City fees under scrutiny after project falls apart

There are rising concerns about the ad hoc and closeddoor nature of negotiations when the City of Vancouver demands so-called community amenity contributions from developers.

The Boffo Properties plan for a non-profit, social-housing project in conjunction with the Kettle Society in east Vancouver fell apart this week, with the developer saying the city’s demands were too expensive. So far, it’s the only public example of such a developer/non-profit project collapsing.

Developers have recently been more vocal in complaining about how city fees and taxes are climbing and making it more expensive for buyers and renters of new homes.

And there are growing questions about how the city determines these amenity charges.

In particular, developers looking to back purpose-built rental buildings feel there should be no community amenity contribution charges when developers are already helping the community by providing affordable or nonprofit housing units in their project.

The Kettle project was to combine supportive housing, condos, and mental health facilities. Boffo Properties said this week that additional development costs expected to be imposed on the project render it “financially unviable.”

Developers argue that, in offering features such as affordable housing, they’re already putting less money in their own pockets and taking longer to get a return on their investments than they would in simply building a condo tower.

There have been “other rental projects killed because the city kept tightening and asking for more, and one where the city got embarrassed and had to give in rather than upping the ante and asking for more (money) when the developer basically gave it the finger,” says David Goodman, a commercial real estate agent who specializes in apartment building sales.

What developers aren’t willing to do is make public their financial math, technically known as their pro formas.

Developers argue they can’t do this because it would compromise their ability to do business by revealing information to competitors.

“It’s their secret sauce,” says Pete Fry, a community advocate seeking the Green party nominations for city council.

Without those details, says Fry, “I don’t think there is any transparency here to make an informed opinion on this.”