I got very excited when I saw this headline in Business in Vancouver:
Not because of the CAC part; I had already read that Bob supported Community Amenity Contributions – and said so at his UDI talk last week:
The city currently takes about 75% of the value of any increase in land value after a rezoning provides for more density. That levy, called a community amenity contribution (CAC), goes to fund social housing, arts and culture space, daycare centres and heritage restoration. …
Rennie said that if the city did not levy CACs, it would have to increase taxes. …
“If there were no CACs for the last four years, and the community amenities were still created and the density was still granted, this would result in a tax increase of 6.78% every year for the next ten years, or a one-year tax increase of 54.25%. The choice would be, ‘Let’s not have the amenities,’ and I don’t want to see it pushed so far that something like that goes to a referendum.’”
It was that last part that made my heart quicken: Bob Rennie opposes referenda on tax and revenue issues!
Bob was an early, close and prominent supporter of Christy Clark, so I’ve wondered what he has said to her about the transit referendum, and even whether anyone had asked his advice before she announced it during the election campaign.
Now, of course, we are stuck with it – and its passage or failure will determine the direction of this region and how it is shaped. In particular, whether there will be more of the transit-oriented development like Marine Gateway that Bob has been so successful at selling.
At a previous UDI talk, he proclaimed that the future of real estate was not so much ‘location, location, location’ as ‘transit, transit, transit.’ So I naturally assumed that Bob had taken a forthright position against the transit referendum. And maybe by implication he has. And maybe in private meetings with the Premier he has. But so far, publically, he hasn’t.
Will Bob Rennie be a leader for the passage of the referendum when the negotiations between region and province are finished, and the question clarified? Or will he, as the Premier appears to be doing, take a distanced, neutral stand – leaving it up to ‘the public.’?
As the Minister of Transportation Todd Stone said early in his tenure, the referendum will have to conducted like a political campaign; it will require support from every regional leader, from the business community, from labour, environmental groups, and community leaders.
In so many respects, that includes Bob Rennie.
Such an overreliance on CACs to fund services is troubling. It ensures that the city must be continually redeveloping just to pay the basic bills. That is a frightening thought to anybody who has any interest in heritage.
You mean like the “heritage” parking lots and ICBC Claim Centres? Cause this is what is being redeveloped that produces the large CAC’s.
No, I mean heritage as in the Legge Mansion or some of the midcentruy homes on Cambie, particularly between King Edward and 33rd.
So, somehow it’s better to hide the true cost of the amenities in CACs? Sooner or later we’re going to have pay the taxes that are necessary to support and maintain these amenities.
And since the city is so keen to hide the true cost of the services it’s supposed to provide, it gives developers even more leverage over zoning and special favours…
But, oh the horror, if ever a referendum was allowed on anything important. Pretty soon we’ll have to stop having elections in case the citizens make a bad choice in government.
The pricipal of representative democracy as I understand it is we elect a representative to reflect our interests….while at the same time actually making hard decisions. As a group
we are extremely bad at making decisions that negatively affect us in the short term even if they are better in the long term.
I’m not the most informed person in the world on CAC’s, but it seems fairly reasonable to me. The initial (read: capital) outlay for a community amenity is paid for through the density bonus and than ongoing (read: operations, maintenance, retrofit & replacement) is paid for through smaller, more typical property tax increases spread over a larger population (presumably those that own the units)? It also seems like a fairly reasonable way to accommodate the need for additional services in a growing city by sharing the cost (to varying degrees) between developers, existing property owners and new property owners.
What I haven’t quite figured out is why politicians (and potentially developers?) don’t see transit as a “community amenity” and fund it in a similar way. If Mr. Rennie is right and the next wave of development is all about “transit, transit, transit”, than isn’t transit the foremost “community amenity”? Shouldn’t some of the incremental income generated by upzoning near transit stations/corridors fund the community amenity that generated some of that land value increase in the first place?
A,
It won’t be transit because the principle behind CAC’s is that you are compensating for the increased density in neighbourhood x by providing amenities in neighbourhood x. Having a big development go in neighbourhood x and then paying CAC’s for transit in neighbourhood y (or city y) doesn’t jive with the intent of CAC’s. They ideally should be spent in the immediate neighbourhood of the development in question.
The concept of CAC’s is based on two principles. Nexus and proportionality. First, there must be a demonstrable link between CAC’s and the impacts of the new development. Second, the CAC’s are to be proportional to the impact of the development. If, for example, a new library is required in a community because it currently doesn’t have one … the new development should not be paying for the cost of the entire library. It should only being paying its proportional cost … if it increases the population of those using the library by 25% then it should cover 25% of the cost and the existing community (through taxes) should cover the balance. The CAC’s are not meant to “subsidize” the exiting community.
CAC’s would be fine in principle if they were actually used to fund amenities that benefited the neighbourhood or the City as a whole. But they aren’t. They go into general revenue and have become critical to the City’s general municipal finance model. The City overspends on basic operations; rather than manage prudently and treat the CAC’s as a windfall to be reinvested or saved for a rainy day, CAC’s are being used to plug what has become a structural hole in the City’s finances. When the development industry slows down, watch out.
There are two additional significant negative effects of this:
(1) Making the City a joint-venture partner in developments (which is essentially what these CAC’s are) puts the City as the regulator in a conflicted position. Even if they do have a Chinese wall with Planning operating independently of Finance, the appearance of conflict exists and has caused a major problem in the perception of a balanced approach taken in community consultations. This is bad for the community but also has introduced additional risk to developers;
(2) Increasing CAC’s DOES increase housing costs, despite what Mr. Rennie states. Even if all of the CAC cost comes off the land (which it doesn’t, it is shared between the purchaser and the vendor of land…the only person who doesn’t pay the CAC is the developer), what that does is (a) make less land viable for redevelopment, thereby reducing supply and increasing the price, or (b) mean that a redevelopment scheme has a far higher density hurdle that needs to be achieved in order for it to be viable. For a development site to be viable, the land value net of CAC’s in the redevelopment scheme must exceed the value of its existing use (ie a house or small commercial building). We don’t have any vacant land in Vancouver so that hurdle is already high, and increasing CAC’s makes it even higher.