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Landbanking in Red Deer Watson, Kenneth Frank 1974

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M RED DEER by KENNETH FRANK WATSON B.A., University of Queensland, 1967 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE SCHOOL OF COMMUNITY AND REGIONAL PLANNING We accept thia thesis ate conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA April, 1974. In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make i t freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of The University of British Columbia Vancouver 8, Canada Date i i i Abstract. This thesis i s about "landbanking". The case study of Red Deer was chosen to illuminate the concept rather than vice versa. The case of Red Deer i s interesting in i t s e l f but has a wider importance because the Federal Government i n Canada and several Provincial Governments have recently pledged massive financial support of local "landbanks". This study i s not a micro-empirical study of a particular land market but i s concerned with a certain policy and i t s market implications. The focus i s on landbanking as a system of urban land conversion in which government agencies play a direct and active role instead of a passive regulatory role. Landbanking has been a particularly confused and contentious topic, the f i r s t three chapters of this thesis attempt to clear away this confusion by an analysis of the concept and the relevant literature. Several distinct "schools of thought" on landbanking are identified and several erroneous conceptions are refuted. The economics of landbanking and particularly those issues relevant to a cost-benefit analysis are examined in depth i n the methodology chapter. The next three chapters are a detailed case study of the Red Deer landbank from i t s inception to December 31 1972. The legal framework of i t s operation, the administration of the program, the financial history of the program, and the policies that structured the landbank are examined. Example subdivisions are analysed. The f i n a l chapter, i s a cost-benefit evaluation of the landbank which relies on the conceptual base established i n the earlier chapters and the empirical data gathered i n the case study. i v Table of Contents Abstract i i i Table of Contents i v L i s t of Tables v i i L i s t o f Figures '. y i i i Chapter 1 D e f i n i t i o n of "Landbanking" 1 Introduction. Problems of Land Conversion 2 Scope of t h i s Study 7 D e f i n i t i o n of Landbanking ••••• 9 Special Purpose Landbanks. Urban Land Conversion i Passive Agents. Urban Land Conversion i Active Agents. The Planned Unit Landbank. Limits of Planned Unit Landbanks 30 Chapter 2 Landbankingi The State of the Art 34 Introduction. Operational Landbanks • 35 The Literature o f Landbanking 49 Chapter 3 Methodology • • 64 The Need f o r Research. Goals of the Planned Unit Landbank 67 Measuring Benefits 82 Measuring Costs 102 Discount Rates 105 Decision Formulae 108 Chapter 4 Establishment of the Red Deer Landbank 113 A Turning Point 1952 116 I n s t i t u t i n g a Landbank .............*..• 122 Staged Growth. Land Ownership. Prepayment Program. Prepayment Charges. Summary • • • 136 V Chapter 5 Landbank Administration 139 Historical Background. Euclidean Zoning vs. Development Control 142 Regulating PUD Landbanks 145 Red Deer Zoning By-Law. Constitutionality. Delegation of Authority. Administration • 151 Division of Functions. Processing Development Applications. Zoning Amendments. Development Permits. Regional Planning Input 1 5 3 Zoning Changes • • 160 Administrative Appeals and Judicial Review 162 Development Appeal Board. Judicial Review of Zoning. The PUD Approval Process 168 Some Alternatives 169 An Example Subdivision 172 Chapter 6 Financial History of the Landbank 188 Program Financing 189 Sales Policy 192 Landbank in High Growth 1958 to 1964 196 Crisis 199 Landbank in Slow Growth 202 Overview 1958 to 1973 • 205 The Future 207 Chapter 7 Conclusion ...................«..*............... 211 Landbank Costs • 214 Evaluation 215 Option 1 Option 2 • j Option 3 Future Research ....... 0........ 220 Bibliography 222 Appendix 1.... .. 237 Appendix 2 245 v i L i s t of Tables. Table Page. 1. Time sequence of Development! West Park Extension ...... 183 2. Land and Improvement.Charges 1 West Park Extension 184 3. Residential Land Sales Policy 195*1 4. Landbank Investmenti 1958 to 1963 196 5. Red Deer Growth Rates 198 6. Residential Lot Sales 1 9 6 l to 1964 200 7. Distribution of City's Equity Dec.31 1965 202 8. Historical Residential Land Prices 206 9. Schedule of Subdivisions Dec.31 1972 206 10. Subdivision Investment 1958 to 1972 • 206.1 11. Landbank Costs and Recoveries 1958 to 1969 206.3 12. Landbank Summary 1973 209 13. Landbank Investment 1953 to 1972 214 1 v i i - . L i s t of Figures Figure Page 1. i x 2. Airphoto of Red Deer 1949 ....... 0....... • • 9 9 9 0 0 9 9 9 0 9 9 9 9 X 3- Airphoto of Red.Deer 1966 0 « 9 9 9 9 x i 4, Landbank» Subdivision Development Dates . » 0 • 9 * 0 9 9 * 9 9 9 e 9 9 x i i 5. 9 * 0 9 9 9 * 9 9 9 9 9 ft 9 0 x i i i 6. Households and Population 1970 . . . . . . . . . . » « 9 9 9 9 9 * 9 * 9 9 9 ft A x i v 7. P r i c e of Single Family Detached Dwellings 9 9 ft 0 XV 8. M i l l Woods Project 0 e 9 9 9 9 9 9 9 9 9 0 9 9 9 339 9. S 9 0 9 125 10. Sanitary Sewers 1969 . . . . . . . • 0 0 0 9 9 0 9 9 9 9 ft; e 9 9 126 11. Development Permit Application Procedure e • 9 9 0 9 9 9 0 0 9 9 9 0 9 150 12. 1 7 4 13. Red Deer Street Pattern 1974 a 9 9 9 9 0 9 9 9 0 9 9 9 e « j. ( ~r 180 1 * . West Park Extension ..... „ 0 • 9 9 'ft 0 0 O ft 9 9 9 « 9 1 8 1 15. Zoning Map - West Park Extension .. a 9 9 ft 999 9 9 9 9 0 9 0- 182 16. Landbank S e l l i n g P r i c e s 1966 to 1973 0 • 9 9 9 9 f t 9 9 9 9 9 tt e • 195.2 17. B u i l d i n g Permits 1948 to 1969 9 9 999909999 • 0 9 « 198.1 18. Landbank Inventory of Serviced Lots 1966 to 1973 ... 9 9 9 9 204.1 T i RED DEER 1966 / / : I I U I I U I U I I I I l U l l l U I I I I I U U I I I U > l l ^ | t | l l l l l l U l l l l l l l l l l l i U i m i l l H l f f l l l l l l M I 1 i! H HILL1  Io I GOLDSN, I WEST/ I ;/ I<K *i ,77 :iiniinii:iiiiiiiiiiiiiiiiii!iiiMiiiiiiiHiuuiiiiiiii::;iiiiiiiiiiiiiiiiiiniiiiii:a P. NORMANDEAU I 1973 NORTHLANDS IHRIVERSI'DE I '(HEAVY i '^INDUSTRIAL fes; PINES -H Jt=f t a M i w r ! nit ' E^\H WOODLANDS!-! II mm I ilPARK^-o^y coir ct«Ri pPAR CHIEFXiX • — —17-n - — i i — 3 - . ^Trrar-ii—j M r n s n c i s N E R JU! •—idJh li i - (I ^*3^; ir] " I f / "Il JLIZ1' c-pJi?;-D¥3Ei,/:_i:i ; \ 1973 i! RED DEER i COLLEGE ! i-J-i.-fb i :-,19o2; i; 10 ANDERS 1974 , ! L J J \ '--J L 19o2  V i .5 I j-HBOWER ' ^ / ^ V v ^ ' H PLACE '4 . v|>. 1 * 4 i-'i 1974 < . ) I '-ifliiiiiiiHiiiniiiiiiiniiiiiiiiiiniiiffiitnniiiiiiiiiiHiiMiiinMiiiiimtiiiitiiiiMitiiiiHtfliH«tiiit«KmnniM - "T O, r-'-'^J ,{//_ 1 FIGURE 4 % ^ ; /( 1 % ! i' I Landbank Subdivision Development Dates. % : // % ' ' </• / '•A u 1 y . ; 7 e r ^ ^ a an EE 3DJS - n u t \u , .. s„__ uUDO U'.j. s i : "3!l" -| - T: ^] \ 1 " i " \ i ! I / H ^ L ...« n • -XT- j .p-'J^-tJ iU-..iu -1 IU ?C '-^  1; '5 ' \<?*>. v. . 1 ...» ^ 10 FIGURE 5. Base Map. 196?. jfrcmmmni»ummmmmjniinji)tjm iiiiniiiiiiiiiiiiiiniiiimiiii|iliiniiii(iii;vii-S . S icoo o 3200 • • .nnr> = » w m t i i i u i i i i H u i i M i i i i i n i i u i i ^ i i i M H n u i u i u ^ 1 ^ ^ U m i U J ' V 2-80--10 HmminniMimHniiiHMttiiiimininiinmiHMMHiiMmmiini^^^ I' Figure 6 Households and (Population) 1 9 7 0 . Sources C i t y Census. ruumiu«)Uiiuwu»Miui»ni/ii^uHuuHmHHHmniinimiii»»n«iiiiiUiwaiHiiniii]!iHitiiiiiiFiiiiMi|: ' M iuiTHiiiiiiifiiiimn{iuniiiN:iain:i:iiHt^iuiuini^uiiRiiuii(imiifiiiiiiHiniiiiifiiiitiiiti*ti«HiiM!iiiiiriin Figure 7 Price Single Family Detached Dwellings Source 1 Linda Paul s thesis 1968. DEFINITION OF "LANDBANKING" Most of the c o u n t r i e s of the world have experienced sharp s h i f t s i n the balance o f t h e i r r u r a l and urban p o p u l a t i o n s over the l a s t t w e n t y - f i v e years. C i t i e s have expanded and seem to be e x e r t i n g an ever s t r o n g e r a t t r a c t i v e f o r c e . More and more people are becoming c i t y d w e l l e r s . Canada i s no exc e p t i o n to t h i s t r e n d . Linked with t h i s movement has been a surge i n r e a l incomes. T h i s i s e s p e c i a l l y t r u e i n North America. F a m i l i e s have become more a f f l u e n t . These two f a c t o r s together have r e s u l t e d i n a very high demand f o r more and b e t t e r l i v i n g space; and t h i s demand has been t r a n s l a t e d i n t o mushrooming suburbs. 2 The growth of these suburbs has not been p a i n l e s s . Often i t was attended by d i s l o c a t i o n s , u g l i n e s s , and inconvenience. N a t u r a l e c o l o g i c a l systems have been ig n o r e d and d i s r u p t e d ; the c o n f i g u r a t i o n of urban s e r v i c e s has been i n e f f i c i e n t ; s c h o o l s have been overcrowded; parks and open space have been sc a r c e and badly l o c a t e d ; and s e r v i c i n g l a g s among other f a c t o r s have r e s u l t e d i n i n f l a t e d land p r i c e s . These symptoms, while not u n i v e r s a l , have been common enough t o l e a d to widespread "no growth" sentiment. People have l o s t p a tience with overloaded tax systems p e r p e t u a l l y s t r u g g l i n g to patch-up the r a v e l l e d urban f a b r i c . An a l t e r n a t i v e i s to look at the process of urban land c o n v e r s i o n to see i f i t can be improved. Perhaps the problems a s s o c i a t e d with growth are not i n e v i t a b l e . I t i s a complex process of many asp e c t s and a c t o r s , and a s i n g l e panacea f o r a l l i t s problems i s not l i k e l y . N evertheless there are systems a l t e r n a t i v e s t h a t seem promising - landbanking i s one. PROBLEMS OF LAND CONVERSION. There i s an e x t e n s i v e l i t e r a t u r e documenting the i l l s of the urban f r i n g e . The problems are c l e a r . But i t i s not c l e a r to many what l i e s a t the r o o t of the problems. The process of land c o n v e r s i o n i s so fragmentary and v a r i e s so much from one l o c a t i o n to another t h a t one i s confronted by seeming w i l d d i s o r d e r . T h i s i s compounded by Byzantine l o c a l government r e g u l a t i o n s , and e n d l e s s l y p r o l i f e r a t i n g r e g u l a t o r y agencies each with t h e i r separate i n p u t i n t o the process. No one i s i n 3 charge. No one has u l t i m a t e r e s p o n s i b i l i t y . T h i s i s e l o q u e n t l y put by James Bouse, a mortgage banker who founded the new c i t y of Columbia: "Our c i t i e s grow by sheer chance - by a c c i d e n t , by whim of p r i v a t e developer and p u b l i c agencies. A farm i s s o l d and begins r a i s i n g houses i n s t e a d of potatoes - then another farm. F o r e s t s are c u t ; v a l l e y s are f i l l e d ; streams are b u r i e d i n storm sewers. Kids overflow the s c h o o l s ; a new s c h o o l i s b u i l t . ... b i t s and p i e c e s of a c i t y are s p l a t t e r e d across the landscape. By t h i s i r r a t i o n a l p r ocess, noncommunities are born - f o r m l e s s p l a c e s without ord e r , beauty, or reason, p l a c e s with no v i s i b l e r e s p e c t f o r people or the l a n d . 1 , 1 T h i s i s the fundamental source of t r o u b l e . There i s no one able to impose human valu e s on the process. But at a , l e s s g e n e r a l l e v e l there are s u b s i d i a r y problems that, being more concr e t e , have l e d to more immediate pr e s s u r e s f o r change. I t i s u s e f u l t o mention these here t o s e t a context f o r the d i s c u s s i o n of the Red Deer landbank which f o l l o w s , although they cannot be t r e a t e d i n depth i n such a s h o r t space. U l t i m a t e l y t h i s study assumes that the problems are r e a l and s e r i o u s , r a t h e r than arguing t h i s r i g o r o u s l y . I t seems a reasonable s t a r t i n g p o i n t . i In Canada the p r i n c i p a l source of concern has been a s p e c t a c u l a r l y high r a t e of i n f l a t i o n i n the p r i c e s of s e r v i c e d l o t s . In the p e r i o d 1950 to 1970, both consumer p r i c e index and c o n s t r u c t i o n c o s t s per s g . f t . f o r NHA bungalows rose from a base of 100 to 160-170. In comparison the land component of a NHA bungalow rose much more from roughly 155 to 500. T h i s i n c r e a s i n g d i s p a r i t y i s r e f l e c t e d i n the f a c t t h a t over the same period the s i t e value as a p r o p o r t i o n of the t o t a l value of the house rose from 9.8* to 20. 1*. The most obvious e f f e c t of d i s p r o p o r t i o n a t e land p r i c e 4 i n c r e a s e s i s t h a t lower income f a m i l i e s are unable to o b t a i n decent housing a t a p r i c e they can a f f o r d . T h i s i s r e f l e c t e d i n the f a c t t h a t lower income f a m i l i e s must pay a much higher p r o p o r t i o n of t h e i r income f o r accommodation than the more a f f l u e n t f a m i l i e s . I f i t i s a matter of s o c i a l v a l u e s t h a t a l l Canadians should be a b l e t o o b t a i n decent housing a t a c o s t l e s s than 2595, of t h e i r household income then the present system i s d y s f u n c t i o n a l . I f r e s a l e v a l u e s r i s e then p r o f i t s can be made by the homeowner. But even t h i s i s i l l u s o r y , as he has to pay an e q u a l l y i n f l a t e d p r i c e f o r a replacement home. There i s a s u b s t a n t i a l group of moderate-income Canadians who own s i n g l e f a m i l y d w e l l i n g s t h a t they purchased then or twenty years ago. But the p r o p o r t i o n of Canadians who can now a f f o r d to purchase "standard" housing i s a dwindling one. The s o c i a l c o s t s i n v o l v e d i n t h i s s i t u a t i o n are c o n s i d e r a b l e . For example, among the r e s u l t s of high and r a p i d l y r i s i n g housing c o s t s a r e : overcrowding, l o c a t i o n a l d i s f u n c t i o n s , and a d i s p r o p o r t i o n a t e d r a i n on the f a m i l y r e s o u r c e s of the poor l e a d i n g t o high debt and f a m i l y breakdown. The c i t y planners who suggest the value of government i n t e r v e n t i o n i n urban l a n d c o n v e r s i o n are o f t e n accused by economists of not understanding the market. In theory the f r e e market lea d s to an optimal a l l o c a t i o n of land resources. In p r a c t i c e the market has a number o f i n h e r e n t d i s t o r t i o n s t h at produce f a r from o p t i m a l r e s u l t s . Some of the reasons f o r the f a i l u r e of the market mechanism t o produce good r e s u l t s a r e : 5 1. The conver s i o n of land to urban use i s a one-way process. Once i t has disappeared under r e s i d e n t i a l s u b d i v i s i o n i t cannot be recl a i m e d f o r a g r i c u l t u r e by an i n c r e a s e d demand f o r a g r i c u l t u r a l products. Land use d e c i s i o n s , good and bad, are i r r e v e r s a b l e i n comparison with other commodity d e c i s i o n s . 2 . Sprawl and i t s i r r a t i o n a l s c a t t e r e d p a t t e r n of improvements makes i t very d i f f i c u l t to superimpose an e f f i c i e n t c o n f i g u r a t i o n of urban s e r v i c e s on an area when i t i s converted from s e m i - r u r a l to urban development. 3. I n s e n s i t i v e d e c i s i o n s can a l t e r the n a t u r a l environment d i r e c t l y through such a c t i o n s as f i l l i n g of marsh land, dredging of channels, and devegetation; or i n d i r e c t l y through waste d i s c h a r g e . These can impose e x t e r n a l c o s t s on the community. 4. The r e s i d e n t i a l land market i n Canada i s l a r g e l y dominated by s t r o n g m o n o p o l i s t i c and o l i g o p o l i s t i c f o r c e s . 5 . L a s t l y the c o s t of urban land i s , w i t h i n c e r t a i n l i m i t s , p e c u l i a r l y unresponsive t o the market mechanism of supply and demand. Owner d e c i s i o n s have an i r r a t i o n a l element. In p a r t i c u l a r p r i c e does not tend t o f a l l when demand f a l l s r e l a t i v e to supply. Wallace Smith s t a t e s t h a t i t i s c l e a r that urban land p r i c e s i n Canada s i n c e the second war have c o n s i s t e n t l y r e f l e c t e d owners' reserve p r i c e s r a t h e r than the l e v e l of housing demand. T h i s has l e d to a " r a t c h e t e f f e c t " whereby land p r i c e s r i s e i n response to demand but do not f a l l with a s l a c k e n i n g demand. 6 " T h i s r a t c h e t - l i k e movement of urban land p r i c e s seems l i k e l y t o produce two kinds of adverse e f f e c t s on welfare. One i s the p r o j e c t i o n of replacement demand i n t o land more and more remote from, the c e n t e r of the c i t y , c a using aggregate t r a n s p o r t a t i o n c o s t s f o r the community to r i s e . ... The other adverse e f f e c t i s t h a t the d e t e r i o r a t i n g c o n d i t i o n s of the i n i t i a l stock of s t r u c t u r e s g r a d u a l l y t r a n s f o r m s t h e u t i l i t y of b u i l d i n g s e r v i c e s i n t o economic r e n t . That i s , income i s t r a n s f e r e d from households (or other b u i l d i n g users) to b u i l d i n g and land owners ..." 3 RESTRICTIONS IN SUPPLY. I t i s g e n e r a l l y accepted t h a t r e s t r i c t i o n s i n the supply of s e r v i c e d l o t s i n Canadian c i t i e s has been a major cause of the p r i c e i n f l a t i o n i n r e c e n t years. There are r e s t r i c t i o n s i n both the p r i v a t e development s e c t o r and i n the government s e c t o r concerned with r e g u l a t i n g the land c o n v e r s i o n process. On the s i d e of p r i v a t e development th e r e i s the m o n o p o l i s t i c element we have mentioned, which encourages p r i v a t e f i r m s to s e t the p r i c e of l o t s at the l e v e l a p r o f i t - m a x i m i z i n g monopolist would s e t them. On the government s i d e there i s a r e l u c t a n c e to approve new s u b d i v i s i o n s which w i l l add to the municipal debenture debt and f u r t h e r burden inadequate s e r v i c e s ; and a l s o a slowness and c a u t i o n r e s u l t i n g from the government agency's commitment t o the p u b l i c i n t e r e s t with only n e g a t i v e r e s t r i c t i v e t o o l s to f u r t h e r t h a t i n t e r e s t . T h i s i s another b a s i c source o f s t r e s s i n the present system of urban land c o n v e r s i o n - i t i s an adversary system with d i f f e r e n t a c t o r s seeking d i f f e r e n t g o a l s , r e s u l t i n g i n c o n f l i c t s and d e l a y s . 7 SUMMARY: LAUD CONVERSION PROBLEMS. In t h i s s h o r t space I have t r i e d t o i n d i c a t e some of the problems i n the present system of urban land c o n v e r s i o n . The main problems are: severe i n f l a t i o n o f l o t p r i c e s r e l a t e d to r e s t r i c t i o n s i n supply; r e g u l a t i o n s t h a t are a chaos of minutae; e x t e r n a l i t i e s such as p o l l u t i o n , congestion, and the d i s r u p t i o n of the n a t u r a l ecology o f an area; t a x a t i o n anomalies; and p e r p e t u a l l y overburdened s e r v i c e systems. Not a l l of these have been d i s c u s s e d , and none have been t r e a t e d a t l e n g t h . I t would take a separate study, or s e v e r a l , t o do so. But an attempt has been made to o u t l i n e these problems ' which have prompted the recent concern i n Canada that the urban c o n v e r s i o n process i s not f u n c t i o n i n g as i t should; and thus to s e t the context f o r f u r t h e r d i s c u s s i o n of the Red Deer landbank which i s the t o p i c of t h i s study. THE SCOPE OF THIS STUDY. The t h e s i s of t h i s study i s that an examination of urban land c o n v e r s i o n i n Red Deer j u s t i f i e s the recommendation of s e v e r a l r e c e n t Canadian p o l i c y r e p o r t s * that landbanking be more widely adopted i n Canada. The study w i l l be a c o s t - b e n e f i t e v a l u a t i o n of a p a r t i c u l a r case. The landbank i n Red Deer w i l l be examined from a l l p o i n t s of view - h i s t o r i c a l , a d m i n i s t r a t i v e , l e g a l , f i n a n c i a l , and i n terms of comprehensive p l a n n i n g . The theory of landbanking w i l l .be examined, and h o p e f u l l y c l a r i f i e d by the i n v e s t i g a t i o n of an a c t u a l landbank. The l i t e r a t u r e of 8 landbanking has i n the p a s t been marred by h y p o t h e t i c a l f l i g h t s of fancy and c o n j e c t u r e . Hany authors have t h e o r i s e d a c c o r d i n g to t h e i r own p r e c o n c e p t ions of what a landbank might be. The r e s u l t has been u t t e r c o n f u s i o n . In f a c t d i f f e r e n t w r i t e r s have meant very d i f f e r e n t t h i n g s by "landbank", o f t e n without r e c o g n i z i n g l o g i c a l i n c o n s i s t e n c i e s . By examining one of the prototype landbanks i n Canada, I hope to e l i m i n a t e the c o n f u s i o n ; and to e s t a b l i s h a f i r m concept of what a landbank i s . Secondly t h i s study w i l l t r y t o e v a l u a t e the achievement of the landbank as r i g o r o u s l y as p o s s i b l e . In t h i s way a s t r o n g foundation might be l a i d f o r f u t u r e p o l i c y d e c i s i o n s r e l a t i n g to land banks. At the same time an e m p i r i c a l study of t h i s s o r t may add to the g e n e r a l knowledge about the nature of the land conversion p r o c e s s . 9 DEFINITION OF LANDBANKING. Landbanking has been p a r t i c u l a r l y unlucky i n i t s i n t e r p r e t e r s . The c l o s e s t anyone has come to s o r t i n g out the t e r m i n o l o g i c a l c o n f u s i o n i s Sy l v a n Kamm's a n a l y s i s that concludes that some of the goals of "landbanking" are s e l f -c o n t r a d i c t o r y . 5 I f one assumes t h a t a l l the w r i t e r s on landbanking have been d i s c u s s i n g the same phenomenon, then t h i s c o n c l u s i o n f o l l o w s . But they have not. There are s e v e r a l d i s t i n c t c o n c e p t i o n s of what a landbank i s . At l e a s t one of these conceptions that has been i n f l u e n t i a l has no base i n r e a l i t y a t a l l . There are s e v e r a l approaches to d e f i n i t i o n that I have r e j e c t e d as inadequate. The most common i s d e f i n i t i o n through g o a l s . T h i s . i s u n s a t i s f a c t o r y because very d i f f e r e n t programs can have the same g o a l s . Indeed most of the g o a l s have been uncontentious ones t h a t the p r i v a t e development i n d u s t r y would claim a l s o . A second r e l a t e d approach i s the " c a t c h - a l l " d e f i n i t i o n where a l l the c o n c e i v a b l e good e f f e c t s (or bad e f f e c t s i f i t i s a c r i t i c speaking) of government i n t e r v e n t i o n i n any aspect of land s a l e s or development are a t t r i b u t e d to landbanking. A t h i r d approach emphasises the p u b l i c h o l d i n g of l a n d . Often the l e n g t h of land ownership i s seen as the crux of landbanking. The c o n n o t a t i o n s of "bank" have tended to r e i n f o r c e t h i s approach, and made i t a popular one i n the news media. The i m p l i c a t i o n i s that land i s loc k e d away f o r f u t u r e need. A l l of these attempts at d e f i n i t i o n miss the c e n t r a l point that landbanking i s a new system of urban land c o n v e r s i o n . 10 He w i l l see that government a c q u i s i t i o n of land i s i n v o l v e d , and government s e r v i c i n g of the land within a r a t i o n a l s e r v i c e s e x t e n t i o n p o l i c y , and c e r t a i n p r i c i n g p o l i c i e s , and c e r t a i n neighbourhood desi g n i n g p o l i c i e s w i t h i n a planned u n i t development system - but a l l of these are l e s s than the whole system. Landbanking i s an i n t e g r a l system of urban land c o n v e r s i o n . T h i s i s so because such t h i n g s as government land a c q u i s i t i o n , and municipal s e r v i c i n g p o l i c i e s , take on new dimensions w i t h i n a landbank. A landbank i s not simply an aggregate of separate land use c o n t r o l mechanisms. Governments ac q u i r e l a n d , and provide s e r v i c e s , and encourage good p l a n n i n g w i t h i n the present system of land c o n v e r s i o n . But w i t h i n a landbank these t h i n g s a c q u i r e a d i f f e r e n t meaning; and t h i s i s because a landbank i s a d i f f e r e n t f u n c t i o n a l system - not simply another i n p u t i n t o the t r a d i t i o n a l system of c o n v e r t i n g land to urban use. At l e a s t t h i s i s so i n what we s h a l l c a l l the c e n t r a l case - the Planned Unit landbank. The j u s t i f i c a t i o n f o r c a l l i n g i t the c e n t r a l case i s that a c t u a l landbanks i n Canada, Europe and A u s t r a l i a , are of t h i s s o r t . We s h a l l attempt to c a t e g o r i z e a l l of the concepts that might c o n c e i v a b l y go by the name "landbank", and then i n d i c a t e t h e i r r e l a t i o n s h i p i f any to the c e n t r a l case of the Planned U n i t landbank. The f o l l o w i n g i s a t e n t a t i v e c a t e g o r i z a t i o n of the d i f f e r e n t concepts which have a t one time or another been r e f e r e d to as "landbanks". S p e c i a l Purpose Landbanks 11 P u n b l i c Lands T r u s t . A g r i c u l t u r a l Landbank. P r o j e c t Assemblies. Urban Renewal Assemblies. Urban Land Conversion: P a s s i v e Agents. G r e e n b e l t s . R e c r e a t i o n a l Open Space. The "Reserve Landbank." P u b l i c U t i l i t i e s Landbank. Urban Land Conversion: A c t i v e Agnets. New Towns. The C e n t r a l Case: Planned U n i t landbank. Each of these concepts w i l l now be d e f i n e d and i l l u s t r a t e d . Because our f o c u s of i n t e r e s t i s on a c t u a l Canadian landbanks, and t h e i r r o l e as systems of urban land c o n v e r s i o n , i t i s imperative t h a t we c o n c e n t r a t e on the Planned Unit landbank. But an examination of the other concepts i s necessary to t r y to c l e a r away the c o n f u s i o n s of meaning. SPECIAL PURPOSE LANDBANKS. In the l a s t few years, governments i n North America have become more i n n o v a t i v e i n the sphere of land h o l d i n g i n a l l i t s a s p e c t s . There are s e v e r a l new programs which deserve a study to themselves. Some have been c a l l e d "landbanks" although they bear l i t t l e resemblance to the l o n g - e s t a b l i s h e d landbanks i n Red Deer, Saskatoon, and elsewhere. One such program i s the A g r i c u l t u r a l Landbank operated by the Saskatchewan Landbank Commission. In t h i s case to say t h a t the program does not resemble a Planned Unit Landbank i s not to d e n i g r a t e i t . I t seems a f i n e endeavour to r e h a b i l i t a t e the c a p i t a l s t r u c t u r e of 12 p r a i r i e farms. In essence, i t i s a leaseback arrangement t h a t enables farmers t o r e a l i s e the "sunk 1 1 c a p i t a l i n the farm while c o n t i n u i n g t o farm, and enables your c a p i t a l - p o o r men with an a p t i t u d e f o r farming to o b t a i n a farm. I t i s concerned with the farmer's secure r e t i r e m e n t , and with t r a n s f e r i n g f a m i l y farms from gene r a t i o n t o g e n e r a t i o n . The en a b l i n g Act was passed i n 1973 and seems a model of i t s k i n d . The o p e r a t i o n may q u i t e l e g i t i m a t e l y be c a l l e d a "landbank"; but i t i s a very d i f f e r e n t t h i n g from the programs i n Canada t h a t have t r a d i t i o n a l l y been known as landbanks. Another i n t e r e s t i n g s p e c i a l case i s the P u b l i c Lands T r u s t . T h i s has two as p e c t s . There i s a San F r a n c i s c o based o r g a n i z a t i o n c a l l e d T r u s t f o r the P u b l i c L a n d . 6 They are an i n n o v a t i v e p r i v a t e agency that i s i n v o l v e d i n open space a c q u i s i t i o n and landbanking f o r p u b l i c purposes. T h e i r mode of op e r a t i o n depends mainly upon tax p e c u l a r i t i e s i n the American system. The second aspect of P u b l i c Lands T r u s t s i s t h i s . S e v e r a l of the new landbanks i n Canada (notably t h a t of the P r o v i n c i a l M i n i s t r y of Housing i n B r i t i s h Columbia) have d e c l a r e d t h e i r i n t e n t i o n of l e a s i n g land at the end of the conv e r s i o n process, r a t h e r than s e l l i n g i t as s e r v i c e d l o t s . This w i l l not make too much d i f f e r e n c e to the program i n i t i a l l y , but i t w i l l change the scope of the o p e r a t i o n i n 25 or 50 years when l e a s e s are f a l l i n g due, and a second c y c l e of urban redevelopment begins. An urban renewal landbank i s another s p e c i a l case we s h a l l c o n s i d e r . I t i s a landbank c r e a t e d i n the context of an 13 urban renewal program. I t has l i t t l e i n common with Planned Unit Landbanks a t the urban f r i n g e . I t i s mentioned because the land a c g u i s i t i o n and d i s p o s a l programs a s s o c i a t e d with urban renewal are the major experience of Worth American planners with an a c t i v e r o l e i n land markets r a t h e r than a p a s s i v e r e g u l a t o r y r o l e . A landbank t h a t r e t a i n s ownership of the l o t s , and l e a s e s them, w i l l presumably be faced i n the f u t u r e with optimal urban renewal s i t u a t i o n s where the l e a s e s i n complete contiguous areas come due at the same time. F i n a l l y i t i s necessary t o c o n s i d e r p r o j e c t assemblies as landbanks. I t has been g e n e r a l l y accepted i n North America t h a t i t i s u n d e s i r a b l e t o agglomerate low income and welfare f a m i l i e s i n t o one smal l geographic area. T h i s c r e a t e s stigma s i t u a t i o n s . I t i s p r e f e r a b l e to s c a t t e r such f a m i l i e s through the community, making t h e i r l i v i n g c o n d i t i o n s as normal as p o s s i b l e . But p r i v a t e developers of condominium and row houses have been r e l u c t a n t t o s e l l p o r t i o n s of t h e i r developments to p u b l i c a gencies f o r use as s u b s i d i z e d housing. So governments i n Canada have become more and xmore i n v o l v e d i n the c o n s t r u c t i o n of condominium housing p r o j e c t s . For these land i s necessary. When such a program begins to plan f o r the long term, and e s t a b l i s h e s an i n v e n t o r y o f land t o s a t i s f y i t s needs, i t may begin to c a l l t h i s i n v e n t o r y a landbank. Once again t h i s "landbank" has l i t t l e i n common with the Red Deer landbank. I t has no i n t r i n s i c i n t e r e s t i n the land c o n v e r s i o n process. Indeed a l l the land i t buys may al r e a d y be s e r v i c e d . I t s purposes and proceedures are e n t i r e l y d i f f e r e n t from the Red Deer type of landbank. The only e x i s t i n g handbook on how to landbank i s concerned with t h i s 14 " p r o j e c t " c o n c e p t . 7 In e f f e c t i t i s concerned with how to operate a competent r e a l e s t a t e s u b s i d i a r y to a c o n s t r u c t i o n b u s i n e s s . T h i s has value of course, but i t i s a s p e c i a l purpose "landbank" i f t h a t name should be a p p l i e d a t a l l . One susp e c t s i t i s c a l l e d "landbanking" only because that term has a c e r t a i n cachet or c h i c among planners at the moment, without any deep understanding of the term's e s s e n t i a l meaning. 15 URBAN LAND CONVERSION: PASSIVE AGENTS. Governments have sometimes ac q u i r e d land at the urban f r i n g e as an adjunct to the p r i v a t e c o n v e r s i o n p r o c e s s . T h i s may take the form of removing p a r c e l s from the process so they would be a v a i l a b l e t o p u b l i c agencies such as the School or Park Board at a l a t e r date. The urban land c o n v e r s i o n process i s l a r g e l y u n a f f e c t e d by these a c t i o n s . Indeed most of such programs are t r i g g e r e d by immediate need, and the l a n d a c q u i s i t i o n comes at the l a s t stage of the c o n v e r s i o n process - the houses and people are there making t h e i r demands f e l t , so s c h o o l and park s i t e s have to be carved out of semi-urbanized development (often by e x p r o p r i a t i o n ) . Some programs show more f o r e s i g h t than o t h e r s ; but government land a c q u i s i t i o n as a supplement to the p r i v a t e c o n v e r s i o n process i s a p a s s i v e program. I t i s remedial r a t h e r than f o r m a t i v e . But sometimes such programs have been c a l l e d landbanks. One example i s the Greenbelt Landbank, as I have heard the Ottawa g r e e n b e l t c a l l e d . The Greenbelt phenomenon i s almost wholly European. A b e l t of land around a town or c i t y i s purchased to prevent the o v e r l a p p i n g of one urban area with another adjacent urban area. T h i s i s p a r t i c u l a r l y common i n the more densely s e t t l e d c o u n t r i e s of Northern Europe such as H o l l a n d . The land purchased by the landbank i s kept i n some use compatible with the landbanking purpose, such as f o r e s t or farmland. The primary purpose i s to prevent the development of one continuous sprawl of b u i l d i n g along a r t e r i a l connectors. I t has an e f f e c t on the urban c o n v e r s i o n process but a passive and 16 i n d i r e c t one. There i s one notable American experiment with t h i s type of "landbank": t h a t i s , the "Greenbelt towns" b u i l t by the Resettlement A d m i n i s t r a t i o n between 1935 and 1938. 8 A second type of supplementary program sometimes c a l l e d a landbank i s the P u b l i c U t i l i t i e s Landbank. T h i s type of "landbank" i n v o l v e s the advance a c q u i s i t i o n of s i t e s f o r p u b l i c u t i l i t i e s such as s c h o o l s , p u b l i c b u i l d i n g s , and t r a n s p o r t a t i o n r i g h t s of way. I t i s an adjunct to the land c o n v e r s i o n process r a t h e r than being c e n t r a l to i t . R e s i d e n t i a l development i s not part of the program, and the a c q u i s i t i o n s are not r e l a t e d d i r e c t l y to the e x t e n s i o n of trunk s e r v i c e s . Because of these r e s t r i c t i o n s i n scope, t h i s s o r t of "landbank" i s more d i f f i c u l t to operate than the Planned U n i t Landbank t h a t we w i l l c o n s i d e r l a t e r . T h i s i s because the problem of f o r e c a s t i n such a program becomes overwhelming. The Planned Unit landbank f i x e s the p a t t e r n of r e s i d e n t i a l development and i n t e g r a t e s p u b l i c u t i l i t y s i t e s e a s i l y w i t h i n i t s u n i t p l a n . But the U t i l i t i e s landbank must guess where the r e s i d e n t i a l growth w i l l be, and consequently where p u b l i c s i t e s w i l l be needed. T h i s i s not i m p o s s i b l e o f c o u r s e , and the p r o v i s i o n of s i t e s f o r f u t u r e s c h o o l s f o r example w i l l have some s e l f -f u l f i l l i n g e f f e c t on the e v o l v i n g r e s i d e n t i a l p a t t e r n . Nevertheless the u n c e r t a i n t i e s are great enough to d i s i n c l i n e most l o c a l a u t h o r i t i e s from adopting such a "landbank". There are a few o p e r a t i o n a l examples of t h i s s o r t of program: Montgomery County and Richmond County i n the U.S.A. are two. 9 17 The r e s u l t s of t h i s s o r t of program f o r u t i l i t i e s other than highways may be u l t i m a t e l y u n s a t i s f a c t o r y because of the p r e d i c t i o n problem. But i s o b v i o u s l y of c o n s i d e r a b l e use i n l i m i t e d i n s t a n c e s . I t i s not best c a l l e d a "landbank" but i s a l l i e d to the s e n s i b l e accumulation of an i n v e n t o r y f o r c o n s t r u c t i o n that we d i s c u s s e d e a r l i e r . In i t s absence the p u b l i c agency might i n c u r unreasonable c o s t s . A case i n p o i n t was the a c q u i s i t i o n of a r i g h t - o f - w a y f o r the Dpper L e v e l s Highway i n V a n c o u v e r . 1 0 The area through which the highway was to pass was q u i t e i s o l a t e d and worth $300-$500 per acre before the highway was g a z e t t e d . At these p r i c e s the 15 acres needed by the highway were worth l e s s than $6000. When the highway was announced p r i c e s of land i n the area jumped to $2000 per acre. T h e r e a f t e r the Department o f f e r e d $19,000 f o r the r i g h t - o f - w a y , and t h i s o f f e r was r e f u s e d . The case went t o a r b i t r a t i o n . A p r i c e of $38,300 was awarded. The Supreme Court on appeal added to t h i s sum a d d i t i o n a l severance damages of $4 8,000. J-1 So the cost to the p u b l i c was $86,000 p l u s c o s t s of l i t i g a t i o n and delay. The R e c r e a t i o n a l Open Space Landbank i s another passive p a r t i c i p a n t i n the c o n v e r s i o n process. Land t h a t has high i n t r i n s i c r e c r e a t i o n a l or e c o l o g i c a l value i n i t s n a t u r a l s t a t e i s purchased by a p u b l i c agency to prevent i t s being homogenized by i n d i s c r i m i n a t e t r a c t housing development. The worth of such a program i s uncontentious. There i s an e x t e n s i v e l i t e r a t u r e on the open space p l a n n i n g p r o c e s s . 1 2 As an autonomous program i t too o f t e n i n v o l v e s expensive eleventh-hour 18 a c q u i s i t i o n s of second or t h i r d c h o i c e land i n areas where problems have become sev e r e , because open space needs were not i n t e g r a t e d with the i n i t i a l development as they are i n a Planned Unit Landbank. The f i n a l p a s s i v e program we w i l l c o n s i d e r i s one that has added much to the c o n f u s i o n surrounding the landbank concept. I t i s the "Reserve Landbank". From 1967 to 1969, the Department of Housing and Urban Development i n the United S t a t e s commissioned a s e r i e s of seven s t u d i e s by the Urban Land Research A n a l y s t s C o r p o r a t i o n 1 3 i n t o a l l asp e c t s of "landbanking". These should have been remarkably u s e f u l s t u d i e s ; but u n f o r t u n a t e l y the concept of a "landbank" they worked with i s a p u r e l y t h e o r e t i c a l c o n s t r u c t t h a t bears no resemblance to a c t u a l landbanks. Two p o s s i b i l i t i e s f o r a landbank were v i s u a l i z e d . The f i r s t i s when a landbank buys a l a r g e s e c t i o n of land i n one area of the c i t y to prevent i t s development u n t i l a l a t e r date. This o p t i o n was not developed, because there would be no reason f o r such an a c t i o n t h a t would have any g e n e r a l a p p l i c a t i o n . The second p o s s i b i l i t y i s one that forms the co n c e p t u a l underpinning of t h e H.U.D. s t u d i e s . I t sees the landbank buying a continuous band of land around the c i t y wide enough t o prevent l e a p f r o g g i n g . T h i s land would be held by the landbank u n t i l a l l developable land nearer the core was exhausted. The landbank would then s e l l i t s land to p r i v a t e developers as raw land, and buy another e n c i r c l i n g band f u r t h e r from the co r e . The i n t e n t i s to keep the c i t y compact. 19 Such a n o t i o n of a landbank has two drawbacks. I t has no a c t u a l prototype p r o j e c t s , and i t makes l i t t l e sense i n theory. I t would be a s o r t of t r a v e l l i n g g r e e n b e l t . I t would be a wholly n e g a t i v e i n t e r v e n t i o n i n the land market. I t bears no resemblance to a c t u a l landbanks such as the one i n Bed Deer; and the chances of such a n o t i o n being implemented would be z e r o . T h i s i s probably f o r t u n a t e , because such a "landbank" would r e s t r i c t supply r a t h e r than augment i t . Janczewski presents a sympathetic summary of the s t u d i e s i n h i s t h e s i s , f o r those who wish t o pursue t h i s concept of a "landbank" f u r t h e r . In theory, the Reserve Landbank ac h i e v e s i t s goals by preventing sprawl. I t does t h i s by a c g u i r i n g land i n the path of urban expansion and p r e v e n t i n g i t s development u n t i l the time i s " r i p e " . The aim i s to prevent premature s u b d i v i s i o n . "A m u n i c i p a l land bank should have as i t s p r i n c i p a l f u n c t i o n to c o n t a i n or compress the outward p y s i c a l growth of a c i t y . I t would do so by immunizing a b e l t of land around the c i t y , keeping i t f r e e from development u n t i l the time i s r i p e and the land made ready. As the c i t y expanded, the landbank would c o n t i n u a l l y be s e l l i n g or l e a s i n g to p r i v a t e d e v e l o p e r s land at the edge of i t s h o l d i n g s t h a t i s c l o s e r to the c i t y c e n t e r , i n the meanwhile buying or r e n t i n g land a t the outer edge of the immunized b e l t . P r o p e r l y conducted, the bank would minimize or e l i m i n a t e sprawl or l e a p f r o g g i n g , " 1 * 20 "In s h o r t a landbank vihich aimed t o hold p e r i p h e r a l lands u n t i l they were r i p e f o r development, a t which p o i n t i t s o l d them to p r i v a t e developers at p r i c e s r e f l e c t i n g the c o n d i t i o n s then e x i s t i n g would c o n t r i b u t e to a more o r d e r l y development of urban a r e a s . H 1 5 T h i s misconception of what a landbank i s seems to be widespread among economists who have e i t h e r looked to a b s t r a c t models f o r an idea what a landbank might be, or who have s t u d i e d non-landbank markets and deduced therefrom what a landbank would be. I t i s c e r t a i n l y not based on o b s e r v a t i o n of a c t u a l landbanks. I t i s an a r t i f i c i a l concept of no r e a l i t y , and very l i t t l e t h e o r e t i c a l a t t r a c t i o n . I t s a b s t r a c t i o n from any f e a s i b l e a d m i n i s t r a t i v e implementation makes i t an easy t a r g e t f o r c r i t i c s of landbanking i n g e n e r a l . O v e r a l l the purveyors of t h i s n o t i o n seem, to have done a d i s s e r v i c e t o f u t u r e landbanks, by 1 21 c o n s t u c t i n g t h i s remote n o t i o n without a s e r i o u s examination of e x i s t i n g landbanks to see whether the t h e o r e t i c a l f o r m u l a t i o n f i t s t he r e a l i t y . I t doesn't. U n f o r t u n a t e l y , t h i s misconception of landbanks i s widespread. Hany w r i t e r s seem to accept the i d e a t h a t landbanks are a ne g a t i v e i n t r u s i o n i n t o the land c o n v e r s i o n process to prevent premature s u b d i v i s i o n . In an era that i s se e i n g a severe shortage of s e r v i c e d r e s i d e n t i a l l a n d , and consequent v i o l e n t p r i c e i n f l a t i o n , a landbank t h a t proposed to "immunize" f r i n g e land from s u b d i v i s i o n and development i s q u i t e p r o p e r l y r i d i c u l e d . "They t a l k of landbanks, mortgage i n t e r e s t r a t e s and higher maximum loans - p a l l i a t i v e s which serve only to preserve an im p o s s i b l e s i t u a t i o n , even i f they can do t h a t . They i g n o r e , purposely or f u r t i v e l y , the simple f a c t t h a t the b a s i c reason f o r the high c o s t of housing i n Canada today i s t he high p r i c e of s e r v i c e d l a n d , and t h a t the only way i n which t h a t problem can be s o l v e d i s by making more s e r v i c e d land a v a i l a b l e . " QgS§'3iiQ_BaildiPgie, e d i t o r i a l , Feb. 1973. As the present study w i l l show, a landbank i s not a means of o b s t r u c t i n g urban land c o n v e r s i o n , but r a t h e r a more e f f i c i e n t system of promoting i t . The HUD s t u d i e s have obscured t h i s f a c t , and engendered i n many a s k e p t i c i s m about landbanking that i s e s s e n t i a l l y u n r e l a t e d to a c t u a l landbanks i n the Canadian exp e r i e n c e . URBAN LAND CONVERSION: ACTIVE AGENTS. In North America, governments have t r a d i t i o n a l l y played a passive r o l e i n the con v e r s i o n of land t o urban use. They have s u p p l i e d mortgage loans, r e g u l a t e d land use and 22 s u b d i v i s i o n , and undertaken to extend m u n i c i p a l s e r v i c e s to meet the expanding demand at the urban f r i n g e . But the a c t i v e i n i t i a t o r s of change have been a multitude of d i v e r s e p r i v a t e f i r m s and i n d i v i d u a l s . D i f f e r e n t government agencies have sought to r e g u l a t e or f a c i l i t a t e the c o n v e r s i o n of land to urban use, but few have taken a d i r e c t p a r t i n i n i t i a t i n g such c o n v e r s i o n . T h i s has meant two t h i n g s . F i r s t the d e c i s i o n process has been very fragmentary and d i v e r s e ; and secondly t h i s d e c i s i o n process has become s u b j e c t to r a p i d l y i n c r e a s i n g c o n s t r a i n t s , as growing government i n t e r e s t i n the process has l e d to more neg a t i v e r e g u l a t i o n s . The r e s u l t s have been both good and bad. The bad e f f e c t i s summed-up by James Rouse: "Why i n a nation with such enormous c a p a c i t y f o r o r g a n i s a t i o n and pr o d u c t i o n i s t h e r e such bewilderment about producing the environment i n which we grow our people? The answer i s easy but g r i g h t e n i n g . We now have no orga n i z e d c a p a c i t y i n the United S t a t e s to put to work the knowledge t h a t e x i s t s among us about p l a n n i n g f o r the f u t u r e growth of our c i t i e s . Many of us are i n v o l v e d i n b u i l d i n g the p i e c e s of a c i t y but f o r the most p a r t the whole c i t y i s nobody's b u s i n e s s , n e i t h e r governments' nor i n d u s t r y ' s . We have assig n e d a vague r e s p o n s i b i l i t y to l o c a l government to pr o v i d e f o r o r d e r l y growth, but we have given i t n e i t h e r the power, the processes, nor the f i n a n c i a l c a p a c i t y with which i t can f u l f i l l t h a t r e s p o n s i b i l i t y . " * Columbia §nd_the Jew C i t i e s . p . 1 7 7 . The present system may be defended by saying that the s t r e n g t h of the process has been p r e c i s e l y i n i t s s c a t t e r e d d e c i s i o n making. I t i s i n c r e m e n t a l , but no g i g a n t i c blunders have been made. The q u a l i t y of the suburbs has been l e s s than we now a s p i r e t o ; but gi v e n the r a p i d growth of the p h y s i c a l c i t y , and the e q u a l l y r a p i d changes i n technology and theory r e l a t i n g t o the c i t y , the present system has provided f l e x i b i l i t y to meet new c h a l l e n g e s that would have been missing i n a more 23 c e n t r a l i z e d d e c i s i o n process. C e r t a i n l y some f i n e suburbs have v been b u i l t , and the q u a l i t y of housing and land use p l a n n i n g i n North America has r i s e n . F i n a l l y i t i s a matter of judgement as to where the balance of advantage l i e s . Marion Clawson, perhaps the foremost a u t h o r i t y on suburban lan d c o n v e r s i o n , says: "In p r a c t i c e , as suburban land c o n v e r s i o n has been c a r r i e d out i n the l a s t twenty years, these a l l e g e d advantages of d i f f u s i o n i n d e c i s i o n making seem to have been l a r g e l y overwhelmed by i t s d i s a d v a n t a g e s . " 1 6 T e n t a t i v e l y one might say that a more c e n t r a l i z e d d e c i s i o n making process t h a t r e t a i n s the b e t t e r elements of d i v e r s i t y and p r i v a t e i n i t i a t i v e would be a reasonable g o a l . T h i s does not mean more government r e g u l a t i o n . In p a r t s of O n t a r i o an a p p l i c a n t to s u b d i v i d e must make up to 300 d i s c r e t e s u b - a p p l i c a t i o n s to almost as many government and semi-government agencies, i n a process t h a t o f t e n takes three years to complete. Lengthening t h i s t a n g l e would not be c e n t r a l i z i n g the p r o c e s s . Governments already provide trunk s e r v i c e s , conduct macro-planning, approve or disapprove p r o j e c t p l a n s , and provide many of the ammenities such as s c h o o l s land parks t h a t are e s s e n t i a l to a community. Perhaps what i s needed i s a program th a t allows the i n t e g r a t i o n and r a t i o n a l i z a t i o n of these w i t h i n a s i n g l e agency r e s p o n s i b l e f o r the c o n v e r s i o n process. There are examples of such " a c t i v e " agencies, which w i l l now be c o n s i d e r e d . One p o s s i b i l i t y i s the New Town. Most new towns i n the world have been developed under a e g i s of a s i n g l e p u b l i c a u t h o r i t y which i n i t i a l l y holds t i t l e to a l l of the land i n the new town a r e a . 1 7 There i s an e x t e n s i v e l i t e r a t u r e on new towns. 24 B r i t i s h new towns were the prototype of Ebenezer Howard and h i s w r i t i n g on Garden C i t i e s at the end of the l a s t c e n t u r y . 1 8 The o r i g i n a l impetus of new towns was that they would be s e l f -s u f f i c i e n t growth c e n t e r s planned as a s i n g l e u n i t away from the "dead hand" of the past t h a t l i m i t s e x i s t i n g c i t i e s . In p r a c t i c e the p u l l o f the e s t a b l i s h e d m e t r o p o l i s has been too s t r o n g , and garden c i t i e s have tended to become garden suburbs. Two of the best known examples o u t s i d e B r i t a i n are V a l l i n g b y and F a r s t a near Stockholm, and T a p i o l a near H e l s i n k i . These new towns are very s i m i l a r t o what have been c a l l e d landbanks i n Canada. Indeed i t i s s u r p r i s i n g t h a t the l i t e r a t u r e o f landbanking has tended to be g u i t e s eparate from t h a t nominally concerned with new towns. A s y n t h e s i s of the two might put both on a s t r o n g e r f o o t i n g . In the United States the new community movement was sparked by the B r i t i s h e xperience, and r e s u l t e d i n some f i n e l a r g e - s c a g e developments such as Heston. Important s t r a i n s of development were the garden apartment, and the planned suburban shopping c e n t e r . P r i v a t e f i r m s such as those t h a t produced Levittown and Park F o r e s t were the a c t i v e agents r a t h e r than governments. These d i f f e r e n t s t r a n d s are p r e s e n t l y c r y s t a l i z i n g as the Planned U n i t Development c o n c e p t . 