Lots of people smarter than me think it’s almost impossible to tackle housing affordability issues in a city like Vancouver. The house prices in certain pockets are so out of whack that it’s hard to imagine that any level of income increase or city subsidy would bring them down.
But mayoral candidates, of course, can’t say that. They have to say something on the topic (well, most of them do).
And I do think there are alternatives around, as long as everyone understands that there is no way to reduce the cost of a current $2 million house to $600,000 or create a breand-new $850-a-month apartment without a very significant level of subsidy. The city can create more alternatives, in between the $300,000 one-bedroom condo and the $1-million house.
We can’t make land or construction cost less, but we can create two- and three-bedroom townhouses or apartments for those families who are willing to trade less space for the advantage of being in the city. (A trade-off that many are willing to make, if they can find the product.) Cities can give density bonuses in order to get things from developers. Or they can simply set certain requirements for developers.
I got to sit in on a meeting with the three major mayoral candidates and Adriane Carr from the Green Party the last two weeks and heard a few more details. (I also looked at COPE’s extensive plan, though not all, as some links aren’t working.)
I wrote a story on three of them (the three we’d done to that point), but they really seem to boil down to this:
Vision/Gregor Robertson:
-Keep giving developers some density bonuses/incentives to get them to build rental that’s guaranteed as rental for 60 years. Yes, it rents at market rates, but every unit built is one that, theoretically, preserves some crummy basement suite or tired old cheap rental from being reno’d for those who can afford more.
– Tinker with above to see if any lower i.e. below-market rental rates can be mandated. (But means likely giving more density.)
– Continue on with the experiment of providing city land to a group of non-profits/co-ops to see if they can create a cluster of housing where the expensive units subsidize some below-market rates.
– Continue collecting money from developer fees and putting it into housing subsidies. In the last three years, the Vision council put $275 million into its housing fund — almost nine times what the council of 200202005 did.
Green/Adriane Carr
– Carr is the most enthusiastic about a model where all developers would be required to give one out of every 10 units they build to the city at cost. So developers wouldn’t get any density bonus. They’d simply be told that the cost of doing business in the city is that price. Unknown whether developers would simply all move to Burnaby or what. Carr acknowledged it would be tricky to figure out who is entitled to get this subsidized housing, which the city would rent or sell for discounted prices, but she was inclined to favour what cities like London have done . There, key city workers, like police, firefighters, medical personal, paramedics, teachers, nurses, and so on, are at the top of the list.
COPE/Meena Wong
– Create a housing agency where the city, through contracts with builders, constructs 800 units of mixed-income housing a year. Half would be rented at welfare rates; I’m not sure what the split on the other half would be. That would mean the city would need to 1. provide the land and 2. come up with all the construction money, unless it could get the province and federal government to chip in. If it couldn’t, my estimate was that the cheapest the city could build the social-housing-type units for is $200,000 a unit. That would mean $80 million a year just for that half. Then there would be most costs, although partially covered through future rents, for the other half — maybe $40 million a year? So $120 million a year, or about 10 per cent of the city’s current budget.
There is currently $150 million in the affordable housing fund, so that could . As well, one part of the plan is for the city to develop some other chunks of its land, build market housing, and take all the profits from that, also to be put towards building the mixed-income housing.
– Many other provisions for either raising money to build low-cost housing or to prevent it from being eradicated. One that caught my eye: setting up a system at the city where a landlord couldn’t get a renovation permit for a unit unless said landlord promised to rent the same unit back to the same renter at the same price, once the work was done.
NPA/Kirk LaPointe
– The NPA platform has only one page on housing issues. LaPointe has mainly said he wants to have a conversation with residents about how to create low-cost housing. One paragraph in his plan does talk about some kind of mixed-use projects where lower-density housing would be combined with higher density. When I asked a few times at the meeting about whether that means developers would get some kind of density bonus to provide low-cost housing, he said yes, under certain circumstances.
