Developer’s $13M offer for downtown lot outbids entertainment venue pitch
Wyng Chow
Sun
In a serious blow to Vancouver‘s arts scene, city council is selling a prime downtown development site to the highest bidder rather than to an entertainment entrepreneur proposing a multi-use project designed to enhance the city’s performing arts and culture.
The difference in price between the competing offers for the 27,000-square-foot vacant lot is about $3 million.
Council voted at an in camera meeting to accept the top bid from Millennium Group, a Vancouver-based condominium development firm that was willing to pay $13 million for the choice property.
The existing zoning on the site on the northeast corner of Robson and Richards allows for a total of 135,000 square feet of residential and commercial development, indicating Millennium is shelling out nearly $100 per buildable square foot — a record price for the Downtown South area.
By contrast, vacant waterfront land along Coal Harbour — where luxury condo units have been selling at prices ranging up to $6 million — has barely topped $90 per buildable square foot.
“We have been told we are the successful bidder,” said Millennium president Peter Malek. “But the deal hasn’t been finalized.”
Council rejected a $10.1-million bid ($75 per buildable foot) from impresario Dennis Law, whose family business, Four Brothers Entertainment Co., owns and operates the nearby Centre in Vancouver for Performing Arts, at 777 Homer.
Commercial real estate sources — who earlier predicted a bidding war for the city-owned site at 788 Richards from among more than a dozen major developers — said Cressey Development Corp. was among the finalists, making its pitch at $10.8 million ($80 a foot).
“Millennium blew everybody out of the water,” one realtor said. “It’s insane.”
Said Cressey vice-president Scott Cressey: “It’s more than I wanted to pay. But (Millennium) must have it figured out. They’re smart business people.”
Law, whose family paid $7.75 million for the 1,849-seat, state-of-the-art former Ford theatre in December 2001, had envisioned building a highly visible arts-oriented complex on the coveted site, connecting it to the existing centre via a glass-enclosed bridge over the lane, creating a “focal point” for the performing arts district.
Instead, he now fears Vancouver will end up getting just another mundane downtown condo tower.
“I think it’s nuts,” Law said in an interview. “We were trying to create a focal point for arts and culture that would help Vancouver demonstrate what a great city it is so it can really showcase the 2010 Olympics.
“But I guess in the final analysis, council decided it needed the extra $3 million, or whatever.”
Law and other development industry sources said the $13-million price that Millennium is reportedly paying doesn’t appear to make economic sense.
“The only thing they can build is residential condos. Otherwise they’ll lose their shirts,” Law said.
Malek said Millennium hasn’t decided what to build on the site, currently used for parking.
“We’re working on a concept,” he said. “We’re considering various options, but there will definitely be a residential component.”
In Greater Vancouver, Millennium’s best-known condo projects have included the $220-million City in-the-Park master-planned community in Burnaby, the $36-million Lumiere in the West End, and the $31-million Edgewater in West Vancouver.
Law made an earlier offer in May to purchase the Richards Street site, but the city — fully aware of his intentions and vision for the land — decided instead to call for public tenders.
Law had commissioned noted Vancouver architect Bing Thom to design a multi-use project that would have included a hotel, some condos, restaurants and retail shops, reinforced by a 200-seat cabaret-style theatre.
Commercial realtor Bryce Margetts, who presented Law’s offer, pointed out the city had the leeway to decide against simply selling to the highest bidder.
“There could be other considerations,” said Margetts, of Colliers International. “[Councillors] might see a significant benefit in selling to an adjacent property owner. They have the ability to pre-empt the tender process.”
Brian Sears, Vancouver‘s senior property development officer, confirmed the city was not obligated to accept the highest bid, or any of the offers at all.
“Council was fully aware of Law’s interest and ideas,” Sears said. “But they decided to sell to the highest bidder.”
Contacted for comment, two councillors defended council’s action, although they remained coy on the subject, saying the deliberations were made behind closed doors.
“In looking at offers, we had to look at the financial benefits to city taxpayers and weigh all the factors,” said Non-Partisan Association Councillor Peter Ladner.
“Any time you don’t take the top bid, you’re in effect subsidizing somebody.”
Meanwhile, COPE Councillor Jim Green pointed out it was the NPA’s past practice to always accept the highest bid when selling off city-owned property.
However, he conceded: “In terms of building cities, that’s not necessarily the best way.”
Green, himself a patron of the arts, said he has asked for a staff report from the city’s real estate division to explore possible alternative guidelines when dealing with the tendering process in future.
“Price is an important issue, but what are the other issues that we could consider?” Green said. “Can we use the fact we’re trying to develop an area as a cultural area, for instance, or other aspect like that?
“How can we use our (city-owned) properties and their sale to advance the public good?”
© Copyright 2003 Vancouver Sun