1 9 A Planned Unit Development has been d e s c r i b e d as "A unique area f o r which a u n i t a r y s i t e plan has been prepared", or more p r e c i s e l y : "Planned Unit Development means an area of l a n d , c o n t r o l l e d by a landowner, to be developed as a s i n g l e e n t i t y f o r a number of d w e l l i n g u n i t s , and commercial and i n d u s t r i a l uses, i f any, the plan f o r which does not correspond i n l o t 25 s i z e , bulk, or type of d w e l l i n g or commercial or i n d u s t r i a l use, d e n s i t y , l o t coverage, and r e q u i r e d open space, to the r e g u l a t i o n s e s t a b l i s h e d i n any one or more d i s t r i c t s c r e a t e d , from time to time, under the p r o v i s i o n s of the municip a l zoning ordinance. «* 2 0 During the l a s t f i v e years there have been a l a r g e number of books and a r t i c l e s on Planned u n i t Development t h a t have been pu b l i s h e d i n the U.S.A. The American S o c i e t y of Planning O f f i c i a l s has r e c e n t l y p u b l i s h e d a comprehensive guide to the l e g a l i s s u e s i n v o l v e d i n d r a f t i n g an ordinancy to encompass PUDs. 2 1 (the usual acronym f o r Planned Unit Development). There are wide o p p o r t u n i t i e s i n the design of PUDs to use d e n s i t y t r a n s f e r s to r e s u l t i n a more d e s i r a b l e open space p a t t e r n w i t h i n the PUD., Innovative approaches to the maintenance of t h i s open space by Home Owner A s s o c i a t i o n s or Land T r u s t s are a l s o d i s c u s s e d . The PUD ordinance seems a uniquely American approach to the zoning f l e x i b i l i t y problem t h a t was addressed by the E n g l i s h Town and Country Act of 1948 through "development c o n t r o l " . T h i s route was not a v a i l a b l e i n the USA because o f c o n s t i t u t i o n a l l i m i t a t a t i o n s on the l o c a l government power to c o n t r o l l a n d use. T h i s w i l l be d i s c u s s e d f u r t h e r i n the chapter of the present study concerned with a d m i n i s t r a t i o n o f the Red Deer landbank. I t w i l l be seen that the o p t i o n s open to l o c a l governments i n Canada i n the matter are much wider than i n the USA. THE PLANNED UNIT LANDBANK. At t h i s p o i n t , a f t e r the previous d i s c u s s i o n of v a r i o u s types of "landbanks" and of r e l a t e d concepts such as PUDs and New Towns, i t may be p o s s i b l e t e n t a t i v e l y to d e f i n e a 26 landbank as the concept r e f e r s to the Canadian exp e r i e n c e . The word " t e n t a t i v e l y " i s a p p r o p r i a t e because, i n a sense, t h i s whole study i s an attempt to d e f i n e what the "landbank" has been and might become. Too many w r i t e r s on landbanks have been content to deduce a p r i o r i , t h a t i s without r e f e r e n c e to e m p i r i c a l o b s e r v a t i o n , what a landbank i s . T h i s i s a very t i d y way o f proceeding, but i s of l i m i t e d u s e f u l n e s s . D e f i n i n g landbanks through o b s e r v a t i o n i s l i k e l y t o be l e s s t i d y , and l e s s d e f i n i t i v e . But h o p e f u l l y i t w i l l provide a c o n c r e t e base f o r d i s c u s s i o n , and draw the debate about landbanks out of the realms of pure s p e c u l a t i o n . The most p r e c i s e name f o r d e s c r i b i n g the landbanks at M i l l Woods, K i t i m a t , Saskatoon, Red Deer, and other p a r t s of Canada, i s "Planned U n i t Landbank" - at l e a s t i t i s as p r e c i s e a term as I have been able t o f i n d . I t d e s c r i b e s the nature of the o p e r a t i o n f a i r l y w e l l . F i r s t of a l l , "landbank" i s s p e l l e d as one word, not two. A Planned Unit Landbank i s an a d m i n i s t r a t i v e process: a process of land c o n v e r s i o n . I t i s not a p h y s i c a l bundle of l o t s (inventory) as "land bank" would imply. Secondly i t i s a p l a n n i n g p r o c e s s . And t h i r d l y the c i t y i s extended i n l a r g e planned u n i t s with an i n t e g r a t e d extension of s e r v i c e s . The whole land c o n v e r s i o n process comes w i t h i n the sphere of the Planned U n i t Landbank. The i n t e n t of a Planned U n i t Landbank i s : 1. To provide s e r v i c e d l o t s i n adequate numbers to more than c a t e r f o r the demand f o r r e s i d e n t i a l , commercial, and i n d u s t r i a l l a n d at the urban f r i n g e . 2. To develop neighbourhoods i n the urban f r i n g e by d e s i g n i n g s u b d i v i s i o n of l a r g e areas (160-200 acres) as a u n i t . 27 3. To i n t e g r a t e sewer and water e x t e n s i o n p o l i c y c l o s e l y with the development of these PODs; and thereby to ensure a compact, and e f f i c i e n t , s e r v i c i n g c o n f i g u r a t i o n . 4 . To provide a mechanism whereby c e r t a i n e x t e r n a l i t i e s can be i n t e r n a l i s e d - e s p e c i a l l y with r e s p e c t to streams and other e c o l o g i c a l l y s e n s i t i v e f e a t u r e s of the area. 5. To p r o v i d e a mechanism whereby the marginal c o s t to the m u n i c i p a l i t y of s e r v i c e s e x t e n t i o n to a new s u b d i v i s i o n can be recouped immediately (through l o t sales) r a t h e r than added to the Mu n i c i p a l debenture debt. 6. To ensure t h a t s c h o o l s and parks on the urban f r i n g e have the most a p p r o p r i a t e s i t e s w i t h i n the p a t t e r n of r e s i d e n t i a l development. 7. To ensure that a mixture of housing types a t a l l l e v e l s of s i z e and co s t are found w i t h i n each subdivision(PUD) . In s h o r t , the Planned U n i t Landbank i s a new system of urban land c o n v e r s i o n . The m u n i c i p a l i t y or a government agency buys or o b t a i n s long-term o p t i o n s to buy land o u t s i d e the urban f r i n g e from 5 to 25 years b e f o r e development i s expected. E v e n t u a l l y i t s e r v i c e s , d e s i g n s , and s u b d i v i d e s t h a t l a n d . I t then s e l l s or l e a s e s s e r v i c e d l o t s to b u i l d e r s or i n d i v i d u a l s s u b j e c t to whatever c o n d i t i o n s i t deems necessary. The Planned U n i t Landbank i s a p u b l i c i n t e r v e n t i o n i n the process of c o n v e r s i o n of land t o urban use. I t i n v o l v e s the a c q u i s i t i o n and assembly of land to enable the pl a n n i n g of l a r g e contiguous areas as i n t e g r a t e d u n i t s . I t i s e q u a l l y important with the s c a l e of the u n i t s t h a t t h e i r development i s c a r e f u l l y d o v e t a i l e d with a staged e x t e n s i o n of trunk sewers and water mains at the urban f r i n g e . G e n e r a l l y the agency which operates the Planned Unit Landbank has ext e n s i v e autonomous pl a n n i n g d i s c r e t i o n , r a t h e r than the d e c i s i o n making machinery being d i s p e r s e d . 28 One aspect of the landbank that has been accorded f a r too much importance i s the length of time land i s held before i t i s developed. The Bed Deer landbank at present holds land t h a t i s s u f f i c i e n t f o r Bed Deer*s p r o j e c t e d needs during the next 15 years. T h i s does not mean that each p a r c e l a c q u i r e d i s h e l d 15 years before i t i s developed. Some p a r c e l s are held 6 months, and some 20 y e a r s . The l e n g t h of time i s of no t h e o r e t i c a l importance. Land becomes a v a i l a b l e i n a l l s o r t s of ways -perhaps a farmer decides t o r e t i r e and o f f e r s h i s land f o r s a l e ; or perhaps an e s t a t e i s s o l d . The timing of a c q u i s i t i o n i s a f f e c t e d by many such f o r t u i t o u s f a c t o r s . Only two t h i n g s i n the ti m i n g of a c q u i s i t i o n seem important. F i r s t the landbank a d m i n i s t r a t o r must have c o n s i d e r a b l e f l e x i b i l i t y i n d e c i d i n g to purchase a p a r c e l t h a t becomes a v a i l a b l e , or not. That i s , the c a p i t a l s t r u c t u r e of the landbank must allow f o r quick a c t i o n to take advantage of fa v o u r a b l e c o n d i t i o n s i n purchasing. Secondly the l a n d must be purchased before trunk s e r v i c e s a re extended to the area. In t h i s c o n n e c t i o n , i t i s important t h a t s e v e r a l a l t e r n a t i v e d i r e c t i o n s f o r the extension of s e r v i c e s be kept open, so an a r t i f i c i a l monopoly i s not c r e a t e d i n land which the landbank needs. The landbank i n Red Deer has never used e x p r o p r i a t i o n to ac q u i r e l a n d . To o b t a i n raw land at a reasonable p r i c e without e x p r o p r i a t i o n , the landbank must keep open the choice of expanding i n any of s e v e r a l d i r e c t i o n s without enveloping or l e a p f r o g g i n g undeveloped p a r c e l s . How e a r l y one has to purchase to n e g o t i a t e a f a i r p r i c e i s a matter of judgement w i t h i n a 29 given context. Of course i t i s expensive to hold l a n d ; so Red Deer n e g o t i a t e s long term "options to buy" when p o s s i b l e . I t has been able to n e g o t i a t e seven or ten year o p t i o n s q u i t e o f t e n . When i t has seemed necessary to purchase lan d f a r ahead of expected development, the land has been kept as farmland on a share crop b a s i s ; and the i n t e r i m monetary r e t u r n thus o b t a i n e d has u s u a l l y defrayed most of the c a p i t a l c o s t s of h o l d i n g the l a n d . But to r e i t e r a t e , the h o l d i n g time of i n v e n t o r y i n a landbank i s a matter of judgement i n a p a r t i c u l a r s i t u a t i o n , and i s of no s i g n i f i c a n c e i n i t s e l f . As we are attempting to d e f i n e the Planned U n i t Landbank, i t i s u s e f u l to ask how much " i n t e g r i t y " the concept has. That i s , i s i t r e a l l y a system we are t a l k i n g about, or i s i t simply a bundle of separate concepts, each of which i s independent of the o t h e r s ? The previous " d e f i n i t i o n " s e c t i o n mentioned c l u s t e r i n g , PUD development, advance a c q u i s i t i o n , marginal c o s t p r i c i n g , staged extension of s e r v i c e s , and government ownership of the l a n d . I f the landbank i s r e a l l y a new system of land c o n v e r s i o n r a t h e r than a bundle of programs conceived as i n t e r v e n t i o n s i n the o l d system, then the landbank must be more than the sum of i t s p a r t s . I t i s not d i f f i c u l t to shew that t h i s i s so. L e t us c o n s i d e r two aspects of the Red Deer landbank: sewer extension p o l i c y , and planned u n i t developments. In the p r i v a t e system of land c o n v e r s i o n , the m u n i c i p a l i t y might t r y to extend sewers i n an e f f i c i e n t , and r a t i o n a l c o n f i g u r a t i o n . But i n t h i s c ontext the s e r v i c e s e x t e n s i o n p o l i c y must i n e v i t a b l y remain a r e a c t i v e one, because the p a t t e r n of r e s i d e n t i a l development i s s c a t t e r e d , s p o r a d i c , 30 and cannot be p r e d i c t e d with accuracy. Because i t i s a r e a c t i v e p o l i c y , i t i s i n e v i t a b l y d i s t o r t e d from an optimum c o n f i g u r a t i o n by e x i s t i n g s c a t t e r e d housing and such t h i n g s as ground p o l l u t i o n from overburdened s e p t i c catchments. Now i f a l l extension' of r e s i d e n t i a l development a t the urban f r i n g e i s by a Planned U n i t Landbank, then the t i m i n g of s e r v i c e s and t h e i r c o n f i g u r a t i o n can be o p t i m a l . And t h i s c o n s t i t u t e s a change i n the "type" of p o l i c y - i t i s no longer r e a c t i v e , but i s a f o r m a t i v e p o l i c y . I t i s s i m i l a r with PUDs. I f the landbank can depend on trunks being a v a i l a b l e i n the r i g h t p l a c e at the r i g h t time, without long expensive e x t e n s i o n s through semi-developed sprawl, then Planned Unit r e s i d e n t i a l development becomes v i a b l e i n a way i t seldom i s i f the c o n v e r s i o n process i s the normal r e g u l a t e d p r i v a t e process. The r e l a t i o n s h i p between d i f f e r e n t p a r t s of the Planned Unit landbank i s a symbiotic one: each depends on the o t h e r s f o r i t s v i a b i l i t y , and takes on a d i f f e r e n t nature i n t h e i r presence from the nature i t has i n the absence of t h e i r support. LIMITS OF PLANNED UNIT LANDBANKS. There i s a tendency when one has i d e n t i f i e d a good program to tout i t as the panacea f o r a l l urban i l l s . T h i s i s e s p e c i a l l y true i n Canada where the country i s so l a r g e and the p e r c e p t i o n of the problems so acute. With most programs t h i s danger i s recognized and p r o v i s i o n s made f o r l o c a l v a r i a t i o n s i n c o n d i t i o n s . With landbank p o l i c i e s from the F e d e r a l l e v e l t h i s i s p a r t i c u l a r l y necessary. 31 When the landbank i n R<ad Deer was s t a r t e d there were only 14000 r e s i d e n t s i n the c i t y . So the c o n s t r a i n t s posed by e x i s t i n g development and vested i n t e r e s t s of p r i v a t e development f i r m s were r e l a t i v e l y few. The landbank i n Saskatoon was i n i t i a t e d when the c i t y had a p o p u l a t i o n of approximately 40,000; and i n t h i s case the e x i s t i n g c o n s t r a i n t s were much more severe. R e p l o t t powers had to be used very e x t e n s i v e l y . So the e x i s t i n g evidence would i n d i c a t e t h a t a landbanking i n t e r v e n t i o n i s a p p r o p r i a t e e a r l y i n the development of a community, and becomes more d i f f i c u l t and hazardous the l a t e r i t begins. I t i s a l s o the case that both Red Deer and Saskatoon were u n i t a r y l o c a l j u r i s d i c t i o n s . So t h e i r experience i s of l i m i t e d relevance to communities which are a jumble of separate m u n i c i p a l i t i e s . And l a s t l y . Red Deer seems to have been f o r t u n a t e i n having a d i r e c t o r of r e g i o n a l p l a n n i n g who had wide experience i n lan d development p r i o r to becoming Regional Planning D i r e c t o r . The s k i l l s are important, and among c i t y p l a n n e r s , r a r e . 32 FOOTNOTES 1. Gurney B r e c k e n f e l d , Columbia and the New C i t i e s , New Yyork, 1971,p.174. 2. J . Spears and B.Bannermen, " C r i t i c s Roast Housing Report", The_Vancouver_Province x Aug.18 1972. 3. Smith,W., Housing: S o c i a l S Economic Elements, U n i v e r s i t y of C a l i f o r n i a P ress, B e r k e l e y ^ 1971, pp768-75. 4. See, Heelyer, Hon.P., Report.of_the Task Force_on_Housing §M_IIlban_Devel^£ment x Ueens P r i n t e r , Ottawa, 1969. And Dennis, H., and F i s h , Low Income Housing: Programs i n S e a r c h , o f _ a _ P o l i c v A CM.H.C, Ottawa, 1972. 5. Sylvann Kamra, Land Banking: P u b l i c f o l i c y _ A l t e r g a t i v e s .and Dilemmas^ The Urban I n s t i t u t e , Washington D.C, 1971. 6. The T r u s t f o r the P u b l i c Land, Huey J . Johnson P r e s i d e n t , 82 Second St., San F r a n c i s c o , C a l i f o r n i a 94105. 7. C a r o l Van Alstyne (ed.) Landbank handbgok f Piedmont T r i a d of Governments, Greensboro, North C a r o l i n a , Sept.1972. 8. Donald Shoup, and Ruth Mack, Advance Land A c q u i s i t i o n by Local..Government, I n s t i t u t e of P u b l i c A d m i n i s t r a t i o n , N.Y. 1968, p.103. 9. Shoup, op. c i t . 10. Mary Rawson, The p u b l i c . I n t e r e s t i n Land, I n t e r n a t i o n a l Union o f Land-Value T a x a t i o n and Free Trade, 12th Conference 1968. \ 11. A r b i t r a t i o n Award of June 25, 1958, given under the Highway Act R.S.B.C.,1948,ch.144, and Dept. of Highways Act, BC S t a t u t e s 1955, ch.33. Also the r e l a t e d Supreme Court of Canada judgement pronounced 11 A p r i l 1960. 12. For example, William Whyte, The Last_LandscaEe x Doubleday, 1968. 13. A v a i l a b l e from N a t i o n a l T e c h n i c a l Information S e r v i c e , Washington D.C. - T i t l e s l i s t e d i n the b i b l i o g r a p h y of t h i s t h e s i s . 14. W i l l i a m L. Letwin, MuDici^al_Land_Banks^ Reserve P o l i c i e s f o r Urban Development, Urban Land Research A n a l y s t s C o r p o r a t i o n , L e x i n g t o n , Mass.,Oct.1969,p.235 15. Letwin, p.178. 16. Marion Clawson, Suburban Land_Conversion i n _ t h e _ U n i t e d S t a t e s ^ Resources f o r the Future, 1971, p.75. 33 17. See James Clapp, "The Hew Towns Concept: P r i v a t e Trends and P u b l i c Response", C o u n c i l of Planning L i b r a r i a n s Exchange B i b l i o g r a p h y #122, A p r i l 1972. 18. Ebenezer Howard, Ga r d e n _ C j t i e s of Tomorrow, 1898. 19. See S t e r n l i e b , George, P l a n n e d U n i t e Development. Exchange B i b l i o g r a p h y #256, C o u n c i l of Planning L i b r a r i a n s , Feb. 1972. 20. Advisory Commission on Intergovernmental R e l a t i o n s , D r a f t B i l l #31-36-00 Planned U n i t Development, Wash.DC. 1970. 21. ASPO Pl a n n i n g Advisory S e r v i c e , Planned Unite Development oiSiMSSJj. M a 5 1973. \ 34 LANDBANKING: THE STATE OF THE ART Only two years ago, Janczewski began the l i t e r a t u r e review s e c t i o n of h i s t h e s i s with the words: " U n f o r t u n a t e l y , r e s e a r c h and w r i t i n g on land banks and advance land a c q u i s i t i o n i s amazingly s p a r s e . " 1 T h i s i s no lon g e r the case. Over the l a s t s i x y e a r s , and p a r t i c u l a r l y over the l a s t t h r e e , there has been a burgeoning of i n t e r e s t i n landbanking in, North America. T h i s has meant an outpouring of l i t e r a t u r e on the s u b j e c t and a p r o l i f e r a t i o n of p r o j e c t s which seek to implement the concept i n planni n g p r a c t i c e . 35 A glance a t the b i b l i o g r a p h y at the end of t h i s t h e s i s w i l l s e r v e to v e r i f y the range of l i t e r a t u r e on landbanking and i t s r e c e n t v i n t a g e . The q u a l i t y of the l i t e r a t u r e i s another matter. I t tends to be p o l e m i c a l and prone to g e n e r a l i z a t i o n . There are few case s t u d i e s , and these few are l e s s than a n a l y t i c a l . The l i t e r a t u r e has been marred by a sense of u n r e a l i t y . I t has tended t o soar on f l i g h t s of co n c e p t u a l fancy, u n r e s t r a i n e d by the p r o s a i c r e a l i t y o f a c t u a l f u n c t i o n i n g landbanks. The l i t e r a t u r e of landbanking i s a c h r o n i c l e of a r e v o l u t i o n i n our t h i n k i n g about urban land c o n v e r s i o n . In B r i t a i n , t h i s has ce n t e r e d around "new towns". In the United S t a t e s , c r e a t i v e c o n t r i b u t i o n s have been made r e c e n t l y i n the name of "planned u n i t development". In Canada, the focus of debate has been on "landbanks". A l l have been attempts to t h i n k i n r a d i c a l new terms about the c o n v e r s i o n of land to urban use. In t h i s chapter I would l i k e to review both the l i t e r a t u r e of landbanking and some o p e r a t i o n a l landbanks. I t would take a long book t o do both comprehensively. These s h o r t comments w i l l attempt to do two t h i n g s : (1) i d e n t i f y c e r t a i n g e n e r i c c h a r a c t e r i s t i c s of the l i t e r a t u r e of landbanking; (2) d e s c r i b e a s m a l l number of landbank p r o j e c t s which may be prototypes f o r North America. OPERATIONAL LANDBANKS. The two c r u c i a l examples of landbanks i n Canada, other than Red Deer, are Saskatoon and M i l l Woods. M i l l Woods i s a 36 s a t e l l i t e suburb of Edmonton, the c a p i t a l of a l b e r t a . There are many other examples, but these two are l a r g e s c a l e and r e l a t i v e l y u n r e l a t e d to extraneous f a c t o r s , such as " s i n g l e r e s o u r c e " e x t r a c t i o n . The number of c i t i e s and towns i n Canada that have a p u b l i c landbank program i s i n c r e a s i n g very r a p i d l y . Both F e d e r a l and P r o v i n c i a l governments are p r o v i d i n g v a s t l y i n c r e a s e d funding and r e l a t e d encouragement f o r such programs. SASKATOON. Saskatoon i s the second c i t y of Saskatchewan and the seat of the U n i v e r s i t y of Saskatchewan. I t has conducted a landbank program over twenty years with e x c e l l e n t r e s u l t s . The program has been r e p o r t e d g u i t e e x t e n s i v e l y . 2 I t i s a mid-sized c i t y . I t s p o p u l a t i o n i n 1946, when landbanking began, was 40,000 and today i s 130,000. So i t s experience i s an i n t e r e s t i n g complement to Red Deer whose landbank spanned a p o p u l a t i o n growth from 4,000 to 30,000. The main f a i l i n g of the program i n Saskatoon has been i t s l a c k o f a c l e a r a d m i n i s t r a t i v e s t r u c t u r e . I t has r a t h e r amorphously blended with the f i s c a l and b u r e a u c r a t i c s t r u c t u r e of the c i t y a d m i n i s t r a t i o n . T h i s means that a model of the landbank o p e r a t i o n has been d i f f i c u l t t o i s o l a t e from the whole. For example, p r i c i n g p o l i c y seems to have been r a t h e r haphazard because data p e r t a i n i n g t o " h o l d i n g c o s t s " and management c o s t s has been kept only s p o r a d i c a l l y . T h i s i s not to d e t r a c t from the many f i n e f e a t u r e s and the o v e r a l l success of the program. I t i s an i n t e r e s t i n g example of a landbank i n a mixed market, whereas 37 Red Deer i s a v i r t u a l p u b l i c monopoly i n land c o n v e r s i o n . The p u b l i c landbank i n Saskatoon operates a l o n g s i d e p r i v a t e developers and would provide i n t h i s i n t e r a c t i o n an i n t e r e s t i n g t o p i c f o r some f u t u r e r e s e a r c h . HILL WOODS. M i l l Woods i s a s a t e l l i t e suburb of Edmonton, the c a p i t a l of A l b e r t a . In 1969, the A l b e r t a Housing C o r p o r a t i o n , with f i n a n c i a l a s s i s t a n c e from C e n t r a l Mortgage and Housing C o r p o r a t i o n (a F e d e r a l agency) purchased 5085 acres of land south east of the e s t a b l i s h e d c i t y and agreed to s e l l t h i s land to the c i t y over 15 y e a r s . With the a c q u i s i t i o n of t h i s l a n d , the c i t y e s t a b l i s h e d a major landbank program designed to accommodate much of the f u t u r e growth of the m e t r o p o l i s . The M i l l Woods P r o j e c t has managed to s t a b i l i z e l o t p r i c e s i n the Edmonton area. I t has done t h i s by p r i c i n g M i l l Woods l o t s below the p r e v a i l i n g market p r i c e . Over the three years t h a t l o t s have been marketed i n M i l l Woods, t h i s d i f f e r e n t i a l has remained; although i t may c l o s e as M i l l Woods absorbs p r o g r e s s i v e l y more of the market f o r new l o t s . In t h i s aspect i t i s an i n s t r u c t i v e case. The Saskatoon landbank a l s o a c t s as a " p r i c e l e a d e r " i n new development. Only M i l l Woods i s an example of landbank i n t e r v e n t i o n l a t e i n the growth of a c i t y i n a co n t e x t of entrenched p r i v a t e development i n t e r e s t s . As such. M i l l Woods seems to i n d i c a t e some i n t r i n s i c problems i n a landbank i n t e r v e n t i o n l a t e i n a c i t y ' s growth. The purchase of land was s e c r e t , -but even so i t 38 was d i f f i c u l t to assemble e i g h t sguare miles of land c l o s e to the c i t y . To do i t the landbank had to d r a s t i c a l l y r e - o r i e n t the d i r e c t i o n of growth of Edmonton. I t i s too e a r l y to t e l l how s u c c e s s f u l the i n t e r v e n t i o n w i l l be. M i l l Woods i s a d i f f i c u l t area t o s e r v i c e . In p a r t i c u l a r the landbank has had to c o n s t r u c t a very l o n g , deep storm sewer t o d r a i n the area at a c o s t of $12 m i l l i o n . T h i s i s " f r o n t end money" which, under the r u l e s of development i n Edmonton, w i l l be p a r t i a l l y recouped from p r i v a t e developers when they enter the area s e r v i c e d by the sewer. But t h i s p r o spect seems f a r o f f . In the meantime, t h i s s e r v i c i n g burden reamins and would perhaps c r i p p l e a s i m i l a r p r i v a t e development. •is 40 AUSTRALIA. I t i s s u r p r i s i n g t h a t i n my review of the l i t e r a t u r e on landbanking I have found only one re f e r e n c e to landbanking i n A u s t r a l i a . T h i s i s a s e r i o u s o v e r s i g h t . The A u s t r a l i a n experience i n t h i s f i e l d i s a very v a l u a b l e one. One major c r i t i c i s m of the "landbank" concept i n North America i s that i t l o c k s to an " i r r e l e v a n t " European experience f o r guidance. T h i s argument does not have much f o r c e because North America has a long and f r u i t f u l t r a d i t i o n of adapting European planning concepts to indigenous needs. But i t does make sense to examine experiments i n p o l i t i c a l and c u l t u r a l s e t t i n g s s i m i l a r to our own. CANBERRA. Canberra i s the c a p i t a l c i t y of A u s t r a l i a . I t s pop u l a t i o n was 100,000 i n 1967 and i s expected t o be 300,000 by 1980. In 1958 the pop u l a t i o n was only 39,000. T h i s tremendous s u s t a i n e d growth would have generated massive t e n s i o n s and d i s l o c a t i o n s i n most other c i t i e s . T h i s has not been so i n Canberra. I t i s a very e f f i c i e n t and l i v e a b l e c i t y . T h i s i s no doubt due to the re s o u r c e s i n t a l e n t and money of the F e d e r a l government which determined to make Canberra a s p e c t a c u l a r showpiece; but i t i s a l s o due i n l a r g e measure to the f a c t t h a t 41 a l l land development i n Canberra has been under the a u s p i c e s of a p u b l i c landbank. "In A u s t r a l i a , the development of Canberra by the N a t i o n a l C a p i t a l Development Commission a f f o r d s a good example of u n i f i e d p u b l i c ownership combined with l e a s e h o l d development, ad m i t t e d l y under the somewhat e x c e p t i o n a l c o n d i t i o n s i n h e r e n t i n the b u i l d i n g of a n a t i o n a l c a p i t a l . The whole s i t e of Canberra i s p u b l i c a l l y owned, but normal commercial, r e s i d e n t i a l and i n d u s t r i a l development i s c a r r i e d out by p r i v a t e e n t e r p r i s e . Canberra a f f o r d s , i n f a c t , an e x c e l l e n t example of harmonious c o l l a b o r a t i o n between p u b l i c and p r i v a t e a g e n c i e s . 1 , 4 None of the landbanks i n Canada have i n the past operated under a l e a s e h o l d system of land tenure, although B r i t i s h Columbia in t e n d s t h a t i t s i n c i p i e n t system of landbanks w i l l do so. The new p r o v i s i o n s of the N a t i o n a l Housing Act (1971) pr o v i d e f o r a longer term of repayment of funds borrowed by l o c a l government f o r landbanking i f the land i s to be h e l d i n l e a s e h o l d tenure under government ownership. I t i s a f a r s i g h t e d p o l i c y and i s l e n t s t r e n g t h by the experience of Manchester and Coventry, which were a b l e to r e c o n s t r u c t i n a more e f f i c i e n t f a s h i o n a f t e r wartime d e s t r u c t i o n because c i t y land was held i n t h i s f a s h i o n . The A u s t r a l i a n experiments with l e a s e h o l d tenure i n a landbank should be s t u d i e d c a r e f u l l y by Canadians before they attempt s i m i l a r i n n o v a t i o n s , e s p e c i a l l y as the N a t i o n a l C a p i t a l Development Commission i n Canberra conducts e x t e n s i v e r e s e a r c h i n t o the i m p l i c a t i o n s of the new methods of development and t h e i r impacts. I t seems c e r t a i n t h a t l e a s e h o l d tenure i s not a panacea, but e n t a i l s c e r t a i n problems of i t s own. I t does not, f o r example, p r o h i b i t s p e c u l a t i o n i n premium l e a s e s and the problems of p r o j e c t i o n and supply are foremost as they are i n 42 Red Deer. P r e d i c t o r s of housing demand are at present too slow and unsure t o enable p r e c i s i o n o p e r a t i o n of a monopoly supply. Even so, there i s reason to suppose t h a t the d i s l o c a t i o n s of supply and demand may be l e s s than i n a r e g u l a t e d p r i v a t e market. THE NATIONAL CAPITAL DEVELOPMENT COMMISSION. Canberra. April. 1973 FIGURE 9. 44 ADELAIDE. Ade l a i d e i s the c a p i t a l of the S t a t e of South A u s t r a l i a . I t i s not a new c i t y l i k e Canberra, but by A u s t r a l i a n standards an o l d one, with the complex h i s t o r y , and the p a r a d o x i c a l aspects o l d c i t i e s have. C o n c e p t u a l l y , i t does not have the elegance of Canberra. But i t does have a t r a d i t i o n of a c t i v i s m by a p o l i t i c a l l y c o n s e r v a t i v e middle c l a s s . Perhaps t h i s seems a c o n t r a d i c t i o n i n terms, and i t may be. Whatever the reason, o f f i c i a l A d e l a i d e has c o n s i s t e n t l y d i s p l a y e d a w i l l i n g n e s s to take r e s p o n s i b i l i t y f o r the form of t h e i r c i t y and to act e n e r g e t i c a l l y t o achieve t h e i r g o a l s . "South A u s t r a l i a n s z e a l o u s l y a t t a c h themselves to some con s c i o u s t h e o r e t i c a l purpose. S c r a t c h i n g the edge of a d e s e r t , they'd d i e poor i f they d i d n ' t . " s Adelaide has over a long p e r i o d operated a p u b l i c landbank f o r both r e s i d e n t i a l and i n d u s t r i a l growth. I t i s worth mention i n the review of o p e r a t i o n a l landbanks because i t i s an e x c e l l e n t example of a phenomenon that has s t r u c k me f o r c e f u l l y i n r eading the l i t e r a t u r e of landbanks. The c r u c i a l f a c t o r i n the establishment of landbanks seems to be the p e r s o n a l i t i e s of l o c a l p o l i t i c i a n s and c i v i l s e r v a n t s . G e n e r a l l y , they have been p o l i t i c a l l y c o n s e r v a t i v e men, but men with v i s i o n and f o r c e to take change and accept r e s p o n s i b i l i t y ^ where they do not t r a d i t i o n a l l y have to do so. 45 EUROPE. European town planning was the genesis of North American p l a n n i n g ; so i t i s to be expected that North Americans should look to the European experience i n new development techniques, i n c l u d i n g landbanking. of course t h e r e are wide d i f f e r e n c e s i n l e g a l and i n s t i t u t i o n a l c o n t e x t s t h a t make comparisons l e s s than simple. For example, the scope of municipal e n t e r p r i s e i n the U.S.A. has been f e t t e r e d c o n s t i t u t i o n a l l y i n a way that i s r a r e i n Europe. T r a d i t i o n a l l y a m u n i c i p a l i t y i n the U.S.A. i s barred from competing with p r i v a t e i n t e r e s t s i n "business 1' e n t e r p r i s e , and the scope of planning c o n t r o l has been r e s t r i c t e d to the " p o l i c e power". In her a r t i c l e "Land Reserves and Teamwork i n Planning Stockholm", AIP_Journal, 1970, Passow c o n s i d e r s the Stockholm landbank i n i t s i n s t i t u t i o n a l and c u l t u r a l s e t t i n g i n order to question the t r a n s f e r a b i l i t y of that experience. It i s not d i f f i c u l t to p o i n t out t h a t Sweden i s d i f f e r e n t from America. But i s the d i f f e r e n c e g r e a t e r than the d i f f e r e n c e between Sweden and England, or Sweden and Germany, or Germany and I s r a e l ? A l l of these c o u n t r i e s have landbank programs. The American l i t e r a t u r e has been too quick to assume that a l l c u l t u r a l and l e g a l d i f f e r e n c e s are p e r t i n e n t to landbanking, and a l l are insurmountable. The p a r t i c u l a r l e g a l mechanisms, or q u i r k s of h i s t o r y t h a t presented an o p p o r t u n i t y i n Stockholm amy not be a v a i l a b l e elsewhere. Yet c i t i e s such as Red Deer have shown t h a t , given a c e r t a i n d e t e r m i n a t i o n , s u b s t a n t i a l l y s i m i l a r programs can be i n s t i t u t e d i n North 46 America. The American l i t e r a t u r e has stopped s h o r t of an a n a l y s i s of wjry l e g a l and i n s t i t u t i o n a l d i f f e r e n c e s may be p r o h i b i t i v e . " The l i t e r a t u r e on landbanking i n Europe i s q u i t e e x t e n s i v e . I t o v e r l a p s with the l i t e r a t u r e on "new towns". I t may be only a quest i o n of s c a l e t h a t separates the two concepts. T a p i o l a i n F i n l a n d , f o r example, i s a s a t e l i t e suburb s i x miles west of H e l s i n k i . I t accommodates 17,000 r e s i d e n t s . Whether one c a l l s i t a landbank o p e r a t i o n or a new town i s beside the p o i n t , landbanks are not n e c e s s a r i l y l i m i t e d to a continuous b e l t of land a t the urban f r i n g e . S a t e l i t e development may be w i t h i n a landbank. In the U.S.A., T a p i o l a would be c a l l e d a PUD - Planned Un i t Development. The v a r i e d nomenclature masks an e s s e n t i a l s i m i l a r i t y . THE U.S.A., There have been many developments i n the U.S.A. t h a t one c o u l d c a l l landbanks. One i n t e r e s t i n g aspect of t h e i r experience i s the confluence of " c i t i z e n p a r t i c i p a t i o n " planning with p u b l i c land development. C i t i z e n p a r t i c i p a t i o n i n p u b l i c planning, and fragmented l o c a l government j u r i s d i c t i o n s are twin problems i n implementing w e l l - i n t e n t i o n e d landbank programs. I t i s not a c o i n c i d e n c e t h a t the poineer landbanks i n North America have been i n Western Canada i n s m a l l towns with a u n i t a r y l o c a l government and a r e l a t i v e l y homogenous p o p u l a t i o n unriven by c l a s s or race c o n f l i c t . The r e c e n t experience of the New York Urban Development C o r p o r a t i o n shows the other s i d e of the 47 p i c t u r e . The New York State U.D.C. holds a landbank i n v e n t o r y worth more than $50 m i l l i o n , and may be the l a r g e s t p u b l i c landbank o p e r a t i o n on the c o n t i n e n t . I t s i n t e r e s t i n the land c o n v e r s i o n process i s s u b s i d i a r y t o i t s c o n s t r u c t i o n g o a l s i n planned u n i t r e s i d e n t i a l developments. In v e r t i c a l l y i n t e g r a t i n g the whole process from raw land to completed r e s i d e n c e s , the New York U.D.C. has gone one step f u r t h e r than Canadian landbanks whose i n t e r e s t terminates with the l a n d c o n v e r s i o n process. The New York U.D.C. was e s t a b l i s h e d i n 1968 and given a mandate by the State l e g i s l a t u r e to b u i l d a gre a t d e a l of moderate p r i c e housing q u i c k l y . I t was given power to o v e r r u l e l o c a l zoning and b u i l d i n g ordinances t h a t hamper i t s o p e r a t i o n . In new town development, and appartment p r o j e c t s i n the i n n e r -c i t y , the C o r p o r a t i o n was q u i t e s u c c e s s f u l . But when i t t r i e d to undertake moderate p r i c e townhouse developments i n the suburbs i t p r e c i p i t a t e d such a p o l i t i c a l storm t h a t i t s o v e r r i d e powers were s t r i p p e d away. I t s experience i s an i n t e r e s t i n g one. In Stockholm a s e m i - p u b l i c c o r p o r a t i o n was a l s o formed to administer the landbank program. (S.T.R.A.D.A.) I t has been very s u c c e s s f u l i n i n c r e a s i n g the pace of development wit h i n the landbank. The i n s t i t u t i o n a l c ontext of p u b l i c land programs deserves much f u l l e r study than t h i s survey chapter i s able to attempt. 6 48 PIEDMONT TRIAD COUNCIL OF GOVERNMENTS. T h i s chapter w i l l only c o n s i d e r two examples of landbanking i n the U.S., because of space l i m i t a t i o n s . The two are chosen, not because they are " t y p i c a l " , but because each i l l u s t r a t e s an i n t e r e s t i n g p o i n t . The second example i s a s e r i e s of landbanks i n the Greensboro, North C a r o l i n a a r e a . A number of p u b l i c agencies i n the area have undertaken landbank p r o j e c t s , and they have c o l l a b o r a t e d t o produce a "Landbank Handbook". 7 One i n t e r e s t i n g aspect of t h i s case i s t h a t a recent study has p r a i s e d the r a t i o n a l way sewer and water e x t e n s i o n p o l i c i e s are i n t e g r a t e d with g e n e r a l planning g o a l s i n the Greensboro a r e a . 8 T h i s serves to emphasize the p o i n t t h a t the l i n k between landbanking and a r a t i o n a l s e r v i c i n g p o l i c y a t the urban f r i n g e i s very c l o s e . T h e i r r e l a t i o n s h i p i s symbiotic. The three North C a r o l i n a Housing Development C o r p o r a t i o n s which are i n v o l v e d r e j e c t the conception of what a landbank should do which was put forward by previous HUD s t u d i e s : "Landbanking was f i r s t proposed a number of years ago on a much l a r g e r s c a l e , and f o r s l i g h t l y d i f f e r e n t reasons (from Greensboro's r e a s o n s ) . O r i g i n a l l y i t was suggested t h a t land should be banked - t h a t i s , purchased, withheld from development, and then r e l e a s e d i n small increments - to f o r c e contiguous development and prevent urban s p r a w l . " 9 T h i s study a l s o r e j e c t s t h i s o l d e r misconception as has been d i s c u s s e d i n the " d e f i n i t i o n " s e c t i o n ; but the North C a r o l i n a HDCs are e q u a l l y misled. T h e i r "landbanks" are not i n v o l v e d i n the land c o n v e r s i o n process a t a l l . I t i s strange that t h i s anomaly was not r e a l i z e d . The authors of the "Landbank 49 Handbook" are aware of Clawson's work on suburban land c o n v e r s i o n and the d i s c u s s i o n of landbanks therein.*° Yet d e s p i t e t h i s awareness t h a t "landbank" has meant d i f f e r e n t t h i n g s to d i f f e r e n t people, t h e r e i s no r e a l a n a l y s i s of the c o n f l i c t i n g i d e a s , and a seeming l a c k o f comprehension of t h e i r importance. T h i s i s a s e r i o u s f a u l t i n a p u b l i c a t i o n t h a t purports to i n s t r u c t o t h e r s how to landbank. In b r i e f , the North C a r o l i n a HDCs see a landbank as a r e a l e s t a t e broker assembling a p o r t f o l i o of l o t s which may l a t e r be used f o r the c o n s t r u c t i o n of low-income housing. In f a c t , i n t h e i r mind, a "landbank" i s nothing more than a c o r p o r a t e l a n d agent uninvolved i n the dynamics of l a n d c o n v e r s i o n , which simply buys and s e l l s land as part of the o p e r a t i o n of a c o n s t r u c t i o n company. Of course t h i s i s an e n t i r e l y inadeguate conception of what a landbank i s . I t i s understandable t h a t i n the e a r l y e v o l u t i o n of a new concept such as "landbanking" everyman w i l l have h i s own conception of i t . But i n a manual that packages one p a r t i c u l a r view f o r g e n e r a l consumption some a n a l y s i s and defence of the b a s i c concept used i s necessary. In t h i s case i t i s missing. THE LITERATURE OF LANDBANKING. In v a r i o u s c h a p t e r s of t h i s t h e s i s l i t e r a t u r e r e l a t i n g to landbanking has been d i s c u s s e d and analysed. T h i s s e c t i o n w i l l not repeat comments made elsewhere, nor w i l l i t attempt to be comprehensive i n d i s c u s s i n g a l l of the books and a r t i c l e s which are r e l e v a n t to landbanking. T h i s would be i m p o s s i b l e . 50 Landbanking as e x e m p l i f i e d i n Red Deer i s a g l o b a l process. T h i s process i s simply one way c i t i e s are b u i l t . So there i s very l i t t l e i n urban planning l i t e r a t u r e which i s f u l l y i r r e l e v a n t to i t . S t i l l i t i s a new concept i n North America and the debate around i t p r o v i d e s the focus f o r t h i s l i t e r a t u r e review. T h i s chapter w i l l t r y to provide an overview of the l i t e r a t u r e , and i l l u m i n a t e the r e l a t i o n s h i p s of one work to another. T h i s attempt i s l i k e l y to be inadequate because of the author's l i m i t e d experience and l a c k o f m o b i l i t y as a student. Thus important s t r a n d s of the p i c t u r e w i l l undoubtedly be n e g l e c t e d . Even so a g e n e r a l i s e d d i s c u s s i o n may provide a u s e f u l s t a r t i n g p o i n t f o r f u t u r e r e s e a r c h . One of the most important c e n t r e s of r e s e a r c h on landbanking has been the Department of C i t y and Regional Planning a t C o r n e l l U n i v e r s i t y i n the United S t a t e s . At the A.S.P.O. conference i n 1967 John Reps, the d i r e c t o r of the C o r n e l l P lanning School, gave a landmark address. T h i s has s i n c e been p r i n t e d and r e p r i n t e d . 1 1 His c o n t e n t i o n was t h a t landbanking was the e s s e n t i a l t o o l t o r e i n v i g o r a t e urban plan n i n g i n North America. Since then authors such as Parsons and Budke i n the same department have w r i t t e n e x t e n s i v e l y on l a n d b a n k i n g . 1 2 A book that deserves s p e c i a l mention here i s Public: L a n d _ A c g u i s i t i o n f o r New Communities and the C o n t r o l of Urban Growth:. 1 3 I t i s a study prepared f o r the New York State Urban Development C o r p o r a t i o n whose r o l e i n landbanking was d i s c u s s e d e a r l i e r i n t h i s chapter. I t reviews a l t e r n a t i v e s t r a t e g i e s , f o r 51 landbanking and f i x e s landbanking f i r m l y i n a coherent framework of the land development process. Most i m p o r t a n t l y i t s t u d i e s the f i n a n c i a l v i a b i l i t y of a l t e r n a t i v e p a t t e r n s of new community development. I t d i s c u s s e s a computerised cash flow model. One danger i n t h i s approach i s to make landbanking seem i n f i n i t e l y complex and d i f f i c u l t . I f Red Deer had had to handle the complexity of the GE-UNC model p r i o r to landbanking they would never have s t a r t e d . There i s some v i r t u e i n keeping w i t h i n the d e c i s i o n making framework which a small-town a d m i n i s t r a t o r can f e e l comfortable with. However, a s e r i o u s weakness of Canadian landbanks has been the l a c k of f i n a n c i a l and p r e d i c t i v e s o p h i s t i c a t i o n , so such a p u b l i c a t i o n i s a v a l u a b l e c o n t r i b u t i o n . PREVIOUS THESES. It may be u s e f u l at t h i s p o i n t to d i s c u s s the pr e v i o u s theses on landbanking. One e a r l y study was by Stanley i n an M.A. t h e s i s at the U n i v e r s i t y of B r i t i s h C o l u m b i a . 1 4 I t s focus i s a c o s t - b e n e f i t e v a l u a t i o n of advance s i t e a c q u i s i t i o n f o r p u b l i c b u i l d i n g s i n urban renewal a r e a . I t s method was a review of the l i t e r a t u r e which was scant a t that time. I t mentions the d i f f i c u l t i e s of q u a n t i f y i n g impacts on the s o c i a l f a b r i c of the community. I t i s a t h e o r e t i c a l d i s c u s s i o n o f the i s s u e s and problems which might be encountered i n an e m p i r i c a l study. Another conceptual d i s c u s s i o n i s An_.Analysis of ai3yii?Sg-l!i£^ .,^ c^iiigi^i2S-§S^-l!§S§ba'S^1r n9 by Janczewski, a M.A. t h e s i s at Ohio State U n i v e r s i t y , 1972. I t i s an i n t e r e s t i n g 52 and w e l l w r i t t e n polemic which examines the case " f o r and a g a i n s t " landbanking. I t r e l i e s on a review of the e x i s t i n g l i t e r a t u r e , and a n a l y s e s arguments and concepts p e r t a i n i n g to landbanking. I t c o n s i d e r s the r e l e v a n t U.S. law i n some depth. I t concludes that the case f o r landbanking i s compelling. A very recent t h e s i s by F l e c h n e r , 1 5 r e l i e s f o r i t s d e f i n i t i o n o f lanbanking on the -Landbank.Handbook p r e v i o u s l y d i s c u s s e d i n t h i s chapter and r e j e c t e d as inadeguate. In p a r t i c u l a r i t l e a d s F l e c h n e r to d e f i n e landbanking i n terms of goals r a t h e r than process. "A comprehensive d e f i n i t i o n of general landbanking ... i s the a c q u i s i t i o n of developed l a n d and undeveloped la n d , h o l d i n g of land and d i s p o s i t i o n of land f o r a l l types of land uses - p u b l i c and p r i v a t e - without p r i o r s p e c i f i c a t i o n of the use f o r p a r t i c u l a r s i t e s , by a p u b l i c body whose d e l i b e r a t i v e purposes are c o n t r o l of m e t r o p o l i t a n growth p a t t e r n and/or r e g u l a t i o n of m e t r o p o l i t a n land p r i c e s and/or r e c a p t u r i n g of c a p i t a l gains and/or r e g u l a t i o n of land u s e . " 1 6 T h i s amalgam of d i s p a r a t e elements i s u n l i k e l y to d i s p e r s e the c o n f u s i o n surrounding the concept, and does not i seem to r e c o g n i z e t h a t d i f f e r e n t w r i t e r s have meant d i f f e r e n t t h i n g s by "landbank". These opposed conceptions cannot be r e c o n c i l e d i n one c a t c h - a l l d e f i n i t i o n . F l e c h n e r d i s t i n g u i s h e s between " g e n e r a l landbanking" and " p r o j e c t landbanking", an u n f r u i t f u l dichotomy but a t l e a s t an attempt to come to terms with a c t u a l o p e r a t i o n a l landbanks. The t h e s i s i s based on a review of the l i t e r a t u r e . A q u e s t i o n a i r e was sent to the Puerto Rico Land A d m i n i s t r a t i o n and the Puerto Rico Planning Board, to o b t a i n i n f o r m a t i o n about a l a r g e - s c a l e landbanking o p e r a t i o n i n Puerto Rico. Neither agency responded; but the q u e s t i o n a i r e has n e v e r t h e l e s s been i n c l u d e d as an appendix. 53 The only t h e s i s t h a t has a c t u a l l y observed and analysed a landbank was by S a v i s on S a s k a t o o n . 1 7 T h i s t h e s i s took an h i s t o r i c a l view of the e v o l u t i o n of the m u n i c i p a l landbank i n Saskatoon. I t was prepared under the a u s p i c e s of the Saskatoon Planning Department, and tends perhaps to be u n c r i t i c a l . The study d i d not generate primary data, nor d i d i t concentrate on the f i s c a l and l e g a l a s p e c t s of the o p e r a t i o n . N e v e r t h e l e s s , i n documenting the experience of t h i s pioneer landbank the t h e s i s served a very u s e f u l purpose. Another t h e s i s on the Canadian experience i s Public_Inyolyement_in_La Development; in jfPgdgPA^Qn^riO-and, Saskatoon J mSaskatchgwan by S p r a g g e . 1 8 The author seems to be an experienced p l a n n i n g a d m i n i s t r a t o r and there i s a wealth of d e t a i l i n t h i s study. Such a comparative study c h a l l e n g e s i t s author to develop a s t r o n g g e n e r i c framework i n which to f i t h i s prototypes and perhaps t h i s i s where the t h e s i s i s l e s s than complete. The s i g n i f i c a n c e o f the d e t a i l i s not always c l e a r . Two other theses are worth mentioning although they are not s p e c i f i c a l l y d i r e c t e d to landbanking. One i s The_Role of i — — — Hater and_Sewer Extension F i n a n c i g g _ i n _ g u i d i n g Urban R e s i d e n t i a l Growth. 1 9 The other i s The Land_Use C o n t r a c t : I t s V a l i d i t y as a means_of_Use_and_Deve^ Each develops i n much g r e a t e r d e t a i l than the present study i s a b l e to attempt two e s s e n t i a l t o o l s of landbanking. They would be of more use to a landbank d i r e c t o r than most of the l i t e r a t u r e d i r e c t l y on landbanking that was read i n t h i s review. A f i n a l t h e s i s t h a t was very h e l p f u l and i n t e r e s t i n g , although not on landbanking. 54 was Linda Pual's S£atial_Differentiation D i s t r i c t s _ i n R e d P e e r , U n i v e r s i t y of A l b e r t a , 1968. I t s focus i s on the c h a r a c t e r i s t i c s and r e s i d e n t i a l s a t i s f a c t i o n s of people i n d i f f e r e n t suburbs i n Red Deer. ECONOMIC STUDIES. In the United S t a t e s t h e r e have been two major economic s t u d i e s of landbanking. The f i r s t was the H.U.D. s e r i e s c o n s i d e r e d i n the previous chapter. The second was Shoup and Macks ^dyance Land^Acguisitj.on_b B§5gf itzCgst.-aiQ2ll§ig-a§-i£-^i^,.^g-,,Pp3:igY' 2 1 U n f o r t u n a t e l y t h i s study was not concerned with urban l a n d c o n v e r s i o n , although the p r o v i s i o n o f s c h o o l and park s i t e s i s i n e x t r i c a b l y caught up i n t h i s process, and cannot be t r e a t e d adequately i n i s o l a t i o n . I t was concerned only with the e f f i c i e n c y of buying s i t e s e a r l y r a t h e r than l a t e . Given the assumption that land p r i c e i n f l a t i o n has been g r e a t e r than the marginal borrowing r a t e of m u n i c i p a l i t i e s , t h i s q u e s t i o n tends to become t r i v i a l . S t i l l i t c o n t a i n s u s e f u l g e n e r a l d i s c u s s i o n of some p e r t i n e n t i s s u e s such as the s t a t u s of taxes foregone i n a p u b l i c land h o l d i n g . There are as yet no economic s t u d i e s of Planned Unit landbanks. The c l o s e s t to such a study i s the p r e l i m i n a r y r a n a l y s i s on the Research Design _ f o r _ a M i l l _ H o o d s _ I m p a c t Study, prepared f o r the A l b e r t a Housing C o r p o r a t i o n i n 1973. 2 4 The component s t u d i e s recommended t h e r e i n have not been funded. When they are completed they should add s u b s t a n t i a l l y to our knowledge of M i l l Woods, and how landbanks might f a r e as 55 s a t e l i t e developments on the f r i n g e of other Canadian c a p i t a l c i t i e s . POLEMICS. In the e a r l y ' s i x t i e s , an a r t i c l e by Angus McKay on "Government Land Development f o r P r i v a t e Housing" sparked a debate on the economic e f f i c i e n c i e s of p u b l i c l a n d b a n k i n g . 2 5 The debate generated a t l e a s t as much heat as l i g h t , and few of the i s s u e s were r e s o l v e d . Many are s t i l l matters of c o n t e n t i o n today - f o r example, the nature of " s u b s i d i e s " i n the landbank, the manner of a l l o c a t i n g s e r v i c i n g c o s t s , the s t a t u s of taxes foregone, and the meaning of the m u n i c i p a l borrowing r a t e . I t i s a debate s t i l l worth r e a d i n g . One of the p r i n c i p a l s i n t h a t debate was R. W.G. Bryant, a Canadian academic who teaches i n Montreal at S i r George Williams U n i v e r s i t y . Recently he p u b l i s h e d a major book on t h e s u b j e c t . 