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This piece by Nathalie Baker in the Province describes the work of  Vancouver’s Affordable Housing Agency (VAHA) to enable the “development of new affordable rental housing. This agency was a Council creation designed to  leverage “city and partner-owned land to create new housing projects that offer both, a greater diversity of home options and greater affordability, than what is currently offered by the private market.”
Originally “affordability” was targeted to households with incomes from social assistance to incomes of $86,500. Affordability was to be based on a maximum allocation to housing cost of 30 per cent of household income.  If your income was $86,500, your rent should be around $2,162.50 a month.
Ms Baker notes that under the city’s “Rental 100 Program” the city waives Development Cost Levies that are usually collected for items like parks, infrastructure and child care if the developer builds “affordable housing”in their development. The City of Vancouver defines “affordable rental” on the west side of Vancouver as being a studio for $1,496; a one bedroom for $1,922; a two bedroom for $2,539; and a three bedroom unit for $3,333. Seriously.
There’s another interesting wrinkle too in this policy. You’d think there would be a minimum unit size for these “affordable” units being developed in exchange for not having to pay a Development Cost Levy. But it’s actually the opposite-for some odd reason the city’s bylaw places a MAXIMUM size of 450 square feet for a studio, 600 square feet for a one bedroom, 830 square feet for a two bedroom. In terms of minimum, it can be reduced to 320 square feet in the case of the studio. Regardless of the size of the unit, developers can still charge the “affordable rent” rates as established by the City.
It is clear that under the Rental 100 program households need to be making over $86,500 to rent a three bedroom unit at $3,333 a month. Indeed you would need about $130,000 a year to make that work.  “A household would require a combined income of over $100,000 to make the two-bedroom units “affordable” if rented at $2,539 a month.”  The City of Vancouver’s own housing characteristic fact sheet notes that the median before tax income for two person families is $80,050 a month. One parent family income median is $41,500. So who is able to afford these “affordable housing” units?
Ms. Baker cites the 46 “social housing units”  being built at 585 West 41st Avenue as part of that development. The developer was given a grant by the City of $620,000 towards the construction and did not have to pay the estimated $454,000 Development Cost Levy fee. But the challenge is that only 15 of the 46 units will be rented  “at or below rents affordable to B.C. Housing Income Limits ($49,500 a year for a two bedroom) and that the remaining 31 units will be rented “at starting rents that are at or below the maximum rents described in the DCL bylaw for for-profit affordable rental housing” .  What this means is that “Vancouver “for-profit affordable rental housing” and “social housing” are now one and the same.”
While the City is offering several sites for sale for developers who build affordable housing, they’ve placed a relatively low value of $72 million dollars on eight sites, or  $9 million dollars a site, a troubling low figure when you consider two of the sites are downtown.
Ms. Baker concludes: “The public should be demanding more transparency of council and the VAHA regarding these deals before they go any further. How is the city going to ensure these rental buildings actually produce affordable rental housing? If the city is going to enter into low-cost land leases with developers that won’t expire until 2117 or later, the people who live and work in Vancouver and subsidize these developments deserve to get value in the form of truly affordable rental housing, not social-housing units renting at $3,000 a month. Unchecked, deals like this will only add further momentum to the current housing crisis.” 
And who are these “affordable” units being built for anyway?
2016_wrapup_v3vaha
 

Comments

  1. It’s good to press the City to do better, but this is not rocket science. The City does not “build” housing. It can only reduce the costs to developers for building new units – and it can only reduce those costs so much. Reducing or eliminating normal development fees helps, as does providing the land itself; but all of the remaining costs to build (i.e. site clearance and preparation, materials, labour, design) are still borne by the developer.
    And they’re not charities. If it costs a developer $10M to build 10 units, they’re going to be sure they’ve at least made $11M back – otherwise nobody’s going to build any housing at all. Even REIT’s want to break even. And for that they have to charge rents or fees equivalent to their recovery targets. Hence “affordable” housing that’s not really affordable to 80% of locals.
    If the City wanted to do more, they’d provide guarantees to developers to cover basic costs. For example, guarantee $5M of that $10M in total construction costs. The developer/management company can charge half their previous amount in recovery rent and the developer is guaranteed a suitable return. Of course this is terribly expensive and opens up a lot of opportunities for fraud, but if the City is serious about helping provide affordable housing, they may actually have to pay out money; not just forego it.

  2. Schemes like this never end well. For instance 66 Cordova was supposed to be affordable ownership for those working downtown, instead many were quickly rented out by purchasers at market rates, or quickly resold at market rates.
    The only way you will knock down prices is to block foreign money buying residential real estate. If they are so hungry for it, the city can make it easier for them to build purely market rental buildings, and let that be the only real estate investment they can make.
    1) Can the city refuse to approve new condos and only permit rental buildings 2) Can the development approval specify the units only be sold locally?

