Wednesday, June 10, 2020

Using redevelopment to pay for SkyTrain (and affordable housing)

Ongoing financial support for transit in our region is primarily from user fees, property tax, and gas tax. Larger projects such as SkyTrain extensions, and new transit vehicles, are additionally supported by funding from the provincial and federal governments.

Since I’ve been involved in local government in Metro Vancouver, people in local government and TransLink staff have been discussing the need to have less reliance on gas tax.

There is a link between transit and increased property value, so one of the ideas discussed has been around capturing some of that increase in property value to help pay for transit and to build affordable housing near transit.

With COVID-19 impacting how people get around in our region, there has been renewed interest in changing TransLink’s funding mix.

A new report titled “Evaluation of Land Value Capture and Urban Development as Sources of Revenue for TransLink” will be presented to the Metro Vancouver Regional District’s Regional Planning Committee. The report authors make some recommendations around how to capture the value created by transit improvements.

The report contains case studies which highlights the change in property values caused by high-quality transit.

One example looks a building a condo along the Broadway Corridor (Case Study #1.)

Today, the value of the property would be $22.8 million. With re-zoning and no SkyTrain, the value of the property after redevelopment would be $45.4 million. With SkyTrain, that value would be $50.3 million. This is a $4.9 million difference.

Another example (Case Study #4) looks at building a mixed-use building in Fleetwood along Fraser Highway. Today, the value of the property would be $3.1 million. Without SkyTrain, it would not make sense to redevelop a single-story retail building into a mixed-use building. With SkyTrain, it would make redevelopment possible. The value of the property would be $3.8 million due to SkyTrain.

Without getting in the weeds, the idea would be to take a share of the uplift in value created by improving transit, to be able to pay for building transit projects such as SkyTrain.

One option that is currently available is creating property tax benefit areas. These could be applied to areas around rapid transit stations. The TransLink portion of property tax in these areas would be higher than what would be paid in other parts of the region.

Another option would be to partner with municipalities to share revenue that municipalities receive as a result of redevelopment triggered by transit improvements such as in Case Study #4.

The report also explores if TransLink should be in the land development business. Acquiring land near future SkyTrain stations, developing the land, and selling it at a profit to pay for transit infrastructure. Of course, creating affordable housing near SkyTrain would have to be part of this.

While there is no clear path forward yet, I think that more serious discussions will now start taking place on how to fund transit improvements through redevelopment. The COVID-19 pandemic has highlighted the challenges with the current funding mix for transit in our region.

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