City offers incentive packages for developers to build more rental housing

Wednesday, May 27th, 2015

Dearth of three-bedroom units prompts incentive packages for developers

Mike Howell
Van. Courier

Saying he has not heard a reasonable alternative to get more rental housing built in this city, Mayor Gregor Robertson and five of his councillors voted Wednesday to continue with a controversial program that waives developers’ fees for construction of rental projects.

At a time when there is no investment from the provincial or federal governments for the much-needed housing, Robertson said the city has to “take action” to build more rental accommodation, particularly three-bedroom units for families.

“This is one tool the city can use to make it happen,” said the mayor, pointing to a staff report that revealed only 530 three-bedroom units exist among 55,800 rental accommodations counted by the city.

City staff said in a presentation to council that 8,000 families are renting a one-bedroom unit or smaller. Since 2010, the city has offered incentives to developers to build more rental housing but only one per cent of 3,783 units approved will be built as three-bedrooms.

“We’ve not seen the supply of three-bedroom units grow in the last 20 years,” said Abigail Bond, the city’s director of housing policy and projects, as she outlined the city’s plan to encourage the construction of three-bedroom units.

Under the existing Rental 100 program, which replaced the STIR program, incentives include the waiving of development cost levies, expedited processing of development permits, bonus density through rezoning and reducing the number of costly parking spots for a development. Depending on the scope of a project, a developer can see more than $600,000 in levies waived.

But up until council’s vote Wednesday, the waiving of levies did not apply to three-bedroom units. In fact, if a three-bedroom unit didn’t meet rental rates set out in city bylaws, the entire project — including studio, one-bedroom and two-bedroom units — would not be eligible for a cut in development fees.

Now the amendment passed Wednesday will still give a developer a partial waiver, even if three-bedrooms don’t meet the city’s rental rates. If rents of all sizes of units are kept at the city’s rental rates, the project would get the full waiver.

The city will set the average rent for a three-bedroom, east of Ontario Street, at $2,338 per month. On the West Side, where land costs are greater, it will be $2,572 per month. Maximum unit size will be 1,044 sq. feet, which is said to be generally in line with B.C. Housing standards for “affordable housing.”

But as NPA Coun. George Affleck pointed out, once the first tenant of a suite in one of the buildings moves out, the owner is free to raise the rent to what the market will bear. Affleck, who was one of four councillors to oppose the amendment, said waiving fees amounts to “gifts” for developers, who are already building market housing. Expediting development permits and reducing parking spots should be the only incentives, he said.

“It’s not affordable at all,” said Affleck, referring to the stated purpose of the programs, which was to create rental housing that keeps rent prices at the average rent in the city, or lower. “Why are we doing this? I don’t see the value, or the purpose.”

The aim of the Vision Vancouver-led program was to build affordable housing for households earning between $21,500 and $86,500 per year, where a maximum of 30 per cent of income is spent on rent.

Green Party Coun. Adriane Carr, who also voted against the amendment along with NPA councillors Elizabeth Ball and Melissa De Genova, said she supports incentives for developers to get rental housing built. However, she said, the city should stop selling the program as one that provides incentives for affordable housing.

As the Courier discovered in an investigation last fall, rent prices for buildings under the program spiked from when first proposed to council to when they opened their doors to tenants.

For example, the 106-studio unit highrise at 1142 Granville St., which saved the developer $638,000 in development cost levies, pitched the rent to the city in November 2010 as $950 to $1,000 a month for all 320-square foot studio apartments. Last September, rents for fully furnished suites fetched $1,260 to $1,400 a month.

The city has since tightened projections of rents, saying the same rents will apply from when a project is approved to when it opens, not withstanding the allowable 2.2 per cent or more hike allowable under the Residential Tenancy Act. The city has no control to set long-term rental rates, a policy that would have to be implemented by the provincial government.

Developer Tat Jang, who is no relation to Vision Coun. Kerry Jang, spoke in favour of the amendment at council, saying he’s already converted some of what would have been three-bedroom units at a project on West King Edward into smaller apartments because he couldn’t get development cost levies waived.

More than 50 per cent of Vancouver residents are renters.

© 2015 Vancouver Courier

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