Summary Market Overview Community of Crofton,

Prepared for: DTW Design and the Municipality of

Prepared By: Land Use Economics, LLC

Date: January 20, 2014

Table of Contents Section 1: Introduction ...... 3 Section II: General Limiting Conditions...... 4 Section III: Background Research ...... 5 Transit Oriented Background Data ...... 6 By-Laws and Permit Regulations North Cowichan Official Community Plan (OCP), 2012 .... 8 Economic and Demographic Focused Documents ...... 9 Tourism Related Documents ...... 12 Near Term Economic Forecast ...... 13 Section IV: Existing Crofton Characteristics ...... 14 Population ...... 14 The Housing Stock ...... 16 Commercial Development ...... 17 General Market Observations ...... 21 Appendix A: Source Documents ...... 21

2 T-1307: Crofton LAP Background Data

Section 1: Introduction

In the fall of 2013 Land Use Economics, LLC (LUE) was retained as part of an interdisciplinary team of advisors and consultants to assist the Municipality of North Cowichan, British Columbia in preparing a Local Action Plan for the community of Crofton, one of three growth areas identified by the Municipality as needing a formal plan to guide future development options. LUE typically acts as an advisor to the private real estate community and local governments seeking ‘greenfield’ new development, helping to define market demand for a variety of land uses affecting the urban fabric. This engagement is somewhat different. Rather than trying to define and project the rate of growth within a competitive market set, the necessary components required to affect and accelerate that growth, phasing, and how to structurally and financially facilitate that growth, this engagement focuses on how to enable a long established, existing small community to understand the implications of the decisions they face on how to manage the evolution of change in a dynamic environment that now faces a regulatory environment by which they will be bound as they move forward. Plans are not a fixed and permanent document. They are designed to evolve and change as a community transforms, renews, and rises to new challenges as the core demographics and employment markets change, the competitive environment shifts, and the desires and vision of the residents mature. The plan contains policies and programs designed to guide community decisions consistent with the long term goals and objectives, and sets forth certain design guidelines, zoning, and land use regulations designed to enhance the built and natural environment. This document is designed not to be a definitive market study, but rather a tool to enhance the decision making process by providing general parameters on the impact of certain land use decisions on the economic vitality and viability of the community. There are few fixed market projections, but rather an interpretation of existing data, an identification of additional markets that might be available to Crofton if the decision is made to cater to those markets, and macro level estimates of the impacts of those decisions.

3 T-1307: Crofton LAP Background Data

Section II: General Limiting Conditions

Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible, and they are believed to be reliable. This study is based on estimates, assumptions and other information reviewed and evaluated by Land Use Economics from its consultations with the client and the client's representatives and within its general knowledge of the industry. No responsibility is assumed for inaccuracies in reporting by the client, the client's agent and representatives or any other data source used in preparing or presenting this study. This report is based on information that was current as of December 2013 or as noted in the report, and Land Use Economic has not undertaken any update of its research effort since such date. No warranty or representation is made by Land Use Economics that any of the projected values or results contained in this study will actually be achieved. Possession of this study does not carry with it the right of publication thereof or to use the name of "Land Use Economics" in any manner without first obtaining the prior written consent of Land Use Economics. No abstracting, excerpting or summarization of this study may be made without first obtaining the prior written consent of Land Use Economics. This report is not to be used in conjunction with any public or private offering of securities or other similar purpose where it may be relied upon to any degree by any person other than the client without first obtaining the prior written consent of Land Use Economics. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from Land Use Economics. This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations.

4 T-1307: Crofton LAP Background Data

Section III: Background Research

In preparing this background report a great deal of information and data was reviewed consisting of readily available secondary source data from Statistics and other public entities, as well as specific studies commissioned by various public agencies regarding development patterns in the Crofton/North Cowichan area. A list of the publications and electronic files provided for our review is contained in Appendix A by the name assigned them by the client. The combined publications contain literally thousands of pages, data tables, and references to other documentation. Publication dates for the studies varied, as does the specifics of data sets analyzed and reviewed. Uniformly, extensive public participation was part of planning process, so it must be assumed that the policies and recommendations that the plans promote contain a strong measure of constituent 'buy-in'. LUE has attempted to distill from the mass of information salient points that might be meaningful to those stakeholders involved in the Local Action Plan (LAP) process, but has not attempted to update or authenticate any of the data as that would clearly be beyond the scope of this engagement. For illustration purposes Map 1 shows the Statistics Canada dissemination areas of Crofton and the boundaries of North Cowichan discussed throughout this report. All information pertaining to population, housing, or similar references are related to this map. Map 1: Study Area Boundaries

5 T-1307: Crofton LAP Background Data

Reference will also be found to the Cowichan Local Health Area 65, a much larger geographic market area that has been defined to track various social characteristics. These boundaries are shown in Map 2. Map 2: Health Area 65

Transit Oriented Background Data

Transit Future Plan, Region, March 2012 This plan reportedly links to other long range regional transit plans, including The Provincial Plan prepared in 2008, and the BC Transit 2030 Strategic Plan (2010). The core goals of this document reflect the vision commonly being seen in urban and suburban areas throughout North America and other countries, namely the reduction of dependency on the automobile, and the creation of jobs and housing options conveniently serviced by public transit. It sets a ridership target of 1.2 million annual rides for the year 2036, and recognizes that this is an ambitious goal requiring tripling the existing ridership levels from currently achievable levels. The plan calls for a variety of regional services, inter-city services, and neighborhood serving conceptual programs.

