ABBOTSFORD. Sa,~A COUNCIL REPORT. Report No. PDS Regular Council. June 22, 2015 File No: R10-015

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1 Sa,~A ABBOTSFORD Report No. PDS COUNCIL REPORT Regular Council June 22, 2015 File No: R To: From: Subject: Mayor and Council Melissa Pryce, Senior Planner Follow up report for the rezoning application for the properties located at and Block Marshall Road and Block Canterbury Avenue. Owners: BC Ltd - R. Dhillon RECOMMENDATION THAT Report No. PDS , dated June 22, 2015, from the Senior Planner, regarding clarification on reducing the density and road financing options in association with rezoning application R , for the properties located at and block Marshall Road and block Canterbury Avenue, be received for information. SUMMARY OF THE ISSUE At its January 12, 2015 Regular meeting of the Council, Council by resolution requested that the rezoning application be referred back to staff to work with the developer to: reduce the density of the development on the south side of the site; review the servicing of the road (Marshall Road connection) through financing options; and that staff bring a follow-up report back to Council for consideration. This report provides the requested follow-up information. BACKGROUND - Application Approval Process On December 15, 2014 a second Public Hearing was held for this rezoning application which, proposes to rezone the subject properties to Urban Residential Zone (RS3-A), Residential Zone (RS5-A), Low Density Townhouse Zone (RM30) and Parks, Open Space and School Zone (P2), to permit 30 single-family residential lots and townhouses consistent with the RM30 Zone (a maximum of 30 townhouse units per hectare of zoned land). In the initial application the applicant had noted an estimated 370 townhouse units were proposed. Reports PDS , EDP and EDP provide background information on this application. Five written correspondences were submitted and twelve members of the public spoke at the Public Hearing, siting concerns primarily about the proposed density and housing form proposed for the site, increased traffic on the local roads near Mountain Elementary School and the removal of large amount of trees, vegetation and an overall loss of habitat for the many animals that use the property and possible slope stability issues and blasting. Following the Public Hearing, Council denied third reading of the bylaw. On January 12, 2015 Council reconsidered its' previous resolution and made a new resolution that third

2 Report No. PDS Page 2 of 8 reading of the bylaw be deferred and that the application be referred back to staff, as noted above in the Summary. Since Council's resolution in January, staff has met both internally and with the applicant on several occasions to review and discuss proposed density and financing options per Council's resolution. BACKGROUND- Road Works For reference, the previously identified road dedication and construction requirements associated with the subject rezoning application, as set out by the OCP and the Development Bylaw, and as previously accepted by the developer are as follows: dedicate 22.5m and construct Marshall Road through the site from the southwest corner to the northeast corner, to an Urban Arterial Road cross section; dedicate 17m and construct Canterbury Avenue through to Marshall Road; dedicate land sufficient to construct urban cui-de-sacs on Eaglecrest Drive and Sunridge Place; construct a new portion and upgrade the existing cross section of Marshall Road beginning at the southwest corner of the lands through to the intersection of Old Yale Road to an Urban Arterial Road. With any rezoning application, where a developer wishes to proceed with development and the local government does not have the funding to build the infrastructure necessary to support the development, the developer may elect to build the infrastructure on their own. Where the infrastructure has been designated as a Development Cost Charge (DCC) funded capital project, the developer is eligible to receive road credits toward their overall DCC payments or a rebate., DCC credits are applicable at the building permit or subdivision stage whereas a rebate is payable upon completion of the road works The dedication and construction of Marshall Road connecting through the site to the intersection of Timberlane Drive, is identified in the OCP as a future Urban Arterial Road (see Figure 2), and the upgrades to Marshall Road from the intersection of Timberlane Drive through to the intersection of Old Yale Road, are both designated as a DCC funded capital projects. As such, the developer is eligible for up to $513,900 as a DCC rebate for the construction of Marshall Road connection through the site, and up to $853,200 in DCC credits for upgrading the road cross section of Marshall Road from the intersection of Timberlane Drive through to the intersection of Old Yale Road. It is important to not5e however, that DCC credits or a rebate only apply to the portion of the road that is being up-sized from a Multi-family Local Road standard (which is a narrower road cross section) to an Urban Arterial Road standard (which is a wider road cross section), and are credited to the developer only at the building permit stage. Essentially, the intent of the DCC Bylaw is that the DCC credits or rebates pay for the added cost of widening the pavement to achieve a higher standard road cross section, and they are not intended to pay for the ultimate construction of the road. Figure 3 shows the concept of which portion of the road works the DCC credit is allotted to. DISCUSSION 1. Density The density of the overall development will be reduced via two (2) mechanisms, with a concentrated reduction on the south side of the site. Firstly, density is reduced through technical changes to the Zoning Bylaw that occurred with the

