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Bonusing downtown housing: an evaluation of goals and means Miller, Robert M. 1982

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BONUSING DOWNTOWN HOUSING: AN EVALUATION OF GOALS AND MEANS by ROBERT M. MILLER B. A. ( H o n o u r s ), U n i v e r s i t y  Of C a l g a r y  ( Calgary  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE School  STUDIES  Of Community And R e g i o n a l  We a c c e p t to  this  thesis  the r e q u i r e d  as  Planning  conforming  standard  THE UNIVERSITY OF BRITISH COLUMBIA September  ©  Robert  1982  M. M i l l e r ,  1982  ), 1975  In p r e s e n t i n g t h i s requirements  thesis  f o r an  in p a r t i a l  I agree  available  f o r r e f e r e n c e and  purposes or h e r  t h a t the L i b r a r y  be  granted  by  representatives.  publication allowed  of  this  without  Department  of  my  thesis  School  September  the  t h e Head of my  for financial  Of  27,  1982  Community And Columbia  British  make i t f r e e l y  I further  of t h i s  of  agree.that  thesis  for  Department  scholarly or by  that copying gain  shall  or  not  written permission.  1W5  Date:  shall  I t i s understood  The U n i v e r s i t y of B r i t i s h 2 0 7 5 Wesbrook P l a c e V a n c o u v e r , Canada V6T  study.  for extensive copying  may  of  advanced degree at the U n i v e r s i t y  Columbia,  permission  fulfilment  Regional  Planning  be  his  i i  Abstract The  purpose of t h i s t h e s i s  effectiveness residential extent  to  housing  density  the  public  downtown,  of  goals  Chapter noting  that,  there  is  potential discuss  for  t o be  realized  systems.  for  Chapter  the  and  of l o c a l  of  large of  North density o f more  The  likely  i n l i g h t of impact  to the problem  a d v a n t a g e s of  firstly,  to  of  systems, objectives the  evaluate  and;  complement  area  re-examine to  systems,  the  bonus Three  secondly,  bonus  governing  the  thirdly,  or r e p l a c e  investigation's  to  bonus  s c o p e and  discussed.  used  in  analysis  themselves, are discussed. number  the  expected  an i n t r o d u c t i o n  housing;  Two p r e s e n t s ,  the  stimulate  markets.  thesis:  of  the  evaluated  the  -  examines  considered.  i s then  mechanisms w h i c h might  bonus s y s t e m  areas  their effectiveness.  downtown  are  to  innovation  i s , the d e s i r a b i l i t y  and  the apparent  t o doubt  Parameters  limitations  goals,  real estate provides  likely  first  bonus s y s t e m  effectiveness  other  is  zoning  potential  t o the e v a l u a t i o n  that  a  despite  cause  arguments  the  One  established  are  downtown  goal,  the  investigation  As a p r e r e q u i s i t e  b o n u s e s on downtown  are  i n the  examine  new  The  bonuses  the underlying  effectiveness the  bonuses.  of housing  in  to  relatively  such  cities.  bonuses,  a  which  development American  of  is  as an example, a b r i e f d e s c r i p t i o n o f downtown  Vancouver.  undertaken The r e s u l t s  in of  The  underlying  defining  the bonuses  interviews  with  a  d e v e l o p e r s a r e summarized, d r a w i n g a t t e n t i o n t o  the  strengths.and  suggesting  s h o r t c o m i n g s of the  inconsistencies  in  system  in  i t s most b a s i c  practice  and  a s s u m p t i o n s and  premises. An core  historical  is  presented  implications character policies area  perspective  of  and  on t h e e v o l u t i o n  i n Chapter Three.  sustained residential  w h i c h emerged  growth  function.  The  goal  are c r i t i c a l l y  arguments a r e l a r g e l y supported  by  a  very  i s drawn t o t h e on  the  public  arguments  reviewed.  intuitive, limited  downtown  area's  goals  to changing c o n d i t i o n s  a r e e x a m i n e d , and t h e u n d e r l y i n g  housing  Attention  employment  i n response  of the  base  i n the  supporting  I t i s concluded  emotional  and  and  that the  value  of e m p i r i c a l  the  based,  e v i d e n c e and  analysis. Chapter " density expected  examines t h e  bonuses  evolution  " as a mechanism  effectiveness  valuation the  Four  evaluated  investment  use c o n t r o l . -in  Their  of  land  methods f o r c a l c u l a t i n g b o n u s e s a r e o v e r l y - s i m p l i s t i c ,  that  a r e u n l i k e l y t o be s u s t a i n e d they  are  theory.  light  of  that  case,  estate  then  f o r land  construction  I t i s argued  bonuses  and r e a l  is  and  over  time and t h a t ,  most  likely  to  be  captured  landowners,  providing  little  or  no  incentive  landowners.  I t i s concluded  undermine  the  expected  stimulating  the p r o v i s i o n  that  these  original  f o r subsequent  shortcomings  usefulness of  by  residential  of  i n any  bonus  seriously systems  development  in  in the  downtown.  In  Chapter  Five,  the goals  f o r downtown a r e r e - e x a m i n e d .  iv  Alternatives the  t o the p r o v i s i o n  downtown's  " problems  of p r o v i d i n g h o u s i n g series  of h o u s i n g  are i d e n t i f i e d .  for further  in  discussed.  context, legitimate  that  to repair  the  area.  be  i s , in  downtown  used  " bonuses  should  terms  subsequent  which c o u l d  of the  findings  t h a t t h e arguments f o r h o u s i n g a  strategic  solution  c o n s e q u e n c e s o f employment  growth i n  not being  of  within  bandaid  housing  rigorous examination  a  as a  further,  might  should first  outlines  f u n c t i o n r a t h e r than  one  arguments  means  of  for developers  which  t o the t o p i c  to  role  the negative  for  Six  "  the  inducement  and  Chapter  .re-considered  I t i s suggested, "  Alternative  the i m p l i c a t i o n s  I t i s suggested  t h e downtown  " solution  research.  In t h e c o n c l u d i n g c h a p t e r are  a  " are put forward.  o f q u e s t i o n s and i s s u e s r e l a t e d  provide d i r e c t i o n s  as  be  over  established.  application,  positive  without Finally,  and e v a l u a t i o n o f such  to their  a  i s largely  promoted  as a  t h a t the e x p e c t a t i o n t h a t  provide time  housing  economic  an i l l u s i o n , more  convincing  t h e need  techniques,  i s emphasized.  and  for a before  V  Table of Contents  Abstract ii L i s t of Figures i i i Acknowledgement v i i I. INTRODUCTION 1 A. OBJECTIVES 4 B. PARAMETERS OF THE ANALYSIS 4 II. DOWNTOWN VANCOUVER - AN EXAMPLE OF BONUSES IN PRACTICE 8 III. IS DOWNTOWN HOUSING DESIRABLE? 20 A. AN HISTORICAL PERSPECTIVE 21 B. DOWNTOWN HOUSING - UNDERLYING GOALS 35 1. GOAL#1 - EFFICIENCY 36 2. GOAL#2 - A " LIVABLE " DOWNTOWN 37 3. GOAL#3 - BROADENING L I F E S T Y L E OPTIONS 38 4. GOAL#4 - SUPPORTING DOWNTOWN A C T I V I T I E S 39 5. GOAL#5 - STABILITY IN THE LONG RUN 40 C. HOUSING AS A " SOLUTION " ? 40 IV. BONUSES - IN THEORY AND PRACTICE 50 A. ORIGINATION 51 B. DEFINITION AND STRUCTURE 55 C. CALCULATING BONUS AMOUNTS 59 D. LAND VALUE DETERMINATION AND DENSITY BONUSES ....63 1. ADDITIONAL PERMITTED DENSITIES 67 a. Development 68 b. Disposition 71 2. COMMERCIAL/RESIDENTIAL DENSITY BONUSES 73 a. Development 73 b. Disposition 79 E. PROBLEMS AND SHORTCOMINGS 81 1. CAN THE BONUS BE ACCURATELY CALCULATED? 81 2. CAN THE INCENTIVE REMAIN OVER TIME? 85 3. FOR WHOM IS THE BONUS AN INCENTIVE? .....87 4. DO A L L LANDOWNERS RECEIVE AN INCENTIVE? .....89 F. SUMMARY OF CRITICISMS 90 V. BEYOND THE BONUS 91 A. HOUSING AS A "MEANS" 93 B. HOUSING AS AN "END" IN I T S E L F 95 VI. DIRECTIONS FOR FURTHER RESEARCH 98 VII. CONCLUSIONS AND IMPLICATIONS 1 01 BIBLIOGRAPHY 106  vi  L i s t of Figures  F i g u r e 1: Downtown Vancouver - R e s i d e n t i a l Bonus Provisions. Figure 2 : Downtown Vancouver - Mixed-use P r o j e c t s U s i n g R e s i d e n t i a l Bonus P r o v i s i o n s , February, 1 9 8 2 .  Acknowledgement I am g r a t e f u l f o r t h e p e r c e p t i v e and s u p p o r t i v e comments of my principal a d v i s o r s , J a y W o l l e n b e r g , J o n a t h a n Mark and C r a i g Davis. T h e i r i n s i g h t s and enthusiasm have made the project c h a l l e n g i n g , i n s t r u c t i v e and e n j o y a b l e . I am especially thankful e n c o u r a g e m e n t d u r i n g t h e s e p a s t two much h e r e n d e a v o u r as i t was mine.  for Sheila's y e a r s , f o r the  patience and t h e s i s was a s  1  I.  For  several  encourage  the  downtown  areas  other  land  downtowns w i t h raising  to  private  and  "  variety  public the  bonuses, as  marketplace use  by  private  projects  either bonuses concept  alike.  construction  of  the  a zoning  evident theory,  that or  i n an  there  future  from  large  have been  its application.  units  the  dearth  That  developers of  within  cities. which  downtown.  a  a  of  Residential they  created, reward  B o n u s i n g , as unorthodox very  form  pro-active  literature  of  to  addressing of  r e v i e w s of not  a  purposes.  effectiveness  is  the  economic v i a b i l i t y  public  few " c r i t i c a l (  both  technique  provision  a particularly  or  for  w h i c h would a c t u a l l y  to achieve  application  estate  f o r the  represented  the  downtown.  1960's, the  dwelling  housing  effort  r o l e of  1970's, b o n u s e s were u s e d  p o l i c y makers t o m a n i p u l a t e  is the  the  to  residents  the  several  it  the  employees to  have been d i f f i c u l t  innovation  as  to  American  mixed-use p r o j e c t s  for providing  close  to  and  offering real  In  and  of  i n exchange  of  and  Canadian  the  In  amenities.  intervention  attempt  within  most  about  c o n t r o l mechanism, was  public  It  in  appeared,  business d i s t r i c t s  were promoted  of  sectors  makers have s o u g h t  R e s i d e n t i a l u s e s , compared  housing  building density  of  density  land  housing  r e s u l t i n g imbalance  " zoning  stimulate  the  the  policy  large c i t i e s .  re-introduce  bonus  central  of  have d e c l i n e d  public  additional  to  of  urban  a number of q u e s t i o n s  Efforts  of  decades  development  uses,  INTRODUCTION  density  either  suggest  the that  2  s p e c i f i c ; bonus detail  by  individual  particular that  schemes  are  At local  -  work and, there  bonus  potential one  implemented, might  and  1  some  infer  from  the  met  to  bonus s y s t e m  workshop  concerns  1981,  in October,  architects  residential  the c e n t r a l  what  should  the  downtown and  of  two  used  questions  those  using  the  public  g o a l s be  what c o n t r i b u t i o n  with  respect to  the  might  new  t h e a r e a make t o w a r d s a c h i e v i n g t h o s e •  i f , indeed, housing  The  suggestion  was  t h e bonus s y s t e m was not  offered  exist. an  the arguments  are  s y s t e m be  1  observe  system: •  did  can  of  f o r doubt.  planners  Throughout  as  One  in Vancouver  e f f e c t i v e n e s s of t h e  repeatedly  least,  exhaustive  therefore, that public objectives  i s cause  investors,  downtown V a n c o u v e r .  emerged  at  in  the  bonus schemes have been  a p r a c t i o n e r s ' workshop  the  evaluating  have been b u i l t .  but  developers,  discuss in  may  t h a t b o n u s e s do realized  been e x a m i n e d  Superficially,  where r e s i d e n t i a l  this  not  developers  sites.)  amount of h o u s i n g  have  an  d e f e n s i b l e , how  forward  illusion  Where d e v e l o p e r s  economic  M i x e d - u s e Workshop on O c t o b e r 1, 1 9 8 1 , Council.  inducement  -  by  effective  downtown  can  a bonus  development?  several participants  that in p r a c t i c e  were,  in theory  in  goals?  for increasing  in s t i m u l a t i n g r e s i d e n t i a l put  housing  at  f o r the p r o v i s i o n  it  least,  that  simply to  be  of d w e l l i n g  ( Proceedings forthcoming ) h e l d i n Vancouver and s p o n s o r e d by t h e C a n a d i a n H o u s i n g Design  3  units  i n mixed-use p r o j e c t s ,  dearly an  for that  economic  sector's  of  the  local  opportunity  burden than  perspective,  w o r k i n g as  the  surfaced  interest Whyte's While  have  Whyte  was  generated  by  bonusing  for  offers a  downtowns,  floorspace  stands  in  nothing relatively  Whyte a r g u e s ,  o f f e r s d e v e l o p e r s an  questionable.  1981 .  the  bonus was  more  From t h e system  Similar  subsequent in  on  of  New  private was  not  perceptions  interviews  mixed-use  with  projects  behalf  in  the  increased  g e n e r a t e more  suggests  that  solution.  costless  in  William  i s , at  system.  public  bonuses The  bonuses  building  to the  and  the  the  very  bulk costs  prevailing provide  suggestion  mechanism  is fallacious,  incentive  " public  residential  direct opposition  "  the  most n o t e d l y  to  that may  of  York C i t y ' s bonus  referring  which, g e n e r a l l y ,  " something  Whyte,  during  raised  accusation  bonused  benefits,  literature  2  his  paid  areas.  criticism not  usually  bonus  i t to.  engaged  been  unreserved  specifically,  than  the  " i n b o n u s i n g more g e n e r a l l y ,  2  had  incentive.  expected  developers presently  Doubts  an  argued,  p l a n n e r s had  they  i f anything,  i t was  i t was  bonus s y s t e m  fact  and,  V a n c o u v e r ' s downtown bonus  it  in  for  a that  improving  extent least,  to  which highly  4  A.  OBJECTIVES The  purpose  desirability bonusing  of t h i s  the  technique.  The  predominantly  to  have  trace  to  of  t h e downtown;  i f the goal  complement  PARAMETERS OF  of  The  development  and  and  has n e i t h e r  of  under  so  as  and to  which they might  be  of h o u s i n g  housing  is  found  actions  the d e n s i t y  to  which  bonus  be  might  mechanism  examined.  application,  do  of  residential  downtowns has o c c u r e d o n l y amassed  an e x t e n s i v e  a broad base of well-documented there  goal  ANALYSIS  1960's  While  the  bonuses  public  or r e p l a c e  i n N o r t h American  draw.  The  and,  other  bonuses  nor  within  thesis:  the development  increased  be b r i e f l y  THE  f o r the  review  residential  in stimulating  defensible,  B.  units  review the assumptions, workings  the c o n d i t i o n s  effective  will  density  l a r g e downtowns.  established  critically  critically  determine  •  the purpose,  of d w e l l i n g of  the  h o u s i n g i n t h e downtown;  limitations  in  re-examine  of  of t h e r e s i d e n t i a l  areas  been  and  increased •  will  the p r o v i s i o n  commercial  objectives •  thesis  effectiveness  used t o encourage  following  i s t o l o o k b e n e a t h t h e assumed  o f downtown h o u s i n g and assumed u s e f u l n e s s  w o r k i n g s and p o t e n t i a l bonuses  thesis  exist  body  experience  a small  number  of  upon  density  since  the  literature which  of a r t i c l e s  to  which  5  discuss from been  this  new  " innovation  " in land  w h i c h have  implemented  those c i t i e s possible  effectiveness been  in  to of  any  for  has  some  been  from  various  " hands  on  experience.  interviews  with  projects,  have  insightful principal  s o u r c e s of  a  to  which  and  has  actual have  such,  the  information fall  these,,  not  they  of  short  coupled  involved  in  of  with  bonused  informative  undertake the  have  literature  downtowns  of  by-laws  the  As  examination  sufficiently  which  it  after  time.  actively  information  planning  of  Nonetheless,  provided upon  bonuses,  bonuses  most  developers  basis  •  sources,  c o n t r o l , and  which e v a l u a t e  period  l i m i t e d t o an  gleaned  "  reports  downtown r e s i d e n t i a l  place  investigation  find  use  and  analysis.  The  included:  relevant  to  alternative  the  planning  land  use  of  control  mechan i sms; •  literature valuation  . •  economic  dealing and  investment  feasibility  municipalities bonus •  with  in  the  theory  of  land  analysis;  studies the  undertaken  course  of  their  for  several  developing  systems;  downtown fifteen  planning large  documents  cities  in  for  Canada  approximately and  the  United  States; •  written  summaries  from  several  w i t h downtown r e s i d e n t i a l •  interviews are  with  actively  bonuses  developers  involved  workshops  in  who  dealing  in Vancouver;  and  have been, or  who  bonused,  mixed-use  6  projects  A  second  Vancouver.  parameter  of the t h e s i s  major  is related  e m p h a s i s p l a c e d on  the economic a s p e c t s of bonus  less  being  attention  consequences this  of  i s that  a particular  form,  often  The  do.  to  which d e n s i t y a prescribed design.  underlying any  latter  while  second-order  The  for  are  - f o r example, bonused,  can  be  t h e method  designed e i t h e r  of  housing obvious  questions t h e bonus  f o c u s of  and  to create  in  project  to  policy  comparison  is likely  the t h e s i s  by  population  concern  in  the  to  the  to r e s u l t  in  is clearly  on  the  not  be  question.  to  downtown's for  system  to other s i t e s ,  resulting  be,  at a l l .  Finally, limited  reason  they  density  the  with  o r t y p e of t e n a n t , a l t h o u g h  units  q u e s t i o n of whether  housing  The  o r t o p e r m i t maximum f l e x i b i l i t y  will  become  systems,  imply  subsidized  -  the  necessarily  bonus  is calculated  characteristics makers,  or  of  to  social/environmental  result.  a  transfer  What  the  bonus s y s t e m s need not  structure  result  to  w h i c h may  environment  expensive  opportunity  given  the p r o j e c t s  imbalance  whether  3  i n downtown  3  t h e n o t i o n of the  provision  commercial  example,  the  " downtown  areas.  West  End,  of  dwelling  Adjacent False  housing  "  need  units  within  residential  Creek  and  the  the  districts,  site  of  B.C.  The " downtown ", in conceptual terms, includes the commercial/retail centre and t h e p r e d o m i n a n t l y n o n - r e s i d e n t i a l t r a n s i t i o n a r e a s w h i c h t y p i c a l l y s u r r o u n d i t , commonly referred to as t h e " c o r e " and " frame ", r e s p e c t i v e l y . In p a r t i c u l a r s i t u a t i o n s , a b u t t i n g r e s i d e n t i a l d i s t r i c t s may a l s o be i n c l u d e d .  7  Place, role  ( a l l o f w h i c h abut  i n terms o f  However,  as  commercial  achieving  public  goals  areas,  such  areas  will  The  importance  be c o n s i d e r e d  where t h e i r  provide  of a d j a c e n t impact  ) may  p l a y a key  the  downtown.  for  d e n s i t y b o n u s e s have t y p i c a l l y  examination. will  V a n c o u v e r ' s downtown  been a p p l i e d w i t h i n the  focus  f o r the  residential  districts  on t h e downtown may  be  of  significance. As  an  introduction  complications of  which  surround  Vancouver's system w i l l  questions  will  then  •  should  •  if are  to the mechanics of bonusing, i t s application,  be p r e s e n t e d .  be e x p l o r e d housing  i n the subsequent  increased housing  study  critical  chapters:  i n t h e downtown?  i n t h e downtown  density  case  The two most  be e n c o u r a g e d  residential  a brief  and t h e  bonuses  isdesirable,  likely  to  be  effective? Finally, replace drawn  other  the bonusing  public  actions  mechanism w i l l  from t h e a n a l y s e s .  which might  complement o r  be d i s c u s s e d and c o n c l u s i o n s  8  II.  DOWNTOWN VANCOUVER -.AN  In system  1975,  the C i t y  EXAMPLE OF  of Vancouver  t o encourage the p r o v i s i o n  certain  districts  of  f o r t h e a r e a had  goals  following  within  proposals •  to  been  improve a  to  caused  bonus  ratios  1974,  statement with  5  the  to housing i n the a r e a : environment  of  downtown  activities,  variety  supporting  by  including  and d i v e r s i t y  commuting and  of m u t u a l l y  growth  over a to  t o enhance  the  activities  and  in appropriate  by e n c o u r a g i n g new for varied  housing,  income  groups.  were p r o p o s e d i n 1974,  tested  by a c o n s u l t a n t  impact  of t h e p r o p o s e d d e n s i t y  feasibility  developments i n  t o r e d u c e t h e p r o b l e m s of a c c e s s  further  l o c a t i o n s and The  mixture  in  bonus  and  to encourage activities  human  by d a i l y  effectiveness  •  prepared  provide  24 - hour day,  services;  a density  of r e s i d e n t i a l  specifically the  encouraging  work  implemented  PRACTICE  t h e downtown." A p r e l i m i n a r y  related  housing,  BONUSES IN  engaged  by t h e C i t y provisions  s t u d y , c o n d u c t e d by W e s t e r n  in  varied  6  and s u b s e q u e n t l y  t o examine on  downtown  the  development.  Realesearch  likely The  Corporation  ' C i t y o f V a n c o u v e r , Z o n i n g and Development By-law, 3575, 414. C i t y o f V a n c o u v e r , 1974. When the development guidelines were a p p r o v e d by C o u n c i l i n 1975, t h e r e f e r e n c e t o " v a r i e d income g r o u p s " was not stated explicitly. 5 6  9  Ltd.,  7  examined  locations,  the v i a b i l i t y  ' assuming  Development  on  profit  no  used  financing  site ",  mortgage  component.  Estimates  would  the  and e q u i t y  six sites  assuming ratios  (  commercial ratios the  which  the  density  and,  i n which a d d i t i o n a l  existing  straight  office  office/retail/residential was  zoning,  residential  the  f o u n d t o be u n e c o n o m i c a l g i v e n  75%  were  (  both  to  For each of  were  in  evaluated density  permissible  were  Without exception,  prototypes,  a  be  levels  an a s s o r t m e n t o f  development,  the  commercial  then the p r o p o s e d  densities  each.  that  be e v a l u a t e d . projects  six  t h e r e would  returns  reduct ions  finally,  commercial zoning.  in  developer's p r o f i t  ) could  implied  that  for  in  determine  assuming  which p r o j e c t e d  existing  )  assuming  prototypical  always  to  obtained  of r e q u i r e d  examined,  first  be  positions  ratios  analysed  subsequently,  used as benchmarks a g a i n s t capital  was  projects  density  initially  8  and,  loan/value  development  different  each  " developer's  of  density  added  whether f o r  office/retail development  existing  market  to  of t h e  or sites  conditions.  " G e n e r a l l y s p e a k i n g i t would appear as though the proposed zoning regulations will not e n c o u r a g e t h e flow of private capital into mixed commercial/residential developments w i t h i n the study area. In effect, the proposed zoning regulations cause a " downzoning effect " which generally d e c r e a s e s the p r o f i t potential on many developable s i t e s i n the study a r e a . " 9  Western  7  8  9  Realesearch Corporation  Ltd.,  1975.  Developer's profit was defined as t h e d i f f e r e n c e between t h e c a p i t a l i z e d v a l u e of t h e p r o p o s e d development upon c o m p l e t i o n and i t s c a p i t a l c o s t . W e s t e r n R e a l e s e a r c h C o r p o r a t i o n L t d . , 1975.  10  The level  factors  of  low  downzoning  shortage  provincial and  high  financing  federal  and  viability  engaged  The  consultants  Realesearch  3 F.S.R.  would not  the  11  be  report  The  response the  to  possible  with  Realesearch Corporation  Ltd.,  and  result  the  in of  land to  direct that  improved.  .the 1 2  City  to  zoning  of  re-assess  proposals.  findings  developers,  1975,  the  units,  indicated  mixed-use z o n i n g  the  and  proposed d e n s i t i e s ,  consultants  local  rising  laws r e l a t e d  beyond  recommendations w i t h  amendments t o  1973,  a  completed  methodology  s t u d y , met prepared  the  previous  construction,  substantially  was  the  as  analysts  above  a s e c o n d g r o u p of  reviewed  l a n d o w n e r s and  Western  1 0  of  were  general  a  Rental  income t a x  which  C i t y of V a n c o u v e r .  soon a f t e r  •  - a l l of  the  costs  1 0  uneconomical  the  p r o b a b l e market  and  funds.  costs  the  Western  be  of  land  r e l a t i o n s h i p of  increases  Vancouver  rising  of m o r t g a g e to  to  i n September,  the  of  Very  impact  controls,  influence with  the  densities  cost  construction the  to contribute  demand,  were a r g u e d rent  development  of  the  architects  respect  to:  proposals;  3.  The amount of floorspace ( or s i z e of b u i l d i n g ) w h i c h i s p e r m i t t e d on a g i v e n s i t e i s r e g u l a t e d by the site's F.S.R. ( Floor Space Ratio ) . The F.S.R. is s i m p l y a r a t i o of p e r m i t t e d f l o o r s p a c e t o a v a i l a b l e s i t e a r e a - an F.S.R. of 3 would p e r m i t 3 s q u a r e f e e t of f l o o r s p a c e f o r e a c h s q u a r e f o o t of site area. For example, a 300' X 120' d e v e l o p m e n t s i t e would have a s i t e a r e a of 36,000 s q u a r e f e e t . An F.S.R. of 3 would permit the c o n s t r u c t i o n of 108,000 s q u a r e f e e t of f l o o r s p a c e . If each f l o o r of the building had 10,800 square feet the r e s u l t i n g b u i l d i n g would be 10 s t o r i e s h i g h . Baxter et a l , 1975.  1 1  1 2  low  apartment  even  included  commercial  costs,  and  particular,  were f e l t  returns  of  construction  which  11  •  other  measures  which  the  City  might  take  to  e n c o u r a g e downtown h o u s i n g ; and •  a framework of  They  a l t e r n a t i v e zoning  argued  that  estimate  average c o s t s  not  accurate  an  for analysing  t h e impact  proposals.  t h e use o f s p e c i f i c  actually  exist  i n the  analysts  a l t e r e d the i n i t i a l  of  the  marketplace.  " r u l e s o f thumb " t o  range  To  investment  1 3  and r e v e n u e s was o v e r l y  description  on  restrictive of  values  illustrate  and which  this,  the  a s s u m p t i o n s by:  •  decreasing  land  values  •  decreasing  the c a p i t a l i z a t i o n  •  reducing  the  by 8%;  parking  r a t e by 5.5%;  requirement  ( costs  )  ent i r e l y ;  They  ®  i n c r e a s i n g net r e t a i l  ®  reducing  building costs  by 11%; and  •  reducing  interest rates  by  then  ( cummulatively  for  one  was n o t e n t i r e l y  by  is relatively  itself,  their  direction  1  analysis  They  impact  of  the  argued  each  modification  prototypical sites. - although  on the  costs  each  and i n c r e a s e  project need  so a s t o more r e a l i s t i c a l l y  B a x t e r e t a l , 1975. B a x t e r e t a l , 1975, 11.  12.5%.  i f a l l of the changes  reduce  impact  by 20%;  of  unexpected  small,  ( i.e.  cummulative  significant. "  1 tt  )  the  conclusion  same  1 3  analysed  rents  economics  for detailed  assess  expected  Their change,  follow the revenues ) may  be  sensitivity returns  at  12  specific  locations  The the  resolution  Zoning  and  Residential downtown space  and.under v a r i o u s  development  ) and e n c o u r a g e d bonuses  ), f o r example,  for  commercial  A r e a D,  permitted  By  in specific 1 ).  areas In  are  which a r e l a r g e r  +  commercial  densities  allow  additional  maximums  bonus  ( approximately market.  areas  Finally,  ( 5, 4 and square  system's  2 foot  and  5  commercial  F.S.R.,  densities,  i s included. and 2  F.S.R.  through the  space a p r o j e c t and 3  could  F.S.R.  a r e a s F, G and H have F.S.R.,  respectively  base  )  and  of commercial  floorspace for  constructed,  to  and 2 + 2 + 2  inception  mixed-use p r o j e c t s  2 ) and none  7  commercial  ), t h e b o n u s e s drew v e r y  Five  (Figure  +  2 F.S.R.  ( 5 + 1 + 1 , 4 + 1 + 1  the  9,  The p e r m i t t e d  2 ) although,  3  of r e s i d e n t i a l f l o o r s p a c e  From  the  3 ).  of  substituted  as  of r e s i d e n t i a l . f o r commercial  foot  be  commercial  substitution  ( 2  use  A, B and C ( o f f i c e  3 F.S.R.  ( referred  accommodate o n l y  commercial  the  where h o u s i n g  residential  each  to  the  i n a r e a s D and E, r e s i d e n t i a l u s e s  to the permitted  f o r example, p e r m i t s  an  through  areas  i n these areas  in addition  residential  throughout  r e s i d e n t i a l f o r permitted  contrast,  projects  conceivably  accordingly.  u s e s up t o a maximum o f 3 F.S.R.  respectively.  yielding  be  i n 1975, and  was amended  the r e s i d e n t i a l uses c o u l d  densities  allowed  to  conditions.  r a t i o s occured  By-law  was  ( Figure  core  commercial  density  Development  ( by s u b s t i t u t i n g  density  are  of f i n a l  market  prescribed  respectively  in little  1975, u n t i l  1980  response  from  were d e v e l o p e d  i n t h e most c e n t r a l  ).  i n t h e bonus  office  core  Figure  1: Downtown V a n c o u v e r  - Residential  Bonus  Subject to c o n f o r m i t y  Provisi  with the guidelines an,-  1  rl^,,c»  T K I  In the area d e n o t e d by the letter ' A ' the m a x i m u m density for any permitted use shall be f l o o r space ratio 9 . 0 0 . In the area d e n o t e d by the letter ' B ' , the m a x i m u m density for any permitted use shall be f l o o r space ratio 7.00. In the area d e n o t e d by the letter ' C , the m a x i m u m density for any p e r n i t t e d use shall be f l o o r space ratio 5 . 0 0 . In the area d e n o t e d b y the letter ' D ' , the m a x i m u m density for any non-residential use shall be f l o o r space ratio 3 . 0 0 ; h o w e v e r , an additional floor space ratio of 2.00 may be p e r m i t t e d f o r residential use. In the area d e n o t e d by the letter ' E ' , the m a x i m u m density for any non-residential use shall be f l o o r space ratio 1.00; however, an additional floor space ratio of 2.00 m a y be p e r m i t t e d for residential use.  G  In the area d e n o t e d by the letter 'F', the m a x i m u m density for any non-residential use shall be f l o o r space ratio 5 . 0 0 ; h o w e v e r , for every square foot o f residential f l o o r area, an additional square foot o f non-residential floor area shall be permitted up to a m a x i m u m additional f l o o r space ratio of 1.00 for residential use and a m a x i m u m additional f l o o r space ratio o f 1.00 for non-residential use. I'n the area d e n o t e d by the letter 'G', the m a x i m u m density for any non-residential use shall be f l o o r space ratio 4.00; however, for every square foot of residential floor area, an additional square f o o t o f non-residential f l o o r area shall be permitted up to a m a x i m u m a d d i t i o n a l f l o o r space ratio of 1.00 for residential use and a m a x i m u m a d d i t i o n a l f l o o r space ratio o f 1.00 for non-residential use.  H  In the area denoted by the letter 'H', the m a x i m u m density for any non-residential use shall be f l o o r space ratio 2.00; however, for every square foot of residential floor area, an a d d i t i o n a l square f o o t of non-residential floor area shall be permitted up to a m a x i m u m additional f l o o r space ratio of 2.00 for residential use and a m a x i m u m additional f l o o r space ratio o f 2 . 0 0 for non-residential use. Hotels shall be considered to be a c o m m e r c i a l use. Within the D o w n t o w n District, residential f l o o r area m a y be substituted for commercial floor area, p r o v i d e d however that in no case shall the density ( F l o o r Space Ratio) of residential use exceed 3.  Source:  City  of Vancouver,  Z o n i n g and D e v e l o p m e n t  By-law  3575.  1975,  p.415.  Ul  Figure  2: Downtown  Vancouver  Residential  -  Mixed-use  Bonus P r o v i s i o n s ,  Projects  February,  1982.  Using  15  where  residential  were n o t  bonused.  numbered  1,  and  building. the  structure  to  of  a  change  had been  with  office  same t i m e ,  expectation  favourable  sluggish  With  in  1 6  ( projects  providing  166, 72  t h e form o f a s e p a r a t e site  with  an  office  ( 4 and 5 ) , i n c o r p o r a t e d  ( 8 and 6 - u n i t s , r e s p e c t i v e l y  that  marketing  mid-1970's,  throughout  )  not  choose have  expectations,  did  to l i v e  been  and 1 9 8 1 .  1 6  By  )  coupled  city  were  in  with  there a  1982,  the  Real E s t a t e Board of G r e a t e r Vancouver, C i t y o f V a n c o u v e r , J a n u a r y , 1982, 11.  Creek  the  group  of  residential  of  themselves,  rising  demand f o r  i n marketing to  applications there  rising  evolved  While  tolerable  of development  At the  False  small  and  involved  rise,  multi-residential  downtown.  sufficiently  February,  ,  exist  viable  s p a c e , may have made t h e r i s k  A flurry  the  space,  to  f o r 1981-1982.  expensive  location  there  Vancouver  began  s u c c e s s of the nearby some  city  perhaps  who might may  prices  downtown  The demand f o r o f f i c e  1 5  the  in  shortages a n t i c i p a t e d  central  construction.  1 5  took  conditions  the apparent  ( in a  since  in mixed-use developments  1980  projects,  large,  common  significantly.  space  development  projects  a  few u n i t s  residential  steadily.  office  sharing  s u b s t i t u t i o n , but  buildings.  which  consumers  five  and e a c h  1979 a n d 1980, market  units  the  The r e m a i n i n g two p r o j e c t s  atop o f f i c e  began  of  respectively,  placement  In  Three  2 and 3 ) were r e l a t i v e l y  454 u n i t s  residential  u s e s were p e r m i t t e d t h r o u g h  were  units  undertake  appeared i n 6  1976 - 1981.  mixed-use  16  projects  under  construction,  o u t s t a n d i n g development being  proposed  several  a  begin  illustrate  problems with •  the  number  of  in  current  attitudes  the  It  was  felt  amenities the  that  B.C.  ).  prospective less  Despite  shops,  restaurants  area's to It  a  in  area.  and  core  terms  was  could  space:  that  or  such,  areas  a high price  F a l s e Creek, lower  the u n i t s  price,  residential t o work,  activities  the  difficult  units.  as  potential  that  " bonused  though  it  at  a  who p u r c h a s e  that a high  be r e a l i z e d .  commercial  site  price  o f 6 F.S.R.  " density i s  were  + 1 F.S.R.  f o r the r e s i d e n t i a l  demands  around  r e c e i v e more a m e n i t y  cultural  i s , a 4 +1  developers  little  marketable  predominantly  and  e x c h a n g e d on t h e market development  related  advantages of a c c e s s  generally felt purchased  which  has  of  similar  a  the  market d w e l l i n g  which  of,  image and e n v i r o n m e n t make i t v e r y  normally  As  and e x p e r i e n c e s  to r e s i d e n t i a l  customers noise  with  projects/proposals  Fairview Slopes,  For  projects  Interviews held  downtown  in  when compared  Place  with  the  ( e.g.  9  with  i n Vancouver.  advantage  downtown  projects than  application  t h e bonus s y s t e m u s e d  competitive  •  and no l e s s area.  shared  both  11  study  involved  uncovered to  approvals  within  developers  another  of  would be  based  on  a  commercial.  land normally potential,  pay  a price  r e n t or s a l e s p r i c e f o r  Those  interviewed f e l t  that  17  the  bonus o f f e r e d  subsequent As  with  desirable,  residential  cannot  developer  be  i n time, " types  "  for  long  units  t o simply  part  develop  time  while  construct  can  result  complications from  site's  the  to  the  viability  i s extremely  defined.  mixed-use  and  hold  office  Most  and  sell on  i n the kinds and  a function  to the e x i s t i n g  particularly  difficult  the  with  Residential  t o p r e d i c t as  types/costs  under c o n s t r u c t i o n  others  undertake  component.  of  sell  for risk.  relative  various  but  objectives  are r e f l e c t e d  activities,  the  p r e f e r to  and s t i l l  they  of  in  others  Differing  location  respect  for  variety  i s , to a large extent,  of  sub-markets  a  the p r o j e c t  and t o l e r a n c e  viability  presently  become l e s s  component  a n a l y s i s which  perceptions  be  immediately,  distribution  poorly  may  to  of d e v e l o p e r s  feasibility  the  to  mixed-use  rents  involved  as soon as p o s s i b l e .  Project of  a  dwelling  their  and  by  ownership of the o f f i c e  who p r e f e r  of  costs  there  project  the  "  component  carried  - some p r e f e r  it  " bonus  and e x t r a  projects  the  incentive  space.  any p o i n t  retain  any,  space d e c r e a s e s ,  as t h e r e s i d e n t i a l  commercial At  a  inefficiencies  which  if  developers/landowners.  t h e demand f o r o f f i c e  sites  in  little,  the  of u n i t s i s  dwelling  units  were, as o f F e b r u a r y ,  18  1982,  to  although the  be  marketed  there  size  consider  the  selling •  Some  The that which  it  of  interviewed  have  been  were  effectiveness  of t h e bonus  raised  is  housing exists  •  the  provide  intended  to.  •  it  and  actually  with  respect  that  project a t the  again outset.  in their the  to  they  view  incentive specific  the  potential  a small  number of  system: to  provide  u n i t s on t o p o f an o f f i c e b u i l d i n g ; will  -  be  built  b o n u s e s and  zoning  economic  only  if  is  cannot c r e a t e  demand demand;  entirely  with  respect  ": a r e  system  in practice; may  not  be  as  project;  not  component  effective  i n c e n t i v e i m p l i e d by t h e bonus  i n a mixed-use  achieve  under  difficulty  Several  the b u i l d i n g ' s a e s t h e t i c q u a l i t i e s good  those  of  unanimous  normally  does not seem t o e x i s t •  that  felt  viability  were  inefficient  dwelling e  buyers  b u i l d i n g a mixed-use  s y s t e m d i d not  it  deal  interviewed  o f i t s economic  reservations  »  felt  currently  a great  the developers  assured  may  which might  the u n i t s .  developers  t h e bonus  groups  I t was  potential  condominiums,  of u n c e r t a i n t y a s t o  projects  were h a v i n g  would c o n s i d e r if  deal  them.  with  identifying  luxury  sub-market  purchasing  construction in  i s a great  of  developers  as  c l e a r what t h e C i t y to  small  the  area's  "  hopes t o  residential  numbers o f l a r g e ,  expensive  19  units to  perched  result  for  i n an  downtown  residential  These  1 975 in  1 7  1 7  is  density  housing  regarding and  the  actually  the kind  1981.  questions  in turn,  increased  housing  The  beginning i n the  1975  re-stated following with  downtown.  likely  When t h e  market  why  of  should  3 F.S.R.  restrict  the  a be  amount  built?  workings of  of  Vancouver's  residential  c r e a t e echo t h e q u e s t i o n s r a i s e d  w h i c h were a g a i n  et a l ,  i t may  really  strong,  limit  w h i c h c o u l d be  October,  Baxter  housing  buildings downtown?  of  can  and  improved  when  comments  it  office  maintained  downtown bonus s y s t e m which  atop  by  component  developers  at the mixed-use chapters  the arguments  examine f o r and  in  workshop these against  20  III.  IS DOWNTOWN HOUSING DESIRABLE?  Historically, business,  city  cultural  character  activities  reflects  forms w h i c h emerge allocation •In  were,  in response  past,  form of  be  the  given  built,  existing  applied  in  changes have  been  transport.  have  1 8  and and  area.  width  how  and  high  reasonably  a  with  preferences  and  layout  building  innovations  economic  growth  and  of c o n s u m e r s a p p e a r  to  the  past  five  c o n t r i b u t e d to a s p e c i a l i z a t i o n  to  the  )  commute t o work  Technological  Specialization  contributed  area's  demand f o r  f o r c e s w h i c h have, o v e r  substantially  turn,  and  sustained  demise of  the  of  growth,  surrounding  areas.  Downtowns been  policy  sometimes  Heilbrun,  could  The  for  downtown a c t i v i t i e s  e a r l y -1900's, c o u p l e d  in  public  of  technology:  f a r one  downtown's f u n c t i o n .  instead,  urban  ( buildings, street  the  residential  the  a focus  of a c t i v i t i e s  i n the  area  underlying  s i x decades,  to changes  as  life.  evolution  intensity  a f f l u e n c e and  the  community  throughout  modes of  i n the  served  the  how  the  and  have  constant  i n p a r t , a f u n c t i o n of  could  or  the  of a c t i v i t i e s  the  physical  centres  have  not  s h a p e d and and  the  evolved  by  re-shaped  by  marketplace  in opposition.  1974,  19-56.  -  What t h e  accident  -  the c o n s t a n t  they  interplay  sometimes moving downtown  is  have, of  i n tandem  today,  and  21  the  role  it  ought  to  play  i n the  respect  to the p r o v i s i o n  of  within  the  t h e complex  g o a l s and  of  of  downtown  i s promoted o v e r  the d e s i r e t o p e r m i t  also  hoping  the on  to e s t a b l i s h  purpose  of  population  chapter  case  be  identified  and  and  f o r more h o u s i n g  explicit  the  alternative  AN  housing  their  base  to  the  " role  for  "  example, while  area.  to b r i e f l y  trace  downtowns, f o c u s i n g to  the  Secondly,  respect to  rationale  public  development  respect  stock.  with  drawn  i n the  American  a s s u m p t i o n s and  the c u r r e n t  downtown  examined. be  areas'  housing  Finally,  debated  the  to  make  p o s s i b l e consequences  of  goals.  PERSPECTIVE  f o l l o w i n g d i s c u s s i o n i s intended  with a general d e s c r i p t i o n  of  the  g o a l s which  l e d to c u r r e n t e f f o r t s  downtown.  It  complex  office  with  between  occurs  i n the downtown w i l l  values,  HISTORICAL  The  as  with  considered  c h o i c e or  is firstly,  large North  be  be  when one  a residential  g o a l s w h i c h have been a d o p t e d will  must  another,  t h e c h a n g e s w h i c h have o c c u r e d  resident  A.  occur  only  relationship  unconstrained  this  r e c e n t e v o l u t i o n of  can  Attention  g o a l s w h i c h may  with  The  housing,  the m a r k e t p l a c e .  trade-off for  context  future, particularly  is,  f o r c e s and  t r e n d s and to an  c o n d i t i o n s which  American  downtowns  the  early  1900's.  has  not  always  admittedly,  ( and The  public  to p r o v i d e  i n the  reader  e v o l u t i o n of  introduce housing  public  into  over-simplification have  shaped  attitudes  sequence of c h a n g e s  occurred  the  linear  of  Canadian  t o w a r d s them affecting  the the and  ) since  downtowns  fashion presented  here,  22  nor  has t h e t i m i n g  Federal United  Urban States.  Francisco,  of c h a n g e s o r major  Renewal  Programs  Further,  very  f o r example  lead  on s m a l l e r  of  the  cities  problems  developed.Further, nearly as  their  affected  by  ( Toronto, Calgary,  downtowns  counterparts,  allowed  Advancements  to  be  allowed But  transit  necessary to b r i n g the  the  about  Heilbrun,  experienced investment  public  always funding  central  problems  and t h e p u b l i c  ability  1974,  to  32; Cook,  ever  techniques  of h i g h r i s e  goals on  use  land  i t was  more  n o t , by  I t was  1980,  6.  only  in  1900's before.  and  The  and t h e  provision automobile  distances.  i n t e n s i v e l y was itself,  a  sufficient  downtowns  when t h i s  1 9  lifting  buildings  t o commute g r e a t e r  changes o c c u r i n g  1950's.  early  t h e use of t h e p r i v a t e  force  f o r change  t h e major  and  i n the  movement of p e o p l e and g o o d s .  s y s t e m s and  condition  1940's  solutions  changes  i n t e n s i v e l y than  construction  t h e downtown l a b o u r  while  or  terms  s h a r e many s i m i l a r i t i e s  innovations  the development  vertical  public  not  the  cities,  1970's,  u s e d more  in building  mechanisms e n a b l e d  of  the  and d e c l i n i n g  differences,  the  ) in  of t h e b o r d e r .  land  efficient  have  constraints  t h e downtowns of l a r g e in  and  nor were t h e i r  confronting  side  these  A number of t e c h n o l o g i c a l  1 9  unrest  York  Vancouver  experienced  Despite  either  ( New  and t h e  year  Canadian  them  i n Canada  the  ) c a n have a t l e a s t a t e n t o twenty  similar legislative  for  e.g.  San  programs.  adopted  (  and  being  U.S.  ) coincided  large c i t i e s  t h e same d e g r e e o f s o c i a l  have  influences  during  technology  was  23  combined office  w i t h a market space  that  late hence, the  period  1940's  the  resulted growth  growth  for  i m p o r t a n c e of t h e  in a sustained  demand  employment, w i t h  generally. have  reflected  to occur.  t h e employment  next  growth  and,  dominated  quaternary  The  sectors  w i t h a g r o w i n g economy,  the m a j o r i t y  space.  of e m p l o y e e s  consequences i n the l a t e  following  the  decades.  