TEXT Andrew Jackson
As they stroll along the grand boulevards of Paris, few visitors understand the creative financial mechanisms that underwrote the city’s reconstruction in the 1850s. Between 1851 and 1869, the Prefect of the Seine, Baron Georges-Eugènes Haussmann, oversaw the expenditure of some 2.5 billion francs and took the view that “expenditures on public works were not expenditures at all but investments readily recoverable in rising tax revenues from the growing population and from increased property values that the expenditures themselves created,” according to historian David H. Pinkney. In 1918, New York City adopted its own form of “creative financing” to preserve its landmark buildings, by allowing owners to transfer their rights to develop to other sites. Since then, Transferable Density Rights (TDRs) have preserved many historic buildings in New York, with over one hundred municipalities in the United States having adopted similar legislation. Such policy mechanisms are less common in Canada.
In the history of urban planning in Canada, 1953 was a turning point for creative financing at the municipal level. That year, the province of British Columbia granted a unique Charter to the City of Vancouver, which, among other things, permitted discretionary zoning. In 1975, Vancouver’s planning officials utilized this acquired authority to apply discretionary zoning–or approve a project based on objective criteria–and give bonus density to certain developments in exchange for community facilities. In 1989, these “amenity bonuses” were formalized to create an interesting experiment in creative financing for the City–the Community Amenity Contribution (CAC).
In a recent interview, the director of real estate services at the City of Vancouver, Michael Flanigan, claims that the Vancouver Charter remains “the envy of every Canadian city.” The director of city planning for the City of Vancouver, Brent Toderian, agrees with Flanigan, but places equal emphasis on the abilities of officials who oversee the discretionary zoning system. With regard to the policy of CACs, Toderian adds, “it has been a cornerstone of the Vancouver model of city building.”
While Vancouver’s Development Cost Levies (DCLs) help fund childcare facilities, parks, social housing, and engineering services, CACs pay for a wider range of services, including artists’ studios, community gardens, non-market housing, park refurbishments, public art, cultural facilities, drug treatment facilities, greenways, and bicycle lanes. Before examining individual CACs, it is important to understand how local architects and their clients negotiate them.
After deducting hard costs, soft costs, a 15% developer profit, and overhead for two to three years, the City of Vancouver negotiates for 70% to 80% of the additional density–also considered a “land-lift” because of the increased value to the property–in the form of a CAC. Flanigan proudly mentions the recent $46.2-million CAC deal for the rezoning of Arbutus Village, a seven-acre site master-planned by DIALOG. Toderian notes that CACs sometimes vary from 70% to 80% of the “land-lift,” depending on the risk associated with a particular development.
Not surprisingly, developers and landowners often balk at such levies. Similarly, Gregory Borowski, a principal at Merrick Architecture, often fields difficult questions from his clients who ask: “What’s in it for me?” As some negotiations over developments last two to three years, frustrated developers end up placing additional burdens on their architects to speed up the projects. Despite delays in negotiating CACs, deputy executive director of the Urban Development Institute (UDI), Jeffrey Fisher, says that on large complex sites, negotiated CACs are generally preferred by developers, whereas on simpler sites or on smaller lots, fixed CACs are preferable. This is not surprising, because developers benefit considerably from CACs. First of all, a developer benefits from the increase in land value created by the rezoning itself. Second, developers may benefit from the increased amenity around their developments. Third, the developer benefits from the additional density included in the rezoning. “At the end of the day,” says Toderian, “developers are not required to provide a CAC, but [then again] the City is not required to grant a rezoning.”
Local activist Terry Martin, who once chaired the City of Vancouver’s Board of Variance, questions whether local residents have the ability to affect rezoning hearings due to the influence of the development industry on City Council. In response, Toderian and Borowski point out that CACs “transform the politics of rezoning.” At a recent rezoning hearing that has yet to come forward to a public hearing, it is anticipated that a proposal submitted by Borowski’s firm would receive support by a local artists’ group because these artists are eligible to apply for a juried selection process assigning studio space for a set time period.
As for the form of CACs, Borowski finds that many clients prefer cash payments to onsite facilities, as clients fear the delays associated with additional construction. Some clients prefer a cash CAC payment since it does not entail construction cost escalation risk or the requirement to construct a facility for use elsewhere in the city. Gregory Henriquez, whose firm Henriquez Partners Architects recently completed the Michael Smith Laboratories at UBC and the Woodward’s Redevelopment, says “the more creative the developer, the more likely they are to integrate the CAC into their projects. The political and cultural value of including physical amenities into a market residential project is rarely understood.” This approach can be found in two of Henriquez’s projects currently under development–one on 6th Avenue and Fir Street and the other on 700 West 8th Avenue.
