I’m bringing forward a comment posted below by Ralph Segal*, who was a (now-retired) Development Permit architect with the City of Vancouver. He has an insider’s understanding of how the process evolved and worked, including the introduction and implementation of Community Amenity Contributions. (That ‘insider’ status is not a reason to dismiss his comments; rather, it justifies a close read of what he has to say. Other commenters are welcome to disagree – but please, based on substantive argument and evidence.**) Slight editing and emphases added.
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Ralph Segal* commented on Ohrn Words: Do CACs add to the cost of housing?
My view is that CAC’s, while by no means “free”, do not add in any measurable way to the overall cost of housing.
It is the marketplace that dictates how much the buying public will/can pay for housing and, as we know, Vancouver’s super-heated real-estate market (distorted by flush off-shore investors and the low Canadian dollar) seems infinitely capable of quickly scooping up whatever housing product is offered. If CACs were to be reduced, with a consequent reduction to funding of needed public amenities, this would not bring down by one penny the selling price of new housing. Developers would simply pocket the reduction.
Just to review, the dollar value of a CAC “extracted” in a rezoning is calculated based on the market value of the increase in proposed density over zoned density, minus a developer profit factor (15% a few years ago but now, I’m told, more like 20+% since developers complained the lower figure was insufficient incentive). This value has typically worked out on spot rezonings to about $43/square feet of increased density, with which the City can fund its choice of needed public amenities from a lengthy, declared shopping list (sorry, no gun ranges listed!).
In certain areas where a neighbourhood policy plan incorporating specified maximum increases in density has been put in place through a public process, such as the Cambie Corridor, the stated (in the plan) CAC has gone up to as much as $55/square foot of density increase. So we needn’t shed any tears for developers not having a very good, if not precise idea of how much CAC will be extracted … they know that they are buying additional density from the City and are expert in fleshing out a pro forma by which they can determine whether a given project will be profitable enough. (For Thomas Beyer, Vancouver Development Cost Levies (or development cost charges) are now set at $13/square foot of ALL proposed floor area.)
As for opaqueness, it is true that the first probes by a developer regarding the City’s appetite for a particular potential spot rezoning are behind closed doors. But at the earliest possible moment, when the proposal actually appears to be serious (quite a number are merely fishing expeditions!), the City has been getting better recently at having the developer host Open Houses where the essential components of the proposition as well as the design are publicly outlined. And, of course, when all aspects including detailed financial breakdown of “the deal” regarding CACs and where the money will go have been determined, these are documented in public City staff rezoning reports leading to a Public Hearing.
All this is predicated on the premise that increasing density in the appropriate locations, i.e. first and foremost, where an area is well served by transit, is not only desirable but necessary for Vancouver’s healthy, sustainable (in all the ways that this word implies) growth. (Please refer to Price Tags very next post: ULI 2016 Europe Conference with ‘Richard Rogers on Density’).
And as any economist would insist, the most direct way to bring prices down is to increase supply! So bring on hundreds, no, thousands of new units in the Cambie Corridor, Little Mountain, Jericho, Arbutus Corridor, Joyce-Collingwood, Norquay, Broadway/Commercial, etc. No shortage of opportunity here. All this, PROVIDED (and this is a big proviso) that the increased density, with all its physical ramifications (including increased building size), can be configured in an urban design that truly enhances, environmentally and experientially, and brings new vitality to the affected context/neighbourhood, in accord with well-documented principles of livability, public realm, neighbourliness, etc. contained in City discretionary urban-design policies and guidelines.
These stated urban-design principles provide quality-based latitude for innovation, against which an individual proposal or a neighbourhood master plan must be tested. This will mean that those Vancouverites who lament the loss of ’50s and ’60s bungalows along Cambie, to be replaced by six-storey apartments, and, on major huge sites such as Pearson-Dogwood and Langara Gardens, replaced with a mix of numerous high-rise and mid-to-low rise buildings along with expansive, integrated public open space and a host of other community amenities for all … well, these folks will have to live with this new urban, rather than suburban, reality.
The thoroughness and rigour of this process and the testing of a proposal’s qualitative urban-design response first, before City staff buy into its increased density and the public goodies the resulting CACs would deliver, is what led to Vancouver becoming over the previous two decades a leader in best practices of urban development and a model for growing cities world-wide.