f o r downtown o f f i c e  of  in  which  three  and  combined  " downtown the  located  t o t h e downtown's  floorspace  the  had a number  A " typical  changes  tertiary  base,  centrally  e x p a n s i o n w h i c h began  demand f o r o f f i c e  by c a r o r t r a n s i t ,  might  economic  industrial  in  began  f o l l o w i n g W.W.II c r e a t e d  downtown's  within  intense,  dramatic  function  of r a p i d  the market  increasing  for  t h e most  form, e n v i r o n m e n t and The  demand  kinds  commuting  for  1940's  The  2 0  downtowns and  1.950's  of c h a n g e s  taking  place the  development  floorspace  causing  such  level  (  industrial,  the  demand  falling moved stock  2 0 2 1  Weimer, Hirsch,  would  factor, a  1960, 1973,  of o f f i c e typically land as  be t h e  values  to  and c o m m e r c i a l  dominant  i n the c o r e  outbid  other  for  central  the  city  middle  mushrooming  which remained w i t h i n  17; G i n z b e r g , 70.  1979,  48-53;  growth  to r i s e land  warehousing, r e s i d e n t i a l  as t h e a f f l u e n t to  employment  uses  );  accommodation and  upper  suburbs. and b e s i d e  to  2 1  The  classes housing  downtown  Y e a t e s , 1975,  was  172.  was  24  p o o r l y . maintained,commanding and  typically  Many  o c c u p i e d by  dwelling  sites  for  units  relatively  lower  income  were d e m o l i s h e d ,  commercial  low  rents  households. providing  development  or  new  surface  park i n g ; •  the  reduced  families housing in  demand  with  for  children,,-  demand by  downtown  housing  coupled  with  downtown w o r k e r s ,  both the a r e a ' s h o u s i n g  stock  from  growing  l e d to changes  and  demographic  mix; •  as  families  growth  moved  in  retail  comparative  activity,  advantages  households,  ample  controlled  shopping  outlets became •  t o the suburbs,  which  chose  the  values  were  face  low  of  free  increasingly  surrounding  t o remain  be  stable  viewed  2 2 2 3  as  downtown,  severe.  inner not  The  2 3  and  to  weather  The  2 2  city  retail downtown  income  property  declining,  impact  cities,  of  because  i n the falling  of  their  households,  was  What were once c o n s i d e r e d t o  neighbourhoods  Cook, 1980, 6; Weimer, 1960, H e i l b r u n , 1974, 364; H i r s c h ,  proximity  or t o l o c a t e  if  American  " slums-"  the  specialized;  h i g h c o n c e n t r a t i o n s of low particularly  closer parking  depressed,  on  capturing  environments.  investment.  investment  of  so t o o d i d t h e  and  were  beginning  " g h e t t o s ",  14; Weaver, 1973, 410.  1977.  to  infested  be with  25  residential  " b l i g h t •".  downtowns, t h e owners o f abandoned t h e i r The  affluence  and  drawn  downtown,  w h i l e the growth of o f f i c e  the development  Public  policy  concentration actively Overall, downtown  of  a  highly  reinforced of downtown  promoting,  which  were  two  widely  of  the  of  and  1940's  and  from  the  away  floorspace  movements  removal  apartments  2  specialized  these  t o be  rental  activity  employment  the  there appeared  retail  American  outright. "  growth  1950's had  to  and  some  low-cost  properties  population  residents  In  had  contributed  activity by  encouraging  permitting,  the a r e a ' s h o u s i n g  strong  base.  sentiments  s h a r e d by p l a n n e r s and  if  the not  stock.  about  the  politicians  alike: »  that  commercial  both  the  should  g r o w t h was  downtown  be  and  encouraged  a source  the  and  of  city  strength for  generally,  and  accommodated a t a l l c o s t s ;  and •  that  "  should The  2  "  2 5  city  was  blighted  be  redeveloped  " heart  and  f o r t h e body  lie  i n commerce and  and  housing.  "  -  were  i n a major the  "  a h e a r t w h i c h had to s u r v i v e .  employment,  Downtown T o r o n t o ,  H e i l b r u n , 1974, Cox, 1962, 109;  areas  d e s c r i b e d as b e i n g  downtown t h e pumping  "  259. San F r a n c i s c o ,  not  2 5  u n d e s i r a b l e , and way. body  ",  t o be  S t r e n g t h was  i n a combination  f o r example,  1966,  13.  was  and  the  big, strong believed of  to  business  described  in  26  the  following  terms:  "The g r e a t , v i t a l hub of T o r o n t o , and i t s r e g i o n . In t h e i n t e r e s t s of e v e r y o n e , i t i s imperative that it expand and f l o u r i s h , becoming a g r e a t e r , f i n e r , more efficient, beautiful and exciting city centre. Development must be c h a n n e l e d t o i t , where b u s i n e s s can be c o n d u c t e d most e f f e c t i v e l y , and s h o u l d not be a l l o w e d t o draw i t s v i t a l i t y t o o t h e r s i t e s . " 2 6  There employment;  was  no  the  symbol  of  l a n d were z o n e d  in  t h e most c e n t r a l  arose  over  re-investment be  end  the  sight  of p r o g r e s s and  presence  of b l i g h t e d  or w h i c h  social  conditions.  in  a t m o s p h e r e of g r o w t h and  unnecessarily could  limit  These were an  Large  development,  -  p o v e r t y and  uncomfortable  prosperity,  t h e more e x c i t i n g  role  concern  which e i t h e r  what were  and  tracts  especially  Widespread  areas  reflected  conditions  s u s t a i n e d g r o w t h of  prosperity.  p a r t s of t h e downtown.  housing an  f o r the  f o r dense c o m m e r c i a l  interest  undesirable  in  2 7  lacked  thought  to  sub-standard embarrassment  were t h o u g h t  which  the  to  downtown  assume:  "Some symptoms of this r e s t r i c t i n g i n f l u e n c e ( the i n a b i l i t y of t h e CBD t o a d a p t t o c h a n g i n g needs ) are worn-out c e n t r a l c i t y areas, drabness, u n s i g h t l i n e s s , s h a b b i n e s s , i n a d e q u a t e p a r k i n g and c o n g e s t e d streets; i n o t h e r words, b l i g h t . " 2 8  It  was  deteriorating  felt  that  physical  C i t y of T o r o n t o , 1967, 27 weaver, 1979, 57. Cox, 1962, 1 10. 2 6  2 8  something  c o n d i t i o n s and  45.  was  needed  to counter  underutilized  the  areas within  27  and  surrounding  housing  t h e downtown.  downtown,  core's peripheral had  in  w h i c h had  reduced  could  not  other  uses.  in  be  immediately The  uses  downtown.  There  public to  in  shared  office  office  the Yet  core  marketplace areas f o r but  little  what  interest be  while warehousing  and  outside  demand (  areas  itself  i t had  to  unrest  blighted  the  housing  users p r e f e r r e d  areas  income h o u s e h o l d s  situation  by  3 0  1960, 1975,  Throughout  21. 139.  with  had  too  of  the  for  downtown  racial  tension,  made  risky,  residential and  2 9  were p r o h i b i t i v e l y  the  private  housing the  and  t o " improve  stimulating  alternative  residents.  -  s e c t o r s , i n b o t h Canada the  areas  providing  Weimer, Carver,  areas  " programs, a t t e m p t i n g  blighted  marketplace  of  land  high for  uses.  responded  3 0  The  perceived social  for higher  the  for  parking,  disappearing,  effective  i n the commercial  renewal  s t o c k was  little  )  of  core.  that  was  violence  residential  the commercial  accommodated  robbery,  surface  quality  better  R e a l and  development  for  were  housing.  The  t h e need  at such a s c a l e  established  industrial  demand  the a n t i c i p a t i o n  t h e amount and  o l d housing  in  with  i n market  r e d e v e l o p a l l of t h e b l i g h t e d  i t s successor?  concentrated  2 9  and  redeveloping blighted  costs  and  p r e v i o u s l y surrounded  happened v e r y q u i c k l y ,  would  combination  expansion  substantially  Reductions  1950's  for and  the  United  creation  of  States "  " the c e n t r a l re-investment existing early  urban city's and  low-income 1960's  urban  28  renewal  schemes were p u t  American  cities,  of r e n e w a l p l a n s ,  projects.  The  blighted cost  used  areas  were  and  and  the  United  had  been  completed  completion in  the p l a n n i n g  In Canada, program its  by  federal urban  In  1960,  and  1961,  halted supported  years,  another and  65  to  in  below-  agencies  further  reduce  were c o n s t r u c t e d to both reduce  and land  housing.  renewal  projects  scheduled  for  projects  were  an e s t i m a t e d 700  renewal  involvement  to  be  made  and  Canada,  the  the  1969,  1969,  the  government of l o c a l  was  urban  which  renewal  to  allow  the p r e p a r a t i o n  implementation  government  U.S.  beginning  expanded  towards  studies,  6.  followed  when t h e program  federal  renewal  Weimer, 1960, 19. Government o f Canada,  Public  were  w i t h the f e d e r a l  this  schemes  urban  or l e a s e d a t  as  through the f i n a n c i n g  By  198  assemblies  )  3 1  programs.  in  so  t h e a d o p t i o n of u r b a n  contributions  improvement  ( expropriation  a p p r o x i m a t e l y 36 urban  by  1964,  renewal  dense  and  development  t h e h i g h demand f o r s u b s i d i z e d  stages.  participation  studies.  very  States,  several  and  interest.  housing p r o j e c t s  Canadian  support f o r the  land  then s o l d  development  Public  i n 1960  was  major  t e n a n t s i n an e f f o r t  satisfy  In  financial  assemblies  undertake  private  risks.  land  the land  characteristicly  costs/unit  i n most major  powers of c o n d e m n a t i o n  to  became p r i n c i p a l  developers'  3 2  public  to stimulate  often  action  making use of f e d e r a l  preparation  were l i b e r a l l y  3 1  into  was had  of  of  civic  effectively financially  resulted  in  135  29  schemes grander  and  48  intent  remaining  that  became n o t e d  that  ofurban  attributes  everything  and,  specific  with  projects.  renewal of  really  run-down  presently e x i s t e d .  for i t s f i r s t  inadequate  w h i c h was  had  stage  financial  t o be  Carver  been  areas  suggests,  to b u i l d  ( assembly  without  and  f o r the  t h e p r o g r a m took  site  the  upon  the  erasing  However, t h e p r o g r a m  3 3  support  retained,  As  3 2  soon  clearance )  conservation on  of  a  pejorative  "  downtowns  meaning.  Urban  renewal,  as a mechanism  and  p r o v i d i n g low-cost  for  a variety •  of  housing,  a l l sides  3  argued  t o be  neighbourhoods, the  i t was  which  insensitive  individuals  renewal  approach •  came under a t t a c k from  reasons: "  i t was  of  f o r " improving  area  and  -  to the presence physical  i t was  r e p l a c e d r a t h e r than  too c o s t l y  of  attributes  a " bulldozer " regenerated;  i n t e r m s of the p u b l i c  subsidies  i nvolved; ®  too  often  private •  3  i n the  the housing  projects  big  too  •  Carver,  failed  investment  and  " ghettos  3 3  it  it  1975,  "Weimer, 1960, 1968; D e n n i s and  to  stimulate  blighted  independent  areas;  w h i c h were d e v e l o p e d  dense  -  were  becoming  too  highrise  ";  artificially  increased/supported  land  values  136. 19; Jacobs, 1961; C a r v e r , • 1975, 122; Adamson, F i s h , 1972; Z e i t l i n , 1972; H e i l b r u n , 1974, 274.  30  which  could  not be s u p p o r t e d  by t h e market  i n the  program's absence; •  the program l a c k e d  objective  s t a n d a r d s by w h i c h t h e  m e r i t s of urban renewal c o u l d in •  i t s successfulness  regional  responsive •  i t may  less  equally  effective  Canada,  to  complex  own  government  r e n e w a l p l a n s and,  sector  pool  land, Many  but  cities  with had  e.g.  their  tax  properties  Program i n  on t h e  downtown a r e a s .  were  left  amounts,  a  little  hope  designated  McLemore, et al ( 1975 ) Renewal Program was s u b s e q u e n t l y Improvement Program ( N.I.P.) A s s i s t a n c e Program ( R.R.A.P.), a p p l i c a t i o n t o t h e downtown c o r e  35  the p r i v a t e  t o development companies.  to r e v i t a l i z e  in varying  of  been  of t h e Urban Renewal  end of t h e 1960's, C a n a d i a n c i t i e s  support.  who  form  have  land assemblies,  subsidies  the d i s m a n t l i n g  and  re-investment. may  t h e end of any c o m p r e h e n s i v e e f f o r t  federal  developable  mechanisms  f o r t h o s e owners land  massive  stimulate  in encouraging  its  local  conditions;  Other,  undertake  a t the  t o be more f l e x i b l e  have been an u n n e c e s s a r i l y  or d i r e c t  the  to l o c a l  resulting  t o measure;  administered  i n order  intervention  relief  1969 marked  level  public  to  In  being d i f f i c u l t  i t m i g h t have been b e t t e r or  be j u d g e d ,  part 3 5  By t h e  with d e t a i l e d  supply  of  urban  assembled,  for federal districts  of  financial  around  the  , n o t e t h a t i n Canada, t h e Urban replaced'by the Neighbourhood and R e s i d e n t i a l R e h a b i l i t a t i o n neither of which had direct area.  31  downtown way  of  as  high density  stimulating  financial By  r e s i d e n t i a l development,  the  early  office  late  1950'  1960's,  and  expansion,  increasingly •  communities  p o l i c i e s for  1960's had  the  «  direct  the  rapid  which  growth required  in  The  serviced were  the  office  expansion  systems, a m e n i t i e s  and  public  contributed  a  general  to  creation  of  buildings,  etc. );  the  wind 3  to  re-  plans  of  continued  now  becoming  low  levels it  weekends, private continued  to  continuing  was  " dead  the  transportation had  deterioration  of  of  direct loss  had  either  sunlight,  of  historic  of  the  s t a b i l i z e d at to  contributed " i n the  and  to  commuter downtown  decline.  towards  evenings  underutilization  provision of  and  and  continuing  argued,  infrastructure  make-up  of  facilities  tunnels,  or  was  employment  7  downtown becoming  the  ( loss  residential population  This;  •  beginning  apparent:  very  3 8  effective of  downtown.  e n c o u r a g e d and  environmental q u a l i t y  3 7  no  short  3 6  were  the  c o n s e q u e n c e s of  floorspace  3 6  had  participation.  examine t h e i r g o a l s and the  r e s i d e n t i a l a r e a s but  a  of  and  on  public  and  need  services; housing  t o change - g r o u n d - o r i e n t e d ,  F o r example, see C i t y of T o r o n t o , 1975, A-48. F r e i l i c h , 1981, 5; Cook, 1980, 6. C i t y of T o r o n t o , 1975, A-17; Weaver, 1979, 63.  the  for  the  stock  was  3 8  large  units  32  were  being  ( which suites  demolished  had  and  provided  ) were redeveloped,  pressures  apartment  relatively  inexpensive  largely  result  to provide development  the  of  s i t e s and parking  l o t s to s e r v i c e the growth i n o f f i c e " White  buildings  development.  p a i n t i n g " was emerging i n the inner c i t y ,  resulting family  i n the  renovation  of  existing  s t r u c t u r e s in r e s i d e n t i a l areas  single-  surrounding  the commercial core and f u r t h e r reducing the supply of low c o s t housing.  Luxury condominiums  and l a r g e  apartment b u i l d i n g s were beginning to appear the edges of the downtown and, to a l i m i t e d in  mixed  Questions  commercial/residential  residents live  f o r c e d to r e l o c a t e ?  i n the expensive  there  be  workers to downtown  any  place  live? make  towards  the downtown was declining  retail  reduction  in  power.  3 9  for  What  a d d i t i o n a l housing •  units  the  c o u l d a f f o r d to  being moderate  built? income  contribution meeting  Would office  should  the  need  for  maintain  its  the  s t r u g g l i n g to  base, which threatened a f u r t h e r area's  39  Weaver, 1 9 7 9 , .66; W i l k i n , 1979,  to  in the c i t y g e n e r a l l y ?  still  the  commentators,  what happens Who  extent,  projects.  were being r a i s e d by s o c i a l  planners and c i t i z e n s a l i k e -  along  23.  vitality  and  drawing  33  •  a  vocal  was  and v i s i b l e  beginning  affected  by  to  values  was  beginning  related  to  some  interim  office  limit  buildings  desire  to  economic p r o d u c t i o n activity downtown  and  towards s o c i a l  make  the  - that  diversity  housing.  - gave  become  a  The e m p h a s i s g i v e n  back  entrenched  d e c a d e s , and t h e k i n d  "° Goodman,  they  0  In  construction cities  re-  1  in  the search  the  the  f o r an  conditions.  simply of  a p l a c e of enjoyment,  arguments f o r  of housing  reflected  pro-growth  o f downtown w h i c h  1971; R e i c h t ,  to  the r o l e  took on a z e a l w h i c h  the  the  place  support  downtown's r e c o v e r y against  of  c o n t r o l by-laws  and m a t e r i a l  downtown more t h a n .i t  social energy  prevalent  breeding  of  pattern  f o r t h e downtown."  1960's were, t h e m s e l v e s , philosophy  costs  life,  while  a t t i t u d e s of growth and r e - b u i l d i n g  alternative The  of  development  of  and  the  c o n s t r a i n t s , and so o n . '  to temporarily  plans  directly  amid c h a n g i n g  quality  were e n a c t e d large  those  historical  fiscal  r a p i d change  r e n e w a l and p r i v a t e  to r i s e  the  redevelopment,  formulated  1950's  urban  the  cities,  among  P u b l i c awareness of  conservation,  The  surface  freeways,  redevelopment. growth  reaction against  a  i n the  striking-  a t t i t u d e s of e a r l i e r had c r e a t e d .  1970.  " F o r example, i n T o r o n t o , see t h e O f f i c i a l P l a n Amendment ( Bylaw 347-73 ) and t h e H o l d i n g By-law ( By-law 348-73 ) and i n V a n c o u v e r , see L i n d e l l , 1982, 49. 1  34  The  plans  f o r downtown w h i c h emerged  fundamentally they in  different  from  r e f e r r e d t o t h e need  for  in  terms  community, p a r t i c u l a r l y  of with  to create a better  activities  and  facilities  as  both  as  the  services  greater  was  2  the case  re-surfacing,  broadly  * For Ltd.,  level,  centres.  goals,  to  the  -  the  goals  role  of the  The  treating  were  this  was  placed  plans  public  quality  in  context  underlying  of  the  1950's.*  launched growth  mass  growth,  r e s u l t e d i n a downfrom  the  on  f o r work-related  rationalization  f o r increased housing and  social  potential  of f u t u r e o f f i c e Within  residential  and a s t r o n g e r  of t r a n s p o r t  granted  efforts  i t was now  housing.  emphasis  environmental  been  and  When  and c o n s t r a i n t s on t h e g r o w t h o f  development  had  proportion  regional and  and  of c o m m e r c i a l  metropolitan  respect  mode  public  which  the  A greater  In a number of c i t i e s ,  densities  meeting  supports  principal  were  f i t between t h e g r o w t h o f downtown  trips.  zoning  commercial  i t s infrastructure  downtown.employment. transit  " downtown,  an improved p h y s i c a l e n v i r o n m e n t  downtown  attempted  mix o f  1970's  1960's p r e d e c e s s o r s .  f o ra " healthy  t e r m s o f a more b a l a n c e d  activities,  their  in. t h e  from  2  generous At  the  to decentralize a t h e downtown  of c h a n g i n g within intents  to  conditions  the  downtown  becoming  more  based.  "example, see Vancouver ( Western R e a l e s e a r c h Corporation 1975, 3 ) a n d T o r o n t o ( C i t y o f T o r o n t o , 1975a, 98 ) .  35  B.  DOWNTOWN HOUSING - UNDERLYING GOALS A strong  downtown all  commitment  h o u s i n g i s emphasized  of t h e m a j o r  to p r o t e c t create  as  emphasis  placed  as  policies  on  does  the  residential what  although,  are  less  rationale for  the  need  to encourage  development  ( which  ) .  The  argued that  single  The d e g r e e of  very  We  w h i c h has been  promoting r e s i d e n t i a l  rationale  population  given  for  inter-woven with  like  specific  of  the  objectives  t o be c r e a t e d consider  advanced  first  throughout  enlarging  target  buildings, about  the  related  to  groups, etc.)  the kind  of  through the  bonus  a synthesis  of the  i n downtown p l a n n i n g  development,  for  i s b a s e d on a  goals  ( affordabi1ity,  aspects  will  the  from  re-appear c o n s i s t e n t l y  reasons  be  varies  a  and  and e n v i r o n m e n t  evident.  virtually  c o m p r e h e n s i v e n e s s of t h e h o u s i n g g o a l s  environmental  mix  projects.  downtown's r e s i d e n t i a l  generally,  residential  downtown and  of m i x e d - u s e  base a r e sometimes  or  identify  of  to  the h o u s i n g should  physical  within  P l a n n e r s have  documents  p l a n s of  mix  plan  number of p r o p o s i t i o n s planning  Policies  3  and  t h r o u g h o u t downtown as  residential  the  adopted.  increasing  precincts  component  amount  n e i g h b o u r h o o d s a r o u n d downtown, t o  o f accommodation a  the  i n the recent  examined."  residential  residential  or  plan,  cities  viable  the p r o v i s i o n use  to i n c r e a s i n g  identifying  documents  the g o a l s  to  " F o r e x a m p l e s , see San F r a n c i s c o , 1981, H-7; D e n v e r , 1981, iii; Calgary, 1978, 64; San Diego, 1979, 38; Ottawa, 1979, 25; P h i l a d e l p h i a , 1976, 10; S e a t t l e , 1981a, 3; Atlanta, 1976, 26; Minneapolis, 1979, 18; Buffalo, 1971, 46; P o r t l a n d , 1978,1; V a n c o u v e r , 1974, 56-; Edmonton, 1981; o r T o r o n t o , 1975. 3  36  be  achieved,,  the  contribution  towards a c h i e v i n g underly terms  those goals  each argument. of  the  values/solutions goals  and  1. It  which  choosing  G0AL#1  public the  of  accepted  actions.  construction while ( e.g.  large urban  of  be  The  that  discussed  and  in  alternative  considered  local  resources,  capital  in  defining  of  promoting  the  private  c i t e d as  tracts  of  renewal  areas,  been a r g u e d , c o u l d  land  railway  ).  The  reduce  these  public  and  well  as  the more  resulting  from  investments  i n e f f i c i e n c y , as  improvements t o  downtown  areas  an  service  rights-of-way,of  inefficiencies  is  in the  commuters  remain v i r t u a l l y  introduction  be  fullest  while,  costs  public  the  as  expenditures  u n d e r u t i l i z a t i o n of  road/transit  governments s h o u l d  investments  planned  cognizant  warehouse/industrial has  also  public  is frequently of  assumptions  view  existing  being  downtown  t h e n be  which  among a l t e r n a t i v e means.  cost/effectiveness generally,  of  t o make  assumptions/values  rationale will  might  managers of  utilization  the  i s argued  - EFFICIENCY  is a well  responsible  and  The  validity  which h o u s i n g  vacant obsolete  housing, i t in  several  ways: •  reducing  h a v i n g more downtown •  by more  workers  jobs;  within  commuting walking  costs  distance  by of  and  intensifying fully  private  land  utilizing  u s e s on existing  underutilized  sites,  infrastructure  and  37  generating  greater  tax  revenues  from  blighted  areas.  2.  