Vancouver is motivating builders to propose larger developments in an effort to finance its own growth, according to real estate consultant Michael Geller.
“The city is encouraging developers to produce bigger and bigger buildings to increase what we call the land lift, to increase the difference between the current value and the rezone value,” Geller told Business in Vancouver.
His comments were in response to a BIV story this week about the removal of the Georgia and Dunsmuir viaducts and development of a beach at the east end of False Creek.
The proposed beach would be considered a community amenity and increase the value of towers likely to be built between the Cambie Bridge and east end of False Creek.
Developers pay the city development cost levies (DCLs) and community amenity contributions (CACs) to help pay for the city’s growth-related projects.
Geller said the city calculates the contributions based on the potential value of the land once the development is built.
He believes this system encourages the city to seek out larger developments that would inherently increase the value of the land and the amenity contribution. Geller said it’s similar to selling zoning.
Bing Thom Architects principal Bing Thom has estimated the city could rake in $150 million in community benefits from developers who build on the land beneath the viaducts.
“It’s got to the point that the city is actually asking developers to come forward with plans for projects that are even bigger than they know the community would accept, and sometimes even bigger than they would like to build,” Geller said.
“But the city is trying to finance growth from these buildings so the whole concept has become distorted.”
He believes developers should be charged a contribution based on the added square footage of the development, not the potential increase in the value of the land.
For more about the proposed False Creek beach, check out this week’s edition of BIV.