Building West Kelowna – As our city grows and develops the need for infrastructure, amenities and services grow. What shared role do developers and West Kelowna residents have in funding these improvements?
At the October 8th West Kelowna City Council meeting, first and second reading was given to what level of financial contribution should developers expect to pay. The Official Community Plan (OCP) refers to this as the Density Bonusing Program (DBP).
Under the DBP, developers who receive approval to build additional stories (above current zoning allowances) would be required to contribute a percentage of the added property value to the city. This increase in property value resulting from higher densification is called “land lift”.
Urban Systems Ltd, a professional consulting firm hired by the city, recommended a 50% land lift contribution from developers. Their Density Bonusing Analysis notes, “a 50% - 75% range of land lift is consistent with the range used by many other municipalities as the basis for their rate setting”. The report acknowledged rising construction costs and high interest rates; however, the report suggests that a 50% contribution would be a fair balance.
The Urban Development Institution (UDI), representing developers, recommended eliminating the Density Bonusing Program or establishing a 10% land lift contribution.
The City of West Kelowna’s Development Services dismissed the Urban Systems recommendation of 50% in favour of the UDI’s recommendation of a 10% land lift.
The Development Services department report showed an example comparing a 50% land lift rate versus a 10% land lift rate. In the example, a 10-acre development could yield $4.6M in development contributions at the 50% rate but would yield only $900,000 at the 10% rate. The city could lose $3.7 million in development contributions with the lower rate.
The city needs to find a balance between encouraging development and establishing fair contributions from developers to address the added demand on city infrastructure and services. Higher density requires more amenities and public services, which should be partially funded by the developers benefiting from the increased value.
Councillor Rick DeJong stated, “development should cover its own costs rather than rely on residents to fund infrastructure” and was in favour of a 50% rate recommended by the city’s independent consultant. Mayor Milsom, Councillors Da Silva and Friesen voted in favour of the lower 10% land lift rate recommended by city staff.
A motion for a public hearing was made and was unanimously passed. The date for the public hearing has yet to be set.
Residents are encouraged to review the October 8th council meeting (starting at 34:30) and to share their opinions with the mayor and council, particularly regarding establishing a fair level of contribution from developers through the Density Bonusing Program.