GOAL#2 - A " LIVABLE  There  is  documents  that  inhospitable. the a r e a robust activity  the  the  downtown  evening,  city  needs  every  a  greater  a r g u m e n t s and s e n t i m e n t s  that  rather, that  it  cultural  of a c t i v i t y , all,  has  still  location? to b u i l d  should  and  be  shopping  e n e r g y and d i v e r s i t y  I t h a s been w i d e l y  a focus  downtown  planning and  of s o c i a l ,  after  is  and f a c i l i t i e s  make two i m p o r t a n t activity  -  not i n a c e n t r a l  activities  A  and  dead  in  " ,s u n i n v i t i n g  -  f o c u s or c e n t r e  role?  "  reflected  of the c i t y ' s  weekend.  be t h e downtown  downtown  is  a mixing  and a r e f l e c t i o n  historic  perception  n o t be l i f e l e s s  enticing,  every  should  clearly  T h e r e a r e , as w e l l ,  should and  " DOWNTOWN  argued  that  and t h a t t h a t that  not  not needed?  and a r e t h e r e  a  focus  been  its  and i s t h e not  already  upon?  residential  contributions to  population  this  i s believed to  intended  revival  of  and a t m o s p h e r e : •  increasing providing greater  the  a broader mix  of  working hours; •  number  o f downtown  b a s i s o f market  activities  areas  other  users  thereby  support  extending  for  a  beyond t h e  and  by p r o v i d i n g t h e c a s u a l , public  users,  ( sidewalks, to  feel  informal parks  surviellance  of  ) which might  allow  s a f e r and more r e l a x e d  ( and  38  thereby  3.  d r a w i n g more u s e r s .to t h e a r e a ) .  GOAL#3 - BROADENING L I F E S T Y L E  In  recognizing a variety  a r r a n g e m e n t s and l i f e s t y l e some  households  argued  that housing  Further, should  options  having  households  be p e r m i t t e d  of  the  demand.  housing  possibility  location  throughout  to  choose  may  the  best  interests  ( which w i l l  be d i s c u s s e d  the  existing  area's  recognizable protected downtown  and t h a t  o f downtown ).  residents  neighbourhood, they  to  those that  among  a  It is  their  could provide  force  businesses  anyway  sometimes  have v a l u e  that  labour  as h a v i n g  residency  the f o u n d a t i o n s  felt  that  created a should  be  f o r a new  community.  Permitting core  would  goal  -  on  later  downtown  forms and l o c a t i o n s and t h a t t h e  o f a f f o r d a b l e u n i t s f o r t h e downtown  in  t h e downtown.  I t i s sometimes a r g u e d  availability be  that  ) i t has been  would do ) o n l y  have t h e o p p o r t u n i t y  alternative  for living  that the option t o l i v e  ( as t h e m a r k e t  effective  should  ( and  p r e f e r a downtown  should  n o t be l i m i t e d  range  o f consumer p r e f e r e n c e s  i t i s sometimes a r g u e d  consumers all  might  OPTIONS  the development  only  provide  i n c e n t i v e s and/or  o f market  a partial  units  throughout  s t e p towards a c h i e v i n g  requirements  have a l s o been  the b a s i s that a f f o r d a b l e u n i t s should  be p r o v i d e d .  the this  justified  39  4. It  G0AL#4 - SUPPORTING i s widely  expand t h e i r For  easy  employment  existing  downtown  downtowns  should  o p p o r t u n i t i e s and l e v e l  an a v a i l a b l e l a b o u r  distance.  For  must be s u f f i c i e n t  it  is  argued,  retail  outlets  consumer  demand.  could  sales.  within  an  t o t h r i v e and  population  have  to  firms to locate  supply  c r e a t i o n of a s u b s t a n t i a l r e s i d e n t i a l  downtown,  continue  of r e t a i l  t o expand and f o r new  must e x i s t  commuting  expand, t h e r e  the  that  businesses  there  The  accepted  DOWNTOWN A C T I V I T I E S  two  within  favourable  consequences: •  by  accommodating  might  be employees  competitive elsewhere proximity •  It  more  with in  amenities  which c o u l d  the  the  ,  expansion  city  in  will  support  to existing  variety  of r e t a i l /  terms  be e n j o y e d  may  of  businesses  of  distance  undoubtedly  businesses  relative  o f downtown  lend  by a l l downtown  a wider  activities.  t h a t more r e s i d e n t s may  the  market  and g e n e r a t e  entertainment  throughout  remain  f o r c e ; and  ( and i m p r o v e d q u a l i t y provided  ( many o f w h i c h  downtown  consumers w i t h i n w a l k i n g activity  being  )  the  retail  variety  households  to the labour  has a l s o been a r g u e d  greater  more  result  in a  ) o f p u b l i c s e r v i c e s and downtown users.  -  benefits  40  5.  its  GOAL#5 - STABILITY IN THE LONG  The  downtown  form  ( closely  oriented  has. become spaced  employment ).  specialization  sudden o r m a j o r  a  more  occur  office  towers  ) and f u n c t i o n that  The l o c a t i n g  within  the  through  employment  of a s u b s t a n t i a l  has  argued,  ensure  decline. at  might for  As r e s i d e n t i a l  substantially  ( and l i k e l y  lower  spaced  the  further  one  without.  C.  HOUSING AS A " SOLUTION from  housing  normative  propositions.  will some  of p u b l i c  that  extent,  should  apart also  would  than  we  measurable  be  base, i t and  business  typically  tax  activity  be d e v e l o p e d  office  ) , the p h y s i c a l  buildings  character  t o be more a d a p t a b l e  of  than  " ?  are  dealing  The f a c t u a l  base  may  or  activity  intensive  prove  resources w i l l  support a broader  ) f o r such  residential  the arguments a d v a n c i n g  downtown  savings  area  densities  a r e a w i t h h o u s i n g might  i s clear  there  decentralization  continued  buildings  an  It  should  marketplace,  The i n t e g r a t i o n  ability  a h i g h degree of  ( o u t s i d e o f downtown  policies.  generating  ( office-  o f employment o u t s i d e o f downtown  spontaneously,  been  i n both  i n t h e economy, o r s h o u l d t h e r e emerge  location  encouraged/enforced  specialized  the area's v u l n e r a b i l i t y  shifts  advantageous  activities.  increasingly  I t h a s been a r g u e d  increases  be  RUN  through  provision  with both  propositions  result,  of r e t a i l  the  or t h a t  activities  empirical  f a c t u a l and  -  that  more -  of  net  residents  may  be,  investigation.  to The  41  normative have  propositions  the  opportunity  neighbourhoods capable  to  should  of  being  that  low-income  live  be  downtown,  tested,  but  may  in light  of  interests.  Between  t h e e x t r e m e s of  the  ( but  no  less  relationship  different  important  between  sunlight  sidewalk  begin  security  and  of  there  analysis  t h e net  exceed  their  will.  costs  There  deserve  closer  It  would  without  public  servicing  generated  by  -  are  although several  and  circumstances  and  value  lies  a  less  dealing  environment  with -  for  availability  social  the  user's  of  good  The  encounters  of on  perception  a of  appropriateness  as much a  intentions  areas  documents  reference  benefits  not  value-based  " prescription.  planning or  are debated  the  comfort?  should existing  -  be  of  i n commercial  (.  social  their  is clearly  shortage  i n many downtown  whether  to  i s no  of h o u s i n g  qualitative  they  downtown  i t is a " technical  desirability find  the  that  debate  size,  affect  of p h y s i c a l  and  of  and  frequency  to adversely  in  judgement as  to  the  his level  housing  While  or  fact  ) area  users  only  values,  example, a t what p o i n t does b u i l d i n g direct  or  protected/reinforced  reconsidered  charted  households  t o be  to  one  i s hard  any such  gained  are  i t is consistently  a s p e c t s of t h i s  about  the  pressed  rigorous analysis  or ) of  expected assumed  assumption  to that  which  scrutiny;  be m i s l e a d i n g t o s u g g e s t cost, the  f o r t h e r e may resident  the a d d i t i o n a l  be  that  incremental costs  p o p u l a t i o n and building  bonused h o u s i n g  bulk  (  related  environmental the  is  costs  reduction  of  42  sunlight marginal of  a  and  reductions  more  extent  views,  pedestrian  safe  residents  volumes,  off-set  reviewed  within  public  costs  -  and  indication to  possible  assume t h a t  support  this  residential contribute marginal within may  be  public  created effort  and  redeveloped  redeveloped for but  we  i n the  those areas? rather  -  This  is  the find  argument  short  be  that  underlying  run  and,  unclear and  is  the  public  amount of required  not  a changing pattern  whether of  the  residents  costs  which  worth  to o b t a i n  it?  -  i s housing  of  likely  housing  questions  not  little  greater  u n d e r u t i l i z e d areas  i f so,  the  undertaken  that  efficiency  U n d e r u t i l i z e d areas are  reflect  a p p e a r s t o be  suggest  plans  exceed  been  must the  created  consumer  of  enough  downtown  likely  the  increase  be  downtown w i l l  to exceed  a limited  two  to  to the  w h i c h may  the  a n a l y s i s has  vitality  is likely  costs  of  is  levels  contribution  there  is  clear  and  be  benefits  will  use  Most  i s not  What  to  -  downtown  their  but  adjacent  its vitality.  downtown  i s not  public benefits w i l l  position.  Reconsidering be  will  detailed empirical  contribution  perhaps the  What  the  public costs?  densities to  the  -  the  and  facility  p e r h a p s t h e y do  that  costs  environment.  evening/weekend a c t i v i t y to  ) . O f f - s e t t i n g t h e s e c o s t s may  i n commuting  lively,  to which  etc.  by  the  should they best  be use  chance,  preferences  ""The expectation that environmental costs may result from i n c r e a s e d d e n s i t y or b u l k i s , i n f a c t , p a r t of t h e r a t i o n a l e f o r e s t a b l i s h i n g b u l k c o n t r o l s on downtown commercial buildings. There is little basis for arguing that many of the c o s t s r e s u l t i n g from b u l k w i l l be any l e s s a d v e r s e where the building i s o c c u p i e d by r e s i d e n t s , as o p p o s e d t o b u s i n e s s e s .  43  and  p u r c h a s i n g power.  the consumers  of  sufficiently housing  for  the  that  gradual in  long  response for  the  or  could  run,  t o market l o n g run  change  its  c o m m u n i t i e s may underutilized applicable with  area's  But  answer  It  - there  could  be  office  i f a community argued  j  might  infrastructure,  that also  ).  The  probably  of u s e s  in wait  i t s course transition  that  or  different  presence  of  simple, g e n e r a l l y  for a l l blighted  their  in a f u l l e r  areas  redevelopment.  ( e.g.  it  institutional, of  existing  by a g r e a t e r d e n s i f i c a t i o n  of  existing  within  walking  the e x t e n t  to which  community might  attempt  measure w i t h each  or  to  to s t i m u l a t e redevelopment,  t h e downtown  the  willing  the  no  which,  utilization  neighbourhoods  associated  is  "  the  redevelopment  the  unlikely  land  signal  b e s t use  tolerances for  types  surrounding to  not  t i m i n g of  result  supported  neighbourhoods around distance  is  hasten  be  users  and  areas  to slowly take  to  chooses  other  blighted  for  i t may  businesses  i n the area's  f o r a l l communities  r e s p e c t to the d e s i r e d Even  exist,  i s t h e community  desirable  a  the m a r k e t p l a c e  " h i g h e s t and  result  have d i f f e r e n t areas  that  f o r the market  direction?  in  because  demonstrated  Where demand might  demand.  i s intervention  not  b e i n g downtown  will  -  have  demand  be a r g u e d  i n an  in these areas  t o compete w i t h o t h e r p o t e n t i a l  principally  transition  the  effective  locations.  It  is lacking  services  i t i s unable  space,  investors.  housing  strong  in these  the case  Housing  ( but  then  still  debate  s h o u l d accommodate differences  alternative.  in  net  redevelopment public  and costs  44  While is  a  the d e s i r e t o r e j u v e n a t e  widely  essentially has  been  greater  shared  a demand-side  solution  is-  public  be  directed areas, the  etc. This,  and  amenity,  demand  f o r housing  " provide different  the  ".  approach, being  The the  more  support  itself  by  equity  or  activities  a  i f there  (  users  shopping  from  the  may  the  across  downtown's  philosophy  follow " and  interested  they  not  be  stimulating a stronger  activities,  were o n l y  although  that,  "  improve  Obviously,  base,  may  might  of  is  quite  housing  will  in strengthening  adopt  the  latter  p r o v i s i o n of market h o u s i n g  as  a  to  necessary  prerequisite  activity.  of  f o r housing,  interesting  shoppers,  virtue  stability  generators  indirectly  the gradual  rationale  ( employees,  and  activity  accepting  there  be a r g u e d  might  more  I f a community  desirable,  generating  and  " provide  downtown's  But  ) w h i c h would a t t r a c t  i n the a r e a .  it  i t c o u l d be more e f f e c t i v e i f  people  thereby  residents,  power i s i n c r e a s e d and a  I t might  in turn,  housing, from  "  adding  supported.  intervention,  stadiums,  image  - by  purchasing  as w e l l .  towards c r e a t i n g  urban a r e a .  follow  solution  of a c t i v i t i e s  supply-side  base  i n c r e a s i n g the r e s i d e n t p o p u l a t i o n i s  argued, aggregate  variety  to  goal,  t h e downtown's a c t i v i t y  " lifestyle should  allocation  of  activities  visitors  land  for  ) and i s g i v e n  of the e q u i t y  ( mixed  marketplace  however, e x t e n d s beyond  ( variety  uses/activities  " argument  rests  purpose  for various  i n and o f choices  arguments.  on t h e p r e m i s e  n o t be t h e s o l e o r c h e s t r a t o r o f  housing  non-residents  of h o u s i n g )  simply  the  income o r l i f e s t y l e  )  The  that the spatial groups.  45  Beyond what one conviction of  an  that  area  needs.  ideal  of  opportunities  realities  - public  severe  relatively may  be  commuting certain  kinds  downtown area.  may  find  reduced The  One  the  and  t o accommodate  might  r i g h t , the  low  retail  to  be-  which  they )  costs  may or  considered  contribution  might make t o w a r d s a c h i e v i n g  income  and/or  make  the  in l i g h t  public  the  access  by  The  which  units  efficiency, households  extent  may  offer  in it in  their  to  objectives  )  to  economic  accommodated  which  in  the  for  the  little  Families  with  children  lacking  the  support  Still  others  ( e.g.  the  contribution  to  downtown as  a  pool.  residential supporting  w h i c h d i f f e r e n t k i n d s of  households  goals  for  costs  labour  of  the  the  " There appears t o be l i t t l e i n d i c a t i o n t h a t analysis has been undertaken to test c o s t s / b e n e f i t s of t h e s e two a l t e r n a t i v e s . 5  their  subsidize  little  of  to  types.  t o a more a c c e s s i b l e  " to  out  subsidized  satisfy  require.  priced  constraints  then  activities.  unsafe  " equal access  must be  and  to  ( e.g.  of  also question  likely  the  equal  subsidized  really  unemployables  commuting  budget  t e r m s of  downtown  be  i s tempered  provision In  be  household  households  for  area  should  of  face  not  lies  well-suited  subsidized  are  support  be  there  market  should  however,  the  the  5  of  core  r i g h t to  location that  on  of  services/amenities elderly  ",  a g e n c i e s may  Some h o u s e h o l d s  market  that  access  desirable  costs."  housing  might  costly locations.  outside  the  for a variety  limits  more  locations  which  been a r g u e d  " equal  in  income h o u s e h o l d s  city  of  place  afford  low  the  I t has  housing  could  the  area  and  ,  detailed empirical the comparative  46  finally,  the  of d i f f e r e n t In  suitability t y p e s of  the  final  question  of  the  downtown.  the  a n a l y s i s , i t i s probably applicable  whether h o u s i n g The  analysis  desirability  in a s p e c i f i c  point  ) would demand a  i n time  magnitude,  timing  e a c h of  " housing  the  would t h e n interests  and  need t o be w h i c h may  B e c a u s e of  the  clearly  difficult.  benefits/costs environmental to  their  impacts, difficult indirect The  (  may  in  exist costs  " and  to  capable  to  terms  reach of  be  p o s s i b l e to  argue  of  the  of  not  and-  of  agreement what the  the  of  of  the  costs  of  These  goals  of  and  potential  such a n a l y s i s  earlier,  p u b l i c and ( equity,  social  comparison. may  with  the  t o be  consider  more l i m i t e d  Monetary  be  equally costs,  uncertainty.  h o u s i n g may  considering  and  respect  marginal  and  would  private  to problems with  impacts  Some may a  mix  complexity  downtown ought  in  its  l o c a t i o n , economy,  impacts,  private  on  to  throughout  " alternatives.  must d e a l  having  answer  community.  ) leading  one  "  evaluating  empirical precision, as  reflected  " no  investigation  measurement and  among i n t e r e s t g r o u p s . to  needs  b o t h b e n e f i t s and  in light  discussed  p u b l i c and costs  to  encouraged  l a r g e l y non-economic  estimate  impacts,  the  for  " non-housing  within  identification, while  of  environmental  be  be  thorough  evaluated  As  " or  s i t u a t i o n ( e.g.  considerations  opportunity  difficult  and  should  not  required  pervasiveness  social  " yes  incidence  exist  economic, be  location relative  households.  a defensible, generally the  of  be  particularly  disparate like the  set  goals  ) which  may  opportunity  of c h o i c e s  for  47  citizens visit  ( i n t e r m s of p l a c e s ),  in  discomfort t o be  reduced  ) in being  incurred.  to  live  user  interesting  satisfaction  downtown, or  O t h e r s may  and  (  places  psychological  i n a d d i t i o n a l commuting  dispute  or  place  to  little  costs  value  on  such c o n s i d e r a t i o n s . In  reviewing  documents, analysis of  i t has  must  identified argument  In any  compare  vary  decision  would  city  " or  and  were  the  goals  One housing  area's  the  is left the  and on  debated,  judgement  not  and  costs  -  the  expected  to  a  results  As  the  political  of t e c h n i c a l  interests  t o be  to t h e i r  be.  i t i s shaped, w i l l  with  measure  and  Whether a downtown becomes  relative  should  be  of  the  p r e f e r r a b l e to  only  trade-off  goals  f i n d s only  community.  the  makers.  users,  or  of d i v e r g e n t  into  more  f o r the  b e n e f i t s and  the  technical  t h r e s h o l d amount  normally  each c o u l d  planning  much  downtown  within  " worse •" r e m a i n s a  which  k i n d or  and  k i n d would be  of  drawing  public policy  the  by  any  considered  emerge,  what downtown s h o u l d process  of  groups  reflecting  made by  " better  One  very  technical analysis could  interest  impacts  goals  realized.  i s a s s o c i a t e d with  expected  but  find  the  magnitude/incidence  * among  analysis  to  in  more h o u s i n g  which  literature  particular  present  t o be  case,  the  importance  t h a t any be  earlier that  relevant  been d i f f i c u l t  indicating  housing  less.  the  not  made  by  expectations  The  area,  likely  and  satisfy  the of the  a l l of  interests.  the  impression  downtown as  that  the  introduction  a means of a c h i e v i n g t h e  variety  of of  48  goals  discussed  limited goals  earlier  technical  should their  be  to  appear  of  the  of  solution  same - t h e  In a l l of  provision  c o n d i t i o n s which  there  little  was  undertaken  to evaluate  the  s y s t e m s on  the v i t a l i t y ,  The  such  of  might  p r o p o s i t i o n s which  has  been  or  the  to  examined,  should  to  of  to  as a s o l u t i o n  while, at  continue  the  same  generates.  time,  had  through  qualitative  to  the  Further,  investigations built  the the  m i t i g a t e many of  of h o u s i n g or  underly  examination  cities  t h a t any  efficiency  it  downtown  growth  impact  housing  rigorous  housing  indication  intuition.  well,  downtown  encourage  of  As  the  g r o w t h of employment  undesirable  not  the area  accommodate t h e the  of  the arguments which  a  into  ".  the  are  future role  housing  a combination  which  untested.  downtown's " p r o b l e m s was  to  Many of  t o be  on  i n t e n t i o n s and  extent  examples  to e i t h e r  infusion  based  realization,  to- find  alternatives  the  accepted.  credibility  direct  and  their  readily  difficult  been  a r g u m e n t s , good  f o r downtown,  contribute  has  been bonus  aspects  of  downtown.  While  one  may  not  a prerequisite  all  of  an  argue  Recognizing  this  limitations  of  attention  to  to which h o u s i n g  f o r t h e downtown's improvement,  the m u n i c i p a l i t i e s  opportunity  the e x t e n t  to  examined  improve  commitment,  regard  the  increased  area  but  cannot  being  well  the arguments which u n d e r l y  the  technique  likely  t h e market  to  second to  provide  be  question an  new  - is  the  the  aware now  density  effective  mechanism  dwelling  units  - of  fact  housing be  i t , we  i s or i s that as  denied. of  the  turn  our  bonusing  for stimulating any  type  or  49  amount?  The  following  chapter  addresses  this  question  50  IV.  For  a  sufficient several  BONUSES  bonus  -  IN  system  economic  THEORY  to  be  i n c e n t i v e to  parameters  by  which  AND  PRACTICE  successful  i t must p r o v i d e  induce development.  There  a  are  i t s p o t e n t i a l e f f e c t i v e n e s s can  be  guaged: •  •  can  density  and,  i f so,  can  the  bonuses p r o v i d e  amount  footage  ) and  returns  )  can  the  over  review use  The of  the  past.  manner  The  examined  notion within  in of  to  provide  accurately  a basis  of  by  to d e s c r i b e  uses are  determined.  marketplace w i l l  of  square  beyond  stimulate  earned  residential  determined? by  a bonus be  residential begin  density  sustained  context the  density  with  a  the  of  bonuses  brief  b o n u s e s as  density of  processes  The  examination  the which  historical  a method of mechanism  land  itself  b o n u s e s have been c a l c u l a t e d i n  residential  be  f o r the  a d e s c r i p t i o n of  which  the  attempts  the  required  ( additional  premium  incentive generated  evolution  c o n t r o l , followed  and  bonus (  investigation will  the  of  incentive  be  effectiveness  follows.  