Do such negotiated amenities affect affordability in Vancouver? At the UDI, Fisher believes there is a direct link between CACs and affordability. At the City, Toderian, citing research by Coriolis Consulting, questions this link because “in a competitive market, prices are determined by many factors.” Architects like Henriquez believe that the genuine affordability crisis in Vancouver has more to do with foreign direct investment than CACs. “Vancouver has become the safety-deposit box for the world,” Henriquez explains. He criticizes talk of a real estate bubble in Vancouver. “Everyone thinks we have reached a bubble, but we are not even close,” Henriquez contends. “On a global scale, Vancouver is still underpriced,” he adds.
Can CACs and TDRs increase the supply of affordable housing in Vancouver? During a recent lecture at Simon Fraser University, local architect Michael Geller said that these planning mechanisms provide the best way to fund new non-market housing in the Lower Mainland. While this has always been part of the City’s density bonus program, over-reliance on CACs supports high-density development, placing more demands on community amenities than what CACs and DCLs can mitigate. “You should not do density to get public benefits, because this is the tail wagging the dog,” Toderian explains.
So far, the most significant CACs have come from the large rezonings around the downtown core. For example, in Southeast False Creek’s Olympic Village, 252 affordable housing units, a 45,000-square-foot Creekside Community Centre, and extensive new waterfront walkways were incorporated into this much-maligned development. Similarly, the Downtown South neighbourhood has experienced a significant boon in community amenities over the last 10 years. As an example, in 2001, the City approved the rezoning of 1133 Seymour Street where two residential towers were to be placed at either end of a site. Now completed, the Hewitt + Company Architects-designed project overlooks the new Emery Barnes Park which was itself partially realized through CACs. In return for an increase in density–raising the FSR from 5.05 to 8.08–the developers co
mmitted to provide a 13,871-square-foot cultural amenity facility that eventually became a 170-seat boutique cinema for the non-profit Vancouver International Film Festival. Today, the Vancouver International Film Centre and 1133 Seymour Street provide a good example of a CAC because “people can see the community amenity alongside the development that created it,” explains Toderian.
Borowski feels that the adjacent Emery Barnes Park also represents a successful example of a CAC. For its recent Symphony Place project, the developer Solterra negotiated a $6-million CAC, of which $2 million went to the renovation of the nearby Orpheum Theatre, $2 million to the Affordable Housing Fund, and another $2 million to Emery Barnes Park. In return, the City increased the site’s FSR from 5.0 to 9.3. Responsible for the park’s design, the manager of research and planning at the Vancouver Board of Parks and Recreation, Tilo Driessen, describes Emery Barnes as a “fabulously successful park patronized by a diverse social mix.”
When asked whether tonier neighbourhoods such as Downtown South can leverage larger CACs at rezoning hearings, Toderian insists, “Absolutely not!” The amount for a CAC is determined by professionally prepared financial analysis and vary due to a number of economic factors and not by politics or influence. Not only do land prices in different neighbourhoods affect the size of CACs, but the relative rate of development also plays a role, explains Flanigan. To test these claims, it is useful to compare the CACs in Downtown South with those in the disadvantaged Downtown Eastside, such as the rezoning of 550 Taylor Street where the City collected just over $1 million in 1997. Between 2004 and 2009, this CAC, along with another $187,500 CAC, paid for the redevelopment of the infamous 300-square-foot “Pigeon Park” located one block from the corner of the troubled intersection of Main and Hastings. With these CACs, the City provided new sidewalks, replaced existing benches, installed a new drinking fountain, and added new trees to Pigeon Park. Whatever the differences between Pigeon Park and Emery Barnes Park, critics cannot ignore the fact that this CAC provided tangible amenities to some of Canada’s poorest citizens. Thus far, it seems that the most trenchant criticism of CACs concerns transparency. It is generally agreed upon that the City has not adequately documented how it distributes revenue from CACs.
In the final analysis, the best test of CACs comes not from their relative size, but from their effect on local liveability. Noting the lack of a similar policy in nearby Seattle, Borowski tells the anecdotal story of his father-in-law who pays for an annual membership at the University of Washington fitness centre because there are no public community centres available. In a similar vein, Toderian compares the community amenities at Concord Pacific’s False Creek North in Vancouver to the lack of comparable amenities at Concord CityPlace in Toronto. In theory, CACs are abstract financial instruments debated at City Hall but in reality, these creative financial instruments (or lack thereof) help determine and improve the quality of life in urban areas. “Visitors don’t realize how we can provide for all of these amenities in Vancouver,” notes Toderian. Doubtless, Baron Haussmann would understand Toderian’s frustration. CA
Andrew Jackson currently lives in Vancouver where he is a PhD candidate at the University of British Columbia.