6 T-1307: Crofton LAP Background Data

While the plan provides near, intermediate, and long term improvement goals that relate to expanding the existing DART fleet of buses as well as improving transit stops, there is no mention of any improvements that would directly impact Crofton or change the level of service beyond the regional Route 6 service linking Crofton to and Duncan that is already in place. The plan recognizes the low population density of Crofton, low population growth projections, and inefficiencies of expanding service for what would ultimately be low ridership revenue. Chemainus Active Transportation Strategy, 2009 While this study is not germane to Crofton because of the study area boundaries and recommendations that were focused on the defined urban area, there were some statistics that might be instructive. The Transit Future Plan pointed to the high level of automobile dependency in the region. A survey of residents in Chemainus documented that dependency, with between 78 and 80 percent of trips for school, work, or recreation stemming from automobiles. Walking was the next most frequently cited mode at between 8 and 20 percent. While the survey results are presented in detail as an appendix, no mention is made of the sample size, so statistical reliability cannot be stated. Also instructive was the distance traveled by trip purpose. The graph below Exhibit 1, shows typical distances traveled (blue to work, green to shop and services, and yellow for recreation) by trip purpose. Chemainus is a relatively more densely populated area than Crofton with a more extensive public transit service level and better supporting services. Thus, it is reasonable to expect that Crofton residents may have a similar travel pattern, but incur greater distances by trip purpose due to the incremental distance from services. Exhibit 1: Distance of Trip Generation by Purpose, Chemainas Survey

The plan does include one interesting discussion point that may be useful to Crofton, which is mention of the Local Government Act (LGA) which outlines mechanisms available to undertake long range planning and to regulate land development. While most of the discussion in the document is focused on how best to leverage active transportation incentives, mention is made of the ability to increase density allocations in exchange for amenity contributions of a broader community interest (Section 904). This ability may prove a valuable planning tool for Crofton in crafting the vision for the study area. The document also references several grant programs that are available to assist in public infrastructure development.

7 T-1307: Crofton LAP Background Data

District of North Cowichan Traffic Calming Policy, 2005 This is a broader policy document that affects the region well beyond Crofton, yet outlines a series of policies and mechanisms designed to improve vehicular safety, reduce speeds, discourage through traffic and minimize conflicts with various user groups. The policies and mechanisms illustrated in this document are now widely adopted, are being implemented throughout North America, and provide good guidance to future planning for the study corridor.

By-Laws and Permit Regulations North Cowichan Official Community Plan (OCP), 2012

District of North Cowichan Development Permit Guidelines This document provides prescriptive guidelines designed to define the allowable uses and character of development in five Development Permit Areas (DPA). They include General, Marine Waterfront, Natural, Hazard Lands, and Farm Land Protection. The General designation affects most of what would be called the typical urban fabric, from residential to various commercial uses. The most important part of the guidelines are those affecting DPA-2, the Marine Waterfront, which not only provides guidance on the complex nature of local and federal regulatory requirements, but also calls for specific considerations at the community level. Crofton is specifically highlighted in Section 2.5.2, and starts with "Crofton's waterfront...is central to its identity and to its success today and in the future.". Following that narrative are ten guiding principles that directly impact the future development character of the study zone. They speak to preserving sight lines, establishing a sense of place, and encouraging public congregation. They also call on new buildings to reflect the historical context, to use natural materials with a rustic finish, and to be of a scale and volume commensurate with prior building context. These are all strong sentiments that have been reflected and repeated in the public planning process to date. Bylaw 3450: Official Community Plan Bylaw 2011 In addition to examining the assets and challenges facing the Municipality this document clearly states the impact of the reduction in resource based employment has had. Jobs have been lost, families have moved in order to find better employment, school enrollment has been impacted, and revenue to the public sector has been reduced through lower tax generation. It is also noted that the jobs that have been created during the economic realignment have been lower income service sector in orientation, and thus the spending capacity of the population has yet to be replaced since the recession. The document goes on to reference the polarization of retail opportunities along the Trans Canada Highway (TCH) which has contributed to the hollowing out of commercial vitality in communities such as Crofton. In LUE's opinion this is exacerbated by zoning, the presence of the ALR lands, and adjacent land ownership that further isolates the community. Map 11 in the bylaw document, which shows the TCH Corridor Designations in particular highlights the zoning impacts. The map shows that for several kilometers both north and south of Crofton that the Highway is designated for rural uses only thereby adding to drive time and the separation of residents to essential services.