incentive  time?  These q u e s t i o n s potential  economic  f o r whom?  development e  an  expected  considered  that by  bonuses body  will of  which l a n d  then  theory  values  bonuses  in  that  light  of  be  which  and  i n t e g r a t i o n of  the  land  within  theory.  51  Finally, to  a number of c r i t i c i s m s  the q u e s t i o n s  raised  argued,  seriously  density  bonuses are  above  -  challenge likely  will  put  forward.in  criticisms  the  t o be  be  which,  it  proposition that  an  effective  response^  land  will  be  residential use  control  mechanism.  A.  ORIGINATION  The  g e n e r a l concept  credited"  6  reaction  to the  system  with  to  controls amenities  created  inability  was  which  use  not  bonused  first  provided  in  occurred."  9  by 8  partial  New  the  " or  York  " bonus City"  traditional  emerging p u b l i c not  through  " zoning i n 1961  7  land  use  goals.  The  that  the  ensuring  redevelopment.  down-zoned and  allowed  )."  of  were  provided  permitted densities was  in  newly  in  were  downtown c o r e  " incentive  beginning  achieve then  of  developers  of  to  the  earn  suggests  compensation  Benson a r g u e s  t h a t the for  the  "  land  use  desired i n the  previously ( housing  bonus  down-zoning  t h a t a down-zoning d i d  a  " bonuses "  providing pedestrian amenities  Barnett  as  zoning  Land  a system  is  not  "  was which  occur  in  " Rose, 1976, 62; Whyte, 1981, 24; Barnett, 1974, 40; W i t h e r s p o o n , 1977, 18; Cook, 1980, 87-98. B o t h Cook, 1980, 115; and Weaver, 1979, 58;, however, indicate that bonuses had actually been i n c o r p o r a t e d i n t o C h i c a g o ' s 1957 downtown z o n i n g ordinance. A bonus s y s t e m was a l s o p r o p o s e d f o r Vancouver in 1961, see C i t y of V a n c o u v e r , 1961, 16. " Z o n i n g R e s o l u t i o n of t h e C i t y of New Y o r k , 1 1 - 1 2 2 ( 1 9 6 1 ) . " Whyte, 1981, 24; Barnett, 1974, 40. F o r an example of t h e s y s t e m ' s s t r u c t u r e see Cook, 1980, 87. " B a r n e t t , 1974, 40. 6  7  8  9  52  any  real  sense  same a s t h o s e bonus of  may  new  since  t h e newly a c h i e v a b l e d e n s i t i e s  previously permitted.  have been a mechanism  requirements/rules  regulations The  in  i n t h e downtown a r e a s  1960's  and  optional in  1970's.  an  middle  f o r promoting  place  of  the  ) .  ( through  development 5  3  Residential  density  and  encourage  old  to  upper  housing  provide income in  amenities  was b e l i e v e d t o b e n e f i t  both  ( through bonuses  below-market communities. " 5  t h e downtown g a i n e d  of a m e n i t i e s higher (  housing the  2  and 1970's  i n otherwise desire  to  momentum t h r o u g h t h e  entice  to  incorporate  5  achievable  i n the early  As  )  manditory  were made t o use t h e "  developers  was the  1960's and 1970's, a t t e m p t s office  development  during  ) were i n t r o d u c e d i n s u b u r b a n a r e a s attempt  the  5 1  the p r o v i s i o n  interests  that  the s u b s t i t u t i o n  o f a number o f c i t i e s  The t e c h n i q u e  environment  private  densities  suggests  o f d e n s i t y bonuses t o o b t a i n p u b l i c  applied  and  Whyte  w h i c h were p r e v i o u s l y i n e f f e c t .  use  the p u b l i c  5 0  were t h e  housing  bonus into  "  to  their  B e n s o n , 1970, 897. Whyte, 1981.  5 0 5 1  T h e kinds of p u b l i c " a m e n i t i e s " which a r e commonly gained through density bonuses include, among others, plazas, connections to public t r a n s i t facilities, arcades, additional building setbacks ( a l l o w i n g s u n l i g h t p e n e t r a t i o n ), t h e a t r e s , elevated walkways for pedestrians and social/recreational facilities. See, f o r example, Cook, 1980, 109. Cook, 1980, 23; Weaver, 1979, 59. " E r b e r and P r i o r , 1974. 5 2  5 3 5  F o r example, see C i t y o f T o r o n t o , 1980, 39; Washington,D.C.., ( Zogby, 1979, 2 ) ; A n c h o r a g e ( Cook, 1980, 110 ) ; C i t y o f V a n c o u v e r , 1975; C i t y o f C a l g a r y , 1973, 127; W i t h e r s p o o n , 1977, 18.  5 5  53  projects.  5 5  The  residential  p r o b l e m s w h i c h had efforts  to  reluctant supply  of  bonus was  historically  provide to  downtown  b u i l d housing  luxury land  •  office  costs/unit  ) for several  permit  have  amenity  may  not  or  government,  mixed-use  have  projects  downtown s t o c k  the  been  l i k e l i h o o d of development  to other  future )  was  level  of  locations  not  in  public  Weimer, 1960, 21; Cook, 1976. Cook, 1980, 26; K e n d i g , 1980, 2.  market  were  too  a  clearly  demand  still tested  a g e n c i e s had subsidies  for  the  senior  market  complicated. a limited levels  major a d d i t i o n s  to  of the  5 7  Weaver,  1980, 339;  relatively  constructed  from of  because:  1980, 8;  in  c o s t l y , r i s k y and  possibilities  were l i m i t e d  of  and/or  sufficiently  t o be  using  evidence  large  projects  argued part,  but  high;  a competitive  relative  sufficiently  unfamiliar,  of  5 6  market;  there  their  lacked  been  perhaps a l i m i t e d  too  the  the  public  had  reasons:  office  may  downtown h o u s i n g ;  number  ( or  downtown  and  Investors  ( except  more p r o f i t a b l e ;  defined  For  housing.  generally  the  •  b o t h p r i v a t e and  were t y p i c a l l y  to  residential  •  hindered  construction  re-zonings  •  t o overcome many of  downtown  condominiums  •  expected  Clayton  1979,  65;  Research  Petersen, Associates,  54  •  federal offered  •  land  and  provincial/state  limited  costs  may  have been t o o  future  downtown  disproportionate households. viciously  The  program  successful,  the  unoffensive provision  of  housing  reasonable  and  mixed-use  buildings  -  reflect  that  elderly had  been  to a h a l t , a  second  received. housing  a  and  major  Even might  if have  investment.  The  a t t r a c t i v e in l i g h t -  brought  subsidized  58  perception  income,  the  " bonus " p r o v i d e d  a market-oriented  downtown.  a  Programs  poorly  perspective,  intervention  government  maximums ) ;  would  low  felt  be  private  market's  of  and  have  for  want t o c r e a t e  Urban Renewal  more  discouraged  unit cost  share  could  high  residents  criticized  g o v e r n m e n t s may  From  ( per  p u b l i c a g e n c i e s d i d not that  programs  resources;  s u b s i d i z e d programs •  subsidy  bonus  of  developers  the  s o l u t i o n to  appeared emerging  were t o be  an the  especially  trend given  back a  to  choice  One i n d i c a t i o n of the bonus s y s t e m ' s a p p a r e n t a c c e p t a n c e i n the m a r k e t p l a c e i s t h a t i t has y e t t o be c h a l l e n g e d i n the courts, which may suggest that it is either well received, i n c o n s e q u e n t i a l t o d e v e l o p m e n t or d i f f i c u l t t o c h a l l e n g e . For a d i s c u s s i o n of the l e g a l a s p e c t s of b o n u s e s see Benson, 1970; and M e s h e n b e r g , 1976, 43. 8  55  between opted  s i n g l e and m i x e d - u s e b u i l d i n g s , for  appeared  to  stimulus  an  For  the p u b l i c  inexpensive,  construction  -  a  " something  term  AND  low-risk  for  nothing  "  STRUCTURE  " bonus  " has been u s e d  A  d e f i n i t i o n has been o f f e r e d  general  the  simplest  to  earn  zoning  money  ".  more s p e c i f i c building or may  throughout  by M e s h e n b e r g ( for  I t i s n e c e s s a r y , however, so  as  density  to  created  differentiate  6 1  as a r e s u l t .  t o mean an a d d i t i o n  to permitted  nothing  more.  The r e s i d e n t i a l d e n s i t y  granting  of a d d i t i o n a l b u i l d i n g d e n s i t y ,  A bonus  which, i n  developers  between  the  incentive  i s used  in this  building densities, bonus  )  t o make t h e  and t h e economic  not o c c u r  the  " f o r r e s i d e n t i a l uses.  of t e r m s , i s " t h e o p p o r t u n i t y  more  additional  " incentive  liberally  describing  thesis  they  the technique  uncomplicated,  literature  w h i c h may  sector,  if  6 0  definition  and  i s e s s e n t i a l l y the  beyond t h a t  w h i c h would  W h i l e z o n i n g and i n c e n t i v e s f o r l a r g e - s c a l e m i x e d - u s e projects in t h e downtown d i d n o t a c h i e v e wide s u p p o r t u n t i l t h e 1960's, landmark p r o j e c t s had been b u i l t i n t h e 1950's, including Penn C e n t r e i n P h i l a d e l p h i a ( 1 9 5 3 ) , Midtown P l a z a i n R o c h e s t e r (1956) and Charles Centre i n B a l t i m o r e (1957). In 1975, W i t h e r s p o o n e s t i m a t e d t h a t a p p r o x i m a t e l y 100 l a r g e - s c a l e m i x e d - u s e projects had been constructed t h r o u g h o u t ' t h e U.S. F o r d i s c u s s i o n s of s p e c i f i c p r o j e c t s and t h e emergence of m i x e d - u s e g e n e r a l l y , see Witherspoon, 1977; C i t y of T o r o n t o , 1975; B r o w n e l l , 1974; Cook, 1980, 8; and Weaver, 1979, 63. W i l b o r n , 1973; Weaver, 1977, 59; Cook, 1980, 23. M e s h e n b e r g , 1976, 45.  5 9  6 1  offer  DEFINITION The  6 0  latter.  for  solut ion.  B.  the  and r e w a r d e d  5 9  56  otherwise  be  additional  permitted,  density  residential incentive  refer  " unearned  returns  granted  through  there  a  Toronto density  In may  greater the  the  either  landowner's  development  there  be  may h e l p  to further  The or  both. to  bonus  An  capture  having  been  d i s p o s i t i o n of h i s  assumed  i s necessarily  illustrate  of  ability  and/or  6 2  commercial  combination  An example o f t h e bonus s y s t e m  that  an e c o n o m i c now  in  because incentive  operation  the general  in  s t r u c t u r e of  bonuses.  the F i n a n c i a l D i s t r i c t a  )  mixed-use  occupancy  owner a g r e e s  project  of  the  (  units  or  a  developer  a maximum 750  units  of 8 per  D e v e l o p e r s may be p e r m i t t e d a  ( 1,000 u n i t s  the handicapped  is  to  be  per  hectare  regulated  )  where  so  as t o  or e l d e r l y . " C i t y C o u n c i l  residential densities to provide  containing  u s e s and 4 F.A.R.  r e s i d e n t i a l density  permit  o f downtown T o r o n t o ,  f o r r e s i d e n t i a l uses.  accommodate o n l y also  some  not immediately  f o r commercial  hectare  or  of h o u s i n g . "  ( as a r e s u l t of the  3  bonus,  construct  F.A.R.  6  the  I t should  created.  to  "  property. is  accommodate  floorspace,  will  )  may  f o r the " p r o v i s i o n  6  to increase  the a d d i t i o n a l housing  may  by 25% where t h e f o r the  purposes  " P r o v i s i o n o f h o u s i n g " may t a k e s e v e r a l f o r m s , i n c l u d i n g t h e construction of u n i t s o n - s i t e , a c a s h - i n - l i e u payment/unit t o a public agency, o r an agreement to provide housing on an a l t e r n a t i v e s i t e o r a t some l a t e r p o i n t i n t i m e .  6 2  Returns are earned i n many ways - a s payment f o r t h e use o f capital, as a reward for expertise or talent, and as compensation f o r assuming risk. Whether or not r e t u r n s a r e " u n e a r n e d " depends upon the i n i t i a l expectations of the i n v e s t o r - how much d i d he e x p e c t t o r e c e i v e i n payment f o r h i s c a p i t a l , e x p e r t i s e and t h e a s s u m p t i o n o f r i s k . " C i t y o f T o r o n t o , 1980, 46. 6 3  6  57  of  the a s s i s t e d In  explicit  practice, and  introduced  in  -  In to  s u b s i d i z e d ) housing  c o n d i t i o n s and on  an  nature  a project  specific  exemptions  or  t h e y may  choosing  faster,  from  setbacks  ).  provided  developers  may  a more d e t a i l e d  be  as  an  provide  6 5 6 6 6 7  an  new  with  two  incentive  for  a  density  of  any  (  e.g.  of  the  their  for ).  developers  process  purposes  and  gain  building bonus  being  proposal  to  i n mind:  for developers  reduction where  a  or where a r e q u i r e m e n t p r o j e c t s has  literature  economic  and  general  units  permit  be  to  provide  and/or  occurred,  the  be  be  process.  commercial  Throughout  in light  r e q u i r e d t o submit  as c o m p e n s a t i o n  within  intents  income, e l d e r l y  requirements  Conversely,  intended  housing;  low  approval  by-law  review  ( e.g.  stream-lined  be  t h e y may  They may  6 6  bonus may  6 7  6 5  t a r g e t e d at p r o v i d i n g housing  t o use  Bonuses have been o f f e r e d  •  basis.  or  policy  the  other  heights,  •  general  project  p o p u l a t i o n groups  some c i t i e s , a  basis,  a l l o w i n g u n p r e s c r i b e d numbers of  type,  enter  by  of  program.  amount of b o n u s e s may  as-of-right  w i t h i n the c o n t e x t on  household  the  implemented  negotiated  very  ( government  to  1977, 1977,  to provide  has  housing  introduced.  developers  18. 18.  permissible  down-zoning  t h e d e n s i t y bonus  incentive  C i t y of T o r o n t o , 1980, 41. Cook, 1980, 23; W i t h e r s p o o n , Cook, 1980, 78; W i t h e r s p o o n ,  been  in  is  argued  to  by  permitting  58  greater  residential  achievable  in  ( plazas, be  return  effective,  than  not  so  as  low  that  t o be  unreasonableness. extraordinary •  subject  gain  the  (  an  permitted  sustained  realized  the  must  market  courts  to  but its  among p r o p o n e n t s  that  because: the  feature  project w i l l  and  that  will  terms  additional  be  exceed  l a r g e r with  generate  ) of  density  cover one  feature extra  i t and  a  profit;  its  does not  therefore  would e x p e c t  to cover return  different,  with  the  effort  risk  associated  costs  which  " incentive returns  the  the  the  with  of  feature  providing  greater  amount  have a l a n d returns  from  need  providing  its  provision  and  an  incentive  for  extent are  to  which  sufficiently  compensating the  cost  costs.  returns  provides  d i f f e r e n c e more t h a n  bonused  the  " depends upon the  from  the  and/or  construction/financing  and  " bonus "  for  only  the  features  density  by  i n the  with  The  and  be  various  t y p e of  associated  developers. costs  the  from p r o v i d i n g  in absolute  the  latter  to challenge  be  total  Conceptually,  generate  the  of  previously  and/or  density,  bonusable  For  is a perception  may  returns  cost;  »  6 8  d e n s i t i e s than  provision  which c o u l d  There  the  •  ).  the  proponents argue that  lower  any  for  housing, e t c .  be  an  and/or commercial  for  the  feature.  M e s h e n b e r g , 1976, 45; K e n d i g , 1980, 339; Dewees, 1975, 46; Kleven, 1974, 1480; E r b e r and P r i o r , 1974, 14; C l a y t o n R e s e a r c h A s s o c i a t e s , 1980, 30; K l e i n and S e a r s , 1974, 267. 8  59  C.  CALCULATING BONUS AMOUNTS It  was n o t e d  earlier  that  the n o t i o n of r e s i d e n t i a l  b o n u s e s grew o u t o f t h e c r e a t i o n bonuses manner  generally.  residential  amenity  bonuses.  s u c c e s s of amenity to f i r s t  have  in constructing  The l i m i t a t i o n s  ( e.g. the  basis,  o f t h e methods u s e d  annual  amenity  estimated, usually  are f i r s t  the annual The  cost  calculates  footage  required  sufficient  amortization/maintenance  costsof  the amenity.  then  amount of a d d i t i o n a l  required  as  cash  then  to  to generate  incentive  the  the a d d i t i o n a l  f o r developers  to  revenue  provide  Krubhkov p r o v i d e an example o f t h e p r o c e d u r e .  However, a s a b o n u s a b l e different  from  It  i n several respects:  differs •  6 9  the other  feature,  public  amenity  Ruth and K r u b k h o v , 1966.  housing  expenditure  generate  to  cover  A  judgement  bonused  relative  an the is  floorspace  provides  amenity.  the  Ruth and  6 9  is  significantly  f e a t u r e s which a r e n o r m a l l y  costs,  of  t h e amount o f  to  which  the  costs  on a s q u a r e  of a m o r t i z i n g that  analyst square  ) the a c t u a l  flow  made  for a public  arcades  net l e a s a b l e net  will  reviewed.  calculated.  additional  calculated  and e v a l u a t i n g  plazas, theatres,  with  review the  been  d e t e r m i n i n g t h e amount o f bonus t o be g i v e n  producing  then  bonuses  t h e methods used  be c r i t i c a l l y  In  foot  i t i s helpful  i n which g e n e r a l amenity  before examining  then  As s u c h ,  and apparent  density  to  total  bonused.  project  60  value,  impose  alterations, building  especially  designs  amenity  costs  construction the  relatively  at  can  an  be  of  modification whereas number  of  separation division public  of  title,  amenities  concerned Housing  with  and  lies  so  at  giving  competitiveness profitability  of  not  the  the  on  stream  of  layout,  introduces a to  the  and t h e  revenue-  need  not  attention  with to the  units.  unlike public to  be  t o consumers.  extreme,  dwellin'g  i t s ability  the  expenses;,  developer  The  amenities,  generate  a  revenues;  bonuses given  to create public  expected  cover  to  only  financing  opposite  their  relatively  normally  considerable  on  component,  site  the amenity  of housing,  largely  projected  are  impact  respect  additional  about m a r k e t i n g  developers  is  or  o f management and o p e r a t i n g  generating  rests  is  i n c o r p o r a t i o n of housing  complications  total  of a p r o j e c t ;  requiring design  such,  can r e p r e s e n t a  amenities  typically  As  a major  bulk,  into  into  The h o u s i n g  component  of b u i l d i n g  the  having  building  public  uncomplicated,  stage.  incorporated  m a j o r c o s t and p h y s i c a l provision  incorporated  early  viability.  because of i t s sheer  the  when  c o s t s without  project's  minor c o s t s and b u i l d i n g  amenities  may n o t be  a p o r t i o n of l a n d c o s t s .  There  some c o n f u s i o n , on t h e o t h e r hand, a s t o whether  61  the  return  should  cover  provide  a return  B e c a u s e of " construction  cost  plus  amount  developers.  One  complications  markets  floorspace these  the  and  level  returns  The  b o n u s e s and  of  the  preliminary  by  analysis  to  costs  and  bonus  simple  to  the  the  the  offer  to  the  to which the land  which  expected  residential  costs.  All  amount of  and  the  additional  extent  costs,  developer,  a  in determining  consider  to a f f e c t  the  apply  density  offset  their three project  required  appears to public  engaged economic c o n s u l t i n g  e a c h of  " approach  extent  land  of  effort  therefore  the  required.  incentives  of  cannot  residential the  component  investment.  housing,  expected  incurred  for general  viability  of  expected be  one  housing  s h a r e of  land  also  subsidize  be  risk  level  required  costs  might  required  to  u n i t s and  should  factors  of  to the  residential  ought  u s e s can  bonused  pro-rated  incentive  of  and  for  a  the  these d i f f e r e n c e s  appropriate  commercial  from  be  to  examined  assessment  A number of evaluate  bonus p r o p o s a l s . studies  residential  more c o m p l i c a t e d  amenities. firms  to evaluate  The 7 0  which d e v e l o p e r s  that  cities  have  the  method of  mirrored  than  financial analysis  the  kind  in of  u n d e r t a k e when  T h e t h r e e s t u d i e s examined i n c l u d e d K l e i n and S e a r s ( T o r o n t o ) ;Western R e a l e s e a r c h C o r p o r a t i o n L t d . ( Vancouver ) ; Clayton Research Associates Limited ( Edmonton ). For additional e x a m p l e s , see a l s o W r i g h t , M a n s e l l and Associates, 1978; Peat Marwick and Partners, 1973; U r b a n i c s , 1978; and B a x t e r , 1975, 139.  7 0  62  first  considering  estimation  of  construction revenues  a  the  and  f o r the  profitability  new  project.  projects'  land  costs  first  full  normally  The  creation )  and  year  included  involved  costs  development,  (  projected  of  one  analyses  net  operation. or  b o t h of  The the  an  operating measures  of  following  two  ratios: •  Return  on  Investment  operating creation •  Yield  year's  net  by  investor's  the  " ( the  R.O.I.  Re  capitalized the  )  value  creation cost,  of  projected  operating  before-tax  basis.  to  the  bonused  undertaken  gross  the  reports  p r i c e s and  t o examine the changing On  conditions-,  the  amount of  year  ,  ( after  an  which debt  equity  which  is  net  ) d i v i d e d by  the  of  required  year's the  net  and  the  service  to  of  costs  yield  only  was  extent  to  values, basis  of  a n a l y s t .then made a  bonused d e n s i t y  required  ).  ( the less  Without  first  reflect  year's a  current  was  interest  analysis reasoned  on  apportioned  returns  to  given  analysis  analysis  the  a  income,  normally  rents,  " Break-  " ratio  the  the  which  ) divided  the  operating  undertook  first  contribution.  were assumed t o  land  the  creation cost  Sensitivity  land  is  examination  reviewed considered  density.  factors.  the  first  a share  other  to  ,  " Developer's P r o f i t  Land v a l u e s  to  market  a  )  initial  revenue  flows  response key  flow  a l l d i v i d e d by  the  first  ( Re  included  and/or  exception,  market  Rate  cash  sometimes  even Revenue  (  )  cost;  Equity  Analysts  or  income  ( R.O.I.  usually  varied  in  rates  and  and  local  judgement  induce  as  developers  63  to provide  the  limitations examined The  housing  of  the  i n a subsequent  s e c t i o n of  reader  be  should  arising  transferrable  to other  in general,  entering  the  ( land  demand/supply  time  (  interest  rates,  tax  may  roughly  be  input and  be  different  D.  market  examination  7 1  As  will  of  as  real of  or  undoubtedly  to l e a d  to  be  the  the  markets  variables  densities,  residential  uses,  point  analysis  values  of  l o c a t i o n and  different  in  capitalization  methods of  relative with  not  to a p a r t i c u l a r  bonused  and  and  are  estate  to a p a r t i c u l a r  vary  very  findings  the  specific  such, w h i l e  s i m i l a r i n each c a s e ,  expected  i s not  ) or  will  analysis  mortgage a v a i l a b i l i t y ,  the  timing  results  under  conditions.  LAND VALUE DETERMINATION AND It  very  office  expectations  ).  