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HOT TOPICS IN REAL ESTATE

Presented by Alexander Fane and Olga

Rivkin

May 1, 2012

ZONING AND COMMUNITY AMENITY

CONTRIBUTIONS

Municipal control of development

Creatures of statute

• Local Government Act

• Community Charter

Stages of involvement with a development

• Subdivision

• Land use

(to be discussed in this presentation)

• Development permit

• Building/occupancy/other permits

Land use planning

The power to zone is the ability to control what can and cannot be done with any particular property

Discretionary power: municipal council makes a decision, at its will, provided they follow due process and decide in good faith

Public participation is required (“Not In My

Backyard”)

Types of land use bylaws

Regional growth strategy

• Adopted by a regional district

• Municipal bylaws must be consistent

Official community plan

• Includes a regional context statement

• Broad stroke land use policy

• Zoning bylaws must be consistent

Zoning Bylaw

• Per-lot land use bylaw

Zoning bylaws

Spectrum of discretion

Process

• Three readings

• Public hearing

• Adoption

• *no vested rights until adoption

Zoning bylaws

Key contents

• Land use

> residential/commercial/industrial

> specific lists of uses

> usually, use is prohibited unless specifically permitted

• Density

>

“means (a) the density of use of the land, parcel or area, or

(b) the density of use of any building and other structure”

>

Example: “all buildings and structures together must not exceed a gross floor area of 0.9 times the lot area” (City of

Coquitlam - residential)

Community Amenity Contributions

Three main methods

• Works and services contributions

• Density bonusing contributions

• Voluntary amenity contributions upon rezoning

Works and services contributions

Rooted in statute (s.938/939/941 LGA; s.565 VC)

Requirement to pay for works and services that are needed to serve a new development

Excess or extended services

Development cost charges/development cost levies

Density bonusing

Rooted in statute (s.904 LGA/s.565.1 VC)

Density cannot be varied by a permit

Authority to require community amenities in return for bonus density

• Base density by bylaw

• Exceed base density in return for community amenities

• Example: base density = 2.5 times the lot area; to achieve additional density of 0.5 times the lot area, a contribution of 75% of the land value of the additional density is required

Voluntary amenity contributions

No statutory basis

Rooted in discretion to rezone

Cannot enter into an agreement to rezone

(other than a phased development agreement)

Often negotiated after third reading, prior to final adoption (remember, no vested rights!)

Voluntary amenity contributions

Example

– Vancouver

(“Community Amenity

Contributions

– Through Rezonings”)

• Mix of density bonusing and voluntary contributions

• Standard rezonings: flat rate of $3 per square foot of additional floor space

• Non-standard rezonings: negotiations on a site-bysite basis (usually includes engineering analysis, market analysis, financial analysis etc. to determine the “lift” in land value as a result of rezoning

Due diligence

Extent, timing and opportunities

• How far along is the transaction

• Nature of client

• Nature of development, vendor, location

Initial considerations:

• who is the owner

• share or asset transaction

• title review

>

Restrictive Covenants

>

Mineral Tenures

>

ALR

>

Airport

Due Diligence

Standard Searches

• Zoning

• CRA

• Bankruptcy

• Corporate

• Employment

>

Employment Standards Branch

>

Workers Compensation Board

Due Diligence

Due Diligence

Standard searches continued:

• Environmental Management Act (British

Columbia)

>

Site Registry

>

Phase 1, Phase 2

• Riparian

• Material leases or land use agreements

• First Nations

Origins of REDMA

Real Estate Development Marketing Act

force on January 1, 2005

(“REDMA”) brought into

Replaces Part 2 of

Real Estate Act. Real Estate Services Act

Replaces Part 1 of the

Real Estate Act

.

REDMA governs marketing, sales, and long-term leases of development units

When considering REDMA, also consider regulations and the

Superintendent of Real Estate’s 15 Policy Statements

Overview of REDMA

Mechanics of REDMA

No marketing without a disclosure statement (Section 3(c))

Disclosure statement must:

Be in the form and content required by the superintendent;

Without misrepresentation, plainly disclose all material facts;

Set out the substance of a purchaser’s rights to rescission as provided under Section 21; and

Be signed as required by the Regulations

(Section 14(2))

Overview of REDMA

• “

Material Fact

” – Means in relation to a development unit or development property, any of the following:

(a) a fact, or proposal to do something, that affects, or could reasonably be expected to affect, the value, price or use of the development unit or development property;

(b) the identity of the developer;

(c) the appointment, in respect of the developer, of a receiver, liquidator or trustee in bankruptcy, or other similar person acting under the authority of a court;

(d) any other prescribed matter.

Overview of REDMA

Mechanics of REDMA

• If a developer becomes aware that a disclosure statement does not comply with

REDMA, or contains a misrepresentation, the developer must immediately file with the superintendent:

(i) a new disclosure statement, or

(ii) an amendment to the disclosure statement

(Section 16)

Overview of REDMA

Mechanics of REDMA

• New Disclosure Statement – Required if :

>

>

Is respecting a matter set out in paragraph (b) or (c) of the definition of “Material Fact” (the identity of the developer or the appointment of a receiver, liquidator or trustee in bankruptcy, does not apply to CCAA Proceedings)

Is respecting a matter set out in paragraph (d) of “Material

Fact” (any other prescribed matter (Policy Statements?))

>

Is of such a substantial nature that the superintendent gives notice to the developer that a new disclosure statement must be filed (has not happened)

Overview of REDMA

Mechanics of REDMA

• A developer must file an amendment to a disclosure statement in any case where a new disclosure statement is not required

• Paragraph (a) – Material Fact

>

“a fact or proposal to do something, that affects, or could reasonably be expected to affect, the value, price or use of the development unit or development property.”

• disclose all “Material Facts” or agreement not enforceable against purchasers.

Overview of REDMA

Mechanics of REDMA

• New Disclosure Statement = Right of rescission

• Amendment to Disclosure Statement = No right of rescission

• (Section 21)

• A promise or an agreement to purchase or lease a development unit is not enforceable against a purchaser by a developer who has breached any provision of Part 2 [Marketing and Holding Deposits]

• (Section 23)

Overview of REDMA

Practical Application

• Risks

• When and what to disclose

• Overview of sales centre

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