3 Report No. PDS Page 3 of 8 adoption of the new Zoning Bylaw in September, Secondly, density will most likely be reduced through a more detailed review of environmental, geotechnical, arboricultural, hydrological, archaeological and form and character assessments of the site, which are necessary to ensure that the proposed development is consistent with the policies of the OCP prior to the issuance of an Environmental Development Permit and Form and Character Development Permit. It is often through this detailed review that site constraints become known, and potentially limit the possible footprint and subsequent density of the development. Density reduced as a result of technical changes to the Zoning Bylaw: The rezoning application has referenced a proposed 370 townhouse units. This number was based generally on a preliminary conceptual development plan and essentially the gross site area of the lands that are proposed to be zoned RM30 and P2. Under the previous Zoning Bylaw (this application was submitted under the previous Zoning Bylaw), a density transfer from undevelopable lands (i.e. the lands to be zoned P2) was permitted to be transferred to the developable area of the site. Therefore, the 370 units noted in previous Council reports was based on the maximum possible density for the site that included the density transfer from the undevelopable lands and the proposed conceptual site development plan. With the new Zoning Bylaw being adopted in September, 2014, the former provision to transfer density from undevelopable areas of the site to the developable areas no longer exists. Therefore, the maximum possible density for the townhouses is strictly based on the actual proposed RM30 zoned area of the site, and does not include the proposed P2 zoned areas of the site. With this approach, the maximum number of townhouses on site is automatically reduced from 370 units to approximately 295 units (estimate based on non-legal survey plan) for the whole site proposed to be zoned RM30 (north and south of the future Marshall Road). The developer submitted a revised conceptual plan indicating a total of 293 proposed townhouse units, which equates to a 29% reduction in density on the south side of Marshall Road and a 3% reduction in density on the north side of Marshall Road. Density reduced as a result of a review of the future Environmental and Form and Character Development Permits The subject property contains steep and challenging terrain, is treed, contains possible species at risk and possible archaeologically sensitive characteristics and is located within an environmental development permit area, in accordance with the Official Community Plan (as outlined in previous Council reports). Therefore, prior to any development on site, detailed environmental assessments including wildlife, geotechnical, arboricultural and archaeological and hydrological are required, and were specified as a recommended condition of the proposed rezoning bylaw amendment by Planning staff. Detailed lot grading plans are also required to be reviewed in accordance with the City's OCP and lot grading provisions of the Development Bylaw, which are typically reviewed in conjunction with an associated development permit.

4 Report No. PDS Page 4 of 8 So far, the rezoning application has been considered primarily from a land use perspective, asking the question, are low density townhouses and single-family lots an appropriate land use fit within the given context of the area? Staff is of the opinion that the proposed land use is an appropriate fit for the area. The details of how the proposed townhouse portion of the development is implemented on the site, how it interfaces with the surrounding existing development and how it integrates within a hillside terrain, is what will make the project successful or not. These details of the development are worked on through the multi-family form and character and environmental development permit stage of the approval process. The site plans presented to Council to date (attached to previous Council reports) should be regarded strictly as preliminary and conceptual, as should the proposed density numbers proposed by the developer, as they have not incorporated the findings of the necessary detailed site development information required through the development permit process, as noted above. As such, it is reasonable to assume that the ultimate density of the townhouses may be further reduced due to site constraints that may arise through further detailed reviews. As one example, a thorough geotechnical review of steep slopes may net out further areas that preclude development that were not already considered. Staff are of the opinion that low density townhouses can integrate well within an existing single-family setting. Given that the maximum possible density of the site under the current Zoning Bylaw is automatically reduced by 75 units (developer proposed an immediate reduction of 77 units), and that there will likely be a further reduction in density due to possible site constraints, as determined through the review and issuance of the development permit, staff recommend support for the proposed rezoning to RM30, RS3 and P2. 2. Road Financing Options Preliminary estimates for the construction of the new portion of Marshall Road through the site to the intersection of Timberlane Drive at an Urban Arterial Road cross section (which is what the OCP calls for) range from $6,531,121 (estimated by the City's Engineering Department and based on costing associated with a similar road construction project for Whatcom Road extension, LIDAR data and anticipated road alignment proposed by developer) to $4,630,000 (based on a preliminary Class C cost estimate provided by the developer's civil engineer). The developer advises that as a means of making the proposed development more viable given a reduction to the originally anticipated density of approximately 370 units, the developer submitted a written request (see Attachment A) for the City to consider the following funding options: 1) City contribution of $2,400,000 towards the construction of proposed Marshall Road; 2) removal of the requirement to upgrade Marshall Road from Timberlane Drive to Old Yale Road; and 3) reduction of the pavement width of proposed Marshall Road by 2.5m to lower construction costs (refer to highlighted portions #1, #2 and #3 of Attachment A). These three proposals are examined in greater detail below.

