Open letter to Mayor on “density” bank in Vancouver (R Chatterjee, 17-Jan-2011)

Editor’s note: This open letter was received by CityHallWatch, and we thought it raised some excellent points so post it here under “special topics.”
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Open Letter to the Mayor and Council of the City of Vancouver:
17  January 2011 (in context of Motion B5 before council on Jan 18)
Managing municipal zoned capacity is akin to regulating the money supply. Just as steering between inflation and deflation is a central focus of the Bank of Canada, avoiding real estate price bubbles and busts is the mandate of Canada’s cities and is heavily influenced by municipal zoning policy.
All things being equal, under-zoning starves the city of growth potential–just as would too restrictive a money supply–and over-zoning–analogous to easy monetary policy–may be fun for a while, but has devastating long-term implications.

In the short term, both the expectation and reality of up-zoning for higher densities and intensities of land use fuels development and increased land prices.
Currently hundreds of hectares of Vancouver–under the various “corridor” and “area studies” (Broadway, Cambie, Kingsway/Norquay, IVV-OHBD, and HAHR)–are planned or already approved for significantly higher residential densities, including among the highest densities of any city in the OECD with allowable FSRs as high as 6.  Under the terms of the new Regional Growth Strategy, which Vancouver’s Metro representatives unanimously approved last week, more than half of the land in the city–any site “near” a “frequent transit corridor” aka bus route– may be rezoned by Metro fiat.  With almost any lot within the City of Vancouver now having the potential to see vastly greater residential density erected upon–and high above–it, the real estate market response has been clear. In such a permissive, “open door” environment, land values must skyrocket, and they have.
But is this inflation of land values durable–or even desirable–despite dramatic short term gains for some?

In the long term the economic development of a city depends primarily on its commercial tax base
, and we are all well aware of its dramatic erosion in Vancouver.  Influxes of capital from outside the region and country are evanescent at best, and never sustainable over time.  The rise and fall of the world’s cities is testament to this truism.  Vancouver is not, or not yet, the current economic powerhouse that is New York City, San Francisco, London, Hong Kong, or even nearby Seattle.  In fact, median real wages, non-construction employment, and our trade balance have been on the decline for over a decade.  Simply put, Vancouver lacks–or has failed to implement–an industrial policy.  Its phenomenal capital influx over the past 15 years has not been invested significantly in export-oriented, let alone productive, ventures.  The result is that the massive increase of Vancouver’s zoned capacity is pushing supply AND pricing far beyond local demand. Vancouver’s land values have thus become highly sensitive and elastic to international capital flows, and exchange and interest rate fluctuations, all far beyond the City’s control.

This is no place for any city to be, least of all one that that lays claim to leadership on “sustainability.”
The information Ellen Woodsworth is trying to secure through her Council Motion, appended below and set for discussion on Tuesday, January 18th, will help ascertain where in this zoned capacity balance Vancouver now sits, for to miss the mark is to subject Vancouver’s economy and land prices to dramatic and punishing volatility in the years to come. This is every bit as important as–and indeed connected to–Mark Carney and the Bank of Canada’s decision making on interest rates.
You can believe the Bank’s Board has a finger on the pulse of Canada’s money supply.  How is it that Vancouver’s Council and staff are not similarly clear about the ciy’s zoned capacity to house our forecast population growth?
Consider seriously the importance of the upcoming motion proposed by Councillor Woodsworth in terms of the future growth of this city, the protection of its assets, and its credit-worthiness.

The value of the City’s Property Endowment Fund hangs in the balance here, as does its tax base.
Are you directly and knowingly undermining the value of both public and private assets so critical to City finances, and all for short-term political–and personal–gain in this, an election year?

Vancouver’s Mayor and City Councillors have a clear fiduciary duty to ensure they make decisions
for all stakeholders on the best information available.  Councillor Woodworth’s motion is a worthwhile effort toward securing this information.
Rand Chatterjee
Vancouver, BC
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B. Motions on Notice, 18 January 2011 2:00 PM, Regular City Council Meeting
5. Density in Vancouver
MOVER: Councillor Ellen Woodsworth SECONDER: Councillor
WHEREAS
1. The City of Vancouver is planning for future growth;
2. The City of Vancouver is committed to preserving and strengthening the diversity of neighbourhoods;
3. The height and density of buildings and areas within the neighbourhoods are dependent on what zoning capacity is required to meet that growth;
4. Neighbourhoods are supporting the need for more environmentally, affordable housing but are concerned about density that has not led to more overall affordability;
5. In order to plan for the future we need to know what capacity the city has now.
THEREFORE BE IT RESOLVED THAT Council request staff to report back, at a meeting available to the public, the total existing zoned capacity in the City of Vancouver. This report should be transparent and include all zones in the city (including but not limited to RA, RS, RT, RM, FM-1, C, C-2, C-3A, FC-1, IC-3, HA, CD, CD-1, FCCDD, DD, CWD, DEOD, FSD and BCPED);
FURTHER THAT these breakdowns of data should also show total capacity in each zone, methodology and assumptions; and
FURTHER THAT this work should be completed as a priority within 30 days.

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