KENNETH CHAN (DAILY HIVE) - Mark Wednesday, January 24, 2024, on your calendar, as this is the day Vancouver City Council is scheduled to review and decide on the policy statement for the massive First Nations-led Jericho Lands neighbourhood development in West Point Grey.
This comes after the release of the draft policy statement in early December 2023. The planning and public consultation process for creating the policy statement began in early 2019.
The policy statement acts as an area master plan to guide the project’s future rezoning applications.
Unlike Squamish Nation’s Senakw project, the 90-acre Jericho Lands site is not on reserve, as it was a former military installation acquired a decade ago by a partnership between MST Development Corporation — the private real estate development entity wholly owned by the Musqueam, Squamish, and Tsleil-Waututh First Nations — and federal Crown corporation Canada Lands Company. For this reason, this project needs to follow the City of Vancouver’s bylaws, policies, and approval processes, just like other developments.
ccording to a newly released City staff report today ahead of next week’s decision, it is stated that Jericho Lands will be built in four phases over 25 years.
The estimated value of the Jericho Lands’ public benefits package is now revealed to be about $1.3 billion. This includes about $550 million for the new 50,000 sq ft community centre, 10,000 sq ft library, five childcare facilities for up to 259 kids and potentially 240 after-school care spaces, 20 acres of parks, 10 acres of open spaces, social and cultural spaces including an outdoor event-friendly venue for up to 2,000 people, and supporting utilities and public works infrastructure. The vast majority of the public benefits value comes from setting aside at least 20% of the residential floor area for about 2,600 social housing units, estimated at approximately $760 million, although it is expected this will require funding assistance from the federal and provincial governments.
This does not include any consideration of a potential cash contribution towards the construction of the Jericho Lands subway station in the middle of the development site for the future SkyTrain Millennium Line extension between Arbutus and the University of British Columbia (UBC). But the project has already offered the required land needed for the subway station, which would be integrated into high-density tall towers.
At the very earliest, the UBC SkyTrain could be ready by the early 2030s. The provincial government is currently leading the advanced technical studies and business case work supporting SkyTrain extension, which is expected to reach completion by late 2024. This SkyTrain project is one of the key 10-year priorities for TransLink and its Mayors’ Council, and it still needs billions of dollars in funding from the federal and provincial governments.
It is noted by City staff that if the UBC SkyTrain extension does not go ahead or if the route and station placements change, the policy statement and phasing strategy for Jericho Lands will need to be “reviewed,” suggesting the level of density and uses outlined in the policy statement are made possible by the existence and placement of both the on-site Jericho Station and the nearby off-site Alma Station just to the east.
The subway station also supports the design of establishing a car-light neighbourhood that prioritizes active transportation, with a network of pedestrian and cycling pathways crisscrossing the site. This station would also be further directly supported by a bus exchange, accessed from West 4th Avenue.
City staff also state the significant residential population of the Jericho Lands will increase local school enrolment by between 550 and 850 elementary students, and between 450 and 750 secondary students. On-site space will be set aside for a new public elementary school for up to 550 students, located next to the new community centre, but the added enrolment of secondary students can be accommodated at the area’s existing school facilities.
As well, West Point Grey Academy, an independent elementary and secondary school currently located on the site, could potentially return in a new space integrated into mixed uses. This would be subject to a lease agreement between the school and First Nations.
Across all uses, the total building floor area on the Jericho Lands will reach up to 13.5 million sq ft, including residential space for about 13,000 homes accommodating 24,000 residents. Currently, about 13,000 people live in the entire West Point Grey neighbourhood.
In addition to setting aside 20% of the residential floor area for social housing, at least 10% will be below-market rental housing. Conventional strata ownership homes will not be available, as the First Nations would like to own the land in perpetuity. Instead, the only ownership option will be leasehold strata.
At least 750,000 sq ft of office, retail, restaurant, hotel, cultural, and creative industrial spaces for about 3,000 on-site jobs.
There will be dozens of high-rise towers — reaching up to 49 storeys for the three “Sentinel” towers, where the subway station will be situated — along with numerous mid- and low-rise buildings.
