Metro Vancouver downplays location-efficient mortgages

For many years, Metro Vancouver (the new name for the GVRD) didn’t pay much attention to the cost of housing in the Lower Mainland. During the early 1990s, a great deal of effort was put into creating the Livable Region Strategic Plan, which called for creating regional town centres connected by rapid transit. In the latter half of the 1990s, GVRD directors focused their attention on finding ways to fund TransLink. The TransLink directors were unable to resist successive NDP and B.C. Liberal provincial governments ramming through the ill-conceived Millennium Line and Canada Line, which thoroughly undermined the LRSP’s elegant land-use plans.

Now, Metro Vancouver faces a housing-affordability crunch, which has forced many workers to move even farther into the suburbs. In the past 18 months, the regional government has published reports, held dialogues, and advocated for greater densification to address the housing crisis. On September 20, Metro Vancouver will hold a forum at the Hilton Metrotown Hotel in Burnaby to hear public input on the issue.

In a June 28 report, Metro Vancouver noted that people here pay 68 percent of their pre-tax income on their mortgage, taxes, and utilities. “Growing market failure in the economics of the housing market in its ability to provide housing to the region’s residents can lead to urban decay if businesses and offices can not find support workers as people move farther away. A longer daily commute not only increases demands on the transportation system and impacts pollution levels but also places pressures on families.”

Despite the gravity of the issue, however, Metro Vancouver has not aggressively advanced one potential solution for working families who don’t own motor vehicles: location-efficient mortgages, otherwise known as transportation-based mortgages. Here’s how these financial products work: if you don’t own a car and prefer to use public transit, walk, or ride a bike to work, you can qualify to borrow more money on a mortgage than your income would normally allow. The savings from not owning a car can then be used to pay this higher mortgage, enabling you to buy a home.

Metro Vancouver didn’t include this term in the glossary of its 10-page Draft Regional Affordable Housing Strategy, which it is distributing in advance of the September 20 meeting. Perhaps one reason is a report from Dale McClanaghan, a social-housing developer and former president of the Non-Partisan Association. His company, McClanaghan & Associates, submitted the 64-page document last October to the GVRD, the Ministry of Community Services, and Coast Capital Savings. It cited concerns from Canada Mortgage and Housing Corp. about linking mortgages to transportation savings.

“From a pure mortgage underwriting perspective, it appears that CMHC would not consider the transportation-linked mortgage to be a viable commercial product,” McClanaghan wrote in a summary of the report for the GVRD.

According to McClanaghan’s report, location-efficient mortgages are available in four major urban centres in the U.S., including Seattle. He noted that in the U.S., a “smart commute mortgage” caps transportation cost savings at $200 per month for a single person and $250 per month for a two-income household, which can be transferred to a mortgage.

McClanaghan concluded that there are four Metro Vancouver communities where the introduction of a transportation-based, or location-efficient, mortgage could improve access to home ownership. They were Langley, Port Coquitlam, North Surrey, and Maple Ridge. The report stated that they “did not have the transportation infrastructure needed to successfully support these initiatives”.

And why not? Because provincial decisions on the Millennium Line and the Canada Line have undermined the region’s capacity to deliver rapid transit to far-flung suburbs.

But if Metro Vancouver has already made up its mind that it’s not going to provide information on this concept in its report, why is the regional government bothering to consult with the public about affordable-housing solutions? Usually public consultation precedes making a decision. In this instance, it appears that the decision has already been made to downplay location-efficient mortgages, even though they have the potential to reward environmentally responsible citizens with home ownership.