Originally posted By Kenneth Chan at 5:12 PM PDT, Wed May 18, 2016, on vancitybuzz
Could developers be a big part of the solution to Metro Vancouver’s funding gap to fulfill a multi-billion dollar public transit expansion and improvement plan? To help alleviate transit funding woes, TransLink’s Mayors’ Council and the provincial government are looking to charge developers extra for building significant dense developments near SkyTrain stations.
Peter Fassbender, the Minister responsible for TransLink, told Vancity Buzz that initial findings indicate $800 million could be raised for a single project like the underground extension of SkyTrain’s Millennium Line under the Broadway Corridor. If all the systemwide opportunities are considered, as much as $2 billion could be generated.
But at this time, there is no proposed funding model and structure for how the new revenue stream could be raised from developers.
“What is clear to us is there is a a potential for revenue that could be used to help fund transit in the future,” said Fassbender. “The way it would be collected and the formula would be something we would want to something we would work with cities and the development community on.”
Developers are already funding several transit infrastructure projects in the region, including a full commitment to the cost of constructing the Canada Line’s planned additional stations at Capstan Way in Richmond and 57th Avenue in Vancouver as well as a partial commitment for the Evergreen Line’s Lincoln Station.
A number of developments around the future Capstan Station, built by developers such as Concord Pacific, Pinnacle, Polygon, and Yuanheng, are funding the $25-million station construction cost through the sales of condo units. As a part of the redevelopment of the Pearson Dogwood lands, Vancouver Coastal Health and Onni Group are providing the funding needed to construct an underground station at 57th Avenue.
And for Lincoln Station, adjacent real estate developers and the owner of Coquitalm Centre mall are funding a portion of the $28-million station.
However, Fassbender says the proposed new model goes much further as it would densify entire major transit corridors, not just the location of the SkyTrain station. A radius of two or three blocks around a station could be densified in exchange for extra contributions from developers for the sole purpose of funding transit projects. In the process, more walkable and transit-oriented communities that depend less on the automobile will be created.
So far, the feedback received from developers about the potential new revenue source has been positive.
“It is attractive for developers to be along transit routes as that helps to increase the value of their developments,” he said. “They also see the benefits of the transit system being expanded that allows for them to build product along transit corridors, and they also want to be sure that whatever formula is produced is fair to them as well so that they can continue to be profitable while they are making and agreeing to transit contributions as well.”
If developers are asked to help cover transit expansion, the costs would likely be passed on to the consumer and potentially add to the region’s housing affordability issues. But Fassbender says it could have the opposite effect by creating more supply, especially if densification optimizes the economies of scale of developments.
“We have more supply, which means there will be more product on the market and prices should moderate as a result,” he said.
Municipalities in Metro Vancouver already pursue developers to cover any additional infrastructure required to support their developments, such as sewers and water connections.
Developers also negotiate with municipal governments for density allowances, particularly for major projects, in return for Community Amenity Contributions (CAC) that support new parks, green spaces, daycares, and public facilities. In Vancouver, social housing is also classified as a possible CAC-funded project.
Although the federal government has raised its transit funding contribution to up to 50% for the Broadway extension and Surrey light rail projects, the provincial government has maintained that it will not increase its share of funding beyond 33%.
With the larger federal contribution, TransLink and local municipal governments are now responsible for 17%, down from the traditional share of 33%. But the provincial government has rejected the Mayors’ Council’s proposals for vehicle levies and tolls to raise the local government share, and regional voters in last year’s plebiscite did not support a half per cent regional increase in the regional sales tax to support the transit expansion plan.
The Mayors’ Council plan will cost $7.5 billion, which includes $4.5 billion for the Broadway extension and Surrey light rail projects.