5 Report No. PDS Page 5 of 8 Request 1 City provides a $2,400,000 cash contribution toward the construction of proposed Marshall Road The developer's manner of determining the amount they seek for funding from the City ($2,400,000) is described in their attached letter (see Attachment A). A preliminary estimate for the construction of proposed Marshall Road is $6,531,121. If this new segment of Marshall Road was not identified in the OCP as a future Urban Arterial Road (a major east-west connector), the developer would be responsible to construct the road to a Multi-Family Local road cross section {which is narrower than an urban arterial) rather than an Urban Arterial Road cross section. Engineering staff estimate that the cost of constructing the new segment of Marshall Road to a Multi Family Local Road cross section would be roughly $5,291,484, which is roughly $1,239,637 less than the cost of constructing the Urban Arterial Road cross section. Given this preliminary information, it would appear that the DCC rebate available for the up-sizing of Marshall Road ($513,900) in the DCC Bylaw is deficient. The construction of Marshall Road was not considered in the previous budget adopted by Council on March 30, If Council wishes to allocate funds within the current budget to pay for the upsizing of Marshall Road, or make any form of contribution toward the construction of Marshall Road, an amendment to the budget would be necessary. The financial implications of this request are discussed in more detail in the Financial Implications section of this report. Developer Benefit The developer would benefit from any amount of a cash contribution from the City, toward the construction of Marshall Road. However, should Council wish to contribute financially to the construction of Marshall Road, a $1,239,637 contribution may be more appropriate than the amount requested by the developer ($2,400,000), given that the $1,239,637 amount is the estimated cost of the up-sizing of the road, which fulfills the intent of the DCC Bylaw in this regard. Refer to the Financial Implications section of this report. Request 2 Remove the requirement to upgrade the cross section of the existing portion of Marshall Road from the southwest corner of the site to the intersection of Old Yale Road Transportation staff advises that while this portion of Marshall Road is a DCC road and is designated to be upgraded to an Urban Arterial Road cross section, the timing of the upgrade is not critical at this time, as this section of the road functions adequately from a vehicle traffic movement perspective. If the requirement for the developer to upgrade this portion of the road cross section is removed as a rezoning requirement, the City can upgrade this road in the future, once it has allocated funds to do so. Development Planning staff have no specific objection to this request. However, it should be noted that there are no sidewalks along the majority of the constructed portion of Marshall Road from the site through to nearly the intersection of Old Yale Road (there is a portion of sidewalk constructed from Old Yale Road to about 90m to the east of the intersection). Therefore, from a pedestrian safety and movement perspective, Development Planning and Engineering staff recommend that the developer construct interim pedestrian improvements along the north side of Marshall Road (such as a widened asphalt shoulder) from the intersection of Timberlane Drive through to the

