Chris Ling, Katherine Thomas and Jim Hamilton
Published March 22, 2007
This case study explores the planning process that has led to the development of the Dockside area of the City of Victoria. The adoption of a tendering process for potential developers based on Triple Bottom Line (TBL) methodology has meant that smaller, more progressive development companies were able to compete for the land. It has also meant that developers were given the flexibility to offset a lower bid for the land in favour of social and environmental benefits.
Two Canadian companies, VanCity and Windmill Development, partnered to design and develop a $600M bid for the development of the 15-acre Dockside Green site, which will incorporate remediation of contaminated land and the ultimate development of a green community. The completed site will consist of residential, office, commercial and light industry buildings, and public spaces that are greenhouse gas positive from an energy perspective and will be substantially built to LEED Platinum building standards.
The development is currently being built and, therefore, it is hard to say exactly what will be successful or not for the community that eventually lives there, but the foundation for a sustainable community has been put in place.
Sustainable Development Characteristics
Sustainable development is a reconciliation of environmental, social, and economic imperatives (Dale 2001; Robinson and Tinker, 1997). Possibly nowhere is this more important than in the design and construction of the neighbourhoods and developments that make up our human habitat (Register, 2006). Many innovative developments are made more difficult through the planning and governance regimes of our municipalities that can work against progressive solutions to development problems (Moore, 1996). It is vital, therefore, that ways of encouraging and supporting, rather than hindering innovative design and sustainable buildings are incorporated into municipal decisions.
This case study demonstrates one such decision-making technique that was used by the City of Victoria. The method used a decision matrix of criteria representative of local environmental, social, and economic concerns. This allowed potential developers to discount environmental and social benefits from the price they were prepared to pay for the land. In addition, the bid process set minimum sustainable development standards. These standards included financial capacity for the project, knowledge to deal with the contaminated land found on the site, a commitment to at least LEED silver standard development, and a commitment to partner with local community associations in the design of the site.
The criteria matrix follows Triple Bottom Line principles (Elkington, 1998): an accounting mechanism that allows environmental and social components of business activity to be considered alongside economic considerations. This was used as a basis for a list of criteria developed by the City of Victoria in collaboration with cross disciplinary and cross institutional partnerships including the local community and the developers interested in bidding on projects. What resulted was an opportunity for developers genuinely interested in sustainable development being able to compete on an even footing with more traditional single bottom line developers. What has resulted is development with as small a footprint as technically feasible, and an opportunity for the introduction of state-of-the-art environmental technology. With the Dockside Green site, what has happened is the full integration of all local partners, including the developer, community associations, and the City of Victoria, in the conceptualization, design and ultimate development of a significant public amenity on what was previously a derelict and dangerous site. Both the city and the developers have, or are on track to receive a profit from their investment.
The attempt in the development stage of the project is to create a sustainable community that, through integrated design, is cheaper and more energy efficient in which to live, offsetting any increased development costs through the use of green technology and system thinking. It could be said that the development is a sustainable community using green buildings – if it is considered that a green building is one that adopts energy technology without considering the economic and social component, a sustainable building being one that also incorporates social and economic components (Dale and McDonald, 2004). This development had the increased costs of the technology offset in the early stages by an acceptance of a lower purchase price for the land, which was compensated for in a holistic way by gains in social and environmental benefits.
Critical Success Factors
Transparency – the Triple Bottom Line criteria were publicly published so that prospective developers and the community knew what was being asked for.
Partnerships – At all stages of the project, interdisciplinary and open partnership were developed. Some of the key ones include:
- Interdepartmental partnerships within the City of Victoria
- the City of Victoria and British Columbia Building Corporation (no longer in existence)
- the City of Victoria and the Vic West Community Association
- VanCity and Windmill Development
- Dockside Green Ltd and the City of Victoria
- Dockside Green Ltd and the Vic West Community Association
Every one of these partnerships was vital in the development of the project. Initial partnership with the city provided necessary real estate and inter-disciplinary expertise that enabled the creation of a valid and sustainable business plan for the site. Later partnerships with the Vic West Community Association enabled local needs and requirements to inform the design and build process. Finally, the partnerships during development helped ease some of the institutional difficulties inherent in the implementation of a novel and progressive development.
