The Crack Cocaine of City Finance

Community Amenity Contributions — CACs — are a debilitating and socially-destructive drug that the City of Vancouver has fallen addicted to over the last twenty years.  They are, to be frank, the crack cocaine of city finance and they need to be flushed right out of our system.

Perhaps many of you have never heard of CACs; they are not, after all, everyday talk in the coffee shops and diners.  CACs are a bribe developers pay the city to allow them to breach the previously agreed zoning for a particular lot.  If you want to exceed the height limits, floor space ratio (FSR), use profile, or some other aspect of what the local community has determined is best for their neighbourhood, you can negotiate a fee — the CAC — with City Planning that will get you off the regulatory hook.  City Planning then puts that money toward specific new public amenities (supposedly in that neighbourhood, but apparently not always).

That sounds like an interesting idea — if a developer wants to break the rules, that’s OK, so long as he buys us a shiny new library or a small park or a community meeting room in exchange.  But it is actually a terrible idea, especially as now the City essentially says that the availability of new community amenities are completely dependent on getting CACs from developers.  In other words, we can have nice things but only so long as we give away profitable density to developers; who, in turn, may or may not contribute some of their excess profits to particular municipal parties.  Moreover, the current system encourages spot rezoning (often against the terms of Vancouver Charter section 565A), especially when the developer is dealing with today’s majority on City Council that never votes against development applications.

It is vital that we de-couple the civic amenities that residents need from the indiscriminate and rapid densification of our beautiful city that six years of Vision Vancouver management has brought us.  The NPA and COPE were also in power during the period while this addiction took hold.

It didn’t used to be this way.  In the good old days — just a couple of decades ago — we voted on plebiscites every other year to determine which amenities we were willing to pay for by issuing City bonds.  It was mostly efficient. It was defiantly democratic.  The people got to decide what they thought was worth paying for, and the developers were not involved at all.  We need to go back to that system or something very much like it.

In return for lessening their costs, by eliminating CACs, I would tie this change into a change to the Development Cost Levy by-law to ensure a developer pays the entire cost of city infrastructure required for new development.

These changes, to CACs and DCLs, frees developers from paying CACs, obliges developments to pay for their own infrastructure, and allows the electors of Vancouver to more directly control the flow of amenities required to make us the most livable city in the world.

 

 

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6 Responses to The Crack Cocaine of City Finance

  1. northvancityvoices says:

    Reblogged this on North Van City Voices and commented:
    The density bonus policy in the City of North Vancouver is not scheduled to be discussed until after the OCP Public Hearing on September 29th.

  2. Richard says:

    I am a developer, I have built many large projects around the City over the past 20 years of my career. I never have and probably never will again agree with anything Jak King says but in this post he is spot on. Negotiated CACs are no good for anyone. The City now has a structural hole in its budget that it plugs with CACs. The City is playing joint-venture partner in real estate development deals, and is thus incented to ignore its normal regulatory role with regard to good urban design. Total conflict of interest.

    In the past, in the “good old days” under Larry Beasley, you always knew where you stood. You start with good urban design, i.e. what density “fits” comfortably on the site, and negotiate from there. Now “good urban design” is not even a factor in the CAC negotiation discussion. I’m aware of an ongoing CAC discussion where the City is asking the developer for $300 per sq.ft. for the density it is negotiating on. $300 per sq.ft.!!! Then the developer has to spend another $400 per sq.ft. on construction costs. And that’s on gross area, not net. This means that the developer will have to sell that space at $950 per sq.ft. on the net saleable area to earn a return. How does that help affordability in the City? The City’s response: “Oh well, that space is added on to the top of your building so you’ll be able to achieve that. Think of the great views!”

    Negotiated CAC’s also negatively affect the supply of housing because there is now so much uncertainty about how much density you can get on a site; as a developer you don’t know what you can afford to pay for land so sites become much more difficult to assemble. So less supply gets built than otherwise would, but when something does get built it is in a massively overbuilt project like the abomination in Emery Barnes Park.

    I agree, the solution lies in fixed (possibly increased) Development Cost Levies which, as Jak notes, were conceived to allow new development to pay for the added services that it will consume. Nobody disagrees with this policy. But new development shouldn’t be expected to pay for other City objectives, as it is the new home buyer who ultimately pays.

  3. “The City now has a structural hole in its budget that it plugs with CACs” – I am worried about exactly this in every municipality, but especially in my home, the City of North Vancouver. I believe our communities have grown so accustomed to CACs that if the residential housing market ever cooled we would not be able fund, maintain, or renew the infrastructure we have built in these boom years. CACs have allowed municipalities to grow their asset base, but do we have the long term funding to maintain these assets? We need to proceed with fiscal caution or we risk sacrificing the quality of services we provide future generations.Then there are the transparency and affordable housing issues exacerbated by this practice. Balance is required. http://www.tonyvalente.ca

  4. I believe this is the most important conversation in this VANCOUVER today and should be on the platform of every candidate running g int he upcoming election.The negative impact and the illegal implication that it poses I would like to know how do we eliminate this clause CACs have to go .The cocky developers an how they praise themselves for their contributions to our social infrastructure when indeed this should be like Jak mentioned in the good old days” we voted on plebiscites every other year to determine which amenities we were willing to pay for by issuing City bonds” The lack of transparency and the arrogance of this lack of VISION party and young ignorant ones like our HELORON man who think s hes gods gift to our future economy with developments like the TRUMP tower. We need to take the power back and put it where it belongs back in the pockets of the people

  5. […] Jak King, former president of the Grandview Woodland Area Council, who calls CACs “the crack cocaine of city finance.” […]

  6. […] Jak King, former president of the Grandview Woodland Area Council, who calls CACs “the crack cocaine of city finance.” […]

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