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Stronger Kamloops; Nuts and Bolts, The Primer to A Small Vision: Kamloops, the Small Town that happens to be quite large; how we can keep it small and keep it prosperous

By Mitchell Forgie

What is this book about? Our taxes keep rising? Why? It is not because public servants get paid too much. It is because our well intentioned policy mountain created over the last 60 years has incentivised a development pattern that destroys value, bankrupts private individuals, lowers property values, restricts job growth, suffocates air quality, cripples our environment and creates disastrous health effects that lead to mountains of health care bills. We did this collectively, and we voted for governments that put these policies in place. Nearly every single policy on its own was well reasoned and well intentioned; often in the name of safety or economic growth. However, the cumulative effect has been to create a new problem, which is economically much worse than the problems we were seeking to correct. This economic deficit is bankrupting us and our governments; and this bankruptcy is structural to the system we have created: Manipulating public wages will not change this and neither will manipulating service levels. If we are bankrupt we have no hope of addressing the other pressing social and environmental concerns that we have to consider in the 21st century. This book is a primer to the concepts involved in the Stronger Kamloops Philosophy. The larger book expands on many of the concepts, and is far more solution oriented. This book is simply a black and white explanation of the structural deficiencies that exist. These problems are not unique to Kamloops or even the cities in our country. Cities all over the world face these similar problems. The more horizontally developed each particular city is, the worse they face these challenges. I suspect Kamloops will surmount these challenges, and become a strong city, perhaps even a leader in our country of what small cities could try to attain. I am an optimist, but I see the flaws in our system as real and difficult challenges that need level headedness to confront. I hope that this book can be a springboard for the discussion and political will required to confront the future.

What is the Problem? I want to introduce you to Arnica Street in Pineview;

re-surfacing method available (HotIn-Place) it will cost the city $45,684 to resurface this road. Provincial standards suggest that this should happen every 9-11 years.

Arnica Street is a Cul-De-Sac, containing 24 properties of which 23 have been developed. Lots cost $100,000+ and the average assessed value is $404,167. All the houses together are worth $9,700,000. Pineview as a whole is looked at by our city planning department as a model of how we should develop. Nice houses, small community feel, etc.

The street in front of these properties is 282m long, and using the cheapest

Single family houses in Kamloops currently pay a tax rate (2012) to the City of 4.37% of each thousand of property value as determined by BC Assessment. This brings in a combined income of $42,389 to the city each year. The City does provide Home Owner Grants to persons who live in their homes, which would reduce this number but without that information we will use the higher number. 6.89% of the city’s budget is devoted to Infrastructure and it’s maintenance. So if we devout 6.89% of Arnica Streets revenue to road maintenance, we find that only $2,920 of each year’s tax accumulates to take care of paving the road when it needs to be done. After a 10 year lifespan, at current paving H-I-P paving rates, it will cost $45,684 to resurface, leaving the city with a $16,484 loss; and this is on what we assume to be a fairly high value street that is only 282m long. Further, this road is a Cul-DeSac, only the folks on Arnica Street benefit from Arnica Street.

On Gordonhorn Crescent in Sahali the same situation exists. The 12 properties on the Cul-De-Sac have a combined value of $4,497,000 on a 115m long road.

Why aren’t we Bankrupt? Have you ever heard of a Ponzi scheme? In a Ponzi scheme a company pays profits to investors from the investment capital of new investments. What has happened in our city is much the same. As new taxes come in from new development, that revenue covers the shortfall from past maintenance commitments. The problem with a Ponzi Scheme is that it requires ever accelerating rates and frequency of investments of new money to pay for the liabilities of the old. Graphically the cash flow of the city looks like this;

The road repavement on Gordonhorn would be $18,630, and the loss would be $5,090 at 10 years, for only 115m of road. A drive through many areas of Sahali will indicate to you however that most of these roads missed their 10 year maintenance investment a long time ago and that intensive maintenance is sorely needed at a far elevated price. Arnica Street has a deficit of $58,452.26/KM; Gordonhorn $44,257.55/KM; Kyle Drive in Westsyde $66,300.00/KM. The cities 1520 km of maintained road loses on

Further, when the city approves a new sub-division, they experience an instant intake of new funds through taxes, and do not have to worry about the maintenance commitment for years to come. For this reason there is a significant time lapse between paying for the maintenance and

maintenance alone $8.6 million/yr.

receiving the initial influx of capital.

