A lot of time I hear liberal urbanists claiming that trading development rights for community amenities (I’d definitely include affordable housing mandates here) is a win-win situation, but there’s a real danger of killing the goose that laid the golden egg, as appears to be happening in Vancouver:
Development of the Cambie corridor is being “paralyzed” because the City of Vancouver is taking too much of the profits resulting from property rezonings, the Urban Development Institute says.
Paul Sullivan, chair of the UDI taxation committee, said at least three potential developments along the new Canada Line have fallen apart because the city is being too aggressive in seeking community amenity contributions when rezonings take place.
The city uses the money — an average of 75 per cent of the profits resulting from rezonings — for community amenities like parks and seniors’ centres.
It’s interesting that the city openly admits to taking the vast majority of the upshot from the rezonings. One could interpret this as a marginal tax rate on dense development of 75% – I’m not sure that you could find a single politician or economist who would support a such a tax bracket on income, but I guess developers are viewed as less productive and more easy to leech off of than even the ultra-rich.
Another odd aspect of the story is that the rules are in fact not even formalized:
Sullivan, a real estate appraiser by trade, said the city could solve the problem by establishing a set amount for CACs that developers can factor into their purchase prices. “What we need is certainty in the policy, not just in the density but in the lift so that land can get priced fairly,” he said. “If you don’t have that it makes it very hard to get a grip on this problem.”
Vision Vancouver Coun. Raymond Louie disagrees.
“I am not sure that a blunt instrument [like set fees] would best serve our citizens. I think a finer-grain discussion or negotiation on what’s appropriate based on what the local needs [are] and what the individual property generates in profit is more appropriate,” he said.
My first reaction was that this is very bad, because it adds an element to uncertainty to development. But my next reaction was: If it weren’t for the ad hoc nature of the program, we might never have known its cost. In the US, where affordable housing mandates are known before developers start making their pitches, it can be difficult to see when the law is having a deleterious effect, because proposals simply won’t be made, and even sophisticated statistical analyses haven’t yielded definitive data on the effects of things like affordable housing and other community benefits. In Vancouver, though, we can see the tangible effect: “at least three potential developments along the new Canada Line have fallen apart.” But who only knows how many were never even proposed.
Anyone know of anything similar happening in other cities? Or maybe someone’s found more convincing evidence than I could about the tangible effects of things like this?
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