Port Moody Set to Establish CAC & Density Bonus Policy

Nearly three years following the City of Port Moody’s adoption of their new Official Community Plan, City Council will now be considering a new Community Amenity Contribution (CAC) and Density Bonusing policy for the City. 

While development has stagnated for close to a decade in Port Moody (even following the 2014 OCP), the arrival of the Evergreen Line and various amendments to the OCP since, coupled with the current market dynamics has led to a more recent uptake in rezoning applications. This led City staff to put forward the idea of a CAC policy in the past year.

The new policies are broken down between Density Bonusing and CAC’s.

Density Bonus Program

The density bonus program will be implemented as an amendment to the Zoning Bylaw, and includes the following major points:

  • The density bonus program applies City-wide, but is most often expected to be used in the Transit-Oriented Development Areas where higher densities will be concentrated;
  • The density bonus will apply to any development with a density greater than 2.5 FAR 
  • applies only to residential gross floor area. It excludes all forms of employment-generating floor space
  • does not apply to density used for low- and moderate-income housing since the City wishes to encourage these two types of housing, per the City’s Affordable Housing Reserve Fund Guidelines;
  • the financial contribution to the City is 75% of the land value of the additional density above an FAR of 2.5 (the land value will be determined on a project-specific basis using an independent professional appraisal, commissioned by the City and paid for by the developer);
  • in lieu of a financial contribution, the City may allow an amenity to be provided by the developer that is equivalent in value to the financial contribution.

Community Amenity Contribution Program

The City of Port Moody has never had a CAC policy although it does already have elements of a program in place including a public art contribution mechanism and the encouragement of developers to contribute toward the City’s Affordable Housing Reserve Fund. However, in the absence of specific policy, the amount collected has been negotiated on a project-specific basis and it has not been consistent (although it has generally been in the range of $2.00 to $3.00 per SF). The proposed CAC policy described below provides consistency and certainty for both developers and staff. It includes:

  • the program will apply to all areas within Port Moody with the exception of the 215A Levy Area of Inlet Centre
  • the CAC is set at $6.00 per SF of residential floor space being developed on a lot that is being considered for rezoning, to a maximum of $6,000 per residential unit (or per lot in the case of single family residential subdivisions);
  • credit will be given for any residential floor space on a lot that is being either retained or demolished as part of redevelopment;
  • the CAC program will apply to residential floor space up to a maximum density of 2.5 FAR, with any floor space above that subject to the City’s Density Bonus Program;
  • the CAC will be allocated as follows:
    • $2.00 to the City’s Affordable Housing Reserve Fund; and
    • $4.00 to the City’s proposed new General Community Amenity Contribution Reserve Fund

Council may, at its discretion, waive some or all of the CAC as part of a rezoning where affordable housing or another public amenity is being directly provided by the applicant.

Market Update: City of Vancouver Adjusts DCL & CAC Rates

Next week the City of Vancouver will consider recommendations to revise DCL and CAC rates. This comes following a decision earlier this year to allow increases to CAC (Community Amenity Contribution) target rates that did not have an inflation mechanism similar to Development Cost Levies (DCL’s – which allowed inflation starting back in 2009). The intent of the increase rates is to keep revenues in line with inflation in property values and construction costs.

DCL Rate Adjustments

The City currently has a City-wide DCL District (which accounts for the majority of land area and development in the City). The proposed 4.6% annual inflationary rate adjustment would result in the following rate changes:
  • $0.60 per SF increase for higher density residential (>1.2 FSR) and commercial developments;
  • $0.20 per SF increase for industrial development; and,
  • $0.14 per SF increase for lower density residential (≤1.2 FSR) development.
  • For residential and commercial development over 1.20 FSR, the DCL rate equates to $13.91 per SF

DCL Target Rate Adjustments

For CAC Targets, the proposed inflationary increase includes a one-time catch-up for inflation not captured since target rates were first established. In the case of Southeast False Creek, the adjustment extends back to 2007 while in Little Mountain Adjacent, Norquay and Cambie the adjustment extends back to 2013, and in Marpole the adjustment dates back to 2014. The magnitude of the rate increase which includes the one-time rate catch-up ranges from 8% in Marpole, 11% in Cambie Corridor, Norquay and Little Mountain Adjacent, and 25% in Southeast False Creek ( as previously noted, the % increase is much higher in areas where the catch-up period is longer).
dcl-cacThe changes come into effect September 30th, 2016.

City of Coquitlam to Expand CAC Program

The City of Coquitlam is likely to approve an expansion to their Community Amenity Contribution (CAC) program, as a result of several findings by City planning staff since late 2015 when they began exploring the idea of a policy regarding city-wide CACs.

