Stronger Kamloops; Nuts and Bolts, The Primer to A Small Vision: Kamloops, the Small Town that happens to be quite large; how we can keep it small and keep it prosperous By Mitchell Forgie
Mar 06, 2016
Stronger Kamloops; Nuts and Bolts,
The Primer to A Small Vision:
Kamloops, the Small Town that happens to be
quite large; how we can keep it small and
keep it prosperous
By Mitchell Forgie
What is this book about?
Our taxes keep rising? Why?
It is not because public servants get paid too much. It is because our well
intentioned policy mountain created over the last 60 years has incentivised a
development pattern that destroys value, bankrupts private individuals, lowers
property values, restricts job growth, suffocates air quality, cripples our
environment and creates disastrous health effects that lead to mountains of
health care bills.
We did this collectively, and we voted for governments that put these policies in
place. Nearly every single policy on its own was well reasoned and well
intentioned; often in the name of safety or economic growth. However, the
cumulative effect has been to create a new problem, which is economically much
worse than the problems we were seeking to correct. This economic deficit is
bankrupting us and our governments; and this bankruptcy is structural to the
system we have created: Manipulating public wages will not change this and
neither will manipulating service levels. If we are bankrupt we have no hope of
addressing the other pressing social and environmental concerns that we have to
consider in the 21st century.
This book is a primer to the concepts involved in the Stronger Kamloops
Philosophy. The larger book expands on many of the concepts, and is far more
solution oriented. This book is simply a black and white explanation of the
structural deficiencies that exist. These problems are not unique to Kamloops or
even the cities in our country. Cities all over the world face these similar
problems. The more horizontally developed each particular city is, the worse they
face these challenges.
I suspect Kamloops will surmount these challenges, and become a strong city,
perhaps even a leader in our country of what small cities could try to attain. I am
an optimist, but I see the flaws in our system as real and difficult challenges that
need level headedness to confront. I hope that this book can be a springboard
for the discussion and political will required to confront the future.
What is the Problem?
I want to introduce you to Arnica
Street in Pineview;
Arnica Street is a Cul-De-Sac,
containing 24 properties of which 23
have been developed. Lots cost
$100,000+ and the average assessed
value is $404,167. All the houses
together are worth $9,700,000.
Pineview as a whole is looked at by
our city planning department as a
model of how we should develop. Nice
houses, small community feel, etc.
The street in front of these properties
is 282m long, and using the cheapest
re-surfacing method available (Hot-
In-Place) it will cost the city $45,684
to resurface this road. Provincial
standards suggest that this should
happen every 9-11 years.
Single family houses in Kamloops
currently pay a tax rate (2012) to the
City of 4.37% of each thousand of
property value as determined by BC
Assessment. This brings in a
combined income of $42,389 to the
city each year. The City does provide
Home Owner Grants to persons who
live in their homes, which would
reduce this number but without that
information we will use the higher
number. 6.89% of the city’s budget is
devoted to Infrastructure and it’s
maintenance. So if we devout 6.89%
of Arnica Streets revenue to road
maintenance, we find that only $2,920
of each year’s tax accumulates to take
care of paving the road when it needs
to be done. After a 10 year lifespan, at
current paving H-I-P paving rates, it
will cost $45,684 to resurface, leaving
the city with a $16,484 loss; and this
is on what we assume to be a fairly
high value street that is only 282m
long. Further, this road is a Cul-De-
Sac, only the folks on Arnica Street
benefit from Arnica Street.
On Gordonhorn Crescent in Sahali the
same situation exists. The 12
properties on the Cul-De-Sac have a
combined value of $4,497,000 on a
115m long road.
The road repavement on Gordonhorn
would be $18,630, and the loss would
be $5,090 at 10 years, for only 115m
of road. A drive through many areas of
Sahali will indicate to you however that
most of these roads missed their 10
year maintenance investment a long
time ago and that intensive
maintenance is sorely needed at a far
elevated price. Arnica Street has a
deficit of $58,452.26/KM; Gordonhorn
$44,257.55/KM; Kyle Drive in
Westsyde $66,300.00/KM. The cities
1520 km of maintained road loses on
maintenance alone $8.6 million/yr.
Why aren’t we Bankrupt?
Have you ever heard of a Ponzi
scheme? In a Ponzi scheme a
company pays profits to investors
from the investment capital of new
investments. What has happened in
our city is much the same. As new
taxes come in from new development,
that revenue covers the shortfall from
past maintenance commitments. The
problem with a Ponzi Scheme is that it
requires ever accelerating rates and
frequency of investments of new
money to pay for the liabilities of the
old. Graphically the cash flow of the
city looks like this;
Further, when the city approves a new
sub-division, they experience an
instant intake of new funds through
taxes, and do not have to worry about
the maintenance commitment for
years to come. For this reason there is
a significant time lapse between
paying for the maintenance and
receiving the initial influx of capital.
