What should BC's land-use rules look like?
What should BC's land-use rules look like?
A wish list
We have lots of people who want to live here, and other people who want to build housing for them, but municipal approval processes are very slow and difficult. The result is that housing is scarce and expensive, with prices and rents rising to unbearable levels to force people out, matching those remaining with the limited supply of housing.
Municipal governments are creations of the provincial government, so the provincial government has the power to fix this. The BC government is planning to bring in legislation in the fall to override municipal restrictions.
Here’s one possible wish list. The overall goal is to allow more height and density where more people want to live (e.g. in a central location with easy access to jobs). The changes should also be reasonably straightforward to explain and defend.
Low- and mid-rise projects
Low- and mid-rise projects should be much faster to plan and build than high-rise projects, and less likely to provoke strong opposition.
The model here is the 2016 Auckland upzoning and the more recent Medium Density Residential Standard in New Zealand. In urban and suburban areas, allow the following by right, with the ability to exclude 20% of residential land from these requirements:
Minimum lot size of 334 square metres (somewhat smaller than 33 feet x 122 feet)
Allow three units per lot
Allow buildings to be three storeys in height (11 metres), with no reduction in floor area for the top floor
Allow maximum building site coverage of 45%
Allow maximum floor area of 1.35 FSR (New Zealand doesn't appear to have a separate FSR limit), e.g. 5400 square feet on a 33-foot lot
For municipalities where scarcity is particularly bad and prices are particularly high:
Minimum lot size of 280 square metres (25 x 122), so 50-foot lots can be divided
Allow four units per lot
Allow buildings to be at least four storeys (14 metres), with no reduction in floor area for the top floor - a small four-storey apartment building shouldn’t require rezoning
Allow maximum building site coverage of 50%
Allow maximum floor area of 2.0 FSR (minimum required to make rental projects viable in Vancouver, according to Coriolis)
Minimum setbacks: front 1.5 m, side 1 m, rear 1 m (based on Auckland’s requirements)
No minimum parking requirements if within 400 m of frequent transit
Allow single-staircase construction up to four storeys, with an external staircase (like Montreal) for a second exit (makes better use of space and allows for small apartment buildings). This was recommended by the Ontario housing task force.
Within 800 metres of a rapid transit station or the central business district, allow six-storey buildings.
Development charges
Economic viability is super-important, but not well understood. It boils down to this: the expected selling price of the new building, minus construction costs (including development charges), has to be significantly more than the value of the property with its existing building. It's not enough to say that taller buildings are allowed: if it's not economically viable to build them, nothing's going to happen.
For a project to be economically viable, the redevelopment value of the property (the expected selling price of the new building, minus construction costs) has to be significantly greater than the value of the property with its existing building. It’s common practice for BC municipalities to attempt to calibrate development charges, either cash or in-kind, to take about 70-80% of the increase in land value (“land lift”) whenever rezoning to allow greater height and floor space. This acts as a brake pedal, slowing down redevelopment. For projects where the development charges are negotiated, this also acts as a barrier to entry for smaller developers.
It’s difficult to say what the province should do with respect to development charges. Maybe something like this:
Encourage but do not require municipalities to pay for infrastructure investments by issuing municipal bonds, paid back over the lifetime of the infrastructure through property tax revenue, rather than by charging development fees up front on new housing. If there’s legislative barriers to doing this, remove them.
Encourage but do not require municipalities to aim for 50% of land lift rather than 70-80% (see the appendix in Shane Phillips, The Affordable City).
Consider requiring development charges to be defined by a set schedule rather than negotiated, and establishing a provincial regulator which would decide whether to approve fee increases. This would likely take some time to set up, so it wouldn’t happen immediately, but the province could put it on the table and state its intentions.
Set a minimum target number of annual housing starts for each municipality, especially where housing is particularly scarce. The municipality is responsible for exceeding this target, in part by setting development charges so as to ensure that projects will be economically viable.
Note that viability depends on economic factors which can change quite rapidly, and so it’s important that municipalities treat the target as a floor rather than a ceiling. When economic conditions are good, it’s better to build a lot of housing that exceeds the target, because there’s likely to be times when it’ll be difficult for any project to be economically viable. (This is the situation now with rental housing: interest rates are high, meaning that capital to build rental housing is scarce.)
Also note that if a low-rise project is legal by right and economically attractive, while a mid-rise project requires a slow, difficult, and expensive rezoning process, low-rise will be built on potential mid-rise sites. So if low-rise projects are attractive under the provincial rules, the municipality should make mid-rise projects attractive as well.
Non-market housing
Non-market housing requirements on individual projects are a form of in-kind development charge, and may have the unintended effect of reducing economic viability.
Non-market housing is the responsibility of the provincial government.
Provincial non-market housing projects should not require a long and difficult approval process.
If a municipality wants to encourage non-market housing, it should provide density bonuses. There’s a tradeoff: more non-market housing requires more height and floor area.
Not covered by this wish list
The MacPhail Report recommends setting fixed timelines for approvals, as Surrey has done. I don’t know if it’s feasible to put this in place immediately.
Shane Phillips’ The Affordable City talks about three priorities: Supply, Stability, and Subsidy. This list mostly focuses on Supply. On the Stability side, if there’s a lot of redevelopment of older rentals (as happened near Metrotown in Burnaby) this would likely lead to greater risk of displacement. The city of Vancouver, where the housing shortage is worst, already has strong renter protection policies in place.
Why provincial action makes sense
Opponents will say that the province is running roughshod over democracy. A couple responses.
The real issue is that the upsides to housing growth accrue across a city, a metro area, or even a state, while the nuisances of new construction (parking scarcity, traffic, aesthetic change) are incredibly local. So if you ask a very small area “do you want more housing or less?” a lot of people will say that they think the local harms exceed the local benefits, and the division will basically come down to aesthetic preference for more or less density. But if you ask a large area “do you want more housing or less?” the very same people with all the same values and ideas may come up with a different answer because they [get] a much larger share of the benefits.
The issue of housing production is not local. It is a regional if not national concern if places that have the most productive jobs and other job centers and have high wages are basically barring people from around the country from being able to access those and then also harming the people who live within the community already by making them pay extraordinarily high rents and housing prices.
And so you need to move the decision-making up and that makes it actually more democratic, not less democratic, because more people vote at the state level. More people vote for mayor than they do for their city council members. They know their mayor and they're more willing to blame their mayor and hold that person accountable than they will local members of government, and that's true across the country. And then when you get to the state level, even more people are willing to hold that person accountable. There's also more journalism that holds that person accountable. When you get to the state level, state governments usually are held at a much higher standard of accountability than any kind of local government, which often has zero journalists even paying attention.
More
Overriding municipalities - an earlier post describing options for the province, based on New Zealand and the Ontario housing task force. The MacPhail Report.
Andrew Sancton on development charges. Surrey guarantees approval timelines.
Auckland Unitary Plan 101, 2018 - a guide to the residential standards established by the 2016 Auckland upzoning, from the Auckland Design Manual team.
Unlocking the Potential of Missing Middle Housing, 2022 - a policy brief from the Terner Center at UC Berkeley based on roundtables with builders, describing barriers to building missing-middle housing in California.