Is it a Beautiful Day in the Neighbourhood?

Ron Bolin: Sept. 15, 2019

On Thursday, September 19th Nanaimo faces a Public Hearing at which Council, after hearing from the public, will decide whether moving a major density apartment development into the middle of a basically single family Old City neighbourhood is a good idea.

The project at 388 Machleary Street leaps from downtown zoning across Fourplex and Medium density zones to land its proposed project in the middle of an old city Residential zone which currently, as the cleared 1.1 hectare site of the former old Nanaimo hospital, has Community Service zoning.

At the required Public Hearing on September 19, Council will consider giving approval to two changes which received first and second reading approvals from them on August 26 which can considerably alter the character of this Old City neighbourhood and the lives of those who live there. The Changes:

• To change the Land Use Plan FROM Neighbourhood TO Corridor; and
• To change the zoning on the parcel at 388 Machleary Street FROM Community Service One TO Comprehensive Development Eleven (a unique zone).

If approved, these changes would increase the residential density on the site adding some 175 units on a property which, in keeping with the usual Old City R13 lots in the area give a density between 14 (single family) and 28 (duplex) units.

In addition the project might qualify for a 10 year property tax exemption from the City which of course must be made up in the budget by taxes from all other City tax payers. See below: Public Cost of Private Projects

What is it about Nanaimo and Public Hearings?

Public Hearings are the only Municipal Public Meetings which are legislatively open to the Public. In Nanaimo they are also the only public meetings of Council which are NOT available live online or as recordings.

When asked about this curious situation, the City responded that a legal opinion had been obtained which indicated that the process was fraught with danger and Council decided against it.

When asked for a copy of this opinion, the City denied access due to “privacy” issues. I do not understand the nature of privacy in a public contract, but nevertheless we neither livestream nor video record Nanaimo Public Hearings. I was also informed that other municipalities also avoided recording Public Hearings.

A quick and non-comprehensive search for the practice of livestreaming and recording public hearings in other BC municipalities found that Vancouver, Surrey and Delta all perform this dangerous public service apparently without catastrophic consequences.
As a Public Hearing legislatively provides the public a chance to give their opinions before Council in an open meeting on issues involving changes to municipal public policy which affect all in the community, why does Nanaimo deny this opportunity to those of its citizens who cannot attend the Hearing in person?

Next Thursday, Sept. 19, there will be a Public Hearing which, among other things, will deal with changing the City’s Land Use Plan from Neighbourhood to Corridor and the parcel Zoning from Community Service One to Comprehensive Development Eleven for the old Nanaimo Hospital site at 388 Machleary Street. This change from what has been and what is to what could be represents a considerable change to the character of the area and is thus of considerable interest to those who live in the old city neighbourhood in particular and to those in other neighbourhoods who may be vulnerable to such future changes in general.

What is it about Nanaimo that denies broader public access to its circa 65,000 municipal electors to important legislatively open public policy discussions than can be provided by a 300 seat auditorium at the Convention Centre?

Public Cost of Private Downtown Projects

As mentioned previously this project may later be eligible for a “Downtown Revitalization Tax Exemption Program” (DRTE), if either four or more multi-family residential units with a construction value equal to or greater than $500,000 are built. As the developer has indicated a goal of 175 residential units on the property and as it lies in the what some would consider generously defined “Downtown” area, if the requested Land Use Plan and Zoning changes are approved at the September 19th Public Hearing, all pre-building permit conditions required for a DRTE would be met and would only need an application for the ten year tax exemption prior to the issuance of a Building Permit.

Exemptions are based on BC Assessment’s standard property assessments and only cover the municipal portion of the improvement tax payment. Under DRTE land values are not exempted from taxation and levies for the RDN, the hospital, schools, etc. which are collected by the City on behalf of those agencies must still be paid. The amount of the exemption will vary annually with both assessment values and the City’s property tax rates.

As an example, in 2019 a new apartment complex with an average unit improvement assessment of $191,340 would be taxed, as are all residential rates, at $6.0491 per $1000 of assessment (.0060491x $191,340= $1157.44). Of this the DRTE exemption on the municipal portion of the tax would amount to $4.4807 per $1000 of assessment, i.e. the municipal portion of the assessment (.0044807x$191,340= $857.34). For the 388 Machleary street example, each unit would lead to a total annual exemption of $857.34×175 per year. The total loss to City coffers for the project would be $150,050 per year or $1,500,345 over the life of the exemption. As the expenses of running the City are not reduced by such a project, but are actually increased due to serving the additional population, these monies must be made up annually for 10 years from the taxes charged to all other ratepayers. For those exempted in such a project, it accounts for a nearly 74% reduction in the municipal property taxes levied on their improvements.

Note also that under the DRTE new commercial buildings with a building permit value equal to or greater than $500,000 OR additions or renovations to an existing commercial building where construction is at least 50% of the assessed value of the building and are built in the designated Downtown area are also eligible for the DRTE. The tax rate on Commercial properties is about three times higher than that for residential properties and thus the DRTE cost to other taxpayer is about three times as great for the same improvement assessment.

The pinch tightens as more residential and commercial projects come under the DRTE, the exemptions multiply and the amount to be collected from Peter to pay Paul climbs.
The question of DRTE exemptions is peripheral to the Sept. 19 Public Hearing, but lurks in the background and requires recognition.

If you have an opinion on the sanctity of neighbourhoods, or the importance of density in the downtown and the definition of the line between downtown and residential neighbourhoods, Thursday’s Public Hearing is your chance to let Council hear about it. As noted, DRTE exemptions are only in the background at this time and to be noted for the future of this and other possible projects, but are not under direct discussion at this Public Hearing.

An Official outline of the DRTE program can be found at:

https://www.nanaimo.ca/docs/doing-business/economic-development/drte-brochure.pdf

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