Translink wants more money
Public transit has an impact on property values (both positively and negatively) so isn’t it only right that the good folks at Translink get some of that boom-time real estate money?
The new TransLink board is looking at real-estate partnerships to solve the problem of spiralling costs for Metro Vancouver’s burgeoning public transit system, says board chairman Dale Parker.
In an interview with The Province, Parker said there are opportunities for TransLink to cash in on the added real-estate value created by rapid-transit lines and station hubs, and TransLink should look at them.
“One of the things we’d certainly like to look at is what are the opportunities for TransLink to benefit from the real-estate development that goes on around the stations,” Parker said following a Monday night public hearing on the property-tax issue. “There’s going to be increased density — can we participate and benefit in the sense of partnerships in real estate?”
Yes. Can we please? Apparently we can!
The board was created in November by the B.C. government, which abolished the old governance structure and a TransLink board made up of elected municipal politicians.
“The new legislation gave us greater scope for participating in ownership around the lines from what we were able to do before,” said Parker.
And what a perfect time to have public transit speculate on real estate! After scrapping a very unpopular tax on owners of non-residential parking spaces the Translink board is looking to make up the 18 million dollars elsewhere:
Rather than slash the $900-million-plus budget for the fiscal year beginning April 1 by $18 million, the board is expected to levy the property tax in some way that stings homeowners and business owners equitably.
Currently, business owners are taxed at a rate five times that of a homeowner for properties of comparable value.
“One thing the board does want to do is focus on what other sources of revenue, certainly other than property tax and fare, because those two may very well be close to being maxed out,” said Parker. “The public is demanding a much larger expanded system and we’re going to have to figure out how to pay for that.”
I’ve got an idea! How about pull-tabs or scratch and win? Hey! You never know!
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March 20th, 2008 at 8:11 pm
Anonymous 2008-03-20 17:50:46,
Did you go to school? Do you know how to think? Why would someone want to sell in a rising market? It’s because the have to!! That’s the same reason why someone will sell in a falling market!!
March 20th, 2008 at 8:02 pm
Whether they want to sell or not may be immaterial, one way or the other that property will be on the market.
very true!
from weak hands to the strong
March 20th, 2008 at 7:54 pm
I suspect that when things crash there will be more than a few people that are terribly overextended, and probably are holding condos or SFH that will be in negative equity territory. Whether they want to sell or not may be immaterial, one way or the other that property will be on the market.
March 20th, 2008 at 7:09 pm
Keep in mind people paid a lot for their RE and are expecting a good return.
People were expecting a good return from their Nortel shares too.
People can expect anything they want. RE will only sell for what buyers are willing to pay. And I don’t go along with this “people don’t have to sell” stuff. People do have to sell, except for those making lateral moves within the market, which are irrelevant to supply and demand, and investors in sustainable cash flow positions, who will be incented to get out by falling prices. Maybe not right away, but soon enough. Don’t forget the builders too.
March 20th, 2008 at 7:08 pm
Anon,
It’s still a seller’s game in that case. When prices are skyrocketing and demand exceeds supply, buyers tend to jump at any opportunity and compete with each other. In the case you cite, the sellers merely have to wait Sooner or later the seller MUST sell, particularly with home prices falling due to oversupply.
March 20th, 2008 at 5:50 pm
I have a friend who is a RE agent. On Jan 1st he guaranteed me RE would go up 10% this year and said it’s still a seller’s market. I saw him the other day and he now says 10% gain only for downtown and it’s turning into a buyer’s market. Funny how RE agents can change their tune so fast.
Actually, a down market is neither a buyer’s nor a seller’s market. Sellers don’t want to sell because they think their property is worth more than buyers are actually willing to pay. Buyers don’t want to buy because they think (correctly) that prices will only go down further. This explains why the number of transactions in places like LA is at an all-time low recently.
March 20th, 2008 at 5:48 pm
I have a friend who is a RE agent. On Jan 1st he guaranteed me RE would go up 10% this year and said it’s still a seller’s market. I saw him the other day and he now says 10% gain only for downtown and it’s turning into a buyer’s market. Funny how RE agents can change their tune so fast.
Actually,
March 20th, 2008 at 5:13 pm
Oops meant offer HIM 50% of the returns.
March 20th, 2008 at 5:10 pm
“On Jan 1st he guaranteed me RE would go up 10% this year”
In that case I have a proposition: I’ll put up all the capital and offer you 50% of the “guaranteed” returns as long as he covers all losses. Since losses are by definition impossible it’s monay in da bank.
March 20th, 2008 at 3:29 pm
If a RE agent will GUARANTEE a 10% increase in one year in any area take them up on it before the kool-aid runs out! If they will put their money where there mouth is and make up for any difference in market price of a unit to total a 10% increase you can’t lose. Take out a 40 year mortgage, put no money down and walk away with the extra money at the end of the year no matter what the market does.
