Thinner Streets, Fatter Revenues

by Zbigniew

Weekday evening: banging away at the keyboard like a deranged monkey when the phone rings.

A young, perky, female voice. It quickly becomes apparent that Vision Vancouver has neglected to remove me from their call list after the lapse in my membership. (Was I really so naïve to believe that electoral politics could actually affect some kind of positive change in this burg? What the devil was I thinking?)

Vision needs my support (ie., money). While less than a year into their mandate, the party needs to bolster its coffers to fight the Non-Partisan Association (Party) and its unholy alliance with Robert MacDonald of MacDonald Development, the source of a whopping $960,000 donation.

“That’s terrible,” I offer. And ask, as innocently as I can muster, “Can you tell me how much the development community gives to Vision?”

There is a pause.

*

Vancouver’s been described as “a city with no visible means of support.” That’s because what passes for an economy in Vancouver is pretty subtle: we build houses to house those that build and sell houses. Property Development is the name of the game, the big employer: architects, graphic designers, marketers, engineers, construction workers, building suppliers, real estate agents, mortgage specialists, stagers, grounds keepers, and others ending –ultimately- with house flippers.

From AB Scale Model Ltd. to Zippy Signs, the industry financially greases the civic political process. Contributions by the development community to both main parties in 2008 totaled $827,679; $410,100 or 49.5% went to Vision Vancouver1, representing 22% of the $1.9 million total raised by the party2. In the 2011 election, development community donations to Vision had more than doubled to at least $924,407, or 63% of all corporate donations received and 42% of total donations3.

Campaign donations aren’t charity but investments; they’re expected to pay off.

What do developers get for their money? Tough to say, for certain. However, in recent months Rize Alliance (2011 campaign contribution: $10,950) was approved for a downtown-style condo tower in the heart of Mt. Pleasant despite a significant negative response from the community, while the Aquilini Group ($5,000) was given a $35 million break on community amenity contributions for its rental apartment project near the Rogers Arena as part of the Secured Market Rental Housing Policy, which provides subsidized land and tax breaks to developers for affordable housing –that’s a pretty sweet deal.

The Robert MacDonalds of the world aside, the modest amounts developers lay out to their political representatives says much about the City of Vancouver’s addiction to development.

Despite the fact that Vancouver has one of the lowest residential property tax rates in the Lower Mainland, 80% percent of the city’s revenues come from property taxes. How do they do it? Volume: replace five or six houses with 50 or 60 condo units and the cash registers at City Hall are ringing.

Meanwhile, increasing density serves as a catalyst for additional revenues. The introduction of a condo a neighbourhood sets a benchmark for the value of the surrounding property, raising assessments and taxes. For the businesses in the area this will mean higher rents and reduced viability, paving the way for further residential development. As even marginal property –the factories and warehouses, the old buildings that house the generation of new ideas- fall, the result is a vicious spiral of ever more limited economic, social and cultural activity.

But that’s ultimately acceptable in the eyes of both developers and the city, for the building boom supports the bottom lines of  both –along with a not-insignificant portion of the citizenry that have benefited financially from rising home prices.

But as more and more land must be freed-up for development, the rest of us need to be sold the scam. A few examples of the political soft shoe, of the comedy stylings of Meggs & Rennie:

The Density = Affordability Mantra – Given our limited land supply, detached houses are out of the price range of most citizens, the idea is that more development -more condos- means more housing, and more housing means greater affordability. It’s supply side economics, and like Reagan’s voodoo, the trickle-down smells of piss. Thousands and thousands of units have been dumped onto the Vancouver market over the last decade but prices have only increased, while the introduction of laneway housing -what I like to call “backdoor condos”- has only served to increased the value of the properties they sit on. Aside from the fact that shoebox sized condos do not meet the needs couples and families, that high maintenance fees undermine affordability even in the era of cheap credit, this supply-focused approach has only fueled speculation and prices, with the prime beneficiary being, again, the city/development cabal.

“Competing” Ideas – The majority of the proposals arising from Re:CONNECT, the public ideas competition for the future of the Georgia and Dunsmuir streets viaducts, advanced the repurposing of roadways in a manner similar to New York’s Highline Park. The city’s choice? Surprise! Remove the viaducts and build condos.

Developer-friendly Policy(“DP” –perfect) – According to the city’s Short Term Incentives for Rental Housing (STIR) and its successor, the Secured Market Rental Housing Policy (or “Son of STIR”), “all new market rental housing in Vancouver is defined as ‘affordable’ irrespective of price … the city gives subsidized land and tax breaks to private rental developers, and if they use these city programs their housing is automatically deemed affordable by Vision Vancouver, with no restrictions on rent.”4 Essentially, the city financially subsidizes developers to increase affordable housing stocks on paper. Too bad we don’t live on paper.

Which brings us to the latest initiative. Among the recommendations of the Mayor’s Task Force on Affordable Housing City is a proposal to split a standard 66-foot road allowance and build houses along one side. In doing so “the city could potentially tap into $2 billion in land value and create an additional 10,000 homes.”5 Other recommendations include “an interim rezoning policy that would add higher-density housing options within 100 metres (or 1.5 blocks) of many of the city’s major streets, including Main Street, Dunbar, Fraser and Hastings.”5

*

The cabals’ view that market will solve our housing issues may, in the end, hold some water –in the manner of a leaky condo. Currently, housing inventory is rising and prices are starting to crack. If the long awaited correction is about to take place and is as massive as some believe it will be, housing prices may again be affordable. All for the modest price of the complete devastation of our development-centred economy and the collapse of the city’s property tax base; it’s Affordability by Apocalypse.

*

“Hello? Hello?” Oh well.

Sources:

1. cityhallwatch.files.wordpress.com/, Table 2 Developer Donations Vancouver Elections 2008 – 2010

2. http://www.straight.com/article-637661/vancouver/over-2-million-spent-vision-vancouver-reelection-campaign

3. City of Vancouver, Elector Organization Campaign Financing Disclosure Statement in the 2011 General Local Election, Vision Vancouver Elector Association

4. http://rabble.ca/blogs/bloggers/mainlander/2012/08/arrogance-profit-metro-vancouver%E2%80%99s-redevelopment-proposal-heather-

5. http://www.vancouversun.com/business/Vancouver+considers+immediate+development+thin+streets+boost/7303613/story.html