With all this development happening in Squamish, why doesn’t the town have a lot more money for Community Amenities? I moved here 25 years ago, and I don’t think there has been a single significant addition to Brennan Park Recreation Centre in all that time. In most places, Developers kick in significant money when they have property rezoned to higher density. But this has not happened in Squamish. Why not?
To answer this question, look no further than October 16th, 2018. Six days before the last municipal election.
That is the day Council passed the new Community Amenity Contribution Policy. This Community Amenity Contribution policy sets rates that are very low and has left millions of dollars in the pockets of developers – money that is desperately needed for Squamish to keep up with growth and pay for the amenities we need.
In an article The Squamish Chief that was published on September 2nd, renowned planner Larry Beasly speaks to exactly this point:
Q: Looking at some of the examples of eco-design, say in Vancouver, there’s a financial strain for towns like ours to do those things. We don’t have the tax base, arguably. Can you speak to this?
A: Something I discovered about 35 years ago, and it has served me very well wherever I have worked in the world, is that there is huge wealth in the redevelopment process itself. Some communities let wealth be bled off completely, leaving them to cope with problems from the public purse. Other communities negotiate a part of that wealth to be reinvested in their community. That is what happened in Vancouver at about the turn of the century. We started saying, ‘Look, it is a privilege to develop in our city. We know you are going to make profits.’
And we started to calculate the numbers and realized just how big those profits were. We told developers they had to contribute back to the city and then we codified what those contributions had to be.
If you start to do the numbers, project after project, you start to realize there’s plenty of profit to be invested in your community and it really does help you to stay true to the vision you conjure up when you work with people — those qualities, those amenities. Squamish is, right now, at a time when the community has the upper hand in terms of development. If someone doesn’t want to do the kinds of things you want to do in your community, just say goodbye and hold out for the people who do. All around the world, I have noticed that those communities that hold out for quality are the ones that are going to get it.
Almost any developer I know would think there is a great opportunity for development in Squamish and in the region, all the developers understand that they really do have to make a contribution. Most won’t make it by themselves, but they will make it if the community itself says they have to.
Clearly, looking at the current Community Amenity Contribution bylaw, Squamish is in the “Let the wealth bleed off completely” category. I’m not sure what happened in the intervening years, but in the early ‘00s, the city planner was walking Council through this policy and running the calculations to capture a high percentage of the increase in land value for community amenities. This is what a lot of communities do when they want to “negotiate part of the wealth to be re-invested in their community”.
How Do Cities Gain From Development?
Every piece of land has a zoning attached to it. The zoning is a “right to build”: if your lot is zoned for a single-family home, you can build one on the lot within the zoning rules, and Council has little ability to interfere. If you want to build a duplex on the lot, you would have to apply for rezoning. When property is rezoned at the request of a developer, this is entirely at the discretion of Council.
When a city government changes the zoning of a piece of land, its value increases as soon as the zoning goes through. These days, that can be millions of dollars, which would benefit the developer or land owner.
If the value increases significantly, Council can negotiate a Community Amenity Contribution to capture some of the value that would otherwise just go to the developer. That way, the financial benefits of the rezoning are shared by the community and the developer.
For example, if a Council were to rezone industrial land worth $1 million to multi-family residential so condos could be built, that land would be much more valuable. If, for example, the land was now worth $5 million, the increase in the value of the land would be $4 million.
Many communities, including Vancouver, have a policy of extracting a high percentage of that value in Community Amenity Contributions from developers. Contributions could be cash, or they could be bike lanes, trails, additional facilities, or contributions to an affordable housing fund.
What percentage should a city or municipality negotiate? Vancouver targets 75%, and has contemplated up to 90%. One would think that 50% would be fair (at minimum). In fast-growing communities like Squamish, 75% may be much more in line: the wealth created by the rezoning would be shared by the developer and the citizens of the community that will be impacted by the growth.
But compared to other communities that are doing this, the Squamish rate, passed before the last election, is about 10% of what it should be.
I’m not arguing that developers shouldn’t make a fair return on their investment. We need developers to build the housing and buildings we need. But it’s the District’s job to build a community.
