97 replies to this topic

[m0nkyman]

'zactly.

And there's no hammer to hit people with when they underbuild something so badly that it harms the urban environment... he said thinking of the Marks Work Warehouse building.

And your phrase reminds me of the old chestnut, when the only tool you have is a hammer, every problem looks like a nail.

[G-Man]

Yeah we should set minimum Density requirements for sites too

[Ms. B. Havin]

...So, this is what I took away from the meeting this afternoon/ early evening:

- DCCs can be used to pay for infrastructure upgrades, but may not be used to pay for amenities

- Amenities are not "extras," in the sense that a library or a park (or even public art) is not an extra; an amenity helps to serve the extra people that, say, a new condo development brings into an area (eg., upgrade the library that now has more users)

- density increases should be determined in a climate of positive encouragement for developers; that is, you don't set up a hostile-to-development political atmosphere that makes developers come begging for "density bonuses" under uncertain conditions. The conditions have to be clear, rational, etc., with pretty clear expectations laid out by the city as to what it expects

- extra density should be given in return for amenities (can be $$ to pay for things that DCCs cannot be used for -- again, a library or arts centre or park or housing affordability anything else that won't come about through market forces only)

- the amount of "amenity" (i.e., $$, say) that the developer pays should be calculated based not on the profit the developer expects to make from a project, but rather should be based on the "lift" that the land value receives through the added density.

That last bit is really key, because it strikes me that quite a few people have a kind of populist notion that developers, out to make a profit, should pay some kind of amenity fee simply because they're making a profit, and that the more profit they make, the more they should pay. What that approach typically does, however, is simply to drive developers away to do business elsewhere, not least because in a situation like that it can take years for a proposal to go through all the hoops and channels before it's approved, which is time that equals money and therefore lost revenue & opportunities, and because the amounts asked for can seem capricious, with everyone second-guessing everyone else.

So how do you make it fair, or "level the playing field," as the Coriolis consultant put it? You determine the amenity amount that the city asks for based on the "lift" that the land value undergoes. Let's say Developer A buys a piece of land that allows him to build 200,000 square feet of building. He buys it for X-dollars. Developer B buys an identically-sized piece of land, which is however only zoned to allow 100,000 square feet of building. He buys it for Y-dollars, which is an amount less than X, because unlike X, zoned to allow the 200,000 square foot building, Y is zoned only for 100,000 square feet. Next, A builds his building, but if B wants to build the exact same building as A, he has to go to the city to ask for a density bonus/ increase/ rezoning. A paid more for his land, but he gets to build without rezoning. Let's say the city rezones B's land, and B builds an identical building as A. At this point, B has only paid for land zoned at 100,000 (NOT 200,000) square feet of building, yet comes out of the deal with the same building & density as A.

What has happened is that as soon as B got his rezoning or density increase, his land value also automatically and instantly "lifted." It magically became as valuable as A's land through the magic of zoning, even though B paid less than A. Therefore, to keep the playing field level, the amenity-$ should be based on the increase in the value of the land. It can range from 70% all the way to 100%, depending on what the market will bear. So if the value of that piece of dirt went from $600,000 to $1,000,000, the amount of amenity the city should ask for is based on the difference ($400,000), and can be anywhere from 70% of that amount ($280,000) to 100% ($400,000). In some very special cases, the city might even be able to ask for more than 100%, but I'm not sure I heard the consultant suggest that Victoria is in that league.

The developer should not be expected to pay an amenity based on the value of the development, however.

I thought that this approach (albeit based on the city deciding in advance that it would create a generally positive development attitude -- for reasons also outlined, having to do with the projected need for more offices & residential, and that if you strangle the market you'll be asking for even more trouble -- higher prices -- down the road) made sense and took a lot of the "angst" out of the whole amenity or "density bonus" discussion.

Ok, I saw some of you others there. Is this what you took away, too?

[G-Man]

I couldn't stay for that part but that sounds almost rational!

I was totally with the lady that spoke about creating a tunnel underground to avoid the germs on the way to the hospital though. Ms B will understand

[Caramia]

Nice summary!
I was trying to figure out who else from VV was there for the round and a half that I stayed for, the only person I could identify for sure was Rob.

