Quote:
Originally Posted by rofina
Not at all.
I do think the buyers were deceptive in their intentions based on the facts that have been made available through FOM requests from activists.
The Liberal Govt got played, and rolled by foreign interest. Its really that simple. They are ultimately responsible for making awful deals, and this is one of many.
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Get the facts right.
Re: Little Mountain
Little Mountain | Why the Struggle for Social Housing is More Pressing Now than Ever
http://spacing.ca/vancouver/2012/01/16/5345/
[EDITORS NOTE: A special thanks to Andrew Witt and the fine folk at The Mainlander where this piece was originally published.]
The new plan for the redevelopment of Little Mountain neighbourhood in East Vancouver has been released to the public. The plan calls for wholesale gentrification of the Riley Park-Little Mountain neighborhood. The 15-acre site that previously held 224 units of social housing will be replaced with 2,000 units of market condominiums.
In exchange for a zero-percent increase in the amount of affordable housing on the site, the neighborhood will be transformed by luxury condos and retail, putting upward pressure on local property values. Like in other working-areas of Vancouver, this new high-end development will usher in rent increases, more renovictions and even more demolitions.
In Vancouver, there are on average two home demolitions per day. The Little Mountain plan ensures that the rate of demolitions will be particularly high in the Riley Park area. In addition to the demolition of Little Mountain social housing, the city has its sight set on demolishing all single-family homes at the north-east corner of the Little Mountain property.
Even though evictions and displacement are systemic throughout Vancouver, the city has not conducted a social impact study to understand the possible social effects of these demolitions and mega-projects. When asked at Thursday’s press conference whether the City plans to conduct such a study, Senior Planner Ben Johnson said “No,” claiming that there are no impacts because “homes are going for $1million in the neighborhood.” According to the city, the renters who make up large part of Little Mountain, Riley Park, Kensington-Cedar Cottage, Sunset, and Mount Pleasant are not part of the equation.
The new plan announced by the private developer, Holborn Group, consists of sixteen towers of luxury condominiums. There are nine towers planned at ten to fourteen stories, while the rest of the density is spread out between four to nine stories. It is assumed that Holborn bought the property from the provincial government for a price fixed to existing levels of zoning, at four stories, while committing to replace the 224 units of social housing.
This “one-for-one” deal is a coup for Holborn because on a mega-project of this size, the city would normally apply its mega-project housing policy requiring that 20% of all units be social housing. The planned 2,000 units would normally accompany at least 400 units of social housing, but in this case the Memorandum of Understanding (MOU) signed between the City and the Province assures Holborn that only 224 units are necessary. Furthermore, low-income tenants have been forced into the precarious waiting room of history. The first phase of the project will now not be completed until 2017 at the absolute earliest, even though all replacement housing was promised to be completed by 2010 at the latest.
When Holborn bought Little Mountain, the land was zoned for four stories. Holborn claims to have paid an above-market rate because the Province promised that the land would be upzoned in the future to allow more condo units. Of course, rezoning is a City power, outside the Province’s jurisdiction. If the Province indeed made a guarantee to Holborn that the land would be rezoned, then the Province was on the one hand attempting to undermine the local community planning process (including the existing Riley Park Community Vision), and on the other hand seems to have misrepresented the Province’s powers to Holborn. However, there is no reason to feel sorry for Holborn. Holborn has more than enough lawyers to know exactly what they were getting into. The most likely scenario is that the Province and Holborn colluded to strong-arm the City and undercut local planning processes.
The Province’s strong-arming seems to have worked on the City, as the MOU signed by the City and the Province assumes that there will be future re-zoning — even though increases in zoning would “contradict” the existing Riley Park Community Vision of four stories. The under-selling of a vast parcel of land to a private developer is reminiscent of the infamous sale of Expo lands/North False Creek land to Concord Pacific in 1988. In that case, the Province also tried to guarantee a rezoning without consulting the city or local community.
In Vancouver, land-value is tied to the amount of development allowed on a site, which city planners call Floor Space Ratio (FSR). An FSR of 1 means that the developer can build enough square-footage to cover the entire property to one storey, while an FSR of 2 would allow double that square-footage. Under Little Mountain’s current zoning, the FSR is set at 2. According to the City’s calculations, increasing the FSR to 2.8 would instantly increase the land value by $40M — probably an under-estimate. This increase in land value is called the “land lift.” Unless the City attempts to recoup this value, the money will go directly into Holborn’ pocket as extra-profits, over and above ‘regular’ profit rate of 15%.
According to an independent economic report by Coriolis consultants, the ‘land lift’ to an FSR of 2.8 would allow the city to recoup about $40M from Holborn. In reality, the number would be less because the city normally keeps a maximum of 75%-80% of any value generated from a land-lift — put another way, the city on average gives away at least 20% free money to the developer on any given deal where the zoning happens after the sale. In return, the developers donate to the two main political parties, NPA and Vision.
City of Vancouver Land Lift Calculation for Little Mountain.
Even if the City recoups 80% of the increase land value, Holborn will keep 20% of these extra profits, which in this case may be $10M. In addition to these extra ‘land-lift’ profits, Holborn will still plan to make the ‘regular’ 15% profit on the entire project. Furthermore, the rezoning increases the over-all size of the project dramatically, so this ‘regular rate’ now constitutes 15% of a much larger pie.
To summarize, the current City administration agrees to a regular profit rate of 15%, calculated after construction and land costs. All city calculations are made to guarantee that a developer will earn super-profits at monopoly rates, and that a rate below 15% is deemed “not viable” — of course, the ceiling can be pushed higher and 15% only represents a guaranteed minimum. Then, when the city upzones a property, this becomes 15% of a larger pie. On top of that, the increased land value (land lift) is only partially recouped by the city, the remainder being extra-profits for the developer. Finally, these profits are back payments to the development industry for financing municipal election campaigns.
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