Vancouver City Council

CITY OF VANCOUVER
COMMUNITY SERVICES
Planning Department
City Plans

M E M O R A N D U M June 20, 2003
TO:	Mayor and Council
COPY TO:	Judy Rogers, City Manager Syd Baxter, City Clerk Jacquie Forbes-Roberts, Manager of Community Services Ken Bayne, Director of Financial Planning and Treasury
FROM:	Ann McAfee, Co-Director of Planning and Director of City Plans
SUBJECT:	Financing Growth - Information for June 24 Council

The Financing Growth report is on the June 24 Council agenda as Unfinished Business. After hearing delegations at the June 10 Special Council Meeting, staff provide the following additional information, attached to this memo:

· Attachment A - Recommendations: These pages list all the recommendations from the Council Report, with new recommended amendments, underlined, as follows:

- Recommendation A: Add Principles (from Council report page 11) for Council approval, to guide future implementation and decisions. This replaces former Recommendation A, which was approved by Council on May 13, to refer the report to hear delegations.

- Recommendation B4: DCL relief for non-profits, as requested by Park Board and other delegations.

- Recommendation C9: Clarify how a CAC is determined, requested by Park Board.

- (Recommendation B9: Borrowing: The Park Board also asked for a policy to use the Emerging Neighbourhood Fund (ENF) to fund opportunities beyond what DCL funding can provide. This request was withdrawn after the Director of Financial Planning and Treasury explained that a variety of funding sources already exist, including the ENF.

· Attachment B - Notes/Options: This page provides information on options if Council wishes to change staff recommendations on:

- Recommendation B1: DCL rates, and/or

- Recommendation B6: DCL phase-in period.

If there are any questions, please contact Ronda Howard (604-873-7215) or Randy Pecarski (604-873-7810). A copy of this material will also be sent to Council electronically.

Ann McAfee
FINANCING GROWTH RECOMMENDATIONS - June 20, 2003
With new and amended staff Recommendations identified by underlining.

A. THAT Council receive this report and refer the following Recommendations and Consideration items for public delegations to be heard. (Approved by Council on May 13, 2003.} THAT Council approve the Principles below, to guide implementation of Financing Growth Policy, and particularly Development Cost Levies and Community Amenity Contributions.

- Maintain community livability as the city grows.
- Require new development to contribute to paying for its growth costs and impacts.
- Share the burden of paying for City facilities and services fairly between new development and existing development, and among various types of developments.
- Provide for consistency with other City policies, such as heritage and social housing.
- Check economic impact so as not to deter development or harm housing affordability.
- Provide a system that is city-wide and that is consistent and predictable for both the development industry and community.
- Provide certainty of rates for most new development, and allow for flexibility where there are special opportunities and situations in some rezonings.
- Make the system as transparent and simple as possible.
- Develop and implement the system with broad input from all stakeholders.

B. THAT for the City-Wide Development Cost Levy (Vancouver DCL), Council approve the following:

B1. Increase DCL rates, to increase the proportion of growth costs recovered from new development:

- Multi-family residential: From $2.50/square foot ($26.91/square metre) to $5.00/square foot ($53.82/square metre)
- Commercial: From $2.50/square foot ($26.91/square metre) to $5.00/square foot ($53.82/square metre)
- Industrial: From $1.00/square foot ($10.76/square metre) to $2.00/square foot ($21.52/square metre).

B2. For schools (k-12) maintain the rate at $0.51/square foot ($5.49/square metre); and for daycare reduce the rate from $0.51/square foot ($5.49/square metre) to $10.00/Building Permit.

B3. Expand the definition of social housing to include rental or co-op housing owned and operated by a non-profit housing society or housing co-op, secured by a City Housing Agreement, thereby exempting these housing forms from DCLs.

B4. For non-profits, provide DCL relief, where considered necessary, to non-profit-owned facilities that are already approved for a Civic Capital Grant, with such DCL relief being in the form of additional grant money, to pay back some or all of their DCL assessments; and, for non-profits that initiate a facility on City land, where the non-profit has raised the majority of funds, and where the facility will be City-owned, staff report back on a strategy for DCL relief where needed.

B5. For Downtown Eastside development (area of tripartite Vancouver Agreement), report back on whether the DCL rate should be lower than for the rest of the City-Wide DCL, after receiving the consultant economic impact analysis.

B6. Provide a grace period of one year from approval of these recommendations before DCL rate increases come into effect. Rate reductions will take effect on enactment of the appropriate amendments to the DCL By-law.

