New Revenue Streams

Rezoning & Densification Phases. 

Some City's get involved in the Development business. This is a mistake. Development has a high degree of risk. I'll argue that much of the money is made in the Development business at the Rezoning and Densification phases.  

The last phase of Development is the building and selling. Which makes a high return, but has huge risks. Will it be built right, on time and is the market going to buy the product built, quickly and for the right price? These are very significant risks and tie up huge sums of capital. City's should not get into this last phase of Development, their expertise is not in construction or marketing. These two areas are the most money intensive, they are extremely time sensitive and has all the market demand sensitivity portion of development. This phase of the Development process is best left for the high risk takers and professionals. 

However, the rezoning and densification phases are exactly what a City does and does well. This is where a City can develop a new revenue stream. 

Value changes

Granting approvals, approving rezoning, approving density have major changes in value of land. The City approving rezoning and Density has the next major change associated with the most significant value changes. It starts with a City expanding, then land zoning changes begin to make sense, then Density Planning makes sense. Then a lot of money is required, complicated financing and the developer puts the infrastructure in, builds roads, subdivides lots and builds homes. This last phase requires significant skillsets and serious funds, making it to risky for the risk profile of residents in  a City. However, the first two phases, rezoning and densification are the most interesting for a City. 

With the zoning & density approvals, land values rise to a point close to the final values. The increase in value is significant because the values after the zoning & densification are exceptionally high, as compared to farm land pricing or pre-zoning pricing.

There are many ways for the City to start this program. From a simple plan of a corner of a large land parcel to various sizes of land within a large land parcel. Starting with 5% of a large parcel, say 5 to 8 acres. This size of land fits well within a single project size or a multiple smaller project sizes. Without getting two complicated, a single small project with a standard condominium residential project with 60 units requires approx. 15,000 sqft and land value sells for approx. $50,000 a unit or $3,000,000 for the site. Taking this from farm land prices of $20,000 to $40,000 an acre and selling zoned land with density approved will fetch a value in the $3,000,000 or more per acre, up to $3,000,000 per site, with 2 to 3 sites possible per acre, for the City. 

Just looking at 5 acres that would generate approx. $15,000,000 or more for the City and the City is approving zoning and density. A developer would see this as a positive, as the City is densifying and zoning an entire area, not just their lands and the City has an incentive to move approvals through in a timely manner, helping move approvals in the area forward at a quicker pace. Really getting all sides working as a team to a successful outcome for all. All approvals and steps are still required, though both groups are getting benefit for timely outcomes. 

To put this in perspective, in 2023 residential tax revenue in Chestermere was approx. $16,000,000.  This Density Leadership ROI was a program our Council was rolling out as a pilot project on a 4 acre parcel at the Serenity Project site. Where we were considering a Seniors retirement village with 6 to 7, sixty unit building sites, bringing Chestermere residents up to $20,000,000 of profit. 

One type of valuable project is a recreation centre. Recreation centres offer many amenities which are in high demand by your residents. A recent trend is to support our aging population within our communities and developers have responded by adding more and more amenities in projects to attract a broader market of retirement and seniors to lifestyle projects. The response has been very strong and is badly needed part of our society which needed improvement. 

Another relatively, recent trend is to connect High Schools to recreation centres and share facilities, primarily during the day. 

One such design concept is to connect seniors & retirement living connected to active lifestyle facilities, such as recreation centres and to connect High Schools to recreation centres. It turns out this is a symbiotic relationship. Recreation centres traditionally have a challenging revenue earning timeframe. Primarily all segments of society are mostly available after work and after school and on weekends. So recreation centre bookings at these times are easier. Conversely, recreation centres are almost completely dead during the days. 

With the connection of a High School and Seniors retirement to a recreation centre, there are significant benefits to all parties and even the evening and weekend participants.  These being, that a more enhanced facility offer more amenities can be built as the financial model is stronger with all groups working together. Simply put the fees are being spread out among more people and the facility is being used more efficiently, rather than just peak times. 

City's need to improve their Financial Sophistication. 

One final major piece the this success story, which gives it some major horse power is that land with which the seniors retirement facility is located on goes from farm land value to zoned, density approved value that the City receives the profit and can turn around and reinvest in the recreation facility, enhancing it further. This can equate to a $30,000,000 injection of capital to the City's funding equation for recreation facilities, plus bring the added revenue from the users, easily another $30,000 per month.