How the Squamish struck gold in Vancouver

From the article:

Senakw has an unusual history. The land it is built on was home to the Squamish people until they were forced out in 1913. Almost a century later, a court case restored the land to the descendants of those who were expelled, along with almost 100 million Canadian dollars in compensation. Freed from the restrictive planning rules that hold back densification in the rest of Vancouver, the Squamish decided in 2019 to use the land to build apartment blocks that, as well as housing Squamish people, are expected to generate around C$10 billion in income, equivalent to more than two million per person.

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This is a story of a dispossessed group that is making the most of a rare and remarkable set of circumstances to generate wealth through upzoning. But it is also a story with relevance all over the world. Senakw shows that when local residents stand to benefit from development, obstacles to housebuilding can be overcome, to the benefit of a much broader group of people.

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By cross-referencing Miranda's extraordinary memory against Catholic church records, government surveys, and early anthropological notes, Kennedy and Bouchard could reconstruct not just genealogies but precise information on who lived where. ‘We transcribed all the Catholic records for the Squamish back to 1860’, Kennedy explains. Thanks to the connection between anglicized names in the church record and traditional Squamish names, ‘We could reconstruct where the houses were, who lived there, and their descendants... All of the success was thanks to Chief Miranda’.This painstaking work would prove invaluable in the court battles that began in late 1977, led by Chief Joe Mathias. It took several decades of legal dispute, but the case that turned the tide was decided in 2001: Mathias vs Canada. The case centered on the fiduciary duty of the federal government towards Indian Bands. Several other indigenous groups also made competing claims over the same land.

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In a ceremony in 2002, the Squamish Nation sailed 28 canoes to the beach in Kitsilano, a symbolic homecoming for the Squamish people. The site did not seem especially valuable: a thin patch of land, approximately half of which lies directly beneath the Burrard Street Bridge in an unusual tri-point shape. With the neighborhood zoned largely for single-family housing, observers did not initially notice its development potential.

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Vancouver is one of the most expensive housing markets in Canada. An average detached house there now costs over C$2 million (USD $1.5 million). Data scientist Jens von Bergmann and UBC associate professor Nathan Lauster estimate that the metro area has 130,000 to 200,000 suppressed households: people doubling up with family or roommates who would live independently if they could afford to. That backlog alone represents six to ten years of recent construction. In 1981, two thirds of 25- to 29-year-olds in Vancouver lived in their own households; by 2021, only a third did. Rental vacancy rates often hover below one percent; vacancy rates in more affordable housing markets, such as Austin, Texas, hover around ten.

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Vancouver never managed to comprehensively reverse the downzoning of the early 1970s, despite the huge pressure on housing affordability since. But it did find a way to permit intensive development in narrow strips, typically along transport corridors, while leaving the suburban expanses largely untouched. The city is dependent on such developments: property taxes are low, so almost half of its C$3.5 billion capital budget comes from developer payments. Through a mixture of fixed development fees and Community Amenity Contributions, which are negotiated during spot rezoning on a case-by-case basis, planners extract funding for parks, childcare centers, and affordable housing units in exchange for permission to build. They aim to capture 75–80 percent of the land value uplift. Because each negotiation process can be lengthy, the city prefers to allocate a small number of highly valuable permits, creating an incentive structure that favors concentrated towers, rather than gentle density across the city.

The downside is that the negotiation process is slow, expensive, and unpredictable. Von Bergmann notes that planners ‘typically get it wrong – they either charge too much or too little’. Getting it right requires predicting market conditions years in advance. Charge too much and the project is rendered unviable and dies, potentially taking the developer and many jobs down with it. Charge too little and the city misses out on valuable capital spending opportunities. Frances Bula, a journalist who has covered Vancouver planning for decades, describes the practical reality: ‘Big developers just cough up when planners demand.’ Smaller builders, including homeowners wishing to add small extensions to their own houses, lack the resources to play the game.

This system is what is known as Vancouver’s grand bargain, and what leads to the largely untouched suburbs occasionally punctuated with tall, thin towers. The grand bargain generates some income for public spending, while minimizing property taxes and development across most of the city. But the price is paid through worsened housing affordability and the economic costs of suppressed construction.

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While reserve land can be leased with federal permission, it cannot be alienated from the band, meaning freehold ownership cannot be transferred in any way. This means it cannot be parceled up and sold off. It also means that the land cannot be borrowed against, because securing a loan on land is only possible if the land’s ownership can be alienated in the case of default. Traditional development finance uses loans as residential mortgages. Apartments cannot be sold as condominiums (where each unit is privately owned, like a house, and each owner also has a share of the overall building), but must instead use leasehold, where residents purchase a right to live in a property for a set period of time rather than owning their home outright.

These restrictions might have made the project impossible without support from the federal government, which agreed to a C$1.4 billion loan through the Canadian Mortgage and Housing Corporation, the largest in the corporation’s history. To work within leasehold constraints, the residential units were earmarked for 100 percent rental.

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Yet reserve land also offered a crucial advantage: because it is reserve land, it is exempt from zoning rules which apply to the rest of Vancouver. The Squamish Nation made the decision to ‘maximize economic benefits for the Squamish community’, which, in Vancouver’s housing-starved market, meant maximizing density: 6,000 rental homes plus commercial space. It also meant opting not to impose many of the costly mandates that cities typically require. They maintained the same safety and building standards that other Vancouver developments adhere to, but stripped away height limits, inclusionary zoning, zero-emissions requirements, parking minimums, design panels, and the years of public consultation that other projects must stick to.

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Mayor Stewart emphasized to me that Canada’s intensifying political discourse around ‘reconciliation’ was critical. Many dismissed this discourse as performative symbolism, but at Senakw it had practical consequences: ‘Promises about reconciliation forced governments’ hands when it came to enabling indigenous-led developments’. The Squamish Nation’s referendums gave the project a democratic legitimacy that Vancouver's usual stakeholder consultations rarely achieve. A city government that had spent years resisting modest density increases facilitated a far more ambitious project when backed by a clear community mandate and a compelling moral case.

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On just one site, Senakw will provide a year’s worth of housing normally built in the city of Vancouver. It functions as a sort of policy laboratory, showing that cities like Vancouver can build many more homes if the decision-makers allow it.

Senakw also offers two lessons for those of us in other cities who want to get more homes built. The first is about incentives. When the Squamish Nation’s members voted on development, they were voting on their own land, and for the economic development of their own community. They chose to maximize density and limit the costly requirements that cities like Vancouver typically impose on new developments because they would bear the costs of these requirements directly. Yet in terms of quality and safety, Senakw is just as good or better than other new developments built just across the river. But residents voting on their own projects make very different assessments of the value of some of these mandates and vote accordingly. Similar dynamics have appeared in other resident-led ballots such as estate regeneration programs in England, and Israel’s Pinui Binui program.