Governance & Politics
August 16, 2018

2018 Civic Election – the Practice of Persuasion

The upcoming civic election in Vancouver (and elsewhere in BC) has something new — controlled campaign spending, less of it, and smaller donations.

This extends to organizations that are not political parties, but advertise on their behalf. They’re called “local advertising sponsors” or “third party sponsors”. They are required to register with Elections BC, and to observe spending limits during the “campaign period”, the 28 days before voting day.

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This month, the City of Vancouver released its proposed Housing Vancouver Strategy (2018 – 2027), made in response to the previous strategy’s inability to address the worsening housing crisis. A public hearing is scheduled for this Wednesday, November 29th.
The plan includes for the construction of 72,000 homes − an increase of 25% to Vancouver’s current housing stock over 10 years; by comparison the 2012 plan aimed for an increase of 14% to the stock over 10 years. Further, the new plan has increased its target for social and supportive housing units by 50% over the old plan.
To put both sets of numbers in perspective, consider that in 2012 the total rental stock in Metro Vancouver was 37% of all housing stock, and the new plan will decrease that number to roughly 35% by 2027*, assuming the other cities in the metro area maintain their average contributions over the last 5 years.
At face value, the quantity of new units appears to be ambitious, but will this reduce (or reverse?) the effects of the housing crisis – and if so, for how long? The homeless rate has grown by 47% since 2011, only one year before the inception of the previous plan. Will doubling the number of new affordable units be enough?“More supply” is the tired trope of the development industry; are housing units the metric of success we should be measuring? “The source of the housing crisis is embedded in the commodification of property, and therefore some more direct targets might include:

  • Decreasing the number of for-profit housing units as a percentage of the overall stock (in effect, saturating the market with affordable housing units thus reducing speculation)
  • Specific methods to capture the monetary windfall gained from upzoning a property. The strategy currently outlines the use of community amenity contributions to this effect, a process which can increase the value of adjacent properties and inadvertently cause gentrification (City of Vancouver staff will bring back a policy report in early 2018 to advise on different approaches to stabilize land values)

There are three ways to sign up to speak at council on Wednesday, Nov. 29: by filling out this form, by emailing speaker.request@vancouver.ca, OR by calling 604-829-4323. You will receive a confirmation from the city with more information. Sign up before Tuesday, Nov 28 @ 9:30 a.m. to get on the list.
To the readers of Price Tags, I am looking for the following data to create a more robust analysis:

    • A tally of property owned by not-for-profit interests versus private interests by year
    • A tally of rental stock versus total housing stock by year

(*) These numbers were calculated based on the Metro Vancouver Housing Data Book.

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The Mayor of Vancouver and the Chief City Planner Gil Kelley have jointly submitted an editorial which has appeared in the San Francisco Chronicle. Under the headline “Vancouver Looks to Collaborate with San Francisco on Housing Solutions” there is an out of context photo of the housing on First Nations Land beside the Tsawwassen Mills Mall. This housing is lease hold land not free hold, but the caption states that this housing “starts at $619,900” and is part of an “economic boom“.
And here are portions of the Mayor’s and Mr. Kelley’s  text:  “The cities of the North American West Coast share so much as vibrant, sustainable and prosperous places to live and work in the 21st century. However, our success is no accident; through thoughtful city planning, San Francisco and the greater Bay Area, Portland, Seattle and Vancouver, British Columbia are cities that are the envy of the world.
We also face a common threat to that livability. We are seeing unprecedented escalation in housing costs for our working families, the “missing middle” and young professionals, as well as the increasing pressure on our most vulnerable populations…
We’ve learned the causes of the housing crisis are deep and powerful: housing is increasingly not “home” first but rather a commodity for investment on a global market for investors large and small, foreign and local, as interest rates remain low and equity searches for substantial returns. Who can blame the couple with equity to invest for buying a house or a condo that in a few years might double their return and provide a nest egg? For larger real estate interests, building and selling at the top of an ever upward-moving market or “reno-victing” tenants to increase rents are a matter of “rational” market behavior…
In Vancouver, we hope to get ahead of the same pressures San Francisco is facing. We’re taking action to limit speculative investment and put our housing stock to its best use by implementing Canada’s first Empty Homes Tax, a 1 percent annual tax on empty or under-used residential properties. We are preparing an ambitious 10-year housing strategy to lay the foundation for a diverse and equitable city. It starts with the notion that supply is not the issue — we have produced lots of housing over the past decade — but rather lack of the “right supply….
As a city similar to San Francisco with a finite supply of land, Vancouver will rely on density bonuses to augment our inclusionary housing requirements, as the primary tools to incentivize developers to provide the range of rental housing we need. We are also looking across all of our neighborhoods — from transit station areas and major corridors to single-family neighborhoods — for creative infill opportunities that maintain the character of these neighborhoods while providing new homes. These opportunities might include duplexes, row homes, town houses and more…
Overall, we aim to produce over the next decade about 7,000 new homes per year affordable to various household sizes and income levels, and not exceeding 30 percent of the household income on housing costs. Like San Francisco, our greatest reservoir of affordable housing is actually already built and rented by working singles and families, students and elderly residents on fixed incomes. We will need to look at ways to secure or replace much of that as affordable long-term rental stock…
We believe it is time for our mayors and planning directors to formalize a working West Coast Collaborative to tackle this and other issues facing our beautiful and prosperous cities, to share experiences and learn from each other as we advance our efforts to remain just and sustainable places. We hope you will join us.”
The full text of this opinion editorial can be found here.
The housing-income disconnect
Vancouver, British Columbia
$56,474 (in U.S. dollars) Median total household income (2015)
$1.119 million Median single-family home price (3Q, 2017)
San Francisco
$88,518 Median total household income (2015)
$1.130 million Median single-family home price

