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Secret plan by Vancouver to increase social-housing requirement? The answer is here

February 11th, 2014 · 13 Comments

On City Plumber. Over to the left, people.

Categories: Uncategorized

  • A Dave

    “…what are you talking about? …city tax money? Where do you get that from?”

    I admit I’m confused, too. In point 2 you talk about various levels of “subsidy” to enable the below-market rental portions of the buildings. But in point 3 you state that “the City has not committed one dime to helping out with subsidies” needed to make the plan work.

    Not one dime from the City? So where do the subsidies for the below-market rentals come from?

    I hope I don’t break anyone’s heart by looking so handsome in my tin foil fedora, but I don’t think it’s that big of a stretch to assume that the taxpayer will be on the hook for these subsidies (if, in fact, any get built). It would seem to be a far bigger flight of fantasy to assume it’s going to come from the pockets of developers. There is, after all, the very recent precedent of tens of millions in STIR subsidies given to developers to encourage rentals. Realistically, is there anywhere else this money would come from, other than the taxpayer?

    But given the apparent lack of clarity, perhaps where the subsidy comes from is what the questioner thinks won’t be announced until after the election? At least, that was my reading of the question, not that the whole Oppenheimer planning process is secret and won’t be announced until after the election, which appears to be FB’s rather sensational reading of it. (Derrida might be proud of our multiple interpretations, but I’m pretty sure Neighbourhood Plans aren’t supposed to read like post-modern literature – though it seems to be a new form of fiction being developed in Vancouver.)

    Anyway, I’m just, ya know, speculatin’ here. As the assistant planner pointed out a few posts back; that’s what folks do when there is no clarity…

  • Frances Bula

    The city is trying to get private development to “subsidize,” just as it did with the rentals incentive scheme. The thinking is, if a developer can make enough money on the market portion of the building, that can subsidize the below-market portion. And they’ll do it if they end up making a profit in the end. The question many have raised is: Will anyone do this? Will a developer be able to make the numbers work?

  • rph

    In Richmond, developers have agreed to a fee of $8000 per condo unit to finance building another Canada Line station at Capstan Way. The City will collect the money, which in turn goes to Translink to build the station.

    Apparently there is enough of a profit margin for this to not adversely affect sales. And of course the developers of the Capstan condos got a nice density bonus.

    If the CoV trades off enough density, why wouldn’t the numbers work?

    (The Capstan project in Richmond, just across the water from Vancouver will add 6,500 new condos, complete with their own transit station.)

  • IanS

    “The city is trying to get private development to “subsidize,” just as it did with the rentals incentive scheme.”

    At the end of the day, isn’t it really the land owners who will be subsidizing any development which may occur? Developers will only engage in development if they make money at it. One way to make money is to lower the cost of acquiring the land. Isn’t that the real effect of the proposed bylaw, to decrease the value of the land?

  • jolson

    Oppenheimer sub area zoning;

    Current zoning: density above 1 FSR requires 20% non-market units, in other words a 0.99 FSR project does not require any non-market units. A 1.01 FSR project requires 20% non-market units.

    Since the maximum density permitted is 2.5 FSR a project could theoretically consist of
    2 FSR market units and 0.5 non-market units (20%), however in practice projects are 100% non-market. The reason for this is that developers prefer not to mix market and non-market units in the same building.

    In the area around Main and Hastings the maximum residential density is 3 FSR. It is proposed that this density be increased to 5 FSR with the portion above 3 FSR being 100% non-market units. Therefore as above a 0.99 FSR project does not require any social housing units. A 1.01 FSR to 2.99 FSR project requires 20% non-market units and a further 2 FSR is available for non-market units. In this case the FSR split is 2.4 FSR market units and 2.6 FSR non-market units.

    The policy is incentive based, but is it enough incentive to generate new non-market units? That depends on the creativity of designers, and the ability of developers to negotiate favourable development obligations.

  • Richard

    Subsidy may be the wrong way of looking at it. Instead, the developers and landlords may break even on the less expensive rental units and make their money on the condos and more expensive rentals.

    There are fixed costs for development that don’t go up with the number of units so the incremental less expensive units don’t cost as much.

    Also, landlords have been making money for decades on old expensive to maintain SROs and other cheap rental. New units should be cheaper to maintain so there could be more profit in them. Of course, the key to all this is low land prices.

    Let’s see if investors can make this work.

  • teririch

    From the Mainlander:

    http://themainlander.com/2014/02/12/analysis-rental-housing-the-new-engine-of-the-real-estate-profitability-in-vancouver/

  • gordon

    I don’t doubt that our governments agonize about what to do over high housing costs. In the same way governments agonize over high gasoline prices. In each case government is the cause of the problem.

    Allow more density on buildable land, shorten approval cycles, charge lower costs on construction and instead of 3-5% housing inflation most years we can have small price declines as new stock gets built at lower cost and faster than in-migration.

    Do our elected officials really not see the madness of add $8,000 per unit costs to new construction in order to raise funds to subsidize against high prices?

  • tedeastside

    vancouver the little rain forest town’s economy is based on real estate speculation, but is there any other industry, for people who don’t want to be in real estate

  • rph

    Is there any reason to believe that were government to lower development levies and taxes on construction, that private enterprise would not just step into that gap and take the difference as extra profit?

    Remember when business was supposed to pass along the savings on reversion to the HST to the consumer – and that didn’t happen.

    The reason why housing prices are as high as they are in Vancouver is because the market will pay that. Business will never leave money on the table.

  • A Dave

    #2 “The city is trying to get private development to “subsidize,” just as it did with the rentals incentive scheme.”

    #8 “Do our elected officials really not see the madness of adding $8,000 per unit costs to new construction in order to raise funds to subsidize against high prices?”

    I agree it is madness to create programs like this for market rentals, a la STIR, where it has cost taxpayers 10s of millions and Vision a lot of political capital just to create a tiny and insignificant blip on the city’s market rental supply. It’s pretty easy to call it a “developer giveaway” when the program is so costly and totally ineffectual.

    However, governments have over a century of precedent in creating subsidies and incentives to stimulate development of social housing and below-market rentals, and it is an acceptable use of resources for most of the general public. This type of program could have a very significant impact on the below-market rental supply, and I applaud folks like Spaxman who have been working so hard to make it happen. I just hope the incentives being offered are enough to make the program successful.

  • Kirk

    Not trying to raise a stink about anything, just curious on how it works. Do houses also pay DCLs? For instance, a $300k, 400sqft condo will have to contribute DCLs or CACs. Does a $3m, 5000 sqft house?

  • gordon

    To RPM. I agree that all else being equal developers will charge whatever the market will pay, you express the point in a very fair manner. But this does not mean changes in development costs are irrelevent. If costs per unit (costs to the developers) drop then there will be an incentive for developers to maximize profits by building and selling more units…that is the mechanism by which the average price faces downward pressure.

    Let me clarify the concept by posing the reverse scenario…if the City put a new $25,000 per unit levy in place, do you think that would be irrelevent to the final consumer price?