6 Report No. PDS Page 6 of 8 existing sidewalk on Marshall Road that currently terminates approximately 90m east of the intersection at Old Yale Road. Developer Benefit As the DCC credits available for the upgrading of existing Marshall Road project would likely cover the cost of construction, it is unlikely that the works would result in a significant cost to the developer in the long run. However, the benefit to the developer should this requirement (minus the interim shoulder work) be removed as a condition of rezoning is that the developer would not have to: provide a security for the road works (up-front cost) as a condition of zoning; front the cost of construction; and provide a security for a one year warranty period once the road works are completed. Request 3 Reduce the pavement width of proposed Marshall Road to reduce construction costs As outlined in Attachment A (marked as #3) the developer recommends a reduction in the width of the future Marshall Road by 2.5m (Engineering staff note a correction that the actual width would be 2.4m, based on the required road cross section), citing that this would help reduce the cost of construction by eliminating that portion of pavement. The cross section of the Urban Arterial Road contains two travel lanes, left hand turn lanes two bike lanes, one continuous lane of on-street parking and one intermittent lane of parking (interrupted where left hand turn lanes are required). While reducing the pavement width would reduce the cost of construction, it must be considered that the DCC credits available for this project are only payable for the up-sizing portion of the road, which in general terms would be the portion of the road the developer is requesting to eliminate (see Figure 3). Therefore, the narrowing of the pavement would theoretically result in cost neutrality in the long run. The second part of the discussion is the loss of on-street parking that would result with the reduction in pavement width. Engineering staff advise that reducing the pavement width by one lane width (2.4m) will result in the loss of the majority of on-street parking on both sides of Marshall Road in order to provide a reduced road cross section that still accommodates left hand turn bays, which are required to assist traffic flow while vehicles access the proposed development site (north and south sides of Marshall Road) and Canterbury Avenue. Engineering staff are of the opinion that the full intended Urban Arterial Road cross section should be constructed in accordance with the OCP. Development Planning staff are of the opinion that on-street parking is essential to accommodate spill-over parking from the proposed townhouses on Marshall Road so that it will not spill-over into other adjacent neighbourhoods. Given this implication, Development Planning staff is also of the opinion that the full intended Urban Arterial Road cross section should be constructed in accordance with the OCP

7 Report No. PDS Page 7 of 8 Developer Benefit As noted above, reducing the pavement width would ultimately result in cost neutrality in the long run. However, the possible benefit to the developer is that they would not have to: provide as large of a security for the road works (up-front cost) as a condition of zoning; front as much of an initial cost for the construction of the road; and provide as much of a security for a one year warranty period once the road works are completed. FINANCIAL PLAN IMPLICATION The widening of the subject section of Marshall Road (from Timberlane to Mountain Drive) beyond a local road standard is included as an eligible project in the Roads Development Cost Charge (DCC) program, so it would be funded by DCCs, though DCC credit and or DCC rebate. As the Roads DCC reserve is currently overdrawn ($15 million at December 31, 2014), funding of the widening costs would be accomplished via internal financing. Additional internal financing of $1.2 million is estimated to add two to four months to the timeline for full repayment of the internal financing, which is currently projected at some time in 2017 or Credit is given to developers for DCC-related work which they perform, up to the DCC value of the works identified within the current DCC program. The $1.2 million for the widening work, identified in this report, exceeds the value of $513,900 identified in the DCC program. The $1.2 million figure is recommended as the credit and or rebate amount, due to the unique characteristics of this road section. Cost estimating for DCC road projects is prepared without the advantage of a preliminary design or supporting field work. The approach taken to developing cost estimates is based on utilization of a unit price per lineal meter of construction cost for various road standards. The Acting General Manager, Engineering and Regional Utilities advises that the subject section of Marshall Road is quite unique when compared to the other Road DCC projects. Due to the extreme topography along the road alignment, substantial cuts and fills in the order of nine meters will be required. As well, a significant amount of rock blasting will be required along with the cost of retaining walls. As a result, the unit price method used to estimate the cost shown in the DCC program significantly understates the actual cost required to widen this road. A value of $1.2 million has been determined to be appropriate. Requests 2 and 3 are not anticipated to have any financial implij ns. wed and approved by the: 1ef Financial Officer

