City’s plans to speed office conversions pass committee, including two-year pilot project

Conversions - construction cranes

A city committee has approved a plan to lower fees and streamline the approval process for turning vacant offices into residential units and directed staff to pilot a financial incentives program for office-to-residential conversions in the downtown core. 

The recommendations to the planning and housing committee, which were outlined in a city staff report last week, included reducing planning application fees for procedures such as Official Plan amendments and an amendment to provide flexibility for conversions where the building envelope remains unchanged. 

The committee also voted to streamline and reduce fees for the site plan control process for conversions where no new storeys or additions are proposed, a move the city says could save applicants as much as $30,000 per project. 

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In a bid to make conversions more financially viable, the committee also approved a motion brought forward by Somerset Coun. Ariel Troster to reduce the amount of parkland fees developers pay on such projects in her downtown ward for the next two years.    

Office vacancies have soared in the city’s core in recent years, and housing remains in short supply downtown. Proponents of conversions say they can help solve both problems at once.  

“We’re kind of in a unique position in Somerset ward,” Troster said at the committee meeting on Wednesday. “Generally speaking, our office vacancy (rate) is 12 per cent; downtown it’s 14 per cent, and I would argue that the specific area in north Centretown that we’re really looking to micro-target is closer to 20 (per cent) or higher.”

According to Troster, most of the vacancies are empty government buildings – some of which are derelict, leading to complaints from residents. There are also concerns that municipal services, including transit, have been significantly reduced because of the decrease in foot traffic. 

Converting empty offices into residential buildings, she said, could be key to addressing those issues. 

“There are huge advantages to office-to-residential conversions,” she said.

While converting office buildings into residential units has been a popular proposed solution, developers are sometimes hesitant to take them on due to the complexity of the projects and high costs involved.

“Some of the bigger developers in the city said they won’t touch any of these,” said Beacon Hill-Cyrville Coun. Tim Tierney. “They’re very, very expensive to convert. It’s not easy.”

Orléans West-Innes Coun. Laura Dudas voted in favour of the recommendations in the report. 

“We know that this has been a trend in our downtown for much longer than the pandemic,” she said. “We’ve struggled with revitalizing areas like Spark Street and the ByWard Market. The key to that is residential; it’s bringing people into our core so they’re there 24-7.”

She added, “There’s so much potential in our downtown core and what we don’t want is ghost buildings. I honestly don’t know how many of those buildings are going to be unlocked and turned into residential because of this report. But for us to do something, I’m more than welcoming of it.”

Cash-in-lieu of parkland fees to be reduced

Troster’s proposal would reduce the amount of cash-in lieu (CIL) of parkland payments for developments in Somerset ward. 

If council approves the plan, the CIL cap will be reduced to eight per cent for office-to-residential conversion projects on the condition that the project’s building permit is issued within six months of its site plan approval. 

Parkland CIL payments are made to the city by developers for the equivalent value of the amount of land that the city would otherwise require them to use for park purposes as part of the development. Under the current formula, a developer’s cash payout amounts to 25 per cent of the land’s value for highrises of 10 storeys or more.

Reducing the amount developers have to pay is a “modest incentive,” said Troster. 

Some developers told OBJ last week they’d like to see parkland fees eliminated entirely, but Troster said that option wasn’t on the table. 

The pilot would be limited to Somerset ward and run for a period of two years to determine whether it’s effective in encouraging more conversion projects. 

“We have to have no illusions about this,” said Troster. “This is not affordable housing; in some cases, it’s even luxury houses. But as far as I’m concerned, people in a building is better than no people in a building and we’re looking at the general vitality of the downtown core.”

Committee members were in favour of the motion but had some reservations. 

“I wasn’t sure about this, but I’m inclined to support the Troster motion,” said River Ward Coun. Riley Brockington. “It’s ward-specific, she’s well aware of the challenges of her ward, she’s willing to make this a pilot, and you have a healthy bank account. I do believe there may be some value to seeing what the results of a pilot would be.”

Coun. Theresa Kavanaugh, who also supported the motion, said she’d like to see guidance in place to guarantee that the money developers save by reducing parkland fees results in reduced rental rates for tenants. 

“Any housing is good housing, but we need to, as a city, make sure we’re still focused on affordable housing.”

Councillors also directed staff to meet with developers and other housing advocates to further explore the potential impact of additional financial incentives and report back to the committee in the first quarter of 2024. 

Also on Wednesday, the provincial government announced that it would remove the eight per cent provincial portion of the HST on “qualifying new purpose-built rental housing” in an effort to address the rental shortage in the province. 

Tierney said he hoped the committee’s decision, paired with the province’s announcement, would be a tipping point to get housing built more quickly in Ottawa. 

“We’ve got to find a way to get (units) built and get them built quick,” he said. “This announcement that just came out (from the province), between that and council, I think there’s got to be a good opportunity to collect some of those financials. I think there’s got to be some kind of benefit to reducing or eliminating any kind of CIL and that would be the need for speed.”

The recommendations go to full council next Wednesday.

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