Amenity contributions are a “double-edged sword” that create “a big revenue stream | Alex Boston
Douglas Todd: Vancouver is selling increased density to pay for more amenities. Is it worth it?
Douglas Todd
The Vancouver Sun
Opinion: Developers’ contributions to infrastructure are a “double-edged sword” that lead to too much luxury housing. But they also create “a big revenue stream,” says specialist
The city of Vancouver website applauds the way property developers are increasingly providing hundreds of millions of dollars to help build housing, daycares, parks and community centres.
But some councillors and specialists warn the city is becoming dangerously dependent on increasing zoning density for highrises and other buildings in return for developers contributing heavily to infrastructure.
“We’ve created a monster,” says Councillor Colleen Hardwick, who maintained previous councils never intended that developers’ so-called community amenity contributions become a regular flow of money and facilities.
A Simon Fraser University sustainability specialist, Alex Boston, says amenity contributions are a “double-edged sword” that create “a big revenue stream,” but also lead to too much housing construction for the luxury market. Vancouver and other municipalities, Boston said, over-rely on them.
Still, the Vancouver city website is full of praise for the hundreds of millions of dollars that developers, in return for upzoning, have devoted to help create scores of amenities, such as the Marpole Family Place, the Jim Deva Plaza and the Creekside Community and Children Centre.
Jim Deva Plaza in Vancouver’s West End on Friday, June 17, 2022. The plaza is a small sample of what has been built using contributions from developers in return for increased zoning density. Photo by Jason Payne /PNG
In a gesture of appreciation, the city of Vancouver offers to put developers’ names on bronze plaques outside each new facility.
The money and contributions involved are huge. One council report points to how a large bulk of contributions — worth more than $100 million in revenue and “in-kind” services — are coming from the upzoning of just four luxury towers in downtown Vancouver.
They include a glamorous 43-storey skyscraper at 1640-1650 Alberni. In exchange for the opportunity to build higher, the developer will provide $33 million worth of contributions in the form of market rental units, below-market rental units, heritage preservation and public art.
While the Vancouver city website says amenity contributions make it possible to reduce property taxes and support growth, Hardwick is among those who worry the frequent spot upzonings contribute to increasing land values and thus the cost of housing.
“We’ve created a business model for the city around selling zoning,” said Hardwick.
About 60 to 80 major rezoning applications are approved each year in return for contributions, according to a report.
Vancouver’s model is based on the idea that, in return for city council approving more density for a highrise or other buildings, “the city targets 75 per cent of all the increase in land value” as an amenity contribution. The developer can take home the remaining 25 per cent as profit.
Hardwick says those who maintain the heightened property values that flow from upzoning don’t contribute to higher housing prices are dealing in “malarkey.”
This map, generated by the city of Vancouver, shows the location of amenities that are being contributed to by developers.
Developers are also expected to make financial or in-kind contributions, although to a much lesser extent, when councillors grant them “density bonuses,” or increased floor space under existing zoning. In 2021, the two methods led to developers being able to build five million square feet of more floor space.
A city report shows Vancouver has been bringing in roughly $200 million to $400 million a year from developers’ contributions, the majority from zoning upgrades. According to reports, developers have been funding about half the city’s facilities and infrastructure.
Councillor Jean Swanson acknowledges contributions are one of the reasons left-wing decision-makers such as herself keep voting to approve lavish highrises, even while most of their units are out of reach for the vast majority of people who live and work in the region.
“I voted for some more condos in a penthouse once because they provided a huge CAC — in the order of $1 million each,” Swanson said, “which is pretty hard to resist when it can be used for the community.”
That said, Swanson believes the contributions are both good and bad for the city.
“They are a cheap way to get dollars for amenities. The city is in desperate need of money to do what residents want, like get affordable housing, community facilities and deal with climate change.”
But Swanson would rather impose a progressive “mansion tax” on properties rather than build “lots of condos” in exchange for developer money.
Councillor Lisa Dominato said there is a role for the amenity contributions. “They support public infrastructure like community and culture facilities, parks, child care and non-market housing that would otherwise have to be paid for solely by taxpayers.”
That said, Dominato added, cities should not rely on them solely for capital projects.
Last year, council hiked property taxes by 6.3 per cent, a near record.
SFU’s Boston said Vancouver and other municipalities over-rely on the amenity contributions because “they’re a big, predictable revenue source. Property taxes and utility fees are insufficient to finance all the services required of municipalities, as well as some of the nice-to-haves.”
Vancouver already has existing zoning to accommodate 20 years of projected population growth, according to a city report, which also estimated that Vancouver, despite containing one-quarter of Metro’s population, has constructed 37 per cent of the region’s apartments.
Given that Vancouver has already upzoned “boatloads of property” to more than absorb future population growth, Hardwick maintains it’s time councillors slow down in their pursuit of amenity contribution, while reducing city spending.
Council, she argued, has “bitten off more than its historic responsibilities” by committing to devoting hundreds of millions dollars a year to housing and combating climate change.
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