Solutions
Currently the solution to this problem
as discussed in the news is this; “How
high will the taxes have to rise, and
how deep will the service cuts be?”
In the news this month we have seen
the cutting out of door-to-door postal
service, cuts to the ambulance
service, complaints about fire-fighters
wages and more. In Kamloops we
have seen tax hikes above inflation
absolutely every year since 2003
except for 2006 (in which there was
still a rise in taxes).
I propose an alternative solution. Not
every place in our city, and not every
development pattern, performs so
dismally. What performs dismally is
low-density, dis-connected, car-
oriented suburbs. Gordonhorn has a
value per Sq. M. of $435; Arnica $637;
Kyle Drive $286.
For comparison our cities most
valuable street, Victoria has blocks
that top $5000 per Sq. M. which is
684% better performing that Arnica
Street, while the infrastructure
maintenance cost to the city remains
roughly the same; because
infrastructure costs more as a function
of distance than a function of size:
Doubling the capacity of a pipe is
cheaper than doubling the length of a
pipe. Even in residential areas
downtown, for example the 200 block
of Nicola is worth well in excess of
$1200/Sq. M. And Pine Street is worth
$671.13/Sq. M. with comparable home
prices to $286/Sq. M. Kyle Drive.
Suburban commercial developments
compare just as dismally to downtown
with Sahali Center Mall (Target) worth
just $191/Sq. M. and our newest
development CityView worth $499/Sq.
M.
The further telling story here is not
only that traditional neighbourhoods in
the city perform better economically
for the tax roll, but that people actually
prefer them. Downtown condos are
the single most expensive real estate
per square foot in the city. Rent
downtown easily doubles rent per
square foot in stripmalls. Even shabby
parts of Tranquille Road ‘outstrip’ strip
style commercial developments with
values between $900 and $1300/Sq.
M.
So if people prefer downtown, are
willing to pay so much more for it and
it performs far better for the city’s
budget; why isn’t anyone building
more of it? And what makes downtown
so valuable anyways?
The Value of Walking
I challenge you to take a trip,
anywhere, and not be a pedestrian on
foot at any point. If you go to the mall
to shop, you probably arrive by motor-
vehicle and then walk through the
mall. If you go to see the Blazers, you
walk in to the arena. Comically, we
even drive to the gym to walk or run
on a stationary device, and pay money
to do so. We walk through the BC
Wildlife Park. We also walk down
Victoria Street, and this is why Victoria
Street is so valuable. This is why a
shop on Victoria Street can pay
$18/sq.ft. in rent and make a killing
while the same shop goes bankrupt at
$4/sq.ft in a strip development. This is
also one of the primary reasons
stripmalls are composed of nearly all
national franchise and large corporate
tenants; they have to rely on large
scale national marketing to generate
interest and education in their
products as no one would ever
accidently ‘stumble’ upon them.
Downtown businesses spend time and
money in window displays while
suburban businesses rarely even have
windows to the parking lot. There are
feedback loops in these design
issues. Interesting store windows
beget walkers and window shoppers,
which begets more potential business.
What makes a place walkable, or
successful? Many authours, planners
and critics have complied entire
anthologies on this subject, with some
of the best and most immediately
readable below;
Walkable City by Jeff Speck
Death and Life of Great American Cities
by Jane Jacobs
The Geography of Nowhere by James
Howard Kunstler
Building Strong Towns by Charles Marohn
The Original Green by Steve Mouzon
My summary of the concepts include
these variables;
Defined and Enclosed Spaces
o Streets are not missing teeth
Landmarks and Terminated Vistas
o Destinations visible
Protection from fast moving cars
o Slow Traffic Speeds
Well connected
o Many routes to take
A threshold of density
o Enough people in walking distance
Incremental Investment Potential
o Buildings, lots, dwelling units of all
sizes, shapes, ages and costs
You will find quite significant
explanations on these points in the full
book Stronger Kamloops starting on
Page 59.
So Why isn’t Anyone Making More Downtown Style Development?
This is a complicated question, but
one thing is for certain; the cities
Official Community Plan, the
document that guides all city growth
has supported many of the qualities of
downtown development for nearly
twenty years.
City Sketch from the North Shore Plan
The OCP asks for dense, mixed-use
development, with native plant
species, bike racks, design that makes
large buildings look smaller, bike
routes, a focus on transit, integration
of social housing, active
transportation for health and many
more well intentioned and well-
reasoned policies; yet not even a
tenth of what gets planned occurs in
real life, or with any expediency, and
often it does not create the desired
effect anyways. The reasons for this
are two-fold; carrots and sticks.