Discussion topics from City staff included:

  • Impact on Housing Affordability – it was determined based on previous studies that a new Citywide CAC would not have significant impact on housing affordability
  • In-kind Contributions – this will be the standard approach at council’s discretion
  • Citywide CAC versus Area-specific CACs – City doesn’t want to have different target rates in different areas thereby creating an uneven playing field for development. CACs are intended to be used in each area.

The new fixed target CAC rates will be as follows:

  1. $3.00 per SF for the gross floor area of all new multifamily;
  2. $5,500 per parcel for all new one-family residential lots over 375 m2;
  3. $4,800 per parcel for all new one-family residential lots under 375 m2.

The new CAC program is set to take effect July 1, 2016, though project applications already in process will be exempt.

Change Coming for City of Vancouver’s CAC Policy

Next week, City of Vancouver council will review a policy report that recommends changes to the Community Amenity Contribution (CAC) policy as part of an ongoing initiative to streamline and simplify the City’s overall approach to development contributions.

 

The major recommendations on changes to the CAC policy include:

 

1. Adjusting CAC target rates annually for inflation
One of the major recommendations is that current CAC fixed target rates will now adjust annually with inflation, just as the current DCL rates do. The proposed inflation rate would be based on a third party index for property and construction costs and would change to reflect “market conditions”. Moreover, there will be a “One-time Inflationary Adjustment Catch-Up to 2015”, as the areas with fixed rates have not been adjusted for several years. Here is a table showing current and proposed new CAC target rates:

CAC Table

The report indicates that the City will minimize any potential negative impacts, either on the
development industry or on the City’s ability to adjust CAC targets and DBZ (Density Bonus Zone) contributions, by:
  • reviewing recommended adjustments with industry stakeholders before applying annual inflationary rate adjustments;
  • carrying out periodic updates to recalibrate CAC targets and DBZ contribution rates. The recalibration of rates would be established by updating the public benefit strategy growth costs and then testing development viability for appropriate growth cost recovery
  • monitoring the pace of rezoning and redevelopment activity in each CAC target and DBZ contribution areas.

2. Administrative Updates to City-wide CAC Policy

The report also identifies some changes to the current overall CAC policy, including:
Removing $3.00 per SF CAC target for Standard Rezonings, and the 1.35 FSR exemption on small site rezonings
The $3.00 per SF CAC rate had been in place since 1999, and had only been used 22 times in 17 years – half of those for office buildings. The City is now proposing to remove this target rate and use a negotiated CAC approach.
Clarifying that CAC payments are due prior to rezoning enactment
Previously, cash-in-lieu payment of CACs could be made at either rezoning enactment or building permit issuance. The new policy will now require payment at rezoning enactment only.
The full report can be viewed here: http://council.vancouver.ca/20160531/documents/p1.pdf

Coincidentally, Council will also receive the Annual Report on Community Amenity Contributions and Density Bonusing for 2015 (the report can be viewed here: http://council.vancouver.ca/20160531/documents/a1.pdf) . Here are a few highlights:
  • in 2015, there were 42 rezoning approvals resulting in 2.4 Million SF of additional density
  • these rezonings generated a total of $103 Million in CACs
  • by comparison, there were 1,600 building permits under existing zoningCAC Table_1
  • in 2015, five large projects accounted for 65% of all CACs:

CAC Table_2

  • Cambie Corridor, Marpole and West End accounted for over 50% of rezoning density and CACs

CAC Table_3

  • There were 14 secured market rental housing projects approved in 2015, representing 1,192 units

CAC Table_4

  • in 2015, applications for density transfers totaling 160,000 SF were approved, reducing the heritage density bank down to 650,000 SF.
  • Affordable housing was the largest recipient of public benefit contributions (56%), followed by childcare facilities (19%), heritage, community facilities, and parks/open space/public art.

District of North Van Updates CAC Policy

The District of North Vancouver will review a report at council next week that seeks to update the District’s Community Amenity Policy, which has not been reviewed since 2010. The update was required due to increased development pressures and was brought forward partially at the encouragement of the development community. Coriolis Consulting assisted with the review of existing policy.

Here is an excerpt regarding the existing policy:

EXISTING POLICY:

The District of North Vancouver’s existing CAC policy includes two different approaches to
determine the appropriate value of a CAC, depending on the location of the rezoning:

  • In the designated Town and Village Centres (growth centres), the value of the CAC is
    determined through a negotiated approach, equivalent to 75% of the estimated increase in the market value of the property due to the rezoning. The reference to 75% of the increase in property value is to ensure that the CAC does not exceed the
    amount that is financially viable for the development project.
  • Outside the Centres, the CAC value is based on a target fixed rate per square foot of additional residential floorspace approved by the rezoning. Outside of centres, the CAC can be negotiated if the developer thinks the fixed rate is not appropriate or the rezoning exceeds the density identified in the OCP.

