Hidden costs barrier to developing vacant lots
Hundreds of properties in Regina aren’t meeting their potential, according to a report that counted vacant lots in the city.
The Underutilized Land Study, commissioned by city council as part of a strategy to promote infill housing, found 585 such sites inside older areas of Regina. It also counted 130 surface parking lots and 37 vacant buildings.
There are large pockets of sparsely developed land in the Warehouse District, Centre Square, Heritage and North Central, with major concentrations along transit corridors like Broad Street and Victoria Avenue.
The report suggested that many properties aren’t being developed for a simple reason: Anyone who built there would risk losing substantial sums of money for years.
“Hidden costs can be quite expensive and create considerable risk for the developer,” it said.
The city has been aiming to funnel 30 per cent of new growth into existing neighbourhoods — known as an “intensification target.” Planning wisdom suggests it will save money, ease congestion and create vibrant neighbourhoods. According to the theory, it would better use existing infrastructure and concentrate people along transit routes.
But it isn’t working. Since the city set that target, only about 14 per cent of new growth has gone to existing neighbourhoods.
“Many challenges stand in the way of intensification,” said the report. It pointed to “prairie attitudes towards higher-density growth, affordable land and the preference for lower-density living.”
The authors noted that the economic downturn has reined in a building boom and left an oversupply of housing in new neighbourhoods. But broad market trends aren’t the whole story.
The report compared vacant properties in three existing neighbourhoods to virgin land in Harbour Landing, crunching the numbers for costs, rents and profits. Projects on Broad Street and North Central would lose money for five years or more. The Broad Street property would lead to “automatic default” on a loan, with losses running into the hundreds of thousands.
Building in Harbour Landing came out on top from a cost perspective and yielded higher rents. Among the three vacant lots, only a downtown property was considered an economically feasible site for a new building.
According to the city’s executive director of planning and development, Diana Hawryluk, one of the major issues is what’s underground.
“Infrastructure costs are a big one,” she said. “With development you want certainty... They’ve got to do a lot of engineering work, and then it’ll tell them how much more they have to do. So sometimes that’s a barrier.
“It’s like renovating an old house and you start opening up walls,” she added. “Sometimes things are a surprise.”
Developers who gave feedback for the report said risks and cost were serious deterrents. They cited soil contamination as a potential risk that could discourage investment.
“Many builders report less risk building on greenfield sites, where costs are more predictable,” the report noted, in summarizing their concerns.
They also objected to red tape, saying the city often moves slowly and doesn’t provide consistent information.
“Stakeholders are generally confused about infill development regulations,” the report noted.
“Many suggested that their experience with the approval process has involved weeks and in some cases several months of waiting.”
Hawryluk said the city will draw on the report to craft recommendations, which will then be presented to city council as part of a strategy to promote infill development. She said her staff will be looking at ideas from other cities, like Saskatoon, which does engineering work ahead of time to provide more certainty to developers.
“It might not be right for Regina, but that’s what we’re going to analyze,” she said.
The report pointed to numerous other strategies that could help. It raised the idea of a single point person for infill development, who could help co-ordinate between city departments.
It further suggested zoning changes to increase flexibility, remove unnecessary regulations and facilitate mid-rise buildings of six to eight storeys.
If the city gets it right, the implications for Regina could be significant. The report estimates that vacant properties could accommodate more than 19,000 new residents.