21 responses so far ↓
1 Christopher Porter // Nov 7, 2014 at 6:29 pm
OneCity’s affordable housing proposals – http://www.onecityvancouver.ca/affordable-housing
2 mikef0123 // Nov 7, 2014 at 7:41 pm
Land values are unusually high in Vancouver compared to local incomes. Rents are not unusually high in Vancouver. Building costs are not that unusual.
Reducing land values in general as a policy objective is problematic because it would hurt some people. That doesn’t mean that there aren’t ways for municipal governments to reduce land values through policy, for example using CACs or land-value taxes. CACs are problematic for many reasons, but they don’t hurt anyone in particular.
I think it’s inevitable that land values will eventually return to a traditional multiple of income, but that this will follow from changes to federal government policies related to mortgage insurance, down payments, interest rates, and (maybe) immigration and from other external factors like employment, wages, sentiment, and bond yields. After all, municipal governments are large land owners.
3 Randy Chatterjee // Nov 7, 2014 at 10:56 pm
Let’s go to the “most unaffordable” city in the world, Hong Kong. Vancouver is number two, with a housing cost multiplier (benchmark home price/median family income) well under that great city of glass towers. Demographia has a benchmark home in Hong Kong costing 15 times the annual salary, versus “just” 11 here. The global average is well under 3, and anything over 3 is considered unaffordable. But this is of course a comparison only of home ownership, and it of course also ignores the effect of mortgage rates on affordability.
Well over a majority, 60-70%, of residents in both cities are renters, who also on average have lower income and thus are more sensitive to housing costs. So this is the population of the greatest interest when considering housing affordability.
The rental market in both cities could not be more different, and for one reason; the Hong Kong Housing Authority. While over 95% of Vancouver’s available rental housing is market priced at a median price of 60% of median renter income, the Hong Kong Housing Authority’s rents are just over 30%. Certainly there are market rentals in Hong Kong, and they are as high or higher than Vancouver, but well over three quarters of renters are tenants of the Housing Authority. Housing costs for those earning less than the median income in Hong Kong, and who are renters, are literally half the draw on income as in Vancouver.
Hong Kong has 3.3 million people renting from the city itself, and spending twice as much in the city’s busy restaurants and shops due to their much higher disposable income. Hong Kong businesses also have a much cheaper and less income-stressed source of labour right in the city. These facts contribute in large part to Hong Kong’s significantly higher labour productivity rates and job satisfaction.
Attached is a map of city-owned property in Vancouver, some or all of which could be candidate sites for Housing Authority apartments, rented at cost and without public subsidy. Solutions for housing affordability are right in from of our noses.
4 Bill_McCreery // Nov 8, 2014 at 12:01 pm
Here’s a suggested way for the City to actually create affordable rental housing, not just say you’re going to do it.
Vancouver needs more affordable housing! That is well
understood by most Vancouver citizens, especially the 53% of us who are renters. Two Insights West polls in March and August have identified affordable housing as the most important issue (40% compared to the next most important, transportation at 17%). There’s consensus that something must be done. A major onetime commitment is necessary at this time.
It is important to recognize that the funding for social housing is a Provincial & Federal responsibility, and that the City of Vancouver does not have the financial resources to solve this problem by itself. However, in recent years the senior governments have not stepped up to the plate in spite of the fact that this is their area of responsibility. Because of today’s
serious affordability gap concerted efforts must be made to change this.
The City of Vancouver should partner with senior governments with a cost sharing approach so that more can be achieved with less. The Mayor and Councillors should work cooperatively to find ways to bring the senior governments to the table. If there is public, Council and inter-governmental agreement to make a one time capital investment equally shared by all three levels of government, 2,730 units of affordable housing can be built and occupied by 2015-16, and 8,125 units by 2041. Two significant advantages of this housing strategy is that the net profits are reinvested annually to create more affordable housing at no additional cost to taxpayers, and that the three governments retain ownership of their land and the improvements on that land.
