Back to OK Life

The Sunday Recap – Local News from the Week March 18-25

Jason Stewart | March 25, 2018
The Sunday Recap – Local News from the Week March 18-25
GSL Group's proposal for the Prospera Place parking lot.

Every Sunday we'll recap local lifestyle and culture news that you may have missed over the last seven days. Real estate from dwellings to big developments take front seat yet again, and a quick heads up that random piano playing is about to become a form of civil disobedience. Seriously, this is a thing – we take a look at the new bylaws being proposed to city council tomorrow.

The Prospera Place Parking Lot Proposal

Vancouver based GSL Group recently submitted a proposal to city council to build two residential towers on the south corner of the Prospera Place parking lot. GSL is the parent company to several businesses that include RG Properties (which owns and operates Prospera Place, and has a 30-year lease with the Kelowna Rockets), Planet Fitness, Boomers Bar & Grill, WHL team Victoria Royals, and online ticketing site, They also run the Rock the Lake festival here and Rock the Ambleside festival in West Vancouver.

The proposal calls for two 27 and 37 storey curvilinear towers that will house 337 residential units total, and sit on top of layered podiums containing mostly retail and five floors of above ground parking dedicated to each. GSL Group says the site “represents a noteworthy major opportunity for development” in the area that will lead to the “creation of a well-designed entertainment district.”

What's interesting about this proposal is that it demands the involvement of city departments other than just City Planning to look closely into the city's 30-year arrangement with GSL Group concerning the construction and maintenance of Prospera Place, and the sale of this particular land in that deal. "We’re looking at everything such as what status Prospera Place is at in terms of functionality" City Planner Adam Cseke said earlier this week.

That's a Helluva Deal!

GSL Group's RG Properties' arena project in Kelowna was one of the first major public-private partnerships in British Columbia. The deal was struck back in 1997 and it hinged on the City of Kelowna buying shares in RG Properties. So RG Properties got their project capital and, as shares, it was non-taxable as well – win-win for them. The shares are also the mechanism for the city to reacquire the land and the building in 2028.

RG Properties and the City of Kelowna have an arrangement for Prospera Place that lasts until 2028

The city also provided further financing for the project by entering into what was called a "Community Use Agreement". Basically the city is buying ice time from RG Properties. The terms of the agreement require the city to make annual payments to RG Properties and receive "a total of 1,500 hours of community use per annum in the facility for an initial term of five years, with five options to renew for further five-year terms" (City of Kelowna).

The city pays for this ice time/community use through annual payments from its taxpayers, estimated at the time to be $17.50 a year (based on the 1997 $160,000 property assessment) or a 1.6 percent tax increase. Yes, if you currently live in Kelowna, some of the taxes you pay continue to go towards addressing this arrangement. A staff member of Kelowna's Parks and Leisure Services Department said at the time, "It's the most expensive ice in the world, its over $700 an hour, in other words you have to pay $700 an hour to rent an ice rink. We aren't really renting an ice rink. It's really a mechanism to provide capital financing for the building. And it's about equal to the cost of capital financing. So it worked out well."1

Additionally in the deal, the city subdivided the seven acres – where Prospera Place currently sits, the parking surface and land immediately around it, and sold RG Properties two chunks totalling three acres at 1997 market prices, which was approximately $500,000 an acre. RG would pay property taxes and set aside $49,000 a year for major repairs or capital works. During a city council meeting in 1997 when the city concluded its negotiations with the developer, City Planner Fred Pritchard was quoted in the Kelowna Daily Courier (Sept 27, 1997) saying "that the parking would be in place for two to five years, until RG puts up a commercial development". It's roughly 21 years later, and now we have RG Properties' proposal for said development.

The other day we read Councillor Ryan Donn's remarks on social media on the city's arrangement with RG Properties. "We pay them over $1,000,000 per year (it has been over but now it is under) that was part of the deal. Honestly it was a pretty amazingly sweet deal for RG Properties", he wrote. "It’s honestly just a bad deal. We are locked into leasing back rental time but we don’t actually get the time used based on how the deal was set up."

Back to the proposal, the site is currently zoned Comprehensive Development Zone CD5 by the city for mixed use commercial/residential, with a maximum building height of 12 storeys, and in order to make the project possible GSL Group is asking to rezone the property with the additional height variance. It will be interesting to see all the moving parts at play here as this process moves forward. City Planner Adam Cseke indicated to the media this week that proposal is still in the very early stages and subject to more discussion, and more importantly final city council approval.

Real Estate Industry Report Finds the Okanagan Housing Market the Fourth Most Unaffordable in Canada

Friday morning we awoke to the news that the Okanagan housing market is ranked the Fourth Most Unaffordable in Canada in a study done by the Real Estate Industry's ZooCasa (see their graphic below). The average price of a home is 18x the median income at $510,000 to $29,000. We rank after Vancouver, The Fraser Valley and Toronto.

Often when negative polls are released, the industry in question attempts to poke holes in the data collection. In this case, the Okanagan Mainline Real Estate Board's Tanis Read, attempts to explain the unaffordability report away as "interesting" because the income figure, she intimated, is so low as it includes both part-time and full-time wage earners. Somehow the sorry state of our employment options shouldn't factor in to the equation I suppose.

Tanis Read contends, correctly, that the median rather than the average figure was used for income. In this case the median is lower than the average which is $47,000 (side note: this fact could reflect the small group of extreme wealth at the top end of the income scale hoisting the average up). Fair enough, but keep in mind that Demographia, the world-renowned urban policy institute, maintains that house prices at 3.1 to 5 times the average income is where unaffordability kicks in, and her preferred figure has us at 10 times.