    1. Your first proposal would make it illegal to own new property. Not a good look. Your second proposal might eventually pass legal muster, but would only result in an explosion of local “brokers” happily purchasing on non-locals’ behalf for a nominal fee; such as is happening to skirt the province’s double tax on foreigners.
      The city might be able to force liens or covenants on properties it subsidizes that caps either the allowable rent or resale value – or the amounts those can be raised. The disincentive is shifted from the developer to the property manager. The City also takes a little hit in reduced valuation and taxes on those properties, but that’s why it ain’t free.

  3. The city has the land. At 200k per unit, one billion builds 5000 units of non market housing. So the province, spending 50 billion per year puts up one billion. The feds, spending 290 billion per year, put up one billion. Ten thousand units of affordable non market housing at less than the price of one bridge. Easy, isn’t it. Any political will out there? Any?

    1. Construction cost $300 sq ft interest cost @ @.2.5% = $7.50 a sq ft per year which is about a !/4 of affordable rent

        1. Not really as it could have been leased with perpetual income or sold. It has value. What significant land does CofV or the province own in Lower Mainland that could be used for 10,000+ units ??
          What is the lost value to tax payers here if allocated to affordable housing at 0 ?

        2. Would that the same metrics (i.e. attaching a land value) would apply to the 40 million square metres of land the city’s road network sits on.

        3. Yes it would, Alex, and that why provinces & feds levies heavy gasoline taxes, cities levy property taxes and some modest parking fees, which of course should be higher. Also see here https://pricetags.wordpress.com/2016/03/07/free-parking-is-like-squatting/
          One needs roads to get around, be it by bike, horse, carriage, car, e-car or truck, for both people and goods. One also needs roads to put pipes & cables below for water, sewer, electricity, gas, fibreoptic cables etc .. As such, having people live somewhere assumes a road network.
          We can & should debate road tolls, of course, and they make more sense to me than gasoline taxes as we now have GPS and cell phone based technology to track it, i.e. technology that was not available 10 years ago !
          Also see growth of online retailers at the expense of local shops due to road use being too cheap for delivery trucks: http://business.financialpost.com/fp-comment/lawrence-solomon-how-city-politicians-are-helping-amazon-destroy-your-favourite-local-retailers

        4. The city has 23 sites that could provide 3500 units ready today, subject to funding. See the link to the proposal. The city has lots land. The Riley Park coop site could have provided hundreds more, but sadly the previous non profit housing will only be replaced, the rest of the site will be market condos. Huge missed opportunity.
          The city makes deals with developers all the time, there are development levies that can go to land acquisition, and there are creative ways to get land. There’s tons of city owned land in False Creek South coming up for renewal. Upzone it, get more coops going there. Lots of coops in the city already that can support more density. If you’re not worried about being reelected, there’s a high concentration of pocket parks on Point Grey road. Zone a couple of them high-rise, sell them to developers. Use the money to buy land on the east side. Replace the park space square meter for square meter, there’ll be plenty of money left over for land for non market housing. Addresses the differential of park space between the west side and the east side, creates space for non market housing, adds density to an RS – 1 neighborhood. Win win win.

  4. It’s patently obvious that working with the private sector to build affordable housing (owned or rented) has not been very successful. The city has lots of land and now — just maybe — willing provincial and federal partners to build public housing, but with well-thought out rules and planning policies.
    Developing mixed use neighbourhoods lightly interspersed with stable, non-profit rentals could be the magic bullet to dampen the market, if done in sufficient quantities all over the Metro. ‘Public housing’ has justified negative connotations from the 60s, but that model needs to be immediately rejected in favour of decentralized individual rental projects, with a preference for low and mid-rises. Subsidized housing will also be more easily built to meet demand instead of piecemealed in sync to a developer’s bottom line. The lands will forever be owned by public agencies and therefore not easily sold out from under the tenant’s feet.
    Moreover, a good architect could work on internal layouts that are designed for real needs, and allow larger units to be subdivided into two to meet the demand for single seniors (an age group growing a lot faster than the younger families who are getting all the press) or expanded from two to three bedrooms for said families. A good architect will also bring in a great looking building that fits into the community early and below budget. There is no reason why ugly buildings designed cheaply would be built under this program.
    On the financial side, the policies could focus on a base rent set just above inflation with added maintenance and replacement reserve fund fees. The owners could also instill a policy that matches the number of bedrooms to the number of family members, anywhere between studio / loft to three bedrooms to avoid over or under-housing, with a 6-month notice to move to another unit if your family status changes . If the buildings are built to stringent energy conservation standards, utilities will be negligible
    Management companies and public agencies love simplicity and resiliency, and people naturally gravitate toward stability.

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