2 6 The book i s comparative and h i s t o r i c a l . I t ranges over a wide spectrum of e x p e r i e n c e s i n la n d use c o n t r o l , t a x a t i o n , l a n d t e n ure, and p u b l i c land ownership. The main c o u n t r i e s c o n s i d e r e d are B r i t a i n , Canada, U.S.A., I s r e a l and A u s t r a l i a . There i s an e x c e l l e n t d i s c u s s i o n of the B r i t i s h Town and Country Planning Act of 1947. The book i s e n t e r t a i n i n g r e a d i n g and r a t h e r a n e c d o t a l . But i t a l s o c o n t a i n s a wealth of background d e t a i l to present Canadian o p t i o n s i n landbanking. A l a r g e s e c t i o n of the l i t e r a t u r e of landbanking i s polemic i n tone. The authors develop i d e a s of the v i r t u e s and v i c e s of a landbank "a p r i o r i " , as an e x e r c i s e i n pure reason. A 56 number of t i t l e s are l i s t e d i n the b i b l i o g r a p h y a t the end of t h i s t h e s i s . Economists have been p a r t i c u l a r l y prone to w r i t i n g about how landbanking would i n t e r v e n e ( g e n e r a l l y d i s a s t r o u s l y ) i n t h e i r p a r t i c u l a r t h e o r e t i c a l model of how an urban land market works. As these models are admittedly p r i m i t i v e and of l i t t l e p r e d i c t i v e power, 2 7 i t i s u n l i k e l y to be f r u i t f u l to s p e c u l a t e on the probable e f f e c t s of complex i n t e r v e n t i o n s . The same t h i n g can be s a i d of s t u d i e s which c o n s i d e r land markets i n which there i s no landbank a c t i n g and deduce from them what would happen i n the event of a landbank being s t a r t e d . 2 8 THE CANADIAN SCENE. In c o n t r a s t to the U.S.A., the impetus towards development of new ideas and programs i n urban land c o n v e r s i o n i n Canada has hot come from the u n i v e r s i t i e s . I t has o f t e n seemed t h a t the s c h o o l s of urban planning have l e f t the f i e l d to urban land economists whose p r o c l i v i t y i s to f i g h t a rearguard a c t i o n a g a i n s t each government i n t e r v e n t i o n i n the " f r e e market". In the Planning s c h o o l s , l a n d use p l a n n i n g has gained the r e p u t a t i o n of being passe. There i s more c h i c i n " c i t i z e n p a r t i c i p a t i o n " or " t r a n s a c t i o n a l p l a n n i n g " , or "urban a e s t h e t i c s " . T h i s i s not to c a s t a s p e r s i o n s on these o r i e n t a t i o n s which are v a l i d i n t h e i r own sphere. I t i s simply to doubt whether c i t y planners can be a l l t h i n g s to a l l men, and to note t h a t the t r a d i t i o n a l realm of planning, that of land use i n c i t i e s , has tended t o l a n g u i s h i n Canadian u n i v e r s i t i e s i n r e c e n t years. Yet the need f o r i n n o v a t i o n and s k i l l i n t h i s f i e l d i s not l e s s than i t was, nor i s the scope f o r u s e f u l work 57 l e s s . The t h r u s t towards improvement i n the land c o n v e r s i o n process i n Canada has come from government departments. At the F e d e r a l l e v e l . C e n t r a l Mortgage and Housing C o r p o r a t i o n and the M i n i s t r y of St a t e f o r Urban A f f a i r s have supported res e a r c h and p o l i c y development i n t h i s f i e l d . At the P r o v i n c i a l l e v e l , O ntario Housing C o r p o r a t i o n and A l b e r t a Housing C o r p o r a t i o n have supported both r e s e a r c h and i n n o v a t i v e p r o j e c t s . There have been no p r i v a t e business f i r m s as dynamic as t h e i r c o u n t e r p a r t s such as the Rouse o r g a n i z a t i o n i n the U.S.A. 2 9 There have been outstanding i n n e r - c i t y developments by p r i v a t e e n t e r p r i s e such i as Place V i l l e - M a r i e i n Montreal, but no f r i n g e development or p r i v a t e new community development to compare with Columbia i n the U.S. In Canada, two r e p o r t s under f e d e r a l a u s p i c e s have been p a r t i c u l a r l y i n f l u e n t i a l . The f i r s t i s the " H e l l y e r R e p o r t " . I n 1968 the then F e d e r a l M i n i s t e r of T r a n s p o r t , Paul H e l l y e r , formed a Task Force on Housing and Urban Development which held p u b l i c hearings a c r o s s Canada. I t t r i e d to determine the housing needs of Canadians and to assess the problems a s s o c i a t e d with meeting those needs. Among the recommendations of the r e p o r t was a st r o n g s u g g e s t i o n t h a t a l l m u n i c i p a l i t i e s i n Canada should become i n v o l v e d i n landbanking. " M u n i c i p a l i t i e s or Regiona l Governments, as a matter of c o n t i n u i n g p o l i c y , should a c q u i r e , s e r v i c e , and s e l l a l l or a s u b s t a n t i a l p r o p o r t i o n of the land r e q u i r e d f o r urban growth within t h e i r boundaries."p.143. The second r e p o r t that has been c r u c i a l i n s p a r k i n g i n t e r e s t i n landbanking i n Canada i s the r e p o r t w r i t t e n f o r 58 CM, H.C. by Dennis and F i s h . 3 1 T h i s r e p o r t r e v e a l e d the strong "Market Power" of s i x or so p r i v a t e developers i n Canada. The Report i s a s t r o n g advocate of landbanking of the s o r t e x e m p l i f i e d by Red Deer. Another important study f o r the P o l i c y P l a n n i n g D i v i s i o n of CM.H.C. i s the P r e l i m i n a r y _ l a n d _ S t u d y which has had l i m i t e d d i s t r i b u t i o n , but which c o n t a i n s an important d i s c u s s i o n f a v o u r a b l e to l a n d b a n k i n g . 3 2 In g e n e r a l , in-house government s t u d i e s of urban land c o n v e r s i o n i n Canada have been much more s u b s t a n t i a l than the c o n t r i b u t i o n from u n i v e r s i t y p l a n n i n g s c h o o l s . As i n the U.S., these government agencies have been concerned with the need f o r a n a t i o n a l urban land p o l i c y , 3 3 but as i n the U.S. a l s o , there has been no c l e a r understanding of what such a p o l i c y would e n t a i l . METHODOLOGY AND CONCEPTUAL ANALYSIS. One of the most u s e f u l s e c t i o n s o f the l i t e r a t u r e of landbanking i s a l s o the s m a l l e s t . I t i s th a t s e c t i o n concerned with f o r m u l a t i n g the r i g h t q u e s t i o n s about the urban land c o n v e r s i o n process, a n a l y s i n g the concepts i n v o l v e d , and s e t t i n g a s t r u c t u r e within which well-founded e m p i r i c a l r e s e a r c h can be s t a r t e d . "Most of the c o n t r o v e r s i e s (about landbanking) are f r u i t l e s s f o r there i s very l i t t l e r e a l r e s e a r c h on the consequences of v a r i o u s s t r a t e g i e s , though there i s a voluminous l i t e r a t u r e of o p i n i o n ... one t h i n g stands out: inadequate methodology i s at the heart of the Canadian housing problem. I f the que s t i o n s are not posed p r o p e r l y , the answers are d u b i o u s " . 3 3 In Canada Norman Pearson's work, from which the above q u o t a t i o n i s a e x c e r p t , has pr o v i d e d an e x c e l l e n t c o n t r i b u t i o n to t h i s endeavour. The Canadian C o u n c i l on S o c i a l Development 59 / has a l s o made d i s t i n g u i s h e d c o n t r i b u t i o n s i n the f i e l d . Another source worth c o n s u l t i n g i s the A u s t r a l i a n r e s e a r c h on the urban land c o n v e r s i o n p r o c e s s . 3 4 Of course most of the b a s i c r e s e a r c h has been done i n the U.S.A. For example, Marion Clawson's Suburban_Land j_Conversioja_in_,the^United S t a t e s 3 5 i s a r e c e n t e x p o s i t i o n of the process t h a t i s l i k e l y to become a c l a s s i c i n the f i e l d . I t recommends t h a t , as one of a package of measures, a landbank i n each m e t r o p o l i t a n area "should seek to have 609? or more of the land i n the general area w i t h i n which i t operates, and t h a t i t should seek to a c q u i r e land f o r more than f i v e years ahead, g e n e r a l l y f o r more than ten years ahead, and o f t e n f o r up to 20 years ahead"(p.359) . GAPS IU THE LITERATURE. In c o n c l u s i o n , i t may be u s e f u l to i n d i c a t e gaps i n the l i t e r a t u r e which, i n the author's o p i n i o n , would best repay s u s t a i n e d work. The f i r s t i s a l a c k of l i t e r a t u r e on the advanced a n a l y t i c a l c a p a b i l i t y needed by landbanks i n the f u t u r e . T h i s study w i l l show tha,t some problems that arose i n Red Deer were the r e s u l t of the l a c k of such c a p a c i t y . The core of such an a n a l y t i c model would be a f i n a n c i a l cash-flow model r e l a t e d to s o p h i s t i c a t e d housing demand p r o j e c t i o n based on demographic a n a l y s i s ; but a wide range of i n p u t s on the e n g i n e e r i n g , d e s i g n , s o c i a l , and economic l e v e l s would be necessary. Perhaps "model" i s the wrong word. What the l i t e r a t u r e does not provide i s a s c i e n c e of landbanking. The second gap i n the l i t e r a t u r e i s on a simpler but 60 r e l a t e d l e v e l . Government agencies i n Canada have provided a r a t i o n a l e i n favour of landbanking and a l s o funding programs i n support of landbanking, but no guidance cn how to landbank. There i s nothing i n Canada comparable to the North C a r o l i n a , Landbank .Handbook. There i s no manual to guide s m a l l communities i n i n s t i t u t i n g landbanks. T h i s i s r e f l e c t e d i n t h e i r c o n f u s i o n and r e l u c t a n c e to become i n v o l v e d , d e s p i t e the otherwise a t t r a c t i v e F e d e r a l support o f f e r e d . T h i s i s an omission which t h i s present study w i l l not r e c t i f y as i t i s not g e n e r a l i z e d beyond the s i n g l e case. These two gaps can provide a u s e f u l focus f o r the l i t e r a t u r e i n the f u t u r e - one aspect i s e s o t e r i c and r e s e a r c h o r i e n t e d , the other i s pragmatic and o r i e n t e d to quick a c t i o n . 61 FOOTNOTES. 1. John D a n i e l Janczewski, . A. n_ft Dgl v§is_gI_2dyance Land ^S2Si§iti9B-§Pd_Landbanking as_an_effeetiye_method of iQ§f.it!lti n c[ „ P1 a n g i n g g rp gr a m Unpublished M.A. t h e s i s Ohio S t a t e U n i v e r s i t y , 1972,p.15 2. See: Buckwold, "Aldn f p o l i c y i n Saskatoon"; Clubb, "Saskatoon the S e r e n i t y and the Surge"; Parsons and Budke "Canadian Landbanks"; and Ravis "Advance Land A c q u i s i t i o n by L o c a l Government: The Saskatoon Experience". Miii..H9S§§„PgS.flopmeyt: Concept. H i l l Woods P r o j e c t , Edmonton, undated. 4. R.W.G. Bryant, Land: P r i v a t e Propertyj. Public_,Conyrol f u Harvest House, Montreal,1972,p.245. 5. Hugh S t r e t t o n , "Adelaide as E s t a t e Agen" i n Idgas_For A u s t r a l i a n _ C i t _ i e s x Melbourne, 1970,p. 15. 6. A good i n t r o d u c t i o n to the U.D.C. concept i s provided by "The State Urban Development C o r p o r a t i o n : New Yorks Innovation", The Urban Lawyer, Summer 1969,vol.1,#2. 7. C a r o l Van Alstyne,(ed.) Land Bank,Handbook z Piedmont T r i a d C o u n c i l of Governments, Sept.1972. 8. Downing, Donald, The Role of Water and Sewer Extension F i n a n c i n g i n Guiding Urban R e s i d e n t i a l Growth^ Research Report #18, Water Resources Center, U n i v e r s i t y of Tennessee,1973. 9. Van A l s t y n e , p.A-3. 10. Marion Calwson, Suburban_Land_Conversion_in_tne_United S t a t e s ^ Resources f o r the Future, B a l t i m o r e , 1971. 11. John Reps, "The Future of American Planning - Requiem or Renascence?" In P l a n n i n g 1967. S e l e c t e d Papers from the ASPO N a t i o n a l Planning Conference, Chicago,1967. 12. See f o r example: Parsons and Budke, Canadian_Land_Banks i ASPO Report #284, Chicago, 1972. 13. Kermit Parsons, et a l , g u b l i c _ L a n d _ A c q u i s i t i o n f o r New Cgmmunities f and„the_control of Urban G r o w t h : . A l t e r n a t i v e StJ^tSai®.8.*. Center f o r Urban Development Research, C o r n e l l U n i v e r s i t y , New York,1973. 14. Thomas S t a n l e y , An E v a l u a t i o n of the E f f e c t i v e n e s s of P r i o r Bggai§it,i9B,-gf „§itg§^^ the_ P§ttern_of_yrban_Land Development, M.A. t h e s i s , unpub.. U n i v e r s i t y of B.C.,1965. 62 15. Harvey F l e c h n e r , Towards_an_Understandi Banking_aI_the_Hetro£olitan_Scale J. C a t h o l i c U n i v e r s i t y of America,1973. 16. Flechner,p.15 17. P u b l i s h e d as Adyance_Land„Acguisition_by_ iL^ The_Saskatoon Exj>erience x Saskatoon Planning Department, 1972? 18. G. Spragge, " P u b l i c Involvement i n Land Development: London, O n t a r i o , and Saskatoon, Saskatchewan", M.A. T h e s i s C o r n e l l U n i v e r s i t y , 1969. 19. Downing, o p . c i t . 20. B. P o r t e r , "The Land Use Co n t r a c t : I t s V a l i d i t y as a means of Use and Development C o n t r o l " , M.A. T h e s i s , U n i v e r s i t y of B.C., 1972. 21. D. Shoup and R. Mack, Advance_Land_Ac£uis Governments: B e n e f i t - C o s t A n a l y s i s as an Aid to P o l i c y , I n s t i t u t e of P u b l i c A d m i n i s t r a t i o n , Hew York, 1968. 22. Urban Land Research A n a l y s t s C o r p o r a t i o n , Inyestment_Policv. for_Landbanks x 1967. Six other t i t l e s are l i s t e d i n the b i b l i o g r a p h y a t the end of t h i s study. Most are a v a i l a b l e i n mimeo. From N a t i o n a l T e c h n i c a l Information S e r v i c e , Washington, D.C. 24. McFayden and Janssen, Research Designator a M j l l Woods Impact_Study I A l b e r t a Housing C o r p o r a t i o n , 1973. 25. McKay, "Government Land Development f o r P r i v a t e Housing", Plan 111 #1 may 1962; C r e r a r , "Government Land Development f o r P r i v a t e Housing", Plan vol.3 #2 1962; R.W.G. Bryant "Land Ownership and C i t y Development" Plan Vol.4 #2 June 1963; Bryant "Land S p e c u l a t i o n : I t s E f f e c t s and C o n t r o l s " Plan vol.5 #3 Feb.1965; McKay "Land S p e c u l a t i o n - A Comment" Plan vol.6 #2 Dec.1965. 26. R.W.G. Bryant, LSS^-gfiY^.^g .P£9R§£^,YxPlJfeJ:iS-Q°I3^£g2<. Harvest House, Montreal,1972. 27. Kamm s a y s : " I t i s the authors premise that the c u r r e n t s t a t e of both theory and e m p i r i c a l knowledge about the o p e r a t i o n s of the market i n land are such as to j u s t i f y no more than a d e s c r i p t i v e approach", ia£^_la£JSi£2i_£]Lfeli£_E22i£2 A Iternatives_and_Dilemmas Urban I n s t i t u t e , WashTBc,1970,p74T 28. See f o r example: R a t c l i f f e R.U. and Hamilton S.W. Suburban Land Develo£ment x Union of B r i t i s h Columbia M u n i c i p a l i t i e s , 19727 29. See Gurney B r e c k e n f e l d , Columbia_and_the_New_C^ 63 N.Y.,1971. 30. Report of the F e d e r a l Task Force on Housing and Orban Development, Queens P r i n t e r , Ottawa, Jan.1969. 31. Dennis and F i s h , Low.IncomeHousing: Programs_in_Search _gf a _ P c l i c j Ottawa, C. M T H . C , 1972. 32. Peter Spurr, g r e l i g i B§£3 , ] [ t i B l l - . § ^ i y d l3? i ^ § i n Report, C. M. H. C. Ottawa 1972. 33. Norman Pearson, Towards a Methodology.,, J?9£.ff o asinqand -L^Jbank_Needs_Analysis x O n t a r i o Housing Corporation,1973,p.7-8. 34. See for-example: Bromilow,F.J., "Some Comments on Research i n t o the Land Conversion Process", Second Report of the Task Force on the P r i c e of l a n d . Appendix 11, Queens P r i n t e r Canberra,1973. 35. Marion Clawson, Suburban Land .Conversion i n ..the,United States.: An .Economic, a rid Goyernroental_jgrocess A Resources f o r the Future, 1971. en METHODOLOGY There has teen very l i t t l e r e s e a r c h i n t o the l a n d c o n v e r s i o n process i n Canada, and even l e s s i n t o the e f f e c t s of d i r e c t p u b l i c i n t e r v e n t i o n i n t o t h a t process. Previous academic theses on landbanking have debated the t h e o r e t i c a l advantages and disadvantages of landbanking, but have not been supported by e m p i r i c a l e v i d e n c e . A p a r t i a l e x c e p t i o n to t h i s i s the t h e s i s by Bavis on Saskatoon and i t s landbank. T h i s study c o n s i d e r s the h i s t o r y o f the landbank i n Saskatoon, but does not analyze i n depth the a d m i n i s t r a t i v e s t r u c t u r e of the landbank, i t s f i n a n c i a l performance, or the l e g a l context i n which i t 65 operated. So although i t i s an i n t e r e s t i n g study, i t i s l e s s than comprehensive. Even i f i t were comprehensive, i t would not d e t r a c t from the value of a s i m i l a r study on Red Deer. The only t h e s i s on r e s i d e n t i a l development i n Red Deer i t s e l f i s t h a t by Li n d a P a u l . T h i s was a study of s p a t i a l d i f f e r e n t i a t i o n among r e s i d e n t i a l d i s t r i c t s i n Red Deer. That i s , i t i s concerned with d i f f e r e n t c h a r a c t e r i s t i c s of the r e s i d e n t s i n d i f f e r e n t suburbs of Red Deer and with t h e i r v a r y i n g l e v e l s of s a t i s f a c t i o n with t h e i r suburban environment. As such i t i s a u s e f u l complement to a study of the landbank i t s e l f , but the two approaches do not ove r l a p at many p o i n t s . In g e n e r a l , although Red Deer has a t t r a c t e d much i n t e r e s t because of i t s landbank, no comprehensive study to eva l u a t e the performance of t h a t landbank has p r e v i o u s l y been attempted. I t i s a l s o r e l e v a n t t h a t many have c a l l e d f o r such r e s e a r c h i n rec e n t years: " (government) should encourage and p o s s i b l y fund r e s e a r c h on the e f f e c t s of l a r g e - s c a l e p u b l i c and p r i v a t e l a n d assembly f o r urban development on l a n d p r i c e s under v a r y i n g growth s i t u a t i o n s . " Kermit Parsons, P u b l i c Land A c g u i s i t i o n ^ 1973, p. 223. "A review of a massive l i t e r a t u r e i n d i c a t e s an absence of much r e a l r e s e a r c h , and a great d e a l of o p i n i o n a t e d a n i m o s i t y . . . . Inadequate methodology l i e s at the r o o t of our problems i n housing and landbanking: we do not ask the r i g h t q u e s t i o n s and as a r e s u l t our answers are uncl e a r and i n a c c u r a t e . " Norman Pearson, Methodology f o r Housing and Landbank Needs A n a l y s i s ^ 1973, p. x i . So t h i s study, i n response to the needs as a r t i c u l a t e d above, has f i r s t t r i e d to ask the r i g h t q uestions about landbanking. I t then seeks some answers to these que s t i o n s i n a comprehensive e v a l u a t i o n of the landbank i n Red Deer. The 66 methodology chosen f o r the e v a l u a t i o n i s c o s t - b e n e f i t a n a l y s i s . C o s t - b e n e f i t s t u d i e s have been common i n North America s i n c e the e a r l y * t w e n t i e s . Huch of the major development of the conceptual t o o l s of the technique has been i n the f i e l d of water r e s o u r c e development; but there have a l s o been many s t u d i e s by urban planners and p u b l i c a d m i n i s t r a t o r s . In the ' t h i r t i e s and ' f o r t i e s the focus of these s t u d i e s was on slum c l e a r a n c e and urban renewal. In the ' f i f t i e s and ' s i x t i e s the focus s h i f t e d to / the urban f r i n g e , and p a r t i c u l a r l y to the cost-revenue a n a l y s i s of r e s i d e n t i a l expansion. In both cases the r e s u l t s of the s t u d i e s were unf o r t u n a t e , at l e a s t p a r t l y due to f a u l t s i n the s t u d i e s themselves. Or ban renewal i n the form advocated by the e a r l y c o s t -b e n e f i t s t u d i e s has been thoroughly d i s c r e d i t e d . The f r i n g e area s t u d i e s r e s u l t e d i n s c o r e s of zoning ordinances and other c o n t r o l s , seeking t o prevent f u r t h e r r e s i d e n t i a l growth or to l i m i t i t to l u x u r y - c l a s s , s i n g l e detached homes on acreage l o t s , l e t these s t u d i e s which prompted the r i s e of " e x c l u s i o n a r y zoning" are e x t e n s i v e l y flawed, and g e n e r a l l y i n v a l i d . As Hheaton p o i n t s out, almost a l l of the s t u d i e s of r e s i d e n t i a l s e r v i c e c o s t s apply average-cost theory when the c o r r e c t measure i s marginal c o s t ; they almost u n i v e r s a l l y make an e q u a l l y s e r i o u s e r r o r i n t r e a t i n g only p r o p e r t y - t a x revenues and i g n o r i n g nontax revenues, other taxes, and s t a t e and f e d e r a l grants i n a i d which together o f t e n c o n s t i t u t e 50% of l o c a l budgets; they are c o n c e p t u a l l y weak i n making a r b i t r a r y and u n r e a l i s t i c assignment of charges to r e s i d e n t i a l areas; and most 67 of them ignore the time dimension by quick a m o r t i z a t i o n of c a p i t a l o u t l a y s i n a decade or so ( a f t e r which f a c i l i t i e s w i l l s t i l l be i n use) and by n e g l e c t i n g t h e ' f l u c t u a t i o n s i n demand f o r m u n i c i p a l s e r v i c e s over the l i f e s p a n of a s i n g l e f a m i l y d w e l l i n g . In g e n e r a l , cost-revenue s t u d i e s have s u f f e r e d from important methodological and c o n c e p t u a l shortcomings, and f r e g u e n t l y they have been a p p l i e d to serve narrow i n t e r e s t s . 1 In a d d i t i o n to t h i s dismal h i s t o r y , the technique of c o s t - b e n e f i t a n a l y s i s i s a t present i n c o n f u s i o n and d i s a r r a y . There are r e p u t a b l e authors h o l d i n g opposite views on almost every aspect of the c o s t - b e n e f i t technigue from the v a l i d i t y of v a r i o u s c l a s s e s of b e n e f i t s , to d i s c o u n t i n g , to d e c i s i o n formulae. So i n using the technique one has to maintain a c e r t a i n h u m i l i t y and s c e p t i c i s m . GOALS OF THE PLANNED ONIT LANDBANK. One of the d i f f i c u l t i e s i n using c o s t - b e n e f i t a n a l y s i s to evaluate a government program such as landbanking i s i n d e f i n i n g the government's u t i l i t y f u n c t i o n . Stephen H a r g l i n has pointed out that t h i s d i f f i c u l t y i s e s p e c i a l l y acute i n North America because i t i s not a planned s o c i e t y and the s o c i a l g o a l s of government a c t i o n have been a r t i c u l a t e d only i n the most vague terms. In the absence of such a framework of s o c i a l g o a l s , a n a l y s t s have tended to t r e a t governments as i f they were p r i v a t e f i r m s whose u t i l i t y f u n c t i o n i s simply to maximize p r o f i t s . T h i s analogy i s l e s s than adequate. To g i v e an example, a government might wish to value b e n e f i t s to a depressed r e g i o n 68 or s o c i a l c l a s s higher then t h e i r market value - t h a t i s , to gi v e a weighting f o r d i s t r i b u t i o n a l e f f e c t s . Or to take another example, a government might not d i s c o u n t f u t u r e b e n e f i t s and c o s t s i n the same way as does a p r i v a t e f i r m , because i t val u e s f u t u r e consuption e q u a l l y with present consumption. The analogy i s with a good parent who val u e s a son's c o l l e g e education e q u a l l y with h i s own present good, r a t h e r than with a p r i v a t e f i r m v a l u i n g present r e t u r n s over f u t u r e r e t u r n s . So i n c o n s i d e r i n g the r e s u l t s of a government program i t i s important to a r t i c u l a t e as c l e a r l y as p o s s i b l e the framework of goals of t h a t government. In North America, g o a l s are g e n e r a l l y vague and i m p l i c i t , and t h e r e f o r e the measurement of t h e i r achievement i s d i f f i c u l t . They are l i k e l y t o c o n t r i b u t e most to i n t a n g i b l e c o s t s and b e n e f i t s , but n e v e r t h e l e s s they are an important f a c t o r i n the f i n a l e v a l u a t i o n . One can i d e n t i f y f i v e main o b j e c t i v e s of landbanking i n the l i t e r a t u r e : 1. An e f f i c i e n t staged e x t e n s i o n of a compact urban space. 2. Improved supply of s e r v i c e d l o t s . 3. Improved Urban P l a n n i n g . 4. Moderating r e s i d e n t i a l l o t p r i c e s . 5. Generating Income f o r other p u b l i c purposes. The f i r s t g o a l i s sometimes simply expressed as 69 " p r e v e n t i n g s p r a w l " . Advocates p o i n t out that a Planned U n i t Landbank r e l i e s on a staged e x t e n s i o n of trunk s e r v i c e s at the urban f r i n g e . The i n t e g r a t i o n of such a s e r v i c i n g plan with p u b l i c land a c q u i s i t i o n f o r planned u n i t development i s the crux of landbanking. I t i s claimed t h a t such a landbank i s an e f f e c t i v e method, or perhaps the o n l y e f f e c t i v e method, of implementing a "comprehensive" pl a n . The second o b j e c t i v e i s to b r i n g the supply of s e r v i c e d l o t s w i t h i n p u b l i c c o n t r o l . The "Dennis Report" e s t a b l i s h e d that a few p r i v a t e f i r m s hold very l a r g e areas of land on the f r i n g e s of major Canadian c i t i e s . I t i s s a i d t h a t these f i r m s have the o p t i o n of r e s t r i c t i n g the supply of l o t s and thus f o r c i n g p r i c e s higher. A p u b l i c agency as a new s e l l e r i n the market co u l d i n c r e a s e the supply of l o t s so that p r i c e s are kept s t a b l e , Another aspect of the supply problem t h a t i s sometimes addressed by advocates of landbanking i s t h a t a p p l i c a t i o n s f o r development approval by p r i v a t e f i r m s are o f t e n met with e x t e n s i v e d e l a y s , s u s p i c i o n , and c o n f l i c t . The government approving a u t h o r i t y sees i t s e l f as the guardian of the p u b l i c i n t e r e s t , and can e x e r t only negative r e g u l a t o r y powers i n seeking to f u r t h e r t h i s p u b l i c i n t e r e s t . T h i s r e s u l t s i n b o t t l e n e c k s i n the flow of the c o n v e r s i o n process. I t i s s a i d that a p u b l i c landbank undertaking a l l aspects of the c o n v e r s i o n process would not be s u b j e c t to these d e b i l i t a t i n g d e l a y s , because t h e r e would be the assumption of good f a i t h on the p a r t of the p u b l i c agency and because s e r v i c i n g , s u b d i v i s i o n d e s i g n , and s a l e s would be c l o s e l y i n t e g r a t e d with each other i n a s i n g l e agency. 70 The t h i r d o b j e c t i v e a s c r i b e d to landbanks i s t h a t of improving urban p l a n n i n g . T h i s has s e v e r a l a s p e c t s , i n c l u d i n g : 1. G e t t i n g the best s i t e s f o r parks, s c h o o l s , and p u b l i c b u i l d i n g s . 2. Implementing s o c i a l p l a n n i n g goals such as en s u r i n g a mix of housing types and p r i c e s i n each s u b d i v i s i o n . 3. Developing s u b d i v i s i o n s on a s c a l e s u f f i c i e n t to allow p l a n n i n g i n harmony with the n a t u r a l e c o l o g i c a l systems of the area. The Research Design f o r a M i l l Woods Impact Study p o i n t s out t h a t these "planning e f f e c t i v e n e s s " goals are t y p i c a l l y mentioned i n l o c a l l e v e l r e p o r t s on landbanking i n Canada, while i n c o n t r a s t , r e p o r t s a t the n a t i o n a l l e v e l tend to emphasize p r i c i n g and e q u i t y g o a l s . There i s no necessary c o n f l i c t i n t h i s , but i t does i n d i c a t e a d i f f e r e n c e of p e r s p e c t i v e . And t h i s d i f f e r e n c e of p e r s p e c t i v e might assume importance i n j o i n t programs i n some circumstances. Let us c o n s i d e r the f i n a l two goals of landbanking that were mentioned: p r i c e s and e g u i t y . Let us assume f o r a moment t h a t a landbank does r e s u l t i n lower p r i c e s f o r r e s i d e n t i a l l o t s . There i s l i t t l e agreement on the s i g n i f i c a n c e of these lower p r i c e s . Is the landbank f a i l i n g to capture the "unearned increment", and o n l y r e d i s t r i b u t i n g w i n d f a l l gains from raw land holders t o r e s i d e n t i a l house owners? Are the lower l o t p r i c e s simply r e f l e c t i n g t r a n s f e r payments, or do they r e f l e c t r e a l e f f i c i e n c y economies? Is the p u b l i c landbank i n v o l v e d i n s u b s i d y - g i v i n g ? A subsidy of course c a r r i e s the stigma of being i n danger of m i s a l l o c a t i n g r e s o u r c e s , apart from 71 i t s p o l i t i c a l u n a t t r a c t i v e n e s s . So i t i s important to c o n s i d e r these questions while we are c o n s i d e r i n g the goals of landbanking. Such an enquiry a l s o f i t s the g e n e r a l p a t t e r n of t h i s methodology chapter which seeks to i n v e s t i g a t e the t h e o r e t i c a l i s s u e s which must be r e s o l v e d to enable one to enumerate c o s t s and b e n e f i t s of a landbank. GOALS: EFFICIENCY, OR REDISTRIBUTION OF HEALTH? In t h i s s e c t i o n i n c o n t r a s t to the l a s t we w i l l be examining p o i n t s made by c r i t i c s of landbanking, r a t h e r than i t s advocates. The debate around landbanking has been confused because the concept i t s e l f has r a r e l y been s u b j e c t e d to r i g o r o u s a n a l y s i s , and because i t i s a comprehensive change from the present system and as such has had something to say about a l l the goals of p u b l i c land p o l i c y . I t has been argued by Sylvan Kamm t h a t the g o a l s espoused by landbank advocates are s e l f - c o n t r a d i c t o r y . She says that the "good p l a n n i n g " goal c o n t r a d i c t s the g o a l of c a p t u r i n g the i n c r e a s e d land values f o r the p u b l i c . T h i s i s at best a very loose use of " c o n t r a d i c t o r y " . I t may be the case t h a t these two goals cannot be maximized at the same time. T h i s does not imply c o n f l i c t n e c e s s a r i l y . F i r s t l y , although one cannot, f o r example, reap huge monetary p r o f i t s and p r o v i d e high q u a l i t y s u b d i v i s i o n with l o t s of parks and open space a t low c o s t . s i m u l t a n e o u s l y , one can have b e t t e r environment and lower p r i c e s t o g e t h e r . That i s , although n e i t h e r g o a l i s maximized, both are achieved more f u l l y than they would otherwise have been. Secondly one such 72 goal may achieve e x p r e s s i o n through the other. Cash-in-hand i s not the only r e t u r n t o the p u b l i c . B e t t e r planning f o r s c h o o l s and parks can be valued and c o n s t i t u t e s a r e t u r n i n i t s e l f . It i s not necessary t h a t an o f f i c i a l have cash i n the hand to have succeeded i n c o n v e r t i n g h i t h e r t o i n d i v i d u a l w i n d f a l l g a i n s to p u b l i c b e n e f i t s . So the argument t h a t a landbank embodies i n h e r e n t l y c o n t r a d i c t o r y goals does not have much f o r c e . Another argument l e s s e a s i l y disposed of i s that the apparent g a i n s i n lower landbank p r i c e s are s o l e l y i n the nature of t r a n s f e r payments and are t h e r e f o r e not of economic b e n e f i t to the community. Some economists say t h a t the r e d i s t r i b u t i o n of wealth can b e t t e r be a f f e c t e d by d i r e c t cash payments, a guaranteed income perhaps, than by f i d d l i n g with the market mechanism. Th i s argument can be answered i n two ways: F i r s t l y , even i f only t r a n s f e r payments are i n v o l v e d , a landbank may be the only p o l i t i c a l l y f e a s i b l e method of e f f e c t i n g the d e s i r e d t r a n s f e r . I t i s l o g i c a l l y p o s s i b l e that a government might make huge cash payments to the pcor to enable them to purchase land i n an i n f l a t e d market such as that i n Vancouver at present, where l o t p r i c e s of $25,000-$30,000 are not unusual. But t h i s i s p o l i t i c a l l y u n l i k e l y ; and the p u b l i c servant has a duty to c o n s i d e r f e a s i b l e methods of implementing p o l i c y . An a c t i o n t h a t i s o p t i m a l under p e r f e c t c o n d i t i o n s i s not n e c e s s a r i l y so i n an i m p e r f e c t world. I t i s a l s o the case that d i r e c t cash t r a n s f e r payments a c t on the demand f o r l o t s , but not d i r e c t l y on the supply. Given that the supply remains i n 73 the hands of a s m a l l number of p r i v a t e developers, d i r e c t t r a n s f e r payments might only f u e l i n f l a t i o n without s u b s t a n t i a l l y improving the p o s i t i o n of the needy. Secondly i t can be argued t h a t landbanking can achieve r e a l p r o d u c t i o n e f f i c i e n c i e s , not only t r a n s f e r payments. There are two r e l a t e d g u e s t i o n s to c o n s i d e r here: 1. Do changes i n the p r i c e of s e r v i c e d l o t s c o n s t i t u t e only t r a n s f e r payments? 2. Is there a hidden subsidy i n v o l v e d i n landbanks s e l l i n g l o t s a t p r i c e s below those which might e x i s t i n the absence of a landbank? And i f there i s such a subsidy, does i t r e s u l t i n a s i g n i f i c a n t m i s a l l o c a t i o n of r e s o u r c e s ? I would l i k e to c o n s i d e r these two g u e s t i o n s i n some depth, because together they c o n s t i t u t e the core of the s e r i o u s c r i t i c i s m of landbanking. l e t us c o n s i d e r the f i r s t q u e s t i o n as to t h e s i g n i f i c a n c e of lower l o t p r i c e s i n a landbank. In the l i t e r a t u r e , there are three i d e n t i f i a b l e p o s i t i o n s on t h i s q u e s t i o n : 12 . Decreases i n l o t p r i c e s are a s o c i a l b e n e f i t ^ 12 . Decreases i n l o t p r i c e s are a s o c i a l c o s t 12 . S o c i a l b e n e f i t s remain the same, but decreases i n l o t p r i c e s r e f l e c t lower s o c i a l c o s t s i n the c o n v e r s i o n process; and are t h e r e f o r e d e s i r a b l e . The f i r s t and t h i r d of these p o s i t i o n s are e q u i v a l e n t i n c o s t - b e n e f i t terms, but are separated to i s o l a t e c e r t a i n c o nceptual mistakes commonly a s s o c i a t e d with the f i r s t . These 74 mistakes are e x e m p l i f i e d by the c o s t - b e n e f i t a n a l y s i s of advance a c q u i s i t i o n attempted by Donald Shoup f o r H.U.D.2 In t h i s a n a l y s i s Shoup s t a t e s t h a t he c o n s i d e r s decreases i n l o t p r i c e s are a s o c i a l b e n e f i t . "A major b e n e f i t i s the s a v i n g to the l o c a l government when land i s bought e a r l y and p r i c e s subseguently r i s e . Savings occur not o n l y because of the g e n e r a l upward t r e n d i n the p r i c e of l a n d , but a l s o because land p r i c e s commonly jump dur i n g c o n v e r s i o n from r u r a l to urban use. For areas i n the path of development t h i s s a v i n g alone w i l l o f t e n outweigh a l l c o s t of advance a c q u i s i t i o n . " (p.38) Shoup's argument hinges on the f o l l o w i n g : "In order to c o n s t r u c t a c o s t - b e n e f i t a n a l y s i s i t i s necessary to s e t t l e on a frame of r e f e r e n c e f o r the d e c i s i o n ... the f ocus of our a n a l y s i s i s c o s t s and b e n e f i t s as p e r c e i v e d by the l o c a l d e c i s i o n makers."(p4) The "as p e r c e i v e d " i s a r e d h e r r i n g . What Shoup means i s c o s t s and b e n e f i t s "as r e c e i v e d by the l o c a l d e c i s i o n makers". But put so b l u n t l y i t sounds l e s s a t t r a c t i v e ; and i n f a c t such a "framework" i s unacceptable. T r a d i t i o n a l l y , c o s t -b e n e f i t a n a l y s i s has counted c o s t s and b e n e f i t s to whomsoever they may occur. I f the government saves some money by buying e a r l y and another person thereby l o s e s money he would otherwise have gained, then the net s o c i a l b e n e f i t i s 0. Shoup's c o n c l u s i o n was: "For a sample of seventeen s c h o o l s i t e s a c q u i r e d i n advance of need by Montgomery County, Maryland, the average sa v i n g has been $50,000 per s i t e a f t e r a l l c o s t s have been taken Into account. Of a sample of 21 s i t e s which Richmond V i r g i n i a has acquired i n advance f o r expressways, s t r e e t widenings and s c h o o l a d d i t i o n s , the average savings ... was $32,000 per s i t e . " (p.101) He t h e r e f o r e decided that t h e r e was a s o c i a l b e n e f i t of ($50,000 x 17) + ($32,000 x 21) = $1,522,000. T h i s i s not so. The s c h o o l board has gained, but not the community as a whole. (at l e a s t that i s a l l Shoup has e s t a b l i s h e d ) The amount i s not 75 a s o c i a l b e n e f i t , but r a t h e r a t r a n s f e r payment with a net s o c i a l b e n e f i t of 0. Decreases i n l o t p r i c e s may s t i l l c o n s t i t u t e a b e n e f i t , but the approach adopted by Shoup and others f a i l s to e s t a b l i s h t h i s . Let us c o n s i d e r the second general p o s i t i o n - t h a t decreases i n l o t p r i c e s are a s o c i a l c o s t r a t h e r than a s o c i a l b e n e f i t . T h i s view was widely h e l d by the c o s t - b e n e f i t a n a l y s t s who i n v e s t i g a t e d urban renewal schemes i n the ' s i x t i e s . "Thus the a p p l i c a t i o n of c o s t - b e n e f i t technigues (to urban renewal programs) p r i m a r i l y i n v o l v e d an assessment of the i n c r e a s e d p r o d u c t i v i t y of land measured i n terms of the i n c r e a s e d land values r e s u l t i n g from redevelopment." Shoup, p.42. T h i s i s a p o s i t i o n taken by L i c h f i e l d , Rothenberg, and Mao i n the context of urban renewal; and i t i s adopted by Stewart Meyers to serve i n the a n a l y s i s of landbanks: "The advantage claimed f o r landbanks i s t h a t they are p o t e n t i a l l y a means f o r i n s u r i n g that urban and suburban space i s u t i l i s e d more e f f i c i e n t l y than i t i s now. E f f i c i e n c y i s d e f i n e d i n terms of the aggregate value of the s e r v i c e s y i e l d e d by the l a n d i n the m e t r o p o l i t a n r e g i o n served by the landbank. That i s , I would assume t h a t the c h i e f o b j e c t i v e of the bank i s t o help a l l o c a t e land among a l t e r n a t i v e uses, both p u b l i c and p r i v a t e , i n such a way t h a t the aggregate value of the land w i t h i n the r e g i o n i s i n c r e a s e d . " Investment P o l i c y f o r Landbanks f 1967,p17. The b a s i s of t h i s view i s the assumption that higher l o t p r i c e s must r e f l e c t a higher " p r o d u c t i v i t y " of the l a n d . The p h i l o s o p h i c a l underpinning of t h i s assumption i s provided by R i c a r d i a n rent theory. Nowhere i s the a p p l i c a t i o n of t h i s theory f r a u g h t with more d i f f i c u l t i e s than i n a n a l y s i s of urban land c o n v e r s i o n . In f a c t i t i s d o u b t f u l whether p r i c e s are s e t by p r o d u c t i v i t y of " r e n t " at a l l i n t h i s c o n t e x t . Wallace Smith says: 76 "The demand f o r urban land i s such, however, that p r o d u c t i v i t y or r e n t i s more l i k e l y t o be determined by the p r i c e l e v e l s at which land and b u i l d i n g s are exchanging than v i c e v e r s a . " S PH 51£315 ocia1_S_Economic_Elements A 1971.p.70 In the urban renewal context i t made a c e r t a i n i n t u i t i v e sense to speak of i n c r e a s e d p r i c e s r e f l e c t i n g i n c r eased s o c i a l b e n e f i t s . Here one i s d e a l i n g with i n n e r - c i t y revenue p r o p e r t i e s whose revenues are i n c r e a s e d by the i n c r e a s e d d e n s i t y a f t e r urban renewal. The same i n t u i t i v e f e e l i n g does not t r a n s f e r e a s i l y to the suburban land c o n v e r s i o n context of landbanking. There i s no evidence t h a t a s i n g l e f a m i l y l o t i s producing more because i t s p r i c e r i s e s . The more revenue a commercial b u i l d i n g or appartment house produces the higher i t s p r i c e w i l l be; but t h e r e i s no easy analogy with the s i n g l e f a m i l y suburban l o t . The s i n g l e f a m i l y l o t continues to house one f a m i l y with a c e r t a i n degree of amenity whatever the p r i c e i n c r e a s e s . And to say t h a t p r i c e s are higher so a p a r t i c u l a r l o t must be producing g r e a t e r s o c i a l b e n e f i t or amenity i s to. get i n t o a s e l f - j u s t i f y i n g loop - a c i r c u l a r argument. T h i s i s not to say t h a t Myers i s wholly wrong. His concept of e f f i c i e n c y as output per u n i t c o s t seems v a l i d . But i n the landbanking case we do not have to deduce changes i n output from p r i c e data. The output i s a c e r t a i n number of l o t s converted t o urban use. G e n e r a l l y t h i s output i s f i x e d by the e f f e c t i v e demand f o r suburban l o t s - that i s , by the number of l o t s people want and can pay f o r . I f t h i s , e f f e c t i v e _ d e m a n d li=5Ilins_j:onstant x_then pgpygj-giP".. P r P c e g § £,§BFe§gpl--'£i2£e^-§££i3i-c^g,t§„ n9£„)?igher 77 s o c i a l b e n e f i t s as Myers supposed. Now i f the landbank lowers p r i c e s the e f f e c t i v e demand w i l l be higher and the i n c r e a s e d amenity o f those f a m i l i e s who are now b e t t e r housed w i l l be a s o c i a l b e n e f i t . a l l i n a l l i t i s c l e a r t h a t the urban renewal p r a c t i c e o f counting p r i c e i n c r e a s e s as b e n e f i t s i s inadmissable i n the land c o n v e r s i o n c o n t e x t . The problem we are c o n s i d e r i n g i s s e t t i n g c r i t e r i a f o r measuring c o s t s and b e n e f i t s . T h i s i s a r e c u r r e n t d i f f i c u l t y , not only i n the landbanking c o n t e x t , but with a l l c o s t - b e n e f i t a n a l y s e s . In the U.S.A. the "Green Book" i n 1950 and the " C o n s u l t a n t s ' Report" i n 1961 were attempts to s t a n d a r d i s e the c r i t e r i a f o r s t i p u l a t i n g the c o s t s and b e n e f i t s of government investment i n water resource development. Despite the narrow focus of t h e i r concern, both these documents were shrouded i n c o n t r o v e r s y and the i s s u e i s u n r e s o l v e d . "The United S t a t e s has no framework f o r planned growth to achieve s t a t e d s o c i a l o b j e c t i v e s from which s p e c i f i c c r i t e r i a might be drawn, and disagreements about the o b j e c t i v e s of p u b l i c investment has been at the heart of much of the c o n t r o v e r s y ...p. 18 In p a r t i c u l a r t h e r e i s no simple way to d e s c r i b e the d e s i r a b l e and d e l e t r i o u s e f f e c t s of economic a c t i v i t y from the p o i n t of view of a government, and one of the major c o n c e p t u a l problems of s u b j e c t i n g p u b l i c investment d e c i s i o n s to economic a n a l y s i s l i e s i n d e f i n i n g the government's u t i l i t y f u n c t i o n . " p . 15 M a r g l i n , P u b l i c _ . I n y e s t m e n t _ C r i t e r i a c 1967. Despite t h i s absence of c l e a r l y d e f i n e d community g o a l s , i t i s sometimes p o s s i b l e to d e f i n e the goals of a government program i n terms that allow measurement of t h e i r achievement. In the case of landbanking during urban land c o n v e r s i o n t h i s does not seem too d i f f i c u l t . Let us suppose that a community has a p r o j e c t e d growth r a t e t h a t demands the 78 c o n v e r s i o n of raw land to provide 100 s e r v i c e d l o t s f o r new households i n the next year. I f t h i s land c o n v e r s i o n i s l e f t to the p r i v a t e market then the p r i c e of the l o t s w i l l i n i t i a l l y be $1000 each ( f o r example). The p r i c e of the same l o t w i l l be $900 i f the c o n v e r s i o n i s undertaken by a landbank. I f each l o t c o s t $500 as raw l a n d , the p r i v a t e development has added,$500 to i t s p r i c e , and the landbank $400. The d i f f e r e n c e i n i n i t i a l p r i c e i s $100. We are assuming of course t h a t both f i g u r e s , p r i v a t e and landbank, r e f l e c t c o s t s p l u s a reasonable p r o f i t ; so the d i f f e r e n c e s i n p r i c e r e f l e c t r e a l d i f f e r e n c e s i n the economic c o s t s of the two methods. Whether i n f a c t landbanks do convert land more cheaply i s s t i l l an open g u e s t i c n to be c o n s i d e r e d l a t e r i n t h i s study; but assuming f o r the moment t h a t they do, i t seems q u i t e c l e a r t h a t the net s o c i a l b e n e f i t of the landbank i n the above case i s $100 per l o t - the measure of i t s improvement over the p r i v a t e mechanism. I f the same l o t i s produced f o r $400 i n s t e a d of $500, then s o c i a l b e n e f i t s are net 20% h i g h e r . What we have e s t a b l i s h e d to t h i s p o i n t i s t h a t , i f a landbank can c o n v e r t land more cheaply than the p r i v a t e market mechanism, then the p r i c e d i f f e r e n t i a l may r e p r e s e n t r e a l economic g a i n s , not simply t r a n s f e r payments. And i t has been argued t h a t lower p r i c e s do r e p r e s e n t economic g a i n s . P r o f e s s o r Grace M i l g r i m , an eminent land economist i n the O.S.A., came to the same c o n c l u s i o n i n a study of land development i n P h i l a d e l p h i a . The study i n d i c a t e s t h a t land t y p i c a l l y s o l d f o r 79 $1350 an acre i n 1945, and f o r $10,250 an a c r e i n 1962. The study estimated t h a t , with a landbanking program by some p u b l i c body, the 1962 s e l l i n g p r i c e c o u l d have been kept to $3250: "The d i f f e r e n c e between these p r i c e s i s the economic c o s t which can be a t t r i b u t e d to maintenance of a p r i v a t e market i n vacant l a n d . " T he_C i t v_ E xp_a nd s x 1968, p. 128. SOB-SIDY? The g u e s t i o n remains whether i n s e l l i n g l o t s a t $100 below the p r i c e we say the market w i l l bear the landbank i s g r a n t i n g a s u b s i d y . I f t h i s i s so, then there i s the i m p l i c a t i o n that r e s o u r c e s are being m i s a l l o c a t e d . Some landbanking s u t h o r i t i e s assume t h a t they are i n v o l v e d i n s u b s i d i e s . For example the Research,Design f o r a Hi 11_Woods,Impact_Study_ s t a t e s : " C o n s i d e r a t i o n should be given to the manner i n which the s u b s i d i z a t i o n b e n e f i t s are d i s t r i b u t e d amongst the purchasers. I f (land i s ) purchased d i r e c t l y from the landbank, the cost of s u b s i d i z a t i o n i s bourne by the c i v i c taxpayers i n g e n e r a l i n p r o p o r t i o n to t h e i r assessed values of t h e i r holdings of land and improvements'^.50. There are s e v e r a l misconceptions here: 1. That the lower p r i c e s r e p r e s e n t only t r a n s f e r payments. T h i s p r o p o s i t i o n has j u s t been examined, and r e j e c t e d . 2. That there are secondary b e n e f i c i a r i e s - " f i r s t and l a t e r round b e n e f i c i a r i e s " . T h i s n o t i o n of secondary c o s t s and b e n e f i t s w i l l be r e f u t e d l a t e r i n t h i s chapter i n the s e c t i o n concerned with measuring b e n e f i t s . 