2024-09-20 Lougheed Landmark Investor Update
Figure 1: Concept rendering by Arno Matis Architecture
Hello Investors;
We are pleased to provide an update on our progress to date.
We have worked extensively with the City Planning Department to eliminate as much of the back-and-forth process as possible. This is a normal development process. For this reason, many builders avoid development applications. It requires patience and perseverance to navigate bureaucracies.
FUNDING
The Class B capital raise is at 60% of its goal. Remember that the $8,000,000 raise for Phase 1 is over and above what we need. To be on the safe side, we over-estimated the Phase 1 raise on the term sheet as part of prudent planning. However, it is not our intention to raise more capital than is necessary. You may see our advertising campaign in the upcoming fall issues of the Western Investor and the commercial issue of Business in Vancouver to reach a broader investor pool to complete Phase 1 and prepare for next year’s Phase 2 capital raise.
OCMI.CA
Check out our re-designed OTBEC Capital Management Inc website at https://www.ocmi.ca
ADVISORY COMMITTEE MEETING
We have good news to share. The application hearing for the Lougheed Landmark project that took place on September 9, 2024 was a committee meeting for advisory purposes only. It was not an official council hearing. We are allowed to attend the advisory meeting, but forbidden to speak on our defense. Why is this good news? By going to the committee first instead of a First Hearing, we saved the project 10 months of delay. The usual process is to submit the application at a First Hearing then re-submit to their specifications. This re-submission process can take months. Now we know that the City will not accommodate FAR variances for an RM6 zoning. This confirms our decision to submit under the C7 commercial zoning application.
C7 SUBMISSION
We informed the City on September 18th, 2024 that we are removing our RM6 application and resubmitting under a C7 zoning. The site lies in the Shoulder Station area as delineated in Schedule O of the City’s Zoning Bylaw 3000, 1996.
OUR DEFENSE
The article in the Tri-Cities Dispatch that summarized the September 9th, 2024 meeting reflects one side of the conversation. Although we met with the councillors to address their concerns before this meeting, those comments were off the record.
Below is our response to the complaints noted in the article.
RM6 is Dead in the Water
Please note that the Mayor’s “dead in the water” comment is in reference to the RM6 zoning. We were originally advised that we could submit our project with RM6 zoning as long as we applied for a variance. The official response rejected this approach. After the advisory committee’s rejection, we are proceeding with the C7 zoning application.
Affordable Housing Units (AHUs)
We had included 92 below-market units in the original design,well over the minimum 10 AHU requirement. AHUs are loss leaders; they do not generate profit. AHUs are usually included in exchange for bonus density. Without receiving bonus density, there is no incentive to include more than the minimum. Therefore, we reduced 9 levels of affordable housing units (AHU) to 1 level. We are happy to accommodate additional AHUs with appropriate incentives.
Significant benefits
When one of the councillors kept repeating his demand for “significant benefits,” he is alluding to the $3,000,000 Community Amenity Contribution (CAC) fund. Our architect upscaled the exterior design into a park-like setting and in doing so exempted the project from having to pay the CAC fee. This was our attempt to be efficient and save project costs. There is no specific legislation dictating CAC implementation. The Province of BC has only created a short best practices guide that is neither detailed nor enforced leaving each municipality to sort out the new system. In any event, the CAC fee remains in the budget.
Density
We knew going in that density was an issue. The average density that councillors expect to see is between 5 to 6 FAR. However, calculating density can be misleading. Larger sites can reduce their FAR number by including the entire lot size as the denominator, but if they used the actual buildable square footage, the density calculation would show a higher FAR. Since our site is restricted, we do not have excess site space to artificially reduce our FAR. It’s about optics. The City confirmed that neighboring developers achieved extra density by purchasing it with community contributions and inclusion of below market rental units. We have included these factors in our FAR calculations.
590 Lougheed owned by City of Coquitlam
Remember that we originally thought that 590 Lougheed was owned by the Ministry of Transportation. It took over a year to discover that the actual owner is the City of Coquitlam, a fact that Olga Karan’s due diligence uncovered. We received no recognition for correcting this error. Recently, the City changed 590 Lougheed from a parcel to a road designation.
The former owners operated an autobody and auto mechanic shop for decades. To accommodate the number of vehicles under repair, they leased 590 Lougheed. Unfortunately, this created a motley assemblage of vehicles in various states of repair, thus creating an eyesore as noted by the Mayor.
In response to the Mayor’s comment that we are “developers who don’t care for their property,” he is referring to the leased portion at 590 Lougheed which is owned by the City of Coquitlam. we have no authority to enforce lease compliance of 590 Lougheed which we do not own. This is a moot point since the former owners are moving out this fall..