While much good work by the Planning Department continues, there has, unfortunately, been a deterioration in the pursuit of the planning and urban-design quality that up until about 2011 had given the City its well-deserved reputation. The recent early buy-in to huge density increases (triple and quadruple the zoned density) in too many politically motivated spot rezoning projects in the past five or so years, however justified on the back of consequent public benefits, and then driven through the process, despite internal concerns raised by City staff, by the then-City Manager (since fired), has resulted in compromise to if not abandonment of proven principles of exemplary Vancouver urban design, typically resulting in excessive building scale and a compromised relationship to neighbouring development (the urban “fit”).
This has led to an understandable loss of confidence by the public in the process and a resultant questioning and cynicism about where we are headed if this continues. Some prominent folks have even suggested that the way to redress this is to hold our breath for three or four years and come up with a brand new comprehensive City Plan, deluding themselves that this would be the path to solving housing unaffordability and a myriad of other city growing pains, including public dissatisfaction!
I would argue that Vancouver has already in place a comprehensive plan combining city-wide broad policies laying out long-term growth objectives, along with its unique discretionary zoning and design guidelines for each and every district, neighbourhood and street of the city. This system, with core urban design principles carefully and thoughtfully pursued, combined with evolving new neighbourhood plans tailored through now exhaustive public consultation for those areas requiring updated visions, had been working quite well, thank you, until its underlying principles were undermined by the ill-advised interventions mentioned above, squandering the goodwill built up over the previous 20+ years of the generally outstanding performance that we see on the ground in a host of significant developments and evolving neighbourhoods.
With the forthcoming hiring of a new Director of Planning and a new City Manager comes the opportunity of restating the core principles of Vancouver’s present Discretionary Zoning system which upholds the requirements of exemplary urban design that captures the uniqueness of this city we all love, as well as, of course, updating it as needed to reflect today’s and tomorrow’s needs to accommodate more density in consort with expanded public transit and other public infrastructure. At the level of architecture, even the visceral criticism of ubiquitous glass towers could be addressed by encouraging greater variety in more innovative building forms and inviting public spaces.
Finding the right individuals for these two key positions and then giving them the mandate and authority to do their jobs (including the ability to say “No” to Council, and to explain why, if too much density is being foisted onto a site or neighbourhood that would compromise proper urban design).
That’s my two cents.
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*As Senior Architect/Urban Designer/ Development Planner, Ralph Segal was in charge of Planning’s Urban Design & Development Planning Centre comprised of eight architects/urban designers and support staff.
While 60 percent of this group’s work was in the testing of major rezoning and development-permit submissions against the City’s urban design and architecture parameters, Ralph and his staff also provided the critical urban design component, including comprehensive design guidelines, for many significant evolving downtown precinct and neighbourhood plans.
In the Downtown, this involved creating urban designs/master plans, either independently or in close, sleeves-rolled-up collaboration with landowners’ design teams for now substantially built-out precincts at densities absorbing major CAC floor area (e.g.. False Creek North and yet-to-come Northeast False Creek pursuant to viaduct removal; City Gate; Coal Harbour, Bayshore and Triangle West; Downtown South, to name a few). This was part of a body of work that earned for Vancouver notoriety as a leader in best practices for urban design and development that serves as a model for growing cities world-wide.
Ralph takes particular satisfaction with his direct role in initiating work that ultimately resulted in Council’s decision to remove the viaducts, pressing for major improvements to the design of the new convention centre and advising on creative ways to increase building heights in opportune locations as part of Planning’s Higher Building Policy review.
In 2013, Planning’s Landscape Architects and Heritage Planners, along with the two-person Urban Design Studio were amalgamated into the U.D. & D.P. Centre to form the Urban Design Division, led by his successor whose title is, appropriately, Assistant Director of Urban Design.
** From Price Tags editor Gordon Price:
One thing that suggests a commenter does not understand what CACs are really about is confusion with Development Cost Changes or levies. Ralph covers some of that distinction, but the main point is this: CACs are applied only to rezonings when additional density is requested. There is no entitlement to the density – and so there’s an easy way to avoid the whole cumbersome process. Don’t ask for a rezoning.
If CACs were eliminated (perhaps by the Province) under the Vancouver Charter, City Council could simply respond by announcing there will be no further significant rezonings (thereby pleasing many residents.) Existing taxpayers would not be expected to fund the impacts of additional growth beyond that assumed in the Zoning and Development Bylaw and mitigated in part by the application of Development Costs Charges (a flat rate based on the existing density allowed). We would then live with the induced scarcity that could well result, with further upward pressure on prices, unless there was a general, though more modest, upzoning across the city.
