Affordable housing a difficult goal

Municipal governments can't bring it about on their own, so election promises on the issue will be hard to keep

By Michael Geller, Vancouver Sun November 18, 2011

In the leadup to Saturday's municipal election, two topics have been dominating the daily news: Occupy Vancouver and affordable housing. As someone who has spent four decades in the public and private sectors designing and building affordable housing, I would like to offer answers to often asked questions.

What is "affordable housing?" Although this term is bandied about, it is generally misunderstood. The Canada Mortgage and Housing Corp. defines affordable housing as that which consumes no more than 30 per cent of disposable income. On this basis, most Vancouverites are in need of affordable housing, although for many, the need is much more severe.

Can municipal governments create affordable housing? Recently, a reporter asked me to comment on the Non-Partisan Association radio ad in which mayoral candidate Suzanne Anton advocates creating a city where her children can afford to live: "Can municipal politicians really do much about affordability or is Anton just blowing smoke?"

The price of housing is a function of supply and demand and municipal politicians can affect both. Ironically, as Vancouver becomes more attractive and livable, more people will come here, thus pushing up prices. In theory, if supply increases, prices should come down. However, as many have observed, while thousands of condos have been built around the region, they too are expensive, especially compared to other North American cities.

So why is new housing so expensive? It is important to look at both the cost to create housing and the price at which it is sold. Cost components include land, materials, labour and soft costs (financing, municipal fees, etc.) However, another factor is developer profit, which is often a function of development risk.

In recent years, a Vancouver requirement that developers rezoning land pay community amenity contributions equal to 75 per cent of any increase in land value has increased development risk. Consequently, while certain developers remain in Vancouver hoping their relationships and negotiating skills will result in approvals, many others are leaving for Surrey, Burnaby and other places where the approval process is more certain. Meanwhile, as the number of new projects is limited, developers can and will charge higher prices.

What has Vision Vancouver been doing about this? Mayor Gregor Robertson has focused on two housing issues: sheltering the homeless and increasing market rental housing through the Short Term Incentives for Rental (STIR) program, which has fasttracked approvals and in some cases granted density bonuses or waived amenity contributions. Some projects are successfully underway. However, others have stalled because of community opposition. Some believe this is due to the program being rushed without approved density-bonus guidelines in place. Ironically, this failure has led to the creation of a new political party in Vancouver, Neighbourhoods for Sustainable Vancouver, which advocates more community involvement in decision-making.

All agree that STIR can create market housing, but not social housing. Surprisingly, while the Vision Vancouver council voted to retain very expensive social housing at Olympic Village, it has not insisted on the inclusion of social housing within some recently approved large projects.

Are emergency shelters a good idea? Vision Vancouver has reduced street homelessness. However, this has generally been achieved by opening new shelters. While they are a quick solution, they provide a very low standard of accommodation at a very high price, in the order of $2,800 per person per month! Many housing experts believe that in future, more cost-effective solutions must be pursued.

What is the NPA's housing platform? The party argues the best way to create rental housing and more affordable ownership housing is to rely on the private sector to increase supply without developer giveaways. It also argues for more certainty in the zoning process by requiring the public sector to zone land, rather than obligate private developers to come forward with rezoning applications. I agree with these approaches. However, on their own, they will not result in affordable housing for lower income households that will continue to require subsidies from other levels of government. Alternatively, the city could encourage the private, public and non-profit sectors to collaborate on a reduced number of social housing units without government subsidies.

What about council candidates Adriane Carr and Sandy Garossino's propositions? Carr (Green party) has advocated that the city should encourage the federal government to reintroduce tax policies to encourage investment in rental housing. No one can argue with this. Indeed, the reason so many rental buildings were built in the past was due to federal tax incentives no longer in place. Carr has also advocated a review of property tax policies as they relate to changing areas like Cambie Street. She's right again. Otherwise, Cambie merchants and homeowners will be forced to vacate their neighbourhood.

Garossino (independent) has raised questions about the impact of foreign investment on the cost of housing in Vancouver and the need for some controls. While this warrants further discussion, it is not something the city can address on its own; nor do I advocate any such controls.

In conclusion, municipal governments can play an important role in delivering more affordable housing. However, they cannot do it on their own. They need to collaborate with the private sector and other levels of government. For this reason, I do not believe the promises to build thousands of new affordable units, nor should you.

Instead, on Saturday, I will be voting for politicians who have a realistic understanding of the issues and the appropriate role of a municipal government. I will also support those candidates who will spend money wisely. Otherwise, an increasing number of people may be sleeping in tents three years from now.

Michael Geller is a Vancouver architect and developer. He is a former CMHC program manager for social housing.

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