- Windmill Development as a company had the necessary flexibility of operation and sustainable development knowledge to take the Triple Bottom Line bidding mechanism and make the most of the opportunities presented. Joe Van Belleghem's leadership throughout the process meant the developers were more innovative than the city required, leading to a more sustainable development than the minimum asked for.
Community Contact Information
Joe Van Belleghem
101-1117 Wharf Street
Victoria, BC V8W 1T7
Director, Community Enterprises
Vancity Enterprises + Dockside Green
3075 Douglas Street, Victoria, BC, V8T 4N3
Kim Fowler (Formerly of City of Victoria)
Director of Development Services
City of Port Coquitlam
The TBL bidding mechanism enabled added value development without compromise for financial gain.
Involvement of community associations and other groups allowed the concerns of the community to be fully incorporated into the development process.
Incorporating a full range of environmental, social, and economic concerns into the development and the master plan.
What Didn’t Work?
Subsequent conditions added to the bid process have frustrated development. For example, the initial proposal from the city was that the social component of the Triple Bottom Line approach would be met by public amenity open space and general neighbourhood and social space improvements in the area; this was in agreement with the Vic West Community Association. Due to political concerns raised on city council, a social housing component was added to the development bid. This was not integrated in a way that made it fully workable, and has proven to be one of the biggest challenges to the development.
There has been a lack of understanding in the city of the complexity involved in creating a novel development. On occasion, this has led to frustrations on the part of the developers with the amount of time taken for city approvals involving novel techniques and technology.
Financial Costs and Funding Sources
The Dockside site was initially sold to the city by the province for $1 due to the environmental liabilities on the site. The city invested a significant amount into site remediation prior to development, and as a minimum, had a requirement to recoup these investments and did not want to take any loss on the transaction.
The city's break-even point on the sale was slightly less than $6 million, although the market value of the land was likely higher. So with this as its baseline, the TBL approach allowed added value from the proposed social and environmental benefits to offset the financial payment for the land itself.
The actual cost of the development for Windmill/VanCity is estimated at $600 million, of which $8 million is slated for the purchase of the land. The Windmill/VanCity proposal represented the lowest of the received bids in terms of what was offered for the land, but included significantly more environmental and social benefits.
The Federation of Canadian Municipalities made $350,000 available to support the development of innovative sustainable infrastructure. These funds were used in part to offset the costs for documentation, the processing costs for the sewage treatment infrastructure, and to help address the costs associated with developing and obtaining approval for the treatment system, which required amendments to the Waste Management Act.
Development charges within the City of Victoria are uniform, and do not vary according to the impact that a particular development may have on existing infrastructure. This can be perceived as a disincentive for developers to implement sewage and storm water treatment systems that minimize water use and the city's costs. However, the development charges are an order of magnitude lower than what provincial auditors recommend, and consequently any review by the city could result in a large hike in development charges across the board. It should be noted that in some Canadian cities developers’ charges for contaminated sites have been rescinded to encourage brownfield recycling, for example, in Kingston, Niagara Falls, and Ottawa.
Part of the partnership process between the developer and the city has involved the sharing of administrative costs for the Dockside project. The City of Victoria provided a dedicated staff member for the development and Dockside Green Ltd pays for part of the costs of that position.
The TBL mechanism used to deliver a sustainable masterplan for the city's Dockside lands resulted in an innovative and successful development that would otherwise likely not have been possible. The development gives clear indications of being environmentally and economically sustainable. What differentiated this development from other similar developments, such as South East False Creek in Vancouver, is that the city did not intend to simply award to the highest bidder for the land and, therefore, the winning bid was able to offset financial costs with the potential non-economic benefits the proposed development would provide; these being judged through the decision matrix in the RPF.
The one possible shortcoming of the development is the social component to the project. The final master plan incorporated a social housing component that appears not as well integrated as it could have been. As to whether the difficulty with incorporating the housing has compromised the sustainability of the project is moot. The social housing component was not requested by the local community association, and it was not originally part of the city’s business plan, which saw the social component coming from increased public amenity and the creation of a walkable neighbourhood.
