Monday, April 28, 2014

Perhaps real estate prices should be legally capped off too

The following article highlights how corporations pressure governments to make decisions that negatively impact ordinary citizens.  I've mentioned how density bonuses or community amenity contributions (CACs) work in Burnaby where developers pay a fee in exchange for being allowed greater heights and more density for their projects.  The fees go into City funds that allow for amenities in the local area where the greater density has been allowed.

The provincial government has created guidelines for fee structures that cities can charge developers in exchange for the tremendous benefit that developers achieve in the form of greater profits.  The guidelines are merely that; guidelines.  Cities have been able to charge developers more than the guidelines for allowing greater density and developers have been paying the higher CACs because it is profitable to do so.

But the "poor" developers want protections with detailed limits on how much they have to pay for the benefit of increased profits...because they want to make even more profits than the hundred of millions that they already do.

It's amazing that corporations want the benefits of a free market economy where they can tremendously profit from a "free market economy" that has been Vancouver's real estate market over the past 20 years, but don't want the free market conditions to apply to them in the form the costs of participating in that real estate market.  Ordinary citizens are required to deal with the same type of free market conditions which has led to inflated real estate prices that have benefited who else but corporations.  If developers want "protections" from the free market, perhaps citizens should have the same protections to keep real estate affordable as well.  Let's cap real estate costs.  Not in the free market spirit?  Then forget about limiting CACs for developers.  Let's let market conditions apply to developers as well.  After all, what's fair is fair.

The question should be asked; if the BC Government places a cap on what municipalities can demand for CACs, how many people and who in the current BC Government will end up with jobs with the very real estate development companies that they will have helped as legislators?

Business inVancouver article below

Court could be the only recourse for property developers in fight with municipalities over CACs

Province lays ground rules for community amenity contributions, lacks enforcement measures

Mon Apr 28, 2014 12:01am PST
Developers might have no option but to sue municipalities that don’t respect provincial guidelines governing community amenity contributions (CACs).
The province’s Ministry of Community, Sport and Cultural Development recently released new guidelines following a two-year study of municipal practice with respect to CACs, which are charged at rezoning.
But consultant Alan Osborne – who drafted the guidelines – told the Urban Development Institute (UDI) last week that there’s no resolution process in place if municipalities ignore the rules.
“Someone has to take them to court,” Osborne said, in response to questions from Anne McMullin, president and CEO of the Urban Development Institute. “There isn’t an appeal board you can go to, the minister can slap them on the wrist, the minister can send letters, but ultimately, in British Columbia, the system is that somebody goes to court.”
While the province might consider entrenching the guidelines in legislation, Osborne said that would be a decision for the politicians if it’s clear that the guidelines haven’t achieved the change in municipal behaviour the province aims to effect with the new ground rules.
“The decision was to produce guidelines; obviously the next step is to monitor the use of guidelines by local governments. Then it’s a political decision about the next steps,” he said. “It’s now very clear what the province thinks about CACs; that foreshadows the next steps if they want to go that far.”
CACs have become a contentious issue for developers over the past decade as municipalities have seen the charges as a lucrative source of revenue for funding public amenities such as child-care facilities, affordable housing and space for community groups.
The charges are typically based on the projected change in a property’s improved value following rezoning.
Between 2000 and 2010, CACs charged to B.C. developers jumped to $720 million from $100 million.
The increase is a function not just of the upswing in rezonings and property values during the period, but funding cutbacks by senior levels of government that forced municipalities to seek alternative revenue sources.
“Somebody’s going to have to pick up that tab,” said Burnaby Coun. Nick Volkow, speaking in lieu of Mayor Derek Corrigan. “That’s why the development community has now got a bull’s eye on their foreheads.”
Vancouver staff have sought to establish fixed rates for CACs to give developers certainty, but it was one of several municipalities, including Richmond and West Vancouver, singled out for harsh criticism during the UDI discussion.
Whether developers act on their ongoing discontent with CACs – which can add millions of dollars to the cost of developments – is another question.
McMullin told Business in Vancouver that litigation is hardly a positive or profitable way to do business.
The industry would most likely ask the province’s attorney general to intervene if municipalities don’t bring CACs in line with the guidelines, and potentially create new legislation to avoid unleashing costly court battles.
“I think if we can bring in legislation based on these guidelines, then we will avoid court cases,” McMullin said. “I don’t think anybody finds any value in going to court.” •

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