CACs are variable because the value of the additional density in a rezoning cannot be determined with assuredness beforehand. A rate set today for the presumed increase in value would be out of date by next month. It’s negotiated because value varies over time. And again, if developers don’t like the City’s assumptions and calculations, they should live with the existing zoning. Isn’t that the basis on which they calculated the value of the land they bought in the first place? If they assumed a rezoning, then they should expect to pay for public benefits incurred by the increase in the density.
Land is a variable that does adjust to incorporate costs that many believe are assumed to be borne only by the ultimate buyer, the home purchaser. When DCCs were first introduced in the Downtown South bylaw, the value of the land adjusted to incorporate that increased cost. Parcels bought before the bylaw was introduced were gramdfathered. One thing that does not drop is, in most cases, the developer’s return on investment – that 15 to 20 percent mentioned above.
Ralph is right: the market determines the selling price. Just as the developer is unlikely to return additional profit to the City, the City is not going to compensate for their risk if they miscalculate.
For those who believe CACs should be done away with and amenities paid for by an increase in property tax, may I suggest another petition. Try that one out on your neighbours.
More likely, in the event CACs were abandoned, amenities on the scale we have become accustomed to would not be provided, the developer would pocket the difference, and the buyer would still pay pretty much the same price, depending on the state of the market at the time they bought.
One thing that suggests a commenter does not understand what CACs are really about is confusion with Development Cost Changes or levies. Ralph covers some of that distinction, but the main point is this: CACs are applied only to rezonings when additional density is requested. There is no entitlement to the density – and so there’s an easy way to avoid the whole cumbersome process. Don’t ask for a rezoning.
If CACs were eliminated (perhaps by the Province) under the Vancouver Charter, City Council could simply respond by announcing there will be no further significant rezonings (thereby pleasing many residents.) Existing taxpayers would not be expected to fund the impacts of additional growth beyond that assumed in the Zoning and Development Bylaw and mitigated in part by the application of Development Costs Charges (a flat rate based on the existing density allowed). We would then live with the induced scarcity that could well result, with further upward pressure on prices, unless there was a general, though more modest, upzoning across the city.
CACs are variable because the value of the additional density in a rezoning cannot be determined with assuredness beforehand. A rate set today for the presumed increase in value would be out of date by next month. It’s negotiated because value varies over time. And again, if developers don’t like the City’s assumptions and calculations, they should live with the existing zoning. Isn’t that the basis on which they calculated the value of the land they bought in the first place? If they assumed a rezoning, then they should expect to pay for public benefits incurred by the increase in the density.
Land is a variable that does adjust to incorporate costs that many believe are assumed to be borne only by the ultimate buyer, the home purchaser. When DCCs were first introduced in the Downtown South bylaw, the value of the land adjusted to incorporate that increased cost. Parcels bought before the bylaw was introduced were gramdfathered. One thing that does not drop is, in most cases, the developer’s return on investment – that 15 to 20 percent mentioned above.
Ralph is right: the market determines the selling price. Just as the developer is unlikely to return additional profit to the City, the City is not going to compensate for their risk if they miscalculate.
For those who believe CACs should be done away with and amenities paid for by an increase in property tax, may I suggest another petition. Try that one out on your neighbours.
More likely, in the event CACs were abandoned, amenities on the scale we have become accustomed to would not be provided, the developer would pocket the difference, and the buyer would still pay pretty much the same price, depending on the state of the market at the time they bought.
Excellent post! Kudos.
Ralph: “2 cents” ?? I’d say way more like $1.50.
Concise and articulate explanation of CACS. The City’s website should have these types of explanations for many if not all aspects of the development process. Thank you for your many years of service.
I entirely agree. The Province seems to be playing for yet another wedge issue in Metro Vancouver, as a distraction from the much more difficult job of reforming taxation on real estate speculation.
There’s a reason that condo prices have hardly moved in years. It’s because the region has done an excellent job of adding supply. In the condo market, demand sets the price more than fee structures. I think CACs are a scapegoat for systemic issues of zoning and lax regulation of real estate. Our political leadership needs to tackle real problems.
I think the thing I have against CAC’s is the manner by which they are tied so explicitly to a specific project … this gives the impression that the public ‘owes’ a certain development X amenity, and that a neighborhood without development of sufficient value will not get Y amenity, even if it needs it.
