Vancouver already has enough zoned capacity to accommodate growth for next 20 years, says City commissioned report. So why the blockbusting rezonings?

cover_CACs_Policy_Review_2014A report commissioned by the City of Vancouver confirmed that there is enough zoned capacity in the city to accommodate development at current rates for the next 20 years. In other words, no new rezoning would be required for new housing. This raises many issues for public debate. City Council and planners should answer some questions.

The CAC Policy and Housing Review was produced by Coriolis and dated June 2014. This report is only being released a year later, in 2015 as an Appendix to the 2014 Annual Report on Community Amenity Contributions & Density Bonusing item that will be reviewed by City Council on Wednesday, June 24th. The timing of the release begs the question, why did the City sit on this report for a year before sharing it with the public?

A number of points that are highlighted in the report summary (page 2) state:

•    The City has sufficient capacity in existing zoning and approved community plans to accommodate over 20 years of supply at the recent pace of residential development.
•    Over the last 5 years, the City has approved rezonings faster than the new capacity is being used.
•    Almost half of new apartment development in the City of Vancouver occurs on land that is already zoned and for which no CAC is paid.

The points in the report raise the question on why the City would want to go above the 4-storey maximum in neighbourhoods like Grandview-Woodland, especially if it is possible to achieve growth by adding “gentle density” within existing zoning. One of the common justifications and rationalizations by planning staff for spot rezonings is the oft-cited claim that one million people are coming to Metro Vancouver over the next 30 years, and the City has the imperative to build more housing.

Airplane view of VancouverThe report makes a number of observations about Community Amenity Contributions (CACs). First and foremost, there is a claim that CACs are not the cause of high housing prices in Vancouver, and that CACs have not constrained new development. Developers may actually profit more by using the CAC model to justify large upzonings:

  • CACs per unit are generally below the market value of the extra density provided by rezoning, meaning that a portion of the land value gain is available to land owners and developers as incentive to participate in redevelopment.

It’s made clear that CACs are only considered when properties are rezoned. We’ll note that CACs are sometimes waived by Vancouver City Council. It’s stated that municipalities have other options to raise additional revenue to pay for new amenities, such as raising taxes for property owners. However, Coriolis failed to mention that in other jurisdictions, land transfer taxes are often used to raise additional revenue (for example, in Toronto). The report states that the use of CACs needs to be financially attractive to multiple parties:

“For CACs to be an effective and constructive means of obtaining amenities…
• New development projects, after rezoning and the payment of any CACs, must be financially attractive from the perspective of unit buyers, the developer, and whoever is selling the land to the developer in the first place. If the developer cannot make a profit or the land owner cannot achieve a sufficient price for land, new development projects will not happen.”

Through a series of select comparisons between developments that occurred on rezoned properties and on land that did not need rezoning: “The sales prices show that units in CAC-paying projects are in the same price range as similar units that did not pay CACs. There is no evidence that the CAC was simply added to unit price.”

The Coriolis study was commissioned by the City of Vancouver in response to the Community Amenity Contributions: Balancing Community Planning, Public Benefits and Housing Affordability report by the Ministry of Community, Sport and Cultural Development in March of 2014 (further details here). Specifically ” the City of Vancouver wants to know if there is any evidence that the City’s record in achieving amenity contributions has come at the expense of constrained development activity or has caused, directly or indirectly, upward pressure on housing prices.”

There are several targets for CAC rates. “These targets range between $10 to $55 per square foot of additional density in most areas”, “in the Cambie Corridor. The target CAC is $55 per square foot of additional density.” The report also states that for the Cambie Corridor, “This pace of development suggests that the CAC has not been an impediment.” It’s also worth noting that there are cases where the “CACs are negotiated on a site-by-site basis.”

Coriolis states, “it seems difficult to conclude that CAC policy has constrained the pace of new multifamily development in Vancouver.” This brings up the question on why are there CAC waivers in the City of Vancouver? (there is a list of projects with waivers in the main  CAC Policy and Housing Review document).

It is noted that Vancouver “has become part of a global real estate market.” Rising prices are attributed to other factors, including:
Demand from local households has been strengthened by a long period of very low interest rates and by increases in purchasing power due to family wealth transfers to help young households get into the market.”

The CAC Policy report does not look at issues of livability, human scale, the impact of rezonings on neighbourhoods or on social fabric (gentrification). The primary focus is to make a case that CACs do not affect housing affordability and that other factors are responsible for rising prices in Vancouver.

Coriolis comparisons rezoning CAC vs zoned

The comparisons in the two tables illustrate sales prices for multiple housing unit developments (CAC vs. no CAC). Based on this data, the report concluded, “The sales prices show that units in CAC-paying projects are in the same price range as similar units that did not pay CACs. There is no evidence that the CAC was simply added to unit price.” However, it must be noted that a much broader comparison would be necessary for the conclusion to be statistically valid (this is only “empirical evidence”)

2 thoughts on “Vancouver already has enough zoned capacity to accommodate growth for next 20 years, says City commissioned report. So why the blockbusting rezonings?

  1. The 20-year supply is a theoretical expression, by simple calculations, of what’s the zone (on paper), and what’s the size of land that is covered by that zone. In the real world, in which most of us live, that figure is meaningless. Metro Van did the same with industrial lands, they hired a firm who got out their calculators and found that we have decades of land. The industry – responsible for actualizing places for and businesses & people to work – provided a more detailed study, which examined at the site-specific level, found much land completely unbuildable, for a variety of reasons (environmental, access, political, etc).

    Bear in mind, that some of that land zoned in the 20-year supply, has sat there, with its potential to provide housing, for many, many decades, and will not be built in your lifetime (often for specific owner reasons). The City has no ability to develop private lands. Moreover, when something does get built, it often does not capture all the theoretical capacity from simple zone calculations; as a small example, land dedications for road, park, access (emergency and non), public realm, etc.

    And finally, the ‘capacity’ calculations are based on CURRENT plans, policy, levies and exactments. Over the decades – especially the last 1.5 – those have negatively impacted the realization of abilities to build housing, at affordable levels. City costs have risen astronomical. This is why all that was created in the 1960s in the west end – creating a liveable, affordable area – could never been done again.

    This ‘report’ was simply an internal exercize justifying the City’s ‘cut’ from new residents and new buyers. It’s goal was to create a few zingers to be used as headlines (“the system is working fine”), and clearly, it is serving that purpose.

  2. This is probably a necro-post but I thought I should say this since when you google “zoned capacity” and “Vancouver” this post comes up.

    People interest in this subject should read the following. It is about Seattle, but applies to Vancouer as well. It goes intowhat Vanessa above said but in detail. It is a must read.

    Basically the article from September 2016 argues that “Zoned Capacity” is a B.S figure that should be disregarded.

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