The project has its opponents, too, with local resident group Jericho Coalition reiterating their desire earlier this month for a lower-density project with 7,200 homes for about 16,000 people within low- and mid-rise buildings. They assert that the proposed high-rise tower concept could potentially puncture the aquifer below the site and that the policy statement process is missing a hydrogeological study that could identify any potential geotechnical issues with tower placement and other uses. Hydrogeological studies are typically only conducted during the rezoning application stage, which will be the next step for the Jericho Lands if the policy statement is approved.
“Without the critical hydrogeological study that covers the potentially serious groundwater issues, the draft policy statement is woefully incomplete – because the whole Jericho Landsproject could have to be changed entirely,” said Murray Hendren, a retired environmental engineer and spokesperson for the group. Puncturing the aquifer and a release of significant groundwater could increase the risk of erosion, sinkholes, and ground subsidence.
Others have more recently asserted that the recently released updated assessed property values by BC Assessment show that the single-family detached houses closest to the Jericho Lands development site had decreased their values.
MST and CLC went through a similar process through the municipal government for their Heather Lands project to redevelop the 21-acre former BC RCMP headquarters just west of Queen Elizabeth Park. The policy statement for the Heather Lands was approved in May 2018, and a site-wide rezoning application was approved in June 2022.
KENNETH CHAN (DAILY HIVE) - There could be some good news for mortgage holders and other borrowers, as borrowing costs could become cheaper later this year.
If the economic trends hold, according to a new forecast by Oxford Economics, the Bank of Canada could be in a position to make its first decrease to the policy interest rate in years, since the pandemic’s early onset and after consecutive unexpected increases last year.
The 5% rate was first established in July 2023, when the rate was last increased.
Oxford Economics believes the 5% rate will be held until the middle of 2024 when the Bank of Canada will trigger the start of a cycle that lowers the rate.
By the end of 2024, the policy interest rate could reach 4.25%. But it could take a few years for the rate to gradually decrease to the 2.25% “neutral” position.
The Bank of Canada began its previous cycle of increasing the policy interest rate in March 2022 to help curb rampant inflation. It has stated that it needs to see a sustained period of stabilized inflation returning 2% before it begins the cycle of cutting interest rates.
According to Oxford Economics, by the middle of 2024, inflation will be below 3% year-over-year, with the unemployment rate nearing 7.5% year-over-year and average hourly earnings growing at about 2% year-over-year. By then, “there should be ample evidence of a firm disinflationary trend.”
It is now expected the inflation rate will return to the Bank of Canada’s 2% target by late 2024, which is about one year earlier than forecast.
The Bank of Canada’s next policy interest rate announcement is January 24, 2024, at which point it will also release an update on its monetary policy.
Moreover, it is believed Canada has already fallen into a “moderate” recession, which will result in a 1.1% drop in GDP between the third quarter of 2023 and the second quarter of 2024. This is a result of the dust beginning to settle on the rippling impacts from the previous policy interest rate hikes.
High interest rates are also leading to delays or even cancellation of much-needed housing projects, especially rental housing, due to the high borrowing costs to support construction financing.
“Economic activity will continue to contract through mid-year, as soaring debt service costs from mounting mortgage renewals push indebted households to deleverage and unaffordability extends the housing correction,” reads the forecast.
“Consumers and businesses will gradually regain the willingness and ability to spend in H2 2024, but they will likely remain on edge as interest rates only slowly ease amid ongoing uncertainty.”
The federal government is not expected to roll out major new stimulus spending, given its retargeted focus on limiting inflation and meeting its years-long timeline for balancing its budget.
When it comes to immigration, another 1.5 million people are expected to arrive in Canada between 2024 and 2025. As businesses are expected to cut back hiring and implement layoffs, the labour supply growth will outpace employment growth, which will lead to the unemployment rate’s increase to 7.5% by the third quarter of 2024. The federal government’s rationale for its elevated immigration targets is to help address Canada’s long-term labour supply shortage, but this has strained the housing supply, especially on rental housing, and put pressure on public services.
