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BC Politics

Timid Tinkering and Partisan Politics Won’t Fix Vancouver’s Housing Crisis

None of the candidates are offering real solutions to fix a broken city.

By Patrick Condon 14 Sep 2018 | TheTyee.ca

Patrick Condon is the James Taylor chair in Landscape and Livable Environments at the University of British Columbia’s School of Architecture and Landscape Architecture and the founding chair of the UBC Urban Design program.

I have written about why non-market housing is the solution to the crisis in Vancouver, and offered ideas on how we might pay for it.

My drive to do something real about the problem — not the “handwringing” many candidates for Vancouver office seem wont to do — is provoked by my growing sense of alarm over the immensity of the housing crisis and my fear that few candidates seem willing to offer hard choices for fear of losing voter support.

I must also admit that being forced from the electoral field of combat by my recent stroke has liberated me from the considerations common to any candidate, permitting me to discuss solutions from the toolkit of the political right (cutting other spending) and the political left (raising taxes) without first considering my own political goals (winning).

In the end I think our housing crisis is so severe that it will require a solution that goes beyond traditional partisan lines, where we collectively agree that a business-as-usual approach will no longer suffice and that withdrawing into our ideological redoubts for the pleasure of lobbing salvos against those who hold opposing political views is an indulgence we can’t afford.

Here is why. It will probably cost more than $1 billion a year to solve this problem — $1 billion spent each year for the next 10 to 20 years.

To come up with that kind of money we will have to reconsider existing expenditures and find new revenue sources.

Some of this money will come from provincial or federal sources, we hope. Certainly Vancouver has the strongest claim to it, given the gravity of our problem.

But if history is any guide, we shouldn’t count on it. Politicians at higher levels of government like to spread money around in as many districts as possible, and we can expect more of the same. So it’s fair to say that if we are serious about solving the problem we better roll up our sleeves. We are largely on our own.

Facts are facts. The Vancouver housing market is completely broken and the “fixes” being proposed by some candidates won’t make a dent in the problem.

According to a recent report, it would take the average young Vancouver family more than 20 years of setting aside 10 per cent of their gross income to save enough money for just the down payment on a Vancouver home. And how can they save 10 per cent of gross income when they have to spend 50 per cent of net income on skyrocketing rents?

No wonder a recent survey indicated that more than 60 per cent of Vancouver millennials are considering moving away for fear of staying house poor forever.

So we must reluctantly conclude that barring a 200-per-cent housing price collapse (which has never happened) or a 200-per-cent increase in average wages (which will never happen) we need a new housing “non-market” for the 50 per cent of Vancouver wage earners that the housing market does not and cannot serve. That’s more than 100,000 people and their families who would need about 100,000 affordable non-market units — provided by co-ops, land trusts and non-profit housing corporations.

They need them right now. But if we start today, and there is an electoral revolution Oct. 20, we might get them in 10 years — if we have the money.

The city is coming around to this point of view. In its recent Housing Reset proposal the city set a target of 72,000 new affordable units to be constructed over the next 10 years and proposed to direct $2 billion in city resources to this end.

That sounds like a lot of money until you compute how many units that gets you when the cost of land and construction now works out to about $1,000 per square foot.

So $2 billion gets you two million square feet of housing, or only about 2,000 units. If we assume the cost of construction will be recovered through rents, we can increase that number to maybe 4,000 units.

Four thousand units is more than a drop in the bucket, but less than a sizeable dent in the problem. How does the city plan to get the other 68,000 units needed called for under its plan? The documents are unclear. We are led to surmise that an unspecified allocation of Community Amenity Contributions (CAC) and Development Cost Levies (DCL) from developers, coupled with relaxations of parking requirements and density bonuses, will generate the other 95 per cent of much needed affordable housing. It won’t. Not even close.

Call me skeptical. Especially since the city’s efforts to get new rental units built produced well under a thousand units in 2017. To induce the construction of this modest amount the city had to forgo many millions in Community Amenity Contributions and Development Cost Levies. And in the end, most of those units were not even affordable to families of average means!

All this leads me to suggest that Vancouver’s proposal to allow city-wide duplexing with secondary suites and the mayor’s own “what the hell” Hail Mary pass proposal to rezone the entire city for apartment density won’t help improve affordability.

Why not? Surely more supply will lower cost, right?

Probably not. Take a look at ads for Vancouver homes. Houses now, no matter the type — high-density apartments, townhouses or single family homes — sell for similar prices, between $900 and $1,200 per square foot. Even these variations are not primarily a consequence of density, but rather of location, with west side homes more expensive per square foot no matter the house type. So higher density does not produce lower cost.

And it won’t help to blame the developers for price gouging when adding density. They are not the ones reaping the rewards. It is the landowners.

Whenever the city increases allowable density (absent a corresponding increase in development taxes), the only thing that happens is the price of land goes up. Land is now priced not “per acre,” but “per square foot buildable.” If you double the allowable number of built square feet on a parcel, all that does is double the price of the land. Neither the developer nor the home purchaser benefits. Only landowners do.

Outgoing mayor Robertson created no end of chaos when he tied his proposal to allow citywide apartment densities to the city staff proposal to allow duplexes across the city. The staff report argued intelligently that land price inflation would be modest if duplexing was allowed, as the scale of buildings would be kept in keeping with existing structures. A desire to restrain land price inflation motivated their concern. This would decidedly not be the case if the mayor’s proposal held sway.

Precedents suggest that a tripling of allowable density, as the mayor proposes, would triple land prices while not reducing housing costs one bit, and lead to the demolition of any heritage house that may be on the parcel.

What to do? If adding all this supply won’t work, what will?

Fortunately the same precedents that teach us the ways that the operation of the land market frustrates our attempts to produce affordable housing also gives us a clue as to how the same failed housing market might generate enough money to finance affordable non-market housing. It has to do with using taxing tools to lower the speculative pressures on land as we grow a fund to finance non-market housing.

Sadly this screed is already too long, so details will have to wait for next week’s installment.  [Tyee]

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