A Vancouver city councillor voted against “huge” budget increases for two Metro Vancouver rental projects in Burnaby, saying he didn’t have enough information.
The two Burnaby developments planned by the regional government came in more than $105 million combined above their 2020 estimates, which raised eyebrows at Metro Vancouver’s housing committee on Friday.
“This is a huge cost escalation,” said Peter Meiszner, a Vancouver city councillor who sits on the Metro Vancouver board. “It does make me a little bit uncomfortable.”
Metro Vancouver staff said the increases are due to design changes and “unprecedented” increases in construction costs and lending rates.
But Meiszner said he didn’t have enough details to support the increases.
“I want to see this affordable housing built; I know how great the need is. I just don’t feel like I have the information to make an informed decision about doubling these budgets.”
Meiszner said he wanted specifics about the design changes, accessibility requirements and construction cost escalations.
The 122-unit development called the Steller at 7388 Southwynde Ave. in Burnaby had its budget skyrocket from $45.5 million to $93.9 million, a 106 per cent increase.
The budget for the 174-unit development called the Connection at 7730 Sixth St. went up 89 per cent from $63.8 million to $120.8 million.
Michael Epp, director of planning and development at Metro Vancouver Housing, said the project costs are not out of range when compared to private sector costs, such as those reported by Altus.
He also noted staff are looking at changes to make the projects as cost effective as possible.
Meiszner asked how the Steller project could come in at almost $800,000 per unit when the City of Burnaby provided the land for free.
“In my anecdotal, layman’s observation of the market, I’m seeing new units in East Van for low $600,000(s), including the land cost, including the developer profit, including the sustainability standards that the City of Vancouver requires,” Meiszner said.
Epp said per-square-foot costs are a better comparator because Metro Vancouver tends to build bigger units than market developers.
“The market produces much smaller units and many smaller units as a proportion of the overall units, which brings down that average unit cost,” Epp said.
Staff acknowledged the budget for the Connection project (estimated at $743 per square foot) is higher than the range for a similar six-storey wood-frame market development.
Jade Hume, Metro Vancouver’s division manager for capital projects, told the committee the site has a “very sloped” topography with an “awkward” underground requiring additional foundation walls to retain the soil.
Budget transparency
Meiszner also asked how Metro Vancouver expects to get competitive rates when the budget is public.
“Help me understand how we get favourable estimates from the market, when the market will know that we’ve approved a budget of $93 million (for the Steller). Aren’t we going to get estimates of around $93 million?” Meiszner asked.
Epp said there are rules in place for Metro Vancouver as a government entity on reporting information.
“These particular projects, for transparency, have to be conducted in open session. We would hope that there is a competitive environment at the time that we tender. … But it is an aspect that comes with being a government entity.”
Linda Buchanan, mayor of North Vancouver city and Metro board director, asked for a further breakdown of the cost increases.
She said Metro Vancouver develops a “different product” than the market, including larger, family-friendly units and said cost breakdowns would clarify how Metro Vancouver’s housing corporation differs from market developers.
“Because people will just think it’s like the market and be critical,” she said.
Meiszner voted against the budget increase for both projects, but both projects passed the committee stage with the votes of the other committee members.
The Metro Vancouver board will discuss and vote on the budget increases at the end of the month.
The Connection project is scheduled to begin demolition of the currently on-site townhomes in the first quarter of this year; work on the Steller is expected to begin at the end of the year.
Committee convos
Daniel Tetrault, a Burnaby councillor and member of Metro Vancouver’s housing committee, supported the project and said he wasn’t surprised to see the project cost increases, though added he was “a little alarmed at how significant it is.”
He asked for a cost breakdown, particularly around the required parking.
Burnaby has been seeing similar massive cost increases in its community centre redevelopments, with some projects coming more than $100 million over the original estimates.
Glenn Pollock, a Port Coquitlam councillor and Metro board member, thanked the City of Burnaby for providing the land for the Steller and for its total expected contribution of $20.4 million to the projects.
“We don’t have that kind of horsepower out here in PoCo, but I think it’s appropriate to compliment them on that,” he said.
