October 11, 2016

CBC, Gil Kelley, Housing Affordability and Vancouver

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This radio interview with new City Planner Gil Kelley on CBC’s Early Edition identifies the biggest challenge in metro Vancouver, and it is no surprise-housing affordability.

Part of the job of planning is making sure we’re bringing on a supply of housing that’s not simply trickle-down theory but actually locking in a substantial portion of new housing as long-term or permanently affordable.”

Gil also addresses the elephant in the room, noting that the Federal government has stepped away from providing any incentives for rental housing. And in Vancouver, developers don’t build rental housing as there’s a higher and quicker financial return  in building new houses and condominiums.

When probed about the Cambie Street corridor densification, Gil notes that this was acceptable for Cambie Street as a rapid transit corridor, but may not be the model for other major arterial streets. He also touches upon the laneway housing, the low density darling of the RS-1 single family zoning. While you can build a suite in the basement of a single family house and put up a laneway house, you can’t turn the house legally into a triplex, something that older seniors have been discussing as a way to age in place, have a rental suite, and maybe have homecare live there too.  Triplexing  could also provide more family units which are desperately underbuilt in the city. I was pleased to hear that Gil will be considering more options in RS-1 zoning as well as triplexing.

Lastly, Gil talked about the importance of a regional approach to addressing the low to middle-income people who may be life time renters in need of a place to call home. Without rentals for middle income people being addressed we will be a city of the very rich and the very poor.  The middle income people need to be included or we will decay  the vitality and diversity of the fabric of this city.

 

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  1. IMO, there is, and always was, a need for publicly-owned rental housing. Governments at all levels have gotten out of building it in favour of schlepping it off to the private sector via zoning or density incentives, or just eliminating it altogether.
    If the city built rental housing, it should be developed on stout construction and design quality (this structural requirement doesn’t translate to granite counters in all units) and social value, not just on the old stigma of “public housing”, meaning exclusive social housing for the poor or those with special needs, usually cheaply built. The 14 provincially-funded social housing buildings on city land is a notable exception.
    So we’re talking about adding the middle income range of the rental market in sufficient numbers to meet a pretty fair amount of demand, including ground-oriented three bedroom units. Yes, that means thousands of apartments, a block of housing big enough to act as a counterweight to the private condo market where prices are bloated and some rentals onerous.
    Moreover, many ‘stratafied’ buildings are now subject to the abuse of owners of multiple units who stack the board to allow short-term rentals that break every conceivable lease out there. A large block of public rentals under simple management rules will offer a viable alternative.
    Public apartment buildings could have market rental rates that are stable and predictable, with leasing incentives for long-term stable tenants. The buildings could be moderate in size (let’s make the ghastly tower block model of 50 years ago disappear) and built on city-owned land, perhaps in partnerships with CMHC. This model should not require subsidies but should also be classified as non-profit. There should be enough rental revenue to cover annual operating costs, construction financing, depreciation, maintenance, replacement and so forth.
    This would be complementary to our standard conception of public housing where subsidized units or incomes are offered.

    1. Only a private landlord, with capital invested, will ensure strict adherance to rules or force evictions on non-compliers. ( We used to manage such a complex for Calgary’s social housing agency and I can write a book about the horror stories, sloppiness and abuse.)
      Indeed we need more rental housing and less condos.
      To do that we need indeed better incentives for private landlords (such as owned/operated like myself .. see here http://www.firesidepropertygroup.com or http://www.prestprop.com) to build, such as cheap or free land, fewer buildings restriction and access to construction financing. It is the latter that is the hardest to get with no pre-sales for a small to medium sized firm ! As such, rental housing today is built primarily by cash-rich REITs or pension funds without any construction financing, in cash. To build 100 units @ $250,000/door you need $25M and that exceeds most even medium sized firms capital pool ! To wit, we are now building townhomes in Oliver, BC and you can buy one as a rental unit for around $300,000 (see http://www.oliverlanding.ca) but this project would make no sense as only a rental building nor does it make financial sense as you would need $6M+ cash to build the first 15 to 18 or so units.
      Hand free (or almost) land, strong incentives AND cheap mortgages to builders and they would build rental housing. It is as simple as that.

      1. It doesn’t really matter who runs it. If private enterprise made lower cost housing choices for that market that would work as well but they don’t. They’re all going for the luxury market.

        1. Of course. Condos are easier to finance AND more profitable. As such, government need to make building easier AND cheaper so rentals make sense for small- to medium sized firms (such as the one I manage). We could not afford to build rental housing in Vancouver, but we would if it made financial sense. It doesn’t – relative to condos, and even condos are getting harder now with the new tax rules, mortgage rules and vacancy tax induced uncertainty. We will see LESS construction going forward in Vancouver and thus, possibly even more supply constraints and higher prices !
          The ONLY way to make more rental is increased supply, reduced demand and cheaper ways to build (incl. all costs such as land, regulatory red tape, mortgage financing costs, timelines, ..)

        2. Perhaps the desire from city hall is that the costs go so high that only the wealthy can afford to buy, then the city gradually gets control of increased numbers of rentals. The state moves into housing, big time.

      2. Your answer, Thomas, is why I ask. I can understand the need for lower priced rental housing in this Vancouver market because this is not a head office town and salaries are lower than major cities. Michael Kluckner also reminds us that cheap rentals come from old stock buildings but, perhaps to meet the goal of greenest city, Vancouver is allowing and encouraging substantial demolitions and construction of new and obviously, more modern and more green buildings, which are inherently more expensive. If the city builds rental stock does it have the staff and the expertise to manage those buildings, or is a new division at city hall envisioned? Would they be turned over to and managed by the societies that now manage social housing?
        Is this the destiny for the Portland Hotel Society, Atira and all the others?

        1. UBC could build rental housing and get a 3 % return for their endowment fund. (1) People that move onto campus free up a rental elsewhere . (2) No need for subsidized transit if you can walk.to school or work. (3) Transit would be more balanced between east & west bound riders AM & PM

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