8 Report No. PDS Page 8 of 8 IMPACTS ON COUNCIL POLICIES, STRATEGIC PLAN The proposed rezoning is consistent with the Official Community Plan. ~ ~~ Department ~oval : Melissa Pryce, MCIP, RPP Siri Bertelsen Senior Plan General Manager of Planning & Development Services Reviewed by: Darren Braun, MCIP, RPP Director of Development Planning Figure 1 - Location Map Figure 2 - Existing OCP Map Figure 3 - Conceptual Road Cross Section - DCC Credit Portion Figure 4 - Marshall Road Proposed Financing Options Attachment A: Developer's Letter dated April 29, Mann Group PDS REG- Follow Up on Density and Road Financing- FINAL June 22, 2015

9 FIGURE 1 LOCATION ADDRESS: APPLICANT: o ~A ABBOTSFORD Planning and Development Services Rem. A Plan BCP5548, Rem. 1 Plan and Marshall Road BC Ltd. R. Dhillon - contact FILE NO I R June 15, 2015

10 Urban Development Boundary Choice of Use Commercial City Residential Urban Residential Suburban Residential Industrial-Business Industrial-Business (CICP) Industrial Reserve FIGURE 2 EXISTING OCP ADDRESS: APPLICANT: o ~A ABBOTSFORD Planning and Development Services Rem. A Plan BCP5548, Rem. 1 Plan and Marshall Road BC Ltd. R. Dhillon - contact FILE NO I R June 15, 2015

11 STREETUGHT ILLUSTRATIVE ROAD AND RIGHT OF WAY SECTION It t> le. Portion of pavement eligible for DCC credit. rt. (R/W) I I I STANDARD PAVEMENT WIDTH Portion of pavement eligible for DCC credit. UPSIZED PAVEMENT WIDTH SIDEWALK I BLVD. Request#3 City reduces road standard (reduce pavement width). TREE STRIP I, SIDEWALK, FIGURE 3 CONCEPTUAL ROAD CROSS-SECTION- DCC CREDIT PORTION ADDRESS: Rem. A Plan BCP5548, Rem. 1 Plan and Marshall Road APPLICANT: BC Ltd. R. Dhillon -contact a.,.._a ABBOTSFORD Planning and Development Services FILE NO I R June 15, 2015

12 A FIGURE 4 MARSHALL ROAD PROPOSED FINANCING OPTIONS ADDRESS: Rem. A Plan BCP5548, Rem. 1 Plan and Marshall Road APPLICANT: BC Ltd. R. Dhillon - contact ~;;;~A ABBOTSFORD Planning and Development Services FILE NO I R June 15, 2015

13 MANN --GROUP-- April29, 2015 City of Abbotsford South Fraser Way Abbotsford BC V2T 1W7 ATTACHMENT A Dear Mr. Braun: Timberland Development Marshall Road Proposal (R10-015) Background The original application granted 3m reading by Council on April10, 2013, involved 370 townhouse (''TH") units and 30 single family ("SF") lots. The PLA for our project expired in late 2014 and, as a result of various project delays, our rezoning bylaw required that a new public hearing be held. As a result of the second public hearing and the public I neighborhood concerns raised on the same project, Council voted to refer the project back to staff to work with the developer to: a} "achieve lower density on the south side of the development" and b} "review the servicing of the road through financing" options. On February 25, 2015, and April 24, 2015, meetings between the developer and City Staff were held to discuss how to address the direction given by Council regarding the achievement of a lower density development concept and financing options for Marshall Road construction costs. The following outlines our proposal to the City addressing the direction provided by Council. Proposal In order to address the reduction of overall unit density, a new development proposal was submitted to staff by the developer. This new development concept includes a reduction of 77 townhouse units from the original approved development concept. With 293 townhouse units, we believe that the revised development concept submitted shows a significant reduction to the project yield and achieves the stated objective of Council with regard to a density reduction. However, this reduction in yield will have a significant impact on our pro forma. At an average profit rate of 22% for the townhouse units, the resulting impact equates to approximately $85,000 per unit. With 77 less townhouse units, the potential decrease in profit for this project would be approximately $6.55 Million. That is a huge hit for any developer to take, especially with the road cost, rock blasting, cut I fill and retaining walls required for this site. In order to help offset this financial impact, we propose that the City agree to the use of a "Development Coordinated Works Agreement" (DCWA} to offset a portion of the construction Surrey BC V3W 4Gl telephone facsimile