Below is an excerpt outlining the recommended changes to be implemented going forward:

“Recommended CAC Approach Outside Centres:

Staffs recommended approach to CACs outside of the Centres is:

1. Establish three separate fixed rate CAC categories outside the Centres with fixed rate
targets as follows:

(a) $6 per square foot (current rate $5) of increased permitted residential gross floor  area for any project with an FSR less than or equal to 0.8 FSR;
(b) $13 per square foot (current rate $5) of increased permitted residential gross floor area for any project with an FSR greater than 0.8 but less than or equal to 1.0 FSR
(c) $20 per square foot (current rate $15) of increased permitted residential gross floor area for any project with an FSR greater than 1.0

2. Negotiate the CAC for the rezoning of any properties that are currently improved with rental housing to take into account the specific details of any rental replacement requirement. The target for negotiations should be at most 75% of the increased value due to the rezoning .

3. Continue to allow negotiated CACs in the specific circumstances currently identified in the District’s policy, but change the target negotiated CAC to be a maximum of 75% of the increased value due to the rezoning, rather than “50% to 75%” of the increased value due to the rezoning as currently written.

Recommended CAC Approach Inside Centres:

Staff’s recommended approach to CACs in the Centres is:

1. Negotiate CACs for major, complex rezonings where it is difficult to determine an appropriate CAC rate in advance of a development application, including:

  • Large sites that have significant land dedications and on-site infrastructure requirements.
  • Sites which include existing rental housing that the District would like to see replaced as part of any redevelopment.
  • Higher density mixed-use sites, such sites in the CRMU 2 and CRMU 3 OCP designations (i.e., mixed-use projects over 1.75 FSR).
  • Highrise residential projects (over 6-storeys in the RES Level 6 designation).
  • Sites identified for a significant on-site amenity.
  • Sites currently zoned for industrial use.
  • Applications that require an OCP amendment.

The target for negotiations should be a maximum of 75% of the increased property value due to the rezoning.

2. Establish new fixed rate area inside the five Centres with a fixed rate target of $20 per square foot (presently negotiated) of additional permitted residential floorspace. The fixed rate areas for inside centres may be found in Schedule 2 of the Draft CAC Policy attached to this report.”

Source: http://app.dnv.org/OpenDocument/Default.aspx?docNum=2796413

Market Spotlight: City of Vancouver CACs and Density Bonusing

The City of Vancouver has released an administrative report that provides information on Community Amenity Contributions (CACs) and Density Bonusing for 2014. These types of reports highlight some interesting market information. Of note, 2014 generated more than the previous two years combined, primarily as a result of the Oakridge Centre rezoning approval.

Here are few highlights:

  • In 2014, there were 50 approvals of additional density resulting in a net increase in floor area of 6,500,000 SF and total public benefit in the amount of $234 Million.
  • The rezoning of Oakridge Centre in May 2014 represents 60% of the density and CACs generated
  • 80% of the public benefits are provided as on-site contributions, and 20% were cash in-lieu
  • 95% of additional density approvals aligned with recently approved community plans
  • The heritage density bank has been drawn down to 800,000 SF, a 50% decrease since the creation of new heritage transfer density was put on hold in 2009
  • There were 14 approvals for secured market rental housing in 2014, or 1,073 apartment units

CAC report_2015 CAC report_2015_1CAC report_2015_3CAC report_2015_4

For those interested, the report provides a full list of all rezoning applications approved by Council in 2014 that generated additional density and public benefits.

City of North Vancouver Seeks to Confirm Density Charge Policy

The City of North Vancouver council will be considering a policy report outlining a formalized density bonus and community benefits policy that was expected after the adoption of the new Official Community Plan back in April.

If endorsed by Council, the new policy will apply to all rezoning applications that seek an increase in bonusable density within the OCP guidelines. The bonus system breaks down into two categories:

  1. Category ‘A’ Bonus. An increase in density up to the OCP Schedule ‘A’ density, or effectively the baseline density for rezoning or sites that are already pre-zoned. The amenity contribution is $20.00 per SF of increased gross floor area above existing zoning.
  2. Category ‘B’ Bonus. An increase in density that exceeds the OCP Schedule ‘A’ density, up to a maximum bonus amount set out in the OCP. This type of bonus would only be for rezoning of higher density. Within the Category ‘B’, there are four paths to providing the requisite benefits, as follows:
    1. Amenity Contributions (CACs) – $140 per SF of increased density in the Lonsdale area; $110 per SF outside this area. City reserves right to negotiate a different rate in unique circumstances.
    2. Secured Rental Housing – Bonuses will be permitted for properties where the new project is secured as 100% market rental; however, mixed rental and condo development will now not be permitted on existing rental apartment sites.
    3. Employment Generating Use – Bonuses for commercial uses above 1.0 FSR will not be charged a contribution.
    4. Heritage Conservation – Bonuses may be offered outside of this policy in unique circumstances.

For those not familiar, here is a depiction of the above Bonus categories:

CNV_OCP Density