One point he made which I found very interesting was that density bonuses should not been seen as "gifts" to developers or "bribes" to council for undesirable height. The point is that the height and density is desirable, and has been determined to be desirable on that site in advance. The trade off between the amenities and the height is a dance whereby council's job is to get the most out of the developper while still making it desirable and profitable for him to build the density. If they ask so little that the developer is able to build something without contributing to the amenities that his new development will burden, they have failed. BUT if they ask so much that the developer decides it is not worth his time to build the density they have failed.

For the lady who wanted an underground mall, I think the idea was neat, but knowing how hard it is for even the Paper Box Arcade to survive off the street, I'm dubious. But I am totally with her in hoping to get a birthing center downtown or at least away from the hospital enviroment. I've always thought that plowing through the Vic General hospital lobby, past the cigarrette smoking cancer victims, up the elevator with the superflue sufferers to the birthing ward was a dismal way to begin a new life. But what Jay pointed out was that only by increasing the residential population can you begin to support specialised services like this.

[Ms. B. Havin]

One point he made which I found very interesting was that density bonuses should not been seen as "gifts" to developers or "bribes" to council for undesirable height. The point is that the height and density is desirable, and has been determined to be desirable on that site in advance. The trade off between the amenities and the height is a dance whereby council's job is to get the most out of the developper while still making it desirable and profitable for him to build the density. If they ask so little that the developer is able to build something without contributing to the amenities that his new development will burden, they have failed. BUT if they ask so much that the developer decides it is not worth his time to build the density they have failed.

Right. The city has to decide in advance where it wants additional density. I believe Jay/Coriolis put it this way: you can go up, or out, or way out. Which meant: Up, obviously you decide that a height increase is in order in the designated "downtown core" (which excludes the heritage areas, though). Out means you expand the definition of "downtown" by putting development into shoulder areas (and in Victoria's case, where so much is still either underbuilt/ below density or is surface parking lot, you have to wonder why you'd want to start spreading things out too much). Way out means having the development go elsewhere (Langford, anyone?).

In terms of asking for amenities, as Jay put it: you want to get the very last dollar from the developer that you can, but without pushing the developer to the point where he says, "that's it, they're not getting that last dollar, I'm taking my business elsewhere." He also pointed out that if a developer has a choice between making a 14% profit on a $1B development vs a 16% profit on a $500M development, guess which one is his better bet? Which means he's not going to quibble too much about paying a bit more to the city in amenities (say 100% on land lift, vs. 80%) if the overall pot is a bigger one. Of course that means that the city has to "signal" its willingness to talk turkey in regard to the bigger pot.

For the lady who wanted an underground mall, I think the idea was neat, but knowing how hard it is for even the Paper Box Arcade to survive off the street, I'm dubious. But I am totally with her in hoping to get a birthing center downtown or at least away from the hospital enviroment. I've always thought that plowing through the Vic General hospital lobby, past the cigarrette smoking cancer victims, up the elevator with the superflue sufferers to the birthing ward was a dismal way to begin a new life. But what Jay pointed out was that only by increasing the residential population can you begin to support specialised services like this.

My kids were born in a midwife-run (no doctors) freestanding birth clinic that operated out of a converted 2-bedroom SFH across the street from a major hospital. Very nice, low stress. If complications were to occur for any of the hundreds of women & families who go through there, the hospital (and doctors) are across the street. The living room had a sleeper couch for the siblings who often trotted along (for my second, the first born and babysitter slept there). Sometimes it could get busy, what with another family giving birth in the other bedroom. But the midwives were calm personified and totally professional.

[Rob Randall]

Excellent summary. That clarifies it greatly.

I'm told DCCs won't necessarily make Bonus Density any less used.

[Ms. B. Havin]

The "land lift" question intrigued me enough to track down some assessment values for 701 Belleville (Crystal Court), and also for Castana, just to see what could be expected (or in Castana's case could have been expected) re. amenity. Here are some numbers:

The assessed value of 701 Belleville is $4,716,900 (which presumably includes the motel currently on site, i.e., the above amount is more than the land value alone).

What will the "land lift" on that parcel be if Westbank gets the kind of density rezoning it wants? Well, it could be really significant.

