Kelowna has learned the 'iceberg' lesson of sprawling development
For decades, the City of Kelowna embraced growth almost anywhere in the city because it brought in big bucks from developers for things like roads, sewers and parks.
Now it’s learned the lesson that sprawl doesn’t pay.
On March 1, city council said no to Thomson Flats, a major new single-family development proposed for the southern tip of the city.
One city planner described the old way of thinking as an iceberg.
Developers pay fees called Development Cost Charges for every housing unit they build. They are higher in places like the Southwest Mission that is far from downtown and, therefore, more expensive to service.
The money was seen as a gift that paid to extend roads and sewer lines, long range planner James Moore told council.
That thinking has changed.
“Much more recently, we’ve really started to look at that a lot more carefully and we’ve seen that's certainly not the case,” he said. “When we talk about development cost charges and what we get from a new development paying for its own infrastructure up front, that may be beneficial for the first number of years. But, eventually, this kind of iceberg catches up to you and that share of that pie, those up-front capital costs that are sitting above the water, get smaller and smaller and smaller the longer you go out and the more you have to operate and maintain.
“The kind of distance that these places are from the central area of the city start to outweigh the revenue we get from them to maintain their systems and they become a drain on the city in the long run.”
Even the property taxes generated from those homes don’t cover all the costs of maintenance and replacement. That has to come from all taxpayers.
“Really, it’s a gift for year one and an obligation for 200 years after that,” Moore said.
In 2014, the city gave the landowners of the Thomson Flats permission to draft an “area structure plan” to develop the area south of Gillard Creek Forest Service Road and east of the Kettle Valley neighbourhood.
At that time, other developments in the area had already been approved with roads and services being upgraded and extended.
But the Thomson Flats planning process has dragged on so long that the city’s thinking has changed. In 2019 council adopted a growth plan that concentrated new development into “urban centres.”
At that time there was the possibility of cutting down the number of lots already approved for some subdivisions, but the city backed off on that plan in the face of stiff opposition from the developers.
Andrew Bruce, the consultant for the Thomson Flats owners, told council that the project, with 680 homes, is not sprawl but is “suburban infill” that will complete and complement development in that area.
He said the developers would build a section of the South Perimeter Road through Thomson Flats that would connect the Kettle Valley subdivision to the new road and provide a third exit from the area. It will relieve the existing congestion on Lakeshore Road and Gordon Drive, he said.
Besides, the project would contribute almost $33 million in development cost charges to the city, including $18.7 million for roads, he said.
If the project went ahead, staff countered, that would force the city to pay as much as $22 million to replace the Casorso Road bridge over Mission Creek. More money would be needed to upgrade Benvoulin Road and a roundabout on Lakeshore Road.
None of this work is considered a priority at this time and won’t need to be done, even after about 1,000 more homes are built in the Southwest Mission. Those have already been approved.
Bruce argued that, especially with more people working from home because of COVID, there’s a huge demand for single-family lots.
Staff disagreed with that as well, saying there are about 1,000 building lots in the Southwest Mission. It will take 10 to 15 years to build all those homes, they said.
There are another 5,000 lots in other parts of the city, such as Black and Kirschner mountains and Tower Ranch.
Over the last 10 years, an average of 300 to 350 single-family homes have been built each year so that gives the city a 15- to 20-year supply of single-family lots, staff said.
“We have ample supply and we have systems in place to tell us if we’re running short,” Moore said. “Even if you’re running short on land, would you say the land (to build on) should be in, probably, the most transportation-challenged part of the city?”
The developers promised to restore Rembler Creek, creating a linear park connecting to other parks and maintain trails that are now well used by neighbours, even if they are trespassing.
Another possible benefit would be a larger population base that may justify construction of a grocery store that would cut down on the number of trips into the Lower Mission.
While such benefits appealed to some councillors, staff’s economic argument against building on the fringes of the city won the day.
“If you approve it, you’re going to lose money on it,” Moore said. “It’s going to make it harder for you to service the infrastructure that you already have approved and is in the ground.”
After more than three hours of discussion, council voted 7-2 to reject Thomson Flats, with councillors Brad Sieben and Mohini Singh voting against the rejection.
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