Thursday, May 5, 2011

New Solutions Required for Olympic Village Social Housing

The following article was recently published on CityCaucus.com. While I like to think this is an interesting story, the story behind the story is even more interesting. One day I will tell it, but for now here are my observations as to how we got into a very expensive mess with the Olympic Village social housing. Grab a chair and a coffee...it's quite long!

For some time, I have been troubled by decisions made by various Vancouver City Councils related to the Olympic Village Social Housing. Today, the City has sunk more than $64 million in subsidies into 252 units, and yet more than 100 apartments are still empty, costing taxpayers hundreds of thousands of dollars each month. At various times, the Province appeared willing to help finance the housing, but the city chose to proceed without Provincial assistance.

It is my hope that by providing Vancouver taxpayers with a chronology of past decisions, we will demand a more rational and fiscally responsible solution to address the current situation, and reduce future losses. It is also my hope that the City will initiate a comprehensive review of its social housing policies and procedures, since in the absence of sufficient federal and provincial subsidies, the current policies no longer work.

2002. VANOC agreed to contribute $30 million towards the cost of the Olympic Village housing.

2006. The 252 social housing units were estimated to cost $65 million, based on $300 a foot (excluding land), which was considered reasonable at the time. Although there was no funding agreement with the Province for the balance of the funds, the City decided to proceed nonetheless, a highly unusual arrangement.

As the drawings progressed, it quickly became apparent that the costs were going to exceed the $65 million estimate, due to unusual building designs, increased unit sizes, higher environmental standards, and general increases in construction costs. City staff approached BC Housing to discuss capital and operating subsidies and reference to a forthcoming funding request was even recorded in Hansard when the matter was raised in the Legislature. However, a formal funding request was never sent.

2007. City staff estimated that the costs were going to rise to $95 million (excluding land) and Council approved a funding increase In-Camera.

2009. By now it was apparent that the cost (excluding land) was going to rise from $65 million to a projected $110 million. In a February report to Council, City and Provincial officials estimated that $56M to $77M in City subsidies would be required to keep the housing affordable for those for whom it was intended. While VANOC’s $30 million was available, the City would have to find significant additional funds.

In reviewing this report, I discovered that only 126 of the 252 units were actually 'social housing' units to be made available on a rent-geared-to-income basis. That’s right. The remaining 126 units were to be rented to just about anybody at slightly below market, which in housing parlance is known as ‘the lower end of market’. While this broader mix was standard practice for larger new social housing projects, it was something that was not generally known or understood by the public.

Given other greater social housing priorities, and the City’s serious financial exposure on the entire Olympic Village development, I and others advocated that the 252 units be sold as condominiums. This would allow the City to recover its costs and potentially make a profit. I noted that new social housing could be developed as part of future developments on the 23 acres of City-owned land immediately adjacent to the Olympic Village.

To make a sale of the social/rental housing more politically palatable, I suggested it could be offered as 'workforce housing' with priority given to firefighters, police officers, and other City workers who wanted to live closer to where they worked. While some worried that selling these units might negatively affect the sale of the remaining condominium units, for which the City was the lender, I proposed ways to differentiate the two products based on my experience at SFU’s UniverCity. These included offering the units as leasehold, rather than freehold tenure, or with other conditions attached.

Sadly, this idea was condemned by some City councillors who said it would turn the village into a "gated neighborhood" where only the rich could live.

However, in November 2009, a small group of housing experts was invited by City staff to confidentially review a draft Report to Council setting out various options for the Social/Rental Housing. These included maintaining a mix of rent-geared-to-income and market rental housing; converting all the units to market rental housing; or selling the units as condominiums as I and others had suggested.

At this meeting, with only one exception, everyone told the city staff that trying to rent many of these units as ‘market rental’ would be very unwise. The apartments were too big compared to other rental suites on the market, and the standard of finishes was not what the market had come to expect, especially at the relatively high rental rates being proposed.

I subsequently learned from a local reporter and others that the Mayor also favoured the option of selling these units. His number one social housing priority had always been to provide shelter and accommodation for the homeless. This was not the group to be served by the Olympic Village. Selling this housing would allow the City to get back its $110 million and a potential profit of up to $69 million, as estimated by the staff report. This could go a long way in addressing social housing needs.

However, as the Olympics were about to begin in a few months, the matter was put on the back burner until the following spring, when the Social Housing report setting out the options finally went to Council, as a rushed ‘Late Distribution’ item, I might add.

2010. Notwithstanding the Mayor's earlier position, Council rejected the concept of selling the units as condominiums. Instead, it voted to retain the status quo with half as social housing, and the other half as rental housing. The only changes it did agree to were to increase the rents to market rent, rather than 'the lower end of market rent', which was exactly what the housing industry experts warned the City not to do. Council also voted to adopt my idea to give priority to city emergency workers and school teachers. However, they would have to be renters, not owners. On this basis, Council estimated the subsidy requirement at $64 million and agreed to find or borrow $32 million, in addition to VANOC’s $30 million and $2 million in Development Cost Charges, to subsidize the units.

