No movement on density bonus

by Wayne Moore - Nov 25, 2008 Castanet:

Kelowna Council can't seem to agree on how developers should compensate the city when receiving a density bonus. The City's elected officials have been kicking the issue around for the better part of this council's three year term, which comes to an end next Monday. Council received a report from a land economist earlier this month, however, deferred making any decisions until after staff reviewed suggestions made by the Urban Development Institute (UDI). The UDI expressed concerns about the interim affordable housing policy submitted by the land economist. The contentious issue is the percentage of land value required to be paid back to the City in exchange for the density bonus. The land economist had recommended developers pay 100 per cent of the market value of the land the developer would otherwise need to acquire in order to achieve the density.

The UDI had suggested 50 per cent should be the maximum contribution for density bonus within current OCP zones, regardless of whether the contribution be in units of cash-in-lieu. In a report to council, staff indicated they met with UDI and were able to arrive at a compromise solution on the value of cash-in-lieu contributions at 75 per cent. UDI, after reviewing the recommendation, sent a letter to council late Sunday night, indicating it would prefer a 50 per cent cash-in-lieu. "For bonus density to be successful as one means to create affordable housing, the contribution levels needed to be structured such that they are an incentive to the development community. While UDI was somewhat willing to agree to a 75 per cent contribution of cash-in-lieu, this concession was being made in the context of the other amendments we are recommending, and it is not something we believe, ultimately, will be successful," says the statement. "If it is the City's goal to create an affordable housing policy that will encourage greater participation by the development community, rather then ask for 75 per cent of the market value of the increased density and possibly get little or no participation, it would be more productive to set a policy that asks for 50 per cent and get participation from the development community on a broader basis."

Councillor, Andre Blanleil, says it seems as if the development community and staff are very close to an agreement. He says it would be nice to finally see them get on the same page. "It would be so good if we could get both the development community and our staff on the same page and I think developers will step up and say they are willing to pay something, but it has to work from a financial sense," says Blanleil. "I think at the end of they day if they pay too much they are just going to leave the land or develop it in the way it was originally done, and we lose either way." Councillor, Robert Hobson agreed that more discussion between staff and UDI is required before council can make a final decision. "I think staff need to go back and take a look at the suggestions that have been made and maybe they need to talk to the land economist just to get that information back in the loop and come back with a report," says Hobson. "On the face of it, I think what UDI is saying is reasonable, but in fairness I think our staff have to review that. We shouldn't be asked to negotiate here at the council table." In the end, council decided to defer a decision pending further input and information.