B7. Allocate DCL revenues among project categories, in the same proportion as growth costs:

- Park 41%
- Replacement housing 32%
- Transportation 22%
- Childcare 5%
And, make the allocation percentages effective at the same time as DCL rate increases.

B8. In each 3-year Capital Plan cycle, provide each project category with DCL revenue in the same percentages as its long-term allocations (see B7).

B9. Spend only DCL revenue that is available -- i.e., establish a pay-as-you-go policy for DCL expenditures for the next Capital Plan cycle, rather than borrowing, and review this approach based on experience.

B10. Apply the following criteria for individual expenditures of City-Wide DCL revenue. Projects should be:

- DCL-eligible capital project categories identified in the allocations: parks, replacement housing, transportation, and daycare;
- In the City-Wide DCL boundary;
- Needed due to city-wide growth, or anticipated growth;
- Part of a city-wide system of facilities and services, and will help maintain City service standards across the city;
- Secured for long-term service use, through appropriate mechanisms, such as City ownership; Housing Agreements, or covenants; and
- In response to Council- (or Park Board-) approved plans and policies, based on public input, including city-wide plans and Community Visions.

B11. Since growth needs cannot be met by DCL revenues alone, combine DCL revenue with Capital Plan funds for overall program expenditure, to work toward meeting growth needs and to provide the required "municipal assist"; and integrate DCL spending with the Capital Plan process as described in this report.

B12. Limit the addition of layered area-specific DCLs (that apply in addition to the City-Wide DCL), generally to areas where there is a new area-wide plan or zoning for growth, and additional growth-related facilities are required that are not covered by Community Amenity Contributions or other sources, as described in this report.

B13. Request the Director of Legal Services to report back, for enactment, amendments to the Vancouver DCL By-law arising from the previous recommendations, where such amendments are within the City's powers set out in the Vancouver Charter .

B14. Request Charter amendments from the Provincial government, arising from this report, and summarized in Appendix A - generally to remove the DCL exemption for less than 4 residential units; to permit exemptions for small additions, City-owned buildings, and heritage transferred bonus density; to permit the City to use DCL revenue to help pay DCL system administration and implementation costs; and to provide more clarity for transportation definitions. And, following approval of any of these requests, staff to report back to Council for direction on follow-up work.

B15. Make DCL rates subject to periodic rate review (every 3 years), taking into account inflationary factors affecting construction costs and land values, and other relevant factors; review whether any changes to the City-Wide DCL should apply to area-specific DCLs (e.g., reduced daycare rate); revisit allocations when new information is available affecting growth costs.

C. THAT for the City-Wide Community Amenity Contribution (CAC) Policy, Council approve the following:

C1. Continue to secure amenities when additional density is achieved from rezonings, through a consistent City-Wide CAC framework, using both the flat rate and negotiation, as follows:

- Standard rezonings: Flat rate CAC - rate remaining at $3.00/sq. ft.($32.29/square metre) on the additional density approved by the rezoning.
- Non-Standard rezonings: reported to City Council, on a case by case basis, to determine whether to apply the flat rate or a negotiated approach.

C2. Reduce the site size for large site rezonings, classified as Non-Standard, from 10+ acres, to 5+ acres - unless located in a Community Vision designated Neighbourhood Centre/Shopping Area, where large sites would be defined as 2+ acres.

C3. Make rezonings on the Downtown peninsula Non-Standard.

C4. Make rezonings that change the land use from commercial to residential Standard/flat rate (unless on large sites or Downtown).

C5. Continue to exempt rezonings for non-residential change of use (unless on large sites or Downtown).

C6. Exempt small sites that are rezoned from single family, where the new zone is residential, or institutional; the new density is less than apartment density (up to 1.35 FSR); and the site size is less than one full city block.

C7. Exempt (along with heritage, social housing, and places of worship which are already exempt):

- Social housing to include rental or co-op housing owned and operated by a non-profit housing society or housing co-op, secured by a City Housing Agreement.
- Housing Demonstration Projects (as defined in City policy).
- Community facility rezoning to the degree that the facility is: providing City-related social and/or cultural services; operated by a non-profit society; open and accessible to all; accepted by the City as a Community Amenity; and secured through a legal agreement and/or land ownership.
- Public schools (k-12).

C8. Make revisions to the City-Wide CAC Policy effective for rezoning applications submitted beginning in six months from the date of Council approval of these recommendations.

