Vancouver staff report on provincial legislation
Without clear political direction, caution and gradualism will take priority over housing
Response to New Provincial Legislation: Bills 44, 46 and 47. Staff report to be received by council today.
Land in Metro Vancouver is both scarce and underused. The approval process for new housing is extremely slow and labour-intensive. We regulate new housing like it’s a nuclear power plant, and we tax it like it’s a gold mine.
The BC government is impatient to speed up the approval process. The province passed legislation last fall requiring municipal governments to update their bylaws by June 2024 to do the following:
Multiplexes: allow four-plexes and six-plexes by right.
Transit-oriented development: allow minimum height and density near SkyTrain stations (5 FSR / 20 storeys within 200 m, 4 FSR / 12 storeys within 400 m, 3 FSR / 8 storeys within 800 m).
Use fixed development charges (ACCs) instead of negotiated Community Amenity Contributions (which are slow and non-transparent).
Do not hold a public hearing for a rezoning consistent with an official development plan.
Reading through the report, I think it’s fair to say that without clear political direction, city staff will always pursue an approach that’s as cautious and gradual as possible. Specific examples follow.
In one sense this is fair - it’s not the job of staff to pursue a risky course of action. But they’re not even putting options on the table for council to consider.
Multiplexes
The city of Vancouver passed a multiplex program last September, with a restrictive floor space limit of 1.0 FSR (a four-plex with about 1000 square feet per unit on a 33-foot lot).
The province’s guidelines allow for a four-plex with 50% site coverage (about 1.5 FSR, about 1500 square feet per unit), or a six-plex with 60% site coverage if you’re within 400 m of a frequent transit stop (about 1.8 FSR, about 1200 square feet per unit). This is considerably less restrictive, so it would result in more housing.
The staff report says that the city isn’t legally required to pursue the province’s guidelines where it’s already allowing multiplexes, and expresses no interest in doing so. The aim is do the minimum required. Staff aren’t presenting any options to council to do more than the minimum.
Given the range of permitted residential uses, and that the R1-1 zone was adopted prior to Bill 44 receiving royal assent, staff’s opinion is that the R1-1 zone is not considered a “restricted zone” and therefore no further update is needed to comply with Bill 44.
There’s a number of duplex-only “RT” zones where the city’s multiplex policy doesn’t apply. In most of these areas, the city has a highly discretionary “character home retention” policy which allows for more floor space. The staff report says that they can use this policy as justification for not upzoning these areas.
It should be noted that several of the RT zones do not meet the definition of “restricted zone”, and therefore are not required to conform to the legislation.
But there will be some specific areas where the city will need to upzone:
Based on analysis of the remaining low residential zones in the City, Staff have determined that some of the RT zones (RT-7 and RT-9), and First Shaughnessy District (FSD) are considered to be a “restricted zone” and therefore must be updated to comply with the legislation. In order to meet the legislative deadline of June 30, 2024, staff will need to scope the initial conformity exercise to these zones. Based on this, the new SSMUH zoning will apply to 1,128 RT lots, and 586 FSD lots.
The provincial legislation explicitly says that the municipal government cannot hold a public hearing to implement multiplexes. But the staff report says that they think they need to hold one anyway.
As it relates to First Shaughnessy District, the lands form part of the Heritage Conservation Area (HCA) Official Development Plan (ODP). The effect of the proposed SSMUH regulatory changes will have an impact on the HCA ODP. Typically, such changes to an ODP would trigger the need for a public hearing. Under the SSMUH legislation, council is prohibited from holding a public hearing for the sole purpose of making the zoning changes to give effect to the legislation. However, this legislation does not prohibit council from holding a public hearing for other matters, including amendments to the ODP. Staff are continuing to review this matter, however, based on the proposed approach to include changes that extend beyond the requirements of Bill 44, staff believe a public hearing will be required.
Multiplexes are now the path of least resistance
One interesting thing about the multiplex policy, not mentioned in the staff report, is that it’s now the path of least resistance. Getting a six-storey rental apartment project approved, even under the city’s Secured Rental Policy, is harder. So 1.0-FSR multiplexes are now outcompeting 2.7-FSR six-storey apartment buildings for land, just as 0.6-FSR single-detached houses outcompete apartment buildings.
Options for responding:
Revise the SRP to make it easier to get approval for six-storey rental buildings.
Expand the multiplex program to include small apartment buildings, along the lines of Montreal plexes or Bryn Davidson’s ideas for a new preapproved Vancouver Special.
At least adopt the provincial guidelines for multiplexes, allowing 1.8-FSR sixplexes. The rule of thumb is that the cost of land should be about 20% of the cost of a new building, so on a 33-foot East Van lot that sells for $1.5M, you should be able to build about $7.5M of floor space. 7200 square feet at roughly $1000 per square foot seems reasonably close.
Do nothing.
“Growth pays for growth” vs. “there’s no free lunch”
Staff generally support the new ACC tool in that it enshrines the concept of growth paying for growth and reinforces the City’s authority to secure and collect development contributions to deliver important amenities and infrastructure to support growth.
I would argue that there’s no free lunch. Somebody has to pay. “Growth pays for growth” sounds good, but “growth” is a concept, not a person. Who pays?
“Land lift” can absorb additional costs (so they’re basically paid by landowners who receive less money from developers), but once that’s mostly gone, projects have to wait for prices and rents to rise. In other words, when costs are too high, they end up being paid by homebuyers and renters, and they affect existing housing as well as new housing (since they compete with each other).
