For decades in Metro Vancouver, private real estate developers have benefited from the significant uplift in land value as a result of new public transit infrastructure, particularly new SkyTrain extensions, and the associated rezoning allowing for new, higher-density development.
TransLink is now looking into capturing some of this value for reinvestment to help fund new infrastructure, repay existing debt for past infrastructure investments, and fund operating costs of public transit operations, as well as increase the regional supply in transit-oriented affordable rental housing. All of this will ultimately help reduce the number of trips made by private vehicle.
“TransLink funds its share of the capital and operating cost of the regional transit system using a variety of revenue sources, including transit fares, property tax, fuel tax, parking tax, and the new regional transportation development cost charge (DCC) that came into effect in January 2020,” reads the report.
“The region needs more investment in transit infrastructure, requiring additional funding. TransLink is interested in exploring new sources of revenue that will be sustainable in the long run and that have the potential to advance regional policies.”
TransLink fiscal forecast. (TransLink)
A newly released study by Coriolis Consulting, commissioned by TransLink, examines a number of mechanisms the public transit authority could take to increase land value capture. The findings will be used by TransLink staff and both municipal and regional governments to draft potential new ancillary revenue sources.
Buying and selling land for development opportunities
To a relatively limited extent, TransLink already practices land disposition and acquisition as a revenue-generating tool, by marketing its properties that become unnecessary for its operations and acquiring land for new SkyTrain extensions.
TransLink also disposed of its surplus land at SkyTrain’s King Edward Station, including the land adjacent to the station and air rights over the station entrance building. Cambie Star, an eight-storey residential and retail building, was completed at this property in 2017.
King Edward Station with its new bike parkade and the Cambie Star building. (Jeremy Segal / W.T. Leung Architects)
However, the study states the public transit authority can become “more creative and aggressive,” such as marketing portions of its properties that are not entirely needed or air rights above transportation facilities that will remain.
TransLink could also acquire additional properties when buying land for new infrastructure projects, especially when there are opportunities for a land assembly that will result in strong development opportunities after the SkyTrain project is complete.
“Because TransLink is engaged in long-term planning for new transit investment, it is in an excellent position to acquire good quality development properties well in advance of new transit construction,” reads the report.
“TransLink can take advantage of general increases in market value, the new value created by transit investment, and new value that is associated with increased density.”
Fletchers Fabricare at 2096 West Broadway, Vancouver. (Google Maps)
Along the Broadway Corridor, the public transit authority has made a number of high-profile acquisitions relating to future transit infrastructure and development opportunities.
It acquired Fletchers Fabricare — the southeast corner of the intersection of Arbutus Street and West Broadway, directly across from the future Arbutus Station subway entrance at the northeast corner — for $17.1 million.
At Commercial-Broadway Station, it purchased The Hub — the brick retail buildings on the north side of the station that are occupied by businesses such as Shoppers Drug Mart, A&W, Blenz Coffee, Megabite Pizza, and Booster Juice. This $36-million acquisition will potentially allow for a future third pedestrian overpass over East Broadway reaching an additional Expo Line outbound platform, plus revenue-generating retail and office redevelopment opportunities.
The Hub retail buildings at 2460 Commercial Drive, right next to SkyTrain’s Commercial-Broadway Station. (Google Maps Streetview)
TransLink’s developer arm
As a real estate developer, if TransLink were to directly participate in development projects, it would not only generate a new source of revenue but enable the public transit authority to gain the tool of the “most direct possible means to shape development and integrate land use and transportation.”
The public transit authority would profit from being involved in financing, building, and selling market-oriented developments, instead of merely selling or leasing property. This could be accomplished alone or in partnership with other developers.
Such developments do not necessarily have to be condominiums, but they could be retail, office, and market rental housing at transit-oriented locations to provide the public transit authority with a portfolio of long-term, revenue-generating property.
The study also suggested considering the idea of adding an affordable housing developer mandate to TransLink, with the public transit authority offering some of its development parcels to non-profit developers or the public sector for new affordable rental housing. But this would reduce the available revenue from such properties towards TransLink’s primary mandate of public transit.
Artistic rendering of the City of Lougheed’s transit plaza area, next to Lougheed Town Centre Station. (Shape Properties)
If TransLink were to set a target goal of making $25 million annually from spearheading development projects, it would have to be involved in over one million sq. ft. of new development each year — equivalent to approximately 800 residential units and several large office buildings.
This could be accomplished by combining land acquisition and disposition with direct participation in development. Municipal governments and the private development community have expressed their support for both of these mechanisms.
Hong Kong’s MTR transit system is renowned for its ability to use land value capture as a significant ancillary revenue source and ridership driver.
In 2019, the MTR recorded HK$54.5 billion (CAD$9.5 billion) in revenue, with HK$5.1 billion (CAD$884 million) coming from its property rental and management businesses, including high-density residential and office clusters, and dozens of major shopping malls around its stations.
Municipal governments, especially the City of Vancouver, are increasingly reliant on developer-funded CACs and density bonusing to finance their new public parks, libraries, childcare facilities, transportation improvements, and affordable housing.
“Any [CACs and density bonusing] revenue received by TransLink could otherwise have gone to local government. For this reason, local governments may not agree that revenue sharing is in their interests,” reads the report.
“If TransLink involvement is perceived as making the system more complicated or time-consuming, it will be resisted by the development industry. If TransLink involvement significantly increases total expectations for CACs, then it could reduce the incentives for land owners and developers to be involved in the rezoning process, leading to reduced pace of development and rising house prices.”
Artistic rendering of Broadway Subway’s South Granville Station integrated into the retail and office development of 1465-1489 West Broadway, Vancouver. (Musson Cattell Mackey Partnership / PCI Developments)
A benefiting area tax is an added property tax that could be applied to areas where new SkyTrain stations are built, as well as frequent transit development areas and corridors.
In 2018, the total property tax revenue, based on the 7% rate, collected by TransLink was approximately $373 million, accounting for about 20% of the public transit authority’s total revenues.
Currently, properties within a 400-metre radius of an existing SkyTrain station (Expo, Millennium, and Canada lines) have a combined total assessment value of about $167.5 billion — equivalent to 13% of the entire region’s assessment base. A 2.2% benefiting area tax applied on the properties within these areas, for example, would theoretically generate $167.5 million in new annual revenue, including $78.6 million from residential properties, $79.4 million from businesses, and $9.5 million from other classifications.
If TransLink were to use a blanket property tax approach to increase revenues, its regional property taxes would have to increase to 14% from the current 7%.
Nearly the entire construction budget for Capstan Station is funded by the city’s ability to raise $31.5 million from area-specific private sector development. Construction is anticipated to begin later this year for a completion and opening in the middle of 2022.
Artistic rendering of Concord Gardens’ Picasso and a conceptual depiction of the future Capstan Way Station. (GBL Architects / Concord Pacific)
As for a share of the property transfer tax, this would entirely depend on negotiations with the provincial government, which collects this revenue directly for its own budget. To raise $25 million annually, TransLink would need a 1.7% share of property transfer tax revenues generated within Metro Vancouver, but this would be affected by the fluctuating volumes in real estate activity and property values.
While there is broad municipal government and stakeholder support for the property transfer tax mechanism, the support from municipalities for the benefiting area tax is mixed.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
