How Richmond developers funded half of the construction cost to build SkyTrain’s new Capstan Station

This is Part Two of Daily Hive Urbanized’s three-part series on the opening of Capstan Station on SkyTrain’s Canada Line.

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The construction of SkyTrain’s new Capstan Station is considered the first of its kind in Canada in terms of its funding model.

After some delays, Capstan Station finally opened on Friday, adding an infill station on the Canada Line at the mid-way point between Bridgeport Station and Aberdeen Station.

With everything now complete, the project’s total cost has reached $62.2 million, reflecting a $10 million increase due to factors such as geotechnical site issues and the extended construction timeline.

TransLink covered $30 million of the cost, including the $10 million cost escalation, while the City of Richmond contributed $32.2 million, an amount that has remained unchanged since the start of construction.

But Richmond’s municipal contribution covering over half of the costs did not come from property taxes or any other general revenue source. Instead, it was raised through a new development levy applied within a defined catchment area around Capstan Station, in the emerging Capstan Village neighbourhood.

The levy amount of $8,500 was applied on each new strata market ownership condominium home built by four developers — Concord Pacific, Polygon, Pinnacle International, and Yuanheng — in the catchment area.

When originally designed and built in the 2000s, the Canada Line’s elevated guideway at the northeast corner of No. 3 Road and Capstan Way was engineered to allow for the future construction of an additional station without requiring any reconstruction of the guideway itself. Additionally, some space was reserved on both sides of the guideway to accommodate Capstan Station’s footprint. Capstan Station is one of the Canada Line’s four potential future additional stations.

In 2012, three years after the Canada Line’s opening, the City of Richmond reached an agreement with Capstan Village developers and began collecting the levy for each new condominium home they built.

By early 2019, the municipal government had achieved its revenue target of over $32 million, which included a small portion earned through interest on the levy revenue held in an interest-bearing reserve. Remarkably, this target was reached within just seven years, far ahead of the originally projected 15-year timeline, which anticipated that the City would reach its revenue goal by 2027.

With its funding raised, the City in 2019 then approached TransLink on proceeding with the long-envisioned project, which then triggered the detailed design process and the start of construction in September 2021.

Today, vast areas around the station that were largely undeveloped at the time of the Canada Line’s opening have now been transformed into high-density mixed-use residential neighbourhoods.

“Having a station right here in the Capstan Village completes TransLink’s and our City vision as we knew how important it would be to have a station serving those visiting, living, and working in the growing Capstan Village. We knew that when we were planning the Canada Line way back in the day that the time would come,” said Richmond Mayor Malcolm Brodie during Friday’s press conference.

“Creative partnerships and shared goals resulted in an amenity that will benefit the entire community without a financial burden to local government, and I’m also pleased to recognize the four primary development companies that contributed to make this station a reality.”

TransLink CEO Kevin Quinn added in his remarks, “This station funding model was a first of its kind and is a prime example of what’s possible when we work together on a shared vision towards a common goal. Together we have shown how innovative funding solutions and successful partnerships can enable major projects like this to succeed.”

About $14 million or nearly half of the municipal government’s contribution was collected from the approximate 1,600 condominium homes built by Concord Pacific.

In an interview with Daily Hive Urbanized, Peter Webb, Senior Vice-President of Concord Pacific Developments, highlighted that the costs of the levy were ultimately passed on to homebuyers through the prices they paid for their homes.

He says that Concord Pacific was involved in the initial discussions with the municipal government to determine the “appropriate” levy fee per home, which would be added to their construction costs and passed along to the buyer.

“This is an excellent example of a municipality that had some creative and economically feasible thinking going on in order to engage and entice the development community to deliver a much appreciated amenity to the community,” said Webb.

When asked if this levy-based funding model could be replicated elsewhere to support the cost of other amenity and transportation infrastructure projects, Webb cautioned that it depends on market demand conditions for housing and the acceptance of a tradeoff — the result in higher home prices.

“We design and develop communities with all their appropriate amenities through negotiations with the municipalities, but the buyer pays all of the costs of the project,” he said.

“As the amenity costs increase, so do unit prices.”

The 1,600 condominium homes by Concord Pacific that contributed to the City’s Capstan Station levy are found across the Concord Gardens and Concord Galleria complexes, which together consist of about a dozen mid-rise buildings.

Concord Gardens reached full completion in 2017, and it was the lion’s share of Concord Pacific’s developments in Capstan Village. About 30% of the homebuyers for Concord Gardens were first-time homebuyers.

The process for marketing and selling the homes at Concord Gardens occurred during a very different time, when market demand was exceptionally strong due to a range of favourable conditions, in contrast to the current weaker market conditions. This previous surge in demand was a major contributing factor to why the City was able to meet its funding target in just seven years, rather than the originally expected 15 years.

“I think this [funding model] approach can always be duplicated in other places. But the key to remember here is that under the present market conditions, if you charge a levy, a per unit levy relative to a station site delivery, an infrastructural levy effectively, you are passing that cost on by its very nature to the buyers themselves because the developer does not subsidize the project. The developer flows through all costs to the buyer and has a profit interest in it,” Webb further elaborated.

