Metro Vancouver, which includes the City of Vancouver and 20 other municipalities, is proposing to increase its development cost charges (DCC):
Metro Vancouver is proposing to increase DCCs by roughly $23,000 per new single-family home; $21,000 per new townhome; and $14,000 per new apartment. For example, fees for a townhouse in Vancouver will rise from $10,027 today to $30,861 by 2027.
In response to this, federal housing minister, Sean Fraser, has just pulled $138 million in funding that was intended to accelerate housing permits and new affordable housing projects in Surrey and Burnaby.
This makes some sense. Because it is pretty weird to say, "Hey, we need more affordable housing. Give us some money for this and, while you do that, we're also going increase the cost of building new housing."
Of course, this is the whole growth-should-pay-for-growth mantra. And supposedly, there's growth-related infrastructure that needs to be built.
To be fair, Metro Vancouver is also proposing to increase its property taxes: 12% in the first year, 11% for the next two years, and then 5% for the next three years. So this is not all going onto new supply.
I don't know enough about the finances of Metro Vancouver to comment on these numbers specifically, but I do think it's important that policy makers understand what the current market environment means for new housing.
It is difficult, and in many cases impossible, to underwrite new housing projects today. Which means that even if all fees and charges were to remain unchanged, we are going to see a decrease in new housing supply.
Last night when I was thumbing through Twitter before bed, I came across this blog post describing Vancouver’s land use types. The blog itself is called Mountain Doodles, but it’s not exactly clear who the author is.
In any event, what she/he did was analyze Vancouver’s land use dataset to come up with a series of charts that break down the percentage of each type: residential single detached, residential low-rise apartment, commercial, green space, and so on.
Here’s what the chart looks like for Metro Vancouver:
And here’s what it looks like for just the City of Vancouver, proper:
When you look at the metro area, green / open space dominates. Although, the author states that, given the dataset, there could be a small overstatement of green space. There’s also the question of where the overall boundary was drawn.
When you look at only the City of Vancouver, it’s land for residential housing (detached and duplex) and roads that dominate, with green / open space coming in a somewhat distant third.
Of course, this does not speak to the intensity in which any of the above land might be used, such as the apartment lands (i.e., the third dimension). But from a two-dimensional perspective, you certainly get a sense of what we – for better or for worse – have chosen to privilege.
Hong kong subway ( central station ) by Renaud Maurouard on 500px
Earlier today it was announced that Metro Vancouver voted “no” to a 0.5% sales tax increase that would have been used to fund a $7.5 billion regional transportation plan.
Roughly 62% of respondents said “no”. And not surprisingly, the percentage of people who voted “no” increased as you moved outward towards the suburbs. But even the City of Vancouver itself sided slightly with “no” at 50.81%.
Since I’m not that plugged into the Vancouver scene, I’m not going to comment on this issue. But hopefully you all will in the comments below. I know that a lot of you are incredibly passionate about this.
Instead, I’d like to pose two questions.
Firstly, why is it that Asian transit operators seem to be so much better than North American transit operators at recovering their costs through fares? (Urban density and car ownership likely have something to do with it). And secondly, why hasn’t Hong Kong’s famous “rail plus property” transit model been exported to North America?
For those of you unfamiliar with Hong Kong’s Mass Transit Railway Corporation, here’s how much money they make (via The Atlantic from 2013):
The Mass Transit Railway (MTR) Corporation, which manages the subway and bus systems on Hong Kong Island and, since 2006, in the northern part of Kowloon, is considered the gold standard for transit management worldwide. In 2012, the MTR produced revenue of 36 billion Hong Kong Dollars (about U.S $5 billion)—turning a profit of $2 billion in the process. Most impressively, the farebox recovery ratio (the percentage of operational costs covered by fares) for the system was 185 percent, the world’s highest. Worldwide, these numbers are practically unheard of—the next highest urban ratio, Singapore, is a mere 125 percent.
In addition to Hong Kong, the MTR Corporation runs individual subway lines in Beijing, Hangzhou, and Shenzhen in China, two lines in the London Underground, and the entire Melbourne and Stockholm systems.
And here’s how they do it (also via The Atlantic):
Like no other system in the world, the MTR understands the monetary value of urban density—in other words, what economists call “agglomeration.” Hong Kong is one of the world’s densest cities, and businesses depend on the metro to ferry customers from one side of the territory to another. As a result, the MTR strikes a bargain with shop owners: In exchange for transporting customers, the transit agency receives a cut of the mall’s profit, signs a co-ownership agreement, or accepts a percentage of property development fees. In many cases, the MTR owns the entire mall itself. The Hong Kong metro essentially functions as part of a vertically integrated business that, through a "rail plus property” model, controls both the means of transit and the places passengers visit upon departure. Two of the tallest skyscrapers in Hong Kong are MTR properties, as are many of the offices, malls, and residences next to every transit station (some of which even have direct underground connections to the train). Not to mention, all of the retail within subway stations, which themselves double as large shopping complexes, is leased from MTR.
I believe that we could do this too. So hopefully we can have a great discussion about it in the comment section below.