Were these fees to go into more of a blind trust there would be less apparent link of buying the right to develop with a sweet enough CAC.
Maybe if there was a ‘blind’ CAC plus the developers could add a public sweetener also, this way it would be clear that there was Z amount to curry public favour, but no-one would have any doubt that this would be a legitimized (and even legitimate) public bribe. Right now, there is no way to distinguish what part of the contribution is what, and so there is the appearance of collusion everywhere.
I brought up the example of the private endowment/building in public university … this is considered ok so long as the donation does not buy a certain kind of research over another, and as soon as there is a whiff of influence, that donation is considered immediately NOT ok.
There is the public appearance now that CAC’s are buying a certain (and unknown) kind of ‘flexibility’ with the city, and this is what I consider the point at which CAC’s aren’t ok. If they can have these lingering questions removed (altogether, or significantly) then they might be able to be again considered legitimate. Just as endowments aren’t going away in academia, (hopefully) just their ‘editorial’ influence on research/publication.
(another analogy is newspapers – they sell advertising, sure, but we question their legitimacy when the news is guided specifically by those advertisers wishes … so long as the advertising remains in a pool of general funds, there’s no issue with its existence)
‘ this gives the impression that the public ‘owes’ a certain development X amenity, and that a neighborhood without development of sufficient value will not get Y amenity, even if it needs it.’
I see it the other way around, the development owes. A neighbourhood with no development doesn’t ‘need’ new amenities. CAC’s aren’t meant to fix past mistakes.
A neighborhood might need to replace its worn amenities, its libraries or its community centers, and by virtue of not being actively developed, not have available cash to do so.
In this I am thinking about Doug Saunders arrival cities – so this issue is specifically more relevant to Surrey at the moment, but also for areas of Vancouver – where an area becomes the new area that immigrants go, and because of a lack of existing facilities/amenities which might aid the integration of these new people, there is a certain languishing of those arrivals. His solution (and that which is being used in many places) is to invest heavily in those areas to improve schools, transportation, business prospects, and if a city relies on development to fund this category, then it would be unable to do so.
I can think of other reasons why an area might indeed need new amenities, this is just one example.
Replacement of existing amenities is done through property tax.
In the real world here, growth is happening so why shouldn’t developers pay to support that growth? Again, if they know how much that is up front, they factor that in their land acquisition costs and it isn’t paid by the end buyer.
While I agree with Saunders’ compelling view, there is often senior government funds committed to helping immigrants and refugees outside of the municipal property tax and development revenue streams. Perhaps a city could focus some of the allowable CAC funds toward this purpose based on need, but CACs would never be created just for helping out with a federal program.
I believe the city has the discretion to determine where CAC funds will be directed. Once paid, the funds are public, not private, and it’s up to staff I would think to practice due diligence, make recommendations based on need or stated policy, and write up a report for council approval. The developer has little control over that process, though I am sure people like Ian Gillespie have opinions they are willing to express on the topic. I’m sure the process is similar in cities.
CA contributions should not be confused with private donations that require little negotiation with public officials, and which often come with strings attached.
That’s an interesting introduction/afterword relative to an earlier, similar post:
https://pricetags.wordpress.com/2015/11/19/for-comment-what-causes-traffic-congestion-and-what-can-we-do-about-it/
I must admit I am not fully convinced by the explanation:
One thing that suggests a commenter does not understand what CACs are really about is confusion with Development Cost Changes or levies. Ralph covers some of that distinction, but the main point is this: CACs are applied only to rezonings when additional density is requested. There is no entitlement to the density – and so there’s an easy way to avoid the whole cumbersome process. Don’t ask for a rezoning
In the Cambie Corrdior, it has been drafted a new plan (with new zoning), and still under this new plan it is asked to thedeveloper to pay for CAC. What is wrong here? The explanation above or the cambie corridor plan?
and, if it is the later, what was the goal of the exercise?
How I see the thing, CAC are very subjective and fuzzy: That just encourages speculation on the land price (yes CAC doesn’t increase the end price of the product which is fixed by the market, it doesn’t impact either the profit margin of a devloper competiting with others: it just impact the land price a developer will be willing to pay – but because CAC is negociable, and there is no firm limit on what can be built, the fundamental for the fair land price is very fuzzy-> that is the main rational for land speculation).
Notice, to rationalize the CAC as to pay to replace existing amenities (as advocated by artitectus), is the definiion of a Ponzi scheme, denounced at length in the Strong-city blog.