Over the longer run, Canada’s population boom through immigration will “lift the economy,” as newcomers fully settle.
ERIK HERTZBERG/ RANDY THANTHONG-KNIGHT (BLOOMBERG) - The Bank of Canada held interest rates steady and kept the door open to further hikes, with economists seeing its historic tightening cycle at its likely end point.
Policymakers led by governor Tiff Macklem maintained the benchmark overnight lending rate at five per cent on Sept. 6, the highest level in 22 years. They acknowledged a rapid downshift in the economy and warned that price pressures are proving tough to wrestle all the way back to their target.
“With recent evidence that excess demand in the economy is easing, and given the lagged effects of monetary policy, Governing Council decided to hold,” the bank said. Officials, however, remain “concerned about the persistence” of underlying inflation and are “prepared to increase the policy rate further if needed.”
The move was expected by economists in a Bloomberg survey and market reaction was muted. The loonie dipped, trading at $1.3660 per U.S. dollar at 12:11 p.m. Ottawa time. Yields on benchmark Canada two-year bonds were up slightly to 4.701 per cent.
While the rate statement suggests policymakers are comfortable waiting to assess how the deteriorating economy will restore price stability, officials are still bothered enough by the persistent momentum in inflation to remain cautious.
They’re also weighing the cumulative impact of 475 basis points of hikes since March 2022. Keeping a hawkish bias this time around contrasts with January’s explicit pause signal and is likely enough to keep premature bets on rate cuts at bay — especially if Macklem is able to reinforce his inflation worries in a speech and press conference Thursday in Calgary.
Most analysts think the Bank of Canada is finished raising rates.
“We doubt it will need to follow through” with another hike, Stephen Brown, an economist at Capital Economics, said in a report to investors. Doug Porter, chief economist at Bank of Montreal, agreed, arguing that “unless growth rebounds in Q3 — which we doubt — the BoC is likely done with rate hikes.”
Economists surveyed by Bloomberg before the decision see the bank’s next move as a cut in April of next year.
In a rare public reaction to a monetary policy decision minutes after it was released, Prime Minister Justin Trudeau’s government praised Macklem for holding interest rates steady.
“The Bank of Canada’s decision to maintain its overnight interest rate is welcome relief for Canadians,” Finance Minister Chrystia Freeland said in a statement. Though she noted she respects the central bank’s independence, she said she’d use all the tool at her disposal to “ensure that interest rates can come down as soon as possible.”
Her comments reflect the increasing political pressure policymakers face as they try to slow the economy without causing unnecessary financial harm. Before Wednesday’s decision, the premiers of Ontario, British Columbia, and Newfoundland and Labrador all urged Macklem to cease raising rates.
With many central banks globally nearing or at their terminal point for rates, Wednesday’s decision suggests Canada’s six-member panel may soon transition the debate to how long they need to hold instead of how restrictive policy should be.
On Tuesday, the Reserve Bank of Australia also kept its key interest rate unchanged and maintained a tightening bias. Consecutive pauses in that country imply a higher hurdle for any further hikes and suggest a surprise shift in economic data will be needed to prompt additional tightening.
After its January declaration, the Bank of Canada moved to the sidelines for five months. It resumed hiking in June and July after undaunted consumers drove unexpectedly strong economic growth. But there’s ample recent evidence the central bank has now done enough to cool excess demand.
Gross domestic product contracted at a 0.2 per cent annualized rate in the second quarter, far below the bank’s estimate for a 1.5 per cent expansion. The labour market is loosening — job vacancies are falling and the unemployment rate continues to tick up — and the housing market has slowed.
“The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures,” the bank said. “This reflected a marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country.”
But with wage growth stuck around four per cent or five per cent, and inflationary pressures remaining broad-based, policymakers are still seeing the difficulty in the last mile of returning inflation to the two per cent target. “The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability.”
The bank kept the last three sentences of the rate statement the same, laying out key metrics policymakers will be monitoring, including the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour.
The central bank’s next decision is due Oct. 25, after double releases of jobs, inflation and retail data, as well as gross domestic product numbers for July and an August estimate.
Updates on Real Estate news happening in your city.