“But the reality is the buyer pays the rate on all infrastructure and levy style costs or taxation costs to the cost of the product. So while that idea can be passed on, all the municipalities need to be cognizant of the idea that increased cost to the project are in fact increased cost to the housing.”

The financial and economic viability of new housing projects is currently constrained by a combination of factors, including weaker homeownership demand due to higher borrowing costs, challenges in securing construction financing also resulting from higher borrowing costs, inflation in the prices of construction materials, labour, and equipment, high land prices, general economic uncertainty, and recent steep increases in various development and utilities fees and amenity contributions imposed by local governments.

There are some other precedent examples for how development can directly help achieve the construction of a new SkyTrain station — Lincoln Station on the Millennium Line’s Evergreen extension, and the future South Granville Station on the Millennium Line’s Broadway extension.

But there are major differences in how Lincoln Station was funded, compared to Capstan Station. Lincoln Station was a last-minute addition to the Evergreen extension’s design, as it would have otherwise been designated as a potential future station. A private-public partnership was hammered out in 2011, just a year before construction on the Evergreen extension began.

The cost of adding Lincoln Station to the design was $28 million. About $13 million was directly covered by the developer owner of Coquitlam Centre shopping mall, which will ultimately support their future long-term redevelopment plans for the property. Another $8 million was provided by the City of Coquitlam, which was covered by density bonus fees collected from rezonings for other projects in the emerging Coquitlam City Centre area — a far less formulaic model compared to the City of Richmond’s per home levy for Capstan Station. The remaining $7 million of the station’s construction cost was covered by the federal government.

For South Granville Station, the provincial government reached an agreement with PCI Developments to integrate the main entrance into the subway station within the developer’s 39-storey mixed-use tower at the northeast corner of the intersection of Granville Street and West Broadway. PCI Developments has set aside prominent street-level space for South Granville Station’s main entrance, as well as some underground space for a part of the concourse level. The tower will reach completion in Summer 2025, while the Broadway extension, including this subway station, will open in Fall 2027.

There are also other examples of how developers have contributed to improving SkyTrain station accessibility and capacity.

The Dunsmuir Street entrance into the Expo Line’s 1980s-built Granville Station was achieved in 2006 as a community amenity contribution (CAC) by The Hudson mixed-use tower, developed by Bonnis Properties. It not only provided this busy SkyTrain station with a secondary entrance to double the station’s circulation capacity from street level, but it also finally equipped this station with an elevator.

Earlier in Fall 2024, construction began on a major expansion of the Canada Line’s Oakridge-41st Avenue Station to better serve the long-term needs of both the new Oakridge Park mall and the surrounding area’s future developments. This includes providing the station’s street-level entrance with a brand new expanded enclosure, two new additional escalators between the street level entrance and the concourse level, and a new secondary station entrance — built underground between the concourse level and new indoor mall. Quadreal Property Group, the owner and developer of Oakridge Park, is covering the overwhelming majority of the costs for these station improvements, which will reach completion in late 2025.

Secondary station entrances are already in the works for the future Arbutus Station and South Granville Station, as an amenity provided by adjacent future tower developments.

For both the Concord Gardens and Concord Galleria projects, Webb told Daily Hive Urbanized that one of the key focuses of their marketing materials was highlighting the close proximity to Capstan Station.

Now approaching full completion is the smaller Concord Galleria complex, which is the remainder of Concord Pacific’s developments in Capstan Village. Of all the Capstan Village developments by various developers, Concord Galleria is the closest to Capstan Station.

Furthermore, Picasso, the final residential building of Concord Galleria, directly fronts Capstan Station to the east, featuring a mix of commercial uses on the lower levels that activate the station’s public plaza.

No homes are left to sell, but they currently have strata retail/restaurant units and office spaces still on the market, with the listings for these commercial properties pivoting into the option of rent-to-own opportunities in 2025.

In total, Picasso’s lower levels fronting Capstan Station feature nearly 10,000 sq ft of retail/restaurant space on the ground level and over 21,000 sq ft of office space in the second level.

In Spring 2025, a new arts and community centre next to Picasso’s commercial spaces will open, spanning 13,000 sq ft on the ground level. Through an agreement with the City of Richmond, the developer made a $9 million CAC towards this facility, including $4.5 million for the in-kind value of building the shell space and another $4.5 million to outfit the space for a non-profit operator.

And to accommodate the required footprint for Capstan Station on the east side of the Canada Line guideway, Concord Pacific dedicated some of its land next to the Picasso building to TransLink. This is in addition to setting aside space to build the two-acre Capstan Neighbourhood Park immediately north of Picasso and Capstan Station.

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This is Part Two of Daily Hive Urbanized’s three-part series on the opening of Capstan Station on SkyTrain’s Canada Line. Part One describes in detail the design features of the new station.

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