CAC's are how municipalities are financing growth. They are contributions made by developers who are successful in obtaining rezonings. The current city policy is that they be approximately 75% of the increase in land value upon rezoning. I think this is wrong, for reasons set out below.
I am not opposed to the city demanding money from developers who successfully rezone land. However, I believe the amounts should be predetermined, based on the cost of providing services, and what will be economically viable....to the extent that they are not so great that they disuade a developer from seeking a rezoning.
Why do developers seek rezonings? Because, and I say this advisedly.....the city oftentimes does not zone land for its most appropriate form of development, so that developers will be encouraged...that word should be in quotations....to come forth with rezoning applications, during which he/she and the city can negotiate the appropriate CAC. I refer to it as "let's make a deal".
While the City of Vancouver is confident that it is legally acceptable that CAC's be 'extracted' in return for rezonings, other jurisdictions are not. Therefore, they require the developer to sign a letter that says the CAC's are a voluntary 'gift', not an extraction! I'm not making this up!
So today, Brent Toderian, the very articulate and forceful Director of Planning spoke to the Urban Development Institute. There was a large audience. Prior to his talk, I suggested that I hoped he would include the topic of CAC's in his talk, and he assured me he would.
His presentation was very good, and when it was over, the moderator asked for questions. Not surprisingly, no one asked a question, so not surprisingly, I did. (In fact, Brent assured his table that I would be the first person to ask a question!)
I asked Brent why the city thought it was a good idea for CAC's to be based on appraised land lift, rather than related to the cost of providing services. (Had I had the time, and wanted to make a speech, I would have added that it is oftentimes difficult to determine the 'lift', and this creates much too much uncertainty for all parties.)
Michael, Brent replied, if the CAC's were tied to the cost of providing services, they would be much higher, and not affordable. A very cute answer!
So tonight I sent Brent an email, which I am reprinting below. I'll welcome any comments.