Every year, real-estate marketer Bob Rennie speaks to members of the Urban Development Institute’s Vancouver chapter. This year, the annual general meeting is scheduled for May 15, and Rennie plans to carry on where he left off last year: talking about affordability. He ended his 2007 speech by asking where police officers, firefighters, and other wage earners could buy homes.
In a recent phone interview with the Georgia Straight, Rennie quipped that he already knows how to find homes for the rich. They don’t have much trouble finding a place to call their own. The challenge lies in figuring out how middle-income people can afford to buy in Vancouver.
“I’m trying to work on an affordability paper that we can incorporate into [planning] mixed-use [developments],” Rennie said. “I know that my business is based on the fortunate and the less fortunate living together.”
Rennie pioneered home ownership for middle-income people downtown with such projects as London Place, a conversion of an office building on Hornby Street. But since those days in the early 1990s, costs have increased astronomically as wealthy people have discovered the pleasures of downtown living.
Last spring, Metro Vancouver released a report suggesting that members of entire employment categories—including police officers and nurses—would have trouble buying their first home in the region at their current income level, assuming a 10-percent down payment and an interest rate of 4.4 percent.
For Rennie, one of the keys is increasing densities and allowing the benefits to be passed along to consumers. But he worries that Vancouver’s EcoDensity Initiative (for more, see page 39) might be putting too much emphasis on environmental sustainability and not enough on addressing the financial challenges faced by middle-
income people. “I think EcoDensity is irresponsible if it doesn’t address affordability,” he said.
Rennie added that he believes housing costs can be brought down if cities and towns give away excess density for free. He said that the provincial government could bring in legislation to ensure that any financial windfall be passed along to consumers rather than to developers. He said it would be possible to do this if there were a per-unit fee on additional density—say, $150,000 for each extra unit built as a result.
For these units, he said, the developer’s profits could be capped at 10 percent by law. Violators could be fined. The developer would have to put in an “IKEA finish” rather than granite or anything luxurious, further driving down the per-unit cost.
If the developer didn’t have to pay various charges to the City in return for density, Rennie said, it’s conceivable that $200,000 could be pared off the cost of a $650,000 unit. This could make it affordable to police officers.
Rennie acknowledged there’s a risk that a buyer who benefits from these favourable terms might flip the property, which wouldn’t enhance affordability over the long term. So he said another step would be necessary: attaching the mortgage to the property title, and ensuring that whoever owns the unit has to carry this mortgage. “We need an instrument that’s registered on title,” he said, adding that this would require the involvement of the provincial government in changing the law. “I think all of the cities and municipalities and the province have to come together on how we’re going to create this density model, because I don’t think it’s just about Vancouver.”
Rennie added that he thinks EcoDensity can promote more home ownership if there’s a “czar” who has the power to force changes to the Vancouver Charter and to other provincial laws. “It needs a dictator,” Rennie said, one who can say, “ ”˜If we need to change the charter or we need to change an act, let’s go do it.’ ”
In a recent phone interview with the Straight, Vancouver mayor Sam Sullivan said that he hasn’t been involved in the details of the EcoDensity planning process. “I certainly gave the terms of reference, and I launched the initiative,” Sullivan said. “What I wanted to do was create the political space for our very capable planners to increase the densities in very sensitive and responsible ways.”
On Tuesday (April 15), Vancouver city council will vote on whether or not to continue with the EcoDensity Initiative.