Density Bonuses for Market Rental Housing Are Not Helping
The City’s practice of granting density bonuses to developers of new market rental housing has had no demonstrable effect on the problem the City is trying to solve — making housing more affordable. It looks more like simply a transfer of a publicly owned resource (extra density) to privately owned companies so they will build bigger and taller privately owned buildings than they would have otherwise.
‘Density’ is the size of the building relative to the size of the lot and calculated as a floor space ratio (“FSR”) by dividing building floor space into lot size. Building lots have an entitlement to a given FSR according to existing zoning. When the City increases, ‘bonuses’, density, it increases property value.
The City can negotiate with the developer to share the increase in the value of the property, and it funded a new City Hall, new Operations Centre and many other public assets without having to increase taxes.
However, density bonuses simply to accelerate the construction of market rental housing does not help the affordability problem in the City. It might be making it worse as buyers speculate on the likelihood the City will increase the value of the land with a density bonus after they purchase it.
In addition to not being an effective way to address affordability, it’s a missed opportunity to create a public asset or contribute to the infrastructure required to support the development.