Solutions Currently the solution to this problem as discussed in the news is this; “How high will the taxes have to rise, and how deep will the service cuts be?” In the news this month we have seen the cutting out of door-to-door postal service, cuts to the ambulance service, complaints about fire-fighters wages and more. In Kamloops we have seen tax hikes above inflation absolutely every year since 2003 except for 2006 (in which there was still a rise in taxes). I propose an alternative solution. Not every place in our city, and not every development pattern, performs so dismally. What performs dismally is low-density, dis-connected, caroriented suburbs. Gordonhorn has a value per Sq. M. of $435; Arnica $637; Kyle Drive $286. For comparison our cities most valuable street, Victoria has blocks that top $5000 per Sq. M. which is 684% better performing that Arnica Street, while the infrastructure maintenance cost to the city remains roughly the same; because infrastructure costs more as a function of distance than a function of size: Doubling the capacity of a pipe is

cheaper than doubling the length of a pipe. Even in residential areas downtown, for example the 200 block of Nicola is worth well in excess of $1200/Sq. M. And Pine Street is worth $671.13/Sq. M. with comparable home prices to $286/Sq. M. Kyle Drive. Suburban commercial developments compare just as dismally to downtown with Sahali Center Mall (Target) worth just $191/Sq. M. and our newest development CityView worth $499/Sq. M. The further telling story here is not only that traditional neighbourhoods in the city perform better economically for the tax roll, but that people actually prefer them. Downtown condos are the single most expensive real estate per square foot in the city. Rent downtown easily doubles rent per square foot in stripmalls. Even shabby parts of Tranquille Road ‘outstrip’ strip style commercial developments with values between $900 and $1300/Sq. M. So if people prefer downtown, are willing to pay so much more for it and it performs far better for the city’s budget; why isn’t anyone building more of it? And what makes downtown so valuable anyways?

The Value of Walking I challenge you to take a trip, anywhere, and not be a pedestrian on foot at any point. If you go to the mall to shop, you probably arrive by motorvehicle and then walk through the mall. If you go to see the Blazers, you walk in to the arena. Comically, we even drive to the gym to walk or run on a stationary device, and pay money to do so. We walk through the BC Wildlife Park. We also walk down Victoria Street, and this is why Victoria Street is so valuable. This is why a shop on Victoria Street can pay $18/sq.ft. in rent and make a killing while the same shop goes bankrupt at $4/sq.ft in a strip development. This is also one of the primary reasons stripmalls are composed of nearly all national franchise and large corporate tenants; they have to rely on large scale national marketing to generate interest and education in their products as no one would ever accidently ‘stumble’ upon them. Downtown businesses spend time and money in window displays while suburban businesses rarely even have windows to the parking lot. There are feedback loops in these design issues. Interesting store windows beget walkers and window shoppers, which begets more potential business.

What makes a place walkable, or successful? Many authours, planners and critics have complied entire anthologies on this subject, with some of the best and most immediately readable below;  

Walkable City by Jeff Speck

The Geography of Nowhere by James Howard Kunstler

 

Building Strong Towns by Charles Marohn

Death and Life of Great American Cities by Jane Jacobs

The Original Green by Steve Mouzon

My summary of the concepts include these variables;      

Defined and Enclosed Spaces o Streets are not missing teeth Landmarks and Terminated Vistas o Destinations visible Protection from fast moving cars o Slow Traffic Speeds Well connected o Many routes to take A threshold of density o Enough people in walking distance Incremental Investment Potential o Buildings, lots, dwelling units of all sizes, shapes, ages and costs

You will find quite significant explanations on these points in the full book Stronger Kamloops starting on Page 59.

So Why isn’t Anyone Making More Downtown Style Development?

The Sticks

The OCP asks for dense, mixed-use development, with native plant species, bike racks, design that makes large buildings look smaller, bike routes, a focus on transit, integration of social housing, active transportation for health and many more well intentioned and wellreasoned policies; yet not even a tenth of what gets planned occurs in real life, or with any expediency, and often it does not create the desired effect anyways. The reasons for this

What is standing in the way of development is actually directly created and enforced by our cities planning department. It is a combination of planning, engineering, fire and building standards that make most every building in downtown Kamloops illegal or cost-prohibitive to build today. From engineered sprinkler systems, parking requirements, mop sink dimensions, bathroom requirements, firewalls, acoustic separation, separate code built fire escape stairwells, maximum lot coverage ratios, setback minimums, use restrictions, rezoning boards, public hearings, development permitting, on and on and on, the cities actual bylaws and standards do not reflect what is encouraged by official community plans. For example, I attended a City organized forum on creating affordable housing, and they included that there is a policy direction to have a tax subsidy for market units created that are below 400 sq. ft. Yet the building code, lot coverage issues and more actually prevent that type of housing from actually being built,

are two-fold; carrots and sticks.

assuming there was a market for it.

