Zoning should not be sold. 2014 Community Amenity Contribution report from BC government

CAC_Prov_2014_selling_zoning

A key report on CACs (Community Amenity Contributions) was published by the BC Government in March of 2014. This CAC report outlines a number of recommended practices for municipal governments to follow. It’s a good read. The entire report is available as a PDF file for download (Community Amenity Contributions: Balancing Community Planning, Public Benefits and Housing Affordability, Ministry of Community, Sport and Cultural Development, March 2014). An open question is whether the City of Vancouver’s practices related to CACs are in line with provincial policy.

CAC_report_2014The report clearly states that City Councils should not focus on rezoning as a revenue source and lose sight of long term planning.” As well, Councils ‘must avoid the perception that they are no longer planning but simply “selling zoning”.’

Here are a number of direct quotes from the report:

Not Keeping an Open Mind – When exercising their legislative discretion to adopt zoning bylaws, council/regional board members must keep an open mind and cannot bind themselves, or pre-determine how they will vote on the proposed rezoning bylaw. Elected officials are free to consider a range of factors but they need to be open to rejecting the rezoning bylaw if, for example, they are swayed by arguments put forward at the public hearing. (p. 11)

This guide describes how CACs, if not handled carefully, can potentially decrease the supply of new housing and lead to increases in housing prices. (p.3)

The public is looking for confidence that the community plan they were consulted on is being followed, both in law and in spirit. Understandably, public confidence in the council/regional board and the OCP would be eroded if they believed that the plan would be amended whenever an opportunity arose to increase local government revenue. (p. 13)

Accepting cash that is not tied to a specific project or capital plan for a group of projects is a poor practice, and can suggest that the council/regional board is not in touch with neighbourhood or community needs. This type of practice is also more likely to be seen by the applicant/developer as unnecessary, arbitrary and simply a tax on development. (p. 15)

Increasingly, local governments are relying on the rezoning process to secure affordable housing, and contributions towards recreation facilities and other community amenities that cannot be funded through DCCs. (p. 3)

“Affordable housing” is housing that does not exceed 30% of household income. This is the general guideline for social and subsidized housing in B.C. and is commonly the percentage lenders use to determine what a family can afford to borrow when purchasing a home. (p. 3 definition)

The courts have acknowledged that zoning is a discretionary power, so councils/regional boards can choose whether or not to approve a rezoning. (p. 6)

• estimating and allocating the costs required to pay for the amenities; and could also include, establishing preferred target amounts for CACs. (p. 14)

In most cases, this planning is best undertaken at the neighbourhood level. (p. 15)

Community amenity contributions should not be used to fund annual operating, long term repair and/or future replacement costs.  Any planning for potential CACs should take into account the full life cycle costs – including the annual operational costs and long-term repair and replacement costs – of amenities that result from the contributions. Local governments should be prepared to assume these costs and only acquire those amenities that they can afford to operate and maintain within their annual budgets. (p. 14)

Being transparent about CACs not only helps the public to have a more complete picture of what the council/regional board is considering when it deals with rezoning requests, it also helps reduce concerns that secretive discussions are being held to secure council/regional board support. (p. 15)

Local governments are encouraged to borrow the principles and practices that apply to DCCs and use them to develop (tables of/schedules of) estimated CAC amounts (p. 15)

Are CACs Likely to Reduce Developer Profit?
A common assumption is that, if a local government obtains CACs from a developer, it simply reduces the return on investment made by the developer. Real estate market economists and historical evidence indicate that this is unlikely. The cost of development has increased significantly over time, with increases in the cost of land, materials, labour, DCCs, etc. There is no evidence to show that such cost increases have reduced developer profits. In fact, developer profit margins have remained remarkably stable over time. (p. 18)

CACs and development costs
(table from page 19)

The above diagrams show that while CACs cannot directly increase the price of housing for a particular development, if they are widely used, CACs can push up prices in the overall market. (p. 19)

Negotiating CACs based on a “lift” approach is inconsistent with the principles set out in this Guide, and is the approach most likely to reduce the supply of developable land and housing, thereby contributing to higher housing costs. (p. 22)

Council encourages applicants for rezoning to consider proposing CACs towards needed infrastructure and amenities as a way of ensuring that their development is seen as making a positive contribution to the neighbourhood and the community at large.  (p. 26)

Ensure CACs are proportional to the impact of the development and consistent with the CACs made by other applicants/developers. (p. 24)

Policy document: http://www.cscd.gov.bc.ca/lgd/intergov_relations/library/CAC_Guide_Full.pdf

4 thoughts on “Zoning should not be sold. 2014 Community Amenity Contribution report from BC government

    • Thanks, Bob. Actually, the point of posting it now is that despite the provincial government’s warnings, the situation continues to get worse. So to ensure the issues do not get buried, we felt it was appropriate to shine a spotlight on how wrong things are with the current mentality and behaviour of our municipal government. Thanks for proving that our post has served as a worthwhile reminder and has attracted some attention. Now where is the leadership to change things?

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