May 1, 2012

HOT TOPICS IN REAL ESTATE

Presented by Alexander Fane and Olga Rivkin

• 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-by-site

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

Due Diligence

• 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

• 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 (“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

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