8 T-1307: Crofton LAP Background Data

Also referenced is the aging of the population, with a greater concentration in the pre-retirement and retirement age bracket and declining working age population. This may have profound long term implications on the nature of services and retailing required and what can be supported. The document takes a very strong economic development stance and outlines several policies and goals to stimulate importation of employment opportunities, but recognizes the need to do so in a manner that strengthens the core urban fabric of existing communities. It puts an emphasis on redevelopment of existing urbanized or developed areas rather than allowing additional sprawl. It also states that given the rate of both population and job gain anticipated that there is more than adequate land already zoned to accommodate anticipated growth of any kind. Bylaw 3488: Revitalization Tax Exemption Program Bylaw This bylaw could present interesting opportunities for future development in Crofton. The entirety of the Focus Area is contained within a designated redevelopment zone that can exempt future development from parcel taxes, and will be available to new development until 2024. Tax exemptions are allowed for class 1 residential development at density of 100 units per hectare and Class 6 (business) development, and are allowed for a full five years. Both light and heavy industrial exemptions for investment exceeding $250,000 in value, and are good for a full 10 years. Crofton is not the only area within the Municipality allowed to take advantage of this bylaw, and will need to compete with other locations with the same designation in attracting investors/developers. It is also uncertain that the scale of development, particularly residential, required to take advantage of the exemption would be compatible with the low density, low scale, mixed use environment sought in the District of North Cowichan Development Permit Guidelines for the Crofton waterfront area. At noted above, those guidelines specify low density scale appropriate development in keeping with the historic fabric of the area.

Economic and Demographic Focused Documents

Commercial /Industrial Lands Needs Analysis, 2008 This was a comprehensive assessment of available zoned lands with the intent of measuring future need over a five and ten year time horizon. There were several noted conclusions and observations that are germane to the future of Crofton. Specifically:  With the demise of the extractive industries on the Island, particularly the pulp industry, much of the existing inventory of such lands are either vacant or severely underutilized.  Consistent with other Municipal policies there is a recognition that these lands should receive more dense development and infill land uses.  The existing Crofton mill site, recognizing that it may at some point become a candidate for other uses, is reported to have limited municipal services, all of which would need to be upgraded to satisfy other uses.  The assessment of the Growth Centre policies in effect stated that while they encourage density bonuses and different development standards to aid development, they did not specifically allow or encourage mixed use development.

9 T-1307: Crofton LAP Background Data

 The inventory of commercial and industrial lands specific to Crofton contained the following descriptions: o The mill site with 132 ha of size: intensively developed on the north end, undeveloped on the south end. There is little likelihood of redevelopment in the near to intermediate term. o The commercial core with 12 ha of size: lightly developed and underutilized. It is considered highly desirable for densification and a mixed use focus. The report correctly states that population growth in the Municipality would be the key determinate in increased demand for commercial lands, and estimated that incremental demand over the 2008 supply would be approximately 17% by 2015. It also noted however, that the opening of Cowichan Commons and redevelopment of existing commercial centers in the Duncan area (a total of 65,000 square meters) probably eliminated the need for additional supply of any consequence in the near to intermediate term. The report stopped short of making concrete projections of demand. It did conclude that based on population growth projections that commercial land supply may need to be increased by 2018. Light industry supply may also need to be increased starting in the same time frame, particularly with the realignment of the labor market to more professional services, finance, and the real estate sectors. Increased demand for both, however, is expected to be modest barring any significant separate economic stimulus. Specifically to Crofton, the study made a policy recommendation that the industrial lands on the north side of Chaplin Street be acquired if possible and repurposed for light industry or other uses. LUE concurs with that recommendation and feels the acquisition is important in creating a buffer from the heavy industry to the north. Municipality of North Cowichan Economic Development Work Plan, 2010 This document contains eight stated goals for improving the economic condition of the Municipality ranging from marketing and infrastructure development to building tourism. Each initiative states specific items to be accomplished during the ensuing three year period (ending in 2013). Creating attractive waterfronts/downtowns was one such goal that specifically singled out Crofton for specific improvements, to include extending the Seawalk and securing better options for boat launching. All of the other goals and action items were more broad based for the Municipality in total, although there were specific projects highlighted. LUE is uncertain as to how closely the plan has been followed, but the goals in general were certainly complementary with strengthening the appeal of Crofton as a place to live and work. Local Health Area Profile, Cowichan (65) This document dates from 2011, and as mentioned above is the local data subset of Statistics Canada. While it mainly focuses on health data it covers a wide variety of data points that are important to keep in perspective for future planning, all of which are particular to the immediate market area. Most of the data set dates from 2005-2006, but the projections take a longer term view to 2030. Major socio-demographic observations include the following:

10 T-1307: Crofton LAP Background Data

 Cowichan has a younger population in general than the broader .  The Cowichan population is expected to grow approximately 24 percent by 2030, but the population older than age 75 will increase by 80 percent during that time frame.  Median family income is lower than that of either Vancouver Island in general or for British Columbia.  The labor participation rate is similarly lower than that of the Island or British Columbia.  The average gross rent is lower than that of the Island or British Columbia, but far more households spend a disproportionately high percentage of their income for rent than either other area. More than 48 percent of Cowichan households spend in excess of 30 percent of income on rent.  Yet, home ownership costs are between 5 and 15 percent lower than those of the Island as a whole or for the Province. Facilities Assessment, 2013 The early 2013 facilities assessment of Municipal school facilities indicated several challenges for many of the area schools. With the changing demographics and recent shrinking of the labor force as the economy realigns the enrollment in the local school is projected to decline from 169 in the current fiscal year to no more than 132 students by 2027. This is against a designed capacity of 182, meaning a shortfall of approximately 27 percent. Exhibit 2 shows projected enrollment levels through 2027. Exhibit 2: Projected School Enrollment

