Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: land use planning

  • More homes, less rezonings

    One of the really positive things that is happening in the world of Toronto land use planning is that the minimum scale of development that is permitted as-of-right continues to grow. We’ve gone from fourplexes to 6-storey apartments, and now we’re talking about mid-rise buildings (6-11 storeys) and even some tall buildings (12 storeys or more).

    What this ultimately means is being able to build without a rezoning application. That means no site specific negotiation, and no fighting over whether the building should be 32 meters tall or 30.5 meters tall with a 2.4 meter stepback because of shadowing concerns on someone’s heritage-designated garden gnome. It means getting under construction sooner.

    Here are some of the specific ideas being reviewed:

    • Expand the number of streets designated as “Avenues” throughout Toronto (Avenues are a defined term and where we have decided that mid-rise buildings should go)
    • New Official Plan policies that would encourage more mid-rise buildings on Avenues
    • Eliminate the rear angular plane requirement (currently a mid-rise performance standard); this is expected to produce ~30% more homes in your typical mid-rise development
    • Increase as-of-right permitted heights to 6-11 storeys (the city estimates that this will unlock ~61,000 additional homes)
    • Introduce “transition zones” between Avenues and low-rise neighborhoods, which could then accommodate things like low-rise towns and apartments up to 4 storeys (it’s worth noting that transition zones were initially part of Toronto’s mid-rise performance standards but then got removed for some reason)

    This is meaningful progress. Let’s enact and keep going.

  • Living vs. just visiting — do these two things require different built environments?

    Many years ago I was in a community meeting talking about a proposal we had to add retail uses adjacent to a park. Residential was the highest and best use, but we were excited by what retail could do for the project and area. We were imagining something like a Parisian cafe where everyone would sit facing outward toward the park.

    Much to our surprise, the community was vehemently opposed. And when we eventually asked who had been to Europe and sat outside in a nice cafe, the response we generally got was, “yeah, we have, and it’s obviously nice there, when on vacation. But that’s Europe. It won’t work here and it’s not appropriate for the area.”

    Hmm. This raises all sorts of interesting questions. But for today, let’s ask this one here: Why is it that some people choose to live in places that are so different than the ones they visit when on vacation?

    Is it because we, as humans, want fundamentally different experiences when we travel? i.e. We want to escape from our current reality. “Oh look how novel this is.” In this case, I guess you could say that our markets are fairly efficient and people are getting the kind of lifestyles that they truly want, both at home and abroad.

    Or, is it because, for a variety of reasons, we’ve created rules and obstacles that force certain built form outcomes? We think the other ways won’t work. I often find myself in this latter camp, meaning that when I travel, I at some point end up thinking: “This is a good idea. I want to both move here immediately, and steal this idea and bring it back to Toronto.”

    How about you?

    Photo by DAT VO on Unsplash

  • Social media as zoning review board

    This is an interesting article about the neighborhood-based social network, Nextdoor, and how it has become a tool for housing politics:

    Overall, activists both for and against more housing regard Nextdoor as an increasingly influential and even critical tool in the fight, which conflicts with the platform’s marketing as a friendly, kinder social media. Rather than being the neighborhood bulletin board, Nextdoors around the country are looking more like the local zoning commission hearing.

    Housing debate is no stranger to social media, but in the case of Nextdoor, the audience gets focused down to the scale of a neighborhood. And that clearly changes things.

    For the full article, click here.

  • Our current public transit problem/opportunity

    Over the past few years, I have been writing about the fall off in public transit ridership that we have seen as a result of the pandemic. Most recently, I mentioned it in my predictions for 2023.

    This topic doesn’t seem to get a lot of air time, but it is a problem. Because the standard way to operate a transit system in North America is at a loss.

    According to this recent WSJ article, the average fare recovery ratio across the US is somewhere around 1/3, with the remaining 2/3 of operating costs being covered by public money.

    (Somehow Japan has figured out a way to make money on rail.)

    During the pandemic, federal aid was disbursed in order to maintain service levels. The MTA in New York, for example, received $15.1 billion. But these aid packages will eventually run out, and ridership has yet to fully return:

    New York’s subway system has regained about two-thirds of its pre-pandemic ridership with about 91 million trips in November, according to the MTA. But that is about 50 million fewer rides than in November 2019. Officials worry usage has stalled out at that level.

    In San Francisco, the Bay Area Rapid Transit, or BART, recorded 3.7 million trips in November—a little more than one-third of the ridership before Covid.

    The obvious answer is likely to be a combination of service cuts and/or more public money. But an even better answer would be to use this opportunity to figure out how to make our transit systems a little more Japanese.

    That is, let’s make them more financially sustainable. And yes, that is going to necessarily involve looking at how we build around and on top of transit.

  • We’re running out of land — or are we?

    The headline, here, is that “the US is running short of land for housing.” But if you read the article, you’ll see that the headline should probably read, “the US has land-use restrictions in place that make it unnecessarily difficult to build enough new housing.” Here’s an excerpt:

    Asking prices for homes in these new communities [the exurbs of Tampa] go as high as $900,000, in part because the land underneath is so valuable. That has a lot to do with land-use regulations.

