Zoned Capacity

The term has recently been making the rounds in Vancouver. A typical statement is that Vancouver has enough zoned capacity until 2041. These kind of claims are usually attributed to the Coriolis report on CACs.

We took a look at the report to see what exactly it says and how the term is used there.

TL;DR Takeaways

• Zoned capacity ≠ Development capacity.
• Much of the zoned capacity referred to in the Coriolis report is not outright zoned but relies on conditional up-zoning the development permit board may (or may not) grant.
• Relying on “zoned capacity” in Vancouver involves (in most cases) tearing down an older building that is below zoned capacity and replacing it with a bigger one maximizing the zoning. In some cases, this will involve

The Coriolis report is primarily concerned with understanding if CACs constrict supply. In the report term “rezoning” is used almost exclusively to denote CD-1 spot zoning.

Past Development

In section 6.3 the report examines the 2004 - 2013 development history, and it distinguishes development in “already zoned land” vs “development that has required rezoning”. It does not state explicitly how rezoning is defined, but from the context it becomes clear that it refers only to CD-1 spot-zoning. Some statements in the report are head-scratchers. It states that

During 2009 to 2013, rezonings added capacity for over 15,000 units, but only 8,200 units were built on rezoned land. From which it concludes that The pace of rezoning is not constraining the pace of development.

Which is an ambitions claim, given the shortness timeframe they looked at and the long time it takes for larger multi-family projects to go from rezoning to completion. However, there may be other reasons that could lend credence to this claim. In particular, in a rising property market there is an incentive for developers to stall projects as they are expecting to be able to sell at a higher rate as they wait out price increases. If this is indeed the concern, one would hope that the city is implementing tools to deal with this, like tying CACs to timelines or not granting new development approvals to developers with a significant backlog.

###Future Development In section 6.4 the report pivots to look at capacity for future development. This is where some of the often quoted statements come from, like

At the recent pace of development of say 3,500 units per year, this zoned capacity represents about 11+ years worth of new development.

Where “this zoned capacity” refers to a capacity of 25k units in existing multi-family zones and 15k in already approved but not yet completed “rezonings”, i.e. CD-1 spot zoning. The CD-1 units are easy to count by looking at the rezonig policies. It is unclear to me how the estimates for the existing multi-family zones were derived and what it takes to activate these “zoned units”. But it does spell out in a little more detail where this zoned capacity is located.

The report further locates capacity for 35k units in Official Plans and Community Plans. It states that some of these may need (CD-1) rezoning, but estimates that there is “little rezoning approval risk associated with this capacity”.

Current capacity in multi-family

To understand better where the current zoned capacity is located we can consult a slightly more detailed breakdown given in the report. In the table we see that most of the potential is in current Commercial zoning, probably a good portion of which is in mixed-use conversions, which are happening organically along many commercial corridors. It also sees potential in the Historic area zoning and some in existing RM.

Looking at the zoning areas broken out in the “other” category it is less clear how residential units can be accommodated. ### IC-3 IC-3 zoning is a bit of a head-scratcher. The zoning document does not allow for significant residential use. Despite that some larger residential developments have been build there recently.

MC-2

MC-2 zoning along East Hastings Street comes with an outright FSR of 0.75 that can be conditionally increased to a maximum of 1.80 FSR for residential uses. One should note however that there is no outright residential use in MC-2 (except for single units attached to artist studios). All residential zoned capacity is conditional use at the mercy of the development permit board, which qualifies as “zoned capacity” only in the sense that the conditional up-zoning does not have to go through council but is handled by the development permit board.

Assuming the maximum conditional residential use were to be approved for all sites and soall buildings were torn down and fully built out to maximize residential use, that would yield an additional floor area of a little over 50,000m&sup2, resulting in a little under 600 units at an average size of 85m², including common areas. As there are competing land uses, a lower estimate of 400 units is more realistic.

The current land use along there is (almost) entirely non-residential, so tearing down these building to max out residential zoned capacity would not result in (significant) loss of existing residential units.

FC-1

FC-1 zoning in East False Creek allows for up to 4 FSR of residential use, only very little of which is currently built out. There are competing land uses allowed that will not allow maximum of 4 FSR residential use to be activated across the zoning, and the zoning document notes that the conversion of industrial to mixed use will take significant time. If maxed out there is a potential for almost 300,000 m² of residential use. Taking the average unit size at around 85m², including common areas, that could yield about 3,500 units. Given competing land uses, maybe 2,500 is more realistic as zoned capacity in FC-1.

Again, (almost) all of buildings that will have to be torn down to make space for these developments are currently commercial or industrial land use.

FM-1

FM-1 is already fairly built out with residential and mixed use, and it is difficult to add more residential use without tearing down older stock that may not be built out to maximum current zoning. It’s outright zoning is for 0.6 FSR, and there are only a few sites that may be below that. This should taken with caution as the FSR estimates become unreliable for small buildigns.

Purely residential buildings built in 1973 or earlier can increase their FSR by 20%, up to a maximum of 1 FSR, but there aren’t many around and this process won’t yield more than a handful of units.

Which leaves us with another conditional use clause that allows up to 1.5 FSR but explicitly asks for “provision of amenities which would result in community benefits” in return. That’s spot-zoning in spirit, with the difference that the application is handled at the development permit office instead of having to go to council. There are a lot of properties below the 1.5 FSR cutoff many if which are quite close to the maximum FSR.

A prime example for maximizing zoned capacity would be the townhouse development at Birch between 7th and 8th. With around 0.8 FSR it’s 78 units sit below zoned capacity, almost another 70 units could be added if it were to be torn down and replaced with a complex like the one across the street that comes in at around 1.5 FSR.

DD

The last zone explicitly mentioned in the Coriolis report is DD zoning downtown, which probably has the largest potential to tear down older buildings and rebuild to increase dwelling units to the maximum allowable under current zoning.

Pace of Development

The argument about the timeframe, 11 years based on the multi-family and existing CD-1 rezoned areas, or 20 years when Official Plans and Community Plans are included, hinges on the pace of development. The report assumes that the recent pace of 3500 units per year will continue. Completions have crept up a bit recently, but we have also continued to spot-zone. More detailed ananlysis is needed to figure out where we are at at this point.

Relying on Zoned Capacity

Development under traditional zoning and development under spot-zoning (“rezoning in the language of the report) are quite different in nature. Development under existing zoning may or may not be attractive. A nicely kept up smaller house may be below the maximum allowable zoning. But it’s probably not a prime target to be redeveloped up to the maximum allowable. Spot zoning on the other hand typically already has a developer willing to re-develop at the negotiation table. Once the re-zoning negotiations are successfully concluded, the development will go forward in almost all cases.

It is important in this context to remember that there are almost no, if any, vacant sites left in current multi-family zones. So any increase in dwelling units but tapping into current zoned capacity is very likely to trigger the tearing down of a building that does not maximize the current zoning, typically an older building.

Sightline recently put out a great overview about “zoned capacity” in the Seattle context, that equally well applies here in Vancouver. It states pointedly

Zoned capacity is an estimate of how much new development could occur theoretically over an unlimited time period
under current zoning. Zoned capacity is not a forecast of how much or when development will occur.

Bryn Davidson explains on Pricetags how zoned capacity relates to development capacity

zoned capacity for lane houses is ~150 times the annual throughput.

The City of Vancouver does a good job explaining the differnece between “zoned capacity” and “development capacity” in this overview looking at the West End.