Municipalities asked to help fund transit in B.C.

Anne McMullin notes that whether it’s the Canada Line, proposed projects like the subway along Broadway in Vancouver, or light rail in Surrey, transit causes property values to shoot up.

A portion of that increase is taken by cities through community-amenity contributions from developers. Some of that should be reinvested in transit, which is typically financed by senior levels of government, the UDI executive said.

“The industry currently, in some municipalities, pays an enormous amount—tens of millions of dollars above the development-cost charges,” McMullin told the Georgia Straight in a phone interview. “Right now, it’s just going into the municipality that has benefited from existing transportation infrastructure, such as the City of Vancouver. The Canada Line created an enormous increase in value along that line, and developers are developing along that line because the buyer wants to buy along there.”

In 2011, Vancouver collected $180 million from developers across the city in exchange for allowing them to build more through rezoning. The money was spent mostly on affordable housing, community facilities, heritage preservation, and parks and open spaces. According to a city staff report, $3.2 million was allocated for “transportation”. The Straight asked the city’s corporate communications and engagement department for details about these transportation expenditures but no information was provided by deadline.

“That money has gone right back to the City of Vancouver—not a portion to TransLink or even a portion back to the province,” McMullin said about public benefits paid by developers. “So I think there are opportunities to look at that: how do we distribute or apply or allocate those community-amenity contributions?”

Two municipalities in the Lower Mainland have demonstrated that cities can work with developers to build transit infrastructure.

In Richmond, a new Canada Line station at Capstan Way (with an estimated cost of $25 million) will be financed by developers of new residential units in the area. Developers are also funding the $20 million Lincoln Station on the future Evergreen Line in Coquitlam. In exchange, developers will be allowed to construct more homes in these transit areas.

“Whether you build the station or contribute to the line, whichever way you cut it, I do think that is a very valid opportunity and a valid allocation of funds,” McMullin said.

In December 2012, the Victoria Transport Policy Institute released a study on transit financing achieved through a model called land-value capture. According to the authors, many planners and economists suggest that “cities could benefit by funding transit system development costs and a major portion of operating costs from land value capture.” They can do that “by taxing a portion of the additional value of adjacent properties that result from transit accessibility”.

In a January 31 letter to Transportation and Infrastructure Minister Mary Polak, the Mayors’ Council on Regional Transportation presented land-value capture as one of five options for funding transit.

According to the mayors’ council, which includes Vancouver’s mayor, Gregor Robertson, “there needs to be a negotiated sharing” of community-amenity contributions paid by developers.

However, Vancouver council’s lead person on transit, Geoff Meggs, doubts whether this model will work for the city on projects like the proposed $2.8-billion underground Broadway transit line.

“It might work best with the UBC setting, where UBC is the landowner and developer and is able to, as they do, make decisions to allocate land for housing and then keep the revenue from that housing,” Meggs told the Straight in a phone interview. “So they may be able to do that for transit; I don’t know.”

Meggs noted that the model works well in Hong Kong, where the transit authority there is also the developer of properties.

“We don’t object to looking at it and exploring it,” Meggs added. “But it’s an innovation that will be hard to implement. And it would be difficult to calculate what the share of improved property value was attributable to, say, general economic growth and how much was due to transit. I’m sure there’s ways to do it, but at the same time, it varies.”

McMullin is hopeful that when Adrian Dix addresses members of the UDI for the first time this Thursday (March 14) at Vancouver’s Hyatt Regency hotel, the B.C. NDP leader will include transit financing in his talk.

“We all know that municipalities, the province, and the federal government are all cash-strapped,” she said. “So what are the priorities? The taxpayers are faced with huge costs in terms of improvements to our waterworks, sewage, and there’s huge demand for transportation in order to keep our economy going. We need to look at how do we allocate funds, and how do we allocate the funds regionally?”