Housing
January 21, 2020

The Coupland Primer: Some of the Basics on The Grand Bargain

Andy Coupland was the go-to guy for stats and data at Vancouver City Hall – and who periodically visits Price Tags with comments and corrections.  With John Atkin, he’s been giving us great insights on our past in Changing Vancouver, and on our present in Changing City Updates.

We asked Andy to do a background to The Grand Bargain and what Vancouverites (City and Metro) should know about this town, especially if they are going to weigh in on the housing crisis and to participate in the City-Wide Plan. 

So here’s the first post in an Andy Coupland Primer:

 

THE NUMBERS

Metro Vancouver isn’t growing any bigger geographically.  But every year its population grows by an average of over 30,000.  So in the past 30 years, over a million extra people have been added, to reach the current population of around 2.5 million.

The City of Vancouver has grown too – 200,000 more people in the same 30-year period.

Some ask: does the City of Vancouver need to add any more people? Others are outraged that the City limits development anywhere.

A reasonable approach fits into the middle somewhere: we can’t or shouldn’t pull up the drawbridge, but there has to be a managed growth that doesn’t encourage Random Acts of Density in locations where services are inadequate.

 

Within the 2,870 square kilometers of the region, two thirds is effectively off-limits for development.*

That means that effectively there are only 837 square kilometers of land where development can occur (29% of the total Metro area). Within this relatively limited area, less than 10% is ‘green field’ land.

The result: in all the region, only 78 square kilometres have never been developed – an area somewhat smaller than the City of Vancouver.

The City of Vancouver has only has five percent of the region’s total land area – just 116 sq. km.  And less than 12 percent of it is developable area.

By the 1990s almost everywhere in the City of Vancouver had already been built on.  In a few spots in downtown, the buildings being constructed today are the fifth on the site, despite the city’s relatively short history.

Nonetheless, the City of Vancouver added on average around 5,600 people a year between 2011 and 2016** despite having almost all the developable land already built out and the highest population density of all the region’s municipalities.

Yet in the same time period, the city also saw an average of 5,500 new homes added every year. At first, that just sounds wrong – almost a new home for every new resident? There are several reasons.

The 5,500 is not net growth – about a thousand homes a year are demolished and almost always replaced by other ones. So only 4,500 additional homes are added each year. But not all of those were occupied with new residents – at least, not in 2016. Some had ‘non-permanent’ residents – students studying here; temporary foreign workers. Some were used as pied-a-terre; some were second homes, some business-owned.  Some are occupied by suburban parents to use a couple of times a week when commuting home was inconvenient. A few were owned by wealthy foreigners with multiple homes around the globe. Some were on AirBnB. Some were vacant, awaiting sale or recently completed.  A few were bought purely as an inflating investment, with rising value offsetting taxes and strata fees.

Conclusion: in five years there were just over 3,000 more dwellings in the city not occupied by usual residents.

It’s not a huge number, but in a city with very low vacant rental rate and a serious affordability problem, it was considered to be a problem worth trying to tackle. So the City of Vancouver, and then the Province (and soon the Federal Government) are taxing homes that aren’t occupied either by the owner or a tenant. Non-residents pay higher taxes. AirBnB (and similar platforms) are being pursued; the rules about how much of a home can be offered as a vacation rental, and for how long, have been tightened up and are being applied. The CRA is going after speculators who buy and resell properties in a rising market,

Read more »

I do hope that those advocating tax relief for ‘small business’ understand that the proposal from the provincial government is a lot muddier than it looks.

The province says the interim legislation would allow municipalities to exempt a portion of the value of a subset of commercial properties from taxation, easing the tax burden for tenants responsible for property taxes through their commercial leases.

If I understand the intent, the City would be able to exempt or reduce the tax on that part of an assessed parcel which has not been developed – the so-called “unused airspace”.   If the zoning allowed a ten-storey building, but there was only a one-storey storefront on the site, presumably the City would reduce the assessment or forgive the amount valued on the ‘unused’ part.

