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Land value tax should replace community amenity contributions

By Raza Mirza for Business in Vancouver

According to the City of Vancouver, “community amenity contributions (CACs) are in-kind or cash contributions provided by property developers when city council grants development rights through rezoning.”

CACs are simple to explain, an easy sell for the city: the property developer who is asking for rezoning, often resulting in extra density, should pay for the amenities needed to support the new density. Not surprisingly, the development industry doesn’t like CACs and wants mass rezoning and relaxed regulation for easy profit. For anti-development industry folks, CACs are a way to stick it to developers that prioritize profits over housing needs of the local working residents. But the reality is very different.

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In business, backers expect a profit margin on total investment. For property developers, CACs are another cost that needs to be financed. While additional cost is simply passed on to the buyers, the developers also expect a profit on every CAC dollar they put in. If CACs add 25% to the cost, the developers walk away with original profit plus 25% extra profit made on investment used to pay CACs.

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