Brent Granby: Secured Market Rental Policy Program will fail without real affordability
At the May 15 city finance and budget committee meeting, Vancouver city council passed a new program to develop more purpose-built rental units in Vancouver. It's called the Market Rental Policy Program, which is intended to replace the two-year pilot Short Term Incentive Rental Program (STIR).
I have written before about STIR when staff did a report back to Council. Is the name of the new program is perhaps a rebranding of STIR to dodge some of the past criticism? To be fair there are some changes based on lessons learned.
By not creating more affordability, the program will still be framed by many as a failure and as a form of “giveaway” to the development industry. If council would benchmark the starting rent to 30 percent of the median income of the community for a certain amounts of units, this would give some direct benefit to the community that most folks would see as positive.
Rents would then go forward in market fashion regulated by the rules of Resident Tenancy Act.
My past contention about STIR is that market-based approaches simply are not going to create more affordability for renters. City staff have been comparing the new purpose-built rental units to home ownership as a way of arguing that more affordability is being created. But in a city as expensive as Vancouver this does not really mean much.
No doubt one of the solutions to developing more affordability in is to increase the supply of purpose-built rental housing. The “increasing of the supply” of units of available rental housing is a necessary condition to developing affordability in the market, but an increase in supply does not necessarily lead to more affordability.
New units that are built will rent for more to cover all the development expenses, including land, construction, and capital costs of the project. Market-based solutions alone are never going to be a real and viable solution to housing affordability in Vancouver.
Most housing experts advise that households should not spend more than 30 percent their pretax income on housing. In fact, to spend more than 30 percent is considered to be a risk factor for homelessness.
If a household is paying more than 30 percent of their income on housing, it is easy to imagine how they are living paycheque to paycheque, making difficult choices between food, rent, and other expenses. A key point around affordability is that there needs to be healthy supply of rental stock in more Vancouver communities that is accessible to the median income for each area of the city.
The larger question on “affordability” is whether there are other tools that city has that could ensure that middle-income residents will continue to live in Vancouver. Does council have the political will to find and develop these tools?
Rezonings are a huge opportunity for council to utilize its discretionary authority to dictate what kind of housing priorities the city wants. If there are concerns about an over-heated condo market that is driven by foreign speculation, then council, in its rezoning, should not even consider allowing them and require rental housing, given that 50 percent of people who live in Vancouver are renters.
Other tools the city could develop and explore include the creation of a housing authority that could seek other stakeholders, such as large institutional investors, to partner with the city through the Property Endowment Fund to invest in rental units.
The city could also get more serious about reducing building cost by rethinking parking in a creative way and capturing the construction cost saved through a more comprehensive use of inclusionary zoning.
These are just some examples, but more tools and methods need to be found to create a Vancouver where more people can afford to live.
The STIR program was designed to fulfill multiple objectives and its ability to create new rental units has been demonstrated. Prior to STIR, on average, only 80 units of rental units per year were constructed in Vancouver. After STIR 550 units on average per year were constructed.
Whether this can be achieved going forward in the future is another matter. The approach of only supporting projects where the whole project is rental—as opposed to mixed developments of condo and rental units—makes sense, given that they are less expensive to build.
Brent Granby is a longtime resident of the West End and ran as a COPE candidate for park board in the 2011 election. This article first appeared on his blog.