    Tampa’s zoning rules prevent developers from building anything larger than a single-family home in much of the city. When officials for Hillsborough County, which includes Tampa, adopted zoning regulations in 1950, they said the measures were necessary to prevent overcrowding and traffic jams and would preserve the neighborhood character, all “with a view to conserving the value of buildings,” according to the regulations.

    If all you can build are single-family homes, then you’re going to need a lot more land compared to if you were allowed to build a bit higher and/or a bit denser. But it is a good way to ensure that supply remains somewhat scarce and that one is faithfully “conserving the value of buildings.”

    It is, however, worth mentioning that we have invented ways to use land more efficiently. The population density of Hillsborough County is somewhere around 1,200 people per square mile. The population density of Paris, on the other hand, is over 50,000 people per square mile.

    Somehow people still enjoy Paris.

  • Sustainable living means living in a city

    The UN’s Intergovernmental Panel on Climate Change (IPCC) has just published its latest climate change report. Available here. As a follow-up to this report, Dezeen spoke with Hélène Chartier of the sustainable urbanism network C40 Cities. And she makes some very good points about the importance of cities in combatting climate change.

    In fact, she goes so far as to say that sustainable living is only really possible, at scale, in cities. Because to live a more sustainable lifestyle, you need the right kind of infrastructure in place. And to have the right kind of infrastructure in place, you need density.

    This crucial point is often forgotten (though never on this blog). If you are truly concerned about climate change, then you should be for urban density. And if you are out there fighting against urban density, then your actions are undermining this global imperative.

    Chartier rightly points out that “architects have a huge responsibility” when it comes to addressing climate change. And this is entirely true. Their job is the built environment. But with all due respect to architects, the problems that need solving are ultimately much broader. Architects can only do so much if they’re hamstrung by dumb land use policies and angry neighbors, among other things.

    This needs to be a coordinated effort. We all have a huge responsibility.

    Photo by Kaspars Upmanis on Unsplash

  • Density bonus as inclusionary zoning offset

    Somebody on Twitter responded to my recent post about inclusionary zoning and asked: Aren’t all the upzonings that the City is already doing a kind of density bonus? In other words, and this is me elaborating here, why is there an economic “shortfall?” Why does there need to be any other sort of subsidy in order to mitigate the economic impacts of inclusionary zoning?

    A density bonus can mean and can be used in a number of different contexts. Sometimes it is used as an incentive with landowners, whereby they get a bonus on top of their sale price if the developer manages to achieve a certain amount of density on the site. But in this particular case — IZ subsidies — we’re talking about something else.

    We’re talking about density above and beyond what you might normally achieve on a particular site in order to directly offset — maybe partially or maybe entirely — the economic shortfall brought about by inclusionary zoning. The fact that upzonings are happening all over the city doesn’t necessarily qualify them as bonuses. In the case of Toronto, the market is just responding to out-of-date zoning.

    Here’s a specific example.

    Let’s say you have a development site with in-place zoning that would allow you to build 20,000 sf of density. This is the as-of-right or by-right density. No need to rezone the site. Just file your building permits and you’re off making things. If this is the most you could build, then the market would value the land based on this density. As we have talked about before, land is the residual claimant in a development pro forma.

    However, if the zoning was out of date and it was fairly clear that one could rezone the site and build up to 100,000 sf, then the market would no longer value the site based on its in-place zoning. It would instead value it based on its future expected density. Again, because land is the residual claimant, more density = higher land value.

    In this second scenario, the additional 80,000 sf is, in my view, not a density bonus. Give or take a bit here and there, it is the density that everyone is generally expecting. The market has already priced it in. A true bonus / subsidy, would be something above and beyond the base of 100,000 sf. Something that is only available to developers if they do X — which could be build affordable housing.

    Maybe the bonus is perfectly tuned to exactly offset the economic drag of doing X, or maybe the bonus is designed to serve as an incentive to do X. In this latter case, the bonus would more than offset the drag and be accretive to the pro forma, which would mean that every sensible developer would now want to do X. More carrot, less stick.

    One of the challenges with this hypothetical scenario is that, for such a bonus structure to work, you need to know the baseline that you’re bonusing against and you need to ensure that nobody gets the bonus unless they do the thing — the X. Using the above example, that means that the 100,000 sf needs to be fairly firm and that anything above that number only happens with the delivery of affordable housing.

  • The real smart city is going to be a crypto city

    Vitalik Buterin — who is best known as the cofounder of Ethereum — recently penned this post on his blog where he argues that “crypto cities broadly are an idea whose time has come.” (Credit to Shamez Virani for sending the post to me this morning.) There has been a lot of discussion over the years about the rise of smart cities. I for one am not really sure what that means besides the fact that it sounds good and it likely involves a bunch of tech and data collection. But maybe crypto can help.

    What Vitalik argues in his post is that we are now at a point in time where blockchain technologies have the opportunity to do two things for cities. One, we can take existing systems and processes and use blockchains to make them more “trusted, transparent, and verifiable.” That would be a very good thing. But the more interesting one is number two. We have the opportunity to use blockchains to create radically new forms of asset ownership (land and other scarce assets) and municipal governance.

