Quote:
Originally Posted by officedweller
|
That report that you found is for the form of development.
This is the rezoning report that added an extra floor. You'll see that it wasn't just the difficult market conditions, but also that Wesbank were very unhappy that Holborn came along with an equally tall tower right across the street. (I recall that their owners made it clear at the public hearing that they didn't want to look at another tower either). Nevertheless, even though they had paid an amount assessed as 94% of the land lift for the rezoning, they still paid a token additional CAC (and DCL) for the extra floor.
I get you general point that in a falling market a developer may have paid too high a CAC (and maybe too high a land price) and so find themselves unable to make a project work. That was sort of true with Jameson House, which was a very fancy expensive design with expensive on-site heritage preservation; in the end Bosa stepped in and completed it. Jameson reemerged and are now developing the 28 storey rental on West Broadway. But equally in a rising market a developer might have paid a CAC based on selling at $800 a square foot, and then the developer sells at $1,000 and the City misses out on a windfall profit with a much lower proportion of the actual land lift than had been calculated.
It's not a perfect system by any means, but it's a mechanism to try to ensure that growth above the base zoning, that adds additional demands for services provided by the City, contributes something to the City's needs. I suspect that CACs aren't really a big reason why rezonings are slowing down, and the City of Vancouver isn't seeing as many deals at the moment. Several projects were marketed and aren't proceeding, suggesting sales of new product aren't going well. That's probably because we're seeing far fewer, if any investor, or flipper purchases. In the past six months the pandemic is obviously a factor. Apart from Terrace House we haven't seen any project stop, or developer call in the receivers, as we've seen in previous slowdowns. Development might pick up again, or it may stay stuck in the doldrums. There's a lot of fear that not all the pre-purchased units in the projects already underway will complete, so it's not surprising the developers are waiting to see how things go. These days, if the units don't sell, I wonder if they then have to pay the empty home tax?