This opinion piece appeared in The Province dated July 29, re-published here with the author’s permission. We have taken the liberty to bold some of the key points, and start with two choice quotes. Lawyer Nathalie Baker points out flaws in the rental housing promotion policies of the City of Vancouver over the past eight years that made them ineffective at creating truly affordable rentals, and that the new initiative, announced last week by Mayor Gregor Robertson with much fanfare, is not much different.
This “new” initiative is almost identical to the city’s eight-year-old Rental 100 Program. The only real difference is the city is now going to require some of the units to actually be “affordable.”
… As I see it, the city’s big announcement is nothing more than a repackaging of an eight-year-old program.
Opinion: Nothing new about city’s new housing initiative
By Nathalie Baker, in The Province, July 29, 2017
On July 23, the city revealed plans for a new initiative to help struggling renters in Vancouver. Although little detail was provided, the gist is this — the city is going to require developers in the Oakridge Municipal Town Centre to ensure that 20 per cent of units in new rental buildings are affordable to households earning an annual income of $30,000-$80,000.
In exchange, developers will get incentives such as increased density, parking relaxations and Development Cost Levy waivers. Under this new pilot project an “affordable,” two-bedroom unit, for example, would rent for between $1,700 and $2,100. The city says this “new approach is part of the city’s update to the Housing Vancouver strategy — the city’s new way to deliver the right supply of housing to match local needs and incomes.”
If this all sounds familiar, it should.
After reading Frances Bula’s recent Globe and Mail article about the proposed pilot project, “Vancouver maps out plan to help the city’s renters,” I was overwhelmed by an eerie sense of déjà vu. In the article, Mayor Gregor Robertson describes a general framework for delivering more rental housing. The new initiative will aim to encourage developers to build a certain percentage of affordable rental units for households in the target income range and to “lock-in” lower rents.
Ring a bell yet? This “new” initiative is almost identical to the city’s eight-year-old Rental 100 Program. The only real difference is the city is now going to require some of the units to actually be “affordable.”
Rental 100, which was originally called Short Term Incentives for Rental Housing, known as STIR, started in 2009. It offers an array of incentives to developers for building affordable rental housing — incentives like extra density, parking relaxations and Development Cost Levy waivers. Since its inception, the whole point of the program was to create rental units affordable to people making “moderate” incomes, defined by the city as an annual income of $21,500-$86,500. Under the city’s definition of affordability, rents are “affordable” if the tenant doesn’t have to spend more than 30 per cent of income on housing.
Between 2009 and 2013, qualifying for the program was easy. Developers would qualify for incentives if they simply “proposed” to charge rents at a certain rate. If the city manager (then Penny Ballem) agreed that the proposed rents were indeed affordable and the building met certain design criteria, the rezoning would proceed and the developer would get various incentives to build the rental building. The city, however, didn’t actually require developers to charge the rents entitling them to the incentives. Once built, the developers could charge tenants whatever they wanted, without restriction.
In 2013, the program’s rules were revised. To qualify for the incentives developers now have to charge “initial” rents below a certain threshold and build the units to a maximum size. For example, in 2013 the maximum initial rent for a two-bedroom unit, no more than 828 square feet, was $2,061 a month. According to the city staff report in support of the changes to the program, these rents were “affordable” because households with incomes between $21,550 and $86,500 could afford them without spending more than 30 per cent of income.
However, once again there was a catch. The maximum initial rents — which are already very high — only apply to the first tenant. After that, all bets are off.
Since 2009, under the assumption supply would improve affordability, the city has been incentivizing developers to tear down old affordable rental stock and replace it with much smaller and much more expensive rental units. In the face of a deepening rental crisis, the city has finally acknowledged that increasing supply doesn’t necessarily translate to more affordability. The next step according to the city is to “ensure that some supply is locked in at lower rates.”
As I see it, the city’s big announcement is nothing more than a repackaging of an eight-year-old program. The minor variation being this: going forward the city is going to require developers to ensure “some” of the rental units are actually affordable in order to get the incentives it’s already been providing since 2009.
This is likely as close as we’re going to get to an admission by the city that taxpayers have been subsidizing developments through Rental 100 without getting the intended benefit — affordable rental housing to households making $21,500-$86,500. I looked at the affordability of the Rental 100 units in the context of the city’s May announcement that it was allocating eight more city-owned sites to the Vancouver Agency for Housing Affordability (http://theprovince.com/opinion/op-ed/agency-a-catalyst-for-more-unaffordable-housing). In a nutshell, the units being created through Rental 100 are, by the city’s own definition, unaffordable to the income-earners that are the target of the program.
The city has also repeatedly claimed it can’t achieve deeper levels of affordability because it has no power to control rents. According to the city’s frequently asked questions regarding the STIR program, “rent control is beyond the mandate of municipalities. Rent increases are governed by provincial legislation under the Residential Tenancy Act” (http://vancouver.ca/files/cov/stir-faq.pdf; see also http://www.am730.ca/syn/112/115155/affordable-housing-units-not).
Despite what the city has been saying for the last eight years, the City of Vancouver does have the power to control rents — it has the power to enter into housing agreements with terms and conditions relating to “the rents that may be charged and the rates at which rents may be increased over time.” Why the city has been unwilling to “lock-in” rents until now isn’t something I can answer, but I suspect the 2018 municipal election has something to do with it.
Nathalie Baker is a lawyer with the firm Stevens Virgin.