11 T-1307: Crofton LAP Background Data

Tourism Related Documents

Vancouver & Lower Mainland Tourism to Vancouver Island, 2010 This document was prepared by the University of Victoria business school and was both quantitative and qualitative in its approach, examining a variety of data sources and employing focus groups from the targeted source markets. In general, the study found that is little awareness of what Vancouver Island has to offer. There is good familiarity with Victoria proper, but the target market believes there is little differentiation from what they can find in other destinations with easier access. Approximately 60 percent of visitors arrive by ferry, but there is rising dissatisfaction with the ferry cost. While the numbers have changed since the date of the report, the relative occupancy experience points to the highly seasonal nature of visitation and observes that the Cowichan area is undoubtedly challenged as a visitor destination. The report showed occupancy experience for BC as a whole, the Victoria submarket, and . In each season Nanaimo achieved the lowest occupancy and was consistently 10-12 percentage points behind Victoria, and routinely +/-5 percentage points behind BC in general. Given that Nanaimo is a much larger city and active port, it must be assumed that Cowichan is more challenged. The existing visitor profile is dominantly Canadian, and the largest group from Vancouver and BC. The United States is the next largest market with the three western states being the best represented markets. Most visitors come for a 1 to 2 night 'getaway', and nearly a quarter of visitors come only for the day. Travel is focused on the summer months. 2012 In Market Research Report, Vancouver Island This report by Tourism BC corroborated the document described above. It used on-line sampling methodology to survey nearly 800 residents of BC, Alberta, and Washington State. In general Vancouver Island received very favorable ratings as a destination, but areas outside of Victoria proper had significantly less awareness and thus a less favorable image. As with the other study, the Island is perceived as expensive and cost is cited as a major deterrent. This may be because the respondent age was significantly younger than the actual visitor. Value of the Comox Valley Visitor Centre, 2007 This study further emphasizes the visitor satisfaction experience and definition of source markets. This was an intercept and mail back survey of nearly 1800 participants. Interestingly, it establishes an average party size of 2.5, with over 20 percent of participants traveling with children. The average per party per day expenditure was nearly $170, which was conservative because only 43 percent of visitors used commercial lodging. The average income was higher than that reported in other studies, with over half of the respondents having household incomes of greater than $65,000.

12 T-1307: Crofton LAP Background Data

Cowichan Region Tourism Plan 2010-2015

This document establishes a platform for integrated tourism marketing for the Cowichan region, attempting to coordinate the efforts of separate communities and to establish a brand for the region. The document makes use of the prior analyses cited above and acknowledges the highly fragmented nature of the industry, lack of data monitoring, inconsistent delivery of the tourism experience, and lack of funding among other issues. The initiatives outlined include the typical funding attempts through business taxes, room taxes, etc., and calls for centralized reservation systems and better web presence. Perhaps most germane to Crofton is the call for a more comprehensive marine tourism focus which would energize the waterfront and bring business to the core study area. Reference is made to a specific Commercial Marine Based Tourism Study Report dated 2005, as a starting point. Other initiatives that would be adaptable to Crofton relate to highlighting the rich agricultural heritage and Mediterranean climate enjoyed by the Cowichan Valley. The initiative makes reference to the growing interest in culinary tourism and viticulture, and there is evidence in many of the other tourism oriented reports to the expansion of these activities in the area. In LUE's experience, this is one easiest means to lessen the impacts of a seasonal market.

Near Term Economic Forecast For nearly ten years Central 1 Credit Union has produced an annual Economic Analysis of British Columbia that makes prognostications and forecasts regarding BC labor markets, population change, the housing market, and a host of other economic indicators. The 2014 edition will be released in February of this year. The 2013 edition presented a generally optimistic vision of the economy through 2017. Exhibit 3 summarizes a few of the projections. Exhibit 3: Economic Projections for BC

2014 2015 2016 2017 Real GDP % Change 2.7% 3.3% 3.9% 3.9% Unemployment Rate 6.0% 5.4% 4.7% 4.0% Housing Starts (000) 26.6 30.0 33.8 37.6 Retail Sales % Change 4.2% 5.4% 5.8% 7.3% Personal Income % Change 2.9% 4.3% 5.7% 7.2% Consumer Price Index % Change 1.8% 2.2% 2.2% 2.8% Source: Statistics Canada In general the document states that much of the improvement in the BC economy will be tied to the strengthening economic conditions in the US, particularly for exports and the timber industry. The labor participation rate is anticipated to increase to 66.7 percent from a current level of 65 percent, forcing the unemployment rate to a low of 4 percent. After a slow 2013, housing starts are anticipated to recover to their 2011 levels and grow in future years. The fastest growing industries are projected to be forestry, wood products manufacturing, mining, primary metal manufacturing, and the professional-technical services. Forestry and wood products are anticipated to grow by 20 percent between 2012 and 2017. Unfortunately for Vancouver Island, Cowichan, and Crofton, pulp and paper manufacturing will continue to lag, using as an indicator the decline in newsprint demand which has fallen 70 percent since 2001.