Maintenace/replacement of existing amenities should be the purpose of property taxes, while DCC should finance new amenities required by the induced growth it means, and yes there is no reason that shouldn’t directed to the improvement of the Public transit offer (it is in Richmond for the future Capstan station).
To conclude
The basic question, underlying CAC, is if we should allow spot rezoning or not?
If not, it is also clear that existing zoning bylaws need to be much more realistic in regard of the development potential of the city.
At this time those bylaw are excessively conservative, and of facto ruling out the “missing middle”, so that the “tower option” is the only option able to justify the hassle to go thru the cumbersome and unpredictable CAC process.
Voony, CACs are not displacing or creating rezoning applications. They are a small component (relative to the total value of a project) that are borne by the overarching rezoning process.
CACs are sometimes rejected or negotiated downwards based on the initial unrealistic expectations of a developer. Not every site in the city is subject to CAC policies.
Ponzi scheme? If that what the Strong city blog specifically says, then they have clearly got it backwards. Or more accurately, upside down. In a Ponzi / pyramid scheme the many pay the few, concentrating the majority of the benefits to the one at the top. The funds from CACs are ultimately distributed in the community, not concentrated into anyone’s hands. Ponzi schemes are also highly illegal, and to use that terminology implies collusion or bribery.
In the Cambie corridor, with three concentrated exceptions, the majority of the zoning allows for 4-6 storey low rise development, up from predominantly one-storey single family detached 6,000+ square foot lots. CACs did not dictate the planning process and do not automatically lead to towers on single-family sites.
I do agree with you on the zoning of the rest of Vancouver’s detached homes on open lots, and the need to create a funding stream for transit through new development. I believe that is already occurring on sites owned by TransLink, but perhaps a regional nominal flat rate DCC could be applied. While I don’t agree that CACs as practiced now are that cumbersome, I do think they will quickly head in that direction when you apply Metro (or even senior) governmental criteria to local development, especially smaller low rise developments where the additional density ultimately granted is quite small. Remember, CACs are applied only to the additional density, not the entire development.
CAC’s do not replace existing amenities or pay to run the city! They are a direct result of ‘unanticipated’ growth. The premise being if everyone stuck to the existing zoning, new amenities if required would be paid for through property tax.
The Cambie Corridor plan did not rezone anything. It designated areas for redevelopment as part of a comprehensive plan. You still have to go through the rezoning process even if you’re designated whatever in the plan. Area plans like this is very common in most cities in Metro Vancouver. The flaw with the Cambie Corridor plan is that there’s no set amenity rate tied to the rezonings, the city still insists on the negotiated CAC process.
In most other places, when a plan area is adopted, it comes with a set amenity rate. x$/unit for fire, school, parks, etc along with the set DCC rate. Both rates are adopted by bylaw and transparent so before a developer goes and buys a bunch of properties to consolidate and develop, they know what it’s going to cost, so they pay an appropriate amount for the land. That’s why CAC’s shouldn’t and don’t increase the cost of land. EXCEPT, if that rate is unknown, like it is in Vancouver.
Here is Surrey’s list, most other cities have this or something similar. https://www.surrey.ca/files/NCPAmenityContribution.pdf
You want to develop and rezone in one of these areas? You pay that amount. Along with DCC’s that are also public and known ahead of time.
You want to develop and rezone outside one of those areas? Then it’s a lot more grey and Surrey also does some negotiating in that case. It is not a good process.
Actually Don, the Cambie Corridor plan does have a fixed rate CAC for the vast majority of rezonings. From the City of Vancouver website “As of September 24, 2013, a fixed rate CAC target of $55.00 per square foot is to be applied as a benchmark fixed rate target for all 4-and 6-storey multiple dwelling rezoning proposals in the Cambie Corridor Plan, Phase 2 area. All other Cambie Corridor Phase 2 sites will be negotiated on a case-by-case basis as part of rezoning applications.”
It’s only a few sites where development is contemplated over six storeys where the negotiation comes into play – and that’s obviously because the additional value of greater density (and additional cost of needed public facilities) could be more than a four or six storey building would create.
The City of Vancouver has similar arrangements for a fixed rate in the Little Mountain adjacent, Norquay Village and Marpole Plan areas. Similarly Southeast False Creek rezonings have had a fixed rate applied since 2006. Here’s the City of Vancouver’s list.
http://vancouver.ca/files/cov/community-amenity-contributions-through-rezonings-policy.pdf
Ok great, so the problem isn’t the cac’s, it’s the lack of plans or planned areas.