the  values  permitted for  studies  and  thesis.) that  The  often  values,  provisions  variables  can  are  rates,  implications  i n the  cities,  in nature.  conditions  developer/community  The  area-specific  m a r k e t s or  local  the  cautioned  from  analysis  downtown a r e a  (  methodology a p p l i e d  conclusions  are,  component.  the  i n t e n t of  the  which  full  process  by  land  general  propositions  this  body  values which  DENSITY BONUSES  of are are  For a concise, chronological l i t e r a t u r e , see Mondor, 1978.  section  to provide  literature determined. most  a detailed  addressing Rather,  relevant  summary of much of  only to  the  the the this  relevent  64  investigation  The  land  in  As  7 2  a  and  given  the  in  central  to  the  price  competition.  As  7 4  to  downtowns  locate  location relative f o r the  self-selects  of the  may  discussed  be  downtown a r e a s have been u n a b l e in a reduction  i n the  amount  existed  downtown  making  it  introduce  new  In  t h e o r e t i c a l terms,  present  value  generated is  deemed  of  through  established  sellers  i n t o the  the  through  negotiating to  be  land  the  and  value  labour located  land  values  most v i a b l e u s e s w h i c h can  most  to  of  for a  offer  the  dominate  the  t y p e s of  housing  increasingly  of  stream  land  of  net  disposition.  the  7 5  is  housing  in  uses,  which  has  difficult  to  by  is, both  in  equal  to  the  income w h i c h can The  i n t e r a c t i o n of  a p r i c e which  acceptable  uses,  each  area.  future  i t s use  urban  t o compete w i t h c o m m e r c i a l  resulting  housing  the  to  to  centrally  expected  earlier,  continued  proximity  to  most  Those a c t i v i t i e s  7 3  land  and  has  in close  e x i s t i n g pattern  time.  for  7 1  most  compete  marketplace  l o c a t i o n and  highest  base  activities  relative  rise  discussed.  b u s i n e s s e s choose  and  force.  be  employment  expand as other  will  willing  the  parties.  I s a r d , 1956; H e i l b r u n , 1974, 16; H i r s c h , 1973, S h e n k l e , 1978,.121; H e i l b r u n , 1974, 116. For a c o n c e p t u a l d i s c u s s i o n of the spatial u r b a n l a n d u s e s , see H e i l b r u n , 1974, 118-120.  value  final  of buyers  be  land and  analysis,  Investors  are  273. distribution  of  H e i l b r u n , 1974; N o l a n , 1978, 6. It is worth noting that " value " to particular investors may a l s o be a f u n c t i o n of t h e i r p o r t f o l i o s and investment objectives, leading them to place a higher value on the p r o p e r t y t h a n s u g g e s t e d by the p r e s e n t v a l u e of i t s f u t u r e net income. 5  65  concerned with use  and  They  eventual  offer  expected which  for net  t o be  judge  Since  risk,  of  property asking  price  built  future cash  zoning,  site,  so  uses  or  changing  and,  hence, a s k i n g As  by  of  projected  and  of  investment  other  expectations  of  in  their  demand,  objectives,  for  incurring  will  value  the  hand,  have  an  p r i c e of c o m p a r a b l e  judgement as  premium  investment  different  each buyer  of  portfolio,  alternative  the  use  a  change  flows return  consumer  tolerances  that  the  their  public and  c h a n g i n g , or  are  market.  by  by  a  and  their  on  cash  them  inflation  the  t o what  property could  be  p o s s i b l e changes  in  on.  effect  permissible uncertain  determined  the  and  One  Sellers,  7 8  future  of  and  to expect  of  by  improvements.  f o r the  have  flows  its  gives  estimation  may  generated  7 6  compensation  The  7 7  form  buyer  for purchase,  on  impact  n a t u r e of  ownership  differently.  available  7 8  the  i t i s reasonable  and  property,  incurred.  each  wealth  land  reasonable  expected  t o be  the  expectations  7 7  the  financing,  choices.  7 6  t o be  the  the  w e a l t h d e p e n d s upon t h e i r  impacts,  in their  in consideration  g e n e r a t e d by  risks  available tax  growth  d i s p o s i t i o n of  resources, the  net  a p r i c e which,  they  their  the  use  densities. where l a n d  significantly, and  land  bidding  market c o n d i t i o n s  controls Where  u s e s and  a s p e c t r u m of p r i c e s may change,  so  is  limit  public  policy  market  conditions  future  will  the  G r e e r , 1979, 7. B i s h and N o u r s e , 1975, 80-81; G r e e r , 1979, 11. See, f o r example, C l a y t o n R e s e a r c h A s s o c i a t e s , 1980,  is  expectations  characterize too  to  the  land  property's  34.  66  value  i n the  marketplace.  In  a competitive  the  price  which c o u l d  use  " for that  7 9  market, be  the  absorbed  property:  exchange p r i c e by  the  should  " highest  reflect  and  best  8 0  " . . . t h a t u s e , from among r e a s o n a b l y p r o b a b l e and l e g a l ' a l t e r n a t i v e uses, found to be physically possible, appropriately supported, and which results i n the highest land v a l u e . " 8 1  In a c o m p e t i t i v e the  price  return  to that  to  the  level new  abnormal p r o f i t s .  3  bidding  different  rates.  has . been a r g u e d  value  which  In a c o m p e t i t i v e  " value  " beyond  that  that,  be  acceptable or  set  in by  of  perfectly classes  tax  of  provisions  8 3  too,  that  remains a f t e r  made. *  argued  up  characteristics  i n v e s t o r s t a k i n g a d v a n t a g e of v a r i o u s tax  been  to b i d  away e x c e s s  diversified  differential  has  the  minimal  m a r k e t s , market p r i c e s may  8  1  thereby  8 2  Recognizing it  the  competitive  that  2  owner,  permits  buyers  It  9  which  expected  competing  and  0  m a r k e t , b u y e r s would be  market,  which  land values  a l l factor  are  payments  land p r i c e s r i s e  exists  at  a residual  the  have  to capture  most  -  been any  competitive  Hamilton, 1970, 54-55; N o l a n , 1974, 20; W i l k i n , 1979, 120. Nolan, 1974, 18; H e i l b r u n , 1974, 121; B i s h and N o u r s e , 1975, 84. B o y c e , 1975, 107. W i c k s e l l , 1935; C l a y t o n R e s e a r c h A s s o c i a t e s , 1980, 25. F o r a d i s c u s s i o n of d i v e r s i f i c a t i o n , see Gau, 1978. "Marshall, 1890; B a r l o w e , 1958, 238; M i l l s , H e i l b r u n , 1974, 114; Wendt, 1974, 154.  1969;  Keiper,  1961;  67  level.  Any  unearned  returns  land development p r o c e s s by r i s i n g  interaction  adjustments  eventually,  The  worthy  firstly,  the  kind  of  zoning  property  on a  S e c o n d l y , we  will  It  two can  option for  is  on  added be  ).  We  in  t o be of  and  the  incentive  are  will  consider,  when  residential  to  the e x i s t i n g  or  residential  ).  residential  and  the e x i s t i n g zoning,  built  order  to  but f o r  utilize  the  "  first  Densities  t h e t y p e o f bonus  residential  -  we  would  density find  created to  a n t i c i p a t e d that  original  t h e owner w i l l net present  when  the  t o e i t h e r d e v e l o p or s e l l  which y i e l d s the g r e a t e s t  risk  expect  value  occurring,  added  commercial  to  the  economic  is  value  t h e bonus  into  created )  land  density.  permitted,  options be  this  with  the s i t u a t i o n i n which  u n i t s must  consider  " add  "  it  A d d i t i o n a l Permitted  previously  of  ( density  examine  commercial  we  capitalized  " bonus  ( be  density  which d w e l l i n g  with  mitigated  one might  of more c a r e f u l e x a m i n a t i o n .  potential  simply  " i n the  be  and  at l e a s t ,  benefit associated  likelihood  development  If  run,  bonuses  f o r t h e m a i n t e n a n c e o f an  matters  1.  density  i f not i m m e d i a t e l y ,  implications  bonused  "middlemen  i n the long  In t h e o r y ,  economic  land.  commercial  of  is critical.  positive  the  should,  by  land p r i c e s .  The  any  enjoyed  densities  landowners the  faced  property.  normally value  cities  s e l e c t the (  adjusted  68  a.  Development  If  the  consider  the  ignoring of  the  his  landowner options  it.  This  landowner,  the  whether  to enter  value  )  t o the plus  .  holding  decision  net  amount  or  bonused  b a s e d on  the  brought also  losses  forward  include  period.  ( per  value  square  i n the  original  its  foot  The  land's  land's  current  and  he  opt  as  to  purchase  incurred  of  price  (  his cost  rates,  the The  capital refers  landowner would  market  cost  during  value.  cost  at  ( market  accrued  replacement  ) w h i c h the at  cost  present  opportunity  ) The  uses  decision  its original  their  or  peculiarities  Should  replacement 8 5  will  economic a n a l y s i s  w h i c h were  to  the  the  he  density  for d i f f e r e n t  into  include  f o r comparable p r o p e r t y  the  property  must make a  value at  owner would  holding  current  be  is c r i t i c a l .  operating  period,  to  If  land's  This  the  its  his  t o him  during  t o pay  will  the  market c o n d i t i o n s  cost  landowner m i g h t  the  using  h o u s i n g component, he  original any  t o d e v e l o p the  to d e v e l o p a mixed-use p r o j e c t .  to b u i l d  accrued  either  decision  the  willingness  its  of  decides  have  that i s ,  marketplace.  landowner v a l u e s  the  land  at  i t s real  cost  T h e r e r e m a i n s some d e b a t e as t o whether l a n d s h o u l d be v a l u e d a t i t s a c c r u e d or r e p l a c e m e n t c o s t . Analysts such as Dewees ( 1975, 48 ) and Peat Marwick and P a r t n e r s ( 1973, 111-8 ) have e m p h a s i z e d the a c c r u e d c o s t a p p r o a c h . However, t h e v a l u a t i o n of l a n d c o s t s i n the f e a s i b i l i t y s t u d i e s reviewed were based on surveys of c u r r e n t l a n d v a l u e s t h r o u g h o u t the downtown ( i . e . c u r r e n t r e p l a c e m e n t c o s t or " market v a l u e ") . Land c o s t s were u s u a l l y a p p l i e d t o the p r o j e c t as a whole. However, in one feasibility study at l e a s t ( C l a y t o n , 1980 ), l a n d c o s t s were apportioned between commercial and residential development p o t e n t i a l on a p r o r a t e d s h a r e of b u i l d a b l e s q u a r e footage. 5  69  t o him, cost  since  likely The  have  incorporated  could  level  would  of demand  earning  development  considers  h i s need  if  other  economic  value,  density.  The  abnormally he  area  market,  the r e t u r n s  provide  sufficient  high  the  on  bonus  residential earn  normal  returns.  unless  Since  to  build  assured  of  return.  i n the f u t u r e .  included  The  owner  sites  realizing  a r e aware of t h e bonused  density's  premium  of t h e r e s i d e n t i a l maintain  generated f u n d s t o buy  original  still  development  be c h a r g e d a  To  i s high,  8 6  the  depending  the landowner's o b j e c t i v e s  landowners he w i l l  density.  r e t a i n s the o p t i o n  to purchase other  size  the  that  ) would not  by p e r m i t t i n g  i s low, t h e owner may  land  f o r whatever  returns  I f demand  to h i s return  i n t h e bonus  negotiation.  such,  units  abnormal  h i s minimal r e q u i r e d  however,  zero  of the r e s i d e n t i a l  and would be u n l i k e l y t o b u i l d  at l e a s t  further  As  realize  a  ( pre-bonus  the d w e l l i n g  u s e s a r e not r e q u i r e d  Suppose,  be a p p o r t i o n e d  f o r the u n i t s .  I f demand  not to b u i l d  through  sell  but be u n a b l e t o r e a l i z e  residential  that,  the value  contributed  development.  or  would  would  purchase p r i c e  b e a r and may  have  returns  component  his original  landowner  market the  the housing  from new  landowner  for  premium w i l l his  is  bonused  be d e t e r m i n e d  participation  this land  the  first  project  for future likely  i n the  to  must  development. value  his  S e e , f o r example, C l a y t o n , 1980, 27. However, i f t h e l a n d had been p u r c h a s e d s h o r t l y b e f o r e t h e c r e a t i o n o f b o n u s e s , but w h i l e expectations of potential bonuses prevailed, there i s every l i k e l i h o o d t h a t r e c e n t p u r c h a s e r s may have p a i d a premium f o r t h e i r s i t e s i n a n t i c i p a t i o n of t h e bonus b e i n g introduced. 6  70  residential its  replacement  unit  which  acceptable "  development p o t e n t i a l at  is  to the  owner has  received  an  land  investment  was  paid  at a l l  realize the  he  7  may  greater  stay  be be  density,  active other  but  to value  his  return  where no  the  minimum  there  now  be  an  he  in  the  initial  the  original  residential premium  generous  return  incentive  would e x p e c t  that  the  participation  in  the  unearned  return  finance  apportioned  his  not  a  but  those  next  land  r e s u l t of  landowner  a zero  land  generate  cost  of  his  objectives  i n the  future,  he  has  little  1980,  35.  when  to  sufficient  I f one  cost  the  would  market.  8 7  See, f o r example, C l a y t o n ,  that  C l e a r l y , the  replacement  development.  we  to  might  situation  position  much more c o s t l y as  i f he  the  speculative  a  future  potential.  but  at  u n i t s g e n e r a t e s any  might  required  projects at  the  his  i n the  land  to h i s  however,  that  looks  future  r e a l i z e d an  returns  develop  of  that  have  development  to  viability  Is  reflects  cost/dwelling  increase  i t is likely  zero,  secured  likely  residential  funds t o  infinite  one  or  past,  forward,  which w i l l  residential  past  the  and  only  -  proceeds w i l l purchase,  will  units.  whether  s a l e / r e n t a l of  -  Looking  l a n d o w n e r has  on  ( w h i c h was  ) i f the  market  and  f o r the  landowner's to  indeed.  prices  which  e s t a b l i s h a land  than zero  depends  Looking  land  will  amount  " to b u i l d housing?  market.  to  This  greater  answer  relative  .  sales/rent  incentive  The  cost  an  is  option  evaluating  the  71  b.  Disposition  Alternatively, in  the o r i g i n a l  i t s undeveloped s t a t e .  demand  a  premium  for  development  potential.  any  in  value  return  has p a i d a  a  that the  be  at  the  bonus,  real  to build  t o as a " w i n d f a l l  is  for  left  the  on  any a b n o r m a l  returns  will  "  for  bonused unit  his  the  8 8  subsequent  the subsequent  density  and  has,  w h i c h must be p a s s e d efficiently,  of t h e premium would  f o r t h e d e v e l o p e r would  The s u b s e q u e n t owner may  initial  literature,  profit.  of t h e s i t e  has  an u n e a r n e d  In t h e  I f the marketplace f u n c t i o n e d t h e amount  he  housing  realize  he has i n c u r r e d .  "  the p r o p e r t y  v a l u e of t h e r e s i d e n t i a l  depending  land c o s t / d w e l l i n g  expected that  landowner.  sell  he i s i n f o r m e d ,  a l l , he may  his acquisition  premium  on t o c o n s u m e r s .  economic  incentive  Through  therefore,  would  of  "  that  I f the o p p o r t u n i t y  referred  what  landowner? owner  the  and t h e r i s k s  i s commonly  But  Assuming  market  as a r e s u l t  expectations this  the  landowner may  still  be s u c h  be c a p t u r e d  realize  it  by  abnormal  returns i f : »  the  residential  density  was  underpriced  i n the  t r a n s a c t i o n ; or •  i f market  conditions  change  and  housing  demand  the p r o p e r t y ,  earning  rises. The abnormal  s u b s e q u e n t owner might a l s o returns  sell  f o r t h e same r e a s o n s as n o t e d a b o v e .  Hagman and M i s c z y n s k i ,  1978.  However,  72  he  also  incurred  residential should  some  density.  property.  The  earning  premium  housing  f o r the  declines,  or  he may be u n a b l e t o  through  disposition  r e t u r n s as  market c o n d i t i o n s o r u n i n f o r m e d  n o t be c o n f u s e d w i t h t h e i n c e n t i v e bonus.  While  d e f i n e d and, o v e r abnormal  This  a  unexpectedly,  h i s investment  the  market  time,  •  market c o n d i t i o n s may  •  some i n v e s t o r s  i s equally  a  buyers  intended  of  the  consequence and s e l l e r s through  the  f o r downtown h o u s i n g may be  even v o l a t i l e ,  r e t u r n s i s always  imperfections  estate  for  o p p o r t u n i t y t o earn abnormal  density poorly  paying  8 9  improved  should  by  I f t h e market  development c o s t s r i s e  develop or t o re-coup  of  risk  present  the p o s s i b i l i t y of  because:  fluctuate  significantly;  and  r e c o g n i z e , and c a n t a k e a d v a n t a g e  of  i n the marketplace.  t r u e f o r any l a n d  use  and  for  any  real  investment.  This risk i s not peculiar to bonused s i t e s but i s , r a t h e r , characteristic of a l l forms o f r e a l e s t a t e . It i s interesting to note that t h i s was n o t a r i s k w h i c h t h e o r i g i n a l landowner had been e x p o s e d t o . 9  73  2.  Commercial/Residential  The are  second g e n e r a l  permitted  commercial  will  landowner  a  at  first  the  the  time  of  f a c i n g subsequent  Development  The  landowner may  they  demand  exists  since  a  underuti1ization  the  to u t i l i z e  the the  construct,  of  additional  or c a u s e  open  to  the  build  only  i g n o r i n g the  landowner  amount  of  bonuses.  If  commercial  may  consider  site's  may  potential. depend on  The  supply/demand c o n d i t i o n s  for r e s i d e n t i a l  •  the  viability  residential  uses;  the  of  the  extent  single  the  in  an  landowner's  of  return  space; space;  commercial  relative  and  to  his  return;  complications a  expected  using  several factors:  o  relative  and/or  result  f o r commercial  •  Again,  the  supply/demand c o n d i t i o n s  required  be  then  that  density  development  bonus w i l l  level  to  original  b o n u s ' s i n c e p t i o n and  •  •  landowners  floorspace.  additional  smaller of  amount  options  support  floorspace  i n which  residential  to  previously permitted,  residential  i s one  owners.  choose  to  Bonuses  given  the  building  decision  a  r e l a t e d amount of  a.  bonus  bonus  construct  consider  situation  form of  floorspace providing  constructed we  to  Density  site.  to  which  he  r e l a t e d to the  can  overcome  combination  of  other uses  on  74  Each of t h e s e f a c t o r s w i l l  •  Supply/Demand C o n d i t i o n s  The his in  landowner's w i l l i n g n e s s  projection turn  will  rates.  of t h e p r o j e c t ' s  be a f u n c t i o n  Rents  competition demand. base  be c o n s i d e r e d  and in  t h e market  to b u i l d future  will  rates  and  Space depend  consider  using  is  and  are  levels a  the general  t h e bonus.  normally  and  criterion  function level  The bonused  landowner  residential  towards v a l u i n g  cost,  for  the  which to  residential landowner  examine  he w i l l dwelling  accrue  component  each were  t o be more w i l l i n g  residential  viability  would  of  f o r development,  Regardless at  his  to i d e n t i f y  u n i t s might  from  both  of a n t i c i p a t e d both  be  viable,  but  not l i k e l y  of  targeted  t o use t h e bonus  i t i s by  Space from  his  or  its  sub-markets  and  the  option. would  the  attitude  cost  the buyer  one  might  project.  real  sub-market  the  commercial  the p o t e n t i a l r e t u r n s  component want  of  for  for Residential  component.  the land  replacement  returns  will  demand  f o r a mixed-use  Supply/Demand C o n d i t i o n s  occupancy  i n c r e m e n t t h e landowner  Anticipated  a prerequisite  no means a s u f f i c i e n t  •  t h e bonused  l a r g e l y on  s t r e a m of r e v e n u e s , w h i c h  I f e x p e c t e d demand s u p p o r t s c o n s t r u c t i o n  floorspace  space  f o r Commercial  of e x p e c t e d r e n t  occupancy  in turn.  likely  If  the  expect  although,  be a s u f f i c i e n t  the  again,  criterion  75  for  undertaking  •  return  landowner  generated  suggested  otherwise project  by  In  a  by  both  value Any  Commercial primarily  zero  may  land  residential  component  excess  revenues  revenues are  not  instances,  overall  thereby  for  it  incorporate  an  a  mixed-use  off-set  by:  l e a s t f o r the  "  would by  to cover  ( i f one 9 0  For  first  project  resulting  total  an  net land  bonused operating  costs.  landowner  l i e i n the  commercial  ) was  incentive  must e x c e e d in  the  does  cost.  is required an  the  apparently  the  by  which  i t i s assumed t h a t  incentive  component.  at  generated  required  i t s replacement  subsidy  be  overall  and  component,  at  to  Uses  landowner,  into  r e v e n u e s can (  i n the  The  ability  cost/unit  income g e n e r a t e d  the  the  the  Residential  interested  have the  residential  ) ;  and  mixed-use p r o j e c t .  commercial  land "  operating  return,  of  b e c a u s e p o t e n t i a l l y low  •  from  the  development.  be  earlier,  owner  after  will  uneconomical  •  not  form of  Relative V i a b i l i t y  The  was  this  unearned  component  t r a n s f e r r e d to  t o e x i s t , net  the  residual  developer's return.  the  revenues required If  this  U n d e r c o n d i t i o n s of very low office demand and very high h o u s i n g demand, i t i s c o n c e i v a b l e t h a t the r e s i d e n t i a l component m i g h t a c t u a l l y s u b s i d i z e t h e c o m m e r c i a l component.  9 0  76  increment  does  This existing  situation between  building strong,  not e x i s t ,  f o r the o r i g i n a l  exist  f o r the i n i t i a l  value  residential  bonused  of r e n t s  demand  h o u s i n g may  exist  •  the  i s high  be b u i l t .  in  the  f o r both i s  I f o f f i c e demand  a sufficient  to develop  incentive  ( assuming  he  is may does  ) but which, n o n e t h e l e s s ,  If or  office  low,  demand  an  is  incentive  low,  to  and  provide  d e p e n d i n g on: n e t r e v e n u e s g e n e r a t e d by t h e o f f i c e  dwelling o  uses  and t h e r a t i o and a b s o l u t e amounts  densities.  residential  relationship  I f t h e market  low,  landowner  not e x i s t .  residential  landowner.  demand  will  fundamental  land a t i t s replacement cost  depends on t h e l e v e l the  a  and  t h e n b o t h components may  and  of  illustrates  the commercial  high  not  the i n c e n t i v e  s p a c e and  units;  the extent  to  which  one  of  the  uses  requires  s u b s i d y ; and •  Another, despite  low  floorspace,  on  the  the  land's value  albeit levels  density.  