By Jennifer Smith - Kelowna Capital News - April 16, 2008
A land economist hired by the City of Kelowna says the municipality needs to offer more density to developers if they want to see uptake on offers of density bonuses for affordable housing. Monday morning, consultant Jay Wollenberg told city staff and councillors there is little incentive for developers to try to build more density into housing projects, given the amount of density this city is willing to consider. “The costs, time, risk and administration associated with (the bonus) are not worth the very small additional market density, so most developers are likely to not bother,” he said, following comments made in a report to council. The city negotiates with developers who want to rezone their land to build more homes than their property is zoned for, asking that the developer offer some of the additional housing they’re asking for at cheaper rates to offset Kelowna’s affordable housing crunch. There is no formal policy on how this should be done, so city staff generally ask that 50 per cent of the extra square footage, or the density bump, to be sold at a reduced “affordable” housing rate.
In 2007, following the Canada Mortgage and Housing Corporation’s benchmark that deems 30 per cent of a household income as an affordable mortgage payment, the city set its affordable rate at $149,000 for a one-bedroom unit. When Wollenberg’s report was filed in February, the municipality had negotiated for 50 such low-cost homes—not enough in Wollenberg’s estimate. The units developers offer are largely one-bedroom and bachelor-style spaces, while the purchasers must meet a $60,000 annual income threshold. Given those requirements, it’s generally couples who can afford to apply for the condos, which are arguably not likely to meet their needs for the long-term. “You need to retool your system cause it ain’t working,” said Wollenberg, noting he’s “not asking (this council) to be guinea pigs.” Municipalities throughout B.C. have successfully adopted density bonusing systems which work, but Kelowna needs to consider higher densities in order to make its system equally viable. “There’s really no reason to limit people to three storeys when they could build four,” he said.
Official Community Plan guidelines which set these standards are arbitrary and vary widely from city to city, he explained and are reworked at councils’ whims. Whether a highrise development is 17 or 19 storeys would likely make little difference to the layperson living beside it, but it could mean hundreds of thousands of dollars more in affordable housing contributions, he added. And for smaller projects, there is a way to elicit an affordable housing contribution, without requiring the developer to sell off one or two units cheaper than they can afford. He suggested developers should pay out 100 per cent of the land costs associated with the density increase—though several councillors balked. “That’s where people start getting confused,” community planning manager Theresa Eichler noted after the meeting. “If you say, well we want all that density back, then you think, well what will this developer get? “But his value is based on the land value which comes in somewhere between $35 to $45 per square foot. You’re still getting building space that’s worth $300 a square foot or more.” Included in that $300 a square foot, of course, are the building costs, marketing costs, and even the legal costs for drafting the affordable housing units needed for the density bonusing.
City staff tried to get council to nail down a formula for these calculations last February, even before debating the land economist’s report. But the majority of councillors where uncomfortable with the maneuver. Wollenberg’s report also examines whether the city could simply ask for voluntary contributions to their affordable housing stock, parks and other amenities in exchange for rezoning, rather than solidifying a density bonusing schedule. But he suggests there is little room for this route to succeed. Through consultation with the local development community, he determined that developable land sells on its OCP value, or the potential density allowed, rather than what it is actually zoned for. So the developer is already paying for a density increase, anticipating there will be little resistance from council. In effect, they’ve already paid out the money the could contribute to city amenities to whomever is selling the land, he said. The report is expected to formally come before city council late May, after further consultation with the development community to determine where the city is likely to see the most resistance. In the meantime, Wollenberg has also been consulting on the city’s redevelopment plans for the downtown waterfront as well. City staff have been given a mandate to pursue more rental housing in their affordable housing policies for that development scheme.
Don Quixote Note: The Wollenberg Report can be found here.
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