80 3. That lower p r i c e s r e p r e s e n t s u b s i d i e s . I t i s not easy t o separate t h i s t h i r d f a c t o r from the f i r s t two; but as f a r as t h i s i s p o s s i b l e , i t can be e f f e c t i v e l y r e f u t e d a l s o . The M i l l Woods landbank i n Edmonton has s o l d l o t s a t about $5000, while comparable l o t s i n other p a r t s of the c i t y cost $8000. The a v a i l a b i l i t y of M i l l Woods l o t s has s t a b i l i s e d the p r i c e s o f l o t s i n other p a r t s of the c i t y , but the p r i c e d i f f e r e n t i a l has remained. M i l l Woods l o t s are s t i l l cheaper, and presumably they too cou l d be s o l d at $8000 i f that were landbank p o l i c y . In t h i s s p e c i f i c case, the quest i o n a r i s e s whether the M i l l Woods buyers are r e c e i v i n g a subsidy of p u b l i c money. I doubt i f t h i s would be a l e g i t i m a t e d e s c r i p t i o n of the s i t u a t i o n . F i r s t of a l l , the M i l l Woods l o t s are not being s o l d at a l o s s - q u i t e the c o n t r a r y . The landbank makes a healthy p r o f i t , as does the Red Deer landbank and the Saskatoon landbank. I t would be a strange use of "subsidy" t o c l a i m t h a t a p r o f i t - t a k i n g e n t e r p r i s e was p r o v i d i n g s u b s i d i e s . Let us c o n s i d e r an analogy. We know that mass production of c l o t h i s cheaper than p r o d u c t i o n by the Medieval cottage i n d u s t r y . Were the new f a c t o r i e s g i v i n g s u b s i d i e s because the c l o t h they s o l d was cheaper? No. I t i s a l s o i r r e l e v a n t here whether the e n t e r p r i s e i s p r i v a t e or p u b l i c . In the e a r l y middle ages the high p r i c e of c l o t h gave an enormous importance both s o c i a l and economic t o " o u t f i t t i n g " o n e s e l f . This i s no longer so because of cheaper methods of p r o d u c t i o n . In an economist's terms, the consumer s u r p l u s was i n c r e a s e d by 81 the new methods of p r o d u c t i o n . That i s , people now had to pay much l e s s f o r c l o t h than they would have paid when they had no other a l t e r n a t i v e . The case i s the same with landbanking. I f the landbank can produce s e r v i c e d l o t s with egual or g r e a t e r amenity at lower c o s t , t h i s means s o c i a l g a i n s or i n c r e a s e d consumer s u r p l u s , but not a s u b s i d y . PRICE | X B DEMAND To put the same p o i n t another way, the $3000 i s not an o p p o r t u n i t y c o s t t o the landbank. I t i s the d i f f e r e n t i a l between a p r i c e t h a t i s c l o s e to the " p e r f e c t c o m p e t i t i o n " p r i c e and a p r i c e t hat r e f l e c t s many market d i s t o r t i o n s . T h i s might become c l e a r e r i n c o n s i d e r i n g Red Deer. A f t e r the f i r s t few years, the landbank i n Red Deer was l e f t with a de f a c t o monopoly i n the con v e r s i o n of raw land to s e r v i c e d r e s i d e n t i a l l o t s . The landbank made a h e a l t h y p r o f i t on the l o t s - 5098 on the land 82 component - but not enough i t seems to induce p r i v a t e developers to compete f o r the small market i n v o l v e d . So here i s a s i t u a t i o n where there i s not a landbank p r i c e below the market p r i c e - only a landbank p r i c e . I t i s the market p r i c e : there i s no o t h e r . Now the landbank makes enough, p r o f i t on the land to ensure that i t can stay i n business. T h i s means being able to buy new acreage at i n f l a t e d p r i c e s i n the f u t u r e to r e p l e n i s h t h e i r d e p l e t e d i n v e n t o r y . But i t does not make any more p r o f i t than i s necessary to maintain the o p e r a t i o n and to ensure there are no l o s s e s to the p u b l i c purse. They s e l l l o t s s e r v i c e d to a very high standard f o r $2500 to $3500 each. Perhaps they could s e l l at $8000. People must have r e s i d e n t i a l land and they pay more elsewhere. But because the landbank does not e x p l o i t i t s monopoly p o s i t i o n t o gouge "whatever the market w i l l bear" some economists have shouted " s u b s i d y " as i f the taxpayer i s somehow being b i l k e d . T h i s i s not so. The present study w i l l not c o n s i d e r " s u b s i d y " theory f u r t h e r , as there i s l i t t l e reason to b e l i e v e i t i s r e l e v a n t to landbanks of the type we are c o n s i d e r i n g . MEASURING BENEFITS. T h i s s e c t i o n w i l l not attempt to be exhaustive of a l l p o t e n t i a l b e n e f i t s of landbanks, but w i l l c o n s i d e r those b e n e f i t s which have prompted d i s c u s s i o n i n the l i t e r a t u r e ; and w i l l attempt to decide i n each case the nature and a p p l i c a b i l i t y of a b e n e f i t claimed by landbank advocates so that the f i n a l e v a l u a t i o n chapter of t h i s study can assume p o s i t i o n s that are 83 argued more f u l l y i n t h i s chapter. The g e n e r a l b e n e f i t claimed f o r landbanking i s that i t i s a more e f f i c i e n t land c o n v e r s i o n process than the present r e g u l a t e d p r i v a t e market. Such an economic e f f i c i e n c y g a i n i s r e a l i s e d i f ^ as a r e s u l t of development a c t i v i t y , e i t h e r more goods and s e r v i c e s are obtained with the same r e s o u r c e s , or the same goods and s e r v i c e s are obtained from fewer r e s o u r c e s . I t i s claimed t h a t the landbank i n Red Deer produces the same goods and s e r v i c e s (or more because of higher e f f e c t i v e demand) from fewer r e s o u r c e s . There are many aspects to t h i s purported gain i n economic e f f i c i e n c y , some of which t h i s study s h a l l c o n s i d e r i n more depth. I t i s i m p o s s i b l e to prove or d i s p r o v e the c l a i m t h a t a landbank i s more " e f f i c i e n t " than the r e g u l a t e d p r i v a t e market because r e l a t i v e l y l i t t l e i s known about e i t h e r . Sylvan Kamm, an urban land economist who has w r i t t e n on landbanking and the p r i v a t e market, says: " I t i s the author's premise t h a t the c u r r e n t s t a t e of both theory and e m p i r i c a l knowledge about the o p e r a t i o n s of the market i n land are such as to j u s t i f y no more than a d e s c r i p t i v e approach (followed by c i t a t i o n of s e v e r a l a u t h o r i t i e s t o support t h i s contention)".p.4 Land Banking: P u b l i c P o l i c y A l t e r n a t i v e s S Dilemmas, 1970. In other words, the e v a l u a t i o n of p u b l i c i n t e r v e n t i o n i n t h i s market i s l i k e l y to be as much a r t as s c i e n c e . S t i l l i t i s u s e f u l to analyse the present knowledge of the urban la n d market, and the i m p l i c a t i o n s f o r landbank b e n e f i t s t h a t seem to f o l l o w from i t . L i t t l e r esearch has been done on the suburban market f o r s e r v i c e d l o t s e i t h e r i n the U.S.A. or Canada. Sherman M a i s e l ' s "Land Costs f o r S i n g l e Family Housing" i n 84 C a l i f o r n i a Housing S t u d i e s (Berkeley, 1963) i s s t i l l the l e a d i n g case study. He found t h a t the t y p i c a l p r i c e of a s i n g l e f a m i l y l o t r o s e from $1300 i n 1950 to $3850 i n 1962. He d i d a s t a t i s t i c a l a n a l y s i s of t h i s p r i c e i n c r e a s e . He found t h a t , based on the o r i g i n a l l o t s i z e , 289? of the change was due to i n c r e a s e s i n the l o t s i z e p r o p o r t i o n a l to the o r i g i n a l t y p i c a l s i z e , and 529? due to i n c r e a s e s i n the p r i c e of raw l a n d . The raw land p r i c e per ac r e , c a l c u l a t e d as a r e s i d u a l , i n c r e a s e d 2219? from $3300 to $10,600. The term r e s i d u a l simply r e f e r s to the f a c t t h at we can estimate the c o s t of the land component i n a s e r v i c e d l o t by s u b t r a c t i n g the s e r v i c i n g and r e l a t e d c o s t s from the l o t p r i c e - what remains i s the land p r i c e , a " r e s i d u a l " . In a subsequent study, Converting,land_from_Rural_to H£iai}_iJseSx. 1968, A l l e n Schmidt estimated that the average value of farmland i n C a l i f o r n i a i n c r e a s e d from $154 per acre i n 1950 to $408 i n 1962, and i n c r e a s e o f 1659? over the same time span considered by M a i s e l . So one can't a t t r i b u t e the 2219? i n c r e a s e i n the l a n d cost of urban l o t s i d e n t i f i e d by M a i s e l s o l e l y to an i n c r e a s e i n the o p p o r t u n i t y c o s t of of farmland. There i s a 56% i n c r e a s e unaccounted f o r . Furthermore, i f we compare the c o s t of a farm acre i n 1962 ($408) with the c o s t of an urban acre i n the same year c a l c u l a t e d as a r e s i d u a l a f t e r c o n v e r s i o n to urban use ($10,600), the p r i c e a p p r e c i a t i o n amounts to 24989?. Another study i n I l l i n o i s 3 i d e n t i f i e d a 20379? r e t u r n on the raw land at a g r i c u l t u r a l p r i c e s . Canadian s t u d i e s have tended to focus on a p p r e c i a t i o n i n the aggregate p r i c e of a l o t over time r a t h e r 85 than on the p r o f i t due to the c o n v e r s i o n process i t s e l f . An example i s Suburban.Land Development ( U n i v e r s i t y of B.C. 1972) by R a t c l i f f e and Hamilton. T h i s i s l e s s u s e f u l 1 i n terms of e v a l u a t i n g the b e n e f i t s of the landbanking o p t i o n , because the impact of a landbank i s on the c o n v e r s i o n p r o c e s s , and only i n d i r e c t l y on the subsequent developments i n the p r i c e l e v e l s of e x i s t i n g housing s t o c k . Despite the inadequacies of working with such concepts as the "average" p r i c e of an urban l o t , i t i s reasonable to i n f e r from the above f i g u r e s that the r e g u l a t e d p r i v a t e market adds enormously to the p r i c e of the land component of a s e r v i c e d l o t , i n an as y e t unexplained way. In h i s address to the t r i -l e v e l Conference on Urban A f f a i r s i n Edmonton during A p r i l 1973, the M i n i s t e r of S t a t e f o r Urban A f f a i r s s a i d : "There i s j u s t not enough good, s e r v i c e d land coming on the market each year to meet the growing demand f o r housing. The r e s u l t of t h i s s c a r c i t y i s the s e l l i n g p r i c e s are o f t e n completely u n r e l a t e d to the c o s t of a c q u i r i n g and s e r v i c i n g l a n d . " SUPPLY LIMITATIONS. T h i s b r i n g s us to the f i r s t major b e n e f i t claimed f o r landbanks w i t h i n the o v e r a l l g o a l of improving the l a n d c o n v e r s i o n process. I t i s s a i d that a landbank can make the supply of s e r v i c e d l o t s more r e s p o n s i v e to the demand. Le t us c o n s i d e r whether t h i s may be so. There are three c a u s a l elements i n t h i s s c a r c i t y : 1. N a t u r a l l i m i t a t i o n s of supply. 86 2. P u b l i c s e c t o r supply r e s t r i c t i o n s , . 3 . P r i v a t e s e c t o r supply r e s t r i c t i o n s . R e s i d e n t i a l l a n d i s s u b j e c t to c e r t a i n n a t u r a l l i m i t a t i o n s of s u p p l y . The most important i s that of " l o c a t i o n a l advantage". Host s t u d i e s of l o c a t i o n a l advantage have focused on the r e l a t i o n s h i p between urban l o t values and d i s t a n c e to the c e n t r a l b u s i n e s s d i s t r i c t ; but f a v o u r a b l e views, low r a i n f a l l , low p o l l u t i o n and s o c i a l s t a t u s are a l s o r e l e v a n t . The i n t r i c a c i e s of R i c a r d i a n rent theory which seeks to e x p l a i n land values i n terms of l o c a t i o n a l advantage do not concern us. I t i s s u f f i c i e n t to say we can't a l l l i v e c l o s e to the C e n t r a l Business D i s t r i c t , with a good view, good neighbours, low p o l l u t i o n , and the other a m e n i t i e s . There are n a t u r a l r e s t r i c t i o n s on the a v a i l a b i l i t y of d e s i r a b l e l o t s and these are impervious to landbank i n t e r v e n t i o n i n most circumstances. C e r t a i n c i t i e s s u f f e r more from n a t u r a l r e s t r i c t i o n s than o t h e r s . Vancouver, f o r example, being c l o s e l y hemmed i n by sea, mountains, and an i n t e r n a t i o n a l border, s u f f e r s from n a t u r a l r e s t r i c t i o n s i n the supply of l a n d to an unusual degree. Bombay and Seoul are other examples. So, b a r r i n g a c t s of God, n a t u r a l r e s t r i c t i o n s of supply w i l l remain d e s p i t e a l l p u b l i c p o l i c y to the c o n t r a r y . P u b l i c s e c t o r r e s t r i c t i o n s i n the supply of s e r v i c e d l o t s are another matter. He have s a i d that the c o s t - b e n e f i t s t u d i e s of the ' f i f t i e s and ' s i x t i e s which purported to show that r e s i d e n t i a l growth did not pay i t s way were l a r g e l y 87 s p u r i o u s . N e v e r t h e l e s s there i s some v a l i d i t y to the po i n t i f the c i t y i s a jumble of separate m u n i c i p a l i t i e s . One m u n i c i p a l i t y might have to support the r e s i d e n t i a l and s o c i a l needs of workers whose place of employment i s l o c a t e d i n and pays taxes t o another m u n i c i p a l i t y . So t h i s i s a f a c t o r that l i m i t s supply - f o r some good reasons and some th a t are popular f o l k l o r e o n l y , m u n i c i p a l i t i e s are r e l u c t a n t t o i n c r e a s e t h e i r debenture debt to s e r v i c e r e s i d e n t i a l s u b d i v i s i o n s . The type of landbank i n Red Deer might overcome t h i s r e l u c t a n c e , because i t provides a method of doing away with debenture borrowing e n t i r e l y , i n the context of land s e r v i c i n g . The marginal c o s t s of a l l p u b l i c s e r v i c e s , o n - s i t e and o f f - s i t e , are recouped w i t h i n one year by a "prepayment" program. In essence t h i s means t h a t the buyer of the l o t pays f o r a l l the necessary s e r v i c e s i n a lump sum as pa r t o f the l o t p r i c e . Returns from l o t s a l e s are used to s e r v i c e new s u b d i v i s o n s the next year. I t may be s a i d that any m u n i c i p a l i t y , with or without a landbank, can apply t h i s p r i n c i p a l of marginal cost p r i c i n g by making a developer pay immediately f o r the whole c o s t of extending s e r v i c e s . But as with many other d e s i r a b l e p o l i c i e s , t h i n g s can be done w i t h i n the i n t e g r a t e d p o l i c y s t r u c t u r e of a landbank t h a t cannot be done i n the r e g u l a t e d p r i v a t e market, or can be done l e s s adequately. Some m u n i c i p a l i t i e s have r e c e n t l y t r i e d to apply marginal c o s t p r i c i n g f o r s e r v i c e s ; but with l i m i t e d success. The s p o r a d i c and fragmented growth at the normal urban f r i n g e makes i t very d i f f i c u l t to c a l c u l a t e the 88 marginal c o s t of o n - s i t e s e r v i c e s , and almost im p o s s i b l e to a l l o c a t e o f f - s i t e s e r v i c e s such as trunk mains and a r t e r i a l roads. So m u n i c i p a l i t i e s who have a s t a t e d p o l i c y t h a t developers must bear the marginal c o s t of a l l s e r v i c e s to the s u b d i v i s i o n have tended to f i n d themselves s t i l l bearing 50% or more of the co s t of municipal s e r v i c e s through debenture borrowing. A Planned Onit Landbank can, i t i s s a i d , a l l o c a t e the marginal c o s t of s e r v i c e s simply and f a i r l y . I f t h i s i s so, then one p u b l i c s e c t o r block to i n c r e a s e d s e r v i c i n g of land would be removed. The p o l i t i c a l r e l u c t a n c e of municipal c o u n c i l s t o assume i n c r e a s e d debt f o r s e r v i c e s would be overcome. Of course many m u n i c i p a l i t i e s have s t a t u t o r y debt l i m i t a t i o n s , and cannot borrow f o r s e r v i c i n g land past a c e r t a i n sum even i f they wished to do so. So i t i s argued that a landbank would l e s s e n p u b l i c s e c t o r r e s t r i c t i o n s on the supply o f land by p r o v i d i n g a simple and e f f e c t i v e mechanism f o r r e c a p t u r i n g immediately the marginal c o s t of a l l r e l a t e d s e r v i c e s . Another aspect of p u b l i c s e c t o r supply r e s t r i c t i o n s i s the e x i s t e n c e of l a b y r i n t h i n e d e c i s i o n processes i n the areas of zoning and s u b d i v i s i o n a p p r o v a l s , which slows the c r e a t i o n of new l o t s . Why i s the process so slow? F i r s t l y because so many r e g u l a t o r y agencies are i n v o l v e d . Secondly because the p u b l i c servant has only negative r e s t r i c t i v e powers to p r o t e c t the p u b l i c i n t e r e s t i n the land c o n v e r s i o n process; and so these r e s t r i c t i v e delays tend to p r o l i f e r a t e . The f i r s t problem can be overcome through a landbank which i s a s i n g l e agency hand l i n g 89 i a l l aspects of the c o n v e r s i o n process; but i t can be overcome as well i n the absence of a landbank by combining zoning, s u b d i v i s i o n , and b u i l d i n g r e g u l a t i o n s i n one code to be administered by a s i n g l e agency. The second problem can only be overcome by emphasizing a c t i v e and p o s i t i v e p a r t i c i p a t i o n by the p u b l i c l a n d conversion agency i n programs such as landbanking. In s h o r t , a landbank c o u l d remove p u b l i c s e c t o r supply r e s t r i c t i o n s although some r e s t r i c t i o n s c o u l d be removed by l e s s r a d i c a l means. I t i s i n t e r e s t i n g to c o n s i d e r what the impact of landbank d e c s i o n s might be on p r i v a t e s e c t o r supply r e s t r i c t i o n s . l e have mentioned t h a t about s i x p r i v a t e f i r m s i n Canada hold most of the land on the f r i n g e of Canadian c i t i e s that w i l l be developed i n the next ten years. T h i s means t h a t they possess "market power", which r e s u l t s from a r e c o g n i t i o n by the f i r m s of t h e i r interdependence i n the market p l a c e . I t i s obvious to a l l t h a t each w i l l b e n e f i t i f p r i c e s are e l e v a t e d to the l e v e l a t which a p r o f i t - m a x i m i s i n g monopolist would s e t them. To e l e v a t e these p r i c e s to t h i s l e v e l the supply of l o t s must be r e s t r i c t e d to fewer than would be forthcoming under t r u l y c o m p e t i t i v e c o n d i t i o n s . The evidence that t h i s does happen i s i n d i r e c t but p e r s u a s i v e - a c t u a l low supply and high p r i c e s . But the c o v e r t system of c o o p e r a t i o n , assuming i t e x i s t s , i s a f r a g i l e one. Each i n d i v i d u a l f i r m w i l l r e s t r i c t i t s supply of l o t s only to a degree. I t w i l l not be w i l l i n g t o have i t s s a l e s f a l l t o l e s s than i t s accustomed p r o p o r t i o n of the market. I f a l l s e l l e r s play the game, then the e q u i l i b r i u m of the system w i l l be maintained and each f i r m w i l l keep i t s share of the 90 market w i t h i n a c c e p t a b l e l i m i t s . I f the landbank ente r s the market as a new s e l l e r , t h i s e q u i l i b r i u m i s upset. As a new s e l l e r i n the market, the landbank has b a s i c a l l y two p o l i c y o p t i o n s . I t can adopt a "high p r i c e , low volume" s t r a t e g y ; or i t can adopt a "low p r i c e , high volume" s t r a t e g y . The conseguences are l i k e l y to be markedly d i f f e r e n t . A "high p r i c e , low volume" s t r a t e g y would d i s r u p t the s t a t u s quo l e a s t . I t i s the p o l i c y t h a t has been f o l l o w e d by North Vancouver m u n i c i p a l i t y , f o r example, i n i t s d i s p o s i t i o n of munici p a l l a n d . I t a l l o w s the e q u i l i b r i u m t o be r e e s t a b l i s h e d without too much s t r a i n . The p r i v a t e development f i r m s might maintain t h e i r p r e v i o u s volume of s a l e s and p r i c e s would then f a l l a l i t t l e . A l t e r n a t i v e l y p r i c e s would be kept a t p r e v i o u s l e v e l s and the volume of s a l e s by p r i v a t e f i r m s f a l l to compensate f o r the entry of the landbank s e l l e r ; or perhaps both p r i c e s and volume of s a l e s by p r i v a t e f i r m s w i l l f a l l a l i t t l e . This i s the most l i k e l y e f f e c t i f the landbank i s i t s e l f t r y i n g to s e l l at the hi g h e s t p r i c e i t can get. I f the landbank were a new p r i v a t e f i r m , then the e s t a b l i s h e d f i r m s might t r y to crush i t at the o u t s e t by i n c r e a s i n g supply and c u t t i n g p r i c e s f o r a l i m i t e d time. T h i s o p t i o n i s h a r d l y f e a s i b l e i f the new s e l l e r i s the m u n i c i p a l c o r p o r a t i o n with which one has to maintain good r e l a t i o n s because i t wields r e g u l a t o r y powers i n the market. A "low p r i c e , high volume" stance by the landbank would be much more t r a u m a t i c f o r the e s t a b l i s h e d f i r m s . If the landbank were on a l a r g e s c a l e , then the p r i v a t e developers would be f o r c e d to a d j u s t to the new s i t u a t i o n of much higher 91 supply and lower p r i c e s . "An urban landbank o p e r a t i n g as a very v i s i b l e p r i c e leader i n such a market can have a gr e a t e f f e c t on r e s i d e n t i a l l o t p r i c e s . P r i c e s s e t by the landbank can perform an imprtant f u n c t i o n i n r e d u c i n g the l e v e l of f u t u r e e x p e c t a t i o n s and r e s e r v a t i o n p r i c e s , p a r t i c u l a r l y i f the landbank enjoys c o n s i d e r a b l e p o l i t i c a l support and p u b l i c i t y . " I§§§iI£fi_P§sign^_nill_Woods_Im£ P.38 So the guestion of the s c a l e o f o p e r a t i o n and the p r i c e p o l i c y o f the landbank are c r u c i a l i n d e c i d i n g whether a landbank c o u l d i n c r e a s e the supply of s e r v i c e d l o t s . I t i s a new s e l l e r e n t e r i n g an e q u i l i b r i u m s i t u a t i o n . I f i t s volume i s low and i t s p r i c e s high then the s t a t u s guo can be maintained by accept a b l e adjustments on the p a r t of p r i v a t e developers. I f the volume i s very high r e l a t i v e to e f f e c t i v e demand and the p r i c e s very low, then the landbank i s l i k e l y to f i n d i t s e l f q u i c k l y i n a monopoly p o s i t i o n with r e s p e c t t o the c o n v e r s i o n of urban land. Both of these outcomes are presumably u n d e s i r a b l e i f the aim of the landbank i s to b r i n g the c o n v e r s i o n market c l o s e r to p e r f e c t l y c o m p e t i t i v e c o n d i t i o n s . To conclude, i t seems reasonable to suppose t h a t a landbank might e l i m i n a t e supply r e s t r i c t i o n s p r e s e n t l y supported by p r i v a t e s e c t o r d e c i s i o n s ; but both s c a l e of i n t e r v e n t i o n and p r i c i n g p o l i c y would need to be o r c h a s t r a t e d to achieve good r e s u l t s . On t h i s g u e s t i o n of the opt i m a l s c a l e of a landbank, Marion Clawson says: "As f i r s t approximations, one may suggest t h a t the agency should seek to have 60$ or more of the land i n the g e n e r a l area w i t h i n which i t operates, and t h a t i t should seek to a c q u i r e land f o r more than f i v e years ahead, g e n e r a l l y f o r more than ten yea r s , and o f t e n f o r up to 20 years ahead." Suburban_Land. Conversion J_in^the_U.S. ^ 1971, p. 358 92 SERVICING COSTS. a second major b e n e f i t w i t h i n the o v e r a l l goal of a more e f f i c i e n t c o n v e r s i o n system i s t h a t t o t a l s e r v i c i n g c o s t s of the c i t y w i l l be l e s s , a Planned Unit Landbank enables trunk sewer and water mains to be extended more cheaply than would otherwise be the case. Often trunks are extended to s e r v i c e f r i n g e areas only when there i s a demonstrated urgent need. Perhaps s u r f a c e water i s being p o l l u t e d by overburdened s e p t i c systems. So- the trunks have to be l a i d through p a r t l y b u i l t - u p areas to serve a random and sprawled p a t t e r n of development. This i s very i n e f f i c i e n t . * In a Planned Unit Landbank the s e r v i c e s are extended i n a staged manner and i n a l o g i c a l e f f i c i e n t c o n f i g u r a t i o n . I t i s not simply that a more compact community i s e a s i e r to s e r v i c e cheaply, although t h a t i s p a r t of i t . In a Planned U n i t Landbank the e f f i c i e n t p a t t e r n of s e r v i c e s f i x e s the p a t t e r n of r e s i d e n t i a l growth, i n c o n t r a s t to a haphazard r e s i d e n t i a l p a t t e r n dominating the s e r v i c e s . Outside a landbank, the municipal s e r v i c i n g p o l i c y must i n e v i t a b l y be a r e a c t i v e one; while i n s i d e the landbank the s e r v i c e s p o l i c y can be a f o r m a t i v e one. Other advantages i n s e r v i c i n g r e l a t e t o the s c a l e of the planned u n i t s , and can be d u p l i c a t e d o u t s i d e a landbank although they seldom are i n Canada tody. For i n s t a n c e , at a c e r t a i n s c a l e n a t u r a l watercourses can be maintained. T h i s means that t h e i r verges which have high r e c r e a t i o n a l p o t e n t i a l and are e c o l o g i c a l l y s e n s i t i v e , can be kept i n v i o l a t e . Then storm sewers can be s h o r t e r u t i l i s i n g n a t u r a l waterways as o u t l e t s . In a 93 comprehensive program of landbanking such b e n e f i c i a l l i n k a g e s can occur. RISK MINIMISATIOH. , A t h i r d b e n e f i t claimed f o r landbanks and r e l a t e d to the goal of a more e f f i c i e n t land c o n v e r s i o n system, i s that of r i s k m i n i m i s a t i o n . In some cases p r i v a t e developers make l a r g e p r o f i t s , but they a l s o take l a r g e r i s k s and sometimes i n c u r l a r g e l o s s e s . Unfavourable zoning d e c i s i o n s or an unforseen change i n t r a n s p o r t a t i o n p a t t e r n s may c r e a t e l o s s e s . The urban land c o n v e r s i o n market as i t g e n e r a l l y operates c o n t a i n s l a r g e elements of u n c e r t a i n t y and r i s k . The developments that are s u c c e s s f u l have to compensate f o r l o s s e s i n those that are not. ~~This h i t - S - m i s s process i s very expensive of time and r e s o u r c e s . The p r i v a t e developer a l s o runs the r i s k of being f r u s t r a t e d i n a land assembly by s m a l l owners demanding unreasonable p r i c e s because of t h e i r a r t i f i c i a l monopoly p o s i t i o n . A p u b l i c landbank would have the power of eminent domain. I t has never been used i n Red Deer; but i n the Saskatoon landbank i t has been q u i t e important. In g e n e r a l i t seems reasonable to conclude that a landbank might minimise r i s k i n the c o n v e r s i o n p r o c e s s , and consequently make the a l l o c a t i o n of r e s o u r c e s w i t h i n that process more e f f i c i e n t . 94 PRICES AND SOCIAL BENEFITS. It i s r e l a t i v e l y easy to measure the c o s t s of a landbank o p e r a t i o n because the i n p u t s of r e s o u r c e s are p r i c e d at l e v e l s t h a t r e f l e c t " a l l the market w i l l bear" - t h a t ' i s , the p r i c e s of i n p u t s such as s e r v i c i n g pipes and personnel wages are a good r e f l e c t i o n of the " s o c i a l c o s t " of these t h i n g s . So the cash out-flow can be taken at f a c e value as a c o s t . The p i c t u r e with b e n e f i t s i s not q u i t e so simple. Re have s a i d t h a t the "consumer s u r p l u s " may be l a r g e r i n landbank s a l e s than i t would otherwise be. That i s people would pay much more than the $3500 per l o t i n Red Deer i f they had t o , r a t h e r than go without. So cash r e c e i p t s i n the landbank are not as good a measure of the s o c i a l b e n e f i t s , as the cash outflow i s of the s o c i a l c o s t s . In the f i n a l c o s t - b e n e f i t e v a l u a t i o n , i t would be reasonable to add some weighting t o cash r e c e i p t s to r e f l e c t t h i s f a c t . T h i s study w i l l not add such a weighting. The consumer s u r p l u s measure i s h y p o t h e t i c a l , and v i r t u a l l y i mpossible to g u a n t i f y adequately. So the landbank w i l l probably have to stand or f a l l without i t s a s s i s t a n c e ; but i t i s worth noting that the p o s i t i v e weighting would be on the s i d e of s o c i a l b e n e f i t s . 95 INTERIM USE RETURNS. One s e c t i o n of the cash-flow which does r e f l e c t b e n e f i t s a c c u r a t e l y i s the i n t e r i m use r e t u r n s . In the normal process of l a n d c o n v e r s i o n by p r i v a t e developers there i s seldom an i n t e r i m r e t u r n from the land during the h o l d i n g p e r i o d . T h i s i s commonly the case with land t h a t was a g r i c u l t u r a l i n i t s p r e v i o u s use. Such land i s g e n e r a l l y held vacant by the p r i v a t e f i r m f o r a c o n s i d e r a b l e p e r i o d p r i o r to s e r v i c i n g . I f the land changes ownership s e v e r a l times a t t h i s stage, as i t o f t e n does, i t i s s o l d as vacant land. In the p r i v a t e market, i t i s g e n e r a l l y more important to be a b l e to act g u i c k l y to take advantage of a good s a l e s o p p o r t u n i t y than i t i s to have an i n t e r i m r e n t a l r e t u r n . Landbanks, i n c o n t r a s t , are l i k e l y to keep land p r o d u c t i v e i n an i n t e r i m use r i g h t to the l a s t minute before development. Red Deer has made very i n t e l l i g e n t use of t h i s p o s s i b i l i t y . Instead of buying farm land and h o l d i n g i t i d l e pending development, the Red Deer landbank has n e g o t i a t e d longterm o p t i o n s to purchase, or purchase-leaseback agreements, that enable the farmer to keep the l a n d i n p r o d u c t i o n u n t i l the year when the land i s a c t u a l l y s e r v i c e d . Thus the c a p i t a l c o s t s of h o l d i n g u n s e r v i c e d land may be minimised or e l i m i n a t e d . I t i s tempting to add some f a c t o r to the r e t u r n t o r e f l e c t the value to s o c i e t y of keeping a g r i c u l t u r a l land i n p r o d u c t i o n r a t h e r than i d l e , but t h i s i s undoubtedly subsumed w i t h i n the r e n t a l r e t u r n . 96 SECONDARY COSTS AND BENEFITS. Secondary b e n e f i t s are a l s o c a l l e d pecuniary b e n e f i t s or pecuniary e f f e c t s . They are sometimes confused with " i n t a n g i b l e " b e n e f i t s (and c o s t s ) . These w i l l be c o n s i d e r e d i n the next s e c t i o n . Secondary b e n e f i t s may be d e f i n e d as induced b e n e f i t s - changes i n the output or u t i l i t y of a t h i r d party due to changes i n the l e v e l of demand. For example, i f a landbank r e s u l t s i n more l o t s being s e r v i c e d , then more pipe has to be manufactured and more men employed to make and l a y i t . These i n c r e a s e s i n output c o n s t i t u t e b e n e f i t s , i t i s sometimes argued. G e n e r a l l y a n a l y s t s agree t h a t , i n a f u l l employment economy, secondary e f f e c t s only s h i f t p r o d u c t i o n from one s e c t o r to another without changing the aggregate t o t a l . So there are no secondary e f f e c t s t h a t should be counted. On the other hand, i n a less-than-full-employment economy, reso u r c e s and labour are used that would otherwise be i d l e . But even i n t h i s case one can assume t h a t investment i n one p r o j e c t w i l l induce the same secondary b e n e f i t s as investment i n a second p r o j e c t - thus the o p p o r t u n i t y c o s t s equal the b e n e f i t s from secondary e f f e c t s . Obviously t h i s i s not n e c e s s a r i l y so. A labour-i n t e n s i v e p r o j e c t w i l l presumably u t i l i s e i d l e r e s o u r c e s i n an unemployment s i t u a t i o n b e t t e r than would a c a p i t a l - i n t e n s i v e p r o j e c t . The marginal secondary e f f e c t s might vary with d i f f e r e n t p r o j e c t s . But with unemployment at the r e l a t i v e l y low l e v e l i t has kept over the l i f e of the Red Deer landbank, the marginal secondary b e n e f i t s o f a change i n investment by the landbank are u n l i k e l y to be s i g n i f i c a n t . 97 INTANGIBLE COSTS AND BENEFITS. I n t a n g i b l e c o s t s and b e n e f i t s are not a d i f f e r e n t kind of t h i n g from other c o s t s and b e n e f i t s . They are c a l l e d " i n t a n g i b l e " only to i n d i c a t e t h a t they are more d i f f i c u l t to q u a n t i f y than o t h e r s . G e n e r a l l y more b e n e f i t s than c o s t s are i n t a n g i b l e , e s p e c i a l l y i n government investment s i t u a t i o n s , A p r i v a t e f i r m that seeks s o l e l y to maximise p r o f i t s i s seeking something more t a n g i b l e than i s a government which has a wide range of s o c i a l goals i n mind. Of course n o n - g u a n t i f i a b l e c o s t s and b e n e f i t s c o n t a i n a l a r g e element of s u b j e c t i v e judgement. T h i s i s i l l u s t r a t e d by such c o s t - b e n e f i t s t u d i e s as The _Case__f or _Opgn_Spacef which analyses the c o s t s and b e n e f i t s of immediate a c g u i s i t i o n of a l l open space lands needed by 1990 (as p r o j e c t e d by the A s s o c i a t i o n of Bay Area Governments i n 1966). The " n o n - q u a n t i f i a b l e " b e n e f i t s enumerated i n t h i s study outweigh the q u a n t i f i a b l e b e n e f i t s 2 to 1. So i t i s good p r a c t i c e to develop them s e p a r a t e l y , and to p o r t r a y them i n the f i n a l e v a l u a t i o n as s e p a r a t e elements. T h i s p r o v i d e s a more honest b a s i s f o r d e c i s i o n making. In r e a d i n g a c o s t - b e n e f i t study i t i s a l s o u s e f u l to determine c a r e f u l l y the b a s i s of s o - c a l l e d " g u a n t i f i a b l e " c o s t and b e n e f i t f i g u r e s . I t w i l l be found t h a t d i f f e r e n t s t u d i e s c o n t a i n d i f f e r e n t ranges of h y p o t h e t i c a l and s p e c u l a t i v e data w i t h i n " g u a n t i f i a b l e " c o s t s and b e n e f i t s and many need to be looked a t g u i t e s k e p t i c a l l y . I t i s a l s o true that enumerating i n t a n g i b l e c o s t s and b e n e f i t s i s an e x e r c i s e i n i m a g i n a t i o n and p e r c e p t i o n . One may 9 8 e a s i l y overlook one or more f a c t o r s t h a t are r e l e v a n t . Some i n t a n g i b l e c o s t s w i l l be con s i d e r e d i n the next s e c t i o n . The f o l l o w i n g are p o s s i b l e i n t a n g i b l e b e n e f i t s of a Planned Unit Landbank. A l l of them can be achieved to d i f f e r e n t degrees by va r i o u s other programs, most l i k e l y ; but as we are not concerned with ranking a l t e r n a t i v e government investments there i s no poi n t i n pursuing such a l i n e of argument. I t can be argued that Planned U n i t Landbanking i s the most e f f e c t i v e s i n g l e program open to governments as an i n t e r v e n t i o n i n the land c o n v e r s i o n process, but t h i s s e c t i o n i s simply an e x p l o r a t o r y i n q u i r y i n t o the nature of some " i n t a n g i b l e " b e n e f i t s - not an argument t h a t they are best achieved by a landbank. The e v a l u a t i o n must wait u n t i l a l a t e r c h a p ter. One i n t a n g i b l e b e n e f i t o f a Planned Unit Landbank i s that the best s i t e s f o r parks and sc h o o l s are obt a i n e d . There are s e v e r a l aspects t o t h i s b e n e f i t . One i s e c o l o g i c a l . Instead of p u t t i n g n a t u r a l watercourses underground i n storm sewers, they can be kept i n t h e i r n a t u r a l s t a t e with b e n e f i c i a l e f f e c t s on w i l d l i f e and r e c r e a t i o n . Another aspect i s that r e c r e a t i o n a l open space can be c l o s e l y i n t e g r a t e d with the r e s i d e n t i a l development enhancing i t s amenity, r a t h e r than being a separate block of land as i s most common. Schools, parks and walking paths can be one i n t e g r a t e d network w i t h i n the PUD. Other i n t a n g i b l e b e n e f i t s r e l a t e d to s i t e a c q u i s i t i o n i n a Planned Unit Landbank are: E x p r o p r i a t i o n of homes and e s t a b l i s h e d businesses becomes unnecessary, while i n the normal c o n v e r s i o n process 9 9 e x p r o p r i a t i o n i s used to a c q u i r e many, i f not most, school and park s i t e s . i . i S c a t t e r e d b u i l d i n g s do not have to be c l e a r e d to prepare the s u b d i v i s i o n s i t e . . There may be improvements i n the procedure of s i t e s e l e c t i o n . There i s more time to study s i t e reguirements thoroughly; and g r e a t e r scope f o r the c o o r d i n a t i o n of d i f f e r e n t agencies and t h e i r s i t e needs f o r f u t u r e f a c i l i t i e s . Another i n t a n g i b l e b e n e f i t may be t h a t the Planned Unit Landbank, i n c o o r d i n a t i n g a l l asp e c t s of the l a n d conv e r s i o n process, may allow s e r v i c e s to be extended at the urban f r i n g e i n a r a t i o n a l and e f f i c i e n t manner. I t might be argued t h a t an e f f i c i e n t s e r v i c i n g p l a n can stand by i t s e l f i n the absence of a landbank; but experi e n c e does not support t h i s view. In many cases water and sewer e x t e n s i o n p o l i c i e s have worked d i r e c t l y counter to other p r o f e s s e d p l a n n i n g goals i n a m u n i c i p a l i t y ; and almost always the optimal c o n f i g u r a t i o n of s e r v i c e s has been d i s t o r t e d by e x i s t i n g s p r awl. In the normal land c o n v e r s i o n s i t u a t i o n , where ownership i s fragmented and development s p o r a d i c , the problem of e x t e r n a l i t i e s can c r e a t e severe diseconomies of land use. Consider, f o r example, the owner of a s t r i p of waterfront land: i f he doesn't develop the land, l a r g e <- amenity b e n e f i t s may accrue to a l l h i s neighbours. But he normally has no way i n which to share these b e n e f i t s . He has no way of charging these surroundings p r o p e r t i e s f o r the amenity b e n e f i t s c o n f e r r e d . His 100 may be the only p r o p e r t y breaking the c o n t i n u i t y of a r e v e r s i d e walk. Nevertheless he may choose to develop the land f o r storage sheds, d e s t r o y i n g the l a r g e r b e n e f i t s to the community. A landbank prov i d e s a mechanism whereby such e x t e r n a l c o s t s to the community can be i n t e r n a l i s e d . I f the r i v e r f r o n t a g e i s l e f t f r e e , the s e l l i n g p r i c e s of the adjacent l o t s or of a l l l o t s i n the development can be r a i s e d to compensate f o r the c o s t of l e a v i n g i t f r e e , with an o v e r a l l g a i n to the community. Another i n t a n g i b l e b e n e f i t t h a t may r e s u l t from a Planned U n i t Landbank i s t h a t the c i t y might be more compact with consequent savings i n t r a v e l time, p h y s i c a l s e r v i c e s , and s e r v i c e s such as the p o s t a l s e r v i c e . (As Red Deer grows l a r g e r t h i s b e n e f i t w i l l no doubt become more important, but at i t s present s i z e i t i s not l i k e l y to be a very l a r g e b e n e f i t . ) The l a s t i n t a n g i b l e b e n e f i t we w i l l c o n s i d e r i s t h a t of p r o v i d i n g g r e a t e r e q u i t y i n the d i s t r i b u t i o n of w i n d f a l l gains i n the land c o n v e r s i o n p r o c e s s . N e v e r t h e l e s s , i f one wished to take the r e d i s t r i b u t i o n of wealth as a s e r i o u s g o a l of governments, good arguments can be mustered that a Planned Unit Landbank r e s u l t s i n d e s i r a b l e r e d i s t r i b u t i o n s . In t r a d i t i o n a l c o s t - b e n e f i t s t u d i e s , i t i s accepted p r a c t i c e to ignore r e d i s t r i b u t i v e e f f e c t s because they rep r e s e n t t r a n s f e r payments r a t h e r than r e a l economic gains. This does not have to be so i i i a l l cases. I t i s c o n c e i v a b l e t h a t the u t i l i t y f u n c t i o n of a p u b l i c landbank c o u l d i n c l u d e weightings so that $1 of b e n e f i t to a low income f a m i l y i s valued more (say $1.04) than $1 of b e n e f i t t o a high-income 101 f a m i l y . Stephen M a r g l i n , f o r one, argues that r e d i s t r i b u t i o n of consumption i s an a p p r o p r i a t e g o a l to be i n c o r p o r a t e d i n a government's u t i l i t y f u n c t i o n . I am sympathetic t o t h i s p o i n t of view. But determining the r e d i s t r i b u t i o n s o f consumption ( i f any) that r e s u l t from the Bed Deer landbank i s beyond the scope of t h i s study; so f o r p r a c t i c a l r e a s o n s , " e q u i t y b e n e f i t s " w i l l play no p a r t i n t h i s study's f i n a l e v a l u a t i o n . 102 MEASURING COSTS. I t i s r a t h e r simpler to c a l c u l a t e the c o s t s of a Planned Unit Landbank than to c a l c u l a t e i t s , b e n e f i t s . The main c o s t i s the c o s t of working c a p i t a l . That i s , the landbank i n v e s t s l a r g e amounts of money i n h o l d i n g land over the long term and i n s e r v i c i n g land over the s h o r t term. T h i s c a p i t a l has an o p p o r t u n i t y c o s t . I f i t wasn't i n v e s t e d i n the landbank i t could be i n v e s t e d elsewhere. The s i z e of t h i s o p p o r t u n i t y c o s t i s determined by the " d i s c o u n t r a t e " which w i l l be d i s c u s s e d l a t e r i n t h i s chapter. A second major c o s t i s management c o s t s of the landbank, There are the marginal c o s t s of i n s t i t u t i n g a landbank program. The m u n i c i p a l i t y w i l l a l r e a d y e x i s t , and i t s p l a n n i n g department, eng i n e e r i n g department, assessment department and land agent w i l l a l l be i n v o l v e d i n the land c o n v e r s i o n process. A f t e r a Planned Unit Landbank i s begun, some of these personnel w i l l be doing d i f f e r e n t t h i n g s than there were doing before. In a d d i t i o n , s e v e r a l or many p r i v a t e developers and r e a l e s t a t e salesmen w i l l be doing d i f f e r e n t t h i n g s than they were p r e v i o u s l y i n v o l v e d i n . The q u e s t i o n i s whether t h i s r e a l l o c a t i o n of e f f o r t i n v o l v e s marginal c o s t s or b e n e f i t s to the community. T h i s study w i l l take the p o s i t i o n that the r e l e a s e of labour i n the p r i v a t e s e c t o r i s a b e n e f i t ; and any i n c r e a s e i n workload by the municipal a u t h o r i t y through the landbank i s a c o s t . An ongoing debate i n the l i t e r a t u r e of c o s t - b e n e f i t analyses of government land programs i s whether or not "taxes 103 foregone" are a s o c i a l c o s t or a t r a n s f e r payment. I f the land i s not purchased by a landbank, then p r i v a t e owners continue paying taxes on i t . Are the taxes l o s t to the government duri n g the h o l d i n g p e r i o d t h e r e f o r e a s o c i a l c o s t ? L e t us c o n s i d e r the two c o n f l i c t i n g p o s i t i o n s : "One r e s u l t of advance land a c q u i s i t i o n i s that i t removes property from the tax r o l l s , and the e f f e c t of t h i s must be co n s i d e r e d by the l o c a l government i n i t s p l a n s . ... The measure of t h i s l o s s i s the present value of the stream of l o s t tax payments, discounted at the a p p r o p r i a t e i n t e r e s t r a t e . " Shoup S Mack, C^Bas an aid^to_Government . P o l i c y ^ 1969,p50. On the other hand: "One item t h a t appears as a c o s t on many l i s t s i s the property taxes foregone by l o c a l government when land i s owned by the landbank. T h i s item i s not on my l i s t , nor do I inte n d to put i t there. Foregone taxes r e p r e s e n t a r e d i s t r i b u t i o n of wealth - which i s h a r d l y an i r r e l e v a n t consequence of the landbanks d e c i s i o n - but they are not a cost or a b e n e f i t comparable t o those d i s c u s s e d above." Myers, Investment P o l i c y f o r Landbanks, 1967,p. 17 I t may be argued t h a t taxes are a value judgement of s o c i e t y . T h e r e f o r e i f p u b l i c investment i s i n taxed f i e l d s , foregone t a x a t i o n should be c o n s i d e r e d a c o s t . Some i n d u s t r i e s are s u b s i d i z e d or not taxed. P u b l i c investment i n those f i e l d s should not c o n s i d e r foregone t a x a t i o n . The argument s t r e s s e s the need to equate marginal s o c i a l r a t e s o f r e t u r n (return a f t e r taxes) r a t h e r than gross r a t e s of monetary r e t u r n . T h i s i s u l t i m a t e l y u n s a t i s f a c t o r y . Of course there i s no need to co n s i d e r foregone t a x a t i o n i f a f i e l d i s untaxed. I t does not f o l l o w t h a t c o n v e r s e l y one must take l o s t taxes as a c o s t i f the f i e l d i s taxed. The guestion i s s t i l l open. In g e n e r a l , t h i s study w i l l assume t h a t taxes foregone are not a s o c i a l c o s t , but are r a t h e r ,a t r a n s f e r payment. 104 i Nothing i s a c t u a l l y c r e a t e d or destroyed i n the t a x a t i o n of lan d . Almost 75% of the t o t a l land i n the Onited S t a t e s and 90% of the land i n B r i t i s h Columbia, f o r example, i s h e l d by government. A c l a i m t h a t governments are somehow i n c u r r i n g huge s o c i a l c o s t s through taxes foregone on the lands has l i t t l e substance. Moreover, i n the mun i c i p a l c o n t e x t , a compelling argument can be made t h a t a government's h o l d i n g land does not mean l e s s tax revenue f o r the government at a l l - i t simply means t h a t the r e g u i s i t e tax burden i s r e d i s t r i b u t e d onto the other lands t h a t s t i l l do pay taxes. The m i l l r a t e i s simply i n c r e a s e d . T h i s seems to be so i n p r a c t i c e . So t h i s study w i l l not count h y p o t h e t i c a l l o s t taxes as s o c i a l c o s t s . 105 DISCOUNT RATES. There are many aspects of the methodology of c o s t -b e n e f i t a n a l y s i s which are s t i l l s u b j e c t s of debate. The s o c i a l d i s c o u n t r a t e i s one of the most c o n t r o v e r s i a l . P r i v a t e f i r m s d i s c o u n t c o s t s and b e n e f i t s a v a i l a b l e i n the f u t u r e to ob t a i n a "present v a l u e " . The r a t e a t which c o s t s and b e n e f i t s are discounted i s meant to r e f l e c t the o p p o r t u n i t y c o s t of c a p i t a l t o t h a t p a r t i c u l a r f i r m . T r a d i t i o n a l c o s t - b e n e f i t a n a l y s i s of government investments have t r e a t e d the government agency as a p r i v a t e f i r m . It has been assumed that c o s t s and b e n e f i t s should be discounted to a present value i n the same way. There are some problems i n t h i s analogy. Some w r i t e r s have t r i e d to demarcate the e s s e n t i a l d i f f e r e n c e between government investments and p r i v a t e investments by saying that governments have a d i f f e r e n t time preference. I t i s s a i d t h a t p r i v a t e f i r m s do not look beyond the l i f e - s p a n of a man i n e s t a b l i s h i n g a time preference f o r r e t u r n s on investment. T h i s i s r a t h e r s p e c u l a t i v e and would seem to a f f e c t a m o r t i z a t i o n p e r i o d s more than d i s c o u n t r a t e s . But i t does seem to be h i n t i n g at a r e a l d i f f e r e n c e . I s the analogy between a p u b l i c landbank and a p r i v a t e f i r m a good one? Might not a b e t t e r analogy be made between the p u b l i c landbank and a good parent who valu e s h i s son's f u t u r e b e n e f i t e q u a l l y with h i s own? In the case of the F e d e r a l government t h a t has the power to c r e a t e money t h i s seems a good argument; t h a t i s , the de f a c t o a b i l i t y to turn $1 i n t o $1.74 i n ten years by p u t t i n g i t i n a bank i s not c r u c i a l . But a l o c a l government i s much more l i k e a p r i v a t e f i r m i n t h i s 106 matter. I t has an o p p o r t u n i t y c o s t s i m i l a r to t h a t of a p r i v a t e f i r m . In cases of municipal government investment, i t has thus been commonly accepted p r a c t i c e to use the m u n i c i p a l borrowing r a t e as the d i s c o u n t r a t e . T h i s flows n a t u r a l l y from a c c e p t i n g the analogy with a p r i v a t e f i r m i n the f i r s t p l a c e . But some w r i t e r s , although i n s i s t i n g that d i s c o u n t i n g i s a p p r o p r i a t e , o b j e c t to the use of the m u n i c i p a l borrowing r a t e as the a p p r o p r i a t e d i s c o u n t r a t e . L i c h f i e l d and Margolis are two t h a t take t h i s l i n e ; but they are undecided how a b e t t e r r a t e could be s e t . What we have been c o n s i d e r i n g so f a r i s the " r i s k l e s s " d iscount r a t e - t h a t i s , the r a t e which measures the o p p o r t u n i t y c o s t of c a p i t a l . In a d d i t i o n to t h i s as yet undetermined r a t e , one might apply an uncertainty__dj.seount^ T h i s i s a d i s c o u n t t h a t measures the r i s k t h a t b e n e f i t s i n the f u t u r e might not eventuate. Presumably i t would grow l a r g e r as the b e n e f i t s and c o s t s are f u r t h e r and f u r t h e r i n t o the f u t u r e . In g e n e r a l the d i f f e r e n t borrowing r a t e s i n the p r i v a t e market are supposed to r e p r e s e n t a b a s i c o p p o r t u n i t y c o s t of c a p i t a l , and v a r y i n g r i s k d i f f e r e n t i a l s . Now i t i s s a i d t h a t a landbank i s a very low r i s k venture and t h e r e f o r e the d i s c o u n t r a t e should be a t the lower end of the spectrum of the r a t e s a v a i l a b l e i n the p r i v a t e market. The a c t u a l borrowing r a t e of the m u n i c i p a l i t y i s low and p r o v i d e s as good a measure as i s a v a i l a b l e . T h i s argument has some f o r c e . 107 A second o p t i o n other than using the m u n i c i p a l i t i e s g e n e r a l borrowing r a t e as the s o c i a l d i s c o u n t r a t e i s a v a i l a b l e i n Canada. In t h i s c o untry, the F e d e r a l government makes d i r e c t loans t o l o c a l governments under s e c t i o n 36 of the N a t i o n a l Housing Act to enable them to i n s t i t u t e landbanks. One c o u l d take the i n t e r e s t r a t e on these loans as the a p p r o p r i a t e discount r a t e . Without knowing how the F e d e r a l government determined the r a t e , such a quesion would be d i f f i c u l t to d ecide. There are two v i a b l e c h o i c e s remaining: 1. To chose the s i n g l e d i s c o u n t r a t e t h a t r e f l e c t s the a n a l y s t ' s judgement as to the o p p o r t u n i t y c o s t of c a p i t a l during the time span i n q u e s t i o n , and the r i s k i n v o l v e d i n the Planned Unit Landbank o p e r a t i o n . 2. To vary the d i s c c u n t r a t e and c a l c u l a t e the d i f f e r e n t outcomes under d i f f e r e n t r a t e s . T h i s i s sometimes c a l l e d s e n s i t i v i t y a n a l y s i s . I t g i v e s the d e c i s i o n maker a range of v a l u e s r a t h e r than a s i n g l e f i g u r e on which to base h i s d e l i b e r a t i o n s . As w i l l become obvious, t h i s o p t i o n can not be used with the " I n t e r n a l Sate of Return" d e c i s i o n formula; but as that formula i s not the one t h i s study advocates, t h i s o b j e c t i o n i s not r e l e v a n t . S e n s i t i v i t y a n a l y s i s seems the more honest, and more u s e f u l , way of proceeding. 108 DECISION FORMULAE. There have been s e v e r a l d i f f e r e n t formulae used i n c o s t - b e n e f i t a n a l y s e s to make a f i n a l e v a l u a t i o n . One t h a t has been popular with p r i v a t e f i r m s i n v e s t i n g i n l a n d has been the I n t e r n a l Rate of Return (IRR) d e c i s i o n formula. I t i n v o l v e s f i n d i n g the d i s c o u n t r a t e , or " y i e l d " r a t e , which w i l l d i s c o u n t the p e r i o d i c b e n e f i t s to equal i n aggregate the o r i g i n a l e q u i t y . That i s , net b e n e f i t s are disco u n t e d to zero; and the d i s c o u n t r a t e n ecessary to do t h i s i s the IRR. The investment d e c i s i o n i s then based on a comparison o f t h i s IRR with the i n v e s t o r ' s d e s i r e d r a t e o f r e t u r n . I f i t i s h i g h e r than the d e s i r e d r a t e of r e t u r n , then one should accept the o p p o r t u n i t y t o i n v e s t . If NCF(t) = net benefit in period t t = l » 2 , 3 » » » » » T r = unknown internal rate of return (IRR) Then Coat =» NCF(l). + NCF(2K +... + NCF(T) T "TT+r) ~TT+F) 2 ^ I + r ) 1 The disadvantages of t h i s d e c i s i o n formula are many: 1. " r " can be c a l c u l a t e d e a s i l y only with a computer. 2. there can be more than one value f o r " r " because the e q u a t i o n i s a polynomial 3. i t i s d i f f i c u l t to put n o n - q u a n t i f i a b l e c o s t s and b e n e f i t s i n p e r s p e c t i v e with " r " . 4. the method does not lend i t s e l f t o s e n s i t i v i t y 109 a n a l y s i s . 5. the method assumes that cash flows (r e t u r n of c a p i t a l ) are r e i n v e s t e d at a r a t e equal to the IBR. For these reasons the IRR technique i s an u n s u i t a b l e t o o l f o r e v a l u a t i o n of landbank programs. Another method t h a t has been popular u t i l i s e s £res__t_yalu__r_t_os_ PVR = P r e s e n t Value B e n e f i t s P r e s e n t Value C o s t s F o r examplei PVR = 103o853 = 1.03853 100,000 The PVR r u l e i s t h a t one may accept any investment with a PVR g r e a t e r than one, and i n the case of mutually e x c l u s i v e p r o j e c t s , accept the p r o j e c t with the h i g h e s t r a t i o . This t echnique i s unacceptable f o r the f o l l o w i n g reasons: 1. I t i s s e n s i t i v e to the s c a l e of investment i n ranking mutually e x c l u s i v e p r o j e c t s - i f you can e i t h e r i n v e s t $1 at 8%, or $12,000 at 7.98%, then i t w i l l a d v i s e you to undertake the $1 investment; and t h i s w i l l l e a v e you a l o t poorer i f the p r o j e c t s are t r u l y i n d i v i s i b l e and mutually e x c l u s i v e . 