..but I’m guessing his guarantee is meaningless and not backed up with cash right?
March 20th, 2008 at 3:19 pm
Time can only tell what will happen. As a first time buyer I’m hoping franko is correct. If you look at the listings getting posted it’s climbing at an alarming rate. Keep in mind people paid a lot for their RE and are expecting a good return. They will be people who will lower their price and some that will just refuse.
I have a friend who is a RE agent. On Jan 1st he guaranteed me RE would go up 10% this year and said it’s still a seller’s market. I saw him the other day and he now says 10% gain only for downtown and it’s turning into a buyer’s market. Funny how RE agents can change their tune so fast.
March 20th, 2008 at 2:46 pm
“The 81 crash and the 90 correction saw price drops of 38% and 22% in less than a year”
Ok, so if it drops a mid 30s % per year it’s still got at least two years of falling to do and I doubt we’ll do much more than just get over the hump this year, proper price drops won’t be around ’till late this Fall at the earliest.
March 20th, 2008 at 1:34 pm
It should be noted that the above is based pretty much on SFD’s, as condos did not play such a significant role in those days. The building frenzy of all those condos will only add more fuel to the meltdown.
March 20th, 2008 at 1:28 pm
“it’s still a few years before prices will be the bottoming point”
All excitement and pumped joking aside, I strongly disagree.
Vancouver is kind of unique when it comes to crashing, and Robert Shiller did’nt call it the “bubbliest city in the world” without a reason.
It has a history of holding in there longer than other areas and drawing attention to it’s insanity with awe, only to blow up in dramatic fashion. The 81 crash and the 90 correction saw price drops of 38% and 22% in less than a year, and languish for several years thereafter. 95 also saw a sudden price drop, but rather than languish, it continued to drift lower for another 7 years.
The big difference is that the current bubble is unprecedented, and the bottom of the crash will not be such a mistery as in areas in the US that were the first to be tested.
The recession that’s heading our way will be the straw to break the camels back.
March 20th, 2008 at 11:08 am
Actually, public transit certainly CAN compete on convenience, but we generally need more density throughout the metro for this to work, which is exactly why it makes sense for Translink to enter real estate. Translink will use their muscle to ensure we don’t get any more 1-storey Sleep Country buildings built beside rapid transit stations – if your municipality doesn’t want density, you won’t get rapid transit, fair and square!
Anyway, let me explain the convenience advantage Translink can offer. More concentrated density in town centres means more people who live, work, and play mostly within their own town centre or at least within other town centres, rather than, say living in a sparse Surrey SFH neighbourhood, working at a Burnaby office park by the highway, and playing downtown.
Also, increased density in town centres actually (in the short-medium term) increases road congestion surrounding them, which makes car travel LESS convenient! At the same time, the full-right-of-way rail lines built to link town centres are extremely convenient (no parking required, and faster than the car in travelling between transit nodes). Translink could even further increase the convenience advantage by offering services such as Wi-Fi on board. I know that for some trips (i.e. if you only like to buy groceries once a week), a car is needed, but for most trips, such as commuting, it can be much more convenient to use transit.
The picture I get is that they’re in this for the long run, rather than trying to time the market. Provided they enter the market gradually, they should be okay.
Also, bear in mind that Translink actually has less at risk than private developers. It can propose more developments which are deeply integrated with stations for higher profit potential. Also, by building high density by stations, they get the benefit of increased ridership, which a private developer wouldn’t.
March 20th, 2008 at 10:56 am
Don’t get too excited Franko, it’s still a few years before prices will be nearing the bottoming out point.
March 20th, 2008 at 10:32 am
Bout time to change the topic, no?
I’m so pumped about the likelyhood of our RE market starting to tank that I can barely contain myself, and we’re screwing around with some intricacies of this translink stuff.
March 20th, 2008 at 10:19 am
BDK,
m waiting for statscan report and mbz4sure dh.
March 20th, 2008 at 10:16 am
I think that Translink is right to want to keep some of the increased value that a new transit line will bring to an area.
But like all things the devil is in the details.
Do you they intend to actually develop land? I hope not because from having worked with some Translink people, you wouldn’t believe the overpaid, under-worked attitude of that place. There is a lot of public-sector padding in Translink and to me it’s not all akin to the lean, mean attitudes of the developers I’ve met. I imagine they’ll partner with developers, and just cream a % off the top.
But where it gets tricky is the conflicts of interest now inherent in the planning process. Do the planners put a stop at a location because Translink already owns the land, or do they try and keep it secret that they like a location so Translink can setup a private, numbered company to go out and buy it.
