Recent decisions by city authorities point the way they envision Vancouver moving as an economy – but they may not all sit well with some seeking to do business here.
Fresh from the widely praised waterfront, the city plans upgrades in a district dubbed The Heights, and in the downtown Main Street area, hoping to stimulate more economic activity.
“We had an opportunity to purchase a substantial piece of property that wasn’t contributing to the city, in a strategic location near several neighborhoods,” said Patrick Quinton, Vancouver’s economic development director, regarding The Heights, an area framed by Mill Plain Boulevard, MacArthur Boulevard and Andresen Road and encompassing the former Tower Mall site. “It’s a chance to replicate the scale and level of investment of the Waterfront, but add elements around inclusivity and accessibility.”
While the waterfont involved $70 million public investment – by several governments, not only the city – and has so far stimulated more than $1 billion in private investments, it is hoped that The Heights will be more significant, he said.
The zone, to feature retail and residential properties, may include an expansion of the city’s Multi-Family Tax Exemption (MFTE) program, which could offer between eight and 12 years’ property tax exemption for developers who create affordable dwellings.
John McDonagh, president and chief executive officer of the Greater Vancouver Chamber, acknowledged The Heights as one of the initiatives, in various parts of Vancouver, that demonstrate the city government’s focus and support for local business.
“The city government has been very cognizant of Vancouver not being only the downtown,” he said.
Quinton said the financing mix for the zone remains undecided. He said the city generally avoids bond issuances, preferring to tap its capital budget and draw from state and federal grants.
He confirmed that the city is considering tax-increment financing (TIF), whereby a local government pays for redevelopment by borrowing against the projected growth in property tax revenue due to the increased value and economic activity in the area in which the redevelopment happens. TIF, used widely in the U.S., became possible in Washington last year.
“The state allows us to put two TIF districts in the city,” Quinton said.
“Businesses have been asking for TIF in Washington for years,” McDonagh said.
Meanwhile, the city has announced its “Main Street Promise” project, seeking to tempt more visitors, residents and businesses to the section of Main Street from Fifth Street to 15th Street. Construction is to start by 2024 based on plans dating back to 1993. Funding comes from city resources and one-time money from the American Rescue Plan Act, a 2021 federal plan prompted by the COVID-19 pandemic.
“The historic corridor hasn’t had the investment it should have had,” Quinton said.
While the outcome will be an improvement on the current state, Quinton and McDonagh noted that the city plans mitigation measures for businesses disrupted by ongoing work.
“We have a robust strategy to help businesses operate during construction, because disruption is a big risk given the makeup of the business community in that area,” Quinton said.
“Discussions are going on now on mitigation to businesses downtown,” said McDonagh. He said the work, which includes replacing water and sewer lines, installing new lighting and rebuilding sidewalks, could restrict store access.
Quinton said officials select such initiatives with an eye to economic and social gains.
“Growing the business community is one objective,” he said. “We are also trying to provide the most modern, safest infrastructure we can. We’re always looking at areas of the city where we can make the biggest impact.”
Local government and businesspeople don’t agree on everything, with alarm voiced about certain recent regulatory steps, though Quinton said these are motivated by the overall good.
A six-month moratorium on large warehouses, introduced as an emergency measure last December, was intended to buy time to revisit zoning regulations, Quinton said. The lack of advance notice was to prevent a sudden rush of development ahead of its coming into force. Quinton said officials felt a need to modify regulations in light of an unusual amount of activity on vacant industrial land.
“It seems to be for the distribution of consumer goods,” he said. “We don’t think it relates to local manufacturing or generates much value-added activity. It has a massive transportation and climate impact. We want that land to be available for companies generating local wealth.”
He said the process to change regulations is public. “We have already met with and will continue to meet with representatives from the local commercial real estate industry,” he said.
The city is allowed to extend the moratorium once, by another six months.
In another change, the city modified its business license fee and surcharge last December.
“It was originally $50 per employee, and rose to $90,” McDonagh recalled. “Companies with more than 200 staff didn’t pay it.”
Under the December 2022 agreement, the fee steps up to $105 this year and will eventually rise to approximately $245, while the cap on employee number is eliminated.
“Businesses are saying this is a bad time, alongside inflation, pandemic recovery and a rising minimum wage,” McDonagh said. He said some are responding by relocating operations out of Vancouver.
“It’s never easy to increase costs to any stakeholder,” Quinton acknowledged. “But historically, we haven’t really adjusted the fees that businesses pay for a while, and the proportion of revenues funded by residents had gone up. We also felt we had a system that put more burden on small businesses. The business base of the city is over 95% businesses with 50 and fewer employees.”
He said the new structure lowers the burden on these businesses, charging them $50.
A ban that the city placed on fossil fuel facilities is motivated by environmental concerns and the desire to use opportunities in clean fuel storage, Quinton said. After years of discussion, the city council passed a Climate Action Framework last December. “The principles in that have an influence on this fossil fuel issue,” he said. “How do we continue to support the local economy while working toward our fossil fuel goals? We have to make tough decisions, which can be unpopular in the moment, but are made with an eye to the next 50 years.”
Note: John McDonagh is a member of Brown Warrior Publishing, LLC, publishers of the Vancouver Business Journal.
