Time for Vancouver to Tear Down Its Viaducts?

[logan5]

The City owned land that flanks Main Street is suppose to be all rental, last time I heard, so there is not much potential for CAC money from that land. I don't know why the City wouldn't leverage that property as much as possible by allowing much higher density. You could have 900m units of rental as well as 900 units of market condo and reap all the benefits.

[Changing City]

Originally Posted by WarrenC12

That soft boom you hear in the distance is Vin's head exploding.

Ah, I thought they were shooting another movie. Using GenWhy's numbers, If the developer is adding an extra 1.275 million square feet of residential space, and they're paying a CAC of $254 per square foot (which on $1,000 per square foot+ condos doesn't seem outrageous), that generates a CAC of $324 million.

[Vin]

Originally Posted by WarrenC12

That soft boom you hear in the distance is Vin's head exploding.

Yeah it is. The City just extorted 325 mil from a developer. I wonder how much they are left with after everything is paid out. There needs to be at least 3,000 to 4,000 units of luxury housing on the site for them to be able to pay out that much.

Originally Posted by Changing City

Ah, I thought they were shooting another movie. Using GenWhy's numbers, If the developer is adding an extra 1.275 million square feet of residential space, and they're paying a CAC of $254 per square foot (which on $1,000 per square foot+ condos doesn't seem outrageous), that generates a CAC of $324 million.

That means they are paying 25% of their gross revenue, assuming at $1,000 psf during sales for the City? Whew! If only there are so many buyers. Developers may see themselves bleeding money at the end of the day.

[GenWhy?]

Originally Posted by Changing City

Ah, I thought they were shooting another movie. Using GenWhy's numbers, If the developer is adding an extra 1.275 million square feet of residential space, and they're paying a CAC of $254 per square foot (which on $1,000 per square foot+ condos doesn't seem outrageous), that generates a CAC of $324 million.

Exactly. You're essentially building a new community.

[Changing City]

Originally Posted by Vin

Yeah it is. The City just extorted 325 mil from a developer. I wonder how much they are left with after everything is paid out. There needs to be at least 3,000 to 4,000 units of luxury housing on the site for them to be able to pay out that much.

You could read the application, or the Policy report. I'm not sure how you can characterize an offer from the developer as extortion, but they offered a package of benefits worth $324 million for a total build of 1.6 million square feet. Only 1.275 million square feet was bonus space, so that what generates the CAC, at $254 a square foot.

Presumably Concord's rezoning should include an offer of at least a similar value, if not more, as they're being allowed a couple of taller (and therefore more valuable) towers.

[Vin]

del

[Vin]

Originally Posted by Changing City

You could read the application, or the Policy report. I'm not sure how you can characterize an offer from the developer as extortion, but they offered a package of benefits worth $324 million for a total build of 1.6 million square feet. Only 1.275 million square feet was bonus space, so that what generates the CAC, at $254 a square foot.

Presumably Concord's rezoning should include an offer of at least a similar value, if not more, as they're being allowed a couple of taller (and therefore more valuable) towers.

You know if it's not financially viable, the developer can just refuse to build, right?

[Changing City]

Originally Posted by Vin

That means they are paying 25% of their gross revenue, assuming at $1,000 psf during sales for the City? Whew! If only there are so many buyers. Developers may see themselves bleeding money at the end of the day.

It's calculated as 75-85% of the increased land value as a result of the rezoning. Don't forget it was bought as industrial land with no rights to residential use. So they got the land for next to nothing compared to what it's worth today, and they get to keep about 20% in land lift as well as all the profit from the 'as of right' space. It's exactly the same as every other rezoning. The land lift here will be one of the highest in the city, as the units will probably sell for well over $1,000 per square foot, and the industrial land value was low.

[GenWhy?]

Originally Posted by Vin

You know if it's not financially viable, the developer can just refuse to build, right?

Land is already rezoned so it's not that bad.

[Changing City]

Originally Posted by Vin

You know if it's not financially viable, the developer can just refuse to build, right?

Of course, and the City can turn down the rezoning too, if they don't think the offer represents a reasonable return for allowing all that extra, valuable density.

[GenWhy?]

I'm not sure who in the city ATM for condos near downtown are selling at $1,000 sf.

[Vin]

Originally Posted by Changing City

Of course, and the City can turn down the rezoning too, if they don't think the offer represents a reasonable return for allowing all that extra, valuable density.

Hence the money isn't guaranteed. Do take note that the offer came about at a time when Vancouver was the darling of condo investors. It has since gone south, literally. Not sure if developers are so willing to take up such a huge financial risk today, meaning financing the viaduct demolition is also not guaranteed. Therefore we get the hush hush from the City.

At this time, I think the City needs the developers more than the other way round, so I don't think it can afford to be cocky.

[Changing City]

Originally Posted by Vin

Hence the money isn't guaranteed. Do take note that the offer came about at a time when Vancouver was the darling of condo investors. It has since gone south, literally. Not sure if developers are so willing to take up such a huge financial risk today, meaning financing the viaduct demolition is also not guaranteed. Therefore we get the hush hush from the City.

There's no hush hush. The current spending is in the budget. There's a deal with Canadian Metropolitan, already recently rezoned. The City will get a cash payment they need towards the viaduct replacement cost - which isn't half a billion dollars - in exchange for the units that can now be developed on the Plaza of Nations site. Concord just finished building The Arc. Resales start at $1,200 per square foot, and they're asking over $1,700 for upper floors. Much of the new Plaza of Nations buildings are waterfront, and the next Concord buildings will be park fronting or waterfront, so unless the entire market collapses, in which case the viaducts replacement will be on hold, then it's likely to proceed with the funds paid from the rezoning.

