Let’s get housing deals out of the backrooms
It’s fairer for all if ‘zoning for dollars’ becomes clear, Thomas Davidoff says.
Real estate brings out the worst in people, and for good reason. Finding a home and protecting it from outside threats is human nature, and neighbours’ decisions about what to do with their property can affect others’ well-being. Turning a parking lot in an area of historical interest into a tall apartment building might profit an individual landowner and provide needed affordable housing units to the city, but it can also upset the area’s character and the residents who love it.
The job of politicians and planners is to help bring worthy projects to fruition, but they find themselves squeezed.
If they give developers too much, neighbourhood advocates will revolt. If they maintain the status quo, people looking for homes and those hoping to add value to property will be disappointed.
Finding the right middle ground is very difficult.
Compromise is a lot easier when property rights are well-defined. If owners had the legal right to build whatever they wanted, politicians would have no right to block developments, no matter the harm to neighbours. On the other hand, if zoning rules were frozen forever, politicians would not have the capacity to create developments that respond to the evolving demands of the city.
For good reason, we avoid both extremes.
There are zoning rules, but they are flexible. And this means property rights are poorly defined, hence all the conflict. Zoning squabbles are resolved with endless hearings and compromise solutions that give more weight to whichever side seems more politically compelling.
Ultimately, this is a bad way to make decisions.
I have a perhaps somewhat extreme solution that uses the magic of markets.
Suppose that community groups were allowed to veto development projects, but could be paid cash to relent. For example, suppose a group of homeowners within some radius could insist that each square foot of apartment space built above current zoning requires payments of $200 to be shared equally, say through property tax reductions. Suppose further that every few months, the city could take bids from developers proposing violations to zoning law. The city could then match developer bids to neighbours’ side payment demands.
Neighbours who are willing to sacrifice money to preserve their neighbourhood could do just that, and needy households would benefit from the matching. Everyone wins.
Increasingly around Vancouver, cities let developers build bigger buildings than zoning allows in exchange for cash, affordable units or other community benefits.
Provincial guidelines urge cities to make Community Amenity Contributions negotiable and related to measurable costs.
This advice adds uncertainty to the development process and ensures that only developers with experience negotiating contributions can participate successfully.
Some say these mandatory contributions (“zoning for dollars”) hold up projects or get passed on to the already burdened real estate consumer.
But others will argue that the increased supply in the market provided by these denser rezoned projects can drive prices down.
Politicians need a bargaining chip to help negotiate between these opposing sides. If they can’t show some civic gain from what activists argue is density pain, what incentive do they have to allow more housing?
Let’s not pretend money doesn’t influence planning decisions. Instead, let’s add market-oriented transparency to the process so that communities get as much benefit as possible from adding the housing that renters and immigrants need. The province should encourage cities to set actual prices up front, so that developers are those who build the best project at the lowest cost, not those who are best at gaming the political system.
VAUGHN PALMER WILL RETURN
Suppose that community groups were allowed to veto development projects, but could be paid cash to relent.