Redeveloping Sites

Abe Zakem House — Charlottetown, Prince Edward Island

Goal

Redevelop a site in need of environmental remediation to create affordable housing.

Target group

Low-income seniors, individuals with disabilities and families.

Synopsis

The Kiwanis Club of Charlottetown created 22 units of affordable rental housing (and one market unit) for seniors through the remediation of an environmentally contaminated (“brownfield”) site that had previously been used as a municipal garage. The City of Charlottetown donated the site, a former public works garage, and CMHC provided Proposal Development Funding to help the Kiwanis Club with the costs of an environmental site assessment and soil load-bearing tests, as well as to complete project drawings and specifications. The Kiwanis Club raised $250,000 through fundraising toward the capital costs, and funding was received from both the Province and the federal government (through CMHC). The City gave five years of tax relief under a program designed to encourage downtown redevelopment and acquired portions of three adjacent lots to address environmental constraints.

Description

Background and context

The Kiwanis Club of Charlottetown’s desire to provide affordable housing for low-income seniors provided an opportunity for the municipal government to promote community revitalization. With 600 households on the affordable housing waiting list for Prince Edward Island, Kiwanis Club members were willing to provide significant equity to build new rental housing. The property was owned by the City of Charlottetown and was previously used as a city public works garage, which included the storage of associated garage maintenance supplies. Previous site activities included large truck service and repair. In September 2002, the City demolished the old garage maintenance building at this site.

Developing the site also had the potential to set a positive example to other property owners in the community. The property is located on a major arterial road in downtown Charlottetown, at one of the main entrances to the city. It is in the older part of the city with the waterfront across the street. Surrounding uses are predominantly residential.

Vacant site prior to construction
Vacant site prior to construction
Source: Prince Edward Island, Department of Environment, Energy and Forestry

How the redevelopment worked

Abe Zakem House, named after the Kiwanis Club’s longest-serving member, is a 23-unit rental complex located in downtown Charlottetown. The project was started in July 2003 and was completed on schedule in December 2004. Abe Zakem House has 16 one-bedroom and 6 two-bedroom affordable apartments, as well as one market unit, and serves seniors and people with disabilities and their families. The land, a decommissioned public works garage site in a mixed residential area, was donated to the Kiwanis Club by the City of Charlottetown. Though environmental remediation was required, the partners believed that developing this property for housing could encourage the renovation of existing buildings and the construction of new housing in the neighbourhood.

As project sponsor, the Kiwanis Club of Charlottetown formed a corporation to develop the housing and manage operations. The Kiwanis Club achieved its specific goal: 22 units of rental housing at rates 20 per cent below market values. In addition to living in affordable and secure housing, the residents enjoy a neighbourhood close to medical and social services, public transit, stores, offices, schools and parks and the scenic waterfront. Rents remain below market and turnover is low, and Club members are proud of the quality they achieved and the standard they set, particularly for accessibility.

The City achieved several goals, including the environmental cleanup of a site it owned, stimulating neighbouring property owners to renovate existing and develop new residential projects, adding new assessed property value to its tax rolls, as well as leveraging the construction of secure affordable rental housing for its citizens.

Planning

The site assessment showed that levels of gasoline, diesel oil, and lubrication oil in the soil and groundwater were above provincial maximums for development. Three adjacent residential properties had also been impacted. The Department of Environment, Energy and Forestry required that a restriction on development be placed on the rear 6 metres (20 feet) of these adjoining residential properties. The City ultimately purchased these properties to expedite the development.

The development site was subject to a risk assessment using the Atlantic Risk-Based Corrective Action (RBCA) process to determine whether the known concentrations of petroleum hydrocarbons presented a risk to human health and the environment. This risk assessment determined that the site could be redeveloped subject to land use restrictions and engineering and building design controls to minimize exposure and prevent vapour intrusion into the building.

Environmental cleanup

Contaminated soils within the building footprint were removed from the site for disposal. The risk assessment recommended the following risk mitigation measures, which were implemented at the site:

  • the residential building must be constructed in a prescribed area of the property with no below grade space;
  • an impermeable vapour barrier must be installed on the underside of the slab on grade floor of the residential building to prevent vapour intrusion into the building;
  • a mechanical ventilation system must be installed to prevent vapour intrusion;
  • the thickness of the concrete slab must be increased over the standard building code requirement;
  • all portions of the property not occupied by the building footprint must have surface cover (asphalt and/or topsoil/sod) to encapsulate any hydrocarbon impacted soil; and,
  • the growing of produce intended for human consumption is prohibited.

The site required rezoning and other normal planning amendment requirements as dictated by municipal bylaws. Zoning variances were also required to permit increased height and density and reduced setbacks. The soil contamination issue resulted in a longer-than-normal project completion timeline.

Design

The end product was a three-and-a–half-storey building with 23 units, each with a parking space. With a lot of only 0.2 hectare (0.5 acre), there was no room for landscaped open space, and project amenities were kept modest to reduce construction costs.

Project nearing completion
Project nearing completion
Source: Prince Edward Island, Department of Environment, Energy and Forestry

Gaining community acceptance

Residents of the area expressed concerns about the environmental impacts of the contamination. Five of them approached the mayor and their councillor with their fears that their land had also been contaminated and proposed that the City should buy them. Immediate neighbours also argued that the development would block their views of the waterfront and add traffic to the neighbourhood. In addition, there was some opposition to the plan to build subsidized housing on the property, and a number of residents argued for a bid by a private developer who wanted to build condominiums on the land.