The Sticks
What is standing in the way of
development is actually directly
created and enforced by our cities
planning department. It is a
combination of planning, engineering,
fire and building standards that make
most every building in downtown
Kamloops illegal or cost-prohibitive to
build today. From engineered sprinkler
systems, parking requirements, mop
sink dimensions, bathroom
requirements, firewalls, acoustic
separation, separate code built fire
escape stairwells, maximum lot
coverage ratios, setback minimums,
use restrictions, rezoning boards,
public hearings, development
permitting, on and on and on, the
cities actual bylaws and standards do
not reflect what is encouraged by
official community plans. For example,
I attended a City organized forum on
creating affordable housing, and they
included that there is a policy direction
to have a tax subsidy for market units
created that are below 400 sq. ft. Yet
the building code, lot coverage issues
and more actually prevent that type of
housing from actually being built,
assuming there was a market for it.
The City has created a document for
the hoops to jump through if you
would like to add a legal basement
suite or laneway house to your
property. They city wants to see these
happen to meet the perceived demand
for affordable rental accommodation,
to mix incomes and ages of residents
through the whole city and to see
development on old infrastructure that
they are already maintaining. Yet it is
not uncommon for a would-be
landlord to spend hundreds of hours
and thousands of dollars (usually
around $10,000) to have City Council
hear their case and possibly have it
denied.
Try to open an unconventional or
small scale business in town you will
find the same as I did. I saved up
about $25,000 to start a 450 sq. ft.
coffee shop. I figured that figure was
enough to buy the espresso machine,
the inventory, tables, chairs and
operating capital. But as I was dividing
an existing unit the sprinkler system
had to be re-engineered and one
head moved for a cost of $5000; the
dividing wall had to be fire rated. I had
to have 6 sinks; 3 dishwashing sinks,
a mop sink, hand washing sink and
bathroom sink; plus a handicap
accessible bathroom at about 100
sq.ft. At that price of meeting city
standards there was no profit left for
me to be made, and no coffee shop
was ever opened.
A further barrier to dense, mixed-use
walkable development is maximum lot
coverage ratios. They prevent a huge
amount of value from accruing in the
city. In all but a couple zoning codes,
which only occur on a few blocks in a
few areas of the city, not only is use
restricted to very narrow types, but the
amount of that use as coverage of the
land is required to be below 40% of
the land. This creates a situation of
sprawling single family lots, many
people with large yards that they do
not want, or are unable to maintain,
and so they grow over with blight.
Or alternatively it creates pods of high
density apartments which are
surrounded by large lawns and parking
aprons. This type of apartment
dwelling may be dense on the site, but
in the context of the block, both height
limits and lot coverage prevent the
buildings from actually being close
enough together, or near different
uses to generate any value or
walkability.
In situations, like a basement suite or
laneway house downtown, to meet the
zoning code you have to maintain this
maximum lot coverage, but you also
have to accommodate 3 on-site
parking stalls. Where walkability
already flourishes, and the framework
and demographic exists to walk, still
more regulations anticipating unlikely
events add cost and restrictions to
what you can build, especially things
that add value to the land and to the
city.
The Carrots
The parking subsidy, covered
extensively in the large book, reads
like this. The city requires each new
development to have a large amount
of parking, sized generally for the
busiest times of the busiest days of
the year. Since suburban
developments are limited to single
uses, there is no crossover in parking
facilities, nor any capacity for spill
over into other streets, and so on the
face of it, parking minimums make
sense for citizen convenience. The
problem is that parking costs money
to build. In the case of a stripmall
parking stall, the cost is around $4000
per stall. The carrying cost of that stall
is bundled into the rents of the
tenants, and then added on to the
price of your goods. For a reasonable
rate of return, a stripmall developer
would have to generate $42 per
month, per parking stall in added rent
from its tenants. A small restaurant of
30 seats is required to have 38 parking
stalls. That means that parking costs
the landlord $1575 per month, and
that is going to be bundled in to my
rent.
Restaurants are a great place that
Donald Shoup, a California based
economist, used to make a fantastic
analogy about the politics of minimum
parking requirements;
“If cities required restaurants to offer a
free dessert with each dinner, the
price of every dinner would soon
increase to include the cost of the
dessert. To ensure that restaurants
didn’t skimp on the size of the
required desserts, cities would set
precise ‘minimum calorie
requirements.’ Some diners would pay
for desserts they wouldn’t have
ordered had they paid for them
separately. The consequences would
undoubtedly include an epidemic of
obesity, diabetes, and heart disease.
A few food-conscious cities like New
York and San Francisco might prohibit
free desserts, but most cities would
continue to require them. Many people
would get angry at even the thought of
paying for the desserts that they had
eaten for free for so long”.