This is a complicated question, but one thing is for certain; the cities Official Community Plan, the document that guides all city growth has supported many of the qualities of downtown development for nearly twenty years.

City Sketch from the North Shore Plan

The City has created a document for the hoops to jump through if you

would like to add a legal basement suite or laneway house to your property. They city wants to see these happen to meet the perceived demand for affordable rental accommodation, to mix incomes and ages of residents through the whole city and to see development on old infrastructure that they are already maintaining. Yet it is not uncommon for a would-be landlord to spend hundreds of hours and thousands of dollars (usually around $10,000) to have City Council hear their case and possibly have it denied. Try to open an unconventional or small scale business in town you will find the same as I did. I saved up about $25,000 to start a 450 sq. ft. coffee shop. I figured that figure was enough to buy the espresso machine, the inventory, tables, chairs and operating capital. But as I was dividing an existing unit the sprinkler system had to be re-engineered and one head moved for a cost of $5000; the dividing wall had to be fire rated. I had to have 6 sinks; 3 dishwashing sinks, a mop sink, hand washing sink and bathroom sink; plus a handicap accessible bathroom at about 100 sq.ft. At that price of meeting city standards there was no profit left for

me to be made, and no coffee shop was ever opened. A further barrier to dense, mixed-use walkable development is maximum lot coverage ratios. They prevent a huge amount of value from accruing in the city. In all but a couple zoning codes, which only occur on a few blocks in a few areas of the city, not only is use restricted to very narrow types, but the amount of that use as coverage of the land is required to be below 40% of the land. This creates a situation of sprawling single family lots, many people with large yards that they do not want, or are unable to maintain, and so they grow over with blight.

Or alternatively it creates pods of high density apartments which are surrounded by large lawns and parking aprons. This type of apartment dwelling may be dense on the site, but in the context of the block, both height

limits and lot coverage prevent the buildings from actually being close enough together, or near different uses to generate any value or walkability.

In situations, like a basement suite or laneway house downtown, to meet the zoning code you have to maintain this maximum lot coverage, but you also have to accommodate 3 on-site parking stalls. Where walkability already flourishes, and the framework and demographic exists to walk, still more regulations anticipating unlikely events add cost and restrictions to what you can build, especially things that add value to the land and to the city.

The Carrots The parking subsidy, covered extensively in the large book, reads like this. The city requires each new development to have a large amount of parking, sized generally for the busiest times of the busiest days of the year. Since suburban developments are limited to single uses, there is no crossover in parking facilities, nor any capacity for spill over into other streets, and so on the face of it, parking minimums make sense for citizen convenience. The problem is that parking costs money to build. In the case of a stripmall parking stall, the cost is around $4000 per stall. The carrying cost of that stall is bundled into the rents of the tenants, and then added on to the price of your goods. For a reasonable rate of return, a stripmall developer would have to generate $42 per month, per parking stall in added rent from its tenants. A small restaurant of 30 seats is required to have 38 parking stalls. That means that parking costs the landlord $1575 per month, and that is going to be bundled in to my rent. Restaurants are a great place that Donald Shoup, a California based economist, used to make a fantastic

analogy about the politics of minimum parking requirements; “If cities required restaurants to offer a free dessert with each dinner, the price of every dinner would soon increase to include the cost of the dessert. To ensure that restaurants didn’t skimp on the size of the required desserts, cities would set precise ‘minimum calorie requirements.’ Some diners would pay for desserts they wouldn’t have ordered had they paid for them separately. The consequences would undoubtedly include an epidemic of obesity, diabetes, and heart disease. A few food-conscious cities like New York and San Francisco might prohibit free desserts, but most cities would continue to require them. Many people would get angry at even the thought of paying for the desserts that they had eaten for free for so long”. Howard Frumkin has also related conclusively the effects of autooriented living with many of the same effects of free desserts including obesity. The required parking in a suburban setting is in fact a double edged sword, as the required parking drives uses further apart, making driving even further required.