Okanagan Mainline is the fourth worst affordabilty-wide
Okanagan homes may be priced at, on average, 10 times the average income, but Okanagan Mainline Real Estate Board's Tanis Read is just fine with that.

Read feels that many still find a way to buy because they have investment income or money raised outside the Valley, such as the Alberta oil and gas sector. It is worth mentioning, that this entire report has been discussed in local media without any mention of the recent attempts by the province to curb soaring home prices with the speculation tax. Weird? This takes me back to my first year media studies courses that taught us how the mainstream media often fails to educate the public on the full context and sources of issues because it reports on them in silos, as if they are somehow unconnected. Part of that is the nature of the beast sure (beat writing and reporting not necessarily being in the service of writing think pieces), but at this very moment it feels a bit tone deaf to us.

Penticton Scribe Pens a Pro Speculaltion Tax Piece But His Editor Won't Like it

This brings us to another news story we came across from our fair neighbour to the south. Writer David Bond, a retired bank economist, wrote a column in the Penticton Herald stating that, against his own editor's opinion (here we go again) that the sky is in fact not going to fall if the speculation tax goes through. In fact, if we do not embrace it, he argues, we risk a devastating rise in housing prices and our nascent yet growing tech sector will decamp for cities where they can attract talent.

The problem, he claims, is that in the cities hit by the tax (West Kelowna and Kelowna), the escalation of the cost of housing is having a deleterious impact upon their economies.

Young people cannot find reasonably priced accommodation in the central city and are forced to commute long distances even for jobs paying the minimum wage. Institutions of higher learning are finding that, while the salaries offered are competitive with those offered elsewhere in North America, the cost of housing acts as a barrier to attracting top-flight scholars. Moreover, major employers are finding it increasingly difficult to attract people to jobs in British Columbia for the same reason.

Worrying that surrounding areas will boom while we don't is missing the forest for the trees. Perhaps, although he doesn't say it, the whole region should be protected from non-resident property investors (as the mayor of Penticton has mentioned he'd prefer), and concentrate on building homes to attract long-term and skilled residents (as we have argued elsewhere). This piece does a great job asking tough questions and situating the speculation tax into a wider regional economic framework, and moreover, it really makes one wonder, when it comes to our local media, where are Kelowna's curious and critical cajones?

Are These Bylaws For Real? They Might Be By Tomorrow

City council is set to discuss 90 new bylaws during their council meeting Monday. All of these bylaws come care of Kelowna's relatively new Bylaw Manager who has been working on it for the past year with "virtually no public consultation" according to Councillor Ryan Donn. The Bylaw Manager is hired by the City Manager, and not city council. Here are just a select number of them set to go up for debate:

$100 = street entertainer fail to obtain valid permit
$100 = street entertainer fail to produce valid permit
$100 = entertain in a restricted area not designated a busk stop
$100 = street entertainer fail to comply with conditions of permit
$250 = cause or permit noise from an instrument, electronic equipment or device to disturb any person
$250 = own, keep or harbor any animal or bird whose sound disturbs any person
$100 = horn, alarm, or warning device from motor vehicle that disturbs any person
$250 = permit noise from your property to disturb any person
$100 = sleep in your car on a street or a public space
$500 = obstruct a by-law officer
$250 = placing paper materials without the permission of the city
$250 = stamp, paint, post, affix, or place materials without the permission of the city
$250 = stop motor vehicle within 500m of a recycling depot and give recyclables to another person
$100 = permit compost that is not closed and sealed
$250 = occupant of motor vehicle stopped at controlled signal, goods or other things to another person

The city's bylaw manager seems like a really fun person.

People have already have balked at the idea that over-regulating buskers in town is not exactly the type of enforcement we need, often referring to that time when Steve Tyler spontaneously began playing piano at one of the city pianos about town to the delight of bystanders and local media.

While a city has the authority (granted by the province) to pass its bylaws, it is not unconditional. City bylaws are open to challenges if they overwrite existing provincial or federal legislation, or if they contravene the Constitution or Charter.

Regarding sleeping in cars, it would be interesting to hear from council if this is aimed at tourists illegally RV parking, or at targeting homeless people (or could be applied unevenly to do so). Some of our west coast municipal neighbours such as Los Angeles and Victoria, who are also struggling with house vacancy issues have run into constitutional/Charter issues by targeting this community with similar bylaws. Last year Victoria’s mayor came out forcefully against existing bylaws because she believes, as reported in the Times Colonist, "the housing crisis in her city has become so dire that bylaws ought to be changed to allow people to legally sleep inside vehicles parked on the street" until the vacancy rate rises. These are some of the cities' most vulnerable people – low-income workers, people who have been evicted from their housing on short notice, (and) people fleeing violence she said.

It is in line with the human rights obligations of cities not to criminalize and punish people for doing what they find necessary to protect themselves when they are homeless, just as you shouldn’t be prohibiting somebody from sheltering in a park when they don’t have another option.

For context, the B.C. Supreme Court ruled that it is unconstitutional to prohibit someone from erecting temporary shelter in a park if there are no available shelter beds, a decision that was upheld by the B.C. Court of Appeal in 2009. So as you can see the bylaws are not always legit, let alone what we want to hold as our city's values.

Fun Fact: The "by" in bylaw is an old Norse word that means "town". A bylaw is simply a town, or local law.

Instagram of the Week

1 From an anonymous interview with a Parks Staff member in a Masters Paper, Planning in the Process for Multiplex Sports Facilities: Integrating and Empowering the Public in Public-Private Partnerships. Donald Nip, Department of City Planning, University of Manitoba


Weekly Newsletter

One email, lotsa scoops. We drop the K‑town knowledge every week, with event highlights, updates and articles.