As Mr. Beasly points out, by rezoning property, you are creating a lot of wealth and developers will contribute to the communities they are working in in order to gain some of that wealth, if the communities make them.
If we don’t want Squamish to become even more of a bedroom community with no recreation or other amenities, then it’s in everyone’s best interest to ask for a fair amount in Community Amenity Contributions – just like many other municipalities do. Developers that don’t like it can develop elsewhere.
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What does our current Community Amenity Contribution bylaw say?
The Community Amenity Contribution bylaw implemented on October 16, 2018 (six days before the last municipal election, I might add) clearly lays out the amounts the District of Squamish will collect from such rezoning. Shockingly, these amounts are a mere fraction of what a reasonable and fair contribution should be from developers in Squamish.
Residential Houses: $20,000 – $25,000 depending on the size of the house and whether the site is greenfield. If it’s a greenfield site (not previously developed) and if you are developing +50 lots, you can pay as little as $5000 for a Community Amenity Contribution per lot.
Yes, you read that right.
Create a bunch of single-family housing lots – worth $800,000 to $1.4 million just for the land in today’s market and pay a maximum of 3% of your revenues towards community amenities. Keep the rest of the money as profit. Oh, and a whopping one dollar per square foot towards parks and active transportation. Better hold off on those marble countertops…
Multi-Family (Townhouses and Condo) Developers pay $15-$18 per square foot of “For Sale” residential Units. As outlined before, with building costs of about $300/sqft, and sale prices of $600/sqft, this captures only 6% of the profit. In this case, the developer walks away with 94%.
Cash or Complicated?
The recently approved Anthem Properties project at Centennial Way, right across from Brennan Park, will see over 259 new housing units added to Squamish. And for this rezoning of what was a campground, the developer will pay only $1.7 million in cash to the district over the 3 phases.
$1.7 million for at least 94 townhouse units that will probably retail for close to $1 million dollars each. Why such a low amount?
In Squamish, a large percentage of the value in our Community Amenity Contributions, low as they are, are eaten up by “Affordable Housing” allocations and market rental units. We definitely need market rental units and affordable rental units, and I am not saying we shouldn’t incorporate rental units into Community Amenity Contributions, but we should consider taking more in cash and a bit less in hard to calculate affordable housing contributions after we substantially increase our Community Amenity Contribution levels. Affordable housing cash is also great to have when provincial and federal affordable housing programs are available.
We need both cash and affordable housing contributions, but only cash can be used to build the amenities that the whole community needs. For this developer in particular, perhaps a substantial contribution towards improving our Recreation Centre would both help the community and add value to the development.
Squamish Needs a Fair Community Amenity Contribution Bylaw
As outlined by Mr. Beasley, when Council rezones land at the request of a developer to increase its value, the developer or landowner should not be the only financial beneficiary. When you add new housing, you need more recreation amenities, services, roads, sidewalks, traffic control – more everything.
Current taxpayers, who have paid for the amenities that the new residents will benefit from, should also benefit from the added density in their community. That’s how we can build a thriving community with the outstanding amenities that the people here want and need to keep their community liveable.
With increasing demand, we need more housing in Squamish and the developers to build it. Some of the developers working in Squamish care deeply about our community. In fact, a number of them walked me through the shortcomings in the District of Squamish’s Community Amenities Contribution policy (kind of like they would tell you about how someone added an extra zero to their cheque). It’s their job to build housing and make a fair return doing so. And that’s fine.
However, they should not make extraordinary profits based on rezoning from Council. Unfortunately, the previous Council, led by Mayor Heintzman and of which Mayor Elliott was a member, gave developers a gift that meant they would pay very little for their rezoning in Squamish – a huge win for developers, but an incalculable loss for the community.
We have collected dimes on what should be dollars with the rezonings this council has approved – dollars that are desperately needed for a fast growing town. This was done for some incomprehensible reason, six days before the last election, and at the expense of our community’s long-term liveability.
Many communities take a share of the increased value of the land when they approve rezonings. Squamish needs a Community Amenity Contribution policy that ensures developers contribute and the community benefits from the wealth that is being created.