This is a touchy subject! CAC’s have become a huge issue for the development industry over the past few years. There are several parts to the issue. Firstly, most developers acknowledge that new development should contribute a reasonable portion of the capital cost of new infrastructure if they are going to dramatically increase density into a neighbourhood. The issue is how much is reasonable? At $55psf the cost is ~$55,000 per 1,000sf apartment. Is this reasonable or a cash grab?
Secondly, do CAC’s impact the cost of housing? As Mr. Segal suggests, developers are generally price takers – not price makers. In other words, the marketplace sets the price of housing up or down based on supply and demand. Nevertheless, the cost of building does influence pricing as developers will immediately stop building if their costs are too high.
Unfortunately, CAC’s significantly reduce the supply of affordable land as the cost of CAC’s is deducted from the price of land a developer can pay a property owner. Since CAC’s were introduced from nothing to $55psf (the current Cambie Corridor rate) all developers have simply reduced the total amount from the price he can pay the landowners (typically single family homeowners). On a typical 8,000sf lot with increased zoning to 2.5FSR the CAC payable by the builder is approximately $836,000. (8,000sf x (2.5 – .6) x $55psf) (The base density for a single family lot is 0.60FSR). In other words, a developer can pay each lot owner along Cambie approximately at least $836,000 more for their lot if CAC’s were not payable. It is actually much more than $836,000 as the developer must pay the City upon rezoning, pay interest on the CAC cost until the project is sold, and lastly earn a profit on the total cost of the project including the CAC. I suggest the total impact is at least $1m per lot along the Cambie corridor.
Kindly note that it is difficult, if not impossible, for developers to assemble four or more lots in a row unless the developer pays at least 50% more than the individual house is worth alone. Ask yourself, would you sell your home for only 25% more than your house is currently worth if some Realtor or developer knocked on your door? For typical families, it takes a lot to motivate them to sell. If you take ~$1m away from each home owner in an average assembly they will clearly all be less motivated to sell therefore reducing the supply of affordable land. This is why, in long winded manner, CAC’s do increase the cost of housing by reducing the supply of available land.
Until Brian Jackson properly fixed the $55psf CAC rate neither developers or homeowners had any idea what CAC amount was payable. It was truly a frustrating mess for several years during the Toderian era while developers tried to determine the CAC cost implications which was based on 75% of the land lift. Realtors were truly frustrated trying to explain to land owners that this cost was being taken away from their property value and many home owners simply refused to sell until the market increased high enough to motivate them. Several Asian speculators were simply unaware of the new policy and paid too much for their land at the beginning. This delay is a key reason why it has taken until now for the first of the projects to start being completed along the Cambie corridor – over six years after the Canada Line was completed. Of course, it can be reasonably argued that these same owners received a nice gift when the city increased their density from 0.60FSR to up to 2.5 FSR. The silly part is why neither the City of Translink did not consider expropriating the lots along Cambie, rezone, and then tender the sites later when Canada Line was completed. Translink could have put a huge dent into the total cost of the line. (Hopefully they do not do the same along Broadway)
The most controversial part of CAC’s for developer’s and property owners is the CAC negotiation process. It can take over a year to negotiate, wasting huge amounts of time and cost paying consultants to negotiate. The idea of the city real estate department negotiating each deal separately is simply “dumb” – but of course it creates good union paid work for someone. The City argues that the developer can sell their new condo’s for more and then turns around and says the developer can build them for less all trying to establish how much the developer might make and how much they can pay for CAC’s. Brian Jackson thankfully resolved this mess once he established a fixed rate of $55psf and should be congratulated for his common sense approach. Both the developer and home owners now know exactly what is payable.
The main thing that bailed everyone out is the amazing increase in condo selling prices from ~$600psf four years ago to over $800psf today. Had the market remained steady many home owners would not have motivated to participate in assemblies and we would have had much less supply.
As a former city bureaucrat, I can appreciate why Mr. Segal endorses the idea that the City should be involved in negotiating proformas with developers and the staff work it creates. But from a practical side it makes no sense at all. In summary, CAC’s should be fixed – not negotiated.
I would love to hear the rationale why Mr. Segal believed the City was entitled to get 75% of the increase in land value upon rezoning. Try explaining that to an average homeowner!
