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Inside the failed Pantages deal

November 11th, 2008 · 3 Comments

A few weeks ago, there was a cascade of stories about how the city had scuttled a private developer’s effort to restore the historic Pantages theatre in the Downtown Eastside. We didn’t get much information about that, except for the general impression that the city had been the bad guy squashing a feisty entrepreneur.

This is the email now going out from the city to people who have expressed an interest in the new study they have started to look at ways to save the Pantages. It gives a lot of the inside details that were previously unavailable (unless you went to hear David Cadman at an east-side all-candidates debate last week, where he spilled many of these beans as he explained why the deal the developer was asking for was no good) because they were deemed to be in camera — a phrase we’ve become familiar with in the past few days with all the controversy over the $100-million loan for the Olympic athletes village.

This isn’t quite on the same scale and, in this case, the city said, No, this is too rich for our blood.

Here’s the memo that’s being sent out by the city—

Thank you for your email/letter regarding the Pantages Theatre. It has been referred to us for a response.

General Comments:

The City firmly believes that the Pantages Theatre site is an important community, historic and cultural asset. Perhaps even more importantly, the site represents a key strategic opportunity for community and economic revitalization and renewal in the DTES.

Over the past few weeks, there has been considerable concern and misinformation as to whether the City has “abandoned” the idea of a renewal project for the Pantages Theatre site. Please be advised that this is not the case. The City remains committed to facilitating a realistic and viable project on this site that reflects the unique opportunities it presents for community renewal, and heritage and cultural revitalization.

Staff have been working with the landowner/developer and advocacy groups to develop realistic options and answer the many challenging questions always associated with complex projects like this.

Cultural/heritage renewal projects of this nature in Vancouver have generally involved a model of shared responsibility between all three levels of government (federal, provincial, and municipal). This “one-third” model has been the basis for other recent successful capital initiatives in Vancouver, like the Stanley Theatre and the Dance Centre. It is also important to note that these types of revitalization projects do not require City ownership in order to achieve success.

However, we understand that it is a difficult challenge for a land owner to identify a viable development concept for such a complex proposal. It is for this reason that on Sept 30th, Council authorized funding ($150,000) for a pro-active consultant project to provide development clarity and viable options and funding sources, for use by any owner of this important site. This includes:

    • Part A – Clear Land Use/Density Guidelines for the Site context – to be produced ASAP by the Planning Department with possible consultant help;

      Part B – Financial/social benefit/risk analysis of, and funding sources for, a range of development options that include community / cultural / housing / commercial components for the full sites, including but not limited to the Theatre. A Request for Proposals will be issued next week to secure qualified consultants to undertake Part B with an anticipated completion date in March 2009.

This consultant project is intended to answer many of the outstanding questions, with the hope that the path to success for any owner will be enhanced. The consultant project will utilize the information provided by the Pantages Theatre Arts Society (PTAS), but will expand and supplement it significantly in the hopes of finding viable options for the historic theatre and surrounding property.

Background on Past Discussions:

While the idea of renewing the Pantages has always been public, it has long been the City’s practice to leave it to applicants to decide what details to share publicly about their considerations and discussions, until such time as a formal development application is received (at which time it becomes public information and we seek public comment on the application). In this case a formal application has not been submitted. The following additional information however, is provided given the extent of misunderstanding and misinformation regarding the past process with the land owner/developer and PTAS.

Earlier this year, senior City staff met numerous times with the site owner/developer and PTAS, indicating support for the general concept, outlining the additional information necessary to move the project forward, and confirming support for the consideration of city mechanisms, including heritage density transfers, totaling approximately $10 million, or roughly one-third of the estimated capital costs for the concept at that time. This support would represent one of the largest heritage/cultural bonuses ever recommended to City Council.

As noted above, such a “one-third” model with two-thirds from senior levels of government is traditionally expected of heritage/cultural projects of this type, and we provided advice on how PTAS might seek the balance of funding required from the two senior levels of government and other sources.

However, the developer and Society requested that the City cover close to the full costs of the theatre project, estimated at $30-40 million. This is an extraordinary amount to attempt to address through density or other municipal tools; as a frame-of-reference, the usual heritage amount on a project addressed through on-site density or transfer has been in the realm of one to four million dollars, and amounts of $10 million are virtually unprecedented. A density approach involving $30-40 million would significantly impact the City’s ability to achieve other heritage projects elsewhere and/or other public benefits and amenities (including other cultural and recreation opportunities) usually achieved through density.

A possible housing component has also been contemplated for a future phase and is estimated at an additional $30 million, over and above the $30—40 million discussed above. 100% of the funding to develop and operate such a housing component would need to be provided from the Provincial and/or Federal levels of government, as is usually the case.

An additional challenging aspect of the proposal, was the developers request that the City facilitate this density approach through sale of a strategic City-owned downtown property asset through a “sole-source” disposition, outside of the City’s required competitive bid process. This would be for a set price anticipated to be less than what a competitive bidding process would achieve. Further, that the developer be allowed to rezone the land in question for residential condos, despite the need for the land for critical future job space to help address the downtown’s identified job-space shortfall predicted in the future. They further requested that the residential development be excluded from contributing development cost levies and other community amenity contributions.

Although Staff believe the developer’s requests were well intentioned, in June Staff wrote to the developer advising him that Council-policy requires that the sale of City-owned land go through an open tender process and be subject to Council’s land use policies i.e. the need for job space over residential in the CBD, and the consideration of local public benefits and amenity needs.

We also wrote to the developer and PTAS indicating support for this project in the more traditional “one-third” funding formula.  For the City’s “third”, staff continued to indicate support for a range of City funding mechanisms, including but not limited to the creation of significant transferable heritage density and a possible capital grant.


The City is following a multi-faceted approach to restoring the Downtown Eastside to a healthy, safe and livable neighbourhood for all. The City’s Downtown Eastside efforts focus on developing and implementing long-term approaches to the community’s safety, housing, and economic development. The role of heritage and culture and the Pantages Theatre within this context will continue to be developed, and we look forward to further developing the opportunities and challenges the site has to offer. We remain very hopeful and optimistic that workable solutions can be found.

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