Dear mall owner, condo developer or, really, almost anyone: Would you like to give us millions of dollars to build a station on a rapid-transit line?
That might sound like an e-mail from a Nigerian businessman.
But the question is being asked more frequently in British Columbia as the province and the regional transit authority TransLink struggle to find ways to pay for hugely popular – and hugely expensive – rapid-transit lines in the Lower Mainland.
It started with the Canada Line in the mid-2000s, as the province cajoled the City of Vancouver into contributing $30-million for a station in the Olympic Village and the Vancouver International Airport Authority into paying $300-million for the spur line to the terminal to help cover the $1.76-billion total.
Now the idea of bringing in partners has expanded to the private sector.
Two years ago, a group of developers struck an agreement with the City of Richmond and TransLink to pay for a new station to be built on the Canada Line at Capstan Way through a $7,800-per-condo-unit charge. That was the first of its kind for Canada. (No work has started on it yet, however.)
And, in one of the most unusual deals, the owners of the Coquitlam Centre shopping mall and the City of Coquitlam have jointly agreed to pay for a $28-million station along the new Evergreen Line that is under construction.
Lincoln Station, one of seven in the 11-kilometre line, is being built on the edge of the mall’s parking lot.
While all the partners – the province, city and the mall owner, Morguard Real Estate Investment Trust – say the new station will bring significant benefits, they also say it was a challenge to put the agreement together.
“There’s time when you think it’s probably not going to happen,” said Maurice Gravelle, the City of Coquitlam’s manager for strategic initiatives. “But we knew it was the right thing to do to have a station there. It’s right in our city centre and the plan is to put a lot of density there.”
It was hard in several ways. First, putting the deal together with Morguard. Second, getting the province to agree to that deal. Finally, putting everything together under a tight deadline to avoid penalties or extra costs for changing the design of the line after construction had begun.
Morguard had to be convinced to come on board, Mr. Gravelle said.
“At the beginning of the process, they didn’t think they should have to put any money in, that it was a provincial responsibility.” But the company was eventually convinced the province wasn’t going to budge from its position that building a station at the mall was not essential to the project.
Back at Morguard, the company got concerned about how different maps of the line showed Lincoln Station appearing and disappearing.
Morguard’s vice-president for asset management, Ken Moffat, said a station there was seen as critical.
“It supports our green initiatives. It brings more people to the property. And it supports plans for future development. The stations do act as catalysts for intensification.”
Once Morguard and the city agreed they were going to be partners on financing, they needed to convince the province that there would be enough density around the station to support it. The city’s revamped plan for the area guaranteed that, as did Morguard’s interest in developing condos on its parking lot some day.
Then they needed to figure out how much each was willing to pay.
Neither side will reveal how much they put in, but Mr. Gravelle said the two agreed to contribute a fixed $28-million to the province (with the number kept confidential until after all the construction costs were finalized with the private builder), rather than waiting for the bills to roll in and finding out what the total would be later.
“We looked at our side and what we were willing to pay. And, for Morguard, we decided to start with a formula the city thought was reasonable. Morguard bought in,” Mr. Gravelle said.
Morguard has contributed land to the project. In return, the city has agreed to allow higher density on any development Morguard builds around the station.
The city also scrambled to put in a request for funding from the federal government’s public-private-partnership agency, set up to encourage P3 deals. With support from the province, the city’s request for up to $7-million from Ottawa was granted. (That $7-million goes back to the city to cover off part of its share.)
All of this took place under time constraints.
The Evergreen Line’s executive project director said everything came together after the bids had already come in, which meant getting the agreement of the builder to make alterations at a set price.
Amanda Farrell said her advice to anyone planning the same in the future would be to try to get the partners in line well before the bids go out.
But Coquitlam, at least, managed to make the deadline. Coquitlam’s neighbour, the City of Burnaby, also looked at trying to develop a partnership to build Cameron Station just north of the Lougheed Centre mall.
But the city and the province couldn’t agree on how to split the cost of changing the grade of the line so that it could accommodate a station. They were still tussling about it while Coquitlam was finalizing its agreement.
“Burnaby came in late in the game. Now they’ll never have a station there,” Mr. Gravelle said.
For both the province, which ends up contributing to and managing the construction of major lines, and TransLink, which is responsible for upgrades and additions, the idea of having the private sector contribute is something they want to pursue more.
“This is definitely new for us. But we definitely welcome innovative ways of financing,” said Derrick Cheung, TransLink’s director of strategic sourcing and real-estate investment, when the Richmond-Capstan deal was negotiated.
TransLink, unlike some transit agencies around the world, notably Hong Kong, doesn’t have the power under its legislation to find money for transit by taking a slice of the profits from development around stations.
It’s allowed to buy only the land it needs for the transit project.
And, under current legislation, it’s cities that reap the benefit of development through their ability to levy extra fees and contributions from developers in return for rezonings that increase density.
The best the province and TransLink can do for now is to get these kinds of contributions. But it’s a start – and one that other cities, provinces, transit agencies and states have been calling about, asking how it’s done.