So, what is the right density? Some additional musings on the Broadway Plan.

I recently sent a message to Theresa O'Donnell. Director of Planning and General Manager of Planning, Urban Design & Sustainability. I don't know if she received it since I didn't receive any acknowledgement, but I did send a copy to the Mayor's Office and members of Council. Below is the message:  

Flawed economic modeling for Broadway Plan heights and densities.

Theresa, I have just reviewed your closing comments document. Having spent five decades developing market and non-market housing in the public, private, and institutional sectors, and often been the proponent for greater heights and densities, I must tell you that while I agree higher densities are required to deliver affordable rental housing, the proposed FSRs and heights as set out below are deeply flawed. 

I would suggest that the land values will be determined by the allowable FSR and heights, not the other way around.

I understand that Coriolis was involved in undertaking fiscal analysis for the city, and while I have known and respected this firm for decades, they are not always right. 

For example, they were wrong in predicting what might happen to property values along Cambie Corridor when they set the CACs. 

Who else has provided the following questionable data? 

• Along Broadway min. 8 FSR (20+ storeys) is required for market rental and office to be financially viable. 10-12+ FSR (30+ storeys) is required for rental with 20% BMR.

• In residential areas, min. 5.5-6.5 FSR (18-20 storeys) is required for rental with 20% BMR

These FSRs are most inappropriate for a city that does not aspire to be New York. I hope Council does not approve this level of density and height, especially in the absence of more park space and community amenities.

I'll be happy to discuss this further. 

While I didn't hear back from Ms O'Donnell, I did receive a response from Councillor Jean Swanson who wanted to know 

"So, Michael how much density do U think would be required for say 30 percent affordable or 40 percent? Thanks. "

I was pleased to receive this question and would like to share my response to Councillor Swanson

You have asked what the required density is to achieve different levels of rental housing affordability. Unfortunately, there is no correct answer since although land costs are a critical cost consideration affecting affordability, there are five other cost considerations that impact housing prices and rents.

These are construction costs, soft costs, marketing, financing (interest rates), and profit. (See attached slide presentation.)

As these costs, especially construction and financing costs go up and down, the cost to create housing goes up and down. I therefore do not think we should attempt to establish Building Heights and FSRs based on certain land value assumptions today since other cost will fluctuate over time.

In addition, the required density will also depend on whether there are federal and provincial subsidy dollars available for a project.

For these reasons, we should do what we have traditionally done; establish densities based on sound physical planning practices. How many people do we want to accommodate around new transit stations? What floor space ratio and building height is appropriate next to lower density neighbourhoods, recognizing they too will change over time.

And based on the anticipated/desired population increase, what is the required amount of new park space, community facilities, etc. and where might they go?

It is simply wrong to say 

• a minimum of 8 FSR (20+ storeys) is required for market rental and office to be financially viable. 10-12+ FSR (30+ storeys) is required for rental with 20% BMR.

• In residential areas, min. 5.5-6.5 FSR (18-20 storeys) is required for rental with 20% BMR

These FSRs are most inappropriate for a city that does not aspire to be New York.

I therefore advocate establishing Building Heights and FSRs that are appropriate from a physical planning perspective, noting that currently, FSRs generally range between 1.5 to 3. While I agree the transit stations warrant special consideration, the density in other areas might be doubled for now depending on location, with bonussing to be determined later over time for more affordable housing projects, considering the other five cost considerations as set out in the attached.

I hope this is helpful. Feel free to share with others to see what they think of my musings! Cheers

Below are the slides I prepared which review six key cost components of housing.