Should be interesting, but again I don’t see why we as taxpayers shouldn’t be allowed some of the spoils of the increased value that public transit brings to an area.
March 20th, 2008 at 10:11 am
Mold City,
Timing a speculative market is easier with stocks and commodities because there are many indicators and technical tools to help you do that.
How do you time the speculative RE market? You could use some of the same tools – although in RE they are more limited.
In my view, we have just in the last month received the first technical indicator of a top in the RE market: affordability is at an 18 year low. Therefore, affordability is just now what it was when the last bubble burst. Until this month, prices still had a way to go before comming up against a historical cealing.
March 20th, 2008 at 10:07 am
“If profit from real estate related deals will help transit, wouldn’t a downturn in the market potentially hurt transit?”
No, that is what taxpayers are for!
March 20th, 2008 at 9:48 am
..And if privatization is the cure to all the worlds woes, why not turn a profit on everything? Roads, police service, etc. Sell the roads off and let companies put tollbooths at every intersection. Have police service available to the highest bidder. Imagine the profit opportunities!
March 20th, 2008 at 9:45 am
Burden of Proof – thanks for the reasonable post, my question is how can you time a speculation driven market? To keep this on topic it appears that Translink is jumping into local real estate when its being driven by nothing but speculation. If profit from real estate related deals will help transit, wouldn’t a downturn in the market potentially hurt transit?
March 20th, 2008 at 9:37 am
Krishh
“People with retardation always deny being retarded.”
You don’t understand what you’re saying, you just type words and think it looks good. You ran away yesterday saying you need a few months to figure stuff out, what’re you doing back again?
March 20th, 2008 at 9:33 am
Vancouver Real Estate is one and the only option for this world to invest,The city of best ever “eclipse” in R.E.Vancouver,B.C.bpe.
March 20th, 2008 at 9:26 am
Micheal Randallbards tumbled by $60 per an ounce, Micheal did someone say there is sand under your feet? Just one cover drive than bat,pad, and teeths in the air.Hope you can stand up again but sand under feet again.Come on Micheal paint this room in yellow.Good Luck!
March 20th, 2008 at 9:11 am
As the other gold fan on this blog, recall that at the time of that gold debate between Freako and I, I called for a correction with the shares of gold miners falling 20%.
I have been agressively short the tsx gold index since that time.
Long term I’m still a bull and when I cover my shorts I’ll go long.
I bring this up because it is not profitable to get emotionally attached to markets and to one’s bullishness or bearishness. To make money, you have to be objective and you must think clearly. The same goes for real estate.
The emotionally attached RE bulls will get their heads handed to them just like the irrationally committed gold bulls. In gold and in real estate – what goes up must come down.
March 20th, 2008 at 8:55 am
So did anyone buy gold on Randallbard’s advice?
no! he comes across as a crackpot…
caveat emptor
a lot of gold and oil speculators are having a nice haircut as we speak…
an Easter Special…..
March 20th, 2008 at 8:50 am
Um, my previous statement is now inoperative. The loss in CAD terms has been smaller of course.
March 20th, 2008 at 8:46 am
Don’t forget that the CAD has also fallen against the USD, so the loss in CAD terms has been bigger.
March 20th, 2008 at 8:30 am
In less than 36 hours, crude oil and gold have fallen almost 10 percent from their Tuesday highs. Gold, which recently crossed the $1,000 mark, slid to nearly $900 a troy ounce in overnight trading. Futures contracts for crude oil were trading below $100 for the first time in more than two weeks. (NYT)
So did anyone buy gold on Randallbard’s advice?
March 20th, 2008 at 8:25 am
trent,
indeed. somehow the idea that public transit should pay for itself, rather than being a subsidised SERVICE, has become mainstream. just like public health, transit is a service and should be financed primarily from the public purse.
March 20th, 2008 at 6:49 am
Maybe I’m just crazy, but I don’t think Translink should be run in any way that attempts to make a profit. I understand that no one likes to pay more tax, but isn’t the goal of public transit to get people out of their cars to reduce congestion and pollution? Public transit sure can’t compete on the convenience level, so it pretty much has to compete on the cost level
I personally believe that instead of being ‘revenue neutral’ the carbon tax should go 100% to supporting public transit. It should be free or very cheap to ride the bus.
March 20th, 2008 at 4:18 am
Was the translink board not recently appointed because we needed to have it run competently by business professionals and not a bunch of locally elected officials? If the first plan out of the gates after raising the board’s salaries is having translink diversify into RE development I am pretty underwhelmed.