Additionally, we were blamed for not purchasing 590 Lougheed. We have made numerous attempts to engage the City of Coquitlam’s real estate division to no avail. Our date-stamped emails prove our attempts. It is the Mayor’s firm position that we must acquire 590 Lougheed first to proceed with the development application of 576 Lougheed and it is the real estate division’s firm position that we are to wait until after rezoning before we are allowed to purchase 590 Lougheed. We are actively pursuing resolution of this conflict.
As a result of dealing with our 576 Lougheed tenants occupying 590 Lougheed space, Olga discovered that the tenants have been paying property taxes directly to the City of Coquitlam for the leased land for over 30 years in addition to paying for it in their lease amount. We have commenced action on behalf of the lessee to have these overpayments reimbursed.
Shoulder Station Area in the Transit Oriented Area (TOA)
To qualify as a Transit Oriented Area (TOA), the site needs to be located 800 metres from a skytrain station. 576 Lougheed is situated 835 metres away, not 875 metres as noted in the article. However, the site is situated in the Shoulder Station Area. This means that we can apply for a C7 zoning with a Shoulder TOA application.
Securing Final Consultants
We engaged civil, mechanical, transportation, and landscape consultants, and reviewing their quotes. Upon approval, we will require funds to engage their services and secure their quotes.
Daycare Expanded
Under the RM6 application, we increased the daycare facility at Council’s suggestion from 5,042 sf to 5,600 sf. In doing so, the additional 600 sf times FAR 6.5 provides 4,000 sf of residential space. With a C7 zoning, we are increasing the daycare component to the entire floor, approximately 7,000 square feet. This allows us to increase the density by an additional four storeys.
EVO Share Services
We are negotiating contracts with EVO for car share, e-bike, and e-scooter to reduce the parking stall requirement. Incorporating car share provides a 1:5 parking stall reduction: that is, one car share stall replaces five automobile stalls. Under consideration is a suggestion from one of the councillors to provide annual Compass Cards to tenants so that we can meet the minimum parking requirements.
Parking
Our transportation consultant confirmed that our proposed parking supply of 228 vehicles is sufficient to meet peak parking demand and anticipates a parking surplus between 10 to 66 spaces. The trend by tenants in high-density rental buildings is adoption of public transit and foregoing automobile ownership in favor of ride-share. This research comes from the publication Parking Generation Manual 6th edition (October 2023) by the Institute of Transportation Engineers and the Metro Vancouver 2018 Regional Parking Study.
ROAD & TRAFFIC
Our negotiations with the City regarding road dedication goes back to June 2023. Their response was to schedule an Enquiry Meeting with the Planning and Transportation departments which we did. Our City liaison advised us on September 9, 2024 that we will not be able to pay for 590 Lougheed and the Edgar road portion until three weeks prior to the Development Permit being issued. We are working to clarify this position as we would prefer to acquire this land sooner.
We need a portion of Edgar road so that traffic going in and out of the parkade has enough space to comfortably turn around. The City will be required to accommodate our need for traffic safety and proper transportation flow if the turn radius is insufficient.
HOUSING CRISIS
The annual Union of BC Municipalities (UBCM) met in Vancouver from September 16-20, 2024. All are agreed that the housing crisis requires a crisis response with a coordinated effort from all players. The Federal and Provincial governments are doing what they think is best to speed up the availability of affordable housing, but local governments are not being consulted. Ultimately, the speed of processing development applications and fees is in the purview of the municipalities.
FOLLOW UPS
The Lougheed Landmark project remains in the negotiation phase as we finetune the application for the official hearing. The one certainty with development projects is navigating bureaucracy. We have invested hundreds of man hours leading up to the committee meeting based on multiple feedback sources. Our architect is familiar with the process and assures us that this happened on many of his successful rezonings in the past. We have also engaged the services of an urban planning company to help facilitate communications with City staff. Our next step is to submit our application under the C7 zoning.
SEE YOU IN 2025
Our next in-person investor meeting will take place early next year. Notification of date, time, and venue will be distributed at least two weeks prior to the event. . Please check our Facebook page at https://www.facebook.com/ocmirealestate/ for additional updates.
Thank you for your kind attention to this update. Please feel free to connect us with potential investors or to reach out for clarification.
Gratefully yours,
July Ono & Olga Karan
OTBEC Capital Management Inc.
#210-15272 Croydon Drive
Surrey, BC V3Z 0Z5
https://ocmi.ca