    One specific example is that of a “city coin”, which cities like Miami are already experimenting with. Supposedly they are one of the first, which of course aligns with Mayor Suarez’s vision to position Miami as a preeminent tech and crypto hub. Though as Vitalik points out in his post, it’s important to maintain some optionality, especially since we are still very much in the early innings of this new frontier. (This recent episode on the Tim Ferriss Show had a great analogy in saying that the anthem at the beginning of the game isn’t even over yet.)

    So how might a “city coin” living on a blockchain work?

    Well let’s imagine that there are incentives in place for all of us who live in Toronto to own the Toronto coin (there’s still time to come up with a better name). You need it to pay your property taxes, you need it to pay for parking, and you need it to vote in the next election, among many other things. So there’s an incentive to buy and hold it if you’re a resident of this great city, but there is far less incentive to hold it if you don’t live here. (Maybe you own a bit of it because you’re a frequent visitor and/or your relatives live here.)

    One of the interesting things about something like this is that it would immediately create economic alignment. Now all of a sudden, everyone who lives in Toronto and owns Toronto coin would have a vested interest in seeing Toronto thrive. At the very least they would want to see the coin hold its value and ideally they would hope to see it appreciate.

    At the same time, the Toronto coin could be used for all sorts of governance matters. Take for example, land use and zoning decisions. What if we set things up such that these decisions weren’t made by the people who show up to community meetings in the basement of their local church but that they were instead made by everyone who holds the Toronto coin? i.e. The entire city, all of whom are, in a way, equity holders.

    In theory we could do this kind of voting today. However, part of the problem is that the economic alignment isn’t there without something like a Toronto coin. Right now a big part of the economic incentive rests with homeownership. If I own a home and a new development is proposed next to me, I am incentivized to do whatever it takes to selfishly maximize my own individual outcomes. And if that means no development and no more homes for people, then so be it.

    But what if we all had part of our net worth tied up in the Toronto coin? And what if when housing supply did not meet housing demand, the value of our coins dropped because it meant fewer residents (less demand for Toronto coin) and more people voting with their feet and moving to other geographies (more demand for some other coin)? This is one of the things about the crypto space. It turns everyone into evangelists because there are now strong economic incentives to be that way.

    Who knows if this is the way that things will actually play out. But it is part of the promise of crypto and it is not some pipe dream. It is already starting to take hold around the world and in the US in places like Wyoming and Colorado. For more on this topic, make sure to check out Vitalik’s full blog post.

  • Building cool things is not as easy as it may seem

    There was a good discussion on Twitter this morning about small-scale commercial uses in residential neighborhoods, like the coffee shop shown above on Shaw Street. In most residential neighborhoods in Toronto, this kind of commercial activity is not permitted if you were to try and initiate it today. The small convenience stores and bodegas that remain are often legal non-conforming uses. And while generally considered desirable in their current confirm, if you were to try and make a change, you could get caught in some municipal red tape where your grandfathered status suddenly no longer applies.

    That is exactly what happened in the case of the above coffee shop and, from the discussions that happened on Twitter this morning, it is a problem that is not unique to Toronto. Alex Bozikovic wrote about this coffee shop and this project in the Globe and Mail over seven years ago. Getting it approved and built was no easy task. And my friend Jeremiah Shamess — who renovated a similar and formerly commercial corner building in the area — ran into the exact same challenges.

    But let’s consider the other side of this argument for a minute. It’s easy to look at a great and well-designed neighborhood coffee shop like this one and say to yourself that it is obviously a desirable use and that we should be encouraging more of them in our residential neighborhoods. But what if it was a noisy late-night bar, a nail salon, or a massage parlor? Would your opinion change? Would it change if you were an immediate neighbor? It is perhaps easy to see why the fear of the things we don’t want has led us to sterilize our neighborhoods to the point where we no longer allow the things that we may in fact want.

    And herein lies the immense frustration that many of us have with our land use policies. There are countless examples of obviously desirable uses and built forms that are exceedingly difficult to execute on because of the barriers that we ourselves have put in place. Whether it’s a cool neighborhood coffee shop or new affordable housing, there are far too many examples of these sorts of projects being stuck in some kind of planning ether — sometimes for decades. We say and know that we want these things, but then it is frequently the case that we can’t get out of the way so that they can actually happen.

  • Planning staff reports

    A bunch of people have asked me lately about what they should do if they want to get smarter on land use planning and on the entitlement process for development projects. It was specific to Toronto, but I don’t think my answer is specific to only this city.

    I took a few planning classes in graduate school when I was in the US. But I was more focused on architecture and real estate, and so I did not leave school an expert by any means.

    I learned about the failures of euclidian zoning and about things like the Low-Income Housing Tax Credit, which always seemed like a sensible supply-side tool to get the private sector to invest in affordable housing.

    But what I have found most useful is to just read planning staff reports. These are the responses to actual development proposals and they show you how staff interpret the policies that are in place and how staff apply them to real buildings.

    I may be in the minority in that I actually find these reports interesting. But regardless, they are a great crash course in planning and development approvals and they can help you manage your entitlement risk.