The big bugaboo of transit development is that ridership fees often do not even cover operating expenses, and on top of it, transit expansion requires a lot of capital investment. This in turn requires lots of tax revenues and/or user fees. This is probably how it should be, but it is hard to spin this, so one could anticipate lots of schemes to generate money out of thin air, and RE was a logical first forlorn hope. Another idea likely to get embraced will be Public-private partnerships…..
March 19th, 2008 at 10:44 pm
jesse,
My point was more that Translink is a much more powerful entity than a private developer, and according to the Vancouver Sun article, it’s interested in seeing municipalities compete for its services, which gives them incentive to change zoning in Translink’s favour.
March 19th, 2008 at 10:15 pm
There could be some opportunities here for Translink if by partnerships they mean developers paying a premium to have the new transit lines designed with consideration to the surrounding properties. I have hard time believing Translink wasn’t doing this before the corporatization of the board.
I’ve been riding the Millennium Line since it opened and I can tell you, stations like Gilmore and Holdom were built in underdeveloped places with the expectation that conods would flourish. And wouldn’t you know it, that’s what happened.
March 19th, 2008 at 9:54 pm
“The City of Vancouver has such underdeveloped station areas that it’s ridiculous, and hopefully having Translink act as a powerful real estate baron will solve this problem.”
I see your point but it’s more about city zoning policies than who owns the land. I can’t see a lowrise Sleep Country being more profitable than a condo development close to transit.
“The only danger in starting now is that the risk is higher that they’ll get off to a bad start”
And who underwrites the financing? That’s the problem. When the RE market or rental market slips they will have to make up the shortfall and this could directly conflict with transit capital spending projects. Backfire central.
March 19th, 2008 at 6:35 pm
This is great in that we will be able to build a more comprehensive network in less time, which will help toward meeting our environmental goals, and make the city more livable. GOOOOOOOOO Translink!
I think they should also explore additional revenue sources such as Translink-branded debit/credit cards which can also function as reloadable RFID transit passes.
If Translink intends to enter the real estate market gradually over the long term, then it theoretically doesn’t really matter when they start buying in, what with dollar-cost averaging. The only danger in starting now is that the risk is higher that they’ll get off to a bad start, and people will call for Translink to get out of the market, which would be a pity.
The City of Vancouver has such underdeveloped station areas that it’s ridiculous, and hopefully having Translink act as a powerful real estate baron will solve this problem. For example, how can we allow a brand new (last year) one-storey Sleep Country to be built within a block from Renfrew station!? Also, the Commercial Drive/Broadway station interchange should really be a regional hub on the scale of Metrotown or larger, but it’s more akin to say, Edmonds.
March 19th, 2008 at 4:50 pm
off topic but should interest vancouverites
calgarys busted…over 12,000 listings and rapidly accelerating…tinyurl.com/248srs
our sales are off 40% yoy but our prices are holding
but not for long..check this graph out tinyurl.com/yuadur
i suspect your in a similar position
the balloon been popped
March 19th, 2008 at 4:41 pm
Wouldn’t you consider it a sign that we’re near the end of the cycle when the government (and Translink at that!) wants in on a piece of this can’t-lose real estate market?
exactly what I thought too!
your quintessential “shoe shine boy” moment, next thing you know the DTES poverty industry will be developing vacant lots…….
March 19th, 2008 at 3:59 pm
I’m sure all of the property along all of the proposed routes just got a bit more valuable because of this announcement, so I’m not sure how Translink thinks they are going to be able to buy this property for any less than market value.
March 19th, 2008 at 3:46 pm
Wouldn’t you consider it a sign that we’re near the end of the cycle when the government (and Translink at that!) wants in on a piece of this can’t-lose real estate market?
I couldn’t think of people who make worse business decisions than these guys.
March 19th, 2008 at 2:35 pm
It’s not just real estate speculation. It is in danger of corruption. The fact is that in London, RE close to rapid transit hubs skyrocketed just before the lines went in. What they are effectively saying is that they control where the lines are put and will pre-buy land knowing the values increase like crazy once they get approval. Closed doors and the market is gamed.
The flipside is what happened on the Expo line. Investors with political connections made a killing selling land close to certain stations. The Translink board taking an interest in RE at least would take some of that $ away and into improving transit. That said, it needs to be very closely monitored and having behind-door closed meetings for all business and an opaque oversight system is ready to be abused.
Such a scheme is impossible to keep under wraps though. Someone will figure out where Translink is buying and horde the properties himself. I think of this scheme as akin to GM spawning a car financing and service division. Diversify too much and the decisions you make will be suboptimal for what you are designed to do. What happens to transit spending if the property division loses money?
March 19th, 2008 at 2:05 pm
5 minutes after the Translink board is occupied by nominees from the business sector, they are wanting to play RE speculation with public money.
This is wrong on multiple levels.