Major developer asks to delay $10 million payment to Vancouver city hall

Anthem Properties is asking Vancouver city council to allow them to defer a $10 million payment for the construction at this property at 1616 – 1698 West Georgia. Photo by Arlen Redekop /PNG

Anthem Properties, a major Vancouver developer, wants to delay a $10 million payment it owes city hall, citing “market uncertainty from recent interest rate increases, coupled with unprecedented increases in hard costs.”

A 33-storey tower with 127 market condos was approved by Vancouver in 2021 for the former site of a Chevron gas station on West Georgia Street near the entrance to Stanley Park.

When Vancouver’s previous council approved the rezoning, Anthem agreed to pay $26 million in community amenity contributions.The developer paid the first $15.6 million, as agreed, before council enacted the zoning bylaw. The remaining $10.4 million was to be paid before the city issued the first building permit for the property, or by 24 months after the enactment of the zoning bylaw, whichever came first.

Now, Anthem is asking for the second payment to be delayed and tied to a late stage of the building permit. The “outside date,” 24 months after the bylaw enactment, would remain the same.

Community amenity contributions are provided by developers to the city to pay for improvements in the area of the rezoning. The $26 million contribution for Anthem’s West Georgia project were earmarked for affordable housing, community facilities, firehalls, libraries, and child care in the West End. The outstanding balance is charged interest at the rate of prime plus two per cent.

Anthem declined to answer questions about the deferral request. In an email, an Anthem representative said: “We don’t have anything to add to the report to council.”

Council will consider Anthem’s request at a meeting next week.

The report going to council, which was made public Wednesday, notes that city planners sought direction from city hall’s risk management committee, which recommended accepting the proposal to delay the payment.

“Staff have carefully considered this request, and are of the opinion that accepting the modification would support the timely delivery of housing while ensuring satisfactory payment of the (contribution’s) outstanding balance,” the report says. It stressed the deferment would be on a ‘one-off’ basis and not change the city’s policy for community amenity contributions.Michael Geller, a Vancouver property developer and real estate consultant, says Anthem’s request might be a sign of things to come.

Today’s rapidly changing market conditions means a rezoning is approved in one environment, and then construction begins a couple of years later in a completely different economic climate, Geller said Wednesday, noting the Bank of Canada has just hiked its benchmark interest rate again.

“The fact that they’re asking for a deferment on the timing of the second instalment, to my mind, is quite minor compared to what others may be seeking, which is forgiveness or renegotiation,” Geller said.“There’s a lot of projects on the back-burner right now. No one should feel sorry for these developers, and I don’t mind saying that. But I do think it’s helpful to at least acknowledge these realities,” Geller said. “Interest rates have increased so much in a relatively short period of time and construction costs have increased.”

It is not unexpected or unusual for developers to seek to renegotiate conditions of prior approvals after the fact, as market conditions change, Geller said.

In 2020, the developers behind the massive project under construction at the former Oakridge mall proposed major revisions to their plans, seeking council’s approval for more density and swapping a condo building for market rentals, The Vancouver Sun’s Joanne Lee-Young reported at the time.

A note in the rezoning application explained the revisions would ensure the project “remains resilient and feasible in the light of current conditions such as changing approaches to retail, a changing residential market and the needs of our community.”

Vancouver’s previous council approved the proposed revisions from Oakridge developers Westbank and Henriquez Partners Architects last year.

Speaking Wednesday, Andy Yan, director of Simon Fraser University’s City Program, asked if requests like Anthem’s could set a precedent.

Anthem’s request illustrates “the changing economic tides for development in the city and how it is eroding the financial assumptions for market development projects,” Yan said. “But when those conditions change, how should the city react? If you consider the city a creditor on these projects, should they be flexible compared to the other creditors on these projects?”

“If the city extends this to Anthem, would Anthem extend this favour to their tenants?”The property at 1616-1698 West Georgia St. was home to a gas station, convenience store, a Pattison billboard, and parking lot. In recent years, the site had been a dog park while awaiting development.

Anthem was founded in Vancouver in the 1990s and has been active in dozens of markets in B.C., Alberta, and several U.S. states.

The company has more than 20,000 homes in its portfolio, nine million square feet of commercial real estate, and more than 34 square kilometres of land in western North America.

Anthem purchased the former Chevron location at 1698 West Georgia St., at the corner of Georgia and Bidwell, in 2017 for $72 million, Business in Vancouver reported at that time, citing Colliers vice-president David Taylor.

The future development, called Park by Anthem, is described on its website as “introducing a distinct perspective on life and luxury.”