Howard Frumkin has also related
conclusively the effects of auto-
oriented living with many of the same
effects of free desserts including
obesity. The required parking in a
suburban setting is in fact a double
edged sword, as the required parking
drives uses further apart, making
driving even further required.
A possible remedy for this is to
include parking stalls in structures
rather than surface stalls. However in
this case we run in to far greater price
prohibition. Structured parking stalls
cost between $20-$40,000 to build
and Underground stalls between $40-
60,000. Therefore real estate values
and parking demand have to be truly
extraordinary to ever justify their
construction. This is one of the
reasons that new mixed-use
construction has not happened
downtown despite the City of
Kamloops offering all kinds of tax
incentives and policies to support it.
City Parking Requirements directly
prevent the type of development that
their plans support from being built,
and also directly prevent land owners
from adding value to their property. It
is said that it is in the culture of
Canadians to drive, and that they will
not walk, yet given the subsidy present
to drive, and the design of our cities,
sprawling, disconnected and with free
parking at each end, driving is the only
economically rational thing to do. We
just pay the cost in our taxes and our
goods rather than as a user fee of
driving on the roads. Developers know
that people will not pay the price of
the parking directly and this is why
they fight City Hall on every project
about parking spaces. On a personal
note, if my downtown condo did not
include a free underground parking
stall, and instead it was added on to
the price of my condo at its cost to
build, approx. $50,000; I would likely
save myself the $50,000 and eight
years off my mortgage.
The land value subsidy is a more
ambiguous one, but also the one that
has the greatest effect on the types of
places that get built. When the BC
Assessment Authority determines the
price of your property, they measure
two metrics; land value and
improvement value. The combined of
these two figures is the amount on
which your property tax is levied.
These two figures carry the same
weight, and the formulas to arrive at
the value for each of these figures is
unclear, but includes construction
costs, sales figures, historical data
and depreciation projections. One
thing is for sure, the further from the
centre and the larger the lot, the less
the Assessment Authority pegs a unit
of land to be worth. A sq. ft. of
infrastructure on the periphery costs
the city the same amount to maintain,
or arguably it actually costs more.
Sales prices, what folks are willing to
pay, on the periphery may be less than
nearer to the center, but from the
cities point of view, the burden of the
service operated by the City should be
consistent in the value of the land
across the city. Consider then the
following Assessment Figures ($/Sq.
M.);
Commercial;
Downtown; 301 Victoria; $683
Downtown; 371 Victoria; $679
Dufferin; 1395 Hillside; $172
Aberdeen; CityView; $153
Valleyview; 2121 Trans Canada; $172
Residential;
Downtown; 724 Battle; $339
Downtown; 135 Battle; $393
Valleyview; 2276 Crescent; $211
Aberdeen; 759 Laurier; $238
Westsyde; 670 Lyne; $140
In Commercial property, it is 341%
more expensive to buy and carry land
downtown than it is in the burbs.
Residential property is roughly double
in most cases downtown compared to
the burbs. If the implication of this is
not clear it should be. Developing on
the periphery is so much cheaper that
no amount of tax subsidy could ever
approach the incentive to develop on
the periphery, especially for a large
scale out of town developer.
The moral of the Story
We have ascertained that downtown
mixed-use, walkable development
styles are far better performing for tax
revenue, for sociability, for
entrepreneurship, for health and is
supported by the City in spirit. We also
now are beginning to understand all
the different factors that make that
ideal completely unrealistic for even
the most ideological and motivated
developers to achieve.
If we want to see more downtown
style development we need to see a
couple things happen;
1. Downtown style development
needs to be allowed outside
downtown.
To achieve this, lot coverage must be
allowed to be at or near to 95%. Of
course no developer would have a
market for complete lot coverage, but
it should be in the developers’ realm
to determine this. The same goes for
parking minimums. The developer gets
to decide how much parking they want
to invest in, not the City.
2. Development requirements in
Downtown need to be more
reasonable
Does a 400 Sq. Ft. café really need to
have a handicapped bathroom, or can
they share with the business down the
hall? Would it be reasonable to
assume that everyone in a small 3
story, 8 unit apartment building should
be able to exit before the fire
department arrives, and thus should
not be subject to the same escape
requirements as an 11 story building?
Or that someone wanting to add
density to their little lot with a Laneway
House be approved by the process
already in place, rather than a
politicized council decision? Or that lot
coverage maximums downtown be
more reflective of the urban setting?
The book, Stronger Kamloops, dives in
to all these issues with far more
precision, support and provides clear
recommendations on the path forward.
While planners search for solutions to
problems that keep shifting, I propose
instead that those of us in the
population be simply allowed to
achieve the cities goals for them by
getting the regulation out of the way
for rational responses to evolve at the
level of the person, the property, the
business, the block, the
neighbourhood. Please check out the
blog at strongerkamloops.blogspot.ca