There’s been recent media attention given to Vancouver’s Broadway Area Plan (BAP) in the context of