This post originally appeared on Orphan Road.
A couple of months back daijimin at STB and I went back and forth
over Vancouver’s proposal to become a real-estate developer. At the time I argued that it was illegal because TIF is barred in our state constitution. Daijimin said, in response, that “if it’s illegal, we might as well go ahead with the even shadier plan of buying the land with eminent domain, building light rail then selling it after the prices go up. That way you capture all of the gains.”
Well, now that more details of the plan have emerged, I think daijimin may have been on to something: Translink has, it seems, gone with the “shadier” approach.
The nickel version of the idea is this: Translink needs funding to build new rail lines, and they know that the property around the stations is going to be in demand, so why not go the extra step and develop the property yourself and use that money to finance the project? It’s certainly more attractive than more property or sales taxes.
There are a couple of problems…
The first is eminent domain. Giving a property developer that kind of power sounds like a recipe for a massive conflict of interest. Already Translink is saying that the only way to reall make it work is to buy the property on the sly:
To build three rapid transit lines in a decade, TransLink will need to secure high-density zoning from municipalities to feed ridership and create opportunities to profit from the real estate appreciation, Jacobsen explained.
To acquire the land cheaply and beat out developers and speculators, TransLink will have early discussions about alignments and station locations and then quickly and quietly buy the land where stations are to be built.
Shady! Especially if, as a government agency they have access to the records about property transactions that private developers don’t have.
The second issue is that property development is itself a risky business. I know that Vancouver (and Cascadia generally) is supposed to be The Land Of Eternally Rising Property Value, but reality doesn’t work that way. Developers go belly-up all the time. Do we really want the trains to stop running if the real-estate market tanks?
Now, Vancouver’s planners are hella smart and I wouldn’t be surprised if they’ve thought of these things. Or maybe it’s just different in Canada and the idea of giving a government agency that much power doesn’t make anyone sweat. After all, they’ve already done it in Hong Kong, apparently.
But if we’re looking for a potential solution for our own fair city, it seems like a LID is a safer, more reliable revenue stream, but one that effectively accomplishes the same thing. Of course, a LID requires all the property owners to approve. Even in South Lake Union, where the vast majority of the property is held by a single owner who was in favor of the tax, there was significant opposition from some property owners.
In short: there are no free lunches!