A quote by an industry expert, buried in a Business in Vancouver article today, reveals the perverse effect of upzoning to increase density.
“The city picks where they want to throw highrises, and you just get, you know, a lottery ticket,” Harding told BIV in a phone interview. “Your profits basically double. When you can put a big tower on a little piece of land, it’s obvious that the land values are going to skyrocket. And when you take away all that [rental] supply, obviously people are going to get upset.”
Real estate broker Brandon Harding, quoted in BIV 16-Aug-2016.
Quoted from “Duelling Supreme Court lawsuits over major Burnaby property deal expose Metrotown land-use bonanza: Businessman, realty firm in court fight after properties sell for almost triple assessed value” (Darryl Greer, Business in Vancouver, 16-Aug-2016). Click for article.
Rezoning actually creates windfall profits for property owners. Municipalities claim that they claw back a major part of that windfall through levies, but CityHallWatch knows that the math is opaque and often highly suspect.
Proponents of higher density justify the density as the best path to housing affordability.
We have often said that the power to rezone land is a license to print money (see “Rezoning defined“), but who when benefits our mayors and councillors print that money, and who suffers?
The vast majority of elected officials (mayors and councillors) come to their posts with nearly or absolutely zero formal knowledge of urban planning and economics. That is the case in Vancouver, and many other municipalities in Metro Vancouver.
Is it possible that naive politicians listen too much to the development industry. A very industry whose principal players provide millions of dollars for civic and provincial election campaigns? Is this relationship between most of our politicians and their funders an example of “regulatory capture”?
Back to the BIV article, an excerpt: For broker Brandon Harding with NAI Commercial, the size of the deal at the heart of the lawsuits was surprising, but not unpredictable. Harding wrote in May of last year that Metrotown was experiencing a “calm before the storm” due to the City of Burnaby’s aggressive land-use plan to raise density around the [Metrotown] mall. Having been involved in many deals in the area, including the properties that were the subject of so-called “demoviction” protests, he said that prices in the area are indeed rising due to future development potential.
The same phenomenon is happening in many neighbourhoods of Vancouver — West End, Grandview Woodland, Mount Pleasant, Marpole, Norquay, and more.