There were many challenges faced by all partners in the development process. Nevertheless, the project has provided profist for the city, potential profits for the developers, and significant environmental improvements to the Dockside site. Included within this has been the creation of a state-of-the-art sustainable development, which minimises energy consumption and incorporates other ecologically-friendly systems into the site up to LEED Platinum standards. There are internal elements of social sustainability, with a walkable design and public transit solutions for transport from the development, as well as significant public amenity. There are many proposed community design elements in the project that will provide these benefits including:
- First ever master planned neighbourhood to reach LEED Platinum status
- Fresh air ventilation systems
- All appliances and fixtures and fittings designed to be low energy
- Neighbourhood heating provided by a wood gasification plant
- On-site sewage treatment and heat recovery
- Grey water recycling systems
- Permeable surfaces to improve water drainage
- Car sharing program and integrated transport planning with a shuttle bus serving the community and harbour ferry terminal
- Public amenity open space
- Working relationships between the community association and First Nations
Details of these can be found on the Dockside Green website.
These innovations happened despite the inertia of the city’s development by-laws and the attitude of the utilities; it is a testament to the strength of the partnerships involved in the development that, by and large, the combined effort of the stakeholders worked through the problems.
At the root of the project is the use of the TBL criteria matrix in the Request for Proposals (RPF), with respondents encouraged to offset the maximum bid price with social and environmental benefits. The city then chose the bid which had the highest value to the community rather than the highest monetary offer for the land. This, along with strong leadership within the city and Windmill Developments ensured that the sustainability of the project was assured.
Detailed Background Case Description
For many years, the abandoned Dockside site has been a problem for the City of Victoria. Initially owned by the Province of British Columbia, the province sold the site to the City of Victoria for $1. Environmentally damaged, the site had seen previous failed attempts at remediation, mainly for light high-tech redevelopment. These failures, combined with general dissatisfaction with respect to other redevelopments in the area, had drawn the concerned attention of the local community associations as well as other interest groups. The reasons for failure are various, but a critical factor was the lack of strategic planning to guide such a process and the absence of a “champion” committed to leading the redevelopment of the site.
In 2001, another attempt was started to redeem the site, and generate new vitality in that part of the City of Victoria. The approach this time, however, was to first form key partnerships to assemble the knowledge and experience required and to keep front and centre the desire to create a sustainable development on the site.
The first partnership of note was with the British Columbia Building Corporation (BCBC). The City of Victoria had a memorandum of understanding with BCBC to support each other when appropriate. This partnership was activated for the Dockside project in order to bring significant real estate experience to the project, a set of skills lacking within the city's administration. BCBC was able to provide the necessary skills to assess site development risks, to address preliminary archaeological and heritage concerns, and to manage the site prior to sale to a private-sector developer.
Next, the City of Victoria created an interdisciplinary project team, deviating from the city’s standard operating procedures, which like most cities are highly “silo-ised” and hierarchical. This internal partnership brought together planners, development economists, engineers, financial personnel from within the city as well as representation from the local community associations. A steering/management group directed the development of a business case to include an analysis of contamination on the site, an exploration of development options, and proposals with respect to land-use and design.
The Vic West Community Association was particularly concerned about the site as it had serious reservations about other recent developments in the same area, both in the way in which they were managed and the resulting outcomes. The city project manager ensured that the community association was involved from the start in the development of the business case and design parameters for the project, and that community association representatives were integrated into the project’s management and steering committees. As a result, from the start the community association was in a position to veto the development and to be fully engaged in the decision-making process at every stage. The city, however, also took a policy decision to only involve the community at large at key moments in the process to avoid consultation fatigue.
The tendering process
It was during the initial business plan development phase and development of the partnerships that the city made the decision to employ a fully sustainable approach to the project using a TBL methodology. In the words of the city’s project director:
“Why wouldn’t you? If you can sell the land for $12M then fine, but if you can sell the land for $8M and can get $6M of public amenity developed for you then even better.”
The design of the evaluation grid permitted the awarding of additional points for proponents' bids which exceeded the minimum environmental standards, set at LEED Silver, and encouraged the winning developer to put forward a proposal based on achieving Platinum standards for most buildings. Interested proponents were informed as to the general nature of the contaminants within the soil, and were required to include appropriate remediation in their development proposals.