 

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It’s not every day that three well-respected urbanists meet to discuss what is happening in the Vancouver housing market, but that is exactly what happened at the Union of British Columbia Municipalities convention which is currently being held in Vancouver. As reported in the Vancouver Sun by Matt Robinson , University of British Columbia’s David Ley, Simon Fraser University’s Andy Lam and Josh Gordon from Simon Fraser University’s public policy program laid it out succinctly and painfully.
Andy Yan  illustrated that the  so-called ‘million dollar and more‘ detached houses are concentrated around the City of Vancouver. However if transportation costs are factored in as  paid by households over a 25 year period to commute to work, those ‘million dollar’ housing units are located right across the lower mainland. Noting that you can’t use sprawl to provide housing affordability, Andy pointed out the disparity between incomes and housing values.  “Where does Vancouver sit? Its (housing) values are between Honolulu and San Francisco at Halifax incomes.” In the Fraser Valley Andy pointed out that housing prices are seven times what median income is, showing that even there local people are not able to buy in this market.
Dr. Ley backed up Andy Yan’s points by showing that 2017 data from the Demographia consultants illustratesthat Vancouver’s detached homes cost over 11 times median incomes. As a guide, affordable housing is classified as three times median income.
 
 

And with locals taking on large debt to finance a house there are implications if interest rates change or if there is a recession. But most importantly workers will not be able to live in Vancouver. “By 2020, workers in 82 of 88 in-demand jobs will be unable to afford a single-family home in Metro, Ley said, citing a 2015 study from Vancity. And in just 10 years, most people will forgo career opportunities in the region and simply relocate elsewhere.”
That is huge~if workers cannot live in the city, they won’t have any incentive to stay here and raise families. Calling Vancouver “a honey pot for global investors” Dr. Ley noted that you can’t build your way to affordability, and that increased supply through redevelopment feeds land assemblies at higher prices, driving up land costs which are reflected in higher valued units. “Housing has become a valued asset in an investment portfolio. Capital flows to select desirable locations, resort locations and gateway cities.”
So how to mitigate the affordability of housing? Josh Gordon from  SFU’s School of Public Policy, bluntly described the challenge of one of foreign money stating “You have to understand supply claims are largely about distracting us from doing stuff on the demand side,” said Gordon, who added that developers simply want to be able to build endlessly for the world’s rich.”

Calling the foreign-buyers tax and the marginal increase in property purchase transfer tax  “insufficient and modest” Gordon observed that what is needed is “a progressive property surtax that is offset by income taxes paid. “What that would do … if you wanted to own property on the basis of foreign income and wealth, you’d have to pay your fair share of taxes.” Local home buyers subsidize foreign buyers as local buyers use income upon which taxes are paid for social and other services. Foreign buyers do not. A property surtax would eliminate that subsidy.  With housing prices over 11 times the median income, and the median housing price now skirting two million dollars, this is no longer a local market. What happens if workers simply decide to live somewhere else  other than the Metro Vancouver region? What shifts can be made by municipalities and the Province to ensure that people in this area can purchase their own housing? Is it all too late?

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