I fear the City of Vancouver is about to make a terrible mistake -

 URGENT - Establishing a Wholly Owned Government Business Enterprise for the purpose of developing market rental housing

Michael Geller <michaelarthurgeller@gmail.com>	14:52 (11 minutes ago)
to Mike, Peter, Sarah, Lisa, Pete, brian.montague, Lenny, Rebecca, Ken, Josh, Brad, lucy.maloney, sean.orr, Cameron, Alison, alazenby, Dan, Jami, Mike

I have so many concerns about this proposed initiative I wish I was in Vancouver and able to talk directly with each of you about them., However, I am in London England where considerable discussion is also taking place regarding the respective roles of the public and private sector when it comes to the development of affordable housing.

My credentials. I'm writing as someone who has had 50 years experience in the public sector development of housing. Given this background, I want to urge you to be very cautious about approving the proposed motions before you. You should defer the matter for the following reasons.

As some of you know I have five decades experience in the development of housing by the public, private, and institutional sectors. More specifically:. 

• I spent 10 years at CMHC where I oversaw the development of South Shore False creek on behalf of the corporation, and development of more than a dozen rental housing projects.
• I also spent seven years as President and CEO of the SFU Community Trust where I built both rental and ownership housing in partnership with others, and entered into leases for thousands of units and commercial facilities.. 
• I spent six years on the board of the British Columbia Buildings Corporation at a time when we were exploring how deeply involved we should be in the development of new projects. 
• I also served for two years on the Board of the Surrey City Development Corporation and 
• three years on the Board of the University of Calgary's Real Estate Corporation

It has been suggested to me that I probably have more experience in public sector development of housing than anyone else in Vancouver. And that is why I'm delaying my dinner in London to share the following thoughts with you.

A desire to generate revenues from the PEF lands. I fully agree with the city's desire to generate revenue from its PEF lands to help offset property taxes There's nothing wrong with this since it too was the goal of the Surrey City Development Corporation. It was so motivatied to make money some board members wee planning to buy  presale condominiums from a local developer and flipping them on completion at a profit. I strongly opposed this and eventually the staff and other Board members decided not to proceed.

I share this since It highlights how a municipally owned development company must be very careful when trying to make money from real estate..

Why is the corporation so focussed on building market rental housing? 

Everyone I speak to in the private sector cannot understand why this corporation wants to start off building 40 and 54 storey rental apartment buildings. This makes absolutely no sense especially for the foreseeable future 

I don't need to tell you how many concrete purpose-built rental projects are sitting on the back burner because the economics don't work. 

 I have not seen any proformas prepared by your staff  but if you speak to prominent real estate consultants including Altus or Ryan and the major development companies in the business, they will tell you that 54-storey rental housing projects will not make money over the next five years. 

Yes over the long term you willmake  money, but I suspect there's a very high probability that you will lose money in the short term and need to feed the Corporation with much more than the $8 million seed money.

Have you consulted the former Director of Real Estate or Director of Housing? Before writing these comments, I reviewed my concerns with Bruce Maitland the city's former Director Real Estate who was instrumental in acquiring properties for the PEF, including some now being contemplated for development,, and Cameron Gray the a highly respected former Director of housing for the city. Both are copied on this email. Both share my concerns that the city may be about to make a terrible mistake.

If you did speak to them they would tell you the three options that staff have set out are overly simplistic and ignore other important opportunities. I would urge you to direct Mr. Foster, and others who will be involved in this initiative to speak with them and others who know much more about public sector development of housing.

Why are you selling all of the sites to The Corporation? Both the UBC properties Trust and SFU Community Trust spent considerable time exploring how best to vest their new corporate entities with the lands. Neither did what you're being asked to do. Instead we came up with a much wiser approach which ensured that the parent entity maintained sufficient control while making the lands available when needed. Did any of you discuss the various options?

I doubt anyone at the city has even explored the best way to do this because if you had Council would not be approving a sale of all the lands.. You should not be selling all of the land worth hundreds of millions of dollars to this corporation at this time. You don't need to.

Conflict of Interest. There is so much more I would like to discuss but I will finish off with two points. The first is whether there's validity to my concern that the city should not be competing directly with the private sector when it comes to building market rental housing. This is something that was discussed extensively by all of the public entities referenced above and it was agreed that there is often too much potential for conflict of interest when an entity is both the approving officer and a developer. (And please don't tell me they are different departments! It's the same Council!)

Especially if the city is building a rental housing project on a site near a major private sector project that is going through the approval process at the same time. Finally...

Why not develop ownership housing on leased land? While I think it is wrong for the city to be developing market rental housing at this time, as a joint venture partner or using its own forces, I think it would be most appropriate to promote affordable ownership housing on leased land. The city has a distinct advantage over every private developer in the city in that it can develop on lease land. Private developers cannot lease land. 

As I told the Vancouver's Sun, by utilizing graduated payment leases and other creative lease structures the city can both help create much needed affordable ownership housing and generate significant revenues.

I therefore urge you to defer any decision on this iniitative until some further discussion can taken place with those who know much more about the pitfalls of building rental housing in 40 and 54 storey buildings, especially as a municipal Development Corporation. 

Sadly these conversations have not sufficiently taken place. Cameron Gray was never consulted. Bruce Maitland was never consulted. And I suspect many other people who have much to contribute were never consulted. 

I hope you will push the pause the button on this to avoid more municipal mistakes like those made in the past by Vancouver's first non-profit housing corporation headed up by Morris Jeroff. (I suspect most of you have never heard of this.) and the mistake made by the city when it tried to generate revenues by leasing land to VLC properties for market rental housng. (This isn't even mentioned in the report! ) I suspect neither Mr. Foster nor most of you know the details of this either.

If you have read this far. Thank you. I am happy to discuss this further when I am back in Vancouver.