A Solution for Affordable Housing in Greater Vancouver
A paper by OBERTO OBERTI, Architect AIBC, President, PHEIDIAS PROJECT MANAGEMENT CORPORATION.
Vancouver is unlike most cities in North America. It is unique in its geography, climate and scenic ocean and mountain exposures. It is also unique because of its position as the most attractive residential destination in Canada. Further, its safe and stable political environment contributes to making it an ideal real estate investment destination, as well as a retirement heaven.
The fact is that Vancouver has become to a certain extent a “resort city”, more similar to a bigger Whistler than to a business metropolis like Toronto or Chicago. If we look at Europe, Vancouver would be more similar to a Monte Carlo or a Geneva rather than a Frankfurt or London.
The result is a cost of housing that is out of balance with the average income of the local work force – therefore resulting in a housing crisis for new local entrants to the market. The high cost of housing is not just a challenge for those with average incomes, but it has also become a challenge for businesses seeking to attract employees.
The Resort Municipality of Whistler has experienced a similar phenomenon, albeit on a smaller scale. It has had some success, however, in countering the high cost of housing by creating special employee housing zones with price controls.
In the City of Vancouver and its metropolitan region, there are four key factors in the high cost of housing:
- Lack of and cost of land;
- Lengthy and uncertain approval processes and cost of design and permits;
- Difficulties and costs of financing;
- The complexities and ever-rising cost of construction, combined with the scarcity of labour force and of specialist trades.
In response to point 1, regarding the lack of land, and its disproportionate cost, there are ways in which local government intervention could cure the problem. A most effective way would be for governments to assemble land and dedicate it to the exclusive use of non-market rental housing for those employed within the Greater Vancouver region. Planning departments could study the urban plan and select appropriate underdeveloped sites with very low density zoning for acquisition or expropriation at current market values. After acquisition by the local or provincial governments (or by government housing agencies or non-profit societies), the owner in cooperation with local government would be able to place a covenant in perpetuity on the land for exclusive use of non-market housing. The local government could then drastically up-zone the land making the cost per square foot of the developable land much less significant. Essentially, the local government can create new “land” for non-market housing by zoning the volume and the floor area that is developable on the land.
The private sector could participate if the same system could be applied to a private company that wanted to provide employee or non-market housing. The private company could get a site zoned for this purpose by the local government, with a covenant for the restricted use for 99 years or in perpetuity. The company could then build and manage the non-market housing for itself and for others. Having the system available to both government agencies and the private sector may provide some checks and balances, a greater amount of supply, and greater political acceptance.
Regarding point 2 (lengthy and costly approval processes), the local government has the power to create zoning and to issue building permits under special conditions for a special purpose, in the public interest. It could use this power to dramatically reduce the cost of approvals and permits by removing prolonged negotiations. A prescriptive fast track process (where there are no uncertainties due to discretion) would reduce the professional fees of consultants and the lower fees could be fixed ahead of time.
Regarding point 3 (difficulty of financing), local governments could approach the senior government and create a scenario whereby federal lending for non-market housing can be made available at very low rates through CMHC and BC Housing.
Regarding point 4 (rising construction costs), the design professions are more than capable of designing quality residential units of simple construction, that would last the test of time and would be easy and economical to build for the construction trades, and in this scenario again their fees could be fixed ahead of time.
I believe that the combination of these points can produce affordable non-market housing with affordable monthly rental rates that can still repay lenders over time. These rental rates could easily be less than half current market rates, without significant competition or negative effects on residential developers’ activities.
Local and Provincial governments have the power to generate affordable housing sustained by the market.