Central Green could affect city’s future purchasing power

Jennifer Smith - Kelowna Capital News Published: October 02, 2009 11:00 PM

Environmental and social housing standards planned for the Central Green development in downtown Kelowna must be relaxed or Kelowna taxpayers will be subsidizing the development, according to a report before city council.The Central Green development is a pre-planned community designed for the old Kelowna secondary school site, which is owned by the City of Kelowna. Over the course of the past two years, city staff have worked extensively with the community to design the development, widely hailed as Kelowna’s most sustainable to date.

The plans included provisions to ensure 20 per cent of the housing on the site be sold as affordable—as per a city council decision—and that the buildings all meet a Leadership in Energy and Environmental Design Gold rating, the second highest LEED standard available under the globally recognized sustainability rating system. However, a new economic analysis suggests these two provisos must be relaxed if the city is to sell the land involved at any profit—standard practice to ensure the municipality can continue purchasing property for taxpayers in the future. “The whole intent of this, and any other disposition, is to balance the value of whatever asset we’re selling against the cost of getting affordable housing, the cost of getting environmental requirements met and the economic return,” said Doug Gilchrist, with the City of Kelowna real estate division.

In this case, the latest financial analysis conducted for city staff suggests that balance is a bit out of whack. “There are just under 700 units in the proposed development, so the cost of building those units to a LEED-Gold standard, with the affordable housing component—which is subsidized because it doesn’t make money on the market—is worth more than the value of the land,” Gilchrist said. As such, city staff have asked council to consider reducing the long-promised 20 per cent affordable housing target to 15 per cent and dropping the environmental standards from a LEED-Gold level to simply requiring LEED certification.

The LEED system ranges from this basic certification through a bronze, silver, gold and platinum rating, based on standardized criteria of increasingly polished sustainability guidelines.In relaxing the LEED requirement, the report states city staff would continue to push for higher LEED levels on all of the buildings involved, including targeting at least one LEED-Platinum building; but by showing a willingness to negotiate on that front, the report suggests the city is more likely to see better uptake from the development community. And taxpayers would not be forced to subsidize the project through a reduced sale price on the land.

“The taxpayers own the land as an asset. So any burden we put on that before we dispose of it essentially is taking away from the value of the asset that the community owns,” Gilchrist said. Should council decide they want to keep their commitment to ensuring 20 per cent of the units are sold as affordable housing units and demand all eight parcels of land meet the original LEED-Gold standard, it would mean the city has a smaller fund for acquiring new land, he said. That’s a choice they can make, Gilchrist confirmed, although the report suggests the planned community simply might not see uptake at all under those circumstances.“Staff believes the mandated requirements of LEED-Gold certification and 20 per cent affordable housing will significantly hamper the quality and quantity of RFP (request for proposal) submissions and affect the creativity that would come from developer proposals,” it reads.