There is a stormy situation in Richmond where developer Onni has been accused of bullying Richmond City Council in the rezoning of prime waterfront lots in historic Steveston that were previously zoned for maritime uses. When there is a major land lift as in this case where the property will be going into a mix of commercial uses, the municipality usually receives the increased assessed value for community amenities that the City would put in place as part of the rezoning. But not with Onni. Consultant Richard Wozny was hired by Richmond to ascertain that the land lift value was conservatively $5.5. million. But in a precedent setting example at public hearing this week, Onni announced that it was not paying that amount, instead offering $4.75 million.
And in a strange precedent, Onni did say they would give $250,000 each to the Richmond Hospital Society and the Steveston Foundation, but not the city. This has nothing to do with the needed city contribution. Of course those donations would be tax-deductible too, all in the favour of Onni. As reported in the Richmond News the Onni representative then stated that the company is doing it as a “creative way to improve our application.”
“Our proposed amenity contribution of $4.75 million already represents 100 per cent of the agreed increase in value. We struggle to rationalise a further increase above that…so we tried to come up with a creative way to improve our application, and we felt we did so by adding more donations. If the council doesn’t believe in it, that’s 100 per cent their problem.”
Well, not really. The increased assessed value was $5.5 million according to the consultant. And Richmond Council was not happy. As one Councillor said “You offer $500,000 more but not to the city. You are trying to embarrass me by going through that route…to a third party to offer other members of the community money.”
Onni has stated that they normally pay only 50 to 75 per cent of the land lift in other municipalities,and they were going to pay the asked for amount in Richmond. And on social media, Richmond Councillor Harold Steves ruefully notes that the true value of the rezoning was probably in the 9 to 12 million dollar range-but with only three “no” and five “yes” votes, Council accepted the precedent setting $4.75 million instead of the $5.5. million.
You can go through the City of Richmond’s Onni development public hearing documents here.
Appraisals are always subject to extraordinary assumptions and at best are a range of values.
The commercial portion is still vacant, and as such the value is likely NOT as high as the City of Richmond claims. Far better would have been more residential use as there is already far too much retail and commercial space available in Steveston. Steveston is commercially viable only in the summer and the odd weekend in between, but pretty dead otherwise.
With only 2 levels of condos and huge vacant commercial space Onni decided that this was probably not all that profitable after all.
It’s vacant because they didn’t have the zoning permission to allow them to rent it.
The real issue here is that ONNI went ahead and built general commercial space without obtaining the proper zoning. Any council could not allow that to stand unchallenged.
The commercial space has LOW value as the demand is low in that location. As such, the appraisal should reflect that. Did it ?
ONNI received zoning approval for Maritime-related uses – i.e. ONNI agreed to the restriction.
It went ahead and built the commercial space with that restriction.
Surprise, surprise – ONNI couldn’t find a maritime-related tenant willing to pay its [high] rent.
No it wants to turn the space into general commercial retail space, which will of course rent at the higher rates because the there’s a shortage of retail space suitable for chain stores in the area. (i.e. the bait and switch).
Think of the maritime-related use as socially-assisted housing
– but in this case, it’s a dying maritime commercial sector that needed a boost.
… now think of the bait and switch.
See which Richmond Council is mad?
A question: the article suggests that the donations made by Onni were tax deductible, as if this was a special benefit, but aren’t they just a normal corporate expense which would be deducted from income so there would be no tax anyway (in effect tax deductible)?
Good question. And further to the appraisal, what was the date of that determination? Within one or two years, it could conceivably be rather undervalued. If you take the West Vancouver illegal reno by comparison, you might have more people yelling for their demolition. But now you can see the value of said “community donations”.
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