2. More i m p o r t a n t l y , i t i s s e n s i t i v e to the c l a s s i f i c a t i o n of a r e s u l t as a c o s t r a t h e r than a b e n e f i t . Now a l l c o s t s can be viewed as negative b e n e f i t s , and v i c e v e r s a . I t i s obvious t h a t t h i s w i l l a r b i t r a r i l y a f f e c t the r a t i o - i f you add $1000 to the numerator the outcome w i l l be very d i f f e r e n t 110 from the outcome i f you had added -$1000 to the denominator i n s t e a d . So t h i s popular formulae i s u s e l e s s . The formula t h a t w i l l be used by t h i s study i s the Net Present Value (NPV) formula. I t i s unambiguous, simple, and c o r r e c t e i t h e r f o r yes/no d e c i s i o n cases or f o r r a n k i n g investment a l t e r n a t i v e s . The r u l e i s to adopt any p r o j e c t with a p o s i t i v e NPV and to rank p r o j e c t s by t h e i r NPVs. In landbanking one i s g e n e r a l l y not concerned with r a n k i n g because c a p i t a l c o n s t r a i n t s are not d e c i s i v e ; so t h i s study w i l l simply attempt to e v a l u a t e whether the NPV of the Red Deer landbank i s p o s i t i v e . Net Present Value i s the term used when the e v a l u a t i o n i s p r i o r t o the p r o j e c t ' s i n i t i a t i o n . I f one i s e v a l u a t i n g a p r o j e c t ' s past performance, as i s t h i s study, then the term used i s " t e r m i n a l v a l u e " . The two concepts are e q u i v a l e n t . Net Present Value = Present Value Benefits - Present Value Costs. NPV = PV(B) - PV(C) T h i s concludes our c o n s i d e r a t i o n of m e t h o d o l o g i c a l i s s u e s r e l e v a n t to the e v a l u a t i o n of a government i n t e r v e n t i o n i n the l a n d c o n v e r s i o n process through a Planned Onit Landbank. The p o s i t i o n s that have been argued i n t h i s c h apter w i l l be 111 a p p l i e d to the e v a l u a t i o n of the Red Deer landbank i n the f i n a l chapter of t h i s study. 112 FOOTNOTES. See W i l l i a m L.C. Wheaton, " A p p l i c a t i o n s of Cost-Revenue S t u d i e s to F r i n g e Areas", J o u r n a l _ o f _ t h g _ A m e r i c a n _ I n s t i t u t e o f _ P l a n n e r s A Nov.1959. Donald Shoup and Ruth Mack, CQSt-Benef i.t_ ,Analysis_as an A i d t2_521§£IlS^Iit_Polic2x US Government P r i n t i n g O f f i c e , 1969. Percy E. Wagner, A . C r i t i c a l _ A n a l y s i s _ o f _ a _ D e v e l o p i n g § 2 b ^ y J . s i o n x American I n s t i t u t e of Real E s t a t e A p p r a i s e r s , Miami Beach, 1961. A u s e f u l example of the imprtance and p o t e n t i a l s c a l e of these e f f i c i e n c i e s i s given by Norman Pearson, Hhat_Price Suburbia^ Lower Mainland Regional Planning Board, Vancouver, 1967. The_Case_for_0£en_S£ace A People f o r Open Space, 46 Kearney St, Room 400, San F r a n c i s c o , Undated. 113 ESTABLISHMENT OF THE RED DEER 1ANDBANK. Red Deer C i t y l i e s midway between the two major c i t i e s of the P r o v i n c e of A l b e r t a : Edmonton and C a l g a r y . I t i s the d i s t r i b u t i o n c e n t e r f o r a prosperous mixed farming area. The c i t y p r o v i d e s a moderately important node of t r a n s p o r t and communications at the midpoint of the 200 mile highway l i n k i n g the major urban c e n t e r s of the P r o v i n c e . The f i r s t s e t t l e m e n t was a t a nearby c r o s s i n g of the Red Deer R i v e r . When the r a i l w a y was being c o n s t r u c t e d from Edmonton to C a l g a r y t h r e e s i t e s were surveyed f o r a b r i d g e over the Red Deer R i v e r . The s e t t l e r s a t the c r o s s i n g n a t u r a l l y expected t h e i r s i t e would be chosen. But 1 14 another s i t e was Leonard Gaetz's farm, and he o f f e r e d the r a i l w a y company a s u b s t a n t i a l p i e c e of land t o b u i l d the bridge on h i s p r o p e r t y . Faced with a " f a i t accompli" the businessmen at the c r o s s i n g a l l moved to the Gaetz farm. The C i t y of Red Deer now stands at t h i s s i t e . In the l a s t y e ars of the ni n e t e e n t h century the Klondike Rush and new p o l i c i e s of the Canadian government f a c i l i t a t i n g l a n d grants r e s u l t e d i n a r a p i d r i s e i n the po p u l a t i o n of Western Canada. On June 20,1901, a proclamation by Liutenant-Governor Forget e s t a b l i s h e d the new Town of Red Deer. A census i n the same year gave the p o p u l a t i o n of the town as 323. In the f o l l o w i n g decade the town underwent an e x p l o s i v e growth t h a t mirrored a s i m i l a r boom i n r a i l w a y towns a l l a c r o s s the p r a i r i e s . There was a l s o a r a p i d s p e c u l a t i v e i n c r e a s e i n prop e r t y v a l u e s . The t o t a l assessed value of the property i n the town was $1,460,000 i n 1910 and $4,229,000 i n 1914. Then the bubble b u r s t . By 1918 the assessment had f a l l e n to $2,621,000; and i t continued t o d e c l i n e u n t i l the outbreak of the Second World War. The p o p u l a t i o n remained s t a t i c . 1901 _911 1921. 1931 1941 Red Deer "323 2118 2328 2344 2924 A l b e r t a 73,000 374,000 588,000 732,000 796,000 1246 1951 1961. 1966 4042 7575 19,600 26,200 803,000 939,000 1332,000 1463,000 The end of the Second World war began a new c y c l e of growth. Both the c i t y and i t s h i n t e r l a n d r a p i d l y i n c r e a s e d i n p o p u l a t i o n . Red Deer doubled and redoubled i n s i z e . A f t e r such a long period of s t a b i l i t y and v i r t u a l l y zero growth, t h i s 115 expansion e n t a i l e d many growing p a i n s . In p a r t i c u l a r i t posed problems i n the p r o v i s i o n of urban i n f r a s t r u c t u r e and c o n v e r s i o n of l a n d t o urban use. The average growth r a t e of the c i t y from 1951 to 1961 was approximately 1098 per annum. In 1963 t h i s s u s t a i n e d r a p i d growth ended r a t h e r a b r u p t l y , and a c y c l e of more moderate growth of the c i t y and a d e c l i n e i n the p o p u l a t i o n of the surrounding r e g i o n began. The p o p u l a t i o n of the C i t y of Red Deer i s p r o j e c t e d to r i s e to 46,000 by 1986, growing a t approximately the same r a t e as the Calgary and Edmonton m e t r o p o l i t a n areas. So with i n the l a s t twenty years Red Deer has seen a long p e r i o d of f r e n e t i c growth g i v e way t o a p e r i o d of modest expansion. The a d a p t a t i o n of the Red Deer landbank program to these d i f f e r e n t s i t u a t i o n s i s very i n t e r e s t i n g . ECONOMIC BASE Red Deer i s a young c i t y . The f i r s t s e t t l e r s were homesteaders who ac q u i r e d land from the Crown. For $10 and a d u l t male c o u l d secure possession o f a qu a r t e r s e c t i o n , and provided c e r t a i n c o n d i t i o n s of r e s i d e n c e and c u l t i v a t i o n were met, he obtained t i t l e t o the land. A g r i c u l t u r e s t i l l p r o v i d e s the mainstay of the l a b o r f o r c e o f the d i s t r i c t f u l l y 475c of those employed i n the d i s t r i c t i n 1961 were i n t h i s s e c t o r . As one would expect i n a r e g i o n a l c e n t e r , 509? of those employed i n the C i t y of Red Deer were engaged i n trade or the p r o v i s i o n of s e r v i c e s . A f u r t h e r 119S were engaged i n p u b l i c a d m i n i s t r a t i o n , a r e l a t i v e l y high f i g u r e which i n d i c a t e s the 1 16 importance of the c i t y as an a d m i n i s t r a t i v e some o i l w e l l s i n the d i s t r i c t as w e l l as a s e c t o r i n Red Deer C i t y . LOCAL GOVERNMENT 1901-1952 Red Deer has a t r a d i t i o n of vigorous although c o n s e r v a t i v e l o c a l government. Two a s p e c t s are notable - the prominent p a r t i c i p a t i o n of the founding f a m i l i e s of the area, such as the Gaetz f a m i l y , i n c i v i c p o l i t i c s ; and the s t a b i l i t y of the c i v i c p u b l i c s e r v i c e . For example, Mr. A.T. Stephenson was S e c r e t a r y - T r e a s u r e r and Commisioner f o r the town from 1908 to 1935, and h i s successor served from 1935 to 1953. T h i s c o n t i n u i t y of p e r s o n n e l was to be c r u c i a l i n e s t a b l i s h i n g l o n g -range planning i n the c i t y . In 1911 the V i l l a g e of North Red Deer was i n c o r p o r a t e d . I t remained a separate e n t i t y u n t i l 1917. In that year i t was amalgamated with Red Deer, the f i r s t of a s e r i e s of amalgamations of f r i n g e land designed p r i m a r i l y to r a t i o n a l i z e the p r o v i s i o n of s e r v i c e s . Red Deer can best be c h a r a c t e r i z e d as a c o n s e r v a t i v e , r u r a l community whose s t a b i l i t y i s r e f l e c t e d i n the extremely long tenure t y p i c a l of i t s c i v i l s e r v a n t s , and which has been f o r t u n a t e i n having i n p u b l i c s e r v i c e c o n s c i e n t i o u s men of a b i l i t y . A TURNING POINT. In 1952 the p o p u l a t i o n of Red Deer was twice what i t had been 1946. The long p e r i o d of s t a b l e and w e l l - o r d e r e d slow c e n t e r . There are s m a l l manufacturing 117 growth was over. But the p u b l i c a t t i t u d e s and responses which had served w e l l i n the e a r l i e r p e r i o d d i d not change o v e r n i g h t . There was a h i a t u s i n which men waited f o r t h i n g s to r e t u r n to normal. So the sewers, water systems and t r a v e l l e d roads which had served a p o p u l a t i o n of 4000 well were now s t r e t c h e d to the breaking p o i n t t o cope with 9000. The c i t y faced severe problems i n p r o v i d i n g the new i n f r a s t r u c t u r e needed. The water treatment p l a n t was unable to remove suspended s o l i d s from the volume of water demanded. There was no reserve r e s e r v o i r c a p a c i t y and pressure was low, so there was i n s u f f i c i e n t f i r e p r o t e c t i o n . There were no storm sewers. S u r f a c e water dr a i n e d i n t o a l r e a d y overloaded s a n i t a r y sewers which backed up a f t e r r a i n . Raw sewage was discharged i n t o the r i v e r . Heavy t r u c k s from the new o i l f i e l d s and i n c r e a s e d g e n e r a l t r a f f i c had reduced the roads to d i s r e p a i r s i n c e o n l y two miles of read were paved. Ne v e r t h e l e s s , Red Deer was a very prosperous community. In 1953 purchases i n the c i t y ' s r e t a i l s t o r e s amounted to $18,200,000 which was an i n c r e a s e of 20.4% over s a l e s f o r 1952. Two thousand s i x hundred Red Deer f a m i l i e s had a net d i s p o s a b l e income of $10,086,000 with an average of $3,879. T h i s f i g u r e represented a s u b s t a n t i a l i n c r e a s e over the average of $3,695 f o r the preceding year. Red Deer was a prosperous community but the c i t y i t s e l f was b u r s t i n g a t the seams under the pressures of growth. I t was c l e a r t h a t m i l l i o n s o f d o l l a r s would have to be spent to c o n s t r u c t l a r g e trunk s a n i t a r y and storm sewers and new 118 trunk water l i n e s , through the areas which were already b u i l t up. V i r t u a l l y a l l of the roads i n the developed part of the c i t y would have to be r e b u i l t a f t e r the new trunks were l a i d , and new grade s e p a r a t i o n s and b r i d g e s would have to be c o n s t r u c t e d . A modern f i l t r a t i o n and pumping p l a n t was e s s e n t i a l . The o n l y method of f i n a n c i n g these u r g e n t l y r e q u i r e d improvements was by borrowing. I t seemed probable t h a t the f i n a n c i n g of these improvements i n the e s t a b l i s h e d c i t y would s t r a i n the c i t y ' s borrowing power to the l i m i t , and t h a t i t would take ten to f i t e e n years to make up the backlog. I t was t h e r e f o r e necessary to f i n d a way to f i n a n c e the e x p l o s i v e expansion of the new f r i n g e s u b d i v i s i o n s without encroaching on i t s long term debt l i m i t a t i o n s . The permissable debenture debt was l i m i t e d . How would the new s u b d i v i s i o n s be provided with s e r v i c e s i n t h i s s i t u a t i o n ? In 1953 the people of Red Deer were only one l i f e t i m e away from the pioneer experience of the f i r s t opening of the land as grant from the Crown. So one assumes that t h i s experience was s t i l l very much a part of t h e i r c onsciousness. In t h i s s i t u a t i o n , the involvement of government i n the d i s p o s i t i o n of l a n d would perhaps not seem unusual. The p o l i t i c a l outlook of the r e g i o n was c o n s e r v a t i v e . In the b y - e l e c t i o n of 1954 Red Deer was one of the few A l b e r t a c o n s t i t u e n c i e s t o r e t u r n a C o n s e r v a t i v e to the P r o v i n c i a l House. Wellington Dawe says of the area: "We tend to keep the same man as our r e p r e s e n t a t i v e . . . T h i s r e l u c t a n c e to change stems from a deep-rooted conservatism i n the a r e a . " 1 So i t i s u n l i k e l y that 119 i n n o v a t i o n s by the l o c a l government to meet the p r e s s i n g i n f r a s t r u c t u r e problem stemmed from p o l i t i c a l r a d i c a l i s m i n any form. Nevertheless the C i t y C o u n c i l d i d assume an a c t i v e r o l e i n l a n d development' t h a t remains q u i t e unusual. I t i s u s e f u l to c o n s i d e r what l o c a l precedents t h e r e were f o r such an a c t i o n . We s h a l l mention three f a c t o r s t h a t were undoubtedly i n f l u e n t i a l : 1. Tax D e f a u l t Land: As has been poi n t e d out, the 1913 - 14 assessment showed a very l a r g e i n c r e a s e from 1910. T h i s was mainly the r e s u l t of i n f l a t e d values placed on unimproved l o t s . In the subsequent slump the owners stopped paying taxes on these l o t s when they found they could not s e l l them at a p r o f i t . By 1920, as a r e s u l t of tax s e i z u r e s , the c i t y held t i t l e to almost a l l vacant land w i t h i n the c i t y l i m i t s . In the long p e r i o d of s t a b l e p o p u l a t i o n t h a t f o l l o w e d , t h e r e was l i t t l e demand f o r these l o t s . A f t e r 1936 a moderate amount of b u i l d i n g began. The c i t y s o l d l o t s only t o i n d i v i d u a l s who promised to e r e c t s u b s t a n t i a l improvements wit h i n one year. S p e c u l a t i o n i n l o t s was i m p o s s i b l e because t i t l e was not t r a n s f e r r e d u n t i l the new b u i l d i n g had passed i n s p e c t i o n by c i t y o f f i c i a l s . The p r i c e charged f o r the land was nominal as the main o b j e c t was to get more property on the tax r o l l . 2. Pay-as-you-go: In Western Canada the accepted p r a c t i c e i n the e a r l y p a r t of t h i s century was t o borrow money f o r p u b l i c works. T h i s was i n one r e s p e c t symptomatic of the la c k of c a p i t a l i n the area. In c o n t r a s t , Red Deer adopted a pay-as-you-go p o l i c y . T h i s was probably made p o s s i b l e by the s t a b l e p o p u l a t i o n of the area which d i d not demand much by way V 120 of new p u b l i c works, n e v e r t h e l e s s a l l debt was c l e a r e d o f f , and the c i t y f a t h e r s took some p r i d e i n the f a c t that nothing had to go f o r i n t e r e s t . 3. E l e c t r i c power: In 1903 John T. Moore formed the Western General E l e c t r i c L i g h t Company, and obtained a twenty-f i v e year f r a n c h i s e t o supply t h i s u t i l i t y i n Red Deer. In 1926, a f t e r prolonged n e g o t i a t i o n s , the C i t y of Red Deer took over the generating p l a n t and d i s t r i b u t i n g system and operated the u t i l i t y as a very p r o f i t a b l e municipal e n t e r p r i s e . The importance of the p r o f i t from t h i s e n t e r p r i s e i s i n d i c a t e d by the f a c t t h a t f o r many years i t was unnecessary t o s t r i k e any m i l l r a t e f o r mu n i c i p a l purposes other than s c h o o l s and h o s p i t a l s . The 1954 Budget i n d i c a t e s t h a t t h i s p r o f i t was about equal to twelve m i l l s on an assessment of 56 m i l l s . 1954 assessment $8,800,000 Tax Levy $ 492,000 P r o v i n c i a l Grant $ 84,000 P r o f i t on E l e c t r i c Power $ 110,000 GOVERNMENT STRUCTURES. C o i n c i d e n t with the i n f r a s t r u c t u r e problems of the c i t y becoming acute there were important changes i n the p r o v i s i o n o f plan n i n g s e r v i c e s i n a l b e r t a . In 1951 the P r o v i n c e of a l b e r t a passed a new Pl a n n i n g a c t i n t o law. I t i s s t i l l c o n sidered to have been an admirable p i e c e of l e g i s l a t i o n . One of i t s p r o v i s i o n s was f o r the establishment of R e g i o n a l P l a n n i n g Commissions. I n i t i a l l y the P r o v i n c e s u p p l i e d 5055 of the funds necessary to operate the Regional Planning Commissions, and t h i s has s i n c e been i n c r e a s e d to 60%. T h i s system gave a strong 121 i n c e n t i v e f o r the establishment of a c t i v e Regional Planning Commissions. A C i t y such as Red Deer had l i t t l e t o l o s e and much to gain from being a member of an a c t i v e Regional Planning Commission. In 1952 the f i r s t D i r e c t o r of the Reel Deer R e g i o n a l Planning Commission was h i r e d . T h i s was Mr. Lawson. In 1953 he moved to Toronto where he l a t e r became P l a n n i n g D i r e c t o r . Mr. Denis Cole became D i r e c t o r i n Red Deer. Mr. Cole was D i r e c t o r of the Regional P l a n n i n g Commission and then C i t y Commissioner over a p e r i o d of 19 years. Together with h i s s t a f f and s u c c e s s i v e C i t y C o u n c i l s Cole provided the impetus towards the planning s o l u t i o n s t h a t were adopted. Undoubtedly h i s p r o f e s s i o n a l background was an important i n f l u e n c e on these s o l u t i o n s . Mr. Cole i s a p r o f e s s i o n a l surveyor and town pl a n n e r . During the Second World War he was Resident Agent at H a i f a Harbor E s t a t e i n P a l e s t i n e . There he was concerned with the r e c l a i m a t i o n of land from the sea f o r a l l o i l t e r m i n a l . A f t e r the war he worked f o r the I r a q Petroleum Company c o - o r d i n a t i n g plans f o r the development of new towns f o r the s t a f f . T h i s experience must have c o n t r i b u t e d to the development of a landbank as the s o l u t i o n t o Red Deer's problem. Mr. Cole i s now C h i e f Commissioner f o r the C i t y of C a l g a r y . Mr. Robert Cundy, who was Mr. Cole's deputy, i s now the D i r e c t o r of the Red Deer Planning Commission. 122 INSTITUTING A LANDBANK. From 1953 t o 1955 the new Planning D i r e c t o r and h i s s t a f f undertook an i n t e n s i v e study of the c i t y . In c o n j u n c t i o n with the C i t y s t a f f they proposed to C i t y C o u n c i l t h a t a l l f u t u r e long-range p l a n n i n g f o r u t i l i t i e s should be based on the needs of a p o p u l a t i o n of 40,000 people. I t was thought t h a t t h i s l e v e l of p o p u l a t i o n might be reached w i t h i n twenty or twenty-f i v e y e a r s . The p o p u l a t i o n at the time was about 8000. So t h i s was the f i r s t c r u c i a l d e c i s i o n : to develop an o v e r a l l s t r a t e g y to cope with the expected growth r a t h e r than r e a c t i n g piecemeal to growing demands. There was s t i l l some s u s p i c i o n that the unusual growth r a t e of the C i t y might suddenly l e v e l o f f . So i t was decided to make use of c o n s u l t i n g e n g i n e e r i n g f i r m s i n p l a n n i n g the p r o v i s i o n of the necessary s e r v i c e s r a t h e r than t r y i n g to h i r e the necessary s t a f f " i n house". In 1953 the C i t y ' s c o n s u l t i n g engineers designed a modern f i l t r a t i o n and pumping p l a n t which was c o n s t r u c t e d i n 1954. The p l a n t ' s i n i t i a l c a p a c i t y was adequate to serve a p o p u l a t i o n of 20,000, twice the e x i s t i n g p o p u l a t i o n . The second major p r o j e c t was a T r a f f i c and parking study by the Regional Planning Commission and c o n s u l t a n t s . During t h i s period designs were prepared to p r o v i d e the downtown area of the C i t y with new sewers. I t was decided that no s t r e e t should be c o n s t r u c t e d or paved u n t i l the t r u n k - l i n e s designed to serve 40,000 were i n s t a l l e d . T h i s was the second important d e c i s i o n - t o provide the i n f r a s t r u c t u r e f o r new s u b d i v i s i o n s i n a l o g i c a l staged manner. 123 STAGED GROWTH. In the long-range plan two guestions were v i t a l - how many new r e s i d e n t s would need t o be provided with s e r v i c e s by the time the p o p u l a t i o n reached 40,000; and which areas of the c i t y c o u l d be most advantageously developed, based on en g i n e e r i n g , planning and economy f a c t o r s . To answer the f i r s t g u e s t i o n a t a b l e was prepared which resembled the f o l l o w i n g : P o p u l a t i o n f o r o v e r a l l p l a n . . . . . . . . . .. 40,000 DED OCT (1) P o p u l a t i o n already l o c a t e d on s e r v i c e s . . . . , , . . , . . . , . . 12,000 (2) P o p u l a t i o n that can be accomodated on vacant werviced l o t s . . . . . . . . . . . . . 1,500 (3) P o p u l a t i o n that w i l l be accomodated i n c e n t r a l a reas as a r e s u l t of apartments, e t c . (i n c r e a s e only) 3, 500 17, 000 23, 000 ADD (1) P o p u l a t i o n to be moved due to expansion of commercial area. ., 500 (2) P o p u l a t i o n now l i v i n g i n areas t o be s e r v i c e d , . , . , . 1, 500 1, 500 Number c f persons f o r whom s e r v i c e s must be pro v i d e d by time t o t a l growth reaches 40,000.. 24,500 "By a l l o w i n g 14 persons per gross a c r e , i n c l u d i n g l o c a l commercial areas, s c h o o l s , parks, d i f f i c u l t toporgraphy and shapes and i n f o r m a l l a y o u t s , i t appeared that about 1,750 a c r e s , 11 q u a r t e r - s e c t i o n s or three sguare miles would have to be s e r v i c e d . " 2 Once the amount of s e r v i c e d land needed was estimated 124 there remained the g u e s t i o n as to the best p a t t e r n of r e s i d e n t i a l growth, and the best land to a l l o c a t e t o i n d u s t r i a l and r e s i d e n t i a l expansion. So a major land-use study was completed. The P r o v i n c e made a 50% grant towards the necessary air-photography and topographic mapping. On the b a s i s of the completed i n v e s t i g a t i o n s the c o n s u l t i n g engineers submitted recommendations on f e a s i b l e s e r v i c i n g p a t t e r n s . 127 LAND OWNERSHIP. At t h i s p o i n t there were s e v e r a l c o n s t r a i n t s o p e r a t i n g . The land on the f r i n g e of the c i t y was h e l d i n l a r g e p a r c e l s by farmers. Experience had shown t h a t a farmer was r e l u c t a n t to s e l l b i t s and p i e c e s of an economic farm u n i t and was i n c l i n e d e i t h e r to maintain the farm i n one u n i t , or s e l l i t whole. I f a trunk sewer was l a i d to a given s e c t i o n of the f r i n g e , two t h i n g s might happen -1. A farmer might r e f u s e to s e l l h i s property to take advantage of the a v a i l a b l e s e r v i c e s , and so f o r c e the C i t y to l e a p - f r o g h i s lands t o s e r v i c e new lands with the consequent waste. 2. I f a s p e c u l a t o r or land developer obtained a l a r g e p a r c e l i n the path of development, then he would have an e f f e c t i v e monopoly of s e r v i c e d l o t s i n the c i t y f o r some years. The growth r a t e was l a r g e but the p o p u l a t i o n base was s m a l l , so the e f f e c t i v e demand co u l d e a s i l y be usurped i n t h i s way. I t was c l e a r that the c i t y c o u l d not a f f o r d to s e r v i c e new areas simply to " o f f s e t the e f f e c t s of one s p e c u l a t o r o b t a i n i n g say one hundred a c r e s i n the path of the f i r s t major sewer. 128 There was undoubtedly other good reasons why i t was a d v i s a b l e f o r Bed Deer to i n s t i t u t e a land bank and other b e n e f i t s c e r t a i n l y became c l e a r over the years, but these were the c o n s i d e r a t i o n s uppermost i n the minds of the s t a f f of the Regional Planning Commission at the time. I t was decided t h a t the C i t y would q u i e t l y a c g u i r e the land necessary to.accommodate the p r o j e c t e d growth. T h i s was done by o u t r i g h t purchase, or by the n e g o t i a t i o n of long term o p t i o n s to purchase when p o s s i b l e . The c r u c i a l t h i n g was that land should be optioned or purchased p r i o r to f i n a l i s a t i o n of plans f o r the extension of trunk s e r v i c e s . T h i s was the trump ca r d . As long as the p o s s i b i l i t y of s e r v i c i n g one area r a t h e r than another was open, n e g o t i a t i o n s f o r land purchase c o u l d go forward i n a reasonable manner. I t was pointed out to p o t e n t i a l s e l l e r s t h a t development would go where land and s e r v i c i n g c o s t s were l e a s t . In f a c t e x p r o p r i a t i o n was never used. A l l lands were acguired by n e g o t i a t i o n and a t reasonable p r i c e s . The other important t o o l was the s u b d i v i s i o n a p p r o v a l power. T h i s l a y with the Regional Planning Commission. So i t was p o s s i b l e to s t i p u l a t e mandatory standards of s e r v i c i n g f o r a l l s u b d i v i s i o n s , both p r i v a t e and land bank. The Regional Planning Commission d i d not make the s e r v i c i n g s t i p u l a t i o n s more onerous f o r p r i v a t e developments than f o r t h e i r own s u b d i v i s i o n s . I t simply assured that they were the same. 129 PREPAYMENT PROGRAM. The d e c i s i o n by the C i t y C o u n c i l to a c g u i r e land and to take an a c t i v e r o l e i n the c o n v e r s i o n of land to urban use was the e s s e n t i a l step i n e s t a b l i s h i n g a landbank. But as soon as t h i s d e c i s i o n was made i t became obvious that "support" p o l i c i e s were needed. The most important of these was the d e c i s i o n to charge the purchaser of a newly sub d i v i d e d landbank l o t the marginal c o s t of a l l the extensions of s e r v i c e which produced t h a t urban l o t . T h i s p o l i c y was c a l l e d the Prepayment Program. Marginal c o s t p r i c i n g f o r m u n i c i p a l s e r v i c e s i s an e x c e l l e n t p o l i c y and has r e c e n t l y been widely adopted i n Canada. In Red Deer i t d o v e t a i l e d b e a u t i f u l l y i n t o the C i t y ' s land a c q u i s i t i o n program. The borrowing power of the C i t y was l i m i t e d , and had to be concentrated on b r i n g i n g o l d e r s e c t i o n s of the C i t y up to an a c c e p t a b l e standard. So the funds that c o u l d be used by a landbank t o develop new s u b d i v i s i o n s were very l i m i t e d . The Prepayment Scheme allowed the C i t y to r e c o v e r the c o s t of s e r v i c i n g new land almost immediately. And t h i s was the bulk of the c a p i t a l investment necessary. The c o s t of h o l d i n g raw land could be l a r g e l y o f f s e t by i n t e r i m r e n t a l r e t u r n . The Prepayment Scheme e s t a b l i s h e d a r e v o l v i n g fund that minimised the c a p i t a l t h a t had to be i n v e s t e d i n s e r v i c e s at any onetime. The "on-s i t e " s e r v i c e s c o s t was recaptured i n one year, and the " o f f -s i t e " s e r v i c e s cost w i t h i n a r e l a t i v e l y few years. One f u r t h e r aspect of "prepayment" t h a t has been found u s e f u l i s that o n - s i t e s e r v i c e s are i n s t a l l e d by the C i t y over 130 two years although t h e i r c o s t i s recaptured i n the f i r s t year. In the e a r l y years of the landbank t h i s was because s e r v i c e s were i n s t a l l e d under the s t r e e t , and the l a p s e of one year before i n s t a l l i n g s u r f a c e improvements was to allow s e t t l i n g of the p r e v i o u s e x c a v a t i o n s . Now the underground s e r v i c e s are put i n the lanes behind the houses. But the p r a c t i c e of i n s t a l l i n g s e r v i c e s over two years has p e r s i s t e d . One presumes t h i s i s because of the "cash flow" convenience a f f o r d e d by the system. In t h i s way the problem of unacceptable long-term debt was s o l v e d . I t remained to f i n a n c e the a c q u i s i t i o n of land and the c o n s t r u c t i o n of s e r v i c e s i n the s h o r t term. T h i s n e c e s s i t a t e d using the working c a p i t a l of the C i t y and s h o r t -term borrowings from the Bank to f i n a n c e some year to year e x p e n d i t u r e s . T h i s prepayment programme i s undoubtedly the key to the success of the Red deer landbank. In many c i t i e s i n Canada at l e a s t 50% of the c o s t s of s e r v i c i n g new s u b d i v i s i o n s i s borne by the g e n e r a l community through the property t a x . T h i s does not i n c l u d e the a d d i t i o n a l c o s t of a r t e r i a l s , s c h o o l and park land (and s e r v i c e s around the p e r i p h e r y of lands) and trunk sewers. A l l these things are prepaid i n Red Deer. The f o l l o w i n g e x p l a n a t i o n of the prepayment scheme, i n terms of i t s mechanics and scope, i s taken c l o s e l y from responses by the C i t y Commissioner Denis Cole to q u e s t i o n s from Red Deer C i t y C o u n c i l i n 1965. Where s e r v i c e s are to be i n s t a l l e d by a M u n i c i p a l i t y to serve p r i v a t e l y owned l a n d s , t h i s i s normally f i n a n c e d by the 131 M u n i c i p a l i t y through debentures and i s . recovered by way of fronta g e charge. Had the C i t y of Red Deer followed t h i s procedure from 1958, i t would have i n v o l v e d borrowing by debenture $"4,657,260 up to December 31 , 1965, f o r i t s improvements i n r e s i d e n t i a l s u b d i v i s i o n s alone. The C i t y had, through i t s development p o l i c y , expended t h i s sum on r e s i d e n t i a l s u b d i v i s i o n s and by 1965 had recovered $4,196,788. Up u n t i l 1963 a l l expenditures on improvements w i t h i n r e s i d e n t i a l s u b d i v i s i o n s (excluding trunks) were recovered w i t h i n 12 months. The 1965 short term debt, (investment), i n r e s p e c t of improvements i n r e s i d e n t i a l s u b d i v i s i o n s t o t a l l e d $460,472; and t h i s would be recovered as l o t s were s o l d . The unusual s i t u a t i o n 1963-65 w i l l be d i s c u s s e d i n a l a t e r chapter. PREPAYMENT CHARGES. In many towns of A l b e r t a , the a c t u a l cost o f a sewer or sidewalk per l i n e a l f o o t was d i v i d e d by two and the l o t owners charged 50%. The m u n i c i p a l i t y as a whole p a i d the c o s t of fla n k a g e , c r o s s i n g i n t e r s e c t i o n s , park, playground and sc h o o l f r o n t a g e s . On t h i s b a s i s the m u n i c i p a l i t y as a whole paid one t h i r d to a h a l f of the t o t a l c o s t . I t was a l s o customary f o r the m u n i c i p a l i t y to meet the e x t r a c o s t of c o n s t r u c t i n g any road wider than t h a t r e q u i r e d f o r a minor r e s i d e n t i a l s t r e e t . The C i t y of Red Deer, i n an endeavour to make i t s expansion as s e l f s u p p o r t i n g as p o s s i b l e , estimated the t o t a l cost o f a l l s e r v i c e s i n c l u d i n g i n t e r s e c t i o n s , f l a n k a g e , s c h o o l , park and playgrounds, wide c o l l e c t o r s t r e e t s , and o v e r - s i z e 132 p i p e s , t ogether with i t s share of perimeter a r t e r i a l roads, trunk sewers and e n g i n e e r i n g . These t o t a l estimated c o s t s were then d i v i d e d by the t o t a l s a l e a b l e f r o n t a g e t o a r r i v e at a per f o o t charge at which to s e l l the l o t s . A. In d e t a i l the C i t y r e c o v e r e d , as i t s o l d i t s l o t s , the f o l l o w i n g c o s t s : (1) Cost_of_Iand plu s 25% - 50% to allow f o r i n c r e a s e d c o s t of replacement. (2) Cost . o f s u r v e y and r e g i s t r a t i o n . (3) Trunk s a n i t a r y and_§torffl_sewer__cost§. T h i s i s the t o t a l c o s t of major trunk sewers d i v i d e d by the area served and averages about $125,000 per gu a r t e r s e c t i o n . (4) P e r i m e t e r , A r t e r i a l Roads. These are the major thoroughfares bor d e r i n g a s u b d i v i s i o n . The c o s t , i n c l u d i n g sidewalks and l i g h t i n g , i s shared e q u a l l y by the s u b d i v i s i o n s on e i t h e r s i d e of the road and averages about $125,000 per q u a r t e r s e c t i o n . (5) §anitarj_Sewers. These are sewers w i t h i n the s u b d i v i s i o n , i n c l u d i n g a l l sewers on fla n k a g e , and adjacent to parks, playgrounds and s c h o o l s . They i n c l u d e the s e r v i c e connection to the property l i n e of each l o t . (6) W a t e r - l i n e s w i t h i n the s u b d i v i s i o n , as i n the case of s a n i t a r y sewers and i n c l u d i n g a l l hydrants. O) Storm_Sgwers w i t h i n the s u b d i v i s i o n , i n c l u d i n g a l l ca t c h b a s i n s . (8) Payed Roads w i t h i n the s u b d i v i s i o n i n c l u d i n g c o l l e c t o r s t r e e t s , s e r v i c e roads and a l l widths. (9) §idewalks x_Curbs_S_Gutters w i t h i n the s u b d i v i s i o n i n c l u d i n g f l a n k a g e , s c h o o l s , parks 8 playgrounds. (10) Power w i t h i n the s u b d i v i s i o n . The amount recovered i s on l y the d i f f e r e n c e i n c o s t between overhead and underground w i r i n g , as overhead w i r i n g c o s t s are recovered out of the power revenues i n a l l p a r t s of the C i t y . T h i s item amounts to about $70,000 per guarter s e c t i o n . ($2.50 per f o o t f r o n t a g e - Edmonton r e c o v e r s $2.25). (11) Oi}dgrgrqund mHiring_f or_,gtreet__ L i g h t s . (12) C o n s u l t i n g Engineers Fees for. D e s i g n .and S u p e r v i s i o n . (13) Continc|encies_. 5% i s allowed i n estimated c o s t s of 133 improvements f o r c o n t i n g e n c i e s . The t o t a l of the estimated c o s t s d i v i d e d by the s a l e a b l e f r o n t a g e produced a "per f o o t c o s t " a t which the C i t y s o l d i t s l o t s . T h i s remained at $45 - $50 per f r o n t f o o t from 1958 t o 1965. No account was taken of Winter Works r e c o v e r i e s i n c a l c u l a t i n g charges. Any such r e c o v e r i e s provided a s u r p l u s to reduce working c a p i t a l . The t o t a l r e c o v e r i e s i n r e s i d e n t i a l s u b d i v i s i o n s under Winter Works were $94,394 on December 31, 1965. B. The C i t y d i d not charge the s u b d i v i s i o n with the f o l l o w i n g items: C) Planning,Cost§_. A l l p l a n n i n g design was undertaken by the R e g i o n a l Planning Commission. There was no d i r e c t c o s t to the c i t y f o r t h i s s e r v i c e , although the c i t y d i d c o n t r i b u t e to the, Commission Budget. There would be no r e d u c t i o n i n t h i s c o n t r i b u t i o n i f the c i t y r e c e i v e d no s e r v i c e s . I t was estimated that a p r i v a t e developer i n an analogous s i t u a t i o n would engage a design c o n s u l t a n t a t an approximate c o s t of $2500 per g u a r t e r s e c t i o n , or $5 per l o t . (2) A d m i n i s t r a t i v e , C o s t s . Because the survey, e n g i n e e r i n g design, and e n g i n e e r i n g s u p e r v i s i o n were a l l c o n t r a c t e d out with charges made to t h e s u b d i v i s i o n , the a d m i n i s t r a t i v e work load of the C i t y was r e l a t i v e l y s m a l l . I t i s d o u b t f u l whether the a d m i n i s t r a t i v e c o s t s of the e n g i n e e r i n g department would have been any l e s s i f s e r v i c e s were designed and i n s t a l l e d by a p r i v a t e developer. A l l l a y o u t and e n g i n e e r i n g designs would have had to be s c r u t i n i s e d with great care and the work checked by i n s p e c t o r s to ensure t h a t the i n s t a l l a t i o n s met C i t y standards. It was c o n s i d e r e d l e g i t i m a t e to charge only the a d d i t i o n a l a d m i n i s t r a t i v e c o s t s over and above the c o s t i n which the C i t y would be i n v o l v e d i f a p r i v a t e developer s e r v i c e d the land. As f a r as the Regional Planning Commission could a s c e r t a i n t h e r e were no such a d d i t i o n a l c o s t s . On the other hand a d m i n i s t r a t i v e c o s t s i n v o l v e d i n the purchase and s a l e of l a n d could be regarded as l e g i t i m a t e c o s t s . The t o t a l s a l a r i e s of the land and tax department i n 1965 were about $17000. In a normal year of o p e r a t i o n i t was estimated t h a t about 60% of the department's time i s i n v o l v e d i n land matters. When the c i t y was s e l l i n g some 300 l e t s per year about h a l f of t h e i r " land time" was a l l o c a t e d to s u b d i v i s i o n a d m i n i s t r a t i o n - e.e. about 30% of t h e i r t o t a l time. The s a l a r y 134 e g u i v a l e n t i s $5000 or $7500 a l l o w i n g f o r f r i n g e b e n e f i t s and overhead. Obviously the land a d m i n i s t r a t i o n work load v a r i e d i n d i r e c t p r o p o r t i o n to the volume of l a n d purchases and s a l e s . I t was estimated that about $25 per l o t or 1% of the s a l e s p r i c e could f a i r l y have been added to the s a l e s p r i c e t o reimburse the C i t y f o r i t s a d m i n i s t r a t i o n c o s t s . -This was not done, because i t was estimated t h a t a d m i n i s t r a t i v e c o s t s of the Lands Department were not m a r g i n a l l y g r e a t e r that they would have been i n a system which r e l i e d on p r i v a t e developers. A l l water l i n e s and power l i n e s w i t h i n a s u b d i v i s i o n r e g a r d l e s s of t h e i r s i z e were charged to the s u b d i v i s i o n concerned. In the e a r l y years trunk l i n e s and primary power l i n e s were debenture f i n a n c e d , but l a t e r they too were apportioned pro r a t a to the l o t s served and absorbed i n t h e i r s e l l i n g p r i c e . In c o n t r a s t to p r i v a t e d e v e l o p e r s , the C i t y had no c o s t s f o r promotion and a d v e r t i s i n g . Taxes on the land which would otherwise have been paid by p r i v a t e owners while i n i n v e n t o r y were not charged to the l o t . T h i s was a minor estimated cost of $2,824 i n 1966, a year of peak i n v e n t o r y . M u n i c i p a l ownership of the land allowed f o r the p r o v i s i o n of adeguate open space, s c h o o l s i t e s and parks. These s i t e s were a l l provided at no c o s t to the C i t y as a whole, or to the s c h o o l boards (with few e x c e p t i o n s ) . The c o s t was recovered from the s a l e of the l o t s - t h a t i s , from those who would d i r e c t l y b e n e f i t . The t o t a l c o s t of the a r t e r i a l roads bordering s u b d i v i s i o n s were a l s o recovered through the s a l e of l o t s and consequently at no c o s t to the g e n e r a l tax payer. As f a r as i s known these c o s t s have been borne by the C i t y as a whole i n every other c i t y and the monies i n v o l v e d are g u i t e l a r g e . 135 The M u n i c i p a l ownership of land f o r r e s i d e n t i a l development enabled the C i t y of Red Deer to l i m i t development to two or three areas a t a time and to discourage s c a t t e r e d development. It allowed a l l b u i l d e r s , l a r g e and s m a l l , to compete on an equal b a s i s i n the c o n s t r u c t i o n o f b u i l d i n g s i n each s u b d i v i s i o n and encouraged a v a r i e t y of housing r a t h e r than groups of homes a l l c o n s t r u c t e d by one b u i l d e r . Where land i s owned and s e r v i c e d by a developer a c i t i z e n o f t e n f i n d s t h a t he can only purchase the l o t he d e s i r e s i f he employs a p a r t i c u l a r b u i l d e r . In Red Deer i n d i v i d u a l s had the f i r s t c h o i c e of l o t s i n each s u b d i v i s i o n before any were s o l d to b u i l d e r s . One f i n a l advantage of municipal ownership and s e r v i c i n g of land was t h a t i t enabled the C i t y t o o b t a i n Winter Works g r a n t s . By 1965 the C i t y of Red Deer had r e c e i v e d $94,394 from the Winter Works grants f o r i t s r e s i d e n t i a l s u b d i v i s i o n s alone. To summarize: The development of land f o r r e s i d e n t i a l purposes may be achieved i n one of three ways -(a) P r i v a t e l a n d s e r v i c e d by p r i v a t e developers. (b) P r i v a t e land s e r v i c e d by the m u n i c i p a l i t y prepaid or debentured. (c) M u n i c i p a l land s e r v i c e d by the m u n i c i p a l i t y . The f i r s t method i s p r a c t i c a l i n me t r o p o l i t a n areas where the demand f o r l o t s i s s u f f i c i e n t l y great to j u s t i f y a number of land d e v e l o p e r s o p e r a t i n g i n c o m p e t i t i o n . 136 The second method i s that adopted by most m u n i c i p a l i t i e s . The C i t y f i n a n c e s the c a p i t a l c o s t of the improvements and r e c o v e r s t h i s c o s t by way of l o c a l improvement charge over twenty years. In most cases the m u n i c i p a l i t y only r e c o v e r s a p a r t of the c o s t from the landowners with one g u a r t e r to one h a l f being borne by the c i t i z e n s as a whole. T h i s method i n v o l v e s long term debt of s u b s t a n t i a l p r o p o r t i o n s and the i n t e r e s t over twenty years doubles the c o s t of the s e r v i c e s to the c i t i z e n . The t h i r d method i s t h a t adopted by the C i t y of Red Deer (and now being f o l l o w e d by a number of s m a l l m u n i c i p a l i t i e s ) . I t i n v o l v e s no long term debt. There i s some short term debt to cover the p e r i o d September to March of peak i n v e n t o r y of s e r v i c e d land p r i o r to s a l e of those newly s e r v i c e d l o t s . I t permits b e t t e r p l a n n i n g , b e t t e r c o n t r o l and g r e a t e r r e c o v e r i e s . I t i s a "Prepayment Scheme" with r e c o v e r i e s through a landbank. SUMMARY. The p o l i c i e s adopted by the Red Deer C i t y C o u n c i l t h a t e f f e c t i v e l y i n s t i t u t e d the landbank were: 1. E x t e n s i o n s to the c i t y would be "staged". The trunk water and sewer mains would be extended i n an e f f i c i e n t c o n f i g u r a t i o n w i t h i n a compact space s u f f i c i e n t to accommodate a t a r g e t p o p u l a t i o n of 40,000. 2. The C i t y would be a major owner and developer of 137 land - i t would a c t i v e l y enter the land c o n v e r s i o n process. 3. The marginal c o s t of extending s e r v i c e s to new s u b d i v i s i o n s would be charged to the s u b d i v i s i o n and recouped by the C i t y as soon as the l o t s were s o l d . 138 FOOTNOTES. 1. W e l l i n g t o n Dawe, Hist o r y _ o f _ R e d _ D e e r _ A ^ H.Ed. T h e s i s , U n i v e r s i t y of A l b e r t a 195*4. 2. Denis Cole, "The C i t y of Red Deer", H a b i t a t x Vol.6 #4, 1963, p.30. 139 LANDBANK ADMINISTRATION. The pr o c e s s of c o n v e r s i o n of l a n d i n North America to urban use has t r a d i t i o n a l l y been r e g u l a t e d by by-laws p e r t a i n i n g to zoning and s u b d i v i s i o n . These measures have had v a r i e d success a c c o r d i n g to demands made c f them. To an e x t e n t , they have been l i m i t e d i n f l e x i b i l i t y and s o p h i s t i c a t i o n , but as r e g u l a t o r s of an i n c r e m e n t a l , l o t by l o t , c o n v e r s i o n process they have seemed adequate t o most a d m i n i s t r a t o r s . Two t h i n g s are changing t h i s : 1. The spread of Planned U n i t Developments wherein 140 l a r g e contiguous areas of land are planned, s u b d i v i d e d and s e r v i c e d as a s i n g l e u n i t . The r e s u l t i s an area of mixed l a n d uses N c a r e f u l l y i n t e g r a t e d with each other i n an i n d i v i d u a l way which f i t s the unique s i t u a t i o n of t h a t piece of l a n d . 2. The advent of p u b l i c a g e n c i e s , landbanks, i n the h i t h e r t o p r i v a t e s e c t o r c o n v e r s i o n p r o c e s s . Both of these developments tend to s t r a i n t r a d i t i o n a l land development by-laws to the breaking p o i n t . In g e n e r a l Canadian l e g i s t l a t i o n was moulded i n a d i f f e r e n t e r a to meet d i f f e r e n t e x i g e n c i e s from those of the mid-seventies. The changes i n the l a s t few years i n A l b e r t a have been p a r t i c u l a r l y r a p i d , but u n l i k e the other p r o v i n c e s i t has some precedent f o r coping with s i m i l a r changes i n Red Deer. Red Deer i s remarkable because v i r t u a l l y a l l of the r e s i d e n t i a l expansion of the c i t y s i n c e 1956 has been i n Planned Unit Development w i t h i n a p u b l i c landbank program. The c i t y p r ovides a case study of the a d a p t a t i o n of t r a d i t i o n a l l e g i s t l a t i o n to a r a d i c a l l y new s i t u a t i o n . T h i s paper w i l l attempt to examine and e v a l u a t e the l e g i s l a t i v e and a d m i n i s t r a t i v e response by the c i t y to the new demands of the PUD landbank. HISTORICAL BACKGROUND. The f i r s t zoning by-law i n Red Deer (#134) was passed i n 1948. I t e s t a b l i s h e d one broad R e s i d e n t i a l Zone i n the c i t y with c o n s t r u c t i o n standards r e l a t e d t o the N a t i o n a l Housing 141 Code. T h i s simple measure was e f f e c t i v e f o r a number of years; but i t was i n c r e a s i n g l y inadequate t o cope with r a p i d expansion of the commercial, i n d u s t r i a l and r e s i d e n t i a l areas of the c i t y . From 1956 to 1959 c o n t r o l of development i n areas adjacent to the c i t y was e f f e c t e d through an Interim Development C o n t r o l Order. The s i g n i f i c a n c e of such terms w i l l be made c l e a r l a t e r i n t h i s essay. The D i r e c t o r of the Red Deer R e g i o n a l Planning Commission was Development O f f i c e r and i s s u e d development permits. The present Zoning By-law #2011 became e f f e c t i v e i n 1960. I t was based on the p r o j e c t e d growth p a t t e r n of the c i t y over the f o l l o w i n g twenty y e a r s . I t has s i n c e been ammended s u b s t a n t i a l l y . Under the o r i g i n a l p r o v i s i o n s of the By-law, C i t y C o u n c i l was the approving body. However, t h i s a c t i v i t y absorbed an i n o r d i n a t e amount of C o u n c i l time, so the By-law was ammended to p r o v i d e f o r a T e c h n i c a l P l a n n i n g Committee delegated by C o u n c i l to perform t h i s f u n c t i o n . In May 1964, under r e v i s i o n s of the Planning Act, the T e c h n i c a l P l a n n i n g Committee was renamed the M u n i c i p a l Planning Commission. In 1968 the Act was f u r t h e r r e v i s e d to s t i p u l a t e t h a t a Development O f f i c e r be appointed to a s s i s t the M u n i c i p a l Planning Commission i n the a d m i n i s t r a t i o n of the By-law. The Fun c t i o n s of t h i s committee a r e : 1. To advise and a s s i s t the C o u n c i l and to c o - o r d i n a t e the a c t i v i t i e s o f the v a r i o u s departments with regard to the planning of o r d e r l y and economic development w i t h i n the C i t y ; 142 2. To ad v i s e the Red Deer Regional Planning Commission with r e s p e c t to any proposed s u b d i v i s i o n w i t h i n or near the boundaries o f the C i t y ; 3. To a c t as the decision-making body i n re s p e c t of C o n d i t i o n a l Uses, and other d i s c r e t i o n a l powers i n v o l v e d i n the zoning By-law. T h i s i s a resume h i s t o r y of development c o n t r o l l e g i s l a t i o n i n Red Deer. The body of t h i s chapter w i l l c o n s i d e r i t s s i g n i f i c a n c e as a r e g u l a t o r of the PUD landbank, and w i l l t r y to e v a l u a t e i t s adequacy as a model f o r other communities. EUCLIDEAN ZONING VS. DEVELOPMENT CONTROL. I t i s i n t e r e s t i n g to note t h a t the f i r s t f our years of the POD i n Red Deer c o i n c i d e d with f o u r years of Interim Development C o n t r o l i n Red Deer County. That i s , a zoning law d i d not apply under "development c o n t r o l " . The pl a n n i n g a u t h o r i t y i s given wide d i s c r e t i o n i n c o n s i d e r i n g a p p l i c a t i o n s f o r development. T h i s i s an important p o i n t . L o c a l a d m i n i s t r a t o r s i n Canada tend to be inundated with p l a n n i n g l i t e r a t u r e from the United S t a t e s , and thereby misunderstand the meaning of "z o n i n g " i n the Canadian c o n t e x t . The phrase " E u c l i d e a n Zoning" stems from the United States Supreme Court d e c i s i o n of V i l l a g e _ o f _ E u c l i d _ v i _ A m b e r !§al£l_C-2i (1926) , 272 U.S. 365 i n which zoning was upheld as a c o n s t i t u t i o n a l l y proper e x e r c i s e o f the p o l i c e power. The concept of " p o l i c e power" i s g u i t e a l i e n to Canadian 143 c o n s t i t u t i o n a l law. 1 In Canada, a "zoning by-law" i s simply a by-law q u a l i f i e d by a d e s c r i p t i v e a d j e c t i v e and i s s u b j e c t to a l l of the normal Canadian l e g a l r u l e s concerning laws and by-laws . "T h i s e s s e n t i a l d i f f e r e n c e may be summarized by sa y i n g t h a t , whereas, i n Canada, the technique of c o n t r o l l i n g urban environments by means of * zoning* i s simply a l e g i s l a t i v e convenience, i n the Un i t e d S t a t e s i t i s a c o n s t i t u t i o n a l n e c e s s i t y . Whereas i n Canada the d e c i s i o n as to whether or not •zoning' should be enforced (and i f so what kind of zoning) r e s t s with the p r o v i n c i a l l e g i s l a t u r e s , which ... have g e n e r a l s o v e r e i g n j u r i s d i c t i o n i n such maters, i n the United S t a t e s the c h o i c e has been between environmental c o n t r o l by means of 'zoning' or no environmental c o n t r o l at a l l . 1 So i n Canada the range of l e g i s l a t i v e power over the development process i s broader than i n the U.S.A. Let us c o n s i d e r E u c l i d e a n zoning then, and the reasons why Bed Deer may have opted f o r "development c o n t r o l " on i t s urban f r i n g e i n t h a t c r u c i a l four years r a t h e r than "zoning". E u c l i d e a n Zoning d i v i d e s a community i n t o zones or d i s t r i c t s . I t implements a land-use plan i f there i s one. I t i n c o r p o r a t e s d e t a i l e d s p e c i f i c a t i o n s of a l l o w a b l e uses, d e n s i t i e s , e t c . , w i t h i n each zone. Zoning maps are an i n t e g r a l p a r t of the zoning by-law. Such a means of development r e g u l a t i o n has s e v e r a l i n t r i n s i c weaknesses: 1. I t i s i n f l e x i b l e . 