Upzoning and redevelopment: The details matter

Abstract

Facing worsening housing affordability, policymakers in a growing number of jurisdictions have heeded economists’ calls for increases in supply through relaxing land use restrictions, particularly on maximum allowed density and increases in the number of units allowed on a single lot. While floor space or floor area ratios (FSR or FAR) and unit count per lot are indicators of the potential for density, local governments have many levers to control the volume, type, and pace of new construction. In this paper, we compare changes in land prices and the pace of redevelopment following two similar, moderate density upzonings (up to four units per lot) of single family neighborhoods in the province of British Columbia (Canada). The upzoning in the City of Kelowna resulted in considerable new construction of higher density residential units as well as a significant increase in lot prices in the upzoned area relative to nearby areas with status quo zoning. In contrast, though the changes in allowed density were nearly identical, in Coquitlam there has been minimal uptake of new multiplex options and no discernible land lift in response to upzoning. We highlight the importance of other regulatory levers that are easy for analysts to miss in contributing to these different outcomes. The Kelowna upzoning was matched with an expedited development permit process for as-of-right fourplexes. In contrast, the Coquitlam rezoning did not alter the city's lengthy development permit process required to build beyond the baseline duplex. Kelowna's upzoning also required less parking than Coquitlam's. An assessment of the regulatory environment relying on the presence of the upzoning alone would miss the alteration to process (or absence thereof) that appear to have had a significant effect across the two municipalities in whether zoning changes led to actual new construction.