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May 1, 2012
HOT TOPICS IN REAL ESTATE
Presented by Alexander Fane and Olga Rivkin
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• ZONING AND COMMUNITY AMENITY CONTRIBUTIONS
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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
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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”)
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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
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Zoning bylaws
• Spectrum of discretion
• Process• Three readings• Public hearing• Adoption• *no vested rights until adoption
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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)
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Community Amenity Contributions
• Three main methods• Works and services contributions• Density bonusing contributions• Voluntary amenity contributions upon
rezoning
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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
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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
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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!)
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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-by-site
basis (usually includes engineering analysis, market analysis, financial analysis etc. to determine the “lift” in land value as a result of rezoning
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Due diligence
• Extent, timing and opportunities• How far along is the transaction• Nature of client• Nature of development, vendor, location
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Due Diligence
• Initial considerations:• who is the owner• share or asset transaction• title review
> Restrictive Covenants> Mineral Tenures> ALR> Airport
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Due Diligence
• Standard Searches• Zoning• CRA• Bankruptcy• Corporate• Employment
> Employment Standards Branch> Workers Compensation Board
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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
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Origins of REDMA
Real Estate Development Marketing Act (“REDMA”) brought into force on January 1, 2005
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
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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))
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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.
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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)
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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)
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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.
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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)
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Overview of REDMA
• Practical Application • Risks• When and what to disclose• Overview of sales centre
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