2. Because i t r i g o r o u s l y separates d i f f e r e n t land uses, i t undervalues the i n t e r r e l a t i o n s h i p s that e x i s t between widely separated uses. 3. I t i s extremely p a r o c h i a l i n nature, tending to i g n o r e anything o u t s i d e of the l o c a l government area. 4. I t i n t r i n s i c a l l y i n v i t e s j u d i c i a l review by d e s i g n a t i n g 144 l a n d use before the f a c t . 5. I t addresses i t s e l f to a supposed end r e s u l t r a t h e r than to the process of development. 3. I t attempts to apply uniform s p e c i f i c a t i o n s to d i f f e r e n t development cases which i n important ways may not be the same. A s o l u t i o n t o these problems was l a r g e l y provided by the E n g l i s h Town and Country Planning Act of 1947 (10 and 11, Geo. 6 c 51). I t was based of the concept of "development c o n t r o l " . Where the zoning by-law i s p r e c i s e and d e t a i l e d , development c o n t r o l r e g u l a t i o n s are vague and g e n e r a l . A l a r g e measure of d i s c r e t i o n i s l e f t to the l o c a l a d m i n i s t r a t o r . A d e t a i l e d p l a n n i n g d e c i s i o n i s not made u n t i l a pr o p o s a l f o r development i s r e c e i v e d ; and n e g o t i a t i o n s with the proposing developer o f t e n play a part i n the d e c i s i o n process. D e c i s i o n s which are made a t the l e g i s l a t i v e l e v e l i n "zoning" are made at the a d m i n i s t r a t i v e l e v e l i n "development c o n t r o l " . Herein, of course l i e s both the s t r e n g t h and weakness of development c o n t r o l . I t i s f l e x i b l e but u n c e r t a i n . The A l b e r t a P l a n n i n g Act, as p r e s e n t l y w r i t t e n , t r i e s to i n c o r p o r a t e the best elements of both systems of development r e g u l a t i o n s . To eva l u a t e how s u c c e s s f u l i t has been i t i s necessary t o e x p l o r e the e n a b l i n g act and Red Deer's zoning by-law f u r t h e r . But f i r s t i t may be u s e f u l to s e t down more p r e c i s e l y the problems of r e g u l a t i n g PUD landbank development. 145 REGULATING PUD LANDBANKS. Recently the American S o c i e t y of Planning O f f i c i a l s p u b l i s h e d a major study of the ways i n which American zoning by-laws might be adjusted t o f a c i l i t a t e PUD developments. 2 I t i s c l e a r that what they term a "planned u n i t development" ordinance i s i n e f f e c t the B r i t i s h n o t i o n of "development c o n t r o l " with some i n n o v a t i o n s stemming from the American experience. These i n n o v a t i o n s are p r i n c i p a l l y i n the area of- s e t t i n g l i m i t s to the d e s c r e t i o n o f the l o c a l a d m i n i s t r a t o r i n such t h i n g s as d e n s i t y t r a n s f e r s and open space; a g r e a t e r c o n c e n t r a t i o n on and f o r m a l i z a t i o n o f the development a p p l i c a t i o n and n e g o t i a t i o n process; and i n n o v a t i v e methods of p r o v i d i n g f o r the community maintenance of the PUD common open space subseguent to i n i t i a l development. There i s a great d e a l f o r Canadians to l e a r n from t h i s , and we s h a l l r e t u r n to i t i n c o n s i d e r i n g a l t e r n a t i v e s to the Red Deer approach at the end of t h i s chapter. In essence PUD developments demand a high degree of f l e x i b i l i t y i n t h e i r r e g u l a t i o n s , and pose problems because of the l o c a l a d m i n i s t r a t i v e d i s c r e t i o n t h i s i m p l i e s . As S t e r n l i e b p o i n t s out: "The disadvantages of planned u n i t development posed by Norman Williams J r . and o t h e r s c e n t e r not around the concept i t s e l f , but r a t h e r on the a b i l i t y of the p a r t i c i p a t i n g agents to adequately embrace the conceptual changes which PUD a c t u a l l y r e p r e s e n t s . " 3 When the p r i n c i p a l PUD developer i s the same l o c a l a u t h o r i t y as i s charged with development r e g u l a t i o n , or a r e l a t e d p u b l i c a u t h o r i t y , then ad hoc i n f o r m a l systems may overcome the o p e r a t i o n a l inadequacies of the formal system as 146 mentioned above, but leave the probelms un r e s o l v e d . RED DEES ZONING BY-LAW #2011. The B r i t i s h North America Act a l l o c a t e d powers to the F e d e r a l and P r o v i n c i a l governments a s s u r i n g both of a c o n s t i t u t i o n a l p o s i t i o n and of p r o t e c t i o n a g a i n s t encroachments on t h e i r r e s p e c t i v e spheres. In c o n t r a s t . M u n i c i p a l governments i n Canada are s o l e l y the c r e a t i o n s of the P r o v i n c e s . P r o v i d i n g that these p r o v i n c e s l i m i t themselves to those matters assi g n e d to them under the B.N.A. Act, they extend or c o n t r a c t a t w i l l the powers o f the m u n i c i p a l i t i e s . So two guestions a r i s e : (1) Does the Pr o v i n c e hold the r e l e v a n t powers on which "zoning" i s based? (2) Were these powers p r o p e r l y delegated t o the c i t y of Red Deer? The c o n s t i t u t i o n a l b a s i s of the zoning power i n Canada r e s t s l a r g e l y i n these s u b s e c t i o n s o f s e c t i o n 92 of the B r i t i s h North America Act - 8 M u n i c i p a l I n s t i t u t i o n s , 10 L o c a l Works and Undertaking, and 14 Property and C i v i l R i g h t s . The power i s t h e r e f o r e e x e r c i s a b l e by the p r o v i n c e s . T h i s answers the f i r s t g u e s t i o n . The Planning Act of A l b e r t a d e l e g a t e s to the m u n i c i p a l i t i e s power to pass zoning by-laws, so the answer to the second q u e s t i o n of c o n s t i t u t i o n a l i t y i s a l s o a f f i r m a t i v e . "A c o u n c i l may pass a zoning by-law to r e g u l a t e the use and development of land w i t h i n i t s m u n i c i p a l boundaries and f o r tha t purpose may d i v i d e the m u n i c i p a l i t y i n t o zones of permitted land use c l a s s e s of such number, shape and area as i t c o n s i d e r s a d v i s a b l e , p r e s c r i b e the purposes f o r which b u i l d i n g s and land may be used, and r e g u l a t e or p r o h i b i t the use of such land f o r any other purpose." 147 (1963, C 43, S 119; 1968, C 77, S 15) CONFLICTS OF CONSTITDTIONAL RIGHTS. The F e d e r a l government has c e r t a i n powers to r e g u l a t e land use, i n c i d e n t a l to i t s power to make laws i n r e l a t i o n of such matters as i n t e r p r o v i n c i a l communication and t r a n s p o r t a t i o n . An example i s the Aeronautics Act, R.S.C. 1952, C 2, S 4 and r e g u l a t i o n s made'thereunder r e l a t i v e t o the zoning of l a n d around a i r p o r t s . I t would a l s o seem that such a g e n e r a l term as " p r o p e r t y and c i v i l r i g h t s " (Section 72) might c o n f l i c t with other g e n e r a l areas of powers a l l o c a t e d to the F e d e r a l government, such as the "Peace, order and good government" cl a u s e i n S e c t i o n 91. Such guestions are s e t t l e d by j u d i c i a l i n t e r p r e t a t i o n , i n the absence of c l a r i f y i n g amendments to the o r i g i n a l l e g i s l a t i o n . N a t u r a l l y , there i s a g e n e r a l wise r e l u c t a n c e to amend a c o n s t i t u t i o n except i n cases of c l e a r e s t n e c e s s i t y . Dawson p o i n t s out t h a t the trend i n j u d i c i a l i n t e r p r e t a t i o n has been to regard the enumerated powers as paramount - f i r s t the f e d e r a l and then the p r o v i n c i a l . As a r e s u l t , "property and c i v i l r i g h t s " has become the t r u e r e s i d u a l c l a u s e . * So j u d i c i a l i n t e r p r e t a t i o n has tended to remove c o n f l i c t s which may be i m p l i c i t i n the w r i t t e n words of the B.N.A. a c t . T h i s p r e s e n t s a r a t h e r t i d y p i c t u r e of c o n s t i t u t i o n a l r e s p o n s i b i l i t y f o r zoning and l o c a l l a n d use c o n t r o l . But of course, the s i t u a t i o n i s never a s t a t i c one. For example, i n 148 1971 the F e d e r a l government e s t a b l i s h e d a M i n i s t r y of State f o r Urban A f f a i r s . T h i s m i n i s t r y a d m i n i s t e r s the C e n t r a l Mortgage and Housing C o r p o r a t i o n , which i s the main source of funds f o r landbanks a t the l o c a l l e v e l . I t has attached c e r t a i n c o n d i t i o n s to the r e c e i p t of these funds which r e l a t e both to l a n d use and land tenure. (See The_Vancouver_Sun A January 20, 1974, " B a s f o r d H i t s B.C. on Land Leases.") Presumably at some po i n t the growing F e d e r a l c o n t r o l over land use d e c i s i o n s may be seen as i n f r i n g i n g on the Provinces* c o n s t i t u t i o n a l p r e r o g a t i v e s . DELEGATION OF AUTHORITY. He have seen t h a t the Red Deer C o u n c i l has p r o p e r l y r e c e i v e d power from the P r o v i n c e to pass zoning by-laws. I t i s common p r a c t i c e f o r a c o u n c i l to r e - d e l e g a t e p a r t or a l l of the powers thus r e c e i v e d to a t e c h n i c a l board or to a c i t y o f f i c i a l . In t h i s r e g ard the c o u n c i l must abide by the l e g a l maxim of £2l§stas_delegata_non_es That i s , the c o u n c i l must have express s t a t u t o r y a u t h o r i t y to a s s i g n to any o f f i c i a l or any other agency any l e g i s l a t i v e or d i s c r e t i o n a r y power rooted i n i t . 5 The e n a b l i n g act envisages the need f o r a C o u n c i l to delegate i t s a u t h o r i t y i n the matter and has provided e x p r e s s l y t h a t i t may (or must) do so. "A zoning by-law s h a l l (a) p r o v i d e f o r the appointment of a development o f f i c e r who s h a l l be an o f f i c i a l of the m u n i c i p a l i t y (b) • a u t h o r i z e t h a t development o f f i c e r or a m u n i c i p a l planning commission to r e c e i v e , c o n s i d e r and decide on a p p l i c a t i o n s f o r a development permit..,." 149 (1963, C 43, S 122; 1965, C 70, S 26; 1967, C 60, S 17; 1968, C 77, S 16; 1969, C 86, S 14; 1970, C 89, S 16) FIGURE 11 Development Permit Application Procedure. I n q u i r y by A p p l i c a n t Z o n i n g Amendment N e c e s s a r y NO Survey l e t t e r ma)| i e s e n t o u t ( i n case o f m u l t i p l e f a m i l y use) C o n d i t i o n a l Use O b j e c t i o n s Dc-c i s i o n to be p o s t e d ( p u b l i c n o t i c e ) 1 •Approved-! Munic i p a l P l a n n i n g Commiss i o n O b j e c t i o n s D e c i s i o n i s f i n a l Development P e r m i t May Be I ssned R e f u s e d N o t i c e s o f Ap p e a l s e n t Out , , Development j^pproved-l A p p e a l U o a r ( i J - Y e s - H S u b m i s s i o n o f A p p l i c a t i o n f o r R e z o n i n g NO P e r m i t t e d Use Development P e r m i t may be I s s u e d C i t y C o u n c i l g J C i t y C o u n c i l F i r s t Reading I f l p p r n n s l Second Readinc P u b l i c I n q u i r y ! I P u b l i c I n q u i r y End o f P r o c e d u r e -Refused- End o f P r o c e d u r e •Appeal t o Supreme C o u r t o f A l b e r t a w i t h i n 30 days on p o i n t o f law o r j u r i s d i c t i o n o n l y . 151 ADMINISTRATION OF THE BY-LAW. In the urban l a n d c o n v e r s i o n process i n Red Deer there are two p r i n c i p a l d e c i s i o n makers: Red Deer C i t y and Red Deer Regional Planning Commission, The p r i v a t e developer who i s the dominant i n i t i a t o r of change elsewhere i s almost absent from Red Deer. The consequences of t h i s are unusual at l e a s t . Both Red Deer C i t y and Red Deer Regional Planning Commission are p u b l i c a gencies. Apart from t h i s they have very c l o s e i n f o r m a l l i n k s . For example, Mr. Denis Cole, who was D i r e c t o r of the P l a n n i n g Commission f o r many years subseguently became C i t y Commissioner. The p o i n t i s t h a t these agencies have been r e g u l a t i n g themselves, so to speak. Of course zoning does not apply s o l e l y to urban land c o n v e r s i o n . Questions a r i s e as to new b u i l d i n g w i t h i n the urban f a b r i c ; but these cases are r e l a t i v e l y few i n comparison to the volume of the suburban c o n v e r s i o n p r o c e s s . So the a d m i n i s t r a t i o n of by-law #2011 i s l a r g e l y a s t o r y of i t s use i n r e g u l a t i n g the planned u n i t r e s i d e n t i a l and i n d u s t r i a l development within the p u b l i c landbank. One must conclude t h a t i n t h i s context the by-law has been l a r g e l y i r r e l e v a n t . I t has n e i t h e r f a c i l i t a t e d nor hindered planned u n i t development. The agencies i n v o l v e d c o u l d have worked as w e l l w i t h i n any formal s t r u c t u r e , or w i t h i n none. The 152 i n f o r m a l ad hoc systems of i n t e r - a g e n c y communication, and the assumption of "good f a i t h " between f r a t e r n a l p u b l i c agencies i s much more important. T h i s has not n e c e s s a r i l y been d e t r i m e n t a l to Red Deer, but i t may have been a f a c t o r i n d i s c o u r a g i n g p r i v a t e developers from e n t e r i n g the Red Deer market as c o m p e t i t i v e PUD developers, and i t may l i m i t the re l e v a n c e of the Red Deer By-law as a model f o r other communities i n t e r e s t e d i n PUD landbanking. DIVISION OF FUNCTIONS. I t i s n e v e r t h e l e s s i n s t r u c t i v e t o examine the a d m i n i s t r a t i o n o f by-law #2011 i n the context of urban lan d c o n v e r s i o n . I t can provide a base from which changes which might be b e n e f i c i a l to Red Deer can be recommended, and some c o n t r i b u t i o n made to a model zoning by-law which w i l l e f f e c t i v e l y f a c i l i t a t e t h i s new type of PUD development. De Smith- says t h a t the manner of c l a s s i f y i n g the f u n c t i o n s performed by the i n s t i t u t i o n s of government i s f a r more important than the manner of c l a s s i f y i n g the i n s t i t u t i o n s t h e m s e l v e s . 6 T h i s i s p a r t i c u l a r l y so i n Red Deer. He d e s c r i b e s s e v e r a l t e s t s to determine whether a f u n c t i o n i s m i n i s t e r i a l , g u a s i - j u d i c i a l ( a d m i n i s t r a t i v e ) , j u d i c i a l or l e g i s l a t i v e . The p r i n c i p a l element of a m i n i s t e r i a l f u n c t i o n i s that i t i n v o l v e s no d i s c r e t i o n . The i n t e n t of the by-law seems to be that the Development O f f i c e r e x e r c i s e only a m i n i s t e r i a l f u n c t i o n . To understand t h i s i t i s necessary to understand a 153 d i s t i n c t i o n t h a t o r i g i n a t e s i n the e n a b l i n g Act - the d i s t i n c t i o n between "permitted uses" and " c o n d i t i o n a l uses". A "p e r m i t t e d use" i s a land use which i s allowed w i t h i n a p a r t i c u l a r zone a u t o m a t i c a l l y or as a matter of r i g h t (By-law #2011, S 7a). On the other hand, a " c o n d i t i o n a l use", although l i s t e d under a p a r t i c u l a r zone i n the by-law, i s s u b j e c t to the almost t o t a l d i s c r e t i o n of the d e c i s i o n making a u t h o r i t y . In the e n a b l i n g Act S 120(b) s t a t e s t h a t a zoning by-law " s h a l l p r e s c r i b e f o r each zone e s t a b l i s h e d , the uses of lands or b u i l d i n g s that are permitted or c o n d i t i o n a l l y permitted or p r o h i b i t e d t h e r e i n " . S 124 (1) and (3) s e t out separate procedures to be f o l l o w e d i n p r o c e s s i n g a p p l i c a t i o n s f o r " p e r m i t t e d " and " c o n d i t i o n a l " uses, and these s h a l l be e x p l o r e d f u r t h e r i n the next s e c t i o n of t h i s essay. S e c t i o n 128 of the Act d i f f e r e n t i a t e d between the two types of uses by c o n f e r r i n g c e r t a i n r i g h t s of appeal from d e c i s i o n s r e l a t i n g to " c o n d i t i o n a l " uses but not " p e r m i t t e d " uses. T h i s aspect w i l l be e x p l a i n e d under the s e c t i o n "Appeals". We can now see t h a t the Development O f f i c e r ' s r o l e i s m i n i s t e r i a l because h i s d e c i s i o n power i s r e s t r i c t e d to " p e r m i t t e d " uses. By the By-law (S 16, 2a) he must " r e f e r to the M u n i c i p a l Planning Commission f o r d e c i s i o n , together with recommendations, i f any, a p p l i c a t i o n s i n r e s p e c t of 1. c o n d i t i o n a l l y permitted uses. . . . " The r o l e of the M u n i c i p a l Planning Commission i s thus a d m i n i s t r a t i v e or q u a s i -j u d i c i a l . The r o l e of the Appeal Board from d e c i s i o n s of the M u n i c i p a l P l a n n i n g Commission i s probably best c h a r a c t e r i z e d as 154 g u a s i - j u d i c i a l although i t i s much c l o s e r to j u d i c i a l than the Munic i p a l P l a n n i n g Commission. The r o l e of the Bed Deer C o u n c i l i s undoubtedly l e g i s l a t i v e , and we s h a l l see that t h i s f u n c t i o n i plays a perhaps unduly l a r g e p a r t i n p r o c e s s i n g a p p l i c a t i o n s f o r development of Planned U n i t Developments w i t h i n the landbank. Each case i s con s i d e r e d on i t s merits r a t h e r than g e n e r a l g u i d e l i n e s being s e t . PBOCESSING DEVELOPMENT APPLICATIONS. Let us c o n s i d e r the process whereby new PDDs are developed w i t h i n the p u b l i c landbank i n Bed Deer. I t i s o u t l i n e d by Denis Cole as f o l l o w s . One can see th a t the process i s dominantly one o f " s i t e plan review" r a t h e r than the a d m i n i s t r a t i o n of zoning r e g u l a t i o n s . "Now t h a t the areas to be served were e s t a b l i s h e d , the order o f development determined t o a l a r g e extent and the f a c t t h a t the c i t y e i t h e r owns or hold under o p t i o n s t r a t e g i c a l l y - s i t u a t e d lands i n r e l a t i o n to f u t u r e development, the process of development i n each area f o l l o w s t h i s a p p r o p r i a t e p a t t e r n : 1. One to f i v e years i n advance of the need, the c i t y a c q u i r e s land or o p t i o n s on land. 2. s u b d i v i s i o n i s designed by d i s t r i c t planning s t a f f based on engineer's p r e l i m i n a r y design f o r trunk s e r v i c e s f o r 40,000 p o p u l a t i o n and e x i s t i n g contour maps and photographs. 3. Design i s forwarded to c o n s u l t i n g engineers f o r comment, checking and suggested r e v i s i o n s . 4. S u b d i v i s i o n designs completed and submitted to C i t y Engineer and C o u n c i l f o r app r o v a l . 5. Survey c o n t r a c t e d out and engineers prepare d e t a i l e d designs and esti m a t e s of a l l s e r v i c e s , ready f o r c a l l i n g t e n d e r s . 6. Tenders r e c e i v e d f o r work, u s u a l l y from 10 to 18 c o n t r a c t o r s , and c o n t r a c t s awarded. 155 7. S u p e r v i s i o n of c o n s u l t i n g engineers under o v e r a l l d i r e c t i o n o f C i t y Engineer. 8. S e r v i c e d l o t s made a v a i l a b l e t o i n d i v i d u a l s f o r one day on f i r s t - c o m e , f i r s t - s e r v e d b a s i s . 9. Balance of l o t s made a v a i l a b l e to h o u s e - b u i l d i n g c o n t r a c t o r s . 1 , 7 156 LANDBANK DECISIONSi FLOW CHART. 1. Inventory Phase» Regional Planning Commission coordinates planning studies. City Engineer and Consultants Plan services pattern. City Lands Department estimates demand for lots. 2. Design Phasei Five years from development target the Regional Planning Commission begins i n i t i a l design. City Engineer and Consultants modify the design. City Council approves in principle. The design i s sent to CM.H.C, School Board, Parks Board, and major u t i l i t y companies for comment. Final design approved by Council. Survey Department prepares subdivision plan. / Options. Manages Raw land Inventory. City Lands Departmenti Negotiates Acquisition. Signs Agreements for Sale City Council* Approves Policy in Principle. Passes Acquisition by-law. p. Development Phasei Regional Planning City Lands Department sets sales date and call s for servicing tenders. Commission and City Development Officer prepare new zoning plan and subdivision Calculates l o t selling prices. Sets Sale date. approval application. Conducts draw for lots. City Council approves rezoning, servicing costs, street names, and sales policy. Inspects lotsonce a month to enforce sale conditions. 157 ZONING AMENDMENTS. When t h i s process of s i t e plan review i s complete the zoning c l a s s i f i c a t i o n s are superimposed on the f i n a l p l a ns. That i s , s m a l l areas w i t h i n the s i t e plan are given an a p p r o p r i a t e zoning d e s i g n a t i o n . T h i s r e s u l t s i n a patch-work of small area zones. The o f f i c i a l zoning maps are then taken to C i t y C o u n c i l f o r amendment. C o u n c i l passes a by-law to amend zoning By-law #2011 by making the new zoning map o f f i c i a l . That i s , the amendment r e f e r s to a zoning map change and i s of the form below. I BYLAW NO. 2011/5Z ******************* IBeing a Bylaw to amend bylaw No. 2011 as amended, being the |Zoning Bylaw of the C i t y of Red Deer. I |COUNCIL FOR THE CITY OF RED DEER ENACTS THE FOLLOWING: I |The Zoning Map as d e f i n e d i n S e c t i o n 2(3) (cc) and the J r e s i d e n t i a l subzone map r e f e r r e d to i n S e c t i o n 5 (5) and the (Trunk Road Map r e f e r r e d to i n S e c t i o n 2, s u b s e c t i o n (1) are jhereby amended i n accordance with Zoning Map A154 and signed |by the Mayor and C i t y C l a r k and impressed with the Corporate j s e a l of the C i t y of Red Deer. | i '. '. j As a method of f o r m a l i z i n g an i n f o r m a l process which has s e r v e d Red Deer w e l l , t h i s has the v i r t u e of s i m p l i c i t y . As a model f o r PUD landbanking i n other communities, i t seems to have some f a u l t s : 158 1. The r e l a t i o n s h i p between d i f f e r e n t uses, d i f f e r e n t zones on the one s i t e i s not put i n t o words. Such t h i n g s as " d e n s i t y t r a n s f e r s " are assumed r a t h e r than expounded. 2. The e x t e r n a l r i g i d i t y of d e t a i l e d zoning masks the wide f l e x i b i l i t y i n the i n f o r m a l systems of the a c t u a l d e c i s i o n making process. 3. Since the i n f o r m a l system depends on p o l i c y formation w i t h i n the p u b l i c agencies f o r guidance, there i s l i t t l e o v e r t i n d i c a t i o n to a p r i v a t e developer as to what i s an acceptable r e z o n i n g and what i s not. DEVELOPMENT PERMITS. The Development Permit i s the b a s i c instrument p r e s c r i b e d by the a l b e r t a P lanning act (S 122a) to a c g u i r e compliance with zoning r e g u l a t i o n s . I t i s not n e c e s s a r i l y the same as the b u i l d i n g permit, which g e n e r a l l y i s concerned with the m a t e r i a l s and c o n s t r u c t i o n plans of a b u i l d i n g . A u t h o r i t y to enact by-laws r e l a t i n g to b u i l d i n g permits i s c o n f e r r e d by s e c t i o n 289 of the Mu n i c i p a l Government Act, S.A. 1968, C 68. Nev e r t h e l e s s , the A l b e r t a P l a n n i n g Act does permit a m u n i c i p a l i t y to combine i t s zoning and b u i l d i n g r e g u l a t i o n s i n one by-law (S 121,2). ' REGIONAL PLANNING INPUT. The P l a n n i n g Act p r o v i d e s f o r the establishment of Regional Planning Commissions. {S 9 ) . The Red Deer R e g i o n a l 159 Planning Commission p l a y s an important part i n the PUD landbank developments. I t s i n p u t i s t h r e e f o l d : 1. I t i s the plan n i n g a u t h o r i t y f o r Red Deer C i t y . That i s , i t conducts planning s t u d i e s and suggests p o l i c y to the C i t y . In p a r t i c u l a r , i t does the economic, market and demographic p r o j e c t i o n s that guide the sequence of PUD developments. I t a l s o does the s i t e plan design f o r each i n d i v i d u a l PUD. 2. The A l b e r t a Planning Act (S 79, S 91) r e q u i r e s the zoning by-laws of each m u n i c i p a l i t y w i t h i n the r e g i o n to conform to any (pr e l i m i n a r y ) r e g i o n a l plan prepared by the Regional Planning Commission. T h i s i s to ensure t h a t adjacent m u n i c i p a l i t i e s do not e x e r c i s e t h e i r zoning power i n i s o l a t i o n and t o the detriment of neighbouring m u n i c i p a l i t i e s . T h i s i s not p r e s e n t l y a problem i n Red Deer. P r i o r to 1947 North Red Deer was a se p a r a t e m u n i c i p a l i t y but i s now part of a u n i t a r y Red Deer C i t y . 3. The Regional Planning Commission i s the s u b d i v i s i o n approval a u t h o r i t y . (S 19.2b A l b e r t a Planning Act.) The Regional Planning Commission undertakes t h i s f u n c t i o n on beh a l f of a l l the s m a l l communities w i t h i n i t s j u r i s d i c t i o n . Because of the amicable r e l a t i o n s h i p with the c i t y a d m i n i s t r a t i o n t h i s d i v i s i o n of a u t h o r i t y does not seem to have been d i s r u p t i v e . Nevertheless i t i s a r c h a i c t o separate s u b d i v i s i o n c o n t r o l from zoning c o n t r o l . "Any planner who has worked with l a r g e complex development p r o j e c t s soon r e a l i z e s the b a s i c s i l l i n e s s of our t r a d i t i o n a l method of s e p a r a t i n g our development c o n t r o l s 160 so that some appear i n zoning ordinances and some i n land s u b d i v i s i o n r e g u l a t i o n s . I d e a l l y , a l l communities should have u n i f i e d development o r d i n a n c e s . " 8 Perhaps the most important f a c t o r c o n t r i b u t i n g to harmony between the Regional Planning Commission and the C i t y of Red Deer i s the s t r u c t u r e of f i n a n c i a l support of the Commission. The Commission i s not a t a x i n g a u t h o r i t y but i s supported by a P r o v i n c i a l fund to which a l l m u n i c i p a l i t i e s and the P r o v i n c i a l government c o n t r i b u t e . These c o n t r i b u t i o n s are compulsory whether the m u n i c i p a l i t y takes advantage of r e g i o n a l planning s e r v i c e s or not. Amendments to the A l b e r t a Planning Act i n 1971 e s t a b l i s h e d the present c o n t r i b u t i o n s formula: "The formula e s t a b l i s h e s a g l o b a l p r o v i n c i a l fund to which a l l m u n i c i p a l i t i e s , a c c o r d i n g to t h e i r p o p u l a t i o n , c o n t r i b u t e . Edmonton and Calgary ( i . e. the 'urban m u n i c i p a l i t i e s with over 100,000 population') c o n t r i b u t e only 0.05 m i l l s , as they have t h e i r own p l a n n i n g department. Other m u n i c i p a l i t e s c o n t r i b u t e on a s l i d i n g s c a l e from 0.10 m i l l s f o r r u r a l m u n i c i p a l i t i e s to 0.H5 m i l l s f o r an urban place with 20,000 to 100,000 p o p u l a t i o n . The P r o v i n c e c o n t r i b u t e s 1.5 of the t o t a l amount c o n t r i b u t e d by m u n i c i p a l i t i e s . " ZONING ADJUSTMENTS. There are many aspects of zoning i n Red Deer which t h i s chapter w i l l not c o n s i d e r because of t h e i r p e r i p h e r a l r e l e v a n c e to PUD landbank. For example, there i s the power of an a d m i n i s t r a t i v e agency to grant a v a r i a n c e which i s a delegated power. The a u t h o r i t y to grant v a r i a n c e s can be t r a c e d back to the Zoning e n a b l i n g l e g i s l a t i o n . But because of the unigue c h a r a c t e r i s t i c s o f l a n d c o n v e r s i o n i n Red Deer t h i s does not concern us. 161 As we have seen the formal a u t h o r i t y to proceed with a POD w i t h i n the landbank i s gi v e n by a zoning amendment. T h i s approval i s i n c o n t r a s t to a system which would e n t a i l only one amendment s e t t i n g out gen e r a l or s p e c i f i c g u i d e l i n e s f o r PUD development and d e l e g a t i n g a u t h o r i t y to the Development O f f i c e r or the M u n i c i p a l Planning Commission t o approve PODs w i t h i n these g u i d e l i n e s . There i s some doubt whether i t i s a p p r o p r i a t e f o r a C o u n c i l to approve each new PUD by a separate l e g i s l a t i v e A ct. In g e n e r a l l e g i s l a t i o n should s e t s p e c i f i c r u l e s r a t h e r than c o n s i d e r i n g i n d i v i d u a l cases on t h e i r m e r i t s . In favour of the system i s the f a c t t h a t some zoning change, from r u r a l A1 to r e s i d e n t i a l A1 f o r example, i s i n e v i t a b l e as part of the con v e r s i o n p r o c e s s ; and secondly the f a c t t h a t PUDs i n Red Deer are both l a r g e and few, en a b l i n g and demanding some p o l i t i c a l i n p u t . I t doesn't take too much of C o u n c i l time, and i n the absence of other avenues does p r o v i d e some c i t i z e n i n p u t i n t o the PUD design p r o c e s s . The steps i n v o l v e d i n the rezon i n g of property i n Red Deer are as f o l l o w s : 1. In some A l b e r t a communities the f i r s t step i s to submit a w r i t t e n a p p l i c a t i o n to the Regional Planning Ccmmission which examines the a p p l i c a t i o n and passes i t , . with recommendations, to the C i t y C o u n c i l . The a p p l i c a t i o n i s r e q u i r e d to d i s c l o s e i n t e r a l i a the type of zoning change r e q u i r e d and the grounds upon which the a p p l i c a t i o n i s made. In Red Deer the a p p l i c a t i o n s are submitted to the C i t y C l e r k and 162 C o u n c i l t h e r e a f t e r s o l i c i t s the w r i t t e n comments and recommendations of the C i t y Commissioner and the D i r e c t o r of the Regional Planning Commission. (By-law #2011, S 82.1) 2. The Planning Act of A l b e r t a p r o v i d e s that p r i o r to e i t h e r the f i r s t or second r e a d i n g o f the proposed by-law, n o t i c e of the proposed amendment and the time and place of a p u b l i c hearing must be p u b l i s h e d i n two i s s u e s of a newspaper c i r c u l a t i n g i n , the m u n i c i p a l i t y (S 130(2)). The by-law #2011 a l s o p r o v i d e s t h a t : "The Commissioner and the Planning D i r e c t o r may submit pr o p o s a l s f o r amendments to the By-law to be i n i t i a t e d by the C o u n c i l . " (S 82.2) It i s t h i s s u b s e c t i o n t h a t has provided the b a s i s f o r approval f o r Planned U n i t Developments w i t h i n the Red Deer landbank. ADMINISTRATIVE APPEALS AND JUDICIAL REVIEW. The zoning by-law i n Red Deer p r o v i d e s t h a t : "The d e c i s i o n of a C o u n c i l i n r e s p e c t of an a p p l i c a t i o n f o r an amendment to the By-law s h a l l be f i n a l and th e r e s h a l l be no appeal." (S 85) Of course, t h i s does not mean t h a t the by-law i s un c h a l l e n g a b l e . I t has been mentioned, f o r example, t h a t the amendment must be compatible with the Regional Plan, or p r e l i m i n a r y r e g i o n a l p l a n . I f i t was not, the zoning amendment by-law would l i k e l y be i n v a l i d (S 91). Laux adds to t h i s : "Aside from i s s u e s a r i s i n g out of procedures to be f o l l o w e d i n passing a zoning amendment, the most f r e g u e n t l y l i t i g a t e d p o i n t i s whether or not an amending by-law i s d i s c r i m i n a t o r y and t h e r e f o r e u l t r a _ v i r e s i The argument t h a t an amendment i s d i s c r i m i n a t o r y a r i s e s n a t u r a l l y out of the 163 f a c t t h a t a s m a l l p a r c e l o f property has been rezoned at the request o f the owner with a c o n s e q u e n t i a l b e n e f i t being c o n f e r r e d upon him. 1 , 9 However he p o i n t s out t h a t the mere f a c t t h at a zoning amendment s i n g l e s out and a f f e c t s but one s m a l l p a r c e l , thereby c r e a t i n g an i s l a n d of land use d i f f e r e n t from the surrounding area does not ip.so_facto render the amendment d i s c r i m i n a t o r y . Laux c i t e s s e v e r a l cases to s u b s t a n t i a t e t h i s p o s i t i o n . 1 0 "Spot Zoning" i s not the ogre i n Canada t h a t i t seems to be i n the U.S.A. In general the by-law i s c o n s i d e r e d to be i n accord with " n a t u r a l j u s t i c e " i f the i n t e r e s t of the community a t l a r g e i s served as w e l l as that of the i n d i v i d u a l seeking the amendment. DEVELOPMENT APPEAL BOARD. Se c t i o n 128(1) of the A l b e r t a Planning Act c o n f e r s upon "a person c l a i m i n g t o be a f f e c t e d by a d e c i s i o n of a development o f f i c e r or a mun i c i p a l planning commission" the r i g h t to appeal that d e c i s i o n t o the development appeal board o r , i n m u n i c i p a l i t i e s i n which no such board has been e s t a b l i s h e d , to the munici p a l c o u n c i l . The Red Deer Zoning By-law #2011 S 68.1 s t a t e s t h a t "there s h a l l be a Development Appeal Board" and s e t s out i n c o n s i d e r a b l e d e t a i l i t s composition and manner o f o p e r a t i o n . The d i s t i n c t i o n between "p e r m i t t e d " and " c o n d i t i o n a l " uses which was di s c u s s e d p r e v i o u s l y i n t h i s essay i s c r u c i a l i n t h i s context -an appeal i s allowed only on d e c i s i o n s r e l a t i n g t o " c o n d i t i o n a l " uses. S 69(a) of the by-law says: "A d e c i s i o n of the development o f f i c e r of mun i c i p a l planning commission made under the by-law may be appealed 164 to the Development Appeal Board (a) by a person c l a i m i n g t o be a f f e c t e d by the d e c i s i o n , except where approval has been given to a development i n an area under t h i s By-law and the proposed use complies with the p r o v i s i o n s of t h i s By-law r e l a t i n g to permissable uses, i n which case no appeal e x i s t s . " The u n d e r l y i n g a u t h o r i t y f o r t h i s s e c t i o n of the by-law i s S 128 (1a) of the e n a b l i n g A c t : "No appeal e x i s t s where a development permit i s i s s u e d i n an area under a zoning by-law and approved f o r the reason t h a t the proposed use complies "with the p r o v i s i o n s of the by-law r e l a t i n g t o permissable uses." T h i s i s a strange p r o v i s i o n . I t seems to mean t h a t the d e c i s i o n of the M u n i c i p a l Planning Commission to grant a development permit f o r a p r o j e c t which i t deems a "p e r m i t t e d " use i s s h e l t e r e d from appeal. I t i s d i f f i c u l t t o see why t h i s should be so. Such a d e c i s i o n i s not q u a l i t a t i v e l y d i f f e r e n t from other d e c i s i o n s which are s u b j e c t to a p p e a l . T h i s i s e s p e c i a l l y so because " p e r m i t t e d " uses i n c l u d e a broad range of uses which are deemed e s s e n t i a l l y " s i m i l a r " to those l i s t e d as "p e r m i t t e d " . S u r e l y i n t h i s case an appeal on the f a c t s i s a p p r o p r i a t e as the M u n i c i p a l P l a n n i n g Commission e x e r c i s e s c o n s i d e r a b l e d i s c r e t i o n as to what i s a " p e r m i t t e d " use and what i s not. I t i s arguable though that the d e c i s i o n c o u l d o n l y be reversed i f the d i s c r e t i o n was e x e r c i s e d i n a perverse f a s h i o n . 1 1 An a__eal_pn a p o i n t of law would be p o s s i b l e i f the Mu n i c i p a l Planning Commission had e x e r c i s e d i t s d i s c r e t i o n i n a i manner t h a t was u l t r a , v i r e s , that i s i n a manner o u t s i d e of the powers delegated to i t by the e n a b l i n g Act and the by-law. The by-law i s not s p e c i f i c as to the grounds s u f f i c i e n t f o r an appeal, nor does i t l i s t , the grounds on which the p r e v i o u s d e v i s i o n may be r e v e r s e d : " (S 76,3) In determining an appeal, the Appeal may confirm, r e v e r s e or vary the d e c i s i o n appealed 165 from and may impose such c o n d i t i o n s or l i m i t a t i o n s as i t c o n s i d e r s proper and d e s i r a b l e i n the circumstances and s h a l l render i t s d e c i s i o n i n w r i t i n g to the a p p e l l a n t w i t h i n 60 days from th e date upon which the a f o r e s a i d hearing i s h e l d . " N e v e r t h e l e s s , the appeals Board does not have a mandate to c o n s i d e r an a p p l i c a t i o n de_novo which would enable i t to s u b s t i t u t e i t s o p i n i o n f o r that of the development o f f i c e r or municipal p l a n n i n g commission i f i t s o p i n i o n d i f f e r e d . I t does not have any d i s c r e t i o n to waive any mandatory requirements and p r o h i b i t i o n s contained i n the zoning by-law. I t i s not i n t h i s case "a board of v a r i a n c e " , although the word "permanent" (use) l e a v e s a loophole that i t has on o c c a s i o n used to r u l e as i t sees f i t . ( A l b e r t a Planning Act 128(3)). "The Development appeal Board (a) s h a l l not allow the permanent use of land or a b u i l d i n g i n a manner not permitted by the zoning by-law on the zone i n which the b u i l d i n g or l a n d i s s i t u a t e d . " (By-law #2011, S 76,2). "The Appeal Board s h a l l not allow the permanent use of land or a b u i l d i n g i n a manner not p e r m i t t e d by the zoning by-law i n the zone i n which the b u i l d i n g or land i s s i t u a t e d . " The d e c i s i o n of the appeal body i s f i n a l and b i n d i n g on a l l p a r t i e s and persons save and except f o r a r i g h t of appeal to the A p p e l l a t e D i v i s i o n of the Supreme Court of A l b e r t a on a q u e s t i o n of law or j u r i s d i c t i o n (Section 76,5 By-law #2011; S e c t i o n 1*46 P l a n n i n g Act of A l b e r t a ) . T h i s s u b s e c t i o n (S 128,6) of the Planning Act does not p r e c l u d e j u d i c i a l review i n the a p p r o p r i a t e case by way of the p r e r o g a t i v e w r i t s or the e g u i t a b l e remedies of d e c l a r a t i o n and i n j u c t i o n . 1 2 166 JUDICIAL REVIEW OF THE ZONING PROCESS, The main j u d i c i a l remedies f o r a l a w f u l g r i e v a n c e a g a i n s t the o p e r a t i o n of the zoning by-law are the p r e r o g a t i v e writ of c e r t i o r a r i x an order of mandamus and d e c l a r a t i o n _ a n d i n j u n c t i o n . . D i f f e r e n t stages of a p p l i c a t i o n procedure f o r a development permit are s u b j e c t to review by d i f f e r e n t methods. For example, a writ o f c e r t i o r a r i i s a v a i l a b l e only a g a i n s t a t r i b u n a l which e x e r c i s e s a j u d i c i a l or g u a s i - j u d i c i a l f u n c t i o n . 1 3 As we have decided t h a t the Development O f f i c e r e x e r c i s e s only a " m i n i s t e r i a l " f u n c t i o n , h i s d e c i s i o n would not be s u b j e c t to review on c e r t i o r a r i although d e c i s i o n s of the municipal planning commission and the development appeal board have both been h e l d amenable to c e r t i o r a r i ^ 1 4 For t h i s reason we s h a l l c o n c e n t r a t e on mandamus which i s not dependent upon a c h a r a c t e r i z a t i o n of the nature of the power of the t r i b u n a l . T h i s remedy w i l l not compel an a d m i n i s t r a t i v e t r i b u n a l to e x e r c i s e a d i s c r e t i o n i n a c e r t a i n way, but w i l l compel the t r i b u n a l t o e x e r c i s e i t s d i s c r e t i o n where i t has refused to do so or where i t has e x e r c i s e d i t s d i s c r e t i o n i n an u l t r a v i r e s f a s h i o n . In Red Deer a Mandamus might be i s s u e d f o r a development permit where the proposed use c l e a r l y f a l l s w i t h i n the types of uses l i s t e d as permitted i n a p a r t i c u l a r zone, provided that i t a l s o complies with the zoning by-law i n other r e s p e c t s . 1 S As we have seen, the Planning Act c o n f e r s a r i g h t of appeal to the A p p e l l a t e D i v i s i o n of the Supreme Court of A l b e r t a from a d e c i s i o n of the Development Appeal Board, and the ( 167 e x i s t e n c e of t h i s form of address may pre c l u d e the use of S_M aIS§i T n e l a t t e r i s pre-eminently a d i s c r e t i o n a r y remedy and the c o u r t w i l l d e c l i n e t o award i t i f another remedy i s e q u a l l y b e n e f i c i a l , convenient and e f f e c t i v e . The f o l l o w i n g p o i n t s a l s o c h a r a c t e r i z e a mandatory order: (2) The duty to be performed must be of a p u b l i c nature. (b) To be e n f o r c e a b l e by mandamus a p u b l i c duty does not n e c e s s a r i l y have to be one imposed by s t a t u t e . I t may be s u f f i c i e n t f o r the duty to have been imposed by c h a r t e r , common law, custom or even c o n t r a c t . (c) I f a t r i b u n a l or other a u t h o r i t y i s placed under a m i n i s t e r i a l duty to perform a s p e c i f i e d act when p r e s c r i b e d c o n d i t i o n s are s a t i s f i e d , mandamus w i l l i s s u e t c compel i t to perform t h a t a c t . ( t h i s p o i n t i s p a r t i c u l a r l y r e l v e a n t t o the h y p o t h e t i c a l case under study) (d) There i s a good d e a l o f j u d i c i a l support f o r the view that an a p p l i c a n t must e s t a b l i s h that he i s s p e c i a l l y g r i e v e d by the nonperformance of the duty or has an immediate i n t e r e s t i n i t s performance g r e a t e r than t h a t of members of the gener a l p u b l i c . (e) Mandamus cannot be d i r e c t e d to the Crown or to any s e r v a n t of the Crown simply a c t i n g i n h i s c a p a c i t y of ser v a n t . (f) The e x i s t e n c e of a r i g h t of appeal a g a i n s t a r e f u s a l to c a r r y out a duty has g e n e r a l l y been regarded as a f a t a l impediment to an a p p l i c a t i o n f o r mandamus. The procedures f o r a p p l y i n g f o r an order of mandamus are o u t l i n e d i n the Supreme Court Rules. I t i s a remedy addressed to s i t u a t i o n s i n which an a u t h o r i t y has neglected to perform i t s duty. I t i s not a p p l i c a b l e to a l l s i t u a t i o n s demanding remedy. For example, a body e x e r c i s i n g j u d i c i a l f u n c t i o n s i s r e g u i r e d t o observe two common law p r i n c i p a l s of n a t u r a l j u s t i c e , namely that an a d m i n i s t r a t o r be d i s i n t e r e s t e d 168 and unbiased jnemg judex,. i n _ c a u s a m sua} and that the p a r t i e s be given adeguate n o t i c e and o p p o r t u n i t y to be heard J a u d i _ a l t e r e m partem}. * 7 Lapses i n these r e s p e c t s are not amenable to mandamus^ but r a t h e r t o c e r t i o r a r i or the s t a t u t o r y appeal process. THE PUD APPROVAL PROCESS. The PUD landbank i n Red Deer operates through a simple r e - z o n i n g i n i t i a t e d by the Red Deer C o u n c i l f o r each major PUD. The zoning map i s amended to accomodate the new uses i n the area i n the c o n f i g u r a t i o n approved through the s u b d i v i s i o n a p p r o v a l a u t h o r i t y which i s the Re g i o n a l Planning Commission. The new subdivided l o t s with t h e i r new zoning d e s i g n a t i o n s are then s o l d to i n d i v i d u a l s and c o r p o r a t e b u i l d e r s who apply f o r development permits to undertake c o n s t r u c t i o n . T h i s system of developing PUDs has the v i r t u e of s i m p l i c i t y , but may have some f a u l t s . For example the amount of " c i t i z e n p a r t i c i p a t i o n " i n v o l v e d i s very l i m i t e d . The A l b e r t a Planning Act r e g u i r e s a p u b l i c hearing when a zoning amendment i s being contemplated; but when i t i s p u b l i c land being rezoned the hea r i n g tends to be a mere f o r m a l i t y . On the other hand the design of the new s u b d i v i s i o n i s very open to comment and c r i t i c i s m by a wide range of p u b l i c agencies f o r a long p e r i o d before i t i s f i n a l i s e d . The p u b l i c s c r u t i n y t h a t a p u b l i c agency i s s u b j e c t to a l s o adds t o the c i t i z e n i n p u t . N Another p o t e n t i a l problem i s t h a t the PUD i s presented to the C i t y C o u n c i l as a patchwork of s m a l l zones. The uses and 169 d e n s i t i e s a l l o w a b l e i n each zone are f i x e d i n g e n e r a l r e g u l a t i o n s . T h i s has two f l a w s : the r e l a t i o n s h i p between the zones i s not a r t i c u l a t e d , and the f l e x i b i l i t y i n h e r e n t i n POD design may be p a r t i a l l y s t i f l e d . One of the a t t r a c t i o n s of PUD i s t h a t the l a r g e s c a l e of p l a n n i n g allows the p r o v i s i o n of l a r g e areas of open space through d e n s i t y t r a n s f e r - that i s d e n s i t i e s are c a l c u l a t e d over the whole area o f the PUD r a t h e r than i n s m a l l i n t e r n a l zones. So some micro-areas might have d e n s i t i e s higher than i s otherwise allowed i n the by-law, t h i s being compensated by adj a c e n t areas being l e f t t o t a l l y open. Streams and other areas with n a t u r a l amenity value can thus be l e f t i n v i o l a t e without economic l o s s to the developer of the PUD. T h i s p o s s i b i l i t y i s defe a t e d by breaking the PUD i n t o a jumble o f s m a l l zones. I t i s a l s o p o s s i b l e i n the absence of a land-use c o n t r a c t committing a Home Owners* A s s o c i a t i o n to some maintenance of the open space i n the PUD that t h i s open space w i l l e i t h e r d e t e r i o r a t e or be a burden on the C i t y i n terms of maintenance. SOHE ALTERNATIVES. One p o s s i b i l i t y i s that Planned Unit Development as a " c o n d i t i o n a l use" could remedy the problems mentioned above. C o n d i t i o n s r e l a t i n g to Planned Unit Development co u l d be l i s t e d i n a s p e c i a l s e c t i o n , and PUD c o u l d be l i s t e d as a c o n d t i o n a l use i n r e s i d e n t i a l zones. T h i s would be an e f f e c t i v e v a r i a n t of the " f l o a t i n g zone" technique. "The f l o a t i n g zone has been f a v o u r a b l y compared to a s p e c i a l permit procedure, because the power of the governmental body to approve the f l o a t i n g zone i s not ] 170 u n f e t t e r e d . " * * Another technique t h a t may be p o s s i b l e i n Red Deer i s to designate a l l of the area contiguous with but o u t s i d e the urban f r i n g e as POD zone. T h i s zone would have i t s own permitted and c o n d i t i o n a l uses. A lower l i m i t o f , say, 60-100 a c r e s c o u l d be s e t on the s i z e of PUDs allowed. T h i s i s only p o s s i b l e i n Red Deer because a l l f r i n g e development f o r many years has been by POD and consequently the l i n e between urban and non-urban remains sharp and d i s t i n c t . In most urban f r i n g e s i t would be i m p o s s i b l e to designate such a zone because of fragmentary sprawl. An important p o i n t i s t h a t the POD a p p r o v a l process would thus become part of the a d m i n i s t r a t i v e machinery with p r o v i s i o n s f o r appeal r a t h e r than depending on a s e r i e s of d i s c r e t e l e g i s l a t i v e a c t s . A t h i r d p o s s i b i l i t y i s the use of "development c o n t r o l " r a t h e r than zoning: "When development c o n t r o l was i n t r o d u c e d i n England i n 1947 i t was designed to be of a permanent nature. In c o n t r a s t , when i n t r o d u c e d i n t o A l b e r t a i t was c l e a r l y envisaged as an i n t e r i m measure capable of being used by a municipal C o u n c i l r e s o l v e d to prepare a g e n e r a l plan and when such a p l a n was adopted by C o u n c i l , a t which time the g e n e r a l plan would be implemented through standard zoning t e c h n i q u e s . " 1 9 S e c t i o n 98 (a) of the A l b e r t a Planning Act a u t h o r i z e s c o u n c i l to e x e r c i s e development c o n t r o l over a l l or any part of the land covered by the g e n e r a l p l a n , "at any time" a f t e r adopting the g e n e r a l plan. Laux says that such a c t i o n appears p o s s i b l e only a f t e r an a p p l i c a t i o n i s made to and approved by the M i n i s t e r , a t which time the M i n i s t e r ' s order must a u t h o r i z e 171 the r e p e a l of the zoning by-law. Laux goes on to argue that the Planning Act i s i n f a c t f l e x i b l e enough to e x e r c i s e development c o n t r o l over s e l e c t e d areas of i t s t e r r i t o r y and r e t a i n i t s e x i s t i n g zoning f o r the remainder. 2° Development c o n t r o l by-laws do not c r e a t e land use c a t e g o r i e s and p r e s c r i b e use and manners of use permitted and p r o h i b i t e d i n each. The Planning Act says: " (S 100,2) C o n t r o l s h a l l be e x e r c i s e d over development on the b a s i s of each i n d i v i d u a l a p p l i c a t i o n f o r permission to c a r r y out development, having regard to the proposed development conforming with the g e n e r a l plan being prepared or as adopted." So the t o o l of "development c o n t r o l " i s c e r t a i n l y f l e x i b l e enough to f a c i l i t a t e PUD development; and the r e l a t e d system of appeal and review, and p u b l i c h e a r i n g s , although d i f f e r e n t from those p e r t a i n i n g to Zoning are w e l l a r t i c u l a t e d i n the Pla n n i n g A c t . A f i n a l p o s s i b i l i t y i s the Land Use C o n t r a c t . " C o n t r a c t zoning" i s a method of development r e g u l a t i o n which may be very s u i t a b l e i n r e g u l a t i n g PUD dvelopment. I t i s a t o o l t h a t has r e c e i v e d much a t t e n t i o n i n Canada i n recent years. " S i t e p l a n n i n g or ' c o n t r a c t zoning* may be d e f i n e d as the a p p l i c a t i o n of the r e g u l a t o r y process t o the use of a p a r t i c u l a r p a r c e l o f land expressed i n the form of d e t a i l e d plans which have been determined by n e g o t i a t i o n between the m u n i c i p a l i t y and the d e v e l o p e r . " 2 1 In g e n e r a l a rezoning i s e f f e c t e d on c o n d i t i o n t h a t the a p p l i c a n t r e s t r i c t the use of the property to that o u t l i n e d i n h i s amendment a p p l i c a t i o n . The c o n d i t i o n i s enforced by r e q u i r i n g the a p p l i c a n t to enter i n t o a c o n t r a c t with the 172 m u n i c i p a l i t y . T h i s c o n t r a c t becomes a covenant running with the lan d (see S 143 of the Planning A c t ) . The scope of a p l a n n i n g agency's a u t h o r i t y to impose c o n d i t i o n s p r i o r to i s s u i n g permits i s a complex guestion beyond the scope of t h i s t h e s i s . 