This tri-government initiative will only supply a part of the affordable housing that is required. However, we can make a start, and with the City’s leadership bring the other levels of government on board to participate as is done with infrastructure investments that are a 1/3, 1/3, 1/3 split.
All civic parties say they want to create more affordable housing, but do not have a realistic, achievable and financially responsible way to accomplish this goal. This includes the Vision Vancouver developer giveaway re-announced recently by Gregor Robertson. Vision Vancouver’s vague promise is to give away City owed land and inappropriate spot rezoning density bonuses, such as the 1401 Comox STIR project, to their developer friends. This is the failed Short Term Rental Housing, STIR/Rental 100, developer giveaway on steroids, and will result a net loss to the City Property Endowment Fund and taxpayers.
Vancouver needs a realistic, affordable housing strategy that can be achieved without additional financial burden to taxpayers. Here’s how can this be done.
The City should work to establish an arms length Vancouver Housing Agency that will build, own and operate affordable housing working in partnership with senior governments and
non-profit agencies. The Vancouver Housing Agency’s Directors and staff will be primarily experienced individuals from the private sector. Contracting with the BC Housing
Management Commission to operate these City owned units should also be explored if there are operational efficiencies.
In order to get affordable housing built and occupied next year the City’s Budget Reports from 2008 to 2013 were examined to identify existing Reserve Funds that can be utilized on a one time basis to create truly affordable bachelor, one, two and three bedroom housing units ready for occupancy in 2015.
Using City, Provincially and Federally owned land and the City paying its share of construction costs from the 2013 Budget Report’s stated Reserve Funds:
• Community Amenity Contribution @ $128.3M, plus
• Emerging Neighbourhoods @ $12.7M, plus
• Affordable Housing @ $17.9M, plus
• Parking Sites @ $53.9M
equals a total of $212.8M. This funding could be provided by the City on the condition that the Federal and Provincial governments contribute equal amounts. That will bring the total construction cost infusion to $638.4M, or 2,730 units of affordable housing renting at an average rent of $1.20/sf/month built and occupied by 2015-16.
There will be $12,134,000 of net rental income in 2017, the first year, from these units for the period that will be reinvested annually to create 365 additional units by 2019, for a total of 3,095 units; expanding exponentially by 2027 to a total of 4,516 units; and by 2041, to 8,125 units. These units will have no financing costs, so with an average rent of $550/month for a 425 sf bachelor, $725 for a 575 sf 1 bedroom, $980 for an 820 sf two bedroom, and $1,050 for 960 sf three bedrooms. This compares to the 2011 CMHC average Vancouver rent of $1.75/sf, and Vision Vancouver’s STIR rents that range from $2.50 to $3.00/sf/month. The $550 monthly rent for a bachelor unit is within the CMHC required 30% of income for a minimum wager earner. These rents are also half of the rents of what Vision Vancouver claims to be affordable housing.
This Affordable Housing Strategy is an internally financed using a onetime Reserve Funds infusion to create an ever expanding supply of affordable housing. The City’s Reserve
Funds money should only be used this one time for this purpose, as they need to be used over time for community amenities that directly serve and benefit neighbourhoods.
5 jolson // Nov 8, 2014 at 3:30 pm
Affordability and homelessness are different issues faced by different constituents.
Rentals are occupied by the working poor who pay more for housing as a percentage of income and in many cases for their entire lives in total 5 times more than a mortgage holder. This is a scandal hiding in plain view. The path to affordability is found with the no-down-payment mortgage. This is a financial instrument that will introduce much needed competition into the housing sector. It will lead to ownership and self reliance for more people and a stronger and more resilient society all around. Landlord emancipation is long overdue!
Homelessness requires various forms of government support.