13 T-1307: Crofton LAP Background Data

Section IV: Existing Crofton Characteristics As illustrated in the photograph on the cover of this document, Crofton enjoys an idyllic coastal location. There are numerous other coastal communities along the eastern edge of the island, most with similar water access and distant views to the islands, but most of the other communities of which LUE is aware do not contain almost a perfect ‘bowl’ setting that provides blue water and sunrise views from the vast majority of the developable portions of the community. In addition, the existing grid system of roads and gentle slopes in the originally developed center of the town lends itself to a highly walkable, pedestrian friendly, village scale and feel. The town has a somewhat ‘removed’ feel, being surrounded on the south by low density rural agricultural uses, on the west by forest preserve, and on the north by agricultural land reserve (ALR) and the large industrial zone occupied by the Catalyst pulp and paper mill operation, that immediately abuts the north edge of Chaplin Street. The grid center of town is the area that was first developed, and as such has the oldest building stock that lacks uniform design standards, varies tremendously in terms of quality, and lacks a clear focal point. It is evident that businesses located in the area are challenged economically. In many ways this central area offers both challenges to, and opportunities for, redevelopment. Given the location of most supporting retail and services along the TCH, Crofton residents export most of their retail spending outside of the immediate community.

Population According to Statistics Canada the 2011 population within Crofton stood at 3,350 residents, almost equally split between male and female. While there are certain differences across households depending on the location in which one lives, some general household characteristics can be summarized as follows:  The vast majority of residents are native Canadian in origin  They are all permanent residents  They are predominately native to British Columbia  Nearly 75 percent are third generation residents of the area  For those working outside of the house the median commute time is between 15 and 18 minutes  The median per capita income over the age of 15 and working is approximately $29,400  The average per capita income over the age of 15 and working, depending on location in the town is between $30,000 and $47,500.  The blended average household income is just above $69,500  Approximately 85 percent of household income is derived from employment  Approximately 42 percent of the population ranks in the top half of the households in terms of Canadian income distribution  The median and average values of their dwellings were $341,000 and $372,000 respectively in 2010  On average 30 percent of households spend more than 30 percent of total income on housing costs  The average family household size is 2.5 (Note: there is no reference to household size across the entire population)

14 T-1307: Crofton LAP Background Data

Based on household characteristics, established migration patterns, birth and death rates and usual statistical projection techniques the population is expected to grow by only 648 people to a total of 3,998, with almost the same balance between male and female, by 2036. There will be a shift in the distribution of population by age cohort, with the median and average age increasing. The exhibit below illustrates this change.

Exhibit 4: Illustrated Change in Age Distribution

Crofton Area Demographic Change Projection between 2011 and 2036 600

500

400

2036 Female

300 2011 Female 2036 Male 2011 Male

200

100

0 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-plus

With a household size of 3.06 the aggregate growth will translate into an increased need for only approximately 212 dwelling units, or average annual demand for only 8.5 units per year, well under the historic absorption discussed below. However, given the reported population and the number of residential units that exist in Crofton, the average household size would be much larger. If the household size is actually the higher 4.2 then demand will be much lower at approximately 155 units. However , it should be remembered that external forces can change both housing demand and population growth. Major new employment sources or industries coming into an area, or leaving, can have dramatic growth or contraction impacts. If Crofton were to position itself to appeal to a retirement market, both housing and population would be impacted. If the area were to develop a reputation as a desirable second home location housing demand would be impacted, but population to lesser degree. It should also be expected that household size will change over time depending on the age of residents, number of children living at home, etc., so the number of homes required should be viewed as a relative number.

15 T-1307: Crofton LAP Background Data

The Housing Stock LUE was provided very detailed information on the current building inventory in Crofton with parcel size, the date of construction, and building type/use. The data records date to 1901. We were also provided annual permit activity from 2010 to the present. LUE examined construction history since 1990 and segmented the housing by type of unit by year. Obviously some years saw very little activity due to cyclicality of the building industry, recessions, etc., but on average Crofton has absorbed approximately 13 residential units annually for over 20 years. The experience since 2010 has mirrored that experience with 13 new units built in each of 2010 and 2011, 14 in 2012, but only 4 single family units added in 2013, but also one 15 unit building. What is remarkable to LUE is the homogeneity of the housing stock. From 1990 to 2009 only 4 multifamily buildings were constructed, only 36 duplex units were added, and only 7 suites. Exhibit 4 illustrates the lack of housing diversity. While we recognize more diverse housing types exist in neighboring communities it is unusual to find such a preponderance of a single housing type. Exhibit 4: Distribution of Housing by Type

