it, the cost goes down as expertise is gained and due to economies of scale.

Yes indeed, Government is usually the best arbiter of what is best for the people. Where are those fast ferries again?

[twoNeurons]

Originally Posted by golog

Spend $100 more in construction to save $100 per year in utilities costs?
Comparison shopping units in different buildings at the same price, and one will pay only 90% of the others' heating & cooling?
We just need to make it easy for sensible decisions to happen

If they knew that, or could guarantee it, I'm sure they would. But, do we REALLY know how much of the improvements are environmentally friendlier but not necessarily more efficient? (i.e. paying for feel-good-feelings.)

[golog]

twoNeurons -- it absolutely is possible. It wouldn't take too many measurements to get a reasonably accurate estimate, maybe take about a day and less than $1000. It should be simpler than a building inspection.

The key thing is that a standard consumption and annual environment profiles would be needed to provide a comparable summary.

Just like how cars are listed with a standard L/100km, as measured according to a Transport Canada standard. Yes some drivers are always a bit smoother and end up using less than the posted fuel efficiency, and some are always a bit harder and end up undershooting the posted fuel efficiency -- but the buyer can make a good guess of what efficiency they'll get with a personal adjustment, or more importantly they'll know which car costs more gas to run before buying and without having to convince the sales guy to give them a couple hours to run tests.

[Login650]

Originally Posted by whatnext

Isn't LEED just another way to drive up housing costs in an already expensive city? Its not like the city owns a gas or electric utility and will be directly impacted by using conventional construction.

The price of housing is based on what the market will bear, period. The market doesn't care if the developer paid a lot or a little to build it.

If a 2bdrm condo with standard finishes & amenities goes for $500k then that is the price it will get whether it cost the developer $10 to build it or $800k to build it.

Increased costs might make it harder for the developer to make the project work or to get the profit he wants, but I don't think it's directly driving up housing costs. Last time you bought property, did you ask the developer what his costs were and base your offer on that?

[whatnext]

Originally Posted by Login650

The price of housing is based on what the market will bear, period. The market doesn't care if the developer paid a lot or a little to build it.

If a 2bdrm condo with standard finishes & amenities goes for $500k then that is the price it will get whether it cost the developer $10 to build it or $800k to build it.

Increased costs might make it harder for the developer to make the project work or to get the profit he wants, but I don't think it's directly driving up housing costs. Last time you bought property, did you ask the developer what his costs were and base your offer on that?

I would suspect the "developer" of the last property I bought is long since dead and buried.

However, as you point out the danger is the developer just won't build at all, or only build units geared to high-income buyers who won't notice the extra cost larded into the unit, though even that strategy can backfire, as evidenced by the Art Cowie rowhouses at Cambie & 33rd still languishing on the market.

[racc]

Originally Posted by whatnext

Isn't LEED just another way to drive up housing costs in an already expensive city? Its not like the city owns a gas or electric utility and will be directly impacted by using conventional construction.

This is worth a read.

Myths About Green Building Busted, Just In Time, Too.
http://www.treehugger.com/files/2011/01/myths-about-green-building-busted.php

[whatnext]

From a website called "Treehugger". Why not throw in something from The Tyee as well if you want to convince us.