The staff report notes that the city has directed 40% of community amenity contributions towards affordable housing. This seems like a potential addiction dynamic to me, where a short-term response to a problem (in this case, housing being scarce and expensive) causes the problem to become worse. In this case, trying to fund affordable housing with taxes and charges on new market housing makes the new market housing more scarce and unaffordable, aggravating the lack of housing.
Comments in the staff report on transit-oriented development:
Some TOAs are characterized by significant infrastructure and servicing constraints and do not have policies which enable growth beyond existing low-density housing. As such, future planning will need to consider how the City can grow in a fiscally responsible manner.
How about proactively upgrading the infrastructure and services in those areas, instead of trying to extract the funds from new housing projects?
Comments in the staff report on amenities:
In Vancouver, like other municipalities, most municipal services (e.g. community centres, swimming pools, ice rinks, libraries, fire halls) are based on city-wide networks that offer services at the local, neighbourhood level. However, urban development generating development contributions (e.g. DCLs, DBZs and CACs) are typically concentrated in a handful of growth districts (e.g. downtown, SEFC, Cambie/Marpole, EFL in recent years). As a result of the underlying land economics, not all urban development generates the same level of development contributions. This creates occasional misalignment between the location of where amenities need to be expanded and the location of where development contributions are collected.
In response, the City has been gradually moving toward city-wide funding tools (e.g. the transition from Area-specific DCL districts to one City-wide DCL district between 2013 and 2018).
This seems like progress, although I would point out that amenities such as libraries and community centres benefit existing residents as well as new residents. I would have thought that funding them through a combination of property tax revenue and long-term bonds would make more sense, instead of up-front charges on new residents (like admission to an increasingly fancy country club).
Staff are trying to convince the province to allow higher development charges:
It is important to note that the Vancouver Charter limits DCLs to no more than 10% of the value of the development. This “cap” is applicable to Vancouver only, as LGA municipalities have no cap, though the Development Cost Charges imposed by an LGA municipality are subject to the review of the Provincial Inspector General. Expanding the DCL with more eligible categories without removing or increasing the cap will hinder the City’s ability to raise funds to adequately address growth needs. As well, the new ACC By-law framework (discussed below) stipulates that amenities can only be funded under DCL or ACC, but not both. To maintain current level of development contributions towards housing and childcare solely via DCL (versus a combination of DCL, CAC, DBZ, etc.) will be challenging if the 10% cap is not removed or increased. Staff are currently in discussion with the Province to address this important issue.
A comment that I found puzzling:
The legislation also provides no direction with regards to the use of Community Amenity Contributions (CACs), which are only applicable to certain rezoning applications, in accordance with the City’s CAC Policy (2020) and CAC Implementation Procedures (CACs). Staff will continue to apply the Council adopted CAC Policy to applicable developments. This will be further reviewed, and recommendations will be brought to Council as part of the future report back pertaining to the ACC Policy Framework.
I thought it was clear that the province is aiming to get rid of negotiated CACs, replacing them with fixed ACCs.
More on transit-oriented development
Heritage and small businesses are more important than housing:
TOAs have also been imposed over important heritage areas such as Chinatown, Yaletown and Gastown, as well as several retail areas and “villages” such as Main Street and Commercial Drive that currently support many independent businesses that could face displacement. The policy manual provides some assurances that Council may continue to regulate other aspects of a development (architectural expression, form of development, etc.) through zoning authority to ensure any new development or additions are compatible and appropriate to the unique historical or cultural context of the district. While Staff support the introduction of TOA heights and densities, there may be circumstances where Council may wish to include conditions to a development or refuse a rezoning application for other reasons beyond height and density.
After pushback, the province is allowing municipal governments to charge for density that’s supposed to be allowed as part of the base transit-oriented density (5 FSR within 200 metres, etc.), at least temporarily. Provincial press release.
The initial December 2023 TOA manual includes a section on the use of density bonusing in TOAs. Specifically, the TOA manual set the Provincial expectation that while local governments can continue to use the density bonus tool in TOAs, the base density is expected to be the minimum allowable density as established in the regulations. Since the release of the TOA manual, several local governments have shared concerns that this approach would limit their ability to apply the density bonus tool in TOAs and result in a loss of public amenities and affordable housing.
This updated version of the manual was made available in early March. It clarifies provincial expectation that, as an interim measure, local governments can use the existing base densities established in their zoning bylaws when using the density bonus tool in TOAs. This use of density bonus within the minimum allowable density framework will provide local governments with time to develop and implement new proactive planning tools, such as Amenity Cost Charges and other tools currently under development for consideration by government. Local governments will then need to transition to using any new tools by mid-2025.
Official development plan
Timeline for Vancouver’s official development plan (set by provincial legislation):
Includes transition provisions to allow the City time to develop an initial city-wide ODP by June 2026, while providing additional time to incorporate existing area specific ODPs by June 2030.
More
The MacPhail Report, June 2021. Identifies two major problems blocking housing supply: the slow, unpredictable, and labour-intensive approval process, and the use of Community Amenity Contributions as a major revenue source.
Multiplexes in Shaughnessy? How B.C.'s new housing legislation will affect Vancouver. Dan Fumano, Vancouver Sun.
City of Vancouver outlines new policies based on provincial legislation on housing. Kenneth Chan, Daily Hive.