However, at a media briefing following this decision, the Mayor and City Manager proclaimed this decision as a major compromise in the interests of fiscal responsibility. Subsequently, under newspaper and radio headlines claiming that the social housing was to be halved, the Mayor was quoted as saying that financial realities were forcing the City to scale back on the amount of social housing. He blamed the mismanagement of the past Council in containing costs. Only Councillor Geoff Meggs made it clear in a subsequent radio broadcast that it had always been intended that only half the units be rent-geared-to-income and the balance rented on the open market. However, he insisted that the market rental units were not being subsidized. He was wrong.

What none of us knew at the time was prior to the Council decision informal discussion had taken place between the City and the Province regarding an alternative funding arrangement for the social housing. While the Province was not prepared to provide the City with capital funding or operating subsidies, it appears it may have been prepared to take over the project. While City and Provincial officials have different recollections on this matter, once again the City continued with the project on its own.

The Province did play a subsequent role assisting the City with the selection of non-profit organizations to purchase and operate the units. However, as we now know, only a few submissions were received, including one from the Portland Hotel Society, an organization acclaimed for its work providing supportive housing for the homeless and hard-to-house. All of the proposals were rejected.

The City subsequently decided to proceed on its own with an alternative plan involving a cooperative housing organization. It agreed to enter into a long term lease to operate some of the housing as a cooperative, and serve as an ‘interim manager’ for the remainder of the units until another longer term solution could be found.

2011. This brings us to today. According to the most recent Receiver's report, 144 of the 252 social/rental housing units are still vacant, more than one year after the Council decision to keep, rather than sell this housing. The Receiver’s report does not set out how much the City has lost, or is paying each month. However, given interest and holding costs, and lost revenues, it could easily be in the order of $200,000 a month.

The Coop is having difficulties leasing the units due to the complex income restrictions in place, and the very factors the industry experts warned the City about in November 2009. The rents for many of the units are too high for the unit sizes and features being offered.

While some City officials are pleased with the progress being made in leasing up the units, others privately worry that it may take a long time to fully lease up these buildings. Ironically, and most sadly, rather than populate the village with new residents to reduce the 'ghost town' feeling, the exact opposite is happening.

While the debate continues over just how much money the city is going to lose on the Olympic Village, and there are repeated calls for a Public Inquiry, I believe the City needs to find new solutions to fill this housing. Options might include revising the Coop’s income restrictions, reducing rents, or upgrading some finishes. Some prominent signage visible from around the site might also help.

The City also needs to initiate a comprehensive review of its other social housing programs. As we have recently witnessed, providing temporary shelters is a costly and poor solution for the longer term. Furthermore, the longstanding policy of requiring 20% social housing in larger developments no longer works in the absence of adequate senior government subsidies. While new projects are proceeding on 12 City-owned sites, they are very expensive and not always housing those in greatest need.

The empty social/rental housing at the Olympic Village is a social and financial tragedy. It is also a testament to bad decision-making by the current and past city administrations. It is now time to identify more rational and fiscally responsible solutions since we simply cannot afford to continue as we have done over the past few years. Moreover, we cannot afford not to house many of those currently living on Vancouver’s streets.

23 comments:

Stuart said...

No doubt you could write a book on this Michael--and I hope you do.

Olympics Accommodation said...

These figures are ashtonishing, why don't Olympics attendees rent houses during the event?

paul said...

This might be a bit off topic, but here you mention that $300/sq ft as a reasonable building cost ( excluding land). Does this not seem out of control? Last year I did a single family modular mfd building and the total cost was 125/ft (excluding land) and was a small scale 1500 sq ft 3 bedroom. How can one do a small scale project at $125/ft and then consider 300/ft reasonable?

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Anonymous said...

Where was Michael Geller, when input could/would/should have been given before the project was approved? Anyone has the ability to disagree afterwards. The bidding process to host the Olympics here included certain promises. Is it wise to renege promises made? Sure, there are challenges, but the thinking that created them should not be used to solve them. New approaches are welcomed, but what works is another mystery, right? As long as no low income people have a place in the OV, then some of the writers in this blog/comments might be supportive of paying the extra costs. The green values and equality is the future as we deplete our planetary resources at the speed of six planets. We all have to learn how to share, work for meaningful life instead of only for big bucks, live in smaller places and be happier with less status symbols. We already share the airspace and pollution what's wrong with working together towards same goals of providing housing for marginalized people, protecting the middle class and working families affordable housing? From Rita/OV

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