Consider the following, Castana's 3 land parcels:

The assessed value of 1025 Sutlej is $4,520,000. I don't know whether that includes the value of the 3 SFH that Amadon tore down. Let's say it does, so let's subtract -- oh, what?, 25% from the above sum? That gets us down to ~$3.3M. But let's pretend that the assessed value is actually up to date and is actually only for the land -- so, round the land value of 1025 Sutlej out to $4.5M.

The assessed value for 230 Cook Street (the Food Country site) is $2,128,000. So let's round that down to $2M.

I couldn't find the value for 240 Cook St. (that's the so-called "Cook Street Building site"), but Oxford Foods across the street at 247 Cook St. is more or less the exact same size, and it's assessed at $2,891,000. Let's say that 240 Cook St., without any buildings on it, is worth $2.6M.

Ok, let's add that up: I get $8.1M. Amadon is offering the three parcels for $15M, advertising it as a rezoned property.

In other words, the asking price of $15M compared to the assessed value of $8M suggests that the land lift has happened, i.e., is factored into the new price. Consider that this effectively represents a land lift in dollar terms of nearly $7M. Am I missing something? Ok, let's err on the safer side, consider that Amadon might never get their asking price, and consider the land lift at $5M.

Now consider this: even at a "mere" 50% of land lift, the amenity the developer might have paid to the city, using the Coriolis model, comes to about $2.5M. Isn't that interesting? True, Fairfield isn't downtown (target for that much more density), but "land lift" is "land lift." And Amadon's realtor seems to think that land has lifted all the way to $15M.

But now consider this: by jumping through the hoops for rezoning, yet now selling it to someone as a package -- meaning that the new buyer will be able to build without having to bother with the city or with any kind of "amenity," Amadon has effectively cut out the city (and the community) from receiving any amenity whatsoever.

Neat trick, eh? One could almost think he did it on purpose, as pay back.

If the city adopted this very rational seeming system based on land-lift calculations, it would have been clear to all from the start that Castana's developers would have been in the ball game for two and a half million dollars owed to the city of Victoria in amenities, and who in their right mind at the city (or the FCA) could have complained about that? Maybe there could even have been some constructive discussion around making the condos 5 or (gasp!) 6 storeys. Or maybe the developer would have thought twice before tearing down the existing buildings, if he knew he was going to be asked for that kind of amenity contribution?

Back to 701 Belleville for a moment: it's currently assessed at just over $4.5M, so without the building it's how much?, say $4M? or $4.2M tops? What do we think will happen to that land value if Westbank gets a rezoning for a tall tower, luxury residential, high density? Perhaps a "lift" of $8M -- to bring the land value to $12M? Not unlikely, given that Amadon's realtor wants $15M for the Cook Street Village land.

Hmmm, at 70% of land lift, that's an amenity of $5.8M to the city. (Holy cow...)

I don't know that Victoria has ever dealt with these kinds of figures in its negotiations with any developer. Of course, that's what they do in Vancouver, and we don't want to be like Vancouver, right?

Sarcasm aside, though, I wonder if the city is smart enough to go out and get it, or whether they'll dicker it all away with moral arguments and stupid debates around "height."

[Holden West]

So who would implement the post-zoning value determination? Would there be an appeal process if there was a dispute? It seems Amadon has done the work for us with Castana by putting their own value on it, which is very informative.

So how would the City implement this? Amenities would go from a few hundred thousand to a couple or a few million dollars. Is there a fair way to gradually introduce this?

It seems the City dug itself a hole by having vague rules on Bonus Density in the past.

[Ms. B. Havin]

So who would implement the post-zoning value determination? Would there be an appeal process if there was a dispute? (…)

…how would the City implement this? Amenities would go from a few hundred thousand to a couple or a few million dollars. Is there a fair way to gradually introduce this?

It seems the City dug itself a hole by having vague rules on Bonus Density in the past.

Those are the $64-thousand (plus a couple of zeros or so) questions, aren’t they? I did find Mark Hornell’s comment (in that Boulevard Magazine article quoted & pasted in the other thread) instructive. On p.14, Licata/ Boulevard wrote:

The City of Victoria is not in a position to negotiate, says Hornell. “The City of Victoria and City of Vancouver operate under different planning legislation. Vancouver has more latitude under the Vancouver Charter to craft deals with developers than Victoria does under the Local Government Act. Vancouver has been more successful in negotiating significant civic benefits through planning approvals for comprehensive developments such as Concordia Pacific and Coal Harbour, situations where it was dealing with a single landowner/ developer.