There were several articles in the local paper, leading to debates at city council and a series of public meetings. The Kiwanis enlisted a number of champions, including the mayor, a member of Parliament, and the provincial minister of health and social services. They were influential in gaining support for the project.

Financing

Abe Zakem House was completed on schedule in late 2004 at the budgeted construction cost of $1.5 million. The Kiwanis Club provided $250,000 toward the capital cost raised through ongoing fundraising. The City of Charlottetown donated the site, valued at over $200,000.

CMHC provided an interest-free Proposal Development Funding (PDF) loan of $65,000 to help the Kiwanis Club with the costs of an environmental site assessment and soil load-bearing tests, and to complete project drawings and specifications. CMHC and the Government of Prince Edward Island provided a $566,000 grant through the federal-provincial Affordable Housing Program.

The Province also provided a grant-credit of $50,000. The project also qualified for property tax relief over five years, valued at $40,000, through a city program that encourages downtown redevelopment. The balance of the financing, approximately $700,000, was provided by a CMHC-insured mortgage.

The City incurred a further cost as a result of being unsuccessful in negotiating a “no development” covenant with three adjacent property owners with portions of their properties impacted by contamination. As a result, the City ultimately purchased these properties to expedite the development, at a cost of almost $450,000.

Summary: Costs and Financing
Costs Thousands
Construction costs $1,500
Value of land $203
Environmental site assessment, engineering drawings, soil-load tests, etc. $65
Environmental consulting fees $42
   
Total $1,810
   
Contributions Of Capital And Land  
Affordable Housing Agreement funding $566
Kiwanis Club grant $250
Contribution of the land by the City of Charlottetown $203
P.E.I. provincial grant and credit $50
CMHC Proposal Development Funding (interest-free) $65
   
Total $1,134
(balance through CMHC-insured loan)  
   
Additional Costs (City)  
City purchase of adjacent properties $450
City property tax relief and grant-credit $90

Cost savings and benefits

Savings were achieved for the proponents, as the land was donated by the City. The mortgage financing and consequent mortgage payments were low because of equity contributions from the provincial and federal governments, as well as from the City. Ongoing costs were also reduced through the tax relief provided by the City.

While the costs to the City were quite high, the City achieved tangible benefits. These include:

  • the production of affordable housing;
  • the cleanup of a contaminated site;
  • the revitalization of the downtown area, as there were subsequent extensive renovations to neighbouring properties; and
  • the spurring of several smaller infill residential developments, which have added to the property tax base.

The completed Abe Zakem House
The completed Abe Zakem House
Source: Charlottetown Area Development Corporation

Impacts on the provision of affordable housing

Affordable units produced

All but one of the 23 units in this development are affordable, with rental rates below market. The project contains 16 one-bedroom, 6 two-bedroom and one market-rent unit. The monthly rent for the affordable one-bedroom units, at $485, was 22 per cent less than the $620 market rate for a one-bedroom unit in the area. The two-bedroom affordable units rent at $610. In return for funding assistance, the Kiwanis agreed to rent the units for a minimum of 10 years at affordable rates to low- and moderate-income households.

Suitability for replication

Most of Canada’s cities have contaminated sites. As shown in this case study, redevelopment and the creation of affordable units can revitalize what might otherwise be an unattractive and neglected area, meeting the goals of municipalities.

Some of the risks are related to:

  • liability;
  • regulations;
  • financial constraints;
  • planning approval processes; and
  • market acceptance.

Some of the lessons learned from the Abe Zakem House case study that address these risks are as follows:

  • It is important to use a scientifically defensible technical tool (such as the Atlantic RBCA process) to determine the extent of contamination and establish whether the site can be safely developed for residential use and what restriction should be placed on that use.
  • The developer should have a clear understanding of the extent of contamination and mitigation measures before approaching the City for approval.
  • If possible, neighbouring property owners should be involved in the planning process as early as possible to increase understanding and acceptance for the redevelopment project prior to the formal process.
  • Brownfield redevelopment projects require a champion. The project may not have happened without the championing efforts of the mayor of Charlottetown and the local member of Parliament.
  • The planning process and issues resolution require time, effort and diligence. In this case, the developer underestimated the amount of effort and time required.
  • It can be helpful to name the project appropriately to underline its values. The public took note of the development and its importance once it was named for a respected member of the community.

Related strategy

Sources of further information

  1. For additional information regarding Abe Zakem House, see the CMHC Brownfield Redevelopment for Housing Case Studies at http://www.cmhc-schl.gc.ca/en/inpr/su/sucopl/upload/3-Zakem%20HouseEN(w).pdf.
  2. For additional information regarding the community reaction and subsequent meetings, see Gaining Community Acceptance: Case Studies in Affordable Housing, prepared for CMHC by CS/RESORS Consulting Ltd, March 2006, pages 43-45, at http://publications.gc.ca/collections/collection_2011/schl-cmhc/nh18-1/NH18-1-8-2006-eng.pdf.
  3. For general information on Brownfield Redevelopment, see the CMHC Research Highlight Brownfield Redevelopment in Canada, Literature Review and Analysis, April 2005, at http://www.cmhc-schl.gc.ca/odpub/pdf/63948.pdf?lang=en.

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