2 2 AN EXAMPLE SUBDIVISION: WEST PARK EXTENSION 1973. T h i s chapter has so f a r surveyed the l e g a l ' and i n s t i t u t i o n a l s t r u c t u r e w i t h i n which the Red Deer landbank has operated. The most re c e n t s u b d i v i s i o n i s the West Park e x t e n s i o n Stage 2. I t may make the f o r e g o i n g d i s c u s s i o n c l e a r e r i f we o u t l i n e the s p e c i f i c processes i n v o l v e d i n t h i s p a r t i c u l a r s u b d i v i s i o n . The area was annexed to the C i t y of Red Deer i n 1957. ANNEXATION. As the C i t y of Red Deer has expanded, i t has annexed the f r i n g e areas p r i o r t o extending the network of C i t y s e r v i c e s to them. Some of these f r i n g e areas have been a s i g n i f i c a n t d r a i n on C i t y funds i n upgrading the e x i s t i n g inadeguate f a c i l i t i e s . N evertheless the problem of jumbled j u r i s d i c t i o n s i s \ thus avoided. T h i s i s c r u c i a l to the planning f o r a r a t i o n a l and e f f i c i e n t e x t e n s i o n of s e r v i c e . , The f i r s t annexation of land i n Red Deer took p l a c e i n 1911 when two g u a r t e r s e c t i o n s of l a n d to the east became part of the Town of Red Deer. The second annexation of land by the C i t y took place i n 1945 i n the south, south-east and south-west d i r e c t i o n s . The area north of the Red Deer River known as the 173 V i l l a g e o f Reel Deer, which had been growing a t the same pace as the C i t y of Red Deer, was annexed by the C i t y i n 1948. The General Plan i n d i c a t e s t h a t i n 1958 about one t h i r d of a q u a r t e r s e c t i o n east o f the C i t y was annexed. In the same year there was a g e n e r a l expansion i n a l l d i r e c t i o n s , and except f o r minor annexations s i n c e then, the e x i s t i n g boundary was e s t a b l i s h e d . //I I I § i M U I U I H U I I U M H I U n i U U U j M U I i y i n n i H I I H I I I I I I I I I I I I U I H l l l l i m i l IIMUMII IIIII t i l m i n i III II • I r| 11.1,1,(. I |IU,I III11 ti m ri III 1111 • I i m f s . I • ;/ nix 1966 } •' 1 I 1 n i i u i i i i i i i u i i i i i i i i i i i i i i i i i M i i i i i i i m i M n i i i i i i i u i i i i i i i i i i i i i u i i i i u m i i i i i i i i J i i i i i i i i i i i n m i i i i i i m i i i i H i i i M 3 FIGURE 12. Annexation Map. 1967 /?" * J 1973 \ ill • 175 ACQUISITION. West Park i s on the south-west extre m i t y of the c i t y . The r e s i d e n t i a l areas i n t h i s p a r t of the c i t y are g e n e r a l l y middle-income. I t was one of the e a r l i e s t s u b d i v i s i o n s developed within the landbank. I t was completed i n 1959. Four years l a t e r i n 1963 the C i t y of Red Deer a c g u i r e d the main s e c t i o n of the Banting farm immediately to the south. T h i s land became the West Park e x t e n s i o n i n 1972-73. I t i s an i n t e r e s t i n g a c g u i s i t i o n because i t i s t y p i c a l of the landbank. Approximately 160 a c r e s were a c g u i r e d at $1000 per a c r e . T h i s amount was to by paid over three years. There was no i n t e r e s t charge on the d i m i s h i n g p r i n c i p a l . Banting r e t a i n e d the use of 12 a c r e s , c o n t a i n i n g h i s house, f o r the remainder of h i s l i f e . T h i s land w i l l r e v e r t to the C i t y on h i s death. Banting was allowed t o continue farming with the s t i p u l a t i o n t h a t 50 acres per year would be sown to grass u n t i l the whole p r o p e r t y was under hay. One t h i r d of the crop each year went as r e n t a l to the c i t y . The C i t y gave t h i s t h i r d share as a donation t o the adjacent s c h o o l . In 1969 the whole area was under hay, and t h i s was the l a s t year a crop was gathered. One p o i n t worth n o t i n g i s that the C i t y of Red Deer has never used i t s power of e x p r o p r i a t i o n to a c g u i r e land f o r r e s i d e n t i a l development. Three f a c t o r s are important here: 176 1. A farmer h o l d i n g land on the f r i n g e of the C i t y might be i n c l i n e d to f e e l some c i v i c p r i d e and to d e a l reasonably with the C i t y because of i t s good r e p u t a t i o n i n land development. 2. Wore im p o r t a n t l y , n e g o t i a t i o n s are conducted before trunk sewer and water mains are l a i d so t h a t some o p t i o n s are kept open i n regard t o the d i r e c t i o n of urban expansion. T h i s prevents a r t i f i c i a l monopoly s i t u a t i o n s d e v e l o p i n g . 3. Ex t e n s i v e use i s made of long-term o p t i o n s to buy. I f t h i s i s not p o s s i b l e then payments are spread over as many years as p o s s i b l e . Farmers are o f t e n happy to r e c e i v e annual payments over a long p e r i o d r a t h e r than a lump sum because of c a p i t a l g a i n s tax p r o v i s i o n s . T h i s can be an a t t r a c t i v e package f o r the farmer i f he i s able t o continue to farm the land u n t i l the l a s t p o s s i b l e moment. The i n t e r i m r e n t a l from t h i s continued farming a l s o c o n t r i b u t e s to o f f s e t t i n g the C i t y ' s h o l d i n g c o s t s , In g e n e r a l the a c q u i s i t i o n procedures i n Red Deer are as f o l l o w s : 1. The property i n quest i o n must be r e l a t e d i n t e g r a l l y to a c h i e v i n g the master p l a n . 2. A d e c i s i o n to go forward i s made by a l l a f f e c t e d e x e c u t i v e s i n c o n s u l t a t i o n : Planning Commissioner, C i t y Engineer, Lands A d m i n i s t r a t o r , and T r e a s u r e r ; and approved by C i t y C o u n c i l . . 3. The necessary a p p r a i s a l s are made by one or more p r o p e r l y g u a l i f i e d a p p r a i s e r s . U. The n e g o t i a t i n g o ' f f i c e r c o n t a c t s the key property owner 177 i n v o l v e d r e q u e s t i n g t h a t he inform the C i t y of the land's a v a i l a b i l i t y and asking terms f o r conveyance. ("Key p r o p e r t y " r e f e r s g e n e r a l l y to the l a r g e s t p a r c e l or the one t h a t i s the most s t r a t e g i c a l l y s i t u a t e d i n terms of the n e c e s s i t y f o r i t s a c q u i s i t i o n or the one whose p r i c e would l i k e l y s e t the c o s t l e v e l f o r the remainder of the a r e a ) . 5. Contacts are s o l e l y with the owners of property or t h e i r d esignated r e p r e s e n t a t i v e s ( e i t h e r a t t o r n e y s or brokers) and the l a t t e r s h a l l i n no case be d e a l t with except a f t e r they have produced a l e t t e r of a u t h o r i s a t i o n from the owner. The C i t y employs no brokers. 6. N e g o t i a t i o n s are p r e l i m i n a r y i n nature. The C i t y ' s a p p r a i s a l i s not d i v u l g e d . The C i t y Commissioners are kept informed throughout, and wherever p o s s i b l e the p r o s p e c t i v e s e l l e r s s h a l l be asked to submit or c o n f i r m o f f e r s i n w r i t i n g . 7. During the course of n e g o t i a t i o n s , or p r i o r to i t i f c o n s i d e r e d a p p r o p r i a t e , the Land a d m i n i s t r a t o r w i l l send a message to C i t y C o u n c i l s e e k i n g a u t h o r i z a t i o n f o r the a c q u i s i t i o n . T h i s message i n c o r p o r a t e s h i s f i n d i n g s and i n d i c a t e s the purpose and importance of the proposed a c q u i s i t i o n . Wherever p o s s i b l e , a u t h o r i s a t i o n i s requested f o r an o v e r a l l area d e s c r i b e d by i t s outer boundaries, with some i n d i c a t i o n of the c r i t e r i a to govern a c g u i s i t i o n of i n d i v i d u a l p r o p e r t i e s . In g e n e r a l the a c q u i s i t i o n of s m a l l p r o p e r t i e s t h a t c o n t a i n d w e l l i n g s i s avoided. 8. Where a p p r o p r i a t e the Land a u t h o r i s a t i o n from C o u n c i l to F e d e r a l a i d . 9. a f t e r s u c c e s s f u l n e g o t i a t i o n s , ^he Land a d m i n i s t r a t o r recommends s p e c i f i c terms of a c q u i s i t i o n t o C o u n c i l and on o b t a i n i n g the necessary by-law c o n t r a c t s a c q u i s i t i o n i n accordance with the n e g o t i a t e d terms. A d m i n i s t r a t o r may seek apply f o r P r o v i n c i a l or SUBDIVISION DESIGN. Each s u b d i v i s i o n i n designed as a u n i t . The area of been approximately 160 acres. the Bed Deer landbank has been each s u b d i v i s i o n has commonly I t i s necessary to d i s t i n g u i s h 178 between design and development i n t h i s r e s p e c t . T h i s design f o r a complete s u b d i v i s i o n over a comparatively l a r g e area i s completed a t the f i r s t stage, and the whole area t r e a t e d as a s i n g l e planned u n i t . On the other hand s e r v i c i n g of the area w i l l l i k e l y proceed i n c r e m e n t a l l y over a number of years depending on housing demand. ^ The beginning of the landbank marked an abrupt t r a n s i t i o n i n development design i n Bed Deer. The o l d e r nucleus of t h e C i t y i s on a r i g i d g r i d p a t t e r n . The f i r s t landbank s u b d i v i s i o n s were a modified g r i d which g r a d u a l l y developed i n t o a design that o f t e n u t i l i s e d c l u s t e r grouping of houses around c u l - d e - s a c s c a l l e d " c l o s e s " . Within the s u b d i v i s i o n land-uses r e l a t e c l o s e l y to each other, and development i s s e l f c o n tained i n r e s p e c t to elementary s c h o o l s , l o c a l parks and playgrounds, and l o c a l shopping needs. In her study of S p a t i a l .Diff g r e n t i a t ign^ among_Res Red Deer L i n d a Paul found t h a t r e s i d e n t s of the landbank n e i g h b o u r h o o d s were b e t t e r s a t i s i f i e d with t h e i r environment than were the r e s i d e n t s of d i s t r i c t s that pre-dated the landbank. The p o s i t i o n of house, driveway and garage on each l o t i s now r e g u l a t e d by the land s a l e agreement. T h i s i s mainly to ensure the e f f i c i e n t p r o v i s i o n of entrance breaks i n the curbs. A l l s t r e e t s have sidewalks and r o l l e d c o n c r e t e curbs. A l l telephone and e l e c t r i c a l w i r i n g i s underground. T h i s i s important to the v i s u a l impact of the s u b d i v i s i o n s . Recently some g e n e r a l r e s t r i c t i o n s on the type of housing i n each " c l o s e " have been i n t r o d u c e d . S t i p u l a t i o n s as to the bulk and s t y l e of 179 house i n a " c l o s e " ensure t h a t the houses r e l a t e harmoniously with one another. Consequently a l l i n c r e a s e i n l i v a b i l i t y . Each " c l o s e " has a c e n t r a l green space. The houses look out on to t h i s c i r c u l a r space which i s g e n e r a l l y f o r t y of f i f t y yards i n diameter. The present green spaces may be a l i t t l e l a r g e because they become a f a v o u r i t e p l a y i n g area f o r c h i l d r e n drawing them away from the more formal playgrounds, and the heavy use i n e v i t a b l y damages grass and bushes and d e t r a c t s from t h e i r v i s u a l a p p eal. Nevertheless i t i s an e x c e l l e n t design f o r f a m i l y r e s i d e n t i a l development. In g e n e r a l the s u b d i v i s i o n s are of a very high standard and the low l o t p r i c e s cannot be a t t r i b u t e d to lower standards of development. The maps and other data r e l a t i n g to West Park extension Stage 2 which are appended to t h i s chapter w i l l i l l u s t r a t e the s p e c i f i c a d m i n i s t r a t i v e process of s u b d i v i s i o n i n the Red Deer landbank. 180 TABLE TIME SEQUENCE OF DEVELOPMENTi WEST PARK EXTENSION 1 AND 2. Land acquisition 15 October 1963. 19681 In December discussions began with Central Mortgage and Housing Corporation with respect to West Park extension. 1969« Regional Planning Commission produces f i r s t tentative sketch layout and discusses i t with CMHC.(Jan.) City Engineer comments on sketch. Negotiations begun with Provincial Department of Highways respecting adjacent highway interchange.(May) City Council approves sketch in principle(Nov.) 19701 From May to December the Regional Planning Commission refines i t s tentative design in discussion with the City Engineer and CMHC. September 1970 to March 1971 City Council entertains a proposal from a private firm to undertake "low dividend" housing under a CMHC program. The application did not eventuate. November 1971 City Council debates planning guidelines for the area. 1972i In June the Regional Planning Commission produced the f i n a l design for Stage 1. On July 31 City Council appropriated $1^7000 for servicing Wallace and Waghom Closes in Stage 1. In October M lots were placed on sale and sold in one day. City Lands Department ask Regional Planning Commission to finalise design of Stage 2 and suggest that more semi-detached lots be provided in Stage 2. In November the Regional Planning Commission consults with the City Engineer, CMHC, and relevant u t i l i t y companies, and produces f i n a l design. On December k the City Council approves the f i n a l design providing for 218 single family units, 86 semi-detached units, and 5 walk-up appartment buildings of 60 suites. On December 11 the City Lands Department and the Regional Planning Commission agree on re-zoning necessary. 1973« On Janruary 15 City Council passes zoning amendment, Map A-133, 2011/4-Q, Rezoning of West Park Extension from RR to P1.P2, R1C,RID,R2A,R3B. In February the City Engineer completes the servicing plans for the area and tenders are called. On March 16 a subdivision application for Stage 2 i s sent to the Land Titles Office in Edmonton. In March the u t i l i t y companies consult with the Regional Planning Commission on easements. On March 29 the Street names are passed by City Council. On April 5 CMHC indicates f i n a l approval of the selling prices/lending values in Stage 2. In May construction of services begins. The Regional Planning Commission sends f i n a l linen tracing of pland to City Lands Department. On July 5 the Subdivision Plan i s registered. On September 10 City Council approves the Land Sales Agreement to be used in selling lots. In November construction of services i s completed. In 1973 single family lots sold number 218 and semi-detached 43. 197^1 On March h the appartment site i s sold for $68,90^. FIGURE 13. Red Deer Street Pattern 1973. 182 FIGURE lo-west Park Extension. Z O N I N G M A P £ $ O E. S C A L E : IN F E E T *oo O H - 0 0 S O O I zoo Prepared by R.D.D.P.C. \ R 2 _ Residentia l -Genera l _ ^ _ ( S u b - d i s t A , B or C) P 3 . _ P a r k s . ._ ' _ . R e c r e a t i o n a l A l A g r i c u l t u r a l . _ „ F a r m t n g 14 . I n d u s m a l Rai lway HK I'.'.'j'ior ve . . . . ..Future Res ident ia l PP1... .......Public S Quas i —pub l i c . . . . .Schools a C o l l e g e s S H E E T Table 2 LAND AND IMPROVEMENT CHARGESi WEST PARK EXTENSION STAGE 2. Type o f Improvement Charges 1. Water Main ( i n c l u d i n g f i r e p r o t e c t i o n ) 10.07 2. S a n i t a r y Sewer 5.0^ 3. Paved Roads 16.76 k. G r a v e l l e d Road ...... 5. G r a v e l l e d Lane 3.56 6. M o n o l i t h i c sidewalk, curb and g u t t e r 9 . ^ 7. R e s i d e n t i a l S t r e e t L i g h t i n g on s t e e l p o l e s s u p p l i e d by underground w i r i n g . 1 . 8 0 8. Trunk Storm Sewer *f.20 9. Trunk S a n i t a r y Sewer 2.40 10. Major Thoroughfare 5.73 11. Storm Drainage 8.75 12. Underground Power 3.00 TOTAL IMPROVEMENT CHARGE PER ASSESSABLE FOOT 70,75 Land Charge p e r a s s e s s a b l e f r o n t f o o t 14.25 TOTAL CHARGE PER ASSESSABLE FOOT ^ $85.00 The appartment S i t e L o t ^5, Block 31, P l a n 2886 T.R. has the f o l l o w i n g a s s e s s a b l e f r o n t f o o t charge -Improvements $70.75, Land $*+5.25, TOTALt $116 Passed a t C i t y C o u n c i l Meeting J u l y 3 1973. 185 186 FOOTNOTES. 1. Peter C o l l i n s and Robin Woodworth. The L e g a l _ C o n t r o l of Canadian^ Urban_Environments H c G i l l U n i v e r s i t y School of A r c h i t e c t u r e , August 1972, p. v 2. Frank S. So, David P. Hosena and Frank S. Bango. Planned Un i t Development Ordinances. A.S.P.O. May 1973. 3. G. S t e r n l i e b ( e t . a l . ) P U D _ T h e o r e t i c a l ^ O r i g i n s _ a n d Evolutionary,. Frame work. t CPL Exchange " b i b l i o g r a p h y "#256, 1973."" 4. R. M. Dawson. The Government_of_Canada^ 3rd. ed. U n i v e r s i t y of Toronto Press. 195*4. P. 109. 5. F o r s t v Toronto (1923) 5*4 O.L.R. 256 a t 275; Murphy v Toronto (1918) 41 O.L.R. 156 at 176; H a l l v Moose Jaw (1910) 12 W.L.R. 693, 3 Sask. L.R. 22; Re. By-law #92, Winnipeg Beach (1919) 3 W.W.R. 696, 30 Man. R. 192, 50 D.L.R. 712 (C.A.) 6. DeSmith, J u d i c i a l R e y i e w _ o f _ A d m i n i s t r a t i v e _ A c t i o n London, 1959, p29. 7. Denis Cole. "The C i t y of Red Deer", Habitat^, 1963, p. 8. So, Mosena and Bango Op. C i t . p. 110. See a l s o F. H. B a i r J r . §pecial_Public I n t e r e s t D i s t r i c t s : a Multipurpose Zoning,Pgyice. P l a n n i n g Advisory S e r v i c e Report #287, Chicago,~A.S.P.a / . 1973. 9. Laux, L.A. "Zoning Game, Pa r t 1 - A l b e r t a S t y l e . " 9, 10. See Napir v C i t y of Winnipeg (1962) 67 Man. R. 332 (Man. L. B.) ; and Township of Scarborough v Bonde (1959) S.C.R. 444. 11. Laux, p. 286. 12. Regina v Medical Appeal T r i b u n a l Ex Parte Glenore (1957) 1 Q.B. 57*4 (C.A.); c i t e d i n Laux, p. 290. 13. R. v E l e c t r i c i t y Commissioners (192*4) 1 K.B. 171 (C.A.) 1*4. M i t c h i e v M.D. of Rocky View (1968) 6*4 W.W.R. 178 (A l t a . S.C.); Re. Herron's Appeal (1959) 28 W.W.R. 36*4 ( A l t a . S.C.) 15. Rogers. Law-of Canadian M u n i c i p a l C o r p o r a t i o n s . 1959, p.p. 7*43-751 . 16. DeSmith, p. 561. 17. DeSmith, p. 135. 187 18. So, Mosena and Bango, p. 50. 19. Laux, F.A. "Zoning Game, Part 2: Development C o n t r o l . " 10, _I_e_t___aw___vi___ 1972, p. 9. 20. I b i d , p. 12. 21. Gerald M. A d l e r . La_§..£l§,D_il?g-I0,£.._^Bi,g,l§_ _§£_,¥§ B§__l_tion_ U n i v e r s i t y of Toronto Press, 1971. 22. See P o r t e r . i_n__U_e_Cont_acts_ U n i v e r s i t y of B r i t i s h Columbia. M.A. T h e s i s , 1973. 188 FINANCIAL HISTORY OF THE LANDBANK. The C i t y of Red Deer has operated i t s r e s i d e n t i a l landbank f o r approximately seventeen y e a r s . The primary aim of the program has been to p r o v i d e high q u a l i t y r e s i d e n t i a l development at minimum c o s t to the C i t y f o r s e r v i c e s . The assumption has been t h a t a l l o f t h e c o s t s of extending urban s e r v i c e s t o a new s u b d i v i s i o n would be paid by the new r e s i d e n t of t h a t s u b d i v i s i o n when he buys a r e s i d e n t i a l l o t . Within t h i s c o n s t r a i n t the C i t y has t r i e d to p r o v i d e new l o t s as cheaply as p o s s i b l e . So one would expect the C i t y to break even over a long period of time. Revenue should approximately equal expenditure. 189 The f a c t t h a t the Red Deer landbank has not made l a r g e p r o f i t s does not i n d i c a t e that i t has been an i n e f f i c i e n t o p e r a t i o n . The b e n e f i t to the l o t buyer i s t h a t he gains h i s urban l o t v i r t u a l l y at c o s t . The b e n e f i t to the c o r p o r a t e C i t y of Red Deer i s that, the s e r v i c i n g of new s u b d i v i s i o n s does not add to the debenture debt, and s e r v i c i n g c o s t s o v e r a l l may be l e s s because r e s i d e n t i a l expansion i s . s t a g e d i n a l o g i c a l e f f i c i e n t manner. The experience of "new towns" such as Columbia i n the U.S.A. and Letchworth i n England i n d i c a t e s that i n a comprehensive development l i k e the Red Deer landbank l a r g e p r o f i t s are to be made p r i m a r i l y i n the commercial development l i n k e d with r e s i d e n t i a l growth r a t h e r than i n the development of-r e s i d e n t i a l land i t s e l f . I f the Red Deer landbank had been seeking l a r g e p r o f i t s the optimum s t r a t e g y would probably have been to s e l l r e s i d e n t i a l l a n d , as they have, and l e a s e s i t e s f o r l o c a l and r e g i o n a l shopping c e n t e r s . As the C i t y has grown such land has become very v a l u a b l e , and a r e n t a l r e t u r n can be adjusted every few years to r e f l e c t t h i s r i s e i n the value of commercial space. But as we have s a i d the C i t y ' s goals were modest - to provide a good r e s i d e n t i a l environment f o r i t s c i t i z e n s a t lowest c o s t to them and to the C i t y . The f i n a n c i a l h i s t o r y of the landbank r e f l e c t s t h i s " n o n - p r o f i t " o r i e n t a t i o n . PROGRAM FINANCING. The major cost to the C i t y has been i n p r o v i d i n g working c a p i t a l to purchase raw land and to hold i t over c o n s i d e r a b l e p e r i o d s . In some cases t h i s was p a r t i a l l y o f f s e t by 190 an i n t e r i m r e t u r n from a g r i c u l t u r a l use. The " h o l d i n g c o s t " of working c a p i t a l was not charged to the s u b d i v i s i o n . I t was f e l t t hat the C i t y was not i n c u r r i n g expenditures t h a t i t would otherwise i n c u r , such as the c o s t of a r t e r i a l roads. In Red Deer these were p a i d f o r by the l o t purchaser i n a lump-sum. In other c i t i e s such c o s t s are borne by the C i t y C o r p o r a t i o n . So i t was thought reasonable i n Red Deer t h a t the C i t y should provide working c a p i t a l t o the landbank i n l i e u of such c o s t s . So the c o s t of c a p i t a l f o r h o l d i n g land i s not r e f l e c t e d i n the f i g u r e s which f o l l o w i n t h i s chapter. The l a r g e s t c a p i t a l e x p e n d i t u r e s i n a land c o n v e r s i o n program are i n the s e r v i c i n g c o s t s . For example i n a semi-detached 33' l o t i n West Park ext e n s i o n the land component of the s e l l i n g p r i c e was $165 (1963 p r i c e ) . The landbank s e l l i n g p r i c e i n 1973 was approximately $2800. The d i f f e r e n c e r e f l e c t s s e r v i c i n g c o s t s i n 1973 which are of course not under the c o n t r o l of the landbank and which do not vary as much from c i t y to c i t y as does the p r i c e of raw developable land. The main po i n t to be made i s t h a t the c o s t of holding land i n c u r r e d by the Red Deer landbank was much lower than t h e , c a p i t a l needed to s e r v i c e that land. T h i s i s m i t i g a t e d somewhat by the f a c t t h at the c a p i t a l used i n s e r v i c i n g i s i n the nature of a r e v o l v i n g fund t h a t t u r n s over very g u i c k l y . Funds t h a t are expended f o r s e r v i c e s are g e n e r a l l y recouped i n approximately s i x months through the s a l e of l o t s , n e v e r t h e l e s s from the s t a r t of s e r v i c i n g a s u b d i v i s i o n u n t i l the l o t s i n the s u b d i v i s i o n are s o l d t h e r e i s a p e r i o d of heavy investment i n the s e r v i c e s . In Red Deer s h o r t term borrowing was necessary during t h i s p e r i o d . 191 Bank loa n s were commonly taken out to provide the funds needed. The c o s t of these loans i s r e f l e c t e d i n the f i g u r e s r e l a t i n g to s e r v i c i n g i n t h i s chapter. Since 1948 the n a t i o n a l Housing Act has provided funds through C e n t r a l Mortgage and Housing C o r p o r a t i o n f o r munici p a l l a n d assembly. D n t i l r e c e n t l y these funds have been q u i t e l i m i t e d and hedged about with many r e s t r i c t i o n s on t h e i r use. Red Deer d i d not apply f o r a s s i s t a n c e under t h i s program. Nevertheless t h e r e was c l o s e c o n s u l t a t i o n with CM. H.C. on another matter: l e n d i n g v a l u e s . Since the Second World War most homes i n Canada have been purchased under N.H.A. loa n s . T y p i c a l l y a l o t th a t i s s e l l i n g f o r $8000 may have an N.H.A. approved lend i n g value of o n l y $5000. In Red Deer the s e l l i n g p r i c e of landbank l o t s was a l s o the N.H.A. l e n d i n g v a l u e . T h i s i s no s m a l l achievement. I t r e s u l t e d from a st r o n g e f f o r t by Red Deer C i t y and and the Regional P l a n n i n g Commission to c o n s u l t with the CM.H.C o f f i c e i n Red Deer at every stage of development on the cost s t r u c t u r e . There has been an on-going dialogue with CM.H.C. as to which s e r v i c e s and c o s t s c o u l d l e g i t i m a t e l y become part of the N.H.A. l e n d i n g v a l u e . There i s another f o r t u i t o u s b e n e f i t of t h i s c l o s e r e l a t i o n s h i p . There are a l i m i t e d number of house b u i l d e r s i n Red Deer. They buy the bulk of landbank l o t s . They are no doubt tempted to add something t o land component i n s e l l i n g a house t o an i n d i v i d u a l buyer. The f a c t t h at CM.H.C. would only g i v e a morthage r e f l e c t i n g the landbank s e l l i n g p r i c e of the l o t was an e f f e c t i v e check on b u i l d e r s padding land p r i c e s f o r r e s a l e . In recent years p r i v a t e banks i n Canada have entered the mortgage 192 f i e l d and t h i s safeguard has been rendered l a r g e l y i n e f f e c t i v e . A p r i v a t e bank i s l i k e l y to allow the b u i l d e r to add 20% or more to h i s purchase p r i c e to compensate f o r " h o l d i n g c o s t s " . T h i s i s d e s p i t e the f a c t t h a t the h o l d i n g period p r i o r to r e s a l e may be very s h o r t . SALES POLICY. The i n d u s t r i a l lands s a l e s p o l i c y i n Bed Deer i s separate from the r e s i d e n t i a l lands s a l e s p o l i c y . T h i s s e c t i o n w i l l c o n s i d e r only the l a t t e r . R e s i d e n t i a l land s a l e p o l i c y has two a s p e c t s : 1. P r i c i n g P o l i c y - the s e t t i n g of l o t p r i c e s . 2., Sales P o l i c y - the c o n d i t i o n s and r e s e r v a t i o n s of s a l e s agreements. In some cases s e t t i n g the p r i c e s of l o t s would be a p a r t i c u l a r l y thorny problem. T h i s would be so i f the land bank produced only a p r o p o r t i o n of the l o t s on the market and the impact on a wider market was a c o n s i d e r a t i o n . I t would a l s o be a problem i f a c i t y was t r y i n g to l i m i t growth and d i d not wish to a t t r a c t immigrants by low l o t p r i c e s . I t might a l s o be a problem where there was an i n t r i n s i c c l a s h of demand f o r l a n d , between a g r i c u l t u r e and r e s i d e n c e s i n p e c u l i a r geographic s i t u a t i o n s f o r example, and one wished t o use p r i c e s as an " a l l o c a t i o n " d e v i c e . I t may a l s o be a problem i f one was attempting to o b t a i n a d i f f e r e n t i a l impact on d i f f e r e n t socio-economic s e c t i o n s of the community by a p a r t i c u l a r p r i c i n g p o l i c y . None of these 193 c o n d i t i o n s p e r t a i n i n Red Deer. The problem i s t h e r e f o r e q u i t e simple. P r i c e s r e l a t e i n a d i r e c t way to c o s t s . The f a c t o r s which are important are: 1. The g e n e r a t i o n of funds f o r f u t u r e land purchases. 2. The c o s t of s e r v i c i n g t h a t p a r t i c u l a r s u b d i v i s i o n both " o n - s i t e " and " o f f - s i t e " . 3. The p r i c e of s e r v i c e d land s o l d by the C i t y i n p r e v i o u s y e a r s . 4. A judgement of the s o c i a l "cachet" of the area, and the value to the C i t y of a t t r a c t i n g r e s i d e n t s to t h a t area. As f o r p o l i c y r e l a t i n g t o c o n d i t i o n s of s a l e , t h i s has changed c o n s i d e r a b l y over the years. We have seen how the o p t i o n agreement changed between 1964 and 1969. The t r e n d s noted have continued and i n t e n s i f i e d to 1973. In general these trends a r e : an i n c r e a s i n g p r o p o r t i o n of the f i n a l p r i c e demanded as f i r s t payment on the o p t i o n ; i n c r e a s i n g l y s t r i c t s t i p u l a t i o n as to the immediacy of c o n s t r u c t i o n s t a r t s on the purchased l e t s ; some r e l a x a t i o n of the p r e f e r e n c e f o r i n d i v i d u a l purchasers over l i c e n c e d c o n t r a c t o r s . One i n t e r e s t i n g p o i n t about the landbank p r i c i n g p o l i c y i s that p r i c e s are made lower i n areas t h a t the C i t y C o u n c i l wishes to s e t t l e but f e e l s are u n a t t r a c t i v e to buyers. This i s so mainly north of the Red Deer R i v e r . The o r i g i n a l c i t y 194 of Red Deer was south of the r i v e r . When North Red Deer was annexed t o the C i t y i t was g e n e r a l l y i n poor shape. The municipal s e r v i c e s were fragmentary and development was sprawled along the main highway. There was a mixture o f r e s i d e n c e s and r e l a t i v e l y u n a t t r a c t i v e commercial and i n d u s t r i a l l a n d junkyards, used car l o t s , and f a c t o r i e s . So the area had a very low appeal to l o t buyers. T h i s may be changing. The landbank developments north of the r i v e r a re making i t a more a t t r a c t i v e area f o r r e s i d e n c e s and the problem may c o r r e c t i t s e l f . In the meantime there i s buyer r e s i s t a n c e t o overcome. The sewerage treatment p l a n t i s i n the f a r north of the C i t y and t h i s means that there i s a gre a t d e a l of land i n North Red Deer that can be sewered without long new trunk sewers. There i s very l i t t l e land south of the r i v e r t h a t i s i n t h i s p o s i t i o n . So i t i s important t h a t north Red Deer be made a t t r a c t i v e to new l o t buyers. But one may wonder whether lowering l o t p r i c e s a r t i f i c i a l l y i n North Red Deer i s the best way to achieve t h i s . Land i n O r i o l e Park i n North Red Deer was $47.10 i n 1964 and i n H o r r i s r o e south of the r i v e r land was $50.90 per f r o n t f o o t . T h i s d i f f e r e n t i a l between land north and south of the r i v e r has s i n c e i n c r e a s e d . In 1973 land i n Highland Green i n North Red Deer i s $72.52 per f r o n t f o o t while land i n West Park e x t e n s i o n i f $85 per f r o n t f o o t . L et us suppose one .is buying a 60' fr o n t a g e s i n g l e f a m i l y house s i t e . The p r i c e i n Highland Green would be $4351 and i n West Park E x t e n s i o n i t would be $5100. The d i f f e r e n c e does not r e f l e c t p r i m a r i l y d i f f e r e n c e s i n landbank c o s t s i n the two areas but r a t h e r C i t y C o u n c i l p o l i c y . One of the r e s u l t s of such a p o l i c y i s t o segregate the C i t y by income. 195 In her t h e s i s S p a t i a l . D i f f e r e n t i a t i o n , , a roong_ R e s i d e n t i a l £i§tricts_in_Red_Deer Linda Paul found that d i f f e r e n t suburbs had very d i f f e r e n t r e s i d e n t s i n terms of income. Presumably i f Worth Red Deer l o t s are a r t i f i c i a l l y kept lower than l e t p r i c e s south of the River then the area w i l l continue to a t t r a c t mainly low income people. I t w i l l then continue to be a low-status area. Perhaps what i s needed r a t h e r than s u b s i d i z e d l o t p r i c e s i s one or two h i g h - p r i c e h i g h - p r e s t i g e s u b d i v i s i o n s . Table 3 RESIDENTIAL LAND SALES POLICY 1973. Payments t One t h i r d on s i g n i n g agreement. One t h i r d w i t h i n f o u r months. One t h i r d w i t h i n e i g h t months. B u i l d i n g i to be s t a r t e d w i t h i n one yea r and completed w i t h i n two y e a r s o f the date o f the agreement. Lat e B u i l d i n g O p t i o m I f b u i l d i n g i s not s t a r t e d w i t h i n the f i r s t y e a r the agreement can be kept i n good s t a n d i n g on the b a s i s of 1% p e r month f o r a maximum o f 6 months, and i f ownership o f the l o t r e v e r t s to the C i t y d u r i n g the e x t e n s i o n time any monies p a i d f o r the e x t e n s i o n are n o n - r e t u r n a b l e and a l e v y o f 12$ o f the t o t a l purchase p r i c e w i l l be kept as l i q u i d a t e d charges. Assignment! The agreement i s non - a s s i g n a b l e u n l e s s the l o t i s purchased by a l i c e n c e d c o n t r a c t o r a c t i v e l y engaged i n c o n s t r u c t i o n o f d w e l l i n g s . In the case o f l o t s f o r duplex d w e l l i n g s one h a l f may be a s s i g n a b l e . Sale i On the f i r s t day t h a t l o t s are o f f e r e d f o r s a l e t h e i r s h a l l be a l i m i t o f one l o t p e r pers o n ( f a m i l y and/or company i n c l u d e d ) . Passed by the Red Deer C i t y C o u n c i l a t t h e i r meeting o f J u l y 3 1973. T T T T " T T : :$2*doo ! " T:1^^8'^ s e l l i n g - 'price .off !a landbank l l o t [in ^ selected imontHs i i i .1 '-i I T V n 1196? 111 M 11111 S'l'j-l-i 1 1 11 i i i :;1968 . J . J U-l.!. j I ! ; I 1 j I ! I'Tl ! I i I i - n i i i l j !.;{ l'"M"H_r'rri T.:\ miix ! !....! 111.!.! ! i ! ! i I ! I I I ' ! T ' i T ! i r ; T 1 i 1 1 -WTJT i" ! i '! I T }"! i_ i ! j ! I I i -I ••• j -; j- - i-Ll. F I G U R E ' 16 ! ! ! J..! i i 969 [ t i 1 1 1970]:: ..U_!_L U. .J..14-1.-1-1 j 1 XX :.! :. I !.U 1 j J ! .1 ! 1 !J-.!..!_!. U...U.J J !.,.).1 !.U •j j j { i I j | U_Li.LLl.LL ' ' • .LULL "1972: *—1—1~ f H - i i 1 ~ T ! " I ; pr R :!j[-! :i979 % r r r _ , . .......r vo - 5 V*196 LANDBANK IN HIGH GROWTH 1958-196/4. The f i r s t s i x years of the o p e r a t i o n of a landbank i n Red Deer saw a r a p i d growth of the po p u l a t i o n of the C i t y . The rat e of po p u l a t i o n i n c r e a s e was about 9% per annum on the average. In 1957 the f i r s t year of landbank o p e r a t i o n s b u i l d i n g permits t o t a l i n g $3.5 m i l l i o n were i s s u e d . In 1963 b u i l d i n g permits worth $10.8 m i l l i o n were i s s u e d . In t h i s c l i m a t e the landbank operated very w e l l . Over the s i x years 1958 to 1963 i n c l u s i v e $3,736,025 was i n v e s t e d i n municipal s e r v i c e s f o r landbank lan d and the eg u i t y i n unsold improvements on December 31 1963 was only $14,445. A memo from the C i t y Commissioner gave the f o l l o w i n g account of the o p e r a t i o n o f landbank s u b d i v i s i o n s i n those y e a r s . I T I I | TABLE | | LANDBANK_INVESTMENT_J958_^_1963X | | Expenditure on land a c q u i s i t i o n $1,303,555 | | Expenditures on Improvements ( s e r v i c e s ) $3^736^025 | | T o t a l . $5,039,580 | | Recoveries from land s a l e s $ 905,922 | | Recoveries from U t i l i t i e s Prepayments $3,63*4, 278 | | Recoveries from Winter Works Grants $ 87 x302 | | T o t a l . $4,627,502 | | Net Investment i n Improvements $ 14,445 | j Net Investment i n Land $ 397 x633 | | T o t a l . $ 412,633 | As we can see from the previous f i g u r e both r e s i d e n t i a l and i n d u s t r i a l - c o m m e r c i a l c o n s t r u c t i o n i n Red Deer peaked i n 1963 and slumped p r e c i p i t o u s l y the f o l l o w i n g year. 197 Th i s slump c o i n c i d e d with, and was probably caused by a abrupt change i n the growth r a t e of the C i t y . In 1963 the percentage r a t e of i n c r e a s e of the p o p u l a t i o n of the C i t y of Bed Deer was 9.5%, and i n the f o l l o w i n g year i t f e l l to 5.8% and continued to d e c l i n e . The r o o t of the d e c l i n e was changes i n the nett i n -migration to the C i t y . In 1963 n e t t i n - m i g r a t i o n was 1,444, i n 1964 i t was 741, and i n 1965 i t was 203. The r e s u l t was an unforseen sharp d e c l i n e i n demand f o r new housing i n Bed Deer. T h i s p r e c i p i t a t e d a c r i s i s i n the landbank. In 1963 the landbank marketed a record number of s e r v i c e d l o t s , and n a t u r a l l y i t p r o j e c t e d s i m i l a r s a l e s f o r the two years immediately f o l l o w i n g . So the slump l e f t the landbank with an u n s a l e a b l e l a r g e i n v e n t o r y o f s e r v i c e d and p a r t l y s e r v i c e d l o t s . T h i s put a unique s t r a i n on the c a p i t a l s t r u c t u r e of the landbank, because u n t i l t h a t time c a p i t a l i n v e s t e d i n s e r v i c e was at a minimum. Each year the c o s t of s e r v i c i n g l o t s which was the major c a p i t a l c o s t had been recaptured through the immediate s a l e of those l o t s . I t was a r e v o l v i n g fund of c a p i t a l , with l i t t l e p r o v i s i o n f o r c a r r y i n g the c o s t of c a p i t a l improvements from one year to the next. T h i s c r i s i s i n c l i n e d both landbank a d m i n i s t r a t o r s and C i t y C o u n c i l to r e a s s e s s the r o l e of the landbank. So i n 1964 and 1965 e x t e n s i v e a n a l y s i s was conducted i n t o the investment r e t u r n s from the landbank and new methods of keeping more comprehensive r e c o r d s were i n s t i t u t e d . I t i s a convenient p o i n t then a t which to c o n s i d e r the f i r s t phase of the landbank. The rec o r d s on which I am r e l y i n g g e n e r a l l y change at t h i s p o i n t ; 198 and a l s o the t r a n s i t i o n from a high-growth stance to a low and d e c l i n i n g growth stance by the landbank i s of i n t r i n s i c i n t e r e s t , i ; 1 t I | TABLE | I I | BED DEER GROWTH RATES, | Year T o t a l Net Percent Percent P o p u l a t i o n In-migration I n - m i g r a t i o n Rate of 1958 16,501 2463 18. 2 21.5 1959 17,593 598 3.6 6.6 1960 18,762 651 3.7 6.6 1961 19,615 354 1.9 4.5 1962 21 ,107 975 5.0 7.6 1963 23,106 1444 6.8 9.5 1964 24,446 741 3.2 5. 8 1965 25,195 203 0.8 3.0 1966 25,752 84 0.3 2. 2 1967 26,173 22 0.1 1.6 1968 26,730 217 0.8 2. 1 1969 26,924 0.7 Source: C i t y Census. 199 CRISIS. We have mentioned t h a t a c r u c i a l aspect of the f i n a n c i a l v i a b i l i t y of the landbank o p e r a t i o n i n the C i t y of Red Deer was t h a t at the end of each annual c y c l e most or a l l of the improvements i n s t a l l e d d u r i n g the year were s o l d . There was a c o n t i n u i n g e q u i t y i n undeveloped land - t y p i c a l l y about $400,000. But the c a p i t a l i n v e s t e d i n s e r v i c e s was recouped q u i c k l y . Thus a t the end of the c o n s t r u c t i o n season i n 1963 t h e r e was only $14,455 i n v e s t e d i n unsold improvements. A year l a t e r at the same stage of the c y c l e the investment i n unsold improvements was $419,645. In a landbank t h a t depended on s h o r t term borrowing to i n s t a l l s e r v i c e s t h i s was a c r i s i s . In l a t e 1973 the same problem of i n c o r r e c t l y f o r e c a s t i n g demand f o r l o t s h i t the landbank again but i n the r e v e r s e d i r e c t i o n . T h i s time a sharp upswing i n demand l e f t the landbank v i r t u a l l y without l o t s t o s e l l on the south s i d e of the c i t y . In t h i s case a p r i v a t e f i r m developed 75 l o t s i n the northeast o f H o r r i s r o e and s o l d them at $110 per f r o n t f o o t where the landbank had been s e l l i n g l o t s i n the same area at $78.40. T h i s meant a n i c e p r o f i t t o the p r i v a t e developer who stepped i n t o the gap; but more i m p o r t a n t l y i t s t a r t e d a s p i r a l of i n f l a t i o n i n raw l a n d t h a t the landbank may have to buy i n the f u t u r e . The e x p e c t a t i o n s of p r i v a t e h o l d e r s or raw land have taken a quantum jump. In 1963 the f i n a n c i a l v i a b i l i t y of the landbank was more d i r e c t l y threatened because demand was suddenly down. The s a l e s of s i n g l e - f a m i l y l o t s i n those years were as f o l l o w s : 200 1961 218 l o t s . 1962 311 l o t s . 1963 413 l o t s . 1964 166 l o t s . At the end of 1963 there was a shortage of l o t s and i t was decided to a l l o w f o r 350 l o t s a l e s i n 1964 and to pr o v i d e f o r a c a r r y - o v e r a t the end of 1964 of 75 l o t s . Conseguently about 425 l o t s were s e r v i c e d f o r s a l e i n 1964. Only 166 of these l o t s were s o l d . TANLE SUMMARY OF RESIDENTIAL LOT SALES 1961 TO 1964. 1961 1962 1963 1964 Vacant l o t s Jan.1965 C i t y P r i v a t e T o t a l . F airview 154 43 4 4 0 4 O r i o l e Park 113 37 90 17 107 West Park 87 8 Eastview 29 4 Mountview 72 53 22 3 2 0 2 Sunnybrook 30 92 235 42 26 40 66 Mo r r i s r o e 80 39 75 114 T o t a l : 218 311 413 166~ 161" 132" 293 Permits Issued: 256 294 407 233 Source; C i t y of Red Deer One can see t h a t the d e c l i n e i n b u i l d i n g permits sharp i n 1974 but not as sharp as the d e c l i n e i n landbank l o t s a l e s . The reason f o r t h i s i s simple. There was an i n v e n t o r y of l o t s held by b u i l d i n g c o n t r a c t o r s . There were about f i v e major r e s i d e n t i a l b u i l d e r s i n Red Deer. T h e i r source o f s e r v i c e d land was the landbank and they seemed very s a t i s f i e d with i t . They were assured of p r e d i c t a b l e access to s e r v i c e d l o t s a t the same p r i c e as t h e i r r i v a l f i r m s without having to i n v e s t time and 201 c a p i t a l i n the c o n v e r s i o n process. From year to year these b u i l d e r s purchased l o t s from the landbank. They g e n e r a l l y h e l d some l o t s i n i n v e n t o r y to be able to o f f e r ' c u s t o m e r s a v a r i e t y of s i t e s . Each of the major b u i l d e r s may have had an i n v e s t o r y of 30 l o t s a t the end of 1963 as t h i s was c o n s i d e r e d a normal number to c a r r y . At the f i r s t s i g n s of reduced demand i n 1964 these b u i l d e r s began r e d u c i n g t h e i r own i n v e n t o r i e s r a t h e r than purchase a new form the landbank. T h i s a d d i t i o n a l e l a s t i c i t y of supply may not have been a p p r e c i a t e d by the C i t y at t h a t time. At 31st December 1964 the bulk of the $419,645 i n v e s t e d i n improvements was i n the new s u b d i v i s i o n O r i o l e Park; and i t exacebated , the problem t h a t O r i o l e Park embodied some i n i t i a l l y unpopular plan n i n g d e c i s i o n s - mainly the d e c i s i o n to balance the growth of the C i t y north of the r i v e r with the growth of t r a d i t i o n a l l y p r e s t i g i o u s s e c t i o n s south of the r i v e r . The response t o t h i s c r i s i s was f i r s t of a l l to cut back f u r t h e r s e r v i c i n g of l o t s t o a minimum. By t h i s simple expedient the inventory i n improvements was reduced. There was a p o l i t i c a l temptation t o s e l l raw land i n t h i s " c a p i t a l crunch", and not to e x e r c i s e long term o p t i o n s to purchase raw land t h a t were f a l l i n g due. Both p o s s i b i l i t i e s were d i s c u s s e d i n C o u n c i l . Both were r e j e c t e d . T h i s was a wise d e c i s i o n as we s h a l l see, because i t kept the landbank s t r u c t u r a l l y sound and a b l e to accommodate a s t r o n g upswing i n growth i n 1972-1973. The l e s s o n of t h i s p e r i o d i s very p l a i n . The landbank depends very h e a v i l y on a s o p h i s t i c a t e d system of market demand p r o j e c t i o n . T h i s i s e s p e c i a l l y t r u e i f the landbank i s i n a 202 monopoly p o s i t i o n i n land c o n v e r s i o n , although the monopoly s i m p l i f i e s the g u e s t i o n of landbank p r o d u c t i o n once the t o t a l demand of the populace i s known. r —i TABLE | DISTRIBUTION OF THE CITY'S EQUITY DEC . 31 1965. RESIDENTIAL SUBDIVISIONS. (ACTIVE (SUBDIVISIONS. LAND IMPROVEMENTS TOTAL IFairview 185 12,141 11 ,955 (cr.) | | Sunnybrook 39,947 (cr) 8,8000 30,946 ( O r i o l e Park 112,695 474,983 587,678 j M o r r i s r o e 63,308 151,622 214,932 INorth H i l l 60,041 ,23,816 83,858 IChoate/Bryant 152,518 1,028 153, 546 | Banting 51,917 1,439 53,256 | A nders 5^613 14^873 20 x486 | T o t a l : 407,333 663,524" $1,070,857 (COMPLETED 1 SUBDIVISION^ |Eastview 19,363 (cr) | | Mountview 116,889 (cr) | |West Park 9, 350 (cr) | | Miscellaneous 50^508 (cr) ( ( T o t a l : $196,112 (cr) | LANDBANKING DURING SLOW GROWTH 1965 TO 1972. In 1965 the f u l l impact of the slowdown i n housing demand h i t the landbank. L o t s a l e s and b u i l d i n g permits f o r t h i s and the immediately preceding years were as f o l l o w s : L o t s . Permits. 1963 413 407 1964 166 233 1965 13 (50 sold-37 taken back) 96. The d r a s t i c d e c l i n e i n l o t s a l e s i n 1965 was p a r t l y 203 due to the r e l a t i v e l y l a r g e i n v e n t o r y of l o t s h e l d by p r i v a t e b u i l d e r s i n 19 64 which they began l i q u i d a t i n g at the f i r s t s i g n s of a slowdown i n housing s t a r t s i n Red Deer. By December 31 1965 i t was estimated that b u i l d e r s and other p r i v a t e i n d i v i d u a l s held o n l y 20 vacant l o t s s u i t a b l e f o r b u i l d i n g . T h i s i s i n c o n t r a s t to 215 on December 31 1963. As one can see from the previous t a b l e 50 l o t s were s o l d by o p t i o n agreement i n 1965 but allowed to r e v e r t to C i t y ownership. The o p t i o n agreement i n use at the time allowed a b u i l d e r to maintain an o p t i o n f o r f o u r months on a d e p o s i t of only $50. One of the steps taken to prevent a r e c u r r e n c e of t h i s s i t u a t i o n was to s t r e n g t h e n the o p t i o n agreement. The land s a l e o p t i o n used i n 1969 f o r example i s much more r i g o r o u s . The i n i t i a l payment i s i n c r e a s e d from $50 to 1/4 of the purchase p r i c e . T h i s i s f o r f e i t i f the o p t i o n i s allowed to l a p s e . A payment of a f u r t h e r 1/4 of the purchase p r i c e w i l l extend the o p t i o n f o r an a d d i t i o n a l f o u r months. The whole purchase p r i c e i s due i n twelve months. At the same time the o p t i o n l a p s e s unless at the end of those twelve months e i t h e r the f o o t i n g s f o r the b u i l d i n g to be c o n s t r u c t e d are complete or a mortgage f o r the c o n s t r u c t i o n o f a b u i l d i n g on the l o t i s approved. T h i s l a t e r agrrement a l s o s t i p u l a t e s where the house driveway and garage may be s i t u a t e d on the l o t . The l a n d s a l e Option Agreement i s approaching what might be c a l l e d a Land Use C o n t r a c t , and i s l i k e l y to be f u r t h e r r e f i n e d i n t h i s use i n f u t u r e . I t i s worth n o t i n g t h a t although the C i t y was i n a d v e r t a n t l y c a r r y i n g a l a r g e s e r v i c i n g debt over these years t h i s was not wholly u n d e s i r a b l e f i n a n c i a l l y . For example the 204 cost of s e r v i c i n g l o t s rose 30% i n the year 1965-66. So i n t h i s i n f l a t i o n a r y s i t u a t i o n there was some advantage i n having s e r v i c e d too much land too e a r l y . At the end of 1966 a study of s e r v i c i n g c o s t s recommended that the s a l e p r i c e of l o t s i n Morr i s r o e be i n c r e a s e d from $50.90 t o $56 per f o o t to cover the i n c r e a s e i n s e r v i c i n g c o s t s . But l o t s i n O r i o l e Park i n North Red Deer as they g r a d u a l l y s o l d were p r i c e d a t 1963 l e v e l s . S e r v i c i n g of new l o t s was kept to a minimum, and an e f f o r t was made to estimate the p o s s i b l e s a l e s over the f o l l o w i n g f i v e years and to plan a c c o r d i n g l y . At the time the landbank t r i e d to hold raw land s u f f i c i e n t f o r i t s estimated f i v e year needs. 205 OVERVIEW 1958-1972. In 1973 the C i t y T r e a s u r e r i n Red Deer prepared f o r C i t y C o u n c i l a s y n o p s i s of the cash flows r e l a t e d to the landbank over the period 1958-1972 i n c l u s i v e . Table # g i v e s t h i s i n f o r m a t i o n . "Land A n a l y s i s " and "Improvement A n a l y s i s " i s given s e p a r a t e l y ; and completed s u b d i v i s i o n s are d i s t r i n g u i s h e d from a c t i v e s u b d i v i s i o n s . I t can be seen t h a t completed s u b d i v i s i o n s showed an o v e r a l l s u r p l u s of $407,383. There i s an o v e r a l l net d e f i c i t cash flow of $7680. The book value of the land i n v e n t o r y h e l d i n the r e s i d e n t i a l and c o m m e r c i a l - i n d u s t r i a l s e c t i o n s o f the landbank t o t a l s $567,818. "During 1958 the C i t y entered the s u b d i v i s i o n development f i e l d with a modest investment t o t a l l i n g $393,100. In the f o u r t e e n year p e r i o d 1958-1972, some $9,055,103 was i n v e s t e d i n s u b d i v i s i o n s c o n s i s t i n g of an investment i n l a n d of $1,875,176 and $7,179,927 f o r improvements. During the same p e r i o d , s a l e s , c u r r e n t s a l e s o p t i o n s and other revenue t o t a l l e d $9,047,423 which i n c l u d e s the f o l l o w i n g elements -land $1,457,828; improvements prepayments $7,455,980 and winter works labour r e c o v e r i e s $133,615. I t should be noted that those s u b d i v i s i o n s t h a t are completed show a book s u r p l u s and i f the e x i s t i n g p r i c i n g p o l i c y c o n t i n u e s as each s u b d i v i s i o n i s completed book s u r p l u s e s w i l l c o ntinue t o grow and w i l l make t h i s e n t e r p r i s e t o t a l l y s e l f -s u f f i c i e n t sometime i n the f u t u r e . The s u r p l u s e s have been generated as a r e s u l t of our r a t e s f o r l o t s which are designed to cover 20% to 50% more than the a c t u a l c o s t to allow f o r the higher c o s t of replacement of the land i n the f u t u r e . " C. S c h i l b e r g May 1973. 206 f " • • ' "" ' ' " " i | TABLE 1 RESIDENTIAL HISTORICAL LAND PRICES j West Park 1961 $ 39.26 | Mountview 1961 46.92 | Sunnybrook 1962 50.50 | F a i r v i e w 1962 44.00 | O r i o l e Park 1963 47. 10 | O r i o l e Park 1969 51 .64 | O r i o l e Park 1971 58.02 | M o r r i s r o e 1964 50.90 | M o r r i s r o e 1966 56.00 | M o r r i s r o e 1967 61 .00 \ | M o r r i s r o e 1969 65.00 | M o r r i s r o e 1971 72.40 | Mor r i s r o e 1972 78.40 j Highland Green 1973 72.52 | West Park Extension 1972 80.75 | West Park Extension 1973 85.00 j Source: C i t y of Red Deer j | TABLE T | THE CITY OF RED DEER | SCHEDULE OF SUBDIVISIONS | AS OF DECEMBER 31, 1972 ( I n d u s t r i a l S u b d i v i s i o n s | Cost of S u b d i v i s i o n s Under Development $ 1, 159,054 | Less Proceeds of Recovery to Date 911,094 _ 247 i960 ( R e s i d e n t i a l S u b d i v i s i o n | Cost of S u b d i v i s i o n s Under Development 4,593,357 | Less Proceeds of Recovery to Date 3 X984 X449 608 _908 | $ 856 ,868 |Less Excess Recovery Over Cost of | Completed S u b d i v i s i o n s : | I n d u s t r i a l 81,580 | R e s i d e n t i a l 325,803 407 x383 ] $449, 485 | Source: C i t y of Red Deer. i ._ _ .. _ , , ,... ,_ 1 TABLE /O SUBDIVISION INVESTMENT JANRUARY 1 1958 TO DECEMBER 31 1972. SUBDIVISION LAND ANALYSIS IMPROVEMENT ANALYSIS Land Costs Land Returns Net (over)/under recovery. Improvement Costs Prepaid Improvement Recoveries Winter Works Recoveries. Improvement Recoveries Total Improve. Net OVERALL NET ACTIVE SUBDIVISIONS. 