willing  to forego  investment  which  of  This  t h e landowner  i n the f e a s i b i l i t y  unusual, s i t u a t i o n  a landowner  bonused  term  assumption  might  analysis.  exist  demand f o r b o t h o f f i c e and  might  still  might  short-term  objectives.  choose  occur  returns  makes a b o u t  in  which,  residential  to develop using  where  in order  the to  the  landowner i s  satisfy  long-  77  •  P o t e n t i a l Returns R e l a t i v e  Greater indicator returns  returns,  in  of the presence generated  t o the r e q u i r e d  Beyond  the l e v e l  incentive  actually  •  rate  of r e t u r n  Despite  the  of  return  return  possibility  The  )  benefit  be e v a l u a t e d  for  each  investor might  of with  investor.  m i g h t demand,  be  required  to  development.  to  exist  respect t o :  of c a p t u r i n g  can a r i s e  w h i c h may,  difficult  •  incentive.  o f Mixed-Use  number o f c o m p l i c a t i o n s mixed-use p r o j e c t s  an  sense, a r e not a v a l i d  which a g i v e n  residential  Complications  absolute  Returns  t h e bonus c a n o n l y  ( or a d d i t i o n a l  initiate  with  of  by u s i n g  respect  an  an  to Required  i n the design  returns,  and o p e r a t i o n  i n some s i t u a t i o n s , make  use t h e bonused d e n s i t y 9  unearned  at a l l .  it  Difficulties  a of  very may  1  p h y s i c a l design structures overview, electrical  -  the arrangement  on-site, difficulties and  spillover in  structural  of  routing systems  of  uses noise  and and  mechanical, through  the  building; •  project  financing  term mortgages •  91  Petersen,  separation  1976; B a x t e r ,  -  t h e need  f o r separate  for different building  of ownership  1975, 13.  -  t h e need  long-  components; to  legally  78  subdivide  the  particularly component units  sold  allocation  In  some  additional levels  entirely,  the  commercial  but d w e l l i n g  ( as  or  an  as  entire  individual  of  operating  expenses/responsibilities  tenants/owners.  costs  complications  separately  components,  ) ;  situations,  of r e t u r n  of  by t h e d e v e l o p e r  building  condominiums  building  ownership  i s retained  are  among  and/or  where  residential  •  land  or as  may  such  risks  complications  on  developers  compensation. pose  or a t l e a s t  In  may  impose  and r e q u i r e  other  higher  situations,  problems  which  prohibit  cause d e l a y s  until  circumstances  the  development change  signi f icantly.  The factors using  prudent  landowner  carefully  in judging  t h e bonus. •  the  Several  will  the b e n e f i t s  implications  potential  location  which to  dramatically •  the p o t e n t i a l depend  depend  gained  vary and  five  through apparent:  the bonused d e n s i t y on p r e v a i l i n g  market  significantly which  can  to  from  fluctuate  time;  benefit  largely  t o be  largely  location  over  of  can  e a c h of t h e s e  are immediately  benefit  landowners w i l l conditions,  consider  on  landowner o r i n v e s t o r  o f t h e bonused the  density  characteristics  himself  -  his  of  will the  perception  79  of  and  tolerance  development tax •  site  But just  which might  potential  depend  project  being  to  without  undermining  is still  been g r a n t e d  a  and  be u n i q u e t o h i m ;  on t h e u n i q u e c h a r a c t e r i s t i c s  extent  there  and u n c e r t a i n t y , h i s  b e n e f i t o f t h e bonused d e n s i t y  largely  and  risk  o b j e c t i v e s and t h e f i n a n c i n g terms  position  the  for  which  complications  another  density  considered, can  the p r o j e c t ' s  option  and  will  of the on  be  the  overcome  viability.  f o r t h e landowner who has  bonus  -  he  may  sell  the  property.  b.  Disposition  As  noted  price,  will  consider  property. dwelling in a  earlier  the  worth  utilize  into  market,  one  expect  potential  of  their  while  offer  price  ensuring  would the  of  accordingly.  may f u l l y  the  permitted  asking that He  their  seller,  will  make  opportunity  and  will  t h e bonus, asking  buyers  the  s p a c e and  The  price,  to  argue and  that so  price.  he  In  estimate  a  the  a n d bonused d e n s i t i e s and  t o t h e maximum w h i c h t h e y  that  of  additional office  reasonable  i t s value  competitve  pay  developers  capitalize  adjust  price  h i s asking  potential  m a r k e t a b l e commodity.  the h i g h e s t  asking  in determining  development  to build  a s t o t h e economic  prospective  revenue  full  u n i t s may be a v e r y  judgement  will  the  landowner,  The o p p o r t u n i t y  rationalizing  adjust  a  are  required return w i l l  able  to  still  be  80  realized. market  As the  positively the  s u c h , one  land  bonused  to the  commercial  market  or is  expected  both  to  The  premium  and  subsidize  under  f o r the  marketplace  to  be  develop  option  to  abnormal  the  the  3 2  i n the  of  or  will their  have having  must  1981,  now  granted i s t o be  23.  the  potential market  p o t e n t i a l for  paid,  to  economically  some e x t e n t ,  approving for  i t is  viable.  9 2  a the  i s poor,  a  exists change  have  the  generating  reduced f o r the  bonus,  pay  in  which  owners s t i l l  f o r the  that Land  conditions  substantially  bonus,  the  scheme.  been  the  under  landowners w i l l  market  be  ).  s i m i l a r to  possibility  the  commercial residential  space  residential  but  land  s p a c e would  density  should  a  base  would be  any  into  additional  landowners  i f i t has  Having p a i d  full  the if  subsequent  argue before the  incorporated  commercial  Subsequent  sell,  of  value  f o r the  contributing  assume  bonus  uses  be  residential  i f the  future.  bonused d e n s i t y .  project  Whyte,  Even  charged/offered  develop  t h e y must be  that  of  may  residential  suggests  a l l .  returns  landowners  the  simple  competitive  The  subsequent  density  a  buyers.  that  the  bonused  facing  residential  consequence  where  bonused d e n s i t y  at  substantially  of  the  theory  premium may  to  slow  commercial/residential  valuation  equal  assume a l o w e r  situation  discussed  and  i t might (  will  example,  foot  in  capable  returns,  for  square  that  if  sellers  density,  value/buildable  expect  density,  developer's  p r i c e by  density,  would  as  a  value  subsequent  a u t h o r i t i e s that a  Given  necessity that  the  if  bonus  81  has  been  paid  dependent  E.  , the p r o j e c t ' s  viability  may v e r y  w e l l be  l i m i t a t i o n s with  respect  upon i t .  PROBLEMS AND The  to  for  SHORTCOMINGS  previous  discussion  identifies  the p o t e n t i a l e f f e c t i v e n e s s of r e s i d e n t i a l  a mechanism but  the  explicit  yet.  suggesting  inherent While  that  effective limited  for stimulating  t h e development  flaws  the  i n the short  that  must  criticisms  density their  bonuses as  o f downtown  bonusing  following  residential  t h e y do s u g g e s t  in  density  by made more  stop  bonuses  housing  can  short  of  never  be  e f f e c t i v e n e s s may be  quite  r u n , and even more s e r i o u s l y l i m i t e d i n t h e  long r u n .  1.  Can The Bonus Be A c c u r a t e l y  It amount  is  extremely  difficult  of bonus needed  to provide  variety  of  underlying schemes  in  investors. the the  operation  of  alternative  bonus  developers,  a  a sufficient  I t was n o t e d  several  returns  as  accurately  cities  generated  prototypical ratios.  preliminary  the  approach  examined  from  the  mixed-use While  of  this  c a l c u l a t e the  incentive  earlier  construction/evaluation  before-tax  adopted  to  Calculated?  that  for a  the a n a l y s i s  alternative considered  first  full  projects may  be  the  bonus  only the year's based  on  approach  t e s t of a p r o j e c t ' s  p r o f i t a b i l i t y by  misrepresents  true  the  potential  82  returns  to investors  by f a i l i n g  to  consider:  •  the tax consequences of the p r o j e c t ;  •  the p o s s i b i l i t y increase  •  the  •  impact  ®  flows  i n the long  ( omitted  i n some s t u d i e s  of c a p i t a l  appreciation  d i s p o s i t i o n of the of  required  t h e impact  on f u t u r e  down-zonings  which  using  developer's  are incorporated  difficult  the impacts  accurate office  t o determine •  there  o r may be  reflected  ", however d e f i n e d ,  of  in  i n time.  a l l of  the  capitalization and r e s i d e n t i a l  i t  above  i n t o the c a p i t a l i z a t i o n  s a l e s p r i c e of the p r o p e r t y .  for  r e s u l t i n g from any  estimates  point  profit  returns  prices  exists  by t h e bonus; and  investors'  which t o e s t i m a t e  which  have p r e c e e d e d ,  that  sales  returns  may  assumed  expected  ) ;  property;  values  implicitly  or  ) on  and t h e p r o c e e d s  land  market a t a g i v e n "  (borrowing  of i n v e s t o r s ;  the range of c o s t / r e v e n u e the  may  run ) ;  returns  among d i f f e r e n t c l a s s e s  •  which  leverage  future  implied  (  financial  the v a r i a t i o n  «  leverage  of  t h e impact from  of o p e r a t i n g  net cash  investor  By  9 3  is on  rate  However, t h e b a s i s on rates  or  expected  u s e s combined may be  because:  may be few c o m p a r a b l e s ,  a s downtown m i x e d - u s e  For a discussion of t h e i m p o r t a n c e of t h e s e investment c o n s i d e r a t i o n s see G r e e r (1979). Peat Marwick and Partners ( 1973, I I I , 15-18 ) a l s o e m p h a s i z e t h e l i m i t e d view o f r e t u r n s r e f l e c t e d i n the " f i r s t year only " a n a l y s i s .  9 3  83  projects •  the  a r e not  yet p l e n t i f u l ;  complexity  conditions, physical among  and  dynamic  government  design  may  nature  subsidy  solutions  projects  and  which vary  make  mixed-use p r o j e c t s v e r y  of  market  programs  and  over  and  comparisons  time with  other  tenuous.  y  Failure bonus  may  lead  g e n e r o u s or mixed-use their  t o c o n s i d e r the  projects. of  feasibility  As  to  by  since i t basically  most  tax  impacts  is either  long  Marwick and  downtown  used  after  which  induce  Peat  Toronto's  analysis  conservative,  run,  t o a bonus r a t i o  insufficient  survey  long  term  of  the  unnecessarily investment  in  Partners discovered in  developers  in  developers  understated  the  1973,  tended return  the to  to  be the  investor: "In our i n t e r v i e w s developers agreed that in periods of r i s i n g r e n t s and l a n d v a l u e s , t h e p o t e n t i a l return to their investment would be greater than thatcalculated in a simple rate of return feasibility analysis."  In the  favourable  market  r e t u r n s p r o j e c t e d i n the  clearly  understate  densities  and  to achieve  These the  net  second  feasibility  profitability  bonuses s h o u l d  a given  c o n d i t i o n s ( e.g  be  and  permitted  rising  revenues  s t u d i e s reviewed suggest  that  than  be  may  ),  would greater  necessary  r a t e of r e t u r n .  difficulties  cash  flows  and  related  deal  of a p r o j e c t difficulty  specifically for different compounds  w i t h p r e d i c t i o n s of investors, the  problem  but  a  still  84  further  -  how  does  incentive  necessary  discussed  earlier,  one to  estimate  stimulate  returns  are  the use  talent,  and  of  earned  payment f o r the use of c a p i t a l , as a  reward  -  expertise  i n c e n t i v e i s intended is,  an  unearned  and  to provide  return  beyond  economic that  regard,  expectations  i t has  been  with  very  investigation/estimates  e s t a t e or other There  and  to  I f the  have been  first  know  the  In  this  returns. find  any  expected other  i s yet  to  that  would  empirical  returns  classes  from  of  another  real  of  way of viewing the amount of bonus i t s calculation.  Generally,  determine the f i n a l d e n s i t y  Research  the  i s argued to be dependent on e x i s t i n g  expected market c o n d i t i o n s , with f e a s i b i l i t y a n a l y s i s  Clayton  9 5  investors'  compared  of bonused d e n s i t y  necessary  9  to  i n payment  inducement,  to  to  or  expectations  of r i s k .  which  as  types of investment.  r e q u i r e d and the method amount  difficult  of  mixed-use development as  respect  -  Whether or not  initial  r e q u i r e d by the i n v e s t o r , i t i s necessary investor's  ways  for expertise  assumption  an  As  9  how much d i d he expect to r e c e i v e  his capital,  economic  bonus? "  many  as compensation f o r assuming r i s k .  of the i n v e s t o r  of  the  in  r e t u r n s are " unearned " depends upon the  for  amount  Associates  9 5  have  figures.  argued,  any  being  However, as increase  in  "The problem of differentiating " earned " r e t u r n s from " unearned " returns is endemic to investment analysis generally, and not l i m i t e d to the a p p l i c a t i o n of bonuses ( although c r i t i c a l to i t ) . Clayton Research A s s o c i a t e s L t d . , 1 9 8 0 .  85  permitted  densities  ( additional landowners  will  density  result  for a  zero  i n t h e bonus a r e a .  in  a  land  As s u c h ,  reiat ive cost  they  )  advantage  for existing  argue:  "The correct additional residential density is a f u n c t i o n of other planning c o n s i d e r a t i o n s . In other words, good p l a n n i n g p r i n c i p l e s and t h e a b i l i t y o f t h e infrastructure t o support additional density may dictate a s e t o f maximum density r e g u l a t i o n s or parameters within which i t would be p r u d e n t t o keep new d e v e l o p m e n t . " 9 6  One  could  the  argue  same  service land  an  the  that  short  analyses  Following may  be  9 6  only  ( environmental the  basis  by  impacts,  for  public  of  analyses  only  only  over  the  and p r i c e s ,  the f i r s t the  years  time.  current  Research A s s o c i a t e s ,  bonus  bonus  despite  The i n i t i a l  1980, 28.  to create  been b a s e d on  particularly  year's  cost/price  examined  ratios/densities  have t y p i c a l l y  re-zoning,  f o r many  which occur  final  studies  those d e n s i t i e s r e q u i r e d  r u n market c o s t s consider  Time?  and t h e f e a s i b i l i t y  Feasibility  unchanged  reflect  Clayton  Remain Over  reflect  the subsequent  conditions will  literature  by d e f i n i t i o n ,  current,  be d e f i n e d  generally.  the determination  incentive.  the  ) which p r o v i d e  Can The I n c e n t i v e  Both  maximums s h o u l d  considerations  capacities, etc.  use c o n t r o l  must,  density  non-economic  2.  argue  that  operating  where flows.  ratios/densities changes  i n market  ratios/densities relationships  in  86  residential system's a  and  the  may  large  c h a n g e , or  basis  shift.  for  The  has  no  way  of  exists  It  i s not  of  investors'  ).  and  into a prescribed continue  ) ,  periodic  an  the  to  within are  an  maintained  to  adjusting  short  to  least  some  t o assume t h a t  in  can  fact,  must It  be  incorporated  time.  one  might  and  no  which If  an  exists  at  responsive  to  be  conditions.  most p r a c t i c a l ,  aspects  densities  remain  The  (where  all  through  landowners  t o c h a n g i n g market  in p r a c t i c e .  time,  changing  desirable,  a bonus s y s t e m w h i c h a l w a y s  s y s t e m would be  exist  incentive  a satisfactory incentive  if,  or  modified,  the  adjusting  ratios/densities  at  costs  r a p i d l y changing.  incentive  (  bonus  housing,  are  a very  permitted/bonused  provide  favour  create  market's v a r i a b i l i t y  in place  not  the  ratios/densities will  initially  reasonable  of  of  However, as  9 7  chosen  i n market c o n d i t i o n s .  t o have  self-adjusting appears  to  shifts  of  the  bonus  incentive  capable  to  to maintain  ratio  i s t o be  therefore,  the  automatically  one  time  interventions  where market c o n d i t i o n s  as  all  required.  insufficient  so  incentive  be  required or  the  r e l a t i o n s h i p s do  rationalizing  circumstances  will  If at  where government  densities  particularly  the  bonus may  become e x c e s s i v e  bonus  markets.  construction,  relatively  prices  office  provides  one  which  But such  I d e a l l y , a s y s t e m by  is  while  a  system  which  the  It is worth noting that in several feasibility studies ( Realesearch, 1974, 7-9; W i l k i n , 1979, 104 ) market c o n d i t i o n s were so p o o r ( i . e . c o n s t r u c t i o n / f i n a n c i n g c o s t s t o o high and expected revenues too low ) that substantial decreases in assumed land, v a l u e and i n c r e a s e s in permitted densities were only e x p e c t e d t o have a m a r g i n a l l y b e n e f i c i a l impact on p r o j e c t feasibility.  9 7  87  market's a c t i o n s  ensure  also  t o a minimum t h r o u g h c o m p e t i t i o n  keeps  it  most e f f i c i e n t the  value  and  of  most  that  easily  Transferrable  established  through  provide  a  starting  system.  A l t e r n a t i v e l y , the  scheme c o u l d market  For  It values  be  the  Whom I s The  was  argued  should  adjust any  g e n e r a t e s at  a given  any  bonus  ( or  It the to  not  might  point  to  be  m a r k e t and  that,  long  in time. or  still  desirable  uncertain making  premium  be  the  which  ( TDR's ) i s sellers  might  to c o n s t r u c t  such a  used  in a given  adjustments  bonus  made  as  only  capture  well as  the  in competitive ( i f not which As  to  such,  the  bonused i t has  "  the  original  a result expected amount of  ) of  been  ,  but  the  returns  for  )  to  argued by  the  landowner.  returns  more f a v o u r a b l e  land  density  generated  unearned  informed  markets,  immediately  the  if  market  development  those  bonused  returns density.  associated  bonused d e n s i t y  - c o n t r i b u t i n g to greater  it difficult for  Incentive?  " incentives  f o r the ( or  run  value  accrue  were not  bonused d e n s i t y  a high  Bonus An  have been c r e a t e d  remain  and  which  method by  b u y e r s and  regularly  become s i g n i f i c a n t l y  if sellers  will  Rights  ratios  i n the  owners may  conditions  Development  density  earlier  returns  likely  Subsequent  The  beginning  ( but ) might  manageable.  for  economic  unearned  are  point  exists  change.  capitalize  that  incentive  i n t e r a c t i o n of  monitored  conditions  3.  an  with  itself  uncertainty  in  )  the  f o r e x i s t i n g l a n d o w n e r s t o demand  residential  development  potential.  88  Superficially, the  extent  value.  t o which  develop  dwelling  particular  greater  future benefits are  other units  one  would  capitalized  expect  the  into  land  marketplace  and  granted  approving  the  probability  watch  of  site.  the  agencies  vague g o a l s and b e i n g Still,  to  value  being  Participants  outcome  of  of  with  approving  authority  developers  for providing  would  development  discretionary  retain  some  At  be c r i t i c i z e d f o r  u n p r e d i c t a b l e or a r b i t r a r y  limited  might  likely  a  i n the  and t h e s u c c e s s / f a i l u r e o f m i x e d - u s e p r o j e c t s .  same t i m e ,  approvals.  uncertainty to lessen  means o f e s t i m a t i n g t h e e x p e c t e d  would c a r e f u l l y  applications  having  expect  amount o f bonus on a g i v e n  l a n d market  the  might  Realistically,  quickly the  one  in their  powers  chance  of  the  rewarding  housing.  Where t h e i n t r o d u c t i o n o f d e n s i t y b o n u s e s f o l l o w s t h e downzoning  of commercial  several will  cities  Land  reflected  the  potential  is  least,  fully  i t i s questionable  values  previous reduced,  an o p p o r t u n i t y  premium  created  compensate  compensation hold  ,  potential  c r e a t e any i n c e n t i v e a t a l l ,  purchasers.  The  )  development  is  for  potential.  owners may  residential  owners  for  the  insufficient, they  loss  land  will  have that  incur a real  or, at  land  values.  bonus may o r may n o t in  value.  one  might  expect  are  able  to  1975, 45; W e s t e r n R e a l e s e a r c h ,  t h e bonus  When  i n terms o f d i m i n i s h e d the  in  recent  down-zoning  by  the p r o p e r t i e s u n t i l  Dewees,  to  commercial  cost  a s t o whether  especially  prior  existing  ( a s has o c c u r r e d  Where  landowners t o  either  1974, 21.  9 8  sell  or  89  develop  them  conditions, ability  built  investors,  a long  period  landowners generated  receive  by a bonus  first  active  and  in  on  the  land  market holding  values  w h i c h h o u s i n g may  of new  the  could  not  be  and w i l l a point  thereby which  only  acquisitions.  )  .  holdings  unearned  unearned  but, f o r  contribute  of  any  term  returns  ( now This  will  having  of r e t u r n  higher  be  In  f o r the premium  market  value  "  end,  costs  the  developers  developers/investors, land  to  perhaps to  the  shot  "  their  required  achieved,  f o r " one  by  an added  current  returns.  returns  " permanent  required  group w i l l  at t h e i r  incentive  generated be  original  i n t e n t i o n s of  For r e p e t i t i v e ,  repetitive to  some of t h e  no l o n g  disposition  i n the area  land  only  benefit  have  the unearned  eliminates  sellers  full  reduce the l e v e l  might c r e a t e  land  the  density  existing  Incentive?  argued that  or l a n d  sites  bonused  their  R e c e i v e An  i n the market.  development  purchase  may  Depending  involved,  ( during  - t h o s e who  developers/investors,  and  loss.  adjustment  of t i m e  i t has been  may  remaining  bonus  the  Do A l l Landowners  Finally,  value  a  ) .  4.  for  incurring  t h e amounts o f d e n s i t y  of  require  without  for  it  future  90  F.  SUMMARY OF  It amount long  CRITICISMS  has  been a r g u e d  of  bonus  term  required  investors  misrepresentative sophisticated credible the  estimate  incentive  conditions.  value  both be  investors'  of  the  But  be  suggest  In  the  bonus's  may  c a p t u r e an  generated pay-  market either  that  c a l c u l a t e d at  if it over the  by for  unearned  the  bonus.  