A possible remedy for this is to include parking stalls in structures rather than surface stalls. However in this case we run in to far greater price prohibition. Structured parking stalls cost between $20-$40,000 to build and Underground stalls between $4060,000. Therefore real estate values and parking demand have to be truly extraordinary to ever justify their construction. This is one of the reasons that new mixed-use construction has not happened downtown despite the City of Kamloops offering all kinds of tax incentives and policies to support it. City Parking Requirements directly prevent the type of development that their plans support from being built, and also directly prevent land owners from adding value to their property. It is said that it is in the culture of Canadians to drive, and that they will not walk, yet given the subsidy present to drive, and the design of our cities, sprawling, disconnected and with free parking at each end, driving is the only economically rational thing to do. We just pay the cost in our taxes and our goods rather than as a user fee of driving on the roads. Developers know that people will not pay the price of the parking directly and this is why they fight City Hall on every project

about parking spaces. On a personal note, if my downtown condo did not include a free underground parking stall, and instead it was added on to the price of my condo at its cost to build, approx. $50,000; I would likely save myself the $50,000 and eight years off my mortgage. The land value subsidy is a more ambiguous one, but also the one that has the greatest effect on the types of places that get built. When the BC Assessment Authority determines the price of your property, they measure two metrics; land value and improvement value. The combined of these two figures is the amount on which your property tax is levied. These two figures carry the same weight, and the formulas to arrive at the value for each of these figures is unclear, but includes construction costs, sales figures, historical data and depreciation projections. One thing is for sure, the further from the centre and the larger the lot, the less the Assessment Authority pegs a unit of land to be worth. A sq. ft. of infrastructure on the periphery costs the city the same amount to maintain, or arguably it actually costs more. Sales prices, what folks are willing to pay, on the periphery may be less than nearer to the center, but from the

cities point of view, the burden of the service operated by the City should be consistent in the value of the land across the city. Consider then the following Assessment Figures ($/Sq. M.); Commercial; 

Downtown; 301 Victoria; $683

 

Downtown; 371 Victoria; $679 Dufferin; 1395 Hillside; $172

Aberdeen; CityView; $153

Valleyview; 2121 Trans Canada; $172


Downtown; 724 Battle; $339 Downtown; 135 Battle; $393

Valleyview; 2276 Crescent; $211

Aberdeen; 759 Laurier; $238

Westsyde; 670 Lyne; $140

In Commercial property, it is 341% more expensive to buy and carry land downtown than it is in the burbs. Residential property is roughly double in most cases downtown compared to the burbs. If the implication of this is not clear it should be. Developing on the periphery is so much cheaper that no amount of tax subsidy could ever approach the incentive to develop on the periphery, especially for a large scale out of town developer.

The moral of the Story We have ascertained that downtown mixed-use, walkable development styles are far better performing for tax revenue, for sociability, for entrepreneurship, for health and is supported by the City in spirit. We also now are beginning to understand all the different factors that make that ideal completely unrealistic for even the most ideological and motivated developers to achieve. If we want to see more downtown style development we need to see a couple things happen; 1. Downtown style development needs to be allowed outside downtown. To achieve this, lot coverage must be allowed to be at or near to 95%. Of course no developer would have a market for complete lot coverage, but it should be in the developers’ realm to determine this. The same goes for parking minimums. The developer gets to decide how much parking they want to invest in, not the City. 2. Development requirements in Downtown need to be more reasonable

Does a 400 Sq. Ft. cafĂŠ really need to have a handicapped bathroom, or can they share with the business down the hall? Would it be reasonable to assume that everyone in a small 3 story, 8 unit apartment building should be able to exit before the fire department arrives, and thus should not be subject to the same escape requirements as an 11 story building? Or that someone wanting to add density to their little lot with a Laneway House be approved by the process already in place, rather than a politicized council decision? Or that lot coverage maximums downtown be more reflective of the urban setting? The book, Stronger Kamloops, dives in to all these issues with far more precision, support and provides clear recommendations on the path forward. While planners search for solutions to problems that keep shifting, I propose instead that those of us in the population be simply allowed to achieve the cities goals for them by getting the regulation out of the way for rational responses to evolve at the level of the person, the property, the business, the block, the neighbourhood. Please check out the blog at

Stronger Kamloops - The Primer  

This is what to read to quickly understand the Strong Kamloops story

Stronger Kamloops - The Primer  

This is what to read to quickly understand the Strong Kamloops story