Community amenity contributions (CACs) are a prickly topic for developers. Over the past 10 or 15 years, British Columbia municipalities have increased reliance on these payments for funding public amenities, amidst continuing criticism from developers over the size of, and arbitrary process for determining and extracting, CACs.
Municipalities like Vancouver have two types of charges that they require developers to pay:
- development cost levies, which are clearly set out in legislation and which allow municipalities to collect money for infrastructure upgrades, transportation and affordable housing
- CACs, which are controversial charges municipalities can, but are not required to, negotiate from developers in connection with rezoning. A change in land use or density typically improves the value of the land. Provincial legislation allows municipalities to negotiate with developers to contribute part of the increase in value to municipalities to pay for additional amenities such as child-care, affordable housing and community space
Between 2000 and 2010, CACs charged to B.C. developers increased dramatically from $100 million to $720 million. Following the lead of certain other municipalities, Vancouver has been trying to establish fixed rates for CACs to give developers certainty, but is still receiving severe criticism of its CAC charges.
In the wake of soaring real estate prices and municipal leaders’ seeming inability to connect the costs they are imposing to the impact on the housing market, the provincial Ministry of Community, Sport and Cultural Development recently issued a guide to municipalities called Community Amenity Contributions: Balancing Community Planning, Public Benefits and Housing Affordability. The purpose of the guide is to help local governments understand the risks, challenges and recommended practices related to obtaining CACs; the guide describes the relationship between CACs and housing affordability, and encourage practices that do not inadvertently cause housing prices to increase.
The guide also outlines the following six recommended practices for municipalities considering CACs (which are discussed in more detail in the guide):
- Avoid Legal Risk and Maintain Public Confidence
- Plan Ahead
- Seek Modest Contributions and Follow an Approach that Balances Community Amenities and Housing Affordability
- Apply Development Cost Charge (DCC) Principles to CACs
- Engage the Development Community
- Choosing an Approach to Obtaining Amenities
It is unclear what recourse developers will have against municipalities that don’t implement the Province’s recommended practices. The guide seems to be an attempt at softly pushing the municipalities in the right direction in advance of harsher action such as the potential creation of legislation based on the guidelines if the municipalities don’t fall into line.