Residential housing mix in Crofton

800 600 400 200 0

While LUE did not perform a detailed housing assessment, we did visually inspect selected other coastal communities to get a flavor for the type and form of housing offered, and it is clear that rental apartments and strata condominiums are embraced in the market. We also examined current real estate offerings to obtain a feel for the relative value of housing in Crofton versus other communities. We examined single family home listings, condominium listings, and lots being offered for sale. We attempted to find a common denominator, which was all offerings having good unobstructed water views over other rooftops, but not a direct waterfront location. Tables1 through 3 shows the comparison of values in Crofton, and Chemainus. It is acknowledged that this is only a 'snapshot' of current available listings, and is not an equal comparison of the broader housing market, but based on relative value on a square foot basis Crofton appears to be a more affordable community than the others. No condominium listings were discovered for Crofton, so Table 3 only highlights offerings in the other communities, but illustrates not only that there is demand

16 T-1307: Crofton LAP Background Data

for this type of housing, that it is relatively affordable, and also that it can obtain a superior price per square foot relative to single family detached housing.

Table 1: Lot Price Comparison Table 2: SFD Comparison Table 3: Condo Comparison

Location Price Sq Ft. $/sq ft. Location Prices Sq Ft. $/sq ft. Chemainus Chemainus $ 149,000 4,800 $ 31.04 $ 370,000 2,900 $ 127.59 $ 145,000 5,414 $ 26.78 $ 414,500 1,938 $ 213.88 $ 126,000 6,534 $ 19.28 $ 340,000 1,818 $ 187.02 $ 159,000 7,011 $ 22.68 $ 388,000 3,137 $ 123.69 $ 149,000 4,863 $ 30.64 Crofton Location Prices Sq Ft. $/sq ft. Crofton $ 360,000 1,800 $ 200.00 Chemainus $ 96,000 4,792 $ 20.03 $ 399,000 2,500 $ 159.60 $ 229,000 1,200 $ 190.83 $ 110,000 4,792 $ 22.95 $ 425,000 3,000 $ 141.67 $ 189,000 1,130 $ 167.26 $ 113,000 9,000 $ 12.56 $ 700,000 3,650 $ 191.78 $ 189,000 982 $ 192.46 $ 115,000 9,000 $ 12.78 $ 639,000 3,471 $ 184.10 $ 117,000 576 $ 203.13 $ 119,000 7,800 $ 15.26 Cowichan Bay Cowichan Bay Cowichan Bay $ 142,500 12,600 $ 11.31 $ 360,000 1,632 $ 220.59 $ 102,000 602 $ 169.44 $ 175,000 12,600 $ 13.89 $ 360,000 1,454 $ 247.59 $ 279,000 1,040 $ 268.27 $ 99,000 5,850 $ 16.92 $ 380,000 1,712 $ 221.96 $ 339,000 1,040 $ 325.96 $ 500,000 14,400 $ 34.72 $ 390,000 2,092 $ 186.42 $ 378,000 1,210 $ 312.40 $ 549,000 21,300 $ 25.77 $ 550,000 3,417 $ 160.96 $ 388,000 1,210 $ 320.66 Source: MLS December 2013 Source: MLS December 2013 Source: MLS December 2013

Commercial Development LUE also examined historic building data on the development of commercial space in Crofton. The data set went back to 1901, and is not consistent, but it shows no recorded new commercial construction until 1956. Development subsequent has been of relatively small scale in any given year, and years pass without any additions. According to the records provided there appears to be approximately 40,000 square feet of mixed commercial building area in the town, including office and retail space. No independent survey of buildings was conducted. There is no magic guide regarding the amount of commercial space that is supportable based on population, particularly in a small community. Moreover, the rapid growth of on-line retailing and work at home trends is rapidly changing the landscape. According to The Square Foot, a networking hub for the commercial real estate industry the United States is massively over supplied with retail opportunities at an average of 24 square feet per person, versus 15 square feet in Canada. Some areas in the United States have as much as 46 square feet per capita whereas Australia has 6.5 square feet and France only 2.3. If Crofton were to go by the Canadian standard the commercial sector is underserved with only approximately 12 feet per person currently, declining to approximately 10 feet by 2036 without new construction entering the market.

17 T-1307: Crofton LAP Background Data

The square footage that is supportable will vary according to the consumption habits of the population, shopping patterns, and availability of goods and services and extraneous factors such as the impact from tourists and/or seasonal residents. And, what is supportable will also depend on the nature of the retailing: comparison shopping and major purchase items tend to serve only much larger populations at a regional level. It is evident given the nature of merchants and businesses that currently are located in Crofton that the vast majority of spending is exported or 'leaked' north and south along the TCH, notably to the Cowichan Commons Mall and revitalized retailing in Duncan. In order to try to illustrate the amount of new commercial development that might be appropriate in Crofton over the next two decades, LUE prepared a calculation based on historic spending patterns reported by Statistics Canada, used the household income cited above, and then took a subset of spending that might logically occur in Crofton by residents if quality opportunities were available. Table 4 derives the total estimated retail spending by Crofton residents for 2011 and 2036. For purposes of illustration LUE has chosen to use an estimated 3.5 average household size because it more closely matches the number of dwelling units in Crofton and the estimated population. We have also used the average household income noted above of $69,500. Statistics Canada estimates that BC households spend approximately 96.5 percent of income, with the balance going to savings. Predicated on those assumptions it appears that Crofton residents would have spent $64.2 million in 2011, and may expect to increase that level to $76.6 million (non-inflated dollars) by 2036. Table 4: Potential Retail Spending