14 MANN --GROUP-- cost of the Marshall Road connection. To illustrate the contribution this project provides to capital funding through Development Cost Charges (DCCs), we have estimated DCC payments by type calculated for this project as follows. Based on the above, the revised project will generate approximately $3.84 Million in DCCs for the City. Of this total amount, approximately $1.82 Million would be paid for "Roads" and approximately $550,000 identified for "Drainage", "Sewer" and "Water" DCC categories. An additional $1.47 Million in DCCs would be generated by this project for Parks purposes. Based on various cost estimates, we believe that the cost of Marshall Road would be significantly in excess of the total amount of applicable DCCs payable by the lower density version of our project. Although City staff have come up with an estimate of $4.5 Million for the Marshall Road extension based on previous data from Whatcom Road upgrades, we have spoken to numerous contractors and been provided with preliminary estimates that are significantly greater than the $4.5 Million estimated by staff. Without the right density and cost sharing program from the City, this project will not be feasible for any developer. As the developer, we would front end the construction cost and absorb any additional construction costs associated with Marshall Road. We propose that the City enter into an agreement to cost-share a portion of the Marshall Road corridor. We propose that the upset contribution from the City be $2.4 Million, a figure that roughly equates to our estimated project DCC contribution for "Roads", "Drainage", "Sewer" and "Water" categories within the total DCC. In order to implement the proposed cost-sharing arrangement, we ask that the City enter into a Development Coordinated Works Agreement (or DCWA) with the Mann Group to cost-share a portion of Marshall Road construction to a maximum upset value of $2.4 Million. The DCWA is a funding mechanism used frequently by municipalities such as Surrey and Langley to 'partner' with developers to have the developers complete works that would normally be completed by the municipality at a future date Surrey BC V3W 4G telephone facsimile www. mcmcorp.ca

15 MANN --GROUP This arrangement provides the municipality with cost advantages by having the works completed by developers and paid for by the municipality. When such works are requested by the municipality, the consulting engineers for the project would normally provide the municipality with a construction cost estimate, contingency (10%) and consulting fee (10 to 12% of construction cost). Given that we propose to use an upset amount, contingency and design costs would be included in the $2.4 Million. Depending on the amount of the DCWA, the municipality would either include the funding arrangement in the development (servicing) agreement or staff would prepare a funding report to be approved by council to allocate funds to the proposed works to be completed by the developer. Once the report is approved by Council, funds are allocated to complete the works and would be included in the development (servicing) agreement. The reimbursement to the developer would either be a lump sum payment upon acceptance of the completed works or, should the amount of reimbursement be substantial (i.e. over $200,000), by interim payments, with the actual progress costs certified by the consulting engineer with either option. This arrangement has the benefit of not imposing any new costs to the City; rather, the City would be "offsetting" a portion of the potential DCC revenue collected from this project to fund a portion of an identified capital project. The unfortunate reality we face is that, without some form of cost sharing arrangement, we may not be able to proceed at all with this project resulting in zero DCCs being made available to the City. Even with the proposed DCWA funding applied to the revised project, our net change in potential revenue as a result of the decrease in density is still down approximately $4.2 Million. As far as Timberline to Old Yale off-site works goes, we propose that the City remove the cash-in-lieu payments for future and offsite works that the City may do at a later date. The total amount represented by cash-in-lieu payments per the 2014 Development Agreements is $ Finally, we propose that the design standard for Marshall Road be amended to reflect a narrower pavement width by eliminating the equivalent of on-street parking from one side of the street (i.e. 2.5m less asphalt). Given that our current townhouse site plan includes approximately twice the required visitor parking, coupled with the reality of a significant grade differential, we believe that on-street parking on new Marshall Road may not be fully utilized. Therefore, we believe that this may be a waste of money to build. This would provide some cost savings without limiting the function or utility of this road. Conclusion We believe that this proposal represents a balanced 'sharing' of the financial impacts brought about by the significant reduction of density. The completion of Marshall Road represents a significant investment and benefit to the City's transportation network. We believe that both developer and City should share in the costs of Marshall Road Surrey BC V3W 4G telephone facsimile

16 MANN --GROUP-- lnder Mann Vice President cc: Melissa Pryce, MCIP, RPP, Senior Planner, City of Abbotsford Surrey BC V3W 4Gl telephone facsimile