[Vin]

Originally Posted by Changing City

There's no hush hush. The current spending is in the budget. There's a deal with Canadian Metropolitan, already recently rezoned. The City will get a cash payment they need towards the viaduct replacement cost - which isn't half a billion dollars - in exchange for the units that can now be developed on the Plaza of Nations site. Concord just finished building The Arc. Resales start at $1,200 per square foot, and they're asking over $1,700 for upper floors. Much of the new Plaza of Nations buildings are waterfront, and the next Concord buildings will be park fronting or waterfront, so unless the entire market collapses, in which case the viaducts replacement will be on hold, then it's likely to proceed with the funds paid from the rezoning.

The demolition is supposed to be 2020, no? With so many other infrastructure works related to the tear-down, it would be dumb to wait for developers to pay in phases, because for things to work, the City needs all the 500 mil of funding secured. Otherwise, this whole area is going to be in a total mess I have to say and will be stretched out for years.

With that said, the City wouldn't even have to worry about all the nonsense if they decide to keep the viaducts, and could've used the funds to put in the streetcars, for instance.

If you add in all the tie-ins, it is half a billion.

[Changing City]

Originally Posted by Vin

The demolition is supposed to be 2020, no? With so many other infrastructure works related to the tear-down, it would be dumb to wait for developers to pay in phases, because for things to work, the City needs all the 500 mil of funding secured. Otherwise, this whole area is going to be in a total mess I have to say and will be stretched out for years.

With that said, the City wouldn't even have to worry about all the nonsense if they decide to keep the viaducts, and could've used the funds to put in the streetcars, for instance.

No - the demolition will happen once the money is in place. The earliest that could be was 2020, but as the Concord rezoning hasn't happened yet, it seems likely to be later. It isn't $500 million. The area has been the way it is for years already, and all that will happen is that it'll stay the same, unless we have an earthquake. If they decide not to replace the viaducts with the current plan, they either have to spend $90 million to strengthen them for a 50 year life, or $120 million to replace them with a 100 year life. Both of those options mean Capital Plan approval to pay for the work.

[SFUVancouver]

I think the CAC system is poorly understood in many quarters. It isn’t appreciated that CACs are calculated on the land lift of the property pre- and post-rezoning, with the public (through the City) receiving most of this change in value because the change in value only exists because it was created by the public (through the City) through the rezoning. All of the CACs are used to provide new public amenities in the city and particularly in the neighborhood, benefiting the residents and adding to property value. The change in value as the result of the rezoning is independently calculated by the City and the applicant and they negotiate on where to meet if they’re apart, including an independent 3rd party to arbitrate it they are wildly apart.

[WarrenC12]

Originally Posted by Vin

Yeah it is. The City just extorted 325 mil from a developer. I wonder how much they are left with after everything is paid out. There needs to be at least 3,000 to 4,000 units of luxury housing on the site for them to be able to pay out that much.

That means they are paying 25% of their gross revenue, assuming at $1,000 psf during sales for the City? Whew! If only there are so many buyers. Developers may see themselves bleeding money at the end of the day.

Won't somebody think of the poor developers?

[WarrenC12]

Originally Posted by Vin

You know if it's not financially viable, the developer can just refuse to build, right?

You know the developer specifically applied for this sqft increase, knowing the full costs, right?

[fredinno]

Originally Posted by SFUVancouver

I think the CAC system is poorly understood in many quarters. It isn’t appreciated that CACs are calculated on the land lift of the property pre- and post-rezoning, with the public (through the City) receiving most of this change in value because the change in value only exists because it was created by the public (through the City) through the rezoning. All of the CACs are used to provide new public amenities in the city and particularly in the neighborhood, benefiting the residents and adding to property value. The change in value as the result of the rezoning is independently calculated by the City and the applicant and they negotiate on where to meet if they’re apart, including an independent 3rd party to arbitrate it they are wildly apart.

TBF, the City didn't 'create' new value. They deregulated for a PSF (effectively) bribe, regardless of the intention.

Originally Posted by Changing City

No - the demolition will happen once the money is in place. The earliest that could be was 2020, but as the Concord rezoning hasn't happened yet, it seems likely to be later. It isn't $500 million. The area has been the way it is for years already, and all that will happen is that it'll stay the same, unless we have an earthquake. If they decide not to replace the viaducts with the current plan, they either have to spend $90 million to strengthen them for a 50 year life, or $120 million to replace them with a 100 year life. Both of those options mean Capital Plan approval to pay for the work.

$336M is being spent on transportation and utilities.
https://dailyhive.com/vancouver/seattle-alaskan-way-vancouver-viaduct-demolition
So no, it's not cheaper, not accounting for the RE play.

Originally Posted by Vin

If you add in all the tie-ins, it is half a billion.

There was never money for the streetcar to begin with. A lot of the tie-ins are stuff that needed to be built anyways, but were lumped into the project. Like the affordable housing and community centre.

Originally Posted by logan5

The City owned land that flanks Main Street is suppose to be all rental, last time I heard, so there is not much potential for CAC money from that land. I don't know why the City wouldn't leverage that property as much as possible by allowing much higher density. You could have 900m units of rental as well as 900 units of market condo and reap all the benefits.

It's not finalized yet- the issue with higher density is the orientation of the site means more density = removing the viewcones over Chinatown and DTES.

[SFUVancouver]

Originally Posted by fredinno

TBF, the City didn't 'create' new value. They deregulated for a PSF (effectively) bribe, regardless of the intention.

[...]

Of course it did. Was the property worth more or less after it was rezoned? Value is created by changing what can be built on a property as of right. When a Council agrees to rezone, it is creating value out of thin air. Most, nearly all, communities give this wealth creation away for nothing.