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Balancing the Density Bank – New Opportunities for Developers, holders of Density and the City of Vancouver

 

Vancouver’s density transfer program has existed since the early 1980’s, so why has there been a recent surge in interest in Vancouver’s Density Bank? The answer lies in the changes to Vancouver’s Transfer of Density Policy and Procedure and the new opportunities that these changes present for developers and owners of transferable density.

Understanding Transferable Density

The City of Vancouver wishes to preserve heritage buildings for their architectural and historical value.  As the maintenance and preservation of heritage buildings was, and continues to be, an expensive process, the City created an incentive program whereby bonus density was granted to owners who restore heritage sites and then, if permitted, the owner of the heritage site (the “donor site”) could transfer this density to the owner of another site where the transferred density is to be used (the “receiver site”) for compensation.  This transferable density is recorded by the City in the “Heritage Amenity Bank”, or “Density Bank”. This process has allowed the City to facilitate its heritage goals without actually funding the program itself.

Despite the name “donor site”, the density is not donated; it is sold. Although the City manages the Density Bank and facilitates the transfer of the density by providing the contact information for owners of transferable density to interested parties, it is not directly involved in brokering deals between developers and property owners. The price of transferable density is determined between the property owner and the developer.

Developers cannot simply purchase density and use it as they wish; permission by the City is required. The type of permit or permission needed to transfer density depends on the amount of additional density that the developer requires and on the location of the receiver site. Depending on these factors, a request to use transfer density either takes the form of a development application made to the Development Permit Board or a rezoning application made to City Council.

In order for transfer density to maintain its viability as a tool, there must be balance in the Density Bank, meaning that the supply and demand for transfer density must be in check.  If supply exceeds demand, owners of donor sites would have incurred expenses in restoration upfront without receiving compensation by purchasers of heritage density.  Recent changes to the program are intended to encourage developers to purchase density that has languished in the Density Bank.

How the Density Bank Became So Full

The Density Bank, in its current form, was created in 1993 when the City amended its Transfer of Density Policy and Procedure to allow for the “banking” of transfer density in the Heritage Amenity Bank. This density could not just be transferred anywhere in the City; its transfer was restricted to specified sites within what was called the “Central Area”, a region that included downtown Vancouver and Central Broadway. In 1998, the City expanded the eligible areas, providing a new zoning schedule that made transferable density available to be transferred away from (but not into) the Chinatown Historic Area (districts HA-1 and HA-1A). The program was further expanded to include Gastown and the Downtown Eastside Oppenheimer District and to allow for a specific transfer out of First Shaughnessy. In 2003, the City announced a new program specifically aimed at providing heritage incentives in Gastown, Chinatown and the Hastings Corridor, and subsequently extended to include Victory Square.

These new initiatives resulted in much success in the revitalization of these heritage areas.  However the amount of inventory in the Density Bank had reached an all-time high, resulting in a larger supply of transferable density than was needed by developers.  In response to these concerns, the City made the decision to “freeze” the Density Bank in August 2007, dramatically reducing the amount of transferable density to be created until further notice. Actions were taken to facilitate the absorption of the existing inventory in the Density Bank and the amount decreased somewhat.  However, the slow pace at which the inventory was being purchased continued to be a concern for owners of density and the City.

A Time for Change

On September 25, 2013, City Council agreed to expand the opportunities for using transfer density. The restriction on the transfer of heritage density to only those lands located within the Central Area was removed and the City agreed to allow heritage density transfers to be considered in CD-1 rezonings on a City-wide basis. The City also agreed to amend the policy that provided that the Development Permit Board could only approve the use of heritage density for increases of up to 10% over the permitted floor space within the Central Broadway C-3A to allow for the Development Permit Board to approve transfers of up to 10% in all C-3A zoned sites in the City.

Furthermore, City Council agreed to apply $4.8 million of unallocated public benefit contributions to a reduction of the Density Bank (i.e. $4.8 million would be used to buy inventory from the Density Bank in order to reduce the Density Bank’s supply). A $3.8 million reserve of public benefit contributions resulting from rezoning applications in the Triangle West area (bounded by Coal Harbour to the north, Cardero Street to the west, Bute Street to the east and Alberni Street to the south) remained unallocated, as did $1 million that was collected through the rezoning of 201-299 Burrard Street. The City provided that a competitive bid process would be used whereby owners of density could submit their “best offer” to have density “purchased” by the City and thereby removed from the Density Bank. The lowest bids would be given preference until the $4.8 million of unallocated funds were exhausted. At a minimum bid price of $65 per square foot, the Density Bank would be reduced by a minimum of 74,000 square feet.

Practically speaking, what these changes mean is that the density held in the Density Bank can now be used more widely and easily across the City. Developers of sites located outside of the City’s Central Area can now consider using the inventory in the Density Bank in their development permit or rezoning applications and owners of heritage density may now have more demand for their inventory. Restoring balance of supply and demand to the Density Bank will ensure that transfer density continues to be a viable planning tool.

 


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