C9. As the purpose of CACs is to secure amenities through rezonings, and rezonings are localized changes to land use, the amenities provided should serve the immediate site and/or community in which the rezoning occurs. The specific amenity must be approved by City Council, and should be determined according to the guidelines provided in this report related to public input, Community Visions or other area or city-wide plans, and evaluation of a full range of City service needs and level of existing amenities in the area.

D. THAT staff notify the development industry and the general public of the approved DCL and CAC changes.

E. THAT Council approve the creation of one permanent full-time Planner II to coordinate and expedite work on Financing Growth implementation, as described in Appendix B, at an annual cost of $75,600. The total cost for fiscal 2003 (six months) including salary, fringe benefits and computer is $39,800 to be funded from existing Community Services budgets. Future funding for this position to be added to the Community Services Operating budget without direct offset beginning in fiscal 2004. Position subject to classification by the Director of Human Resources.

CONSIDERATION

THAT, should Council wish to increase the time period before higher DCL rates become effective beyond one year, Council could amend the timing as follows:
F. A two-step DCL rate increase: the first increase to become effective in one year: from $2.50/sq. ft. to $4.00/sq. ft. for commercial and residential and from $1.00/sq. ft. to $1.60/sq. ft. for industrial; and the second increase to become effective six months later: from $4.00/sq. ft to $5.00/sq ft for commercial and residential and from $1.60/sq. ft. to $2.00/sq. ft. for industrial.

THAT Council consider whether or not more projects should be eligible for DCL revenue, and either:
G. Continue as is - DCL revenue can only be used for the currently eligible facilities: parks, childcare, replacement housing, and specified engineering infrastructure (transportation, sewer, water, drainage)

OR
H Request a Charter change to expand the list of facilities that the City can use DCL revenue for, to include all City-owned facilities that provide public services and have growth costs: community centres, libraries, cultural facilities, social service facilities, and fire and police facilities.

FINANCING GROWTH NOTES AND OPTIONS Attachment B

1. DCL Rates (Recommendation B1)

Staff recommend an increase to $5.00/ft² for residential and commercial and to $2.00/ft² for industrial. Some of the public delegations suggested higher rates. The following table provides Council with rate packages for higher rate options.

DCL Rate Options		Residential (Apt)	Commercial	Industrial	Cost Recovery
Recommended	B1	$5.00/ft2	$5.00/ft2	$2.00/ft2	67%
Other Options	(a)	$5.50/ft2	$5.50/ft2	$2.20/ft2	73%
	(b)	$6.00/ft2	$6.00/ft2	$2.40/ft2	80%
	(c)	$6.50/ft2	$6.50/ft2	$2.60/ft2	87%
	(d)	$7.00/ft2	$7.00/ft2	$2.80/ft2	93%
	(e)	$7.50/ft2	$7.50/ft2	$3.00/ft2	100%

 

 

 

 

 

 

Residential and Commercial Rate Relationship:
Staff recommend maintaining the established practice of charging residential and commercial the same DCL rate because:
· Research shows the growth costs for these two uses are equal on a square foot basis. Residential requires a variety of services. Commercial has a higher need for transportation services, and commercial buildings have more than twice the number of people per square foot vs residential.
· Conversion between these two uses is increasingly common, and it can be difficult to distinguish between them (e.g., live/work).
· Vancouver growth targets are for a roughly equal number of additional residents and employees.
Industrial Rate Relationship
Staff recommend maintaining the practice of keeping the industrial rate at 40% of the residential and commercial rate because:
· Research shows that industrial development shares 40% of estimated growth costs.
· It maintains an equal amount of growth cost recovery from each of the major land uses.

2. DCL Grace Period Options (Recommendation B6)

The Council Report recommends a one year grace period before DCL rate increases become effective. Public comments and submissions suggested both shorter and longer phase-in periods. From the experience of implementing the Interim City-Wide DCL in January 2000, staff note that the number of applications increases prior to the DCL rate increase. Therefore, the following comments are provided if Council is interested in a grace period of less than the recommended one year:

· If Council is interested in a 6-month phase-in period, staff note that the effective date would be Christmas Eve. During the Christmas holiday period, it will be difficult to process the expected increase in permit applications in the normal processing time-frame.
· Instead of six months, staff would recommend that a November 2003 or a February 2004 date be selected to avoid the holiday period. (Similarly, if other phase-in timing is desired, staff recommend avoiding July to mid-September effective dates.)

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