Change 2011 2036 2011-2036 Population 3,350 3,998 648 HH 957 1,142 185 HH income (EST 2011) $69,500 $69,500 HH Consumption (StatCanada) 96.5% 96.5% Annual HH Spending (constant 2011 $) $67,068 $67,068 Total HH Spending ($ millions) $ 64.19 $ 76.61 $ 12.42 Table 5 segments spending by major categories. Statistics Canada keeps very detailed data on household spending by type and by province. The percentages shown in Table 5 are the averages for British Columbia. The categories shown account for approximately 95.3 percent of total spending and encompass the vast majority of what is normally considered to be retail spending.

18 T-1307: Crofton LAP Background Data

Table 5: Retail Spending by Category

HH Spending by Sub Change Category ($ millions) % 2011 2036 2011-2036 Clothing 4.1% $ 2.63 $ 3.14 $ 0.51 Education 3.4% $ 2.18 $ 2.60 $ 0.42 Food and Beverage 11.6% $ 7.45 $ 8.89 $ 1.44 Housing 27.4% $ 17.59 $ 20.99 $ 3.40 HH furnishing/supplies 5.3% $ 3.40 $ 4.06 $ 0.66 Insurance 8.4% $ 5.39 $ 6.44 $ 1.04 Medical services 3.9% $ 2.50 $ 2.99 $ 0.48 Miscellaneous Goods/Services 4.6% $ 2.95 $ 3.52 $ 0.57 Recreation/Cultural 9.2% $ 5.91 $ 7.05 $ 1.14 Communications 4.9% $ 3.15 $ 3.75 $ 0.61 Travel 1.4% $ 0.90 $ 1.07 $ 0.17 Vehicles 11.1% $ 7.13 $ 8.50 $ 1.38

% of Total Spending 95.3% Total $ 11.83 As shown very few of the categories account for a disproportionate share of household expenses and spending, specifically housing, food and beverage, and vehicles (which includes purchase/lease/repair/and fuel). Travel expenditures normally flow outside the immediate market. Similarly, insurance costs and education expenses largely flow out of the area and do not support a retailing environment. Thus, it is prudent to use a subset of total spending to obtain a better idea of the amount of spending available to support retail businesses. Table 6 provides that calculation. Table 6: Refined Estimate of Available Retail Spending ($MM)

Total Change 2011 2036 (2011-2036) Clothing $ 2.63 $ 3.14 $ 0.51 Food and Beverage $ 7.45 $ 8.89 $ 1.44 HH Furnishing/supplies $ 3.40 $ 4.06 $ 0.66 Medical Services $ 2.50 $ 2.99 $ 0.48 Miscellaneous Goods/Services $ 2.95 $ 3.52 $ 0.57 Recreational/Cultural $ 5.91 $ 7.05 $ 1.14 Communications $ 3.15 $ 3.75 $ 0.61 Total Subset $ 5.41 As illustrated the subset of household expenditures that support retail/commercial less than half of total household spending. This calculation ignores office users, but in a typical mixed use environment as might be expected to be created in Crofton, small business office users may only constitute 10-20 percent of the retail space supplied. Table 7 provides an illustration of how much retail space can be supported given two variables: (1) the amount of the spending that can be captured in the local community versus 'leaked' to competing locations, and (2) the required sales per square foot in order to support a particular business, which is normally determined by the underlying lease expense. In this case we have shown a wide range of

19 T-1307: Crofton LAP Background Data

'capture' rates and sales from $100 to $500 a square foot. Typically 'branded' stores achieve higher rents per square foot, and small business in neighborhood shopping locations achieve sales at the lower range. Table 7: Illustration of Supportable Retail Space

2011 Sales (000) 2036 Sales (000) $ 17,910 $ 21,374 Capture Rates 15% 25% 50% 75% 15% 25% 50% 75% Sales/Sq Ft Square Feet of Commercial Space Supportable At Each Capture Rate $ 100 26,865 44,775 89,549 134,324 32,061 53,436 106,871 160,307 $ 200 13,432 22,387 44,775 67,162 16,031 26,718 53,436 80,153 $ 300 8,955 14,925 29,850 44,775 10,687 17,812 35,624 53,436 $ 400 6,716 11,194 22,387 33,581 8,015 13,359 26,718 40,077 $ 500 5,373 8,955 17,910 26,865 6,412 10,687 21,374 32,061 While well beyond the scope of this document to prepare a detailed retailing strategy, from LUE's examination of the market, and given the size of the retail inventory in Crofton, LUE still examined selected listings for commercial space, both for rent and for sale. The inventory advertised on line is relatively low, but the asking prices for both sale and lease properties would indicate that sales per square foot are on the lower end of the spectrum. The few properties that exist as of the date of this document are advertised for sale in the $100 to $110 per square foot range, with one 31,000 square foot building on 7.6 acres being sold for $80 per square foot, undoubtedly below the replacement cost of the building let alone land acquisition. The value of a commercial building is derived based on the supportable rent, and based on the asking prices for the properties LUE would estimate that achieved sales in the market are at the lower end of the illustration above. Given the inventory that exists in Crofton we would also estimate that the capture rates are in the 15 to 20 percent range. If the same economic performance is maintained (non-inflated dollars) given the existing population projections, this table illustrates the incremental demand for commercial space will be slight. On the other hand if the desire is to increase performance to a point where new construction can be recaptured through competitive market rents, then on-site capture will need to increase dramatically. The objective of this table is to illustrate the balance that is necessary in planning for retail/commercial needs. Retailers seek to drive more sales per square foot, and too rapid an increase in retail space/tenants can severely dilute the overall market. In resort environments it is common to underwrite the rent for retail space for years to enable merchants to survive during the initial operating years. In urban environments it is also common to stimulate small business and retail development in redevelopment districts through various subsidies and tax relief. Such is the purpose of Bylaw 3588 referenced earlier.