A few things to keep in mind:

The exemption directly benefits the property owner, not the tenant, unless the latter also owns the property.  Presumably ‘small’ businesses (whatever they are) would see a drop in their ‘triple-net leases’ from the landlord which includes the property taxes, though in fact it’s the owner who pays the property tax directly to the City.  And it’s the owner who could well see the market price of the site increase as a result of this exemption of unused density.  (Also, listen to the “This is Vancolour” interview with Tom Davidoff, who explains how our low residential property tax rates have contributed to our unaffordability.)

It may also encourage further speculation since the holding costs will go down as the asset value (hopefully) goes up.  The lower those holding costs, like property tax, the longer the speculator has to appreciate the increase in capital gain, the less need to redevelop the underutilized land, and the more desirable the property for speculative purposes.

Secondly, there is a reason why the ‘unused’ part of a site is included in the assessment: it’s a very real part of the value.  ‘Density’ (or FSR) is not measured by current use but as potential development, whether realized or not.  No owner of a property is going to sell at a price lower than what the market would pay because the site hasn’t been built out to the maximum possible. Nor is a buyer going to get away with offering less since what is being bought and sold is that potential, not just current uses.

The Assessment Authority determines what the market will pay on a given date when it evaluates the property’s worth.  That’s the whole point of a market-based assessment system, which has very significant benefits with respect to objectivity, simplicity and transparency.

If the City accepts the Province’s offer, it’s going to be in the subjective (and probably not very transparent) business of deciding what is ‘small’, what is ‘legacy,’ what is ‘unused,’ not to mention who it will tax (or what services to cut) to make up the difference.  It will get ugly, and there will be unintended consequences.  (If a business has ten employees, does it become big when it has eleven?  If it has two outlets, does it becomes a chain at three, and hence just another Starbucks?)

At the moment, the City can pass off the subjectivity and complications of assessments because it doesn’t do that job.  It’s the reason why we have a separate provincial authority to set the value of each individual property, since it’s less subject to political pressure.  The City’s job is to set the overall tax rates, which vary by class of property (commercial, residential, industrial, etc.) but not to vary the tax rate within a class.

Now it looks like it is going to wade into this very messy territory, which will soon begin to feel more like quicksand than an attempt to drain the swamp.

Read more »

 

It’s not often that a political columnist will delve into the details of urban and regional planning.  Those are weeds too thick for most readers.  

But Sun Victoria correspondent Vaughn Palmer did so today, perhaps because he got fed a report on what could be, in fact, a pretty big deal: a direction for the urban and economic planning of British Columbia. 

If taken seriously, backed up with action and able to survive changes in governments, it could be for the province what the first regional planning was the GVRD (now Metro Vancouver) in the 1970s.  That is from whence came the Livable Region Plan, or ‘Cities in a Sea of Green.’   We adopted it, stuck to it, and a half century later can the results.  It worked out pretty well.

This ‘economic framework’ is more the structure on which such a plan could be built.  It seems to be a result of departmental thinking aligned with the priorities and strategies of the government – in other words, not just an NDP political exercise to justify what they wanted to do anyway. 

Following are excepts from Palmer’s column, found here in its entirety.

 

An economic framework recently distributed by the provincial government outlines strategies to accommodate future population, trade and business growth. Key elements of the plan include developing Surrey as a “second downtown” for Metro. ECONOMIC PLAN CALLS FOR DISPERSING GROWTH

The John Horgan government has adopted an economic plan to shift growth and investment away from Vancouver and toward less congested parts of the province.   … Key elements will promote the development of Surrey as a “second downtown” for Metro Vancouver, anchoring a “growth corridor” extending into the Fraser Valley.

Part and parcel of that push will see development of an updated transportation and regional land-use plan in co-operation with local governments.

While the plan mentions few specifics, it does quote favourably from a recent B.C. Business Council paper, which called for “a new Fraser Valley innovation corridor anchored by a commuter rail system running from Chilliwack to the city of Vancouver.”