The second stage of the process was the creation of the development context. There was a strong desire to avoid focusing on zoning because of the perception that it tends to preclude flexibility and ,therefore, innovation and, by extension, sustainable development. Instead, a ‘sandbox’ approach was taken, whereby the zoning was applied to the desired masterplan, rather than set up in advance, therefore limiting the final proposal.
The main financial requirement from the ity was that the development should at least pay back the city's costs of remediation and other works already carried out on the site. Two general approaches to the site were developed: a high-tech light industrial development, which the city preferred; and, a mixed use development, which the project team backed. Both options were considered commercially feasible and within the city’s risk tolerance limits in that they would enable the city to at the very least break even – meaning the site needed to be sold for at least $6 million.
These two options were then presented to the Vic West Community Association. The light industrial option retained the current density of development and was the city’s preferred option. The second option was a mixed use development with residential, office and light industrial elements – and a significant public open space amenity and storm water management. This option represented an increase in density from the previous use of the site of 2:1. The city project manager would have preferred an increase of 3:1, but this was considered too much by the Vic West Community Association and the city council. The mixed use ‘New Urbanist’ style development was the one chosen by the community, and was also the preferred option of the city’s multidisciplinary project team.
Planning guidelines were then issued to seek expressions of interest from interested developers. These guidelines included the TBL assessment grid against which all expressions of interest and tender were going to be assessed. The assessment process and the scoring mechanism were made publicly available online for full transparency.
The assessment grid was based on a total of 300 points, with 100 points allocated to each of the three components - economic, environmental, and social elements – in accordance with typical TBL methodology. The method encouraged a holistic approach to building and infrastructure design and the provision of public space. In essence, the grid would place the emphasis on sustainability, and sustainable land use planning. Interested parties had to fulfill two mandatory criteria: the demonstrated capacity of the developer to finance the project; and, demonstrated capacity and knowledge necessary to address the environmental remediation requirements of the site.
The criteria and weighting for the evaluation were determined by the project steering committee and included recommendations from the community, from the business development process, and the various members of the transdisciplinary project management group. Expression of interest respondents were also asked to comment upon the criteria and suggest improvements that would lead to a more sustainable project.
The process returned five short listed expressions of interest and a number of suggestions to the TBL criteria. Modification to the criteria, largely limited to a movement between categories and to the weighting, was then carried out and the RPF distributed to interested parties. One part of the bid process was for developers to present proposed development plans to an open meeting of city council. This fostered an openness and transparency in the bid assessment process, and also allowed council members to gauge the reaction of the general public to the bids. By this stage, three of the bidding developers had withdrawn from the process. The reasons are unclear, but it is suspected that the TBL approach proved to be too progressive for some larger more established development companies – meaning that the risk involved with the process meant that the development was not a priority for them in a very vibrant development market in British Columbia. The eventual winning bid – that of VanCity and Windmill Development for Dockside Green – was awarded a standing ovation when the formal presentation was made to council.
Despite the increased complexity of the tendering process, selection of the successful proponent was gained in a shorter time span than typical for a project of such a scale.
The developer’s perspective
Windmill Development has experience and expertise in developing environmentally responsible ”green” building projects in various sites across Canada; Dockside Green, which will cost approximately $600M is the largest and most ambitious project to date. Capital for the project was raised through a partnership with VanCity Credit Union, split 1/3 for Windmill Development, and 2/3 for VanCity. Windmill Development brought the environmental expertise to the project, while VanCity provided the expertise related to the social aspects of development. Both organisations have significant development expertise and both have a commitment to sustainable development.
VanCity is the largest credit union in Canada with 325,000 members and encompasses a number of subsidiary companies, such as VanCity Capital Corporation and VanCity Enterprises, which have different areas of expertise and have participated in different aspects of the project. For example, VanCity Capital Corporation provided funding for investments in alternative sources of energy (biomass heating system) for the project.
VanCity Enterprises has expertise in developing innovative and affordable housing as well as working with NGOs.
