It sounded like a juicy city scandal, but in the end it was something worse.
My often outraged friend the Old Leftist called me recently from his mountain cabin, High Dudgeon. Had I heard, he sputtered, that the Aquilini company had been allowed this July to save $35 million in the Community Amenities Contributions it would normally have paid the city on its new project next to Rogers Arena?
As someone almost as suspicious as the Old Leftist is about the treacherous borderlands where zoning, taxation and profit intersect, I was immediately interested, and envisioned a scathing column in which I could decry corporate favouritism and profit taking.
But no. Contrary to my friend's impression, this wasn't a squalid tale in which a favoured developer got unmerited exemption from a clear, rational city policy. It's a long standing and legitimate policy that recognizes how zoning can elevate property values, and consequently exacts payments from developers who benefit from such alterations to generate funds to create community amenities such as parks and daycare).
So far as I can tell, there was no corruption or malfeasance involved in the city's Aquilini decision. It was just something even more problematic-confused and confusing bureaucracy and nearly unintelligible policies. Although it is worth noting that such confusion more often than not operates, albeit unevenly, to the advantage of the wealthy and powerful. The madness is not altogether random.
Zoning changes in Â鶹´«Ã½Ó³»can trigger two kinds of payments to the city from developers, Development Cost Levies (DCL) and Community Amenity Contributions (CAC). DCLs are notionally payable on all developments affected by zoning changes, but with 11 different DCL zones in the city and different rules for each zone, including "layering" and some complicated exemptions, it is not entirely clear just how often DCLs are paid. Both mechanisms for deriving city income and community benefits in trade for valuable zoning changes seem to be porous and uneven in application.
The second such mechanism, the CAC, which some documents on the city website describe as "voluntary" and others as "negotiated," is typically charged when new zoning is created for developments.
But not always. As Nancy Eng of the city's perhaps aptly named "Corporate Communications" office told me about the Aquilini decision, "The review concluded that after factoring in the costs associated with the provision of the 614 market rental housing units, there was no increase in the land value generated by the rezoning (i.e., the additional density improves the economic viability of the rental housing but does not create any lift in land value.")
She also told me that as part of the deal the new rental units cannot be converted from rental status for 60 years.
While I remain bemused by the notion that putting new rental units on a property doesn't lift its value, it does seem that the Aquilini company wasn't singled out for special treatment. The company's nimble staff simply found their way through the labyrinth of policy to a $35 million savings, exactly what they are paid to do. And CACs and DCLs together did generate $180 million in public benefits last year.
But the system is so complex that it can even confuse the highly competent staff at city hall. Ms. Eng assured me that the decision to exact CAC funds from developers of rental units was made on a case-by-case basis, while an anonymous staff source close to the mayor's office, in contrast, insisted that CACs were never, as a matter of policy, charged on any new rental units.
Clearly, a system so convoluted that even the well educated city professionals at 12th and Cambie are baffled about such basic points is not desirable. The principle behind CACs and DCLs-that developers who are enriched by zoning decisions should be required to contribute to the general welfare of the neighbourhoods where they build-is sound. What we need now is to junk the tangle of confusing rules and exceptions in favour of a simplified single tax on the increased real estate values created by zoning, a tax levied on all developments, both condo and rental, in amounts robust enough to provide the city with adequate funds for community amenities. Developers should be heavily taxed in a simple, transparent and uniform manner when they are enriched by zoning.
Until then, the bureaucratic fog bank at city hall will continue to confuse residents and city employees, and the city will not be getting its fair share of the value its zoning decisions create.
Tom Sandborn welcomes feedback and story tips at [email protected].
(Allen Garr is on vacation.)