Let me just add that, in my opinion, he starts to muddy the waters when he says that those projects fell under “single landowner/ developer” purview – specifically in relation to trying to understand Victoria’s situation, why should that make a difference, except in regard to the scale and build-out of those specific projects? I mean, he’s not suggesting, I hope, that Vancouver wasn’t “successful in negotiating significant civic benefits through planning approvals” for lesser projects, is he? We don’t have a Coal Harbour etc. project on the table anyway, and should stay on topic to talk about what Vancouver does that Victoria could do. And in that regard, the difference seems to be administrative and legislative, so maybe that would be the first area to start working on.

That is, instead of constantly scaring the population at large with dire warnings about houses built one room at a time or downtown plans that haven’t been perfected yet, why not draw attention to this basic deficit in governance?

Councillor Madoff is right when she points out, “We’re abrogating our responsibility in terms of leadership” (also on p.14), but can we finally get a grip on just what leadership is? I don’t happen to think that it’s a question of talking about “vision” until the cows come home, yet that’s mostly what the hand wringing always gets back to. Forget vision for a moment -- what about more “boring” things like laws and governance, like differences between a Charter and a Local Government Act? Diane Carr does the same thing – fixing on the ephemeral, I mean – when (again, p.14) she accuses developers of essentially exploiting the sheer buzzy-ness of the term smart growth “without [as she adds] any understanding or mention of other integral aspects of the philosophy.” [emphasis added]

I don’t know about the rest of you, but I can only take so much amorphous talk of “values,” “vision,” and “philosophy” applied to bricks and mortars and cold hard cash before I feel like I’m going to blow a gasket. I think I could probably understand the differences between Charters and Local Gov’t Acts, but frankly, I may never understand so-and-so’s philosophy or vision, ever. And that’s ok – in fact it scares me silly to think that we should all have to get on the same freakin’ page about things like that.

Back to Holden’s questions: I guess that City has been wondering about the same ones, as Jay / Coriolis pointed out that staff (on City’s side) and developers have to work together to come up with fair numbers re. pre- and post-zoning “lift” values. I guess that’s part of the answer. And there has to be a climate of transparency so that Victorians’ favourite hobby (concocting conspiracy theories) doesn’t get out of hand.

Maybe one way to avoid going from paying too little to paying for the moon would be by raising the density generally in those areas that you want density in (i.e., City decides where it wants the density – which is also something Jay advised: he clearly said that the City has to decide where it wants to put the density downtown). Then one could say, “ok, if we’re already ‘lifting’ this area [of downtown] from 3:1 up to 5:1 anyway, that part of the ‘lift’ is either exempt or falls under a 30% clause or something below the ideal 50%-70%. That is, the developer shouldn't have to pay extra for density that's no longer extra (in the sense that it's now density that the city wants. But if the developer then comes along and asks for an additional lift above the 5:1, at that point he pays more – 50% or up to 70% on the part above the 5:1 or whatever the new ‘normal’ is.”

But you’re right, Holden, that you can’t go from single digits to the moon in a single leap. That would probably shut everyone down.

[Holden West]

We're still trying to convince people we need the density.

Then we have to determine where it will go.

The City hasn't really dealt with where high density should go, except for vague comments about "the north". Even then, the Mayor does backflips trying to soothe people that the Hudson "won't set a precedent". So back to square one! Do we want density or not? Mayor Lowe, forget about re-election for one minute and re-iterate your committment to densifying downtown.

So do we want to cluster towers together? Spread them out evenly? Have several mini-clusters? Only in the north/Rock Bay? Does the City have the courage to answer these vital questions?

[Caramia]

Id go for several mini clusters, each grouped around a crowning building. Part of the price of building the highest building in a cluster should be a skyline ammenity - that is to say a stunning cap - Sussex quality.

[Baro]

an unfinished looking metal frame set in some painted cement boxes??

[Caramia]

I think it is pretty!

[G-Man]

I have to say that I am more of an organic city person. I would hate the city to seem overly contrived (zoned) that it makes parts stick out too much. I am thinking of La Defense in Paris here.

