Agenda Index City of Vancouver

POLICY REPORT
URBAN STRUCTURE

TO:

Vancouver City Council

FROM:

Director of City Plans and Director of Financial Planning and Treasury, in consultation with the Director of Current Planning; the General Manager of Engineering Services; the Manager of Housing; the Director of Social Planning; the General Manager of Parks and Recreation; and the Director of Real Estate Services

SUBJECT:

Financing Growth Review: Paying for City Facilities to Serve a Growing Population, and the Role of City-Wide Charges on New Development

 

RECOMMENDATION

CITY MANAGER'S COMMENTS

COUNCIL POLICY

To address increased demands for City services as a result of new residential and employment growth, in January 1999, Council adopted two types of interim city-wide charges on new development, to help pay for new facilities:
· The Interim City-Wide Development Cost Levy (DCL), for all new development to help pay for specified growth-related costs, taking effect in January 2000:

· The Interim City-Wide Community Amenity Contribution (CAC) Policy, to secure additional amenities from privately-initiated rezonings where additional density is approved:

Council also approved the Financing Growth Review for a more complete look at city-wide growth costs, and how to best use development charges in the overall City context. The interim charges were to remain in effect until the completion of the Financing Growth Review.

PURPOSE

The purpose of this report is to convey the Financing Growth draft report to City Council, and ask Council to refer the report to a broader public review. This report is being coordinated with the Capital Plan report, since the Capital Plan and development charge revenue are the two key partners in paying for growth-related facilities.

BACKGROUND

Vancouver has been growing and will continue to grow under current regional and City Plans and zoning. More people will place more demands on parks, libraries, transportation, community centres, and other City facilities. A key issue is how to accommodate growth without deterioration in the level of amenities and services for those who live and work here already, as well as for the new residents and employees.

Traditionally, the City provided the new facilities mainly through property taxes. But this has been increasingly difficult:

· The City and its property tax base are under pressure to deliver a wider range of services than in the past, from seismic upgrading to environmental improvements.
· There is a growing stock of aging infrastructure to maintain.
· Meanwhile, senior government funding to the City has significantly decreased.

Vancouver, like other municipalities across Canada and the U.S., has sought new tools for funding, including charges on new development to help pay for the additional facilities need to serve growth. In Vancouver, charges on new development have evolved gradually over the past two decades. In several sub-areas of the city, policies and by-laws were put in place in the1980s and 90s for new development to help pay for new facilities, such as in Downtown South and the North Shore of False Creek.

By the year 2000, this had left a piecemeal pattern of development charges in the city. Only recently planned areas had provisions for new development to contribute to their growth costs. Yet, growth will occur across the whole city-e.g., in downtown office buildings, housing above shops along commercial streets, and in townhouses, rowhouses, and suites in residential neighbourhoods throughout the city.

To help pay for the increased demands for City services as a result of city-wide growth, Council introduced a city-wide system of interim charges on new development: an Interim Development Cost Levy (DCL) for all development, and an Interim Community Amenity Contribution (CAC) Policy for rezonings.

The interim charges cover the area referred to as the City-Wide Area (white area on map). This excludes areas already covered by sub-area DCLs, CACs, and related agreements (black areas on the map).

City Council also asked for the Financing Growth Review to refine and improve the interim development charges, and to place them within a broader context on how the City's capital costs of growth should be funded.

The work has involved an Interdepartmental Team, including representatives from Housing, Social Planning and Cultural Affairs, Real Estate, Engineering, Parks Board, Law, Library, Police, and Fire, and a liaison member from the School Board.

A multi-stakeholder Resource Group has also assisted in preparation of the report. The Group included members from the development and building industry, property taxpayers, and project interests, such as daycare and affordable housing. They met monthly to review information and emerging Policy Choices, and helped to identify questions that need to be answered, make sure a full range of Policy Choices was included, and improve the general understandability of the material.

DISCUSSION

The draft Financing Growth report is attached: "Financing Growth-Paying for City facilities to serve a growing population: the role of city-wide charges on new development." A Technical Supplement is also available.

The Financing Growth report provides information for the first time on city-wide growth costs, and how they fit into the City budget context. The report includes facilities for which the City has the primary, or a key, role in funding: community centres, rinks, pools; cultural facilities (e.g., civic theatres, art gallery); daycare; fire; library; neighbourhood house/family place facilities; park; police; social and affordable housing; and transportation.

The report provides Policy Choices and preliminary staff recommendations. The key policy question is:

· What share of growth costs should be paid by charges on new development (DCLs) as compared to what share falls on the regular Capital Plan, funded primarily through property taxes? I.e., what rates should be charged on new development to help pay for growth?

The report includes the findings of a consultant study on the economic impact of DCL rates on varying types of development, and findings from a survey of DCL rates in other GVRD municipalities.

The report sets out Policy Choices, ranging from retaining the current DCL rate for most development of $2.50 per square foot, to charging a rate of $7.50 that would pay for virtually all the growth costs.

Other Policy Choices and recommendations in the Financing Growth Report address:

· Whether to charge DCLs on developments with less than four units, which are currently exempt under the Vancouver Charter?
· Whether certain types of development should have lower rates due to their public service role (e.g., City buildings, non-profit facilities, hospitals)?
· How to allocate the revenue received from development charges, and integrate spending with the City's regular Capital Plan?
· Whether more types of City facilities should be eligible to use the DCL revenue to help fund new facilities?
· How to secure community amenities from rezonings receiving additional density, and more specifically, how different types of rezonings should be treated (such as downtown rezonings, hospital rezonings, and rezonings that change the use of land, but not the density, such as "big box" retail)?

PUBLIC PROCESS

The recommendation at this time is for City Council to receive the Financing Growth report and refer the Policy Choices and preliminary staff recommendations to a wider public review. This provides an opportunity for the variety of people affected by how the City pays for growth to share the information and consider the Choices-development and building industry, property taxpayers, and project interests (e.g., parks, daycare, affordable housing).

The Financing Growth public process will be coordinated with the Capital Plan public process, as the Capital Plan and the development charge revenue are the two key partners in paying for capital facilities. Since development charges are a newer tool, the Financing Growth public process will be longer and more intensive.

The Financing Growth public process will expand on the role of the Resource Group and focus on encouraging informed dialogue, with the following elements:

· The Financing Growth report and summary material will be sent to a wide variety of major stakeholder groups and interested individuals.
· Copies will be posted on the City web site.
· Staff will be available for presentations and discussions.
· A feedback form will be provided with the Financing Growth report, for people to indicate desired Policy Choices and comments.
· The process will conclude with a working session, where participants from different stakeholder groups will join in small group discussions.
· A final staff report to Council will provide staff recommendations and summarize public input. Interested members of the public will also have an opportunity to address Council at this time.

The public process will occur during the fall of 2002, and will be reported back to City Council early in 2003. Funding for the public process is already available in the Financing Growth project budget.

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