With its focus on sustainability, the Dockside Green project fits with the VanCity brand, its reputation, and interest in social issues. VanCity will also have an opportunity to potentially leverage its investment in Dockside Green by developing financial products tailored to meet the needs of Dockside Green businesses, residents and workers.
Joe Van Belleghem, partner in Windmill Development and the public face of Dockside Green is one of the founders of the Canada Green Building Council. He became interested in environmentally sustainable development and realized that to achieve the most benefit and the most sustainable systems, it was necessary to work with large scale projects, which, because of size, can incorporate features supportive of sustainability.
Windmill Development found the collaborative and iterative planning process based on the TBL to be a very positive feature of the process, and welcomed the opportunity to bid on a project using these principles. In addition, the transparency of the process made the City of Victoria’s TBL-based process easy to work with. The rating criteria and points allocated within the grid matrix were published on the city website and available for all to review upfront, a mechanism existed to facilitate proponent responses, and a fairness advisor was engaged during the process to ensureall developers were treated appropriately.
The part of the project that has proven the most difficult is the provision of social housing. Within the grid on which the RPF’s were evaluated, affordable housing was awarded proportionately few points, notwithstanding the political pressure to include social housing within the project. Social housing was not a major part of the city's nor the community association’s initial aspirations for the site, but emanated from a subsequent decision of city council. In alignment with VanCity’s interest in affordable housing, Dockside Green will include a contribution of $3M towards providing approximately 50 rental units and 26 ownership units geared towards families with incomes in the range of $30,000-$60,000.
It should be noted that the affordability of housing is a major issue in Victoria, which is one of the most expensive cities for housing in Canada. The project's critics have found the housing component of the development an easy target in that the number of affordable units is lower than originally suggested, and the majoritiy are small, one- or two-bedroom units, and not larger dwellings more suitable for family use.
During consultations with the community, the developers addressed concerns that included sightlines, architecture and pedestrian-friendly design. For the developer, working with the community was a positive experience, involving regular meetings, which started at the beginning of the process, and were ongoing. The process started with consultations over a largely blank canvass, rather than a set model around which details were discussed. The general attitude was to explore issues until a solution evolved that everybody could accept. The main concerns of the community were sightlines and the appearance of the architecture as the community felt that previous developments in the area had not provided an attractive environment. Meetings occurred bimonthly and involved 15 members of the Vic West Community Association and the developer’s staff. The community association has a long history of local activism, and is considered to represent the local population.
One challenge faced by the Dockside Green partners has been the difficulty of managing expectations. The Dockside Green development is innovative and has generated considerable publicity, as well as support, and has been perceived as a vehicle to resolve a number of the City of Victoria’s problems with respect to housing, social issues, business challenges, and the environment. Throughout the evolution of the project, it has been necessary to reconcile financial management imperatives, which are typically conservative and risk adverse, with the desire to test new technologies and complex approaches.
The Dockside model and TBL assessment mechanism has not been used for subsequent City of Victoria developments. A contributing factor is that the personnel that championed the method have departed. As a consequence, there appears to be little interest or expertise to apply sustainable development approaches to planning decisions. The model has been exported to the Municipality of Port Coquitlam by Kim Fowler, the former city project manager for the Dockside Green project.
- Is there any way to embed the learning from novel development projects into changes to the municipal by-laws, zoning and so forth?
- What sustainability assessment mechanisms are best suited to tendering processes?
- Can inter-disciplinary working practices be institutionalised?
Resources and References
Dale, A, 2001. At the edge: sustainable development in the 21st century. Vancouver: UBC Press.
Dale, A and McDonald, R. 2004. The Economics of Green Buildings in Canada,. E-Dialogue held on October 7th 2004.
Elkington, J. 1997. Cannibals with forks: The triple bottom line of 21st century business. Chichester: Capstone Publishing.
Moore, J. L. 1996. "An introduction to what is stopping sustainability, part three." New City Magazine, Vol. 17. No. 1, p 24.
Robinson, J. and Tinker J. 1997. 'Reconciling Ecological, Economic, and Social Imperatives: a New Conceptual Framework' in Surviving Globalism: Social and Environmental Dimensions. ed. T. Schrecker. London: Macmillan p 71-94.