6 Kerry Sauriol // Nov 8, 2014 at 4:19 pm
I have very little hope of any affordable housing, when the ongoing pattern is to get rid of the units that are available. BCHousing units are not being maintained and now neither are the MVHC units. The council members who are on the board of MVHC are doing nothing to keep those units affordable, instead hell bent on rezoning and upgrading and getting rid of subsidy opportunities at every chance they can get. I have asked each party, council and board members why they won’t support maintaining and improving and KEEPING the rents affordable for MVHC instead of pushing for higher rents and taking away housing from those that need them. Greed will not stop. I watched a show from the 60’s about the Vancouver councils plan on removing ‘blight’ from the city. Blight was the homes that (gasp) poor people living in and was ugly. Instead of thinking we need to make better homes, they wanted them raised to the ground and everyone put in tenements….I can see that this idea will not ever go away….
7 Lewis_N_Villegas // Nov 8, 2014 at 9:39 pm
A Vancouver Housing Authority is an important option that we should be considering… Say, during a change election.
8 Lewis_N_Villegas // Nov 8, 2014 at 9:48 pm
We are in a real estate bubble and that distorts people’s perceptions. However, I agree with your concerns and add one consideration about housing—we should not look at ‘housing’ in isolation but we should also look at it as an integral part of the neighbourhood that its residents call home. We are not just seeing the ball dropped on the housing issue, we are also seeing little or no action from our city hall moving to support the many neighbourhoods that are falling apart or being harmed by ‘big picture’ planning decisions.
I can think of two examples right off the bat. One close to home, the other close to my heart. Broadway east of Main is treated as a freeway by local authorities with no concern for the obvious fact that it is the shopping street of the local residents. Then there is the over pass recently completed on Powell Street along with the two new hi-rise buildings currently under construction. Under their shadow this year we saw the local population take up yet another protest at Oppenheimer Park.
We are 7 days from voting. When will these issues be discussed?
9 Lewis_N_Villegas // Nov 8, 2014 at 10:02 pm
The money is there. The land is there. There is the option of a Housing Authority owning the property or of using 99-year leases so that land and improvements (i.e. buildings) will return to the city 99 years from now.
So what’s missing?
10 Bill_McCreery // Nov 8, 2014 at 10:23 pm
What’s missing is the political will to 1) bring this up in an election, 2) the political will to do something about it, including, and as a first step, get public concensus to spend public moneys in this manner, 3) engage and involve the senior governments. This is a concept that if applied nationally would be a one time commitment and investment. Affordable housing is a senior government obligation, the City is calling their bluff to participate.
To their credit Cope has alluded to wanting to do something like this, but without the essential ‘how to’.
11 Gerald Dobronov // Nov 9, 2014 at 10:01 am
What still needs to be decided is which level of income earner should be accommodated the most in this plan. If it’s welfare level, then I think it will be nearly impossible to create more than a handful of units, given the severity of the inflated prices. If it’s the middle-income earner (perhaps the largest group) then I believe it will be more effective.
Two factors that are often left out of the discussion of housing the lowest incomes, is that there needs to be a great deal of money available for maintenance, since it’s been shown that the degree of upkeep by the owner/tenant is generally much lower than average. If that’s not taken care of then you wind up with ghetto-like conditions. The other major factor is that people having to pay market value are often putting their economic future at risk if their property values take a hit, and sharing a building with welfare-earners is not very attractive to many. I’m sure that some would do it out of principle, but when you’re putting out $350K+ on housing you tend to become very conservative. I just don’t see these mixed housing projects being that attractive to developers unless significant concessions are made in other areas.
12 Kerry Sauriol // Nov 9, 2014 at 1:03 pm
I totally agree with you. I think Vancouverites live in a bubble too. Voting is done by those who are in love with beaches, bikes and views. Those who don’t vote are those that should be voting the most as they are the forgotten. The infrastructures that make a sustainable city are sadly lacking: childcare, well paying work, support for low income families, support for low income kids at school and so on.
13 Lewis_N_Villegas // Nov 10, 2014 at 12:18 am
And affordable housing… and so on. I always make a point of reminding folks that our ‘free market’ is a regulated economy. When inflation was runaway during the time of the 1970s oil crisis the Feds stepped in and imposed price controls. Why are our runaway housing prices not being regulated?