1. RESIDENTIAL Morrisroe 113,833 (169,851) (56,018) 1,089,753 (1,200,448) (7,910) (1,208,358) (118,650) (174,623) Fairvlew 82,356 (72,883) 9,473 484,497 (543,404) (8,697) (552,101) (67,604) (58,131) Banting & Westbrook Ext. 178,037 (68,267) 109,770 252,425 (426,928) (11,202) (438,137) (185,712) (75,942) Choate/Bryant North Hill & General 202,333 (22,591) 179,742 362,943 (395,024) (8,262) (403,286) (40,343) 139,399 Highland Green 133,778 (8,040) 105,738 302,438 (53,882) (53,882) 248,556 354,294 Oriole Park 183,745 (144,630) 39,115 1,182,482 (1,211,541) (17,394) (1,228,934) (46,452) (7,337) Anders 20,497 20,497 20,497 Golden West 3,851 3,851 13,373 (20,454) (20,454) (7,081) (3,230) Sylvan Lake A,278 4,278 2,738 (34,840) (34,840) (32,102) (27,824) TOTAL 882,211 486,262 395,949 3,711,146 (3,886,521) (53,471) (3,939,992) (228,846) 167,103 2. COMMERCIAL/ INDUSTRIAL Herniary 49,090 (59,411) (10,321) 80,893 (93,303) (93,303) (12,410) (22,731) South Hill 53,464 (63,221) (9,757) 222,869 (227,432) (3,656) (231,088) (8,219) (17,976) Riverside 342,751 (150,809) 191,942 409,982 (293,794) (19,468) (313,262) 96,720 228,662 TOTAL 445,310 (273,441) 171,869 713,744 (614,529) (23,124) (637,653) . 76,091 247,960 o ON COMPLETED SUBDIVISIONS OVERALL NET. Eastview 74,310 (76,545) (2,235) 688,695 (701,251) (4,573) (705,824) (17,129) (19,364) Mountview-Altpn 30,072 (30,078) (6) 152,094 (250,659) (18,313) (268,972) (116,878) (116,884) West Park 52,847 (52,847) 630,542 (632,621) (5,622) (638,243) (7,701) (7,701) Sunnybrook 220,834 (287,483) (66,649) 1,283,706 (1,370,399) (28,512) (1,398,911) (115,205) (181,854) CNR Industrial 169,592 (251,172) (81,580) (81,580) TOTAL 547,655 (698,125) (150,470) 2,755,037 (2,954,930) (57,020) (3,011,950) (256,913) (407,383) Land Costs Land Returns Net (over)/under Improvement Prepaid Winter Total Improvement OVERALL recovery. Costs. Improvement Works. Improvement Net NET Recoveries. Recoveries. TOTAL INVESTMENT 1958 TO 1972. 1,875,176 (1,457,828) 417,348 \f 7,179,927 (7,455,980) (133,615) (7,589,595) (409,668) 7,680 o ON TABLE // Schedule of Landbank Costs and Recoveries 1958 to 1969. SUBDIVISION 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 Total. Morrisroe Land Cost(-) 1 rnprovements (-) Land Returns(+) Uti1 ity Return(+) Winter Works(+) 27,840 1670 20,000 12,624 20,234 54,726 20,000 5,913 43,428 178,810 37,559 231,014 1,666 694 216655 12764 9948 5155 418 5739 16635 91538 91,849 11,455 88,387 453 122,179 34,207 253,993 633 618 249,847 25,942 190,287 113,832 1,024,800 (144,912) (954,877) (7,909) IOTAL 27,840 1670 32,624 (34,491) 25,913 48,002 209,378 (102852) (8447) (166,655) 34,235 30,933 Fa i rview Land Cost(-) Improvements Land Return Uti1ity Return Wi nter Works 53,750 7,470 12,340 320,915 42,781 360,259 124,587 19,541 100,530 8,413 12,281 3,582 19,295 11,384 283 564 150 1,455 10,449 655 3,742 32,231 66,091 477,859 (71,103) (522,913) (8,696) TOTAL 6-, 220 69,784 (3,897) (10,594) 11,101 (58,762) Eastvi ew Land Cost Improvements Land Return Ut i 1 ity Return Winter Works 30,400 271,745 (27,322) (211,564) 33,795 161,478 (10,263) (204,348) 1,614 142,067 101,529 (17,479) (12,695) (166,772)(118,624) (4,573) 8,500 11,938 (8,500) (60) 65 (284) 74,310 688,695 (76,545) (701,251) (4,573) TOTAL 63,257 (19,337) (45,143) (29,790) (11,998) (350) (19,363) Mountview-A1 ton Land Cost Improvement Land Return Uti 1 ity Return Winter Works 30,072 33,048 (15,013) (205,704) (685) 98,232 (5,884) (54,134) (17,628) 20,808 30,072 152,088 20,897 (259,838) (18,313) TOTAL (158,282) 20,584 20,808 (116,889) O ON • SUBDIVISION 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 Total South H i l l Land Cost Improvements Land Returns Ut i l i ty Return Winter Works 9,150 9,058 46,059 22,930 105 21,206 (18,313) 35,000 24,268 (12,500) (31,064) (997) 6,337 (28,906) (4,262) 19,029 (3,500) (36) (500) 2,209 (7,108) (218) 5,194 (13,272) (19,112) 5,564 (56,385) (1,939) 276,874 (224,263) 53,313 406,745 (287,483) (154,100) (3,655) TOTAL 9,150 32,187 2,998 14,706 (26,832) 15,065 (5,117) (8,077) (19,112) (52,760) 52,611 14,818 Banting Land Cost Improvements Land Returns Ut i l i ty Return Winter Works 1,339 25,917 1,339 24,660 26,239 9,606 52,212 55,129 (11,209) 1,005 46,418 (10,656) (26,557) 15,407 28,102 (1,776) (10,629) 146,782 140,596 (12,432) (37,186) (11,209) TOTAL 1,339 27,256 24,660 35,846 96,132 10,210 31,105 226,550 North H i l l Land Cost Improvements Land Returns Ut i l i ty Return Winter Works 44,639 106 15,894 23,710 (493) 1,908 65,392 (200) 3,622 (11,209) 680 1,827 (550) 62,442 93,979 (693) (550) (11,209) TOTAL 44,746 39,111 67,101 3,622 680 1,277 155,179 West Park Land Cost Improvements Land Returns Ut i l i ty Returns Winter Works 51,940 235,950 (6,720) (64,878) 209,180 (16,828) (278,778) 677 140,021 (8,660) (73,205) (5,597) 230 42,731 (20,041) (198,050) 120 ' 26 (10,338) 120 7 (596) (5,771) 990 (1,600) (24) 52,847 628,892 (52,847) (32,621) (5,621) TOTAL 216,291 (86,426) 53,234 (175,130) (10,191) (6,495) (633) (9,350) Choate/Bryant ^ a n d C o s t 45,100 54,568 52,850 17,235 9,705 11,320 11,320 202,080 Improvements 2,600 1,571 29 2,222 300 3,580 Land Returns Ut i l i ty Returns Winter Works ' TOTAL — 47.700 56.139 52.850 i « fiio SUBDIVISION 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 Total. Riverside Land Cost 40,359 81,222 112,523 10,422 1,138 8,250 45,358 7,070 908 1,017 308,272 Improvements 51,137 93,707 38,311 2,836 51 3,969 31,381 23,420 55,623 93,215 393,656 Land Returns (10,967) (52,099) (2,175) (1,093) (2,750) (39,994) (3,845) (486) (12,727) (8,876) (135,013) Uti l i ty Returns (12,231) (31,347) (57,249) (3,243) (3,250) (16,932) (8,397) (55,851) (31,570) (33,089) (253,161) Winter Works• (9,443) (2,891) (675) (3,359) (3,098) (19,467 TOTAL 40,359 109,162 113,340 (13,581) , (360) 2,301 (8,273) 26,280 (35,366) 7,245 51,250 294,286 Sunnybrook/ South Mountview Land Cost 62,967 51,331 58,020 48,188 327 84 84 220,834 Improvement 93,481 243,010 475,718 341,682 138,391 7,861 181 189 892 219 1,283,630 Land Returns (77,624) (30,376) (103,777) (38,871) (9,215) (7,858) (8,595) (5,511) (5,652) (287,483) Uti l i ty Returns (326,295) (192,715) (544,891) (156,603) (25,128) (34,163) (41,490) (22,358) (5,32511,348,971) Winter Works (450) (10,496) (14,564) (3,000) (28,511) TOTAL 62,967 144,362 (102,889) 272,318 (321,223) (60,083) (26,398) (41,923) (49,896) (26,977) (10,758) (160,502) Oriole Park Land Cost 42,409 82,939 34,994 528 1,322 4,499 164,047 Improvements 167 348,721 488,793 3,446 327 1,990 46,237 889,684 Land Returns (35,532) (8,673) (4,010) (419) (1,557) (3,716) (13,289) (66,319) Uti l i ty Returns (300,420) (27,718) (20,613) (7,577) (13,951) (32,817) (127,500) (515,445) Winter Works (11,559) (5,833) (17,393) TOTAL 42,576 84,148 481,603 (20,650) (7,001) (13,518) (36,534) (90,053) 454,574 General Improvements 11,594 23,411 20,842 27,098 10,346 30,674 59,526 6,474 16,134 8,373 202,881 Uti l i ty Returns. (15,410) (52,003) (55,009) (4,957) (3,500) (42,858) (21,177) (883) (7,664) (26,130) (214,276) Winter Works (4,074) (426) (3,801) (8,262) TOTAL (3,816) (28,592) (34,256) 22,140 2,810 (12,609) 34,548 5,590 8,469 (28,897) (30,797) O ON 207 THE FUTURE. , In February 1973 the Research D i v i s i o n of the A l b e r t a Housing C o r p o r a t i o n prepared the C i t y of Rgd.Beer^long,Range Land.Banking Need and Demand Report. I t conluded: "The request f o r a s s i s t a n c e f o r long range l a n d banking i s w e l l j u s t i f i e d on the f o l l o w i n g grounds: 1. The f i n a n c i a l burden would a f f e c t the C i t y ' s f i n a n c i a l p o s i t i o n . 2. Raw land s p e c u l a t i o n has a l r e a d y taken plac e to a s m a l l but s i g n i f i c a n t amount ( t e s t i f i e d to by the Red Deer Regional P l a n n i n g Commission and the C i t y of Red Deer). 3. Lot p r i c e s i n e x i s t e n c e are extremely c o m p e t i t i v e . 4. The C i t y ' s a d m i n i s t r a t i o n has competent and experienced s t a f f i n the r e s i d e n t i a l l a n d f i e l d . 5. Comprehensive planning on a long range b a s i s producing o r d e r l y and c o n t r o l l e d growth. The Research D i v i s i o n of A l b e r t a Housing C o r p o r a t i o n concludes t h a t the C i t y should c o n t i n u e to a c g u i r e and s e r v i c e a major p o r t i o n of the l a n d r e q u i r e d f o r urban growth wit h i n i t s boundaries, and t h a t A l b e r t a Housing c o r p o r a t i o n should a s s i s t t h i s p o l i c y by f i n a n c i a l l y c o n t r i b u t i n g to the land banking p o r t i o n of the c o s t s . The p r o j e c t e d l a n d needs are f o r 750 a c r e s over 15 y e a r s . The Research D i v i s i o n recommends t h a t the P r o v i n c i a l Government, under the a u s p i c e s of A l b e r t a Housing C o r p o r a t i o n , should make funds a v a i l a b l e f o r the purpose of land banking between 400 and 500 a c r e s of land i n the C i t y of Red Deer. I t must be s t r e s s e d a t t h i s time t h a t whatever the Board's d e c i s i o n , i t w i l l be s u b j e c t to e n a b l i n g f e d e r a l l e g i s l a t i o n being passed by the C e n t r a l Government i n Ottawa, and the t o t a l c a p i t a l c o s t of such a land ban." (p17.) In f a c t the P r o v i n c i a l Government d i d purchase a s e c t i o n of land (S1/2 32, E1/2 31), approximately 640 a c r e s , l a t e r t h a t year which i t w i l l hold f o r the use of the C i t y landbank a t some time i n the f u t u r e . In the same year the C i t y i t s e l f i n i t i a t e d major a c q u i s i t i o n s which now seem to ensure i t s supply of land f o r r e s i d e n t i a l landbanking f o r 15 or more ye a r s . For example the a c q u i s i t i o n s below were approved by Bylaw 2409 which r e c e i v e d f i r s t r e a d i n g on A p r i l 23 1973. 208 L e g a l Payment T o t a l Owner_ D e s c r i p t i o n Acreage Term P r i c e E . J . Hermary N.E.1/4-29-38-27-W4 ~155.18 $271,565.00 E.J. Hermary S.E.1/4-29-38-27-W4 56.00 98,000.00 Hermary Indus S.E.1/4-29-38-27-w4 40.00 70,000.00 Rathwell L.5H., Plan 2175 HW 13. 10 22,925.00 R. D. Murray Lot 21622 Blk 3 P i . 4706 AN 0. 20 1,000.00 E. F a r n e l l S.148.5» of l o t 15, Plan 4600V 0.39 1,185.66 Hamilton S. 50» of l o t 2, Blk 10 Plan 5218 MC 0. 12 625.00 264.99 $465,300.66 209 PERMITS ISSUED: TABLE LANDBANK SUMMARY 1973. YEAR SINGLE-FAMILY SEMI-DETACHED 1973 LOT SALES: 1971 1972 1973 (NOV. 14) WEST PARK HIGHLAND GREEN ORIOLE PARK MORRISROE(PRIVATE VACANT LOTS 1972 MARKETED 1973 PERMITS ISSUED 1973 (NOV.14) VACANT NOV.14 153 151 239 218 35 3 74 330 SOURCE: CITY OF RED DEER. 10 26 18 43 8 51 132 381 513 257 256 In May 1973 the C i t y Assessor submitted a " R e s i d e n t i a l Land P o j e c t i o n " which o u t l i n e d the l i k e l y development of the landbank over the f o l l o w i n g ten years. T h i s p r o j e c t i o n i s in c l u d e d as the c o n l u s i o n t o t h i s c h a pter. At the beginning of 1974 the C i t y ' s i n v e n t o r y of s e r v i c e d l o t s was f u l l y depleted, and demand was running ahead of landbank supply. T h i s d i d not mean th a t i n d i v i d u a l s c o u l d not o b t a i n l o t s t o b u i l d on. As one can see from the t a b l e above there were a l a r g e number of vacant l o t s h e l d by b u i l d e r s i n the C i t y . (256 Nov.14 1973). But i t was an i n d i c a t o r of a s t r o n g economic up-swing i n Red Deer. In ge n e r a l 1973 was a very o p t i m i s t i c year f o r the Red Deer C i t y landbank. The market f o r l o t s was very strong and once again the 210 landbank was s e l l i n g improvements i n the same year i n which they were i n s t a l l e d , E q u i a l l y i m p o r t a n t l y the landbank v a s t l y expanded i t s i n v e n t o r y of raw l a n d , so t h a t i t i s now i n a secure p o s i t i o n to provide most of Red Deer's needs f o r new s u b d i v i s i o n s over the next f i f t e e n y e a rs. 211 CONCLUSION. As we have d i s c u s s e d a t l e n g t h i n the methodology chapter of t h i s t h e s i s , there are s e v e r a l s u b s t a n t i a l l y unresolved i s s u e s i n the l i t e r a t u r e of c o s t - b e n e f i t a n a l y s i s . T h i s makes i t more d i f f i c u l t than i t would otherwise be to come to an u n c o n t e n t i o u s e v a l u a t i o n of the landbanking program i n Bed Deer. A l s o the e f f e c t s of the landbank are so a l l p e r v a s i v e i n the l a n d c o n v e r s i o n market i n Red Deer that i t i s d i f f i c u l t to i s o l a t e c o s t s and b e n e f i t s which are s p e c i f i c to the landbank. There are no s t a b l e bases f o r comparison. I f a p u b l i c p r o j e c t s h i f t s the c o n s t e l l a t i o n of goods and s e r v i c e s o n l y a l i t t l e , 212 then that l i t t l e can be measured i n r e l a t i o n t o the s t a b l e context. But the landbank has had a g l o b a l impact i n i t s sphere i n Red Deer over the past twenty y e a r s . So i t i s d i f f i c u l t to envisage how t h i n g s might have been i n the absence of the landbank, In attempting to e v a l u a t e the o p e r a t i o n of the Red Deer landbank over the l a s t twenty years one i s faced by s e v e r a l p o s s i b l e approaches. The f i r s t approach i s the one opted f o r i n the methodology chapter of t h i s study. I t envisages measuring co s t s and b e n e f i t s "to whomsoever they may accrue". The t e r m i n a l value (Net Present Value e g u i v a l e n t ) at December 31, 1972 would then be c a l c u l a t e d by compounding those c o s t s and b e n e f i t s at a given i n t e r e s t r a t e from t h e i r i n s t i g a t i o n . Net present b e n e f i t s minus net present c o s t s would g i v e a Net Present Value (NPV) which i s the d e c i s i o n c r i t e r i o n adopted i n the methodology chapter. E v a l u a t i n g c o s t s w i t h i n t h i s framework i s not too d i f f i c u l t . The major c o s t s are the o p p o r t u n i t y c o s t of c a p i t a l and the a d m i n i s t r a t i v e c o s t of the landbank. The a d m i n i s t r a t i v e c o s t s have not i n the past been added to the " c o s t s t r u c t u r e " of the landbank. It has been thought t h a t the work load of the C i t y s t a f f was not m a r g i n a l l y g r e a t e r than i t would have been i f there had been no landbank - t h e i r work might have been d i f f e r e n t but not l e s s . The major p l a n n i n g and design work f o r the landbank was conducted by the Red Deer Regiona l P l a n n i n g Commission. I t i s an o r g a n i z a t i o n autonomous from the C i t y and i t does not charge the ~ C i t y f o r s p e c i f i c planning work. 213 n e v e r t h e l e s s the C i t y does c o n t r i b u t e to i t s budget. In 1974 the C i t y Assessor has recommended to the C i t y C o u n c i l that 5% be added to the s e l l i n g p r i c e of landbank l o t s to compensate f o r such c o s t s . 214 LANDBANK COSTS. r 1 I I | TABLE | | SCHEDULE OF LANDBANK INVESTMENT 1958 TO 1972 I YEAR TOTAL YEAR. AT DEC. 31 CUMULATIVE. 1958 374,953 379,103 1959 60,850 (CR) 314,102 1960 291,657 605, 759 1961 18,278 624,037 1962 128,037 (CR) 496,000 196 3 83,922 (CR) 412,077 1964 477,807 889,885 1965 207,797 1 ,097,683 1966 17,037 1,114,720 1967 10,383 (CR) 1,104,336 1968 192,986 (CR) 91 1,350 1969 14,548 (CR) 896,801 1970 7,996 (CR) 888, 905 1971 308,577 (CR) 580,328 1972 130,843 (CR) 449, 485 SOURCE: CITY OF RED DEER. | I I i i I t would not be c o r r e c t t o assume that the cumulative t o t a l s r e p r e s e n t the f i g u r e on which the landbank i n c u r s a h o l d i n g c o s t i n the f o l l o w i n g year. The landbank s e r v i c e d the bulk of i t s land from September onwards to take advantage of winter works g r a n t s from the F e d e r a l Government. So the date December 31 r e p r e s e n t s the peak of i n v e n t o r y i n each annual c y c l e of s e r v i c i n g and s e l l i n g . But to be c o n s e r v a t i v e we w i l l assume t h a t the cumulative t o t a l i s the amount of investment that landbank had to c a r r y through the f o l l o w i n g year although t h i s i s c l e a r l y not so i n years t h a t saw the cumulative t o t a l d e c l i n e . L e t us a l s o assume f o r the moment th a t the c o r r e c t i n t e r e s t (discount) r a t e to use i s the a c t u a l borrowing r a t e of the m u n i c i p a l i t y which i n t h i s p e r i o d was approximately 5%. The 215 o p p o r t u n i t y c o s t of c a p i t a l i n v e s t e d i n the landbank over the p e r i o d i s $515,720 under these assumptions. The gross r e t u r n from l o t s a l e s over the same p e r i o d was $8,913,808. I f we assume that the a d m i n i s t r a t i v e c o s t was 5% of the gross r e c e i p t s then t h i s cost was $445,690. The "book value" of the a s s e t s held by the landbank at Dec. 31, 1972 was $567,818. T h i s i s the a c t u a l f i g u r e spent cn land i n previous years not yet recouped through s a l e s . I t i s the p r i c e p a i d f o r the raw land t h a t the landbank held a t that date. Much of the l a n d was bought years e a r l i e r , and a l l of i t was purchased at a p r i c e of $1000 to $1500 per acre. Of course i t was much more v a l u a b l e than that a t Dec. 31, 1972. In t h a t year a p r i v a t e f i r m purchased raw land i n M o r r i s r o e f o r $3000 per acre. T h i s i s the b e s t i n d i c a t o r of "market v a l u e " we have f o r the landbank i n v e n t o r y . So c o n s e r v a t i v e l y we s h a l l estimate t h a t the raw land held by the landbank at that date had a market value of $1,000,000. The f i g u r e s above r e p r e s e n t a generous e s t i m a t i o n of c o s t s and a c o n s e r v a t i v e e s t i m a t i o n of r e t u r n s . OPTION 1. The crux of the f i r s t o p t i o n open to one i n e s t i m a t i n g the Net Present Value of the Red Deer landbank at t h i s date i s to assume t h a t the cash r e t u r n s to the landbank are a good measure of the s o c i a l b e n e f i t o f the landbank program. T h i s i s the normal assumption i n Cost B e n e f i t a n a l y s i s - that the s e l l i n g p r i c e of a "good" r e f l e c t s what i t i s worth to the buyer. Dnder t h i s assumption the f o l l o w i n g c a l c u l a t i o n s w i l l g i ve us a Net Present Value at December 31, 1972: 216 C a p i t a l = I n t e r e s t = A 3 m i n i s t r a t i o n = T o t a l : Costs. 9,055,103 515,720 445,690 $10,016,513 B e n e f i t s , Cash r e t u r n = E g u i t y = T o t a l $10, 0*47, 423 9,047,423 1, 000,000 The Bed Deer landbank would have had then a Net Present Value a t December 31, 1972 of $30,910. I t i s a p o s i t i v e value so from the p o i n t of view of the community as a whole the landbank was to t h i s date a sound investment. OPTION 2. The second o p t i o n open t o us i s a more r e a l i s t i c and a t t r a c t i v e one. I t i n v o l v e s r e j e c t i n g the assumption i m p l i c i t i n the f i r s t o p t i o n that the s e l l i n g p r i c e s of landbank l o t s adeguately r e f l e c t t h e i r value t o the buyers. I t i s the avowed p o l i c y of the landbank t o provide l o t s at c o s t . One can see from the schedule of c o s t s and r e t u r n s that t h i s o b j e c t i v e has been achieved. The landbank s e l l s l o t s to the buyer at the c o s t to the landbank o f making t h a t s e r v i c e d land a v a i l a b l e . The buyer i s not charged "what the market w i l l bear". The "consumer s u r p l u s " i s r e l a t i v e l y l a r g e as we saw p r e v i o u s l y i n d i s c u s s i n g su b s i d i e s . So we assume t h a t the l o t buyer i n Bed Deer would pay more i f he had to do so. The f a c t t h a t a p r i v a t e developer can s e l l l a n d f o r $110 per f r o n t f o o t where the landbank had been s e l l i n g f o r $75 i s good evidence of t h i s . Now t h i s changes the Net Present Value eguation very markedly. The c o s t s remain the 217 same but the b e n e f i t s are assumed to be much higher than p r e v i o u s l y estimated. T h i s means th a t the NPV i s c e r t a i n l y p o s i t i v e . To s p e c i f y the value of the NPV under t h i s assumption we must f i n d a way of e s t i m a t i n g the " b e n e f i t s " s i d e of the equation. Having r e j e c t e d the measuring s t i c k of market r e t u r n s i t i s very d i f f i c u l t to estimate the b e n e f i t s . There are s e v e r a l p o s s i b i l i t i e s . One i s to attempt to measure the b e n e f i t s d i r e c t l y through some s o r t of amenity index. One c o u l d f o r example ask the r e s i d e n t s the p r i c e at which they would s h i f t from the C i t y r a t h e r than pay f o r r e s i d e n t i a l land. T h i s would be a s u b j e c t i v e and u n r e l i a b l e measure. Another p o s s i b i l i t y would be to deduce a " t r u e " market f i g u r e from p r i v a t e l o t s a l e s i n the C i t y . T h i s would be u n s a t i s f a c t o r y because although 78 p r i v a t e l o t s were s o l d i n 1973 a t $110 per f r o n t f o o t t h i s s a l e was w i t h i n a market co n t e x t t h a t was dominated by the landbank a c t i n g as a s t r o n g p r i c e l e a d e r . The l a s t p o s s i b i l i t y i s to deduce a true market value by comparison with a m u n i c i p a l i t y i n which a landbank has not operated. I n i t i a l l y I had addressed t h i s problem by contemplating a comparative study of p u b l i c land a c q u i s i t i o n i n Red Deer and i n Surrey, B r i t i s h Columbia. T h i s may have produced some estimate of the advantages of a landbank compared with p u b l i c l a n d a c q u i s i t i o n as an adjunct to r e g u l a t e d p r i v a t e land development. T h i s i n t e n t was abandoned p r i m a r i l y because i t would have i n v o l v e d a bulk of work f o r beyond the scope of a CI. A. t h e s i s . But more to the p o i n t i t r a i s e d vexed guestions 218 about the a p p l i c a b i l i t y of the Red Deer experience i n other c o n t e x t s . These are "second o r d e r " q u e s t i o n s , and should l o g i c a l l y be preceeded by a c l e a r study of the Red Deer program i t s e l f . N e vertheless the l a c k of such f i r m comparisons w i l l c o n f r o n t us i n t h i s search f o r a " t r u e " market v a l u e . In the absence of a s t a b l e b a s i s of comparison i t i s probably i m p o s s i b l e to deduce market values from the experience of another c i t y because the s i t u a t i o n of t h a t other c i t y i s l i k e l y t o d i f f e r i n too many important ways from Red Deer. So although t h i s o p t i o n i s the most a t t r a c t i v e t h e o r e t i c a l l y i t seems impossible to o p e r a t i o n a l ! z e . S t i l l one can say with v i r t u a l c e r t a i n t y t h a t the NPV would be a high p o s i t i v e v a l u e . OPTION 3. The t h i r d o p t i o n i s what i s sometimes c a l l e d a "focused" c o s t - b e n e f i t a n a l y s i s . T h i s would t r y to a r r i v e at a NPV from the s t r i c t l y s e l f i s h p o i n t of view of the C o r p o r a t i o n of the C i t y o f Red Deer. Whether i t i s ever a v i a b l e approach i s debatable but as a method of e v a l u a t i o n of a p u b l i c n o n - p r o f i t program i t would be e n t i r e l y i n a p p r o p r i a t e . Both c o s t s and b e n e f i t s would be d i f f i c u l t to e s t i m a t e . For example the C i t y r e c e i v e s l a r g e s c h o o l and park s i t e s at no c o s t through the landbank, but foregoes c a p i t a l g r a n ts from the Province that would otherwise be forthcoming f o r the a c q u i s i t i o n of s c h o o l s i t e s . I t seems f r u i t l e s s to debate the advantages of a landbank i n t h i s c o n t e x t . I t i s more reasonable to assume that the C i t y C o u n c i l i s seeking the g e n e r a l p u b l i c good r a t h e r than some narrower i n t e r e s t , and to e v a l u a t e the landbank w i t h i n the 219 t r a d i t i o n a l c o s t - b e n e f i t framework of e i t h e r o p t i o n 1 or o p t i o n 2. The c o n c l u s i o n under e i t h e r of these o p t i o n s i s t h a t the NPV i s p o s i t i v e . I t has been argued that the s i z e of t h i s NPV i s i n d e t e r m i n a t e but very l i k e l y l a r g e . 220 FUTURE RESEARCH. The present study i s perhaps complete enough to enable other s m a l l communities i n Canada to decide whether the Red Deer landbank p r o v i d e s a good model of an urban land c o n v e r s i o n system. The a p p l i c a b i l i t y of the Red Deer experience i n other urban contexts has not been t r e a t e d i n t h i s study. Yet to be t r u l y u s e f u l to p o l i c y makers the concept of urban landbanking must be g e n e r a l i z e d beyond the s i n g l e case. T h i s i s a task f o r f u r t h e r r e s e a r c h . Even to judge the s i n g l e case of Red Deer i n c o r r e c t p e r s p e c t i v e i t i s u l t i m a t e l y necessary to measure the landbank's performance a g a i n s t other land c o n v e r s i o n systems i n s i m i l a r c o n t e x t s . There has been very l i t t l e comparative r e s e a r c h on urban land development. One study i n progress that promises to be very u s e f u l i s being conducted by the A l b e r t a Task Force on U r b a n i z a t i o n and the Future. I t i s a study of urban land development i n f i v e A l b e r t a c i t i e s , one of which i s Red Deer. I t w i l l i d e n t i f y the d e t a i l e d stages i n urban land c o n v e r s i o n i d each c i t y , and the t y p i c a l time necessary t o complete each stage of the land c o n v e r s i o n p r o j e c t . I t w i l l a l s o i d e n t i f y the "value added" t o the raw land at each stage of the c o n v e r s i o n process. Comparative res e a r c h of t h i s type should be very f r u i t f u l i n adding t o our understanding o f the c o n v e r s i o n process. A f i n a l avenue of r e s e a r c h that seems v a l u a b l e i s ba s i c e m p i r i c a l s t u d i e s i n Red Deer i t s e l f . The present study i s only a p r e l i m i n a r y enquiry. The data which the study uses i s data t h a t e i t h e r the Red Deer R e g i o n a l Planning Commission or 221 the C i t y of Bed Deer had compiled f o r other purposes. I f one was to contemplate the d e f i n i t i v e study of land c o n v e r s i o n i n Red Deer then i t would be necessary t o work d i r e c t l y with data from assessment f i l e s and the land r e g i s t r y o f f i c e . P r i c e changes and land use changes could be t r a c e d much more s p e c i f i c a l l y than i s p o s s i b l e i n t h i s study. Another approach would be to look more c l o s e l y at the d e c i s i o n - p r o c e s s e s i n v o l v e d i n the a d m i n i s t r a t i o n of the landbank program. One would need to read C i t y C o u n c i l and committee minutes over f i f t e e n years and t o i n t e r v i e w the p r i n c i p a l a c t o r s i n t e n s i v e l y . L a s t l y as a r e s u l t of these f u r t h e r s t u d i e s , and s t u d i e s a l r e a d y completed on landbanks (Red Deer, M i l l Woods, Saskatoon), i t should become p o s s i b l e to i s o l a t e those aspects t h a t are g e n e r i c to landbanking and to i d e n t i f y the best procedures i n e s t a b l i s h i n g landbanks. I t seems l i k e l y t h a t there are t y p i c a l problems i n e s t a b l i s h i n g landbanks and v i a b l e ways of overcoming the problems. T h i s study does not approach by a long way the " s c i e n c e " of landbanking t h a t f u t u r e r e s e a r c h must produce i f landbanks are to f u l f i l l t h e i r best promise. 222 BIBLIOGRAPHY 223 SOME RELEVANT BIBLIOGRAPHIES Contant, F l o r e n c e , Land Reform: A B i b l i o g r a p h y . Center f o r Community Economic Development, 1972. Pearson, Norman, Bibliggraphy,on.Housing Seeds and Landbanking c i n Towards a Metholodology f o r Housing and Landbanking Needs a n a l y s i s ^ O n t a r i o Housing C o r p o r a t i o n , O n t a r i o , A p r i l 1973. Schiffman, I r v i n g , The P o l i t i c s of .Land-Use r P,lanning_and_ Zoning: IlI*^£J}°iaJ:Sd_BiJ)lig I n s t i t u t e of Governmental A f f a i r s , U n i v e r s i t y of C a l i f o r n i a , 1970. Spurr, P eter, Canadian_Land. BibliograEhv,, CM. H.C., Ottawa, Jan. 1973. S t e r n l i e b , George, Planned Unit Development f Exchange B i b l i o g r a p h y No. 256, C o u n c i l of Planning L i b r a r i a n s , Feb. 1972. D.N. Food and A g r i c u l t u r a l O r g a n i z a t i o n , L a n d _ R e f o r A n n o t a t e d Bibliography, o f FAO_ P u b l i c a t i o n s .and_Documents £ 1945-1970,~N7Y ., 197T7 Urban Land I n s t i t u t e , New Towns Planning - and Development: A j J S l l ^ - j j i ^ g - j - i k l i o g i a p h v A U.L.I. Research Report #20, Washington, D.C 7~ 19737" Naughn, W i l l i a m , B i b l i o g r a p h i c a l Survey of M a t e r i a l s on F o r e i g n Experience with Land Reserve P o l i c i e s , L exington, Mass., Urban Land Research'Analysts C o r p o r a t i o n , 1968. GENERAL STUDIES OF LANDBANKING Bryant, R.W.G., Land..z.Priyate_Property^ P u b l i c C o n t r o l , Harvest House, Montreal, 1972. Downing, Donald A., The Role of ,Water_and Sewer_Extensign F i n a n c i n g _ i n . G u i d i n g . U r b a n _ R e s i d e n t i a l Growth L Research Report #18, Water Resources Research Center, U n i v e r s i t y of Tennessee, 1973. S t a n l e y , Thomas Brock, An E v a l u a t i o n of the E f f e c t i v e n e s s of P r i g r A c g u i s i t i o n of S i t e s f o r p u b l i c Use as a Technique to Guide^the_ Pat t e r n t of _Urban _Land_Develgpment - t M.A. T h e s i s , U n i v e r s i t y of B r i t i s h Columbia, 1965. Bureau of M u n i c i p a l Research, Landbanking: Investment^in_the Future^ C i v i c A f f a i r s B u l l e t i n #1, 1973, Toronto. Flechner, Harvey L., Towards an. Understanding of General Landbanking.at.the M e t r o p o l i t a n S c a l e t M.A. T h e s i s , C a t h o l i c U n i v e r s i t y of America, Washington D.C, 1973. Heydecker, Wayne D., " P u b l i c Land Ownership and C o n t r o l of Urban 22<4 and Suburban Land", Natignal„Municipal,_Beyiew x XXVI, #12 Dec. 1937. Janczewski, John D a n i e l , An. a n a l y s i s _ o f _ A d y a n c e _ L a n d _ A c q u i s i t i o n and Land Banking as an E f f e c t i v e Method._of_Ingtituting_Planning £E22Ell§x T h e s i s , Ohio S t a t e U n i v e r s i t y , 1972. Kamm, Sylvan, L a n d b a n k i n g P u b l i c ^ P ^ l i c y ^ Alternatiyes_and Dilemmas x Urban I n s t i t u t e , Washington D.C, 1970. 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Cole, Denis, "The C i t y of Red Deer", H a b i t a t , V o l . 6, No. 4, 1963. Dawe, We l l i n g t o n , H i s t o r y . o f R e d D e e r , (B. Ed, T h e s i s Uni. of A l b e r t a , 1954). Published by the Kiwanis Club of Red Deer, 1968. Red Deer Advocate, " C i t i e s are f o r People", ( e d i t o r i a l ) , Nov, 2, 1966. Red Deer C i t y Assessor, fiesidential_Land P r o j e c t i o n _ R e j j g r t x Hay 17, 1973. Unpublished. Red Deer C i t y Assessor, I n d u s t r i a l Land In v e n t o r y , a Report from the C i t y Assessors to the C i t y Commissioners, A p r i l 1972. Unpublished. Red Deer C i t y Commissioner, R i v e r s i d e a n d Hermary,Subdivisions -I n d u s t r i a l . S i t e s A October 30, 1968. Unpublished. Red Deer C i t y Commissioner, A^Report to the^City_Engineer_on Prepaid_Rates_-_Morrisrge_Sub September 2, ,1966. Unpublished. Red Deer C i t y Commissioner, Report on C i t y o f Red Deer Land peyelgpment_Operatigns x June 24, 1966. Unpublished. Red Deer C i t y Commissioner, R e s i d e n t i a l _ L a n d _ P o l September 23, 1966. Unpublished. Red Deer C i t y Commissioner, Report g n . i S e r v i c i n g _ g f . . S u b d i v i s i o n s t August 9, 1965. Unpublished. Red Deer C i t y Commissioner, R i y e r ^ i d e _ I n d u s , t r i a l Park._and_Gglden W e s t _ I n d u s t r i a l _ A r e a ^ July 1, 1964. Unpublished. 236 Red Deer C i t y C o u n c i l , " r e s o l u t i o n on Revised Land S a l e P o l i c y " , J u l y 6, 1973. Unpublished. Red Deer C i t y T r e a s u r e r , Report on Current P r e p a i d . S u b d i v i s i o n L a n d . A c g u i s i t i o n _ C o s t and H i s t p r i c a l _ D a t a _ o n _ P a s t _ S u b d i y i s i o n £§I§i2£Slg n.t_in_Red_Deer x Hay 18, 1973. Unpublished. Bed Deer Regional Planning Commission, P r o v i n c i a l . Set tang _ of The J-Pgg£-Bg3i2Sgl-Pl aP ni53- C o f f i miggi°5-^£§§.it Report Submitted to the M i n i s t e r f o r M u n i c i p a l A f f a i r s , Government of the P r o v i n c e of A l b e r t a , December 1972. Red Deer Regional Planning Commission, P r e l i m i n a r y Downtown S t u d y x _ C i t y _ o f _ f i e d _ D e e r x December 1970. Red Deer Region a l Planning Commission, General Plan_Statefflent §nd_Urban_Renewal_Stuay x C i t y of Red Deer, 1969. Red Deer Region a l Planning Commission, Economic_Base_Study x Hanson Economic Surveys, Edmonton, March 1969. Bed Deer Beg i o n a l Planning Commission, R e s i d e n t i a l L a n d lB^gS^2£3I^Qiil-2 wSg^-PgggBfe§I-31*.-32§5 !L Unpublished. Reid Crowther & P a r t n e r s L t d . , C o n s u l t i n g Engineers and Plan n e r s , Edmonton: C i t y of Bed Deer Beport on Sewer Bate S t r u c t u r e 1963. C i t y of Bed Deer Revised Sewer Rate S t r u c t u r e Report 1970. C i t y o f Red Deer Water Bate S t r u c t u r e Report 1970. C i t y of Red Deer Sewage Treatment P l a n t - Design B r i e f . S t a n l e y , Grimble, R o b l i n L t d . , Edmonton: C i t y of Red Deer T r a f f i c Study 1964. Strong, Nelson, & Lamb L t d . , C a l g a r y : U t i l i t y Study - North Red Deer. Baker, Alan M., The_Red_Deer_Begion g Unpublished Uni. of A l b e r t a T h e s i s 1962. Campbell, N e i l , A_Case_Study_in_Economic_Deye1opment_in_the BogPyy_llig_and Bed Deer^Farming Communities, Unpublished Uni. A l b e r t a T h e s i s 1966. Paul, L i n d a J . , S p a t i a l . D i f f e r e n t i a t i g n _ a m o n g R e s i d e n t i a j D i s t r i c t s i n Red Deer x Univ. of A l b e r t a T h e s i s ?968. APPENDIX 1 . RESIDENTIAL LAND SALES AGREEMENT 1969. 238 THIS AGREEMENT made this day of A .D. , 1 9 6 9 . BETWEEN: • • THE CITY OF RED DEER, a municipal corporation i n the Province of Alberta, (hereinafter called "the City1') OF THE FIRST PART - and -of i n the Prov-ince of Alberta, (hereinafter called "the Optionee") OF THE SECOND PART WHEREAS the City i s the registered owner of Lot , i n Block as shown on a plan of subdivision on record i n the Land T i t l e s Office for the North Alberta Land Registration D i s t r i c t as Number ; AND WHEREAS the.Optionee i s desirous of obtaining and the City of granting an Option to Purchase the lands hereinbefore described reserving thereout a l l mines and minerals (hereinafter called "the said lands") at the price and upon the terms and conditions hereinafter contained for the pur-pose of the Optionee constructing thereon a residential dwelling (hereinafter referred to as "the building"). NOW THEREFORE THIS AGREEMENT WITNESSETH that i n consideration of the premises, the sum of i$ ' (insert an amount equal to 1/4. of the t o t a l purchase price) now paid by the Optionee to the City, receipt of which i s hereby acknowledged, and the covenants and agreements hereinafter contained, the parties hereto covenant and agree together as follows: 239 1. The City hereby--grants to the Optionee the sole and exclusive right and option to purchase the said lands in the manner and upon the conditions hereinafter set out and within the time hereinafter limited for acceptance at and for the sum of § . (insert f u l l purchase price) 2. (a) The Optionee shall be entitled to accept the Option hereby granted at any time up to and including but not after the expiration of four calendar months from the date hereof by performing the requirements of subsection (e) of this section and by paying to the City in cash or by certified cheque the said purchase price less the consideration paid for the granting of this Option. (b) In the alternative, the Optionee may extend this Option for a further period of four calendar months by paying to the City in cash or by certified cheque at any time up to and including but not after the expiration of four calendar months from the date hereof the further sum of $ ; . ; , in which case (insert an amount equal to 1/4. of total purchase price) the Optionee shall be entitled to accept this Option at any time up to and including but not after the expiration of eight calendar months from the date hereof by performing the requirements of subsection (e) of this section and by paying to the City in cash or by certified cheque the said purchase. price less the amounts paid for the granting and extending of this Option. (c) In the further alternative, the Optionee may extend this Option for a further period of four calendar months by paying to the City i n cash or by certified cheque at any time up to and including but not after the expiration of eight calendar months from the date hereof the further sum of # ; ; , in which case (insert an amount equal to 1/4 of total purchase price) the Optionee shall be entitled to accept this Option at any time up to and 240 including but not after the expiration of twelve calendar months from the date hereof by performing the requirements of subsection (e) of this section and by paying to the City in cash or by certified cheque the said purchase price less the amounts paid for the granting and extending of this Option. (d) In the s t i l l further alternative, the Optionee may extend this Option for a further period of one calendar month by paying to the City in cash or by certified cheque at any time up to and.including but not after the expiration of twelve.calendar months from the date hereof the further sum of $ , in which (insert an amount equal to 1/4. of total purchase price) case the Optionee shall be entitled to accept.this Option at any time up to and including'but not after the expiration of thirteen calendar months from the date hereof by performing the requirements of subsection (e) of this section. (e) Notwithstanding the foregoing, upon payment\in f u l l of the said purchase price at any time up to and including, but not after, the expir-ation of twelve calendar months from the date hereof, the within Option shall remain open for acceptance in the manner hereinafter provided beyond the expiration of thirteen calendar months from the date hereof upon the Optionee paying the monthly sums as hereinafter specified. It is a condition precedent to and of the essence of this Agreement that notwithstanding pay-ment in f u l l of the said purchase price, the Optionee shall not be entitled to accept this Option unless and until either: (i) the Optionee shall have caused footings for the building to be constructed upon the said lands to be completely constructed and installed i n a proper and workmanlike manner, or (i i ) the Optionee shall have provided to the City such evidence as the City reasonably requires of the approval of a mortgage 2 4 1 loan for the sole purpose of constructing the building upon the said land3. Such construction shall be completed or such evidence shall be provided, as the case may be,' within thirteen calendar months of the date hereof fail i n g which, this Option and a l l of the rights of the Optionee hereunder shall, at the option of the City, absolutely cease and determine unless the Optionee shall have paid to the City a sum ec;ual to 1% of the said purchase price, which said payment shall extend this Option for a further period of one calendar month. In like manner and by like payments on or before the ex-piration of the previous calendar month, the Optionee may extend this Option for further periods of one calendar month until such time as such obstruction shall be completed or such evidence provided, as the case may be, failing which and failing such further payments, this option and a l l of the rights of the Optionee hereunder shall, at the option of the City, ab-solutely cease and determine. In the event that this Option ceases and determines as aforesaid or in the event that this Option ceases and det-ermines by reason of the Optionee not having accepted this Option as herein provided and not having made the payments referred to in subsection (b) or (c) of this section, the City shall pay to the Optionee U/5 of the amount paid by the' Optionee upon the said purchase price, i t being distinctly under-stood and agreed that the remaining 1/5, together with a l l payments made for monthly extensions hereof under this subsection, shall be retained by the City as liquidated damages for loss of tax revenue which the City would have received had a building been constructed on the said lands and for the City's expenses connected with and arising out of this Option, and not as a penalty or forfeiture. (f) In tho event that this Option i s accepted as aforesaid, the City shall dolivor to tho Optionee a registerable. Transfer of the said lands 242 ' The Purchaser shall install or cause to be installed in such building a Class A chimney and a smokeless and odourless incinerator of a type approved by the Canadian Gas Association or equivalent thereto. 5. The Purchaser shall construct or cause to be constructed in a proper and workman like manner from the City sidewalk to the front building line a driveway of gravel, concrete or asphalt of a minimum width of 8 feet. Unless the site abuts the lane adjacent to 32nd Street or y+Oth Avenue, the said driveway may be continued to the lane. h. It shall be the responsibility of the Purchaser to stake the site so as to indicate the curb cut desired for the driveway hereby required. If for any reason the Purchaser fails to so mark the site, the Purchaser shall pay to the City the cost of making a curb cut, prior to such work being done by the City. In the event that a curb cut has already been installed for the servicing of the site at the time of the execution of this agreement, and such curb cut. is not satisfactory to the Purchaser, the Purchaser shall pay the cost of the removal of the said curb cut and the further cost of an additional curb cut at a location chosen by himself, prior to the City undertaking the work. 7. No building permit for such building shall be issued until a l l under-ground services and gravelled roads are available. 8. It is understood that the lanes adjacent to 32nd Street and Z+Oth Avenue shall not be constructed by the City but will be landscaped by the City, which landscaping shall include a.planted hedge. 9. Subject to subsection (d) hereof the Purchaser further agrees that the minimum side yard on one side of the site shall be five (5) feet. The minimum side yard on the opposite side of the site shall be: (a) five (5) feet where a garage or carport is attached to or is an integral part of the principal building, or (b) ten (10) feet where a garage or carport is to be provided in the rear yard of- the site, or (c) seventeen (17) feet where a garage or carport is to be attached to the principal building at a later date, (d) In the event that the front building line of the site is 70 feet in length or greater, the minimum side yard on one side of the site shall be ten {±0%) per cent of such building line. The minimum side yard on the other side of the site shall be; in the case subsection (a) hereof applies, ten (lC$) per cent of the said building line; in the case subsection (b) or (c) hereof applies, ten (10) feet or seventeen (17) feet respectively, as the case may be. (a) (b) (c) 7? 5" 10 fr 5. .17 > 244 9. The Optionee specifically covenants and. agrees to landsccpo and maintain in.a good and husbandliko manner the u t i l i t y lot abutting upon the site and described as < and this covenant i s and shall for a l l purposes be deemed to be a covenant running with the said land3 in favour of the said u t i l i t y lot, and the City may f i l e a caveat against the said lands to protect this covenant. IN WITNESS V/HEREQF the party of the f i r s t part has hereunto af-fixed i t s corporate seal attested to by the signatures of i t s authorized officers in that regard and the party of the second part ha3 hereunto (affixed i t s corporate seal attested to by the signatures of i t s authorized officers in that regard/ set his hand and seal) the day and year f i r s t above written. THE CITY OF RED DEER Signed, Sealed and Delivered p Q r. Mayor in the presence of (Witness) City Clerk APPENDIX 2. TABLES FROM "SPATIAL DIFFERENTIATION AMONG RESIDENTIAL DISTRICTS IN RED DEER." BY LINDA PAUL 1968. Note i (*) added to i n d i c a t e landbank s u b d i v i s i o n s . FIGURE 17 - RESPONDENTS' VIEWS ON DISTRICT ENVIRONMENTAL QUALITIES /o GO to 20 Mount view * n 60-to I £ 3 H 5 b 7 8 S' 10 N.ijhbourhoud Qualities Sunnybrook * 2<H D 6o] 10-£ 3 4 5 6 7 KbourViooJ Qua] West Park °/Q Neighbour riooJ Qualities 6CH 4 10 D D a / £ 3 4 5 6 7 8 « J I 0 o u r h o o d Q u a l i t i e s '?„ South Central- Parkvn le 20H in D Lin n % HO] 2 3 4 5 6 7 8 <5 IO 2 0 Ob a nin i £ 3 4 5 6 7 8 4 / 0 . N e i ^ h b o u r r w o J Q u q l i t i e ; . NEIGHBOURHOOD QUALITIES - P e r c e n t a 9 o f R e s i d e n t s u/ho Ii— i l L i h e t h e Q u a l i t y L L l p —P e r c e n t a g e . whc.D13l1ke.lt 1 - M i x n y , w a l l - k e p t P a r K l 2- Q u i e t 3 " G oo d CVio.ra.ct.er r»r RaisinjC^ Hr?a 4 -New District 5 -Spacious Atma^pW-u-e. 6 - Like PeopW in Araa 7 - E x c l u s i v e A t m o s p h e r e 8 - A t t r a c t i v e . D i s t r i c t 1 - J\o Heavy Tru.f tic IO-hOo ObnoMous LanJ-Ufiea Ncjrky 80 60-4o-Morrisroe* 20-D D % i D 8 o i Grandview-Michener Hill 1 0 6CH acH r a D a. Q % 40J 2 3 V 5 6 7 8 <? 10 NavgVitaurhoaJ Civilities North RedDeer a % £ 3 4 5 6 7 8 7 N e l i j K o v j r h o g d Q u a l i t i e s 10 < 20-n n n I E l 2 3 4 5 6 7 8 4 / 0 N c i j K b o u r h g j J Q u a l i t i e s fy R cd D e er Aye.-ag; • 6 0 20 DlDLa o /o. ec 604 lnl I 2 3 4 5 6 7 8 ^ / 0 Oriole Pork * % 8 0 i 6OH 4oH 2CH % 2CH % 104 io D a n 2 3 4 5 6 7 8 1 10 Woodfea-Waskcsoo a n 2 3 4 5 6 7 8 ^ / 0 Eastview n ra Ok a old l £ 3 4 5 6 7 8 f / o North Centra] n ra ra d 2 3 H 5 6 7 S .4 io N*i$tlbourkojJ O ^ j l i f c j j * S o u r c e : Qvl«.sti«r,r,oirc D a t a LIR FIGURE 18 - RESPONDENTS' VIEWS ON CONVENIENCE OF THEIR DISTRICTS %* Sunnybreok 6cH 40 o p'riL rn / 2. 3 H 5 6 7 Convenience. tat-tn">atft G r an dv iew-Michener Hill •flOi 60-10-i 4 ?°1 80-60-101 Z 3 4 5 6 7 Coownitive Estimate Morrisroe inn / 2 3 4 5 6 7 Convenience f s L^uU 60 South Hill n n n I 2. 3 4 5 6 7 Caoitfuen^e Estimate *° North Cenfrcl 80i a a / 2 3 4 5 6 7 Convenience Est'^ w^ e •9 _ Mount view* 6cH ten h I Z i 4 5 b 7 ? North Red Deer 60H 20- r - t n n n 2 3 4 S 6 7 *0 6c> Convenience JL»limatt Farview a nO 30 / 2 3 4 5 6 7 Convenience Estimate .South Csnfroi-Pcrkvtfe h n i h i ! I JC-i I ! I ! Z 3 4 5 o 7 60 Woodfea-Woskcsoo D SO-60-/ £ 3 4 5 6 7 Convenience. ?*timatt Eastview * ! ! !l » f i—r=' O - i 90-1 60-40-j J" / :i :; - 5 £ Oriole P e r t * G !' on! H i ! i ' n-r H ! I i H / £ 3 H 5 6 7 Congruence cat,mala PROXIMITYTO: 1 Work. 2 S c h o o l 3 Shop« (Grocery,Dru<js) Recreation Area^  5 Church 6 fami'^ t/ o r F r i e n J i 7 D o w n t o w n 19 Conve^ '^ t^. Kcipo n d £ n t Fecis Fn^ lor LJr ,51 nc onvemeni ^ Red Deer Averags QCn 604 40J 20 h n vVsst Perk * 2^ j <-Oi i i I! ii 3 4 5 6 7 ro FIGURE 19 - RESPONDENTS ' VIEWS ON T . ' I E I R DWELLING UNITS 248 4(1 South Hill 20-^  0 a ala 60-40-£0-I 2 3 4 5 6 7 8 4 10 QuuJ">fcie5 Grandviev/- Michener Hill n • a n 6^ 1 / £ . 3 4 5 6 7 8 9 10 Qua l i t i e s North Central H0-\ 2oA adn a % 80 40H 2 0 / £ 3 4 5 6 7 8 9 10 Qualities WestRirk * D I 2 3 4 5 6 7 8<} 10 Qualtt ies % 80-60 40-20 Oriole Park D / £ 3 4 5 6 7 0 4 10 Q U A L I T I E S OP D V / t L L I N C U M I T 5 DF" Respondent Lik«c 0 - -* I! - -i -Respondent Feds QuJ.tv, I, ' Uckin-j f - Suf'f IC.I* rH-VVivacy (?• Rcio tivrl?-l .-.wT;,-/-. 2"Lar^ o. Enoy-jhHeme 7-Cood V'l'f w 3"SpAc.ioasYttT-d 8"L<>.vcl I.and •Jt Vow Coil 10-Atl.-.. Woodlea-Waskcisoo 60-, 40-20-n o 60-40-20-I £ 3 4 5 6 7 8 4 10 Qua t i t les South-Central Parkvab D a / a 3 4 5 6 7 8 4 I O ©/ Qualities IO 60-4CM Sunnybrook n a o % eo-60-HQ-20-l 23 4 5 6 7 8 9 to Qualities Fair view * ID a an I a 3 4 5 6 7 '3 9 10 Qu.ll. tics /o 60 — 'io 20 D n ID Red Deer Average a % 60-| 40H 2CH I 2 3 4 5 6 7 S 4 / 0 Q y a l i t i t s Eastview * a n D 6o] 40H 20J I £ 3 4 5 6 7 8 4. 10 Qual i t ies . North Reel Dser. n o Q r n a. % 80-. 60 2CH I 2 3 4 5 6 7 8 1 10 O L J O I I ties Morrisroa D D % so 6 0 -20 1 2 3 4 5 6 7 3 ' ? /0 Qualit ies . . . * Mountvi3v. la D a n nla » £ 3 45 6 7 8 ? 10 Qualit ies Sour t Que*itioni\iAir c Ij P TABLE XXI - FAVOURABLE AND UNFAVOURABLE RESPONSES TO MUNICIPAL SERVICES PROVIDED D i s t r i c t E l e c - Running t r i c i t y Water Un- Un-Fav. fav. Fav. fav. Sewer Street Lights Un- Un-Fav. fav. Fav. fav. Paved Roads Paved Walks Un- Un-Fav. fav. Fav. fav. Telephone 'Bus Un- Un-Fav. fav. Fav. fav, Sunnybrook * Morrisroe # Mountview * Fairview * Oriole Park* ,West Park * Eastview * Grand.-M.Hill South H i l l North Red Dr. Woodlea-Wask. S.C.-Parkvale North Central C i t y Average 76.9 — 80.0 — 100. — 91.3 — 100. — 89.7 — 72,7 — 66.6 90.6 — SO.6 — 77. 8 — 88.2 — 53.3 — 84.4 — 73.1 — 73.1 76 .9 8*0,0 — 7 0 . 0 10 .0 8 0 . 0 100, — 100. — _ 95.7 91.3 — 91.3 — 82.6 100. — 9 4 . 1 _ — 94,1 89.7 — 89.7 86.2 72,7 — 72.7 75.7 70 .0 — 6 6 . 6 . - — 73.3 9 0 . 6 9 0 . 6 9 0 . 6 64 .5 6.5 2 9 . 0 67.7 74.1 — 74.1 66.7 85.3 — 8 8 . 2 — _ 82.4 8 0 . 0 — 8 0 . 0 8 0 . 0 82.5 0 .5 79.7 3 . 0 8 0 . 9 4 .3 4 . 3 3 . 4 3 .3 9.7 76 .9 80.0 95.7 91.3 82.4 89.7 75.7 73.3 81.3 35.5 70.4 79 .4 80.0 — 73.1 — 80.0 4.3 95.7 — 87.0 4.3 4 .3 9 4 . 1 89.7 — 75.7 ~ — 73.3 — 3 .1 81.3 3 .1 33 .7 35 .5 3 5 . 5 — 7 0 . 4 — — 79.4 — — 8 0 . 0 — 1.9 77.8 3 .5 78.1 3 . 6 7 6 . 9 8 0 . 0 100. 91.3 100. 89.7 66.7 73.3 84.4 71.0 74. 1 79.4 80 .0 3 . 8 -4 . 3 — 21 .9 13 .0 3 . 4 - -59.4 12.5 4 5 . 2 22 .6 — 7.4 11.8 5.9 6.7 6 . 7 ' 8 2 . 0 — 12 .0 5.2 Source: questionnaire data, 1967 TABLE' XXII - RESPONDENTS' VIEWS CM TiiLi HOUSING MARKET • •SITUATION IN RED PEEK Percentage who Problems s t a t e d : Renting D i s t r i c t Yes No Problems •-. Choice Buying Yes No Inr-uf- S u f f i - N.'.<':u-f i c i e n t ciont Sunnybrook" M o r r i s r o e * Mountview * Fairview* ' . , O r i o l e Park* West Park* Eastview* . Grandview-M.Hill South H i l l North Red Deer Woodlea-Waskasoo S.Cent.-Parkvale North C e n t r a l Whole C i t y 23 .1 0 . 0 3 4 . 6 26 .9 3 0 . 0 0 . 0 4 0 . 0 0 . 0 26 .1 4 .3 21 .7 52 .2 3 9 . 1 8 .7 17.4 26.J. 35 .3 0 . 0 35 .3 35 .3 20 .7 13 .8 20 .7 20 .7 3 9 . 4 0 .0 24 .1 "9.1 13.3 6 .7 13.3 6 .7 3 7 . 5 12 .5 9 .4 0 . 0 16 .1 19 .4 12 .9 12 .9 7 .4 7 .4 22 .2 2 5 . 9 3 8 . 2 2 .9 5.9 1 1 . 8 43 .3 3 .3 13.3 13 .3 28 .4 6 .1 20 .8 17 .8 38 .5 34.6 3.8 7 0 . 0 0 .0 10.0 3 0 . 4 47 .8 8.7 39 .1 26. J 4.3 58.8 29 .4 11.8 34 .5 3J .0 . ] 3.8 4 5 . 5 24.2 3-D 3 0 . 0 10 .0 3.5 4 0 . 6 18.8 3.1 29 .0 29 .0 • 3 . 2 29 .6 . 33.3 0 . 0 38 .2 20 .6 : 0 . 0 50.0 10.0 6 .7 41 .1 24.2 5.5 Source: questionnaire data, 1967 

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