[Holden West]

^Yeah, look at the Sussex building. Immediately beside it on Broughton you'll have two new smart looking little four storeys. You probably won't get that in a district that's all zoned 5:1.

[G-Man]

^ isn't the res building six, but that is exactly what I meant.

You don't want a wall of new Victoria behind the protected old town area. Not that there is really a chance of that in Vic anyways.

[Ms. B. Havin]

Now we're moving back into the realm of "taste" (some like this building, some don't), with the usual problems around justifying scale, height, etc. But: What does the market want or what will it bear? And: What can the architects design?

As for the Sussex being set off more nicely by a couple of pleasant low-rises, or having the city grow "organically," consider that (1) the Sussex could look smashing as the small office tower it is if its neighbours were a couple of stunning beauties of greater height (i.e., just because the Sussex looks great now, doesn't mean it would lose its looks if it suddenly had bigger vs. smaller neighbours); and (2) organic growth is all very well and good within the context of sane commitments to having density and deciding where you want it, but otherwise leaves us in the murk we're in now. Organic is a very slippery term -- don't get me wrong, I like it, I'm in favour, and I don't want a centrally planned city at all, but I just don't think we can continue to pass the buck on making some decisions re. where added height & density should go. (This gets back to Holden's rhetorical questions to the Mayor, too.)

Without that commitment or decision, we remain stuck in the place we're at now: unable to figure out how or what to charge re. amenities, or on what to base it. Continuing with a blanket 3:1 or 43 m. restriction is what will create the walls and fatscrapers, not creating a relatively limited zone (or zones) of 5:1 in some areas of downtown. (I don't think we'd get Paris's La Defense with a rezone, either. La Defense is a product of French political megalomania, coupled with pent-up demand produced by the extreme restrictions affecting Paris's core -- which is vastly bigger than Victoria's litte Old Town, or Old Town coupled with Tourist Town around Inner Harbour & Douglas to Fort, say. In Victoria's case, we're talking about areas of downtown measured in mere blocks, not entire districts as large as our whole core.)

What I think strategic rezoning could look like is this: say you have an area of 5 blocks by 5 blocks that really could absorb greater density as well as height. It's currently zoned 3:1 and 43m. Let's say for the sake of this scenario that each block is worth $10M under the current zoning. You rezone to 5:1 (and allow greater height). The land value instantly goes up to, say, $20M per block (remember, I'm making this up). At this point, however, you don't charge the developers 50%-70% on the 100% increase (which you have effectively caused), but instead charge a very reduced rate -- 5%-10% -- because you've decided that you actually want to encourage development in that area. So, let's say your policy is to charge 5% on that portion of the land lift that occured because you rezoned the land (you could even tie this to a timetable: go up incrementally each year, or 5% every 3 years or something like that). Now, if a developer thinks that the market would bear a taller building with a 6:1 density and asks for a rezoning, up from 5:1, you figure out what the difference in land lift value is between the 5:1 to 6:1, and then charge full market rates (like they do in Vancouver) for that added density (i.e., not the piddly 5%, but the full 50-70%).

You'd be affecting the look of the city in the un-rezoned areas, too: they would either stay the same, or become "hot" for location-location-location reasons. Also, since those areas would not be rezoned to 5:1, but instead stay at 3:1, then any rezoning for added density requested by a developer there would mean that the developer is on the hook for the full amount of the "land lift."

I'm not a legislator. Maybe this isn't possible in the real world (or in "Victoria World"), but it kinda makes sense to me. Maybe it would allow the market to unfold properly. Victoria really needs a revitalization of downtown, yet we can't agree on how much to charge developers, what's fair, what isn't, etc. The last few comments make clear that on this forum we can't even agree on whether there should be rezoning(s)! That's depressing IMO, 'cause without the city rezoning some areas (i.e., deciding, in Jay's terms, that this is where we actually want greater density), we'll keep trying to determine amenities and bonuses and what-nots based on shifting terrain.

Anyway, irrespective of "lifts" and amenities, at least we agree that this is what should apply to any development at all: insistence on architectural quality, light and air for the street, better than great street-level interaction, quality finishes, great shapes (for the skyline), great standards.

And so we continue to dream on...