But we can do our bit and talk to our close friends who are most likely turned off by the whole thing (I can think of a couple) and encourage them to go vote in whichever way they see fit. Participation is the baseline of democracy, even if one vote seems so insignificant in the grander scheme of things.
And, yes, we agree. We have to do much better in creating and maintaining a social net. In the end it is more cost effective. But that’s not the reason. Our governments should work with both the corporate sector and the private sector. Not just one or the other.
14 Lewis_N_Villegas // Nov 10, 2014 at 12:30 am
I think we’re on the same page, Bill. I was trying to stay ‘high-level’ and not delve into the details. But there is a lot in common between what TEAM was doing and what Chatterjee is talking about.
Just to be clear for all the readers, the three of us have spent time sitting around the same table. That said, even if we look at the land bank and consider building social housing on city land, we could follow a model that was in place in the UK… well, even before the United Kingdom was formed!
I am referring to leasing city land to non-profits for 99 years or some such term, after which time the land and the improvements (the buildings) would return to the city some generations after we have long left the arena. This proposal achieves two goals: (a) it makes it more affordable to build social housing; and (b) it safeguards the land bank for future generations.
Of course, this proposal could be managed under a housing authority, a city entity that may have all manner of projects on the go.
We have also discussed, and it should be aired here, the need for a direct connection between municipal governments—especially the top 20 or so cities in Canada—and the federal government. This business that municipalities are an act of provincial legislatures cannot provide us with the kids of cross-contamination of ideas at the municipal level that is necessary to arrive at ‘Made in Canada’ solutions to the housing dilemma.
However, I close on a point you and Rand have alluded to and that I feel most vehemently… The lack of ideas and proposals from the front runners in this election.
Anyone out there willing to break the ice at the party? Any takers for a risk or two on how your administration might do things differently?
15 Lewis_N_Villegas // Nov 10, 2014 at 12:37 am
Note: Please see discussion under the Randy Chatterjee post for the continuation of this discussion.
16 Bill_McCreery // Nov 10, 2014 at 4:47 pm
I haven’t a lot of time right now to properly respond, but look forward to sharing a beer or three after the election with you and Rand and others. There’s some amazing people and ideas out there.
17 Lewis_N_Villegas // Nov 10, 2014 at 11:31 pm
I attended several of the early sessions with TEAM and I want to congratulate and thank you, and the handful of dedicated folks that were there with you, that came together over issues they believe in and hold close to their hearts.
18 Bill_McCreery // Nov 11, 2014 at 2:35 pm
Thank you Lewis. Your contributions were appreciated. Depending on what happens saturday the tasks at hand may be very different for the next 4 years.
19 Bill_McCreery // Nov 11, 2014 at 2:39 pm
Careful Lewis re: 70s Fed oil price intervention. Arguably, it had more negatives than positives in the long run. But, working together is an essential goal.
20 Bill_McCreery // Nov 11, 2014 at 2:44 pm
The problem with +/-20% required rental housing is that it further inflates the cost for purchasers buying condos.
It also makes smaller projects (in many cases more desirable due to a better neighbourhood fit) uneconomic. I’ve worked on a few that never saw the light of day.
21 Lewis_N_Villegas // Nov 12, 2014 at 9:43 am
I was a teenager then, so I didn’t really get to understand the issues in depth. But I remember interest rates at about 17.5% and runaway inflation. Of course, I had just a few years out from Montevideo where in January 1969 inflation was something like 100%—hyper inflation.
The point that I am making—and sorry to take 19 hours to see this and reply—is that our free market in Canada is in fact a managed economy.
Thus, when house prices hit an annual ‘inflation’ rate comparable with monetary inflation rates of the 1979s the governments must act. Is it going to be 100% successful? Probably not.
However, standing by and not doing anything about something that can potentially threaten our democracy—that can also be very dangerous for the long run.
Consensus and common ground, we agree, is the way to go about finding the best course of action. Not easy but very possible.