20 T-1307: Crofton LAP Background Data

General Market Observations It is evident that the overall economy of much of Vancouver Island has been negatively impacted with the demise of the pulp and related industries, and in an even broader sense with the downturn in the United States economy. The latter is righting itself, and as noted in the Credit 1 Economic Analysis, there is a relatively strong recovery that should become evident in 2014. There will still need to be a fundamental realignment of the employment market in order to replace the jobs lost in the extractive industries, but in the absence of luring a major new type of employer to the island, the expansion of the job market in the financial, professional, and related service industries will take time. Also, trying to encourage light industry into the Town may be challenging given the sheer amount of existing such zoned space with better access to TCH with competitive land values. One potential path to stimulate more growth in the immediate area may be to expand the tax relief policies to attract different housing types, to include rentals and condominiums that can offer a more affordable housing alternative. This may require modifying the policies to allow densities lower than the current cap. They may also be expanded to encourage mixed use, which may enable small businesses to enter the market through tax relief policies. Those same policies may be used to attract market specific housing developers such as retirement centers and assisted living venues. If the community wants to pursue a more active tourism initiative LUE believes one could be successfully developed, but it would need to be concerted effort with broad sponsorship. Small inns and bed and breakfast opportunities could be successful as owner operated enterprises, particularly if a calendar of programmatic events is developed and marketed. Outdoor movie and music nights on the waterfront, food and wine festivals, chefs series, wine tours, etc., are all viable events that appeal to day visitor and overnight guests as well, and dramatically expand lodging operating seasons and occupancy. Marketing to affinity organizations (i.e. automotive clubs) also help. It should be expected that such an effort can take several years to gain recognition and requires suitable infrastructure. As mentioned above, LUE understands that the heavy industry zoned land on the north side of Chaplin Street was offered for sale to the Municipality in recent years. LUE believes every effort should be made to acquire the property to create a buffer and to enable development of a more complete urban experience. It should be expected that the mail mill site will be redeveloped in the future because of the deep water access, but future uses may range from even more intense industrial or housing. In either event having a green buffer would be important.

21 T-1307: Crofton LAP Background Data

Appendix A: Source Documents The following is a list of the various source documents used in preparing this report. Some were obtained from the Municipality of North Cowichan, some directly from Statistics Canada, and the balance from a variety of on-line sources. Not all were found to be relevant, but all were examined, and specific elements that relate directly to the planning for Crofton have been highlighted in the preceding pages.

Excel Files  BC Assessment Building Area Data  Geocortex LAP Property Extracts  Match Focus Area with BC Assessment  Study Area Combined with BC Assessment  Crofton Building Information  Population Projections Crofton (2DEC2013)  Building Permit Report 2010 to Current  2011 Crofton NHS

PDF Files  BC Transit- Transit Future Plan  Chemainus Active Transportation Strategy  BC Transit Route 6 Map  BC Transit Route 6 Schedule  Transit Calming Policy  Development Permit guidelines, 2011  District of North Cowichan Official Community Plan, 2011  Revitalization Tax Exemption Program  Zoning Bylaw # 2950, 1997  Climate Action and energy Plan Final Report  Strategic Agricultural Plan  AAC Implementation and Work Plan Approved  Commercial Industrial Land Needs Analysis 2008  Economic Development Strategy, November 2013  Local Health Area Profile Cowichan (65) July 2011  Contamination Report DFO  School District 79 Long Range Facilities Plan Phase One Report, February 2013  Cowichan Region Tourism Plan FINAL April 2010  Crofton Trails  CVRD Regional Parks& trails Master Plan, March 2007  Economic Impacts of Commercial Nature Based Tourism Report  Long Terms Needs Analysis, Recreation Facilities, September 2009  Statistics Canada 2011 Census  Long Range Tourism Marketing Strategy, 2010  2012 In-Market Research Report, Vancouver Island, BC Tourism

22 T-1307: Crofton LAP Background Data

 Value of the Comox Valley Visitor Centre, 2007  Central 1 Credit Union Economic Analysis of British Columbia, 2013

Word Files  BCA building Information Report User Guide  Crofton Population Projection

23 T-1307: Crofton LAP Background Data