(This article is longer than most pieces on media websites.)

Nobody in the media has explained why general manager of planning, urban design and sustainability Gil Kelley parted ways with the City of Vancouver.

Longtime city-hall watcher Mike Howell has reported that Kelley will receive severance. This suggests he wasn't fired for cause.

Over at CBC News, reporter Justin McElroy wrote that "if you read between the lines, it's fairly clear it wasn't exactly his choice".

McElroy also suggested that "all indications are that it was sudden, based on general dissatisfaction rather than any specific situation".

But could it be linked to an extremely controversial policy regarding the preservation of rental housing in commercial districts? It's an area that hasn't been fully explored to date.

One thing is clear: during Kelley's four-and-a-half year tenure as the top planner, he supported rezoning applications and promoted policies to sharply increase the supply of rental housing.

In fact, more than half of the total housing units approved last year were purpose-built rental. That's an astonishing transformation from the years before he was in this position.

This reflected Mayor Kennedy Stewart's oft-stated desire to dramatically increase the supply of rental housing.

Stewart has supported this in areas of the city normally off-limits to purpose-built rental housing projects, such as the southern section of Dunbar Street and in Shaughnessy.

The timing of Kelley's departure is noteworthy.

It occurred just as council was in the middle of addressing a report he presented to council.

The report that Kelley brought forward earlier this year recommended that council amend the Rental Housing Stock Official Development Plan.

This would extend a requirement for one-to-one replacement of existing rental housing units to the C-2, C-2B, C-2C, and C-2C1 zoning districts.

Right now, this one-to-one replacement applies to new developments of three or more units in apartment-oriented RM and FM zones, and in CD-1 zones, according to the staff report.

On Thursday, March 11, council heard several speakers with diametrically opposed views on the recommendation.

Then on Monday, March 15, the city announced that Kelley was leaving his position.

The public hearing will reconvene on April 1 without Kelley as the city's planning director.

Heated discussion at public hearing

It's clear from the report that city staff saw several negative consequences resulting from amending the policy.

This is flagged under the headline "City Manager's/General Manager's Comments":

"Over the last 2 years, Council has approved several motions and directed staff to undertake a number of initiatives to further protect the existing rental stock and renters, while calling upon senior governments to take action and support City initiatives," this section states.

"In response to Council's direction to expand the Rental Housing Stock ODP to commercial (C-2) areas of the city, the City Manager has directed staff to undertake the associated technical and consultation work."

However, this section revealed that staff had "previously recommended" to the elected officials that the Rental Housing Stock Official Development Plan not be expanded to include C-2 areas. (Italics added.)

Yet this very same report from Kelley encouraged council to do this, notwithstanding many reservations in the document.

"Commercial areas, along with other areas zoned for non-residential uses, were not originally included in the Rental Housing Stock ODP because they contained significantly less existing purpose-built rental compared to residential multifamily areas," the report states.

"Over time, this has meant that development has been explicitly focused on commercial areas, along arterials and on major project sites, as the opportunities were minimized in the RM and FM apartment areas and few opportunities exist for new housing in low density areas of the City."

Policy could affect land values

The report suggests that the current approach seems to be showing results, with the vacancy rate in purpose-built rentals rising from 0.6 percent in 2015 to one percent in 2019.

"In 2020, the vacancy rate in purpose-built rental has increased to 2.6%, resulting from the pandemic-related reduction in demand for rental housing, driven by restrictions on immigration and in-person higher education; and loss of income due to temporary or permanent job losses," it notes.

The policy recommendation regarding commercial areas has strong support from the Vancouver Tenants Union. A vast majority of tenants who responded to the city's survey also supported the change.

However, it is vehemently opposed by the Urban Development Institute, which represents the development industry. More than 90 percent of property owners who responded to the survey also disagreed with the amendments.

UDI chair Bo Jarvis characterized the recommended amendments as equating to "a mass downzoning without compensation to property owners and will ultimately destabilize the very system that our industry relies on".

Jarvis added that this would hurt "every single property owner in the city" as $500 million in equity would be wiped out.

He also said that Schedule 1 banks were likely to change lending practices in Vancouver if council went ahead with the recommendation.

These comments drew condemnation from Kareem Ibrahim, an advocate with the Vancouver Tenants Union. He described Vancouver as "hilariously unaffordable" and accused the development industry of engaging in "fear-mongering rhetoric" just as many of his neighbours in the Strathcona area were homeless.

"We have people who cannot afford to move out of their home," Ibrahim said.

There are 380 purpose-built rental buildings with 3,050 rental units in C-2 zoning districts. That's about four percent of the city's purpose-built rental housing stock.

According to the staff report, about 80 percent have 10 or fewer units and the median number is five.

Kelley didn't speak at public hearing

If council approves the recommendation, it would mean that the Rental Housing Stock Official Development Plan would apply to 81 percent of purpose-built rental stock in Vancouver, up from 77 percent today.

The report acknowledged that the recommendation will increase protection to both renters and the rental stock in C-2 commercial areas.

Yet it pointed out that only 81 units of existing rental stock have been lost in C-2 zones over the past decade without the one-to-one rental replacement rule. This has been due to strata projects. That's been offset by a gain of 691 new rentals in C-2 areas as a result of rental-incentive policies.

"The addition of rental replacement requirements will decrease development of future strata projects on sites with existing rental housing and reduce the number of existing renters being displaced in these areas due to redevelopment," the report stated.

In other words: fewer evictions but fewer total rental units because strata projects with rentals would not be built.  

A slide presentation at the public hearing indicated that older buildings have far lower rents than newer purpose-built rental buildings.

If the amendments passed, the report stated that this would result in a reduction of land values, leading to "uncertainty around land value assessments".

The report also noted that this would lead financial institutions to re-evaluate loan guidelines for strata redevelopments that have existing rental units on site.

"This will result in lower loans to equity for developers and landlords. The impact can be significant, particularly on existing loan applications. In addition, the proposed policy change could impact a landlord's ability to finance maintenance or operating costs."

This, in turn, would "have a destabilizing and slowing effect on the housing system, especially on rental housing development", according to financial institutions.

Kelley didn't speak about the report to council at the March 11 hearing. Instead, senior planner Edna Cho delivered the staff presentation and explained the slides.

She pointed out that the Rental Housing Stock Official Development Plan has been in place since 1989. And in 2019, she noted, council twice instructed staff to extend it to commercial areas.

Here's another interesting aspect of the discussion: council voted to put off asking the staff questions about the recommendations until the hearing reconvened.

Did they know at the time that Kelley was already on his way out the door?

At this point, nobody is talking because issues involving labour relations are held in-camera.

One thing is clear: a fair number of members of council—and possibly the majority—may be prepared to go ahead with requiring one-to-one rental conversations in commercial zones with the support of tenant advocates 16 months before the next election.

It's coming against the vehement opposition of developers, bankers, and city staff.

And just as this is about to occur, the city's general manager of planning, urban design and sustainability—who also raised concerns—was replaced on an interim basis.

It reminds me of a quote on coincidences from motivational speaker Wayne Dyer.

"In mathematics, two angles that are said to coincide fit together perfectly," Dyer declared. "The word 'coincidence' does not describe luck or mistakes. It describes that which fits together perfectly."