the  conditions, an  the  project.  and  adjust  investment  lost  and  landowners  chose to absorbing  residential or  value  sell  to  the  their "  depending  component  financial  burden  time  on  may  of  properties  incentive  landowners c o u l d and,  would  subsequent  ( at  any  in  changing  value  density  economic advantage  point  economic v a l u e  Subsequent  bonused  given  more  even i f  incentive's  ) who  return,  a  automatically  land  not  f a r more  f l u c t u a t e with  could  time,  particular, original  introduction  to  A  Secondly, a  for  if  to provide  incentive.  the  incentive  returns.  necessary  expected  even  calculating  over-simplified,  likely  required  could  of  a meaningful  grossly  c a p i t a l i z e d into land  purchasers.  use  been  market c h a n g e s o c c u r i n g  likely  method  to c r e a t e  were a c c u r a t e l y  market  theory  the  m e t h o d o l o g y would be  its  to  has of  time,  for  that  be  "  expected  prevailing result  f o r the  in  mixed-  91  V.  Recognizing most  the market's tendency  expensive  public  efforts  a major  BEYOND THE BONUS  housing  from  intervention  the  business  growth  into  The be  making  goal of i n c r e a s i n g  American  argued  indeed,  city  to  be  that  investments  labour  supply,  The  preceeding  residential  projects,  such  residential ( even  t o be d o m i n a t e d by for  of housing  hard  not  occuring  analysis  pressed  only  for  a  larger  i n t h e a r e a may to find  its  efficiency which  a large  i n the area  Housing  own of  i t is  of the p o t e n t i a l  bonuses  suggests  f o r only  subsequent  initiative  market  likelihood  distant.  f o r the support  b e s t , may be e f f e c t i v e While  is  In  sake public  believed  ( market  to  support,  s t r e e t s / p a r k s , and so on ) .  density  landowners.  one  represent  i s every  prospects  the stock  that  marketplace.  continue  choice,  activities safer  i t s provision  there  even more  desirable  ) but a l s o  t o other  the  i t i s clear  i s not s u p p o r t i v e of the g o a l .  ( 1ifestyle/locational  lend  initiatives  i n the area  appropriate;  North is  base  area  the workings of the  of downtowns w i l l  expansion,  residential  core  t o encourage or t o ensure  the absence of such p u b l i c that  the  t o e l i m i n a t e a l l but t h e  i s most  conditions,  i f the f i n a n c i a l  a  that  small  owners likely  the technique, a t group  of  original  may c o n s t r u c t m i x e d - u s e t o come  or l e g a l  returns are  e f f e c t i v e n e s s of  from  requirements  minimal  )  .  improved t o do so  Despite  the  92  need  for  difficult  additional t o argue  beneficial, several  if  downtown  that,  only  valuable  interventions  to  i n the long  in  a  very  contributions  support  housing,  it  r u n , bonus schemes a r e limited  towards  way.  is  not  They may make  increasing  the supply  of  housing: •  by  drawing  stimulate •  by  attention  housing  encouraging  projects  the  city's  e f f o r t s to  construction; the  which,  development  to  development  themselves,  and  consumer  of  mixed-use  might  interest  stimulate  in  downtown  h o u s i n g ; and •  by  providing  an  incentive  developers to provide Although capable  of  proponents  r e s i d e n t i a l density satisfying  may  contribution  have  the  high  for  would  least  some  housing. bonus s y s t e m s a r e p r o b a b l y not expectations  for their effectiveness,  entirely  at  probably  do  which  their  dismissing  the  their  technique  a  disservice.  In level  creating  or f o r the mixed-use a r e a  units  through  comprehensive A  a r e s i d e n t i a l e n v i r o n m e n t , whether a t t h e u n i t  blanket  situations control projects,  density  as a whole,  bonuses  s e t of p u b l i c  objectives  b o n u s i n g a p p r o a c h may and/or  forms.  may  There  provisions/incentives  simply  not with  satisfy respect  lead  to housing  may  be  related  t h e i n t e g r a t i o n and i n t e r f a c e  providing  need  a  the more  to housing.  in  undesirable  for  additional  t o q u a l i t a t i v e a s p e c t s of of  different  building  93  activities,  and t o t h e r e l a t i o n s h i p  sites/buildings. provisions  Additionally,  f o r the treatment  development  in  housing  these  may  other  downtown  was  be r e l a t e d  expected is  people much  that  to  The c o u r s e  of a c t i o n  underlying  the i n t e r e s t s  be s u p p o r t i v e  goals  as  most  businesses  important  only  and  the  ,  housing  there  would  may  itself.  be  One a p p r o a c h might  using  because of  be t h e numbers o f  stock  and  In  not  so  a d d i t i o n to  ( discussed  in  s e v e r a l " non-housing "  be e q u a l l y a n d , p e r h a p s , more  t h e number o f p e o p l e  for i t s  pedestrians.  might c o n t r i b u t e t o t h e a r e a , of  earlier,  which dominate a  of h o u s i n g  section )  increasing  be u s e d  in turn.  the  which c o u l d  to  or t o the b e n e f i t s of housing  b e n e f i t s f o r downtown  presence  useful  and, as n o t e d  aimed a t i n c r e a s i n g t h e h o u s i n g  actions  is  which might  techniques next  it  the s p i n - o f f b e n e f i t s a c c r u i n g to  may  which housing the  limitations,  be d i s c u s s e d  perceived  of  potential.  would depend on t h e  i s not i n c o n c e i v a b l e council  phasing  to either  activities  Each w i l l  the  to achieve  HOUSING AS A "MEANS"  What  sites,  special  expected  A.  the  small  o f bonus s y s t e m s .  situation  sake.  municipal  may be r e q u i r e d  techniques/actions  own  It  of  bonus's  o r use i n p l a c e  a particular  which  the  discuss other  augment  there  and t h e t r a n s f e r o f d e v e l o p m e n t  Recognizing briefly  o f new b u i l d i n g s t o a d j a c e n t  effective  in  downtown.  be t o i n c r e a s e t h e amount and v a r i e t y of  94  activity  in  the  T e c h n i q u e s might  area  activities  marketplace  or  be  the  public  undertaking area's  so on.  ).  The  l a n d s u b s i d i e s or or  drawing  l e a d i n g these  incentives  to  provide  A  bicycle  skeleton  for public  second  accessibility  a  activities  approach  t o the  area  increase  significantly.  improving  pedestrian access  might  the  volume of  Specific into  parking  while  providing storage  A  be or  fares  ),  might  include area, lowering  designating  shoppers  might  the  and/or  facilities,  for  foot, car,  users  through (  public  and  bicycle improving  during  non-  hours.  third  approach  residential  densities  downtown.  Greater  walking  might  events  by  downtown  facilities  routes  lowering  to e n t e r  and  non-working hours  working  and  lighting,  improving  actions  rates during  s e r v i c e and/or  (  special  involve  parking  also  downtown's  ) , efforts  of  - i f i t i s easy  routes  to  might  natural amenities,  etc.  program  might  areas.  or p u b l i c t r a n s i t ,  increasing  signage,  a  joint public/private  new  plazas, parks,  crowd-  restaurants,  of p h y s i c a l improvements t o t h e  - sidewalks,  power.  incentives for  theatres,  center  accessibility,  entertainment  bus  its  In a d d i t i o n t o p h y s i c a l / d e s i g n improvements  landscaping, made  e.g.  exhibition  Complementing  increase  p r o v i s i o n of  (  d e n s i t y bonuses,  ventures..  so  i n c l u d e the  generating  include  and  or b u s i n g  might in  involve substantially increasing  areas  resident  immediately  populations  d i s t a n c e might  lend  adjacent  within  support  to  a  to  the  convenient the  area's  95  retail  activity  shopping/access  and  increase  many of  might  embark  conceivable that  and  image might the  Where  bonus  system  "END"  but  their  it  sectors.  A  and  achieve  realizing.  It  activity  base  i n the area  and,  to i n c r e a s i n g  to  develop  sake,  t h e y may  would  energies  density  is  i s worth federal  the  area's  a substantial  housing  and  the  identifying public are  use  Among  costly  scope  of  disadvantages several  this  a  better  served  by  other  methods.  in perspective  - mechanisms  thesis  w h i c h have been  stimulating  By  which  situations.  to d i s c u s s the  of a l t e r n a t i v e  at  developers  utilize  kept  to  in p a r t i c u l a r  before.  the  of  housing  agencies  aimed  be  s y s t e m s must be  less  the  choose  probably  to  bonus  beyond  encouraging/requiring amount.  a  ITSELF  wish  a d v a n t a g e s and  mechanisms  or  IN  they  be more e f f e c t i v e  relative  and  AN  o t h e r mechanisms f o r p r o v i d i n g  While  it  market demand f o r h o u s i n g  communities  Residential  may  i s a l s o aimed a t  improvements t o t h e a r e a ' s  downtown, f o r i t s own  directing  with  fuel  private  and  base.  HOUSING AS  stock  the  and  commitment  a l l three approaches  long run, c o n t r i b u t e i n d i r e c t l y  residential  B.  upon  the g o a l s which h o u s i n g  is  in  requires public  of c o o p e r a t i o n between t h e p u b l i c  community  principal  streets.  E a c h of t h e s e a p p r o a c h e s degree  p e d e s t r i a n v o l u m e s on  mechanisms,  used  by  local  f a r , t h e m a j o r i t y of the  supply  to provide housing  of  mechanisms w h i c h p r o v i d e an  some  side, type  inducement  96  are: •  public  subsidies  residential  of  the  financing  property  •  r e l a x a t i o n of  e x i s t i n g land  •  shortened  processing/approval  tax  residential  •  supply  of  involvement  facilitating  the  w h i c h the  O t h e r mechanisms a r e  •  zoned  aimed a t  market market  include  demonstration  i n c l u s i o n of  to develop other  periods  for  projects;  land  or has  for  residential  uses.  re-zoning  and  in  sub-market  failed  to  satisfy.  assembly,  joint  direct  ventures  and  projects. of  a more p r o h i b i t i v e n a t u r e ,  housing  or  restricting  T h e s e mechanisms land  residential  stimulating  filling  land  construction/management,  the  controls;  and  Mechanisms  forcing  use  and/or mixed-use  direct public  voids  the  exemptions;  i n c r e a s i n g the uses;  of  component;  •  •  costs  ( parcels  or m i x e d - u s e  or  the  aimed  at  opportunity  include: areas  ) to permit  only  structures;  •  inclusionary  requirements  •  restrictions  of  9 9  residential  development  potential  "It is worth noting t h a t w h i l e b o n u s e s were i n t e n d e d t o f a l l w i t h i n the f o r m e r " inducement " category, once subsequent owners have p a i d f o r the b o n u s e d d e n s i t y , the bonus may be, i n practice, little more than an inclusionary requirement ( particularly where it is matched to bonused commercial d e n s i t y ).  97  in  A demand  second  competing  i n the a r e a .  household  income  condominium •  an area  •  and  the  be  downtown.  used  to s t i m u l a t e  increased  These i n c l u d e : support  for  renters  number/variety  i n t h e p r o v i s i o n of  residents  i n t h e amount and  areas.  and/or  of a c t i v i t i e s  w h i c h make i t a more a p p e a l i n g  area  the  purchasers;  improvements for  o u t s i d e of  g r o u p of mechanisms may  for housing •  areas  place  support  to  of  public  the  live;  services  ( homecare, c h i l d c a r e , quality  in  etc. ) amenity  98  VI.  Debates and  DIRECTIONS FOR FURTHER  over  the d e s i r a b i l i t y  t h e most e f f e c t i v e  invite  and  require  related  to the  implications ample  statement  environmental,  both  constructs  provide  some  physical  some  initial  How  valid  of  increased  extent should  and c o s t s  the  presented identify exist?  they  the  considered  and  goal  range o f to  what  technical  analysis  be  and  decision-makers consequences  much  impact  who  might  of  housing  ( form, u n i t  to  meet t h e i r  of  as  the  to  clearly  options  which  has downtown h o u s i n g  had on  choose  to l i v e  numbers e s t i m a t e d ?  demands?  required  so  organized  downtowns?  and t h e i r  be  research.  How  identified  would  i n the t h e s i s  and compared?  in specific  those  re-  measured  to  How  l i e in  following  What a r e t h e f u l l  t o be  cross-  be  the  vitality Can  The  for further  housing?  provide  interests  studies.  ideas  economic  and  a r e the arguments which u n d e r l y  can  which Issues  f o r t h e downtown  one's  case  and  investigation  whether or  i t , are subjects  o f t h e " unknowns " d i s c u s s e d  benefits  •  focused  analysis,  of  •  for  i n t h e downtown,  e x p l o r a t i o n and r e s e a r c h .  of the p o s s i b l e s c e n a r i o s  disciplinary  might  social,  latitude  theoretical  of housing  ways o f p r o v i d i n g further  RESEARCH  size,  cost  )  downtown be What  are  kinds  required  What amount o f s u b s i d y / u n i t  t o make t h e u n i t s v i a b l e w i t h i n  99  specific  situations?  What a r e t h e  i m p l i c a t i o n s of  residents/employees comparative For  a  in  indicators  particular  implications  of h a v i n g  downtown, as compared much  housing  as  employment, and How  do  To  retail  city,  what  no  housing  to  so  returns  returns  vitality  with  the combination To  what  supportive?  may  or  from  may  could  adjusting  i n the  advocating  more  housing  as than  buildings  s i n g l e purpose  buildings?  beyond  those  b u i l d i n g s , necessary  of u s e s  extent  not  any  features  to  and  are  form  the  to  a  satisfied  i n which  uses  they  mutually  expectations/attitudes sense  of c o h e s i o n  e x i s t among r e s i d e n t s  Should  those  be  the  from m i x e d - u s e  have t o w a r d s any  contribute might  be  whatsoever  of m i x e d - u s e b u i l d i n g s  What  buildings? protect  )?  developers?  the occupants  residents  measurable,  would  policies  of  on?  Are  live?  ratios  any  ( e.g.  f o r s i n g l e purpose  compensate  the  of  what e x t e n t a r e a d d i t i o n a l r e t u r n s ,  received  How  terms  employment,  investors'  compare w i t h  different  effort  which  of d i f f e r e n t  be made t o p r o v i d e  of t h e downtown w h i c h  sense  do  of community, however  or  might that  defined? a bonus s y s t e m as  benefits  market  be  designed  conditions  of a bonus be  to  be  self-  How  might  falling  upon  change?  assured  of  100  those  who  previously How  build  housing,  owned t h e  and  given  downtown  ensure  s u f f i c i e n t competition  bonus  systems  number and  need  t o accommodate  does  i t s growth  i n the land  a and  market?  actual  impact  of  in  select  cities  i n t e r m s of t h e  kinds of u n i t s  and  potential  the  bonus i n a f f e c t i n g pattern  who  land?  much c o m m e r c i a l d e v e l o p m e n t  What has been  not. on t h o s e  form  built,  the  the development of  the  residential  role  decision  downtown's  of  the  and t h e  residential  component? In  particular  mechanisms be in  comparison  public  situations,  how  in stimulating to  density  commitments would  be  effective housing  bonuses? required?  might  other  construction What  kinds of  101  VII.  CONCLUSIONS AND  A community can wants - t h e r e it  should  with  choose  i s no  be,  each c h o i c e .  suggests that,  wanted  their of  however, clearly  made t o  the  recent on  which  it  s i n g l e s o l u t i o n f o r what or  how  costs  the  bias  paper  area's  commercial  towards  both  stimulate  the  at  deteriorating  the  p r o v i s i o n of  or  ability  commercial  activities  higher  pursuing  and  prices  for  supporting  leverage  both  development  seems t o have p r e c l u d e d  the  ways  considered  in  C l e a r l y , the  which employment  in i s o l a t i o n  from one  area.  for  the the  desire growth  scale  of  most In  and  aimed  at  residential commercial of  a  greater  to encourage housing i s accommodated c a n n o t  another.  the and  of  possibility  the  returns  policies  employment  been  against  to generate higher Public  have  stifiled  little  appear  housing.  have  attitudes  speculation,  i n t o the  activities  amount of  costs,  )  has  consequences  housing  land.  ambivalent,  growth  efforts  the  a  In p r a c t i c e ,  employment  While  have  commerce and  private sectors'  quality  h o u s i n g has  of  American  makers  character.  land  introduce  associated  large North policy  housing,  ( high  environmental  to protect  and  potential.  f o r space,  bid  downtown  trade-offs  of  sustained  competition  so  and  least,  p u b l i c and  r o l e and  expansion  of  of  experience  community's v i t a l i t y  dominated  attempts  are  kind  downtowns t o become b o t h a c e n t e r  the  towards  there  The  cities  symbol  the  prescribed,  although  IMPLICATIONS  and be  102  The both  f i n d i n g s of t h i s  the  future role  not  Firstly,  be  strategic for  choice  the  desirable  )  .  seem t o be little  majority expect  indication  that  a  of  housing  business,  and  need be  matters  for housing re-examined  residential efficiency.  begin  of  the  warranting  light  may  be  bandaid unsafe, and  beyond  the  For  example,  the  level,  rigorously  between acreages, )  would  yet  there  examined  reviewed. of  in  One the  the  would area's  to b r i n g i n t o q u e s t i o n  the  assumed  employment  the  area.  growth  in  appendage t o t h e  of h o u s i n g  being  living  developed  the  make t o t h e sufficient  downtown, probably  Additionally, areas  c o n t r i b u t i o n which downtown's to  expansion  conditions,  re-consideration.  of  a  far  w i t h i n t h e downtown's c o m m e r c i a l in  as  a  balance  policy  of  should  legitimate  i n terms of  description  resulting  p r e c i n c t s can It  the  o n l y as an  likelihood  as  r a t e s , or w h a t e v e r  studies  explicit  might  a  housing.  been  planning  i s to serve  the  at  or  lifeless,  " target "  growth  for  use  more  ) than  as  i t defined  i t has  unconstrained  the q u a l i t y  become  ( be  requirement that  should  implications  or  the  viewed  be  role  to provide  sizes,  more  continuation  has  relative  downtown  role  of  a  obvious  residential  Where  area  population  of  there  being  downtown's  employment,  an  control  of whether  ( i.e.  of how  of  and  floorspace,  is  The  matters  determination  i n f l u e n c e or  downtown must be  problems  residential  practical  housing  i n the  implications  f o r t h e c o n s t r u c t i o n and  ( what downtown s h o u l d  area's  inefficient  to  the q u e s t i o n  more h o u s i n g  have  o f downtowns and  c h o i c e of mechanisms u s e d land.  investigation  the  should adjacent  vitality  have r e l a t i v e l y  and dense  103  resident that  p o p u l a t i o n s a d j a c e n t t o t h e downtown w i t h o u t  people  Dwelling  live  within  u n i t s may  specifically ( through  be  encouraged  there appears  t o be  residents  of  public  economic  ( through  requirements  within  ).  the  illusion  incentives  - and  As  of the  impact  a r e a s on  that  that  most  the  bonus  commercial  relying  on  density  possibility still  that  residents  cannot  is  good  support  The  than  nothing that  Likewise,  the  those  original  in  policy  where  will  -  p r o v i d e an  the  In very  outcome i s  makers may  feel  downtown  i t is unlikely bonuses  result  incentive  has  densities  appears  a benefit  to  to over  to  be  original time.  of a d d i t i o n a l c o m m e r c i a l / r e s i d e n t i a l  unlikely  owners who  fact  residential the  back  thinking.  density  a  The  the  potential  residential  "  t o be  promoted  on  residential  and  densities,  receive  be  generated  Where  " up-zoning  combination  is equally  not  t h e c o s t s of h o u s i n g ,  an  or  realization  likely  wishful  desired  been o v e r - s o l d - i n f a c t ,  more  be  timing,  enough.  u s e f u l n e s s of  owners but  densities  the  of the m a r k e t p l a c e , not  the  being e s t a b l i s h e d .  perhaps  the  s i m p l y added t o e x i s t i n g  nothing  first  base can  bonuses,  achieving  is  developed.  probably are  of  a function  that  be  development  earlier,  of e x i s t i n g  is  more c o n v i n c i n g a r g u m e n t s  of  mandated  developers  without  a residential  or  not  areas.  means of a c h i e v i n g the g o a l - s h o u l d  that  )  but  discussed  decisive  suggestion  themselves.  areas,  incentives  commercial  g o a l s f o r those  areas  commercial  l i t t l e evidence  projected  Secondly,  commercial  permitted in  development  broader  the  requiring  t o p r o v i d e an  choose  to s e l l ,  incentive rather  t o any  than  but  develop  104  their  properties.  On  balance,  which bonuses might  make  development,  presence  efforts  to  their encourage  something  limitations creative in  is  the small  awareness  of  bonuses  by  being  casting done,  residential  development  mechanisms  identified  way o f e n s u r i n g  may,  and  the  and  in fact,  thereby occuring.  i n Chapter introduction  the  mixed-use  that  housing  A recognition  will  of  the  do more t o s t i m u l a t e t h e for providing  improve As Five  illusion  and t h a t  o f a l t e r n a t i v e means  downtown,  contribution  may a c t u a l l y do more t o u n d e r m i n e  the bonuses a r e i n p l a c e .  development  the  public  housing  constructive  emerge b e c a u s e  to  despite  the  such, may  of  likelihood  the  of  alternative  be t h e o n l y  any  housing  amount  effective  of  housing  downtown.  Thirldly, live  i f p o l i c y makers a r e i n t e n t on h a v i n g more  downtown  they  will  commitment  than  simply  stimulate  the  construction  may of  be need social  This going  to  incentives  While in  examination  the  o f new  provision  of  respect open  i s hoped t h a t  techniques  downtown,  this  in  bonuses the  need  stronger  units.  space  and  and  only a  There  public  generally.  t o t h e need  have  to  to the d e l i v e r y  planning  for  a  subsidies  of e n v i r o n m e n t a l q u a l i t y  residential  of t h e i r  and  of s u i t a b l e d w e l l i n g  improvements w i t h  and t h e l e v e l  demonstrate  i n v e s t i g a t i o n has drawn a t t e n t i o n  control.  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