The thin air of bonus density

By Gene Miller, June 2013

Why do we penalize those who are trying to densify the city core?

I’m tempted to devote this entire column to the news that while the McDonald’s on Pandora Avenue and Vancouver Street charges four cents less for a large coffee, the McDonald’s on Esquimalt Road near Esquimalt’s Archie Browning Recreation Centre is a masterpiece of tasteful, intimate restaurant decor, especially the leather armchairs and the booth seating. Yes, leather armchairs, booth seating.

The Pandora McDonald’s is straight out of the prison cafeteria riot school of interior design (the “lockdown” look), and evokes Agent Smith’s disgust in The Matrix when he describes humans as a disease, a virus. The beautifully furnished and finished Esquimalt restaurant, however, communicates trust, love of people, belief in the goodness of the human community, faith that someday we will overcome our differences and all be as— 

Okay, sorry about that. But if you saw the place in Esquimalt you would rhapsodize, too. 

I’m trying to get my arms around something elusive and chimerical this month: air and space—though these words may be just markers for the real subject: value. I referenced a few months back the City of Victoria’s roughly two-year-old policy that allows developers in selected downtown areas to buy additional project density from the City. Density, you’ll remember, is the ratio of building square footage to site square footage. Under this latest formulation, the developer gets added density above 3:1 to a cap of 6:1 and the City gets money.

As near as I can determine, the City’s case for this bonus density charge is that the City, in permitting densities of up to 6:1, is bestowing an unpaid-for benefit upon the developer (“bonus” says worlds about the City’s mindset); and in doing so, the City has the right to collect money because it functions like a secondary property owner—not of the “dirt,” but of a volume of space, up in the air. This renders the City the notional “owner” of a purely conceptual spatial volume and, in selling this development entitlement, the practitioner of an alchemy that the rest of us can only dream of: commodifying thin air. 

If the value of land is determined by what you can build on it, then this makes the City’s ownership of a spatial volume, as expressed in its land use policies, a fascinating subject—legally, business-wise, and philosophically. If you don’t mind some smudges on your clothing, come on down the rabbit hole with me.

Cities evolved from simple crossroads origins to become towns and city-states ruled by an aristocracy and, in time, rough-cut administrative units run at first by powerful bosses and mayors. Eventually, a more democratically constrained elected leadership emerged. (The phrase “You can’t fight city hall” is believed to have originated in the US in the mid-1800s.)

Cities exist to frame and manage the very complex living arrangements of a human community occupying a tightly-bounded geography; to foster opportunity; be the promoters of urban well-being; and behave as stewards of the future.

In such pursuits, cities make budgetary and policy decisions based either on common sense; or support for the community’s mood and values; or the ghost-lit pursuit of some civic intention or aspiration. Here are some examples of each: Management of a water supply or charging for downtown parking or installing traffic controls at intersections are common sense. Detaining public troublemakers and preserving public parkland reflect community values. Licensing cats or charging for downtown density over 3:1 are batshit nutty. 

Oh, sorry, I’m breaking the writer’s omerta by not saving the crazy for later. 

So, here’s the thought: Why doesn’t the City zone everything 1:1 and charge for all additional density? Why not zone residential neighbourhoods one-storey and charge for the second storey on two-level homes? And you say: “Those are the silliest and most preposterous things I ever heard!” Oh, and charging for density above 3:1 is what? Solomonic?

3:1 says to developers “You can build three times your site area.” 6:1 says to developers “You can build six times your site area.” 6:1 with a density bonus charge says “Please, don’t build in Victoria.” 

Presumably, logic and desire led the City to say okay in the first place to greater densities. In other words, somebody thought it was a good idea for some reason, just as other somebodies thought 3:1 was a good idea at previous times. Though right here might be a good place to remind ourselves that there are a number of pension-age downtown buildings—the Central Building, 612 View, Belmont Building, Dogwood Building, Sayward Building and the Yarrow Building, for example—with densities approaching and in some cases exceeding 6:1, all of which were put up umpteen years ago without bonus density charges, and all of which were seen in their day to be making a positive contribution to the downtown. In spite of these historic precedents, wise heads in today’s Victoria believe that a density of 6:1 is a developer’s windfall, and that the City is entitled to capture most of it. What it says as social subtext is that developers are sociopathic and criminally insane and must be punished for their ambitions.

Let’s turn to an obvious but as-yet-unasked question: Why did the City raise the density cap to 6:1 in the first place? Surely, the City concluded that higher density buildings might result in more people working and living in and around downtown—a good thing. If this was the City’s principal motivation, why aren’t those presumed beneficial economic and social outcomes (and downstream property tax revenue) quid pro quo enough? And why wouldn’t the City turn a blind eye to a developer windfall (more theoretical than real, anyway) to get developer juices flowing?

The City was for several years getting a strong message from the development industry that given downtown Victoria’s high land costs, densities greater than 3:1 would enhance project viability. The City was also aware that many developers of downtown projects were using the cumbersome rezoning process to achieve densities in the range of 5:1; and that downtown area property owners were pricing their property on the assumption that 5:1 was a slam-dunk via rezoning. Old expectations of value die hard, of course, and even with the City’s new bonus density policy, property owners have hardly backed off their earlier asking prices. So, when the City stacks bonus density charges on top of a property owner’s price expectations, the essential rationale for greater density falls apart and turns into an invitation principally to take on the greater risks of attempting to sell or lease bigger buildings.

And last, there is an argument floating around out there that the City needs to charge this bonus simply as a “gimme” because it needs new Downtown amenities; and our underground infrastructure is old and at capacity; and greater density puts more pressure on infrastructure, so developers should make a contribution to improving/increasing that capacity. Leaving aside the mind-bending circularity of that thinking, why then wouldn’t the City make any and every new development pay a bonus, regardless of density, since every development adds pressure; and further, isn’t infrastructure-upgrading precisely what the City is supposed to be doing within its franchise, with its normal tax revenues through the annual budgeting process? 

In consideration of all of these circumstances, what exactly explains the City mordida from new projects seeking densities greater than 3:1? Well, first, the present bonus density payment program is meant to rationalize a previous horse-trading system in which developers exchanged affordable housing units, public art or contributions to the City’s affordable housing fund for greater density. Folks thought that system lacked transparency and was open to developer abuse. (Can you believe that?) Second, other cities do it—justifying such charges against high civic processing costs, when in fact it’s just the City saying to developers: “Hey, if you’re trying to max your building density, we must be doing something right, so share.” Third, the City needs the dough, and it’s cheaper for the industry to pay than take the City to court. 

Of course, this is Victoria, so there are also “dark side” explanations for the bonus density policy: first, that it picks up on strong anti-density/anti-height sentiment in Victoria and by “punishing” developers with a surcharge tosses a bone to the folks who believe those higher densities threaten Victoria’s character and really should not be permitted under any circumstances; second, that by imposing bonus density costs, the City plays to the values of the single-family house-owning “urban aristocracies” of James Bay, Fairfield and elsewhere. Such values—call it the “Victoria lifestyle premium”—percolate into City land use policy and drive up property and housing costs in the core.

Funny how Victoria’s land use policies are trapped in this murk of living contradiction, a dreamscape, a social mystery in which the amenities and nostalgic charm of an intransigent past and the needs and imperatives of an urgent present battle for validation. 

Maybe we should modify the old axiom to give it local relevance: “You can’t comprehend city hall.”

Gene Miller, founder of Open Space Cultural Centre, Monday Magazine and the Gaining Ground Conferences, is currently writing Massive Collaboration: Stories That Divide Us, Stories That Bind Us and The Hundred-Mile Economy: Preparing For Local Life.