“Squamish, the Tri-Cities, Delta, Tsawwassen, Langford” (yes, Horgan’s hometown) “and others offer significant advantages for technology startups or satellite office locations …  “Kamloops, Rossland, Nelson, Canal Flats, Campbell River and many others are seeing transformational growth in the technology sector from businesses and workers purposefully seeking out the cost and lifestyle advantages of a smaller community, while staying connected to their B.C. and global customers through high-speed internet.” …

To help persuade investors to locate operations in the north, the province cites access to “B.C.’s clean affordable hydroelectric grid that can power industrial development.”  The latter pitch depends in part on successful completion of the hydroelectric dam at Site C on the Peace River. The New Democrats discounted the project as unnecessary during their opposition days, but it now dovetails conveniently with their new economic strategy. …

Also in the works is “a regional inventory of investment-ready opportunities, including transportation, energy, educational, internet connectivity, community and other infrastructure needed to support quality economic growth.”

But the inventory is no more public than the plan itself, which, as noted here Tuesday, was crafted mainly for the eyes of the public service and selected stakeholders. …

As to the rationale for all this, the plan notes that the province is scheduled to add a million people over the next 30 years. …

“B.C.’s population grew by close to a million people, with much of the population increase concentrated in the Lower Mainland.”

The region was unprepared for growth of that scale.

“Demand for housing, public services and infrastructure exceeded supply, with particularly acute impacts for housing affordability. Higher demand led to sharp increases in the cost of rental and market housing, and those with lower incomes were squeezed out — or sometimes forced out through ‘renoviction’ — of housing they could no longer afford. Families moved farther away from their work in order to find housing within their means, resulting in longer commute times and growing congestion problems.” …

The fallout from runaway and unplanned growth is one reason why the New Democrats picked up 10 seats in Metro Vancouver in the last election and the B.C.

Read more »

 

Vancouver fashion at zero degrees:

Calling on our long-time relationship with outdoor recreation, we know how to dress well when the temperature is on either side of zero.

We accommodate a mild coldness, kind of like our temperament, and perfect for the puffy jackets we wear all winter long for every occasion.

Notice the black-and beige combo on everyone.  With the well proportioned backpacks. And a spot of colour.

 

 

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Another intriguing one from Maps on the Web:

Have you ever wondered what the world’s richest people studied in college? If you guessed that many of them have degrees in business or economics, you’re right. But there is actually a surprising amount of diversity in the types of degrees that today’s wealthiest individuals hold. We dug into the data in order to create these maps to show the college degrees of each country’s richest person: 
. Click through for each continent – but here’s North America (click on title of post): . . Fun fact: Canada’s richest guy, David Thompson (at $37.5 billion), is one of only two of the billionaires with a history degree.  Not sure what to conclude about him, Canada or billionaires. . Read more »

Time has run out for the Harper Strategy on climate change.

I like to give Stephen Harper credit for this strategy because, in his trips to the Arctic, he so well exemplified it.  (I wrote about it in 2014, and again here🙂

If the goal is to keep climate change off the public agenda, the most effective strategy is not the ‘hard denialist’ strategy of rejection but the soft strategy of omission: saying as little as possible, preferably nothing, to keep the topic off the agenda.

As previously noted, that was the brilliance of Prime Minister Harper’s ninth Arctic trip in August, as observed by Jeffrey Simpson in The Globe:

“Nowhere in Canada is the impact of climate change more increasingly evident than the North. And yet, the words ‘climate change’ are never heard from Mr. Harper in the North, as if the idea they connote are so distasteful that he cannot bring himself to utter them.”

No denial, just no recognition.  And hence a standard for others in power to follow, whether politicians, business people or editors: serious people don’t have serious public concerns about climate change, so that decisions today need not take into account tomorrow’s probable reality.

The strategy works only so long as nothing too serious happens too frequently.  That results in fear, and then anger, and then bad things politically.  And then you have to say something.  If you have nothing substantial to say about climate change – because the whole strategy was never to do anything substantial – then you’re in trouble.  As George Bush quickly discovered in his indifferent response to Hurricane Katrina.

And as Australian Prime Minister Scott Morrison just found out.

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