Metro Vancouver Housing, the housing development arm of the Metro Vancouver Regional District (MVRD), is seeking significant budget increases for both The Steller and The Connection, two housing projects that are set for Burnaby, according to staff reports that are set to be considered by the MVRD Housing Committee later this week.
The Steller is a six-storey, 122-unit residential building planned for 7388 Southwynde Avenue while The Connection is a six-storey, 174-unit residential building planned for 7730 6th Street. Both projects were authorized by the Metro Vancouver Housing Corporation (MVHC) in October 2020 and now require substantial budget increases to get off the ground, in large part due to construction costs, but also adjustments to the previous design plans.
According to Metro Vancouver staff, the project budget for The Steller was estimated at $45.5M in October 2020, but recent estimates peg the project budget at $93.9M — just over double the original amount.
"From 2021 to 2023, site studies were undertaken, an architect and design team was engaged, a construction management team was engaged, and the design and permitting for new building progressed through schematic design, design development, and the rezoning application process," staff said in a report. "Since the original MVHC Board approval in 2020, estimated project costs have increased to $93.9M, based on Class C cost estimates prepared in November 2023."
A Class C cost estimate was provided by both the construction manager — Kinetic Construction Ltd. — and the quantity surveyor — Hanscomb Quantity Surveyors. According to the staff report, the revised budget would entail a construction financing and takeout mortgage for $26.6M as well as an equity contribution of $22.5M from Metro Vancouver Housing.
Staff note that construction costs have seen "unprecedented increases" over the past three years. A portion of the increases are also the result of changes to the project design, however, which includes an increase in gross floor area by 9% in order to increase unit sizes to the point that they qualify for grants provided by BC Housing and the CMHC. Staff also say that additional bicycle storage space was sought out by the City of Burnaby, which ultimately increased the parkade area by 21% due to the irregular shape of the lot.
The anticipated funding breakdown for The Steller.(Metro Vancouver)
The revised budget of $93.9M includes $29.3M from BC Housing, coming as part of the agreement the two parties signed in April 2023, which would see the two entities partner to build over 2,000 units of affordable housing. The project is also expected to receive funding from the CMHC and City of Burnaby.
The Steller was granted a second reading by the City of Burnaby in July 2023. According to Metro Vancouver staff, the project team submitted for a partial building permit and Preliminary Plan Approval in November 2023, and the hope is that construction can commence by Q4 2024. Staff have also recognized that the revised budget they are seeking could potentially need to be increased even further, following Class B and Class A cost estimates, which have yet to be completed.
A rendering of The Steller, planned for 7388 Southwynde Avenue.(Metro Vancouver)
For The Connection, the original budget was estimated at $63.8M, but Metro Vancouver Housing is now seeking a revised budget of $120.8M — 189% of the original budget.
Similar to the reasoning for The Steller, Metro Vancouver Housing staff say project proponents were engaged between 2021 and 2023, which resulted in some modifications to the original concept, on top of the "unprecedented increases" in construction costs. Modifications to the original concept include a 12% increase in the gross floor area, again to become eligible for BC Housing and CMHC grants; increasing the amount of residential units from 172 to 174, as a result of newfound design efficiencies; and again an increase in bike storage lockers that was sought by the City of Burnaby.
Kinetic Construction Ltd. and Hanscomb Quantity Surveyors again provided cost estimates, in December and October, respectively, and the updated budget of $120.8M that is being sought would entail a construction financing and takeout mortgage of $43.5M and an equity contribution of $17.0M from Metro Vancouver Housing, out of the MVHC development reserve.
The anticipated funding breakdown for The Connection.(Metro Vancouver)
A rendering of The Connection, planned for 7730 6th Street.(Metro Vancouver)
Again, funding for The Connection is expected to come from BC Housing, the CMHC, and the City of Burnaby.
According to Metro Vancouver staff, the City of Burnaby granted The Connection a second reading in April 2023 and saw their Preliminary Plan Approval application approved in October 2023. The project is now in the final stage of the rezoning process, with 95% of design development drawings submitted, with the hope being that demolition of the existing building can begin in Q1 2024 and construction can begin by Q3 2024.
The revised budgets for both The Connection and The Steller will be considered by the MVRD Housing Committee on Friday, January 12.