On point towers in other cities, the CAC $ per ft2 are applied to the floors allowed above the height restriction. These are penthouse units 45-storeys in the sky with screaming views, and the hardship to the wealthy buyers is relative. And being point towers, the land assembly is pretty small.
From the experience of most planning departments in the Metro dealing with record development levels, believe me, they don’t want more work, especially when management refuses to staff up enough and existing staff are overworked.
At least you didn’t complain about “high city costs” and “exorbitant processing times.” Should you have done that, I would have responded with a rebuttal longer than your piece on how some incompetent developers and their consultants screw up on basic application requirements, misinterpret simple factual instructions, call and harass staff incessantly, and plug the queue with untenable delays. They are their own worst enemies.
On the other hand, applicants who have their act together and strive to meet city bylaw requirements from the beginning are often the first to complete their projects, and the process is a thing of beauty.
So cac’s increase the cost of land because home owners are greedy? They are only greedy because they know someone will and has paid too much in the past and they want in on it. Who is it that’s done that?
Thanks Don and all for the clarification.
I was naively thinking that the community plans (and all de facto accepted zoning and accepted density) was coming with its financial counterpart (as in the Surrey example), and “negociable CAC” was limited to site where it was no plan in place.
(the sentence “CACs are applied only to rezonings when additional density is requested. There is no entitlement to the density… suggests exactly that, since a community plan is to effectively encourage a certain form of development, hence application toward that: so if there is no “entitlement” per sei, there is expectation…)
In any case, we all seem to agree that the lack of visibility on the CAC is fueling land price speculation.
I don’t buy the rational that the “value of the additional density in a rezoning cannot be determined beforehand”.
In Vancouver, We have enough information, to project the land value after rezoning, to at least have the city capture the land lift value involved by rezoning (that is just what is really needed), and this apply also to the tower sites.
Thanks to “Really?” to eloquently expose the flaws of the Cambie corridor plan, and more generally the flaws of the city’s preferred approach.
I also notice that MB, on one side present the CAC negotiation as a simple process, but on the other laments that “some incompetent developers and their consultants screw up on basic application requirements”: that is kind of mutually exclusive to me…
Regarding the Ponzi scheme:
I don’t argue for it, and don’t say it is what the CAC are, I was answering to people rationalizing the CAC as a way to finance the replacement of existing amenities. The definition of a Ponzi scheme, is when the “existing benefits enjoyed by an existing homeowner, are financed from new capital paid new homeowners” to paraphrase wikipedia (the denunciation of it is at the core of the strongtown blog: http://www.strongtowns.org/the-growth-ponzi-scheme/ )
Voony, the basic development or rezoning application requirements are just that. There is a long-standing system in place with clear rules, but it is very frustrating just how many development reps and architects repeatedly don’t get it right, require hand holding, and pester staff for early approval despite the fact several other projects are ahead of them in the queue.
CAC negotiations are a separate process on top of rezoning, and the basic tenets, as I am led to understand them, are not complicated. What does get complicated is deciding how much additional density will be allowed, what to charge if there isn’t a flat rate in place, and internally, making a decision on where to direct the funds. Some developments are large enough to include additional community centres, day care facilities, etc. within the scope of the project, but often with smaller projects the funds go into an account for future use.
These are two separate parts with separate processes.
Regarding Ponzi schemes, I was reacting to your choice of language. Another commenter on another blog at another time called CACs “crack cocaine for Vancouver planners / politicians.” Both “Ponzi” and “crack cocaine” are loaded, one-sided words full of prejudgment and offend planners who deal with negotiating CACs, and using them demonstrates a lack of knowledge of what they actually are and what planners actually do.
CACs DCCs LEED, bus shelters, district energy connections, bike-share racks, etc. No, these don’t affect prices. Two years haggling with city while money is tied up comes free too.
http://www.chba.ca/uploads/Urban_Council/Spring%202013/Tab%206%20-%20City%20fees%20add%20to%20Vancouver_s%20housing%20cost%20disparity.pdf
Developer paid community improvements and permitting expenses are nice but they are a cost and are naturally factored into the price to the buyer.
Restrictions in Australia haven’t resulted in lower prices either.
Eric, still waiting for your positive alternative.
The cost is covered (and then some) by the profits from the additional multi-million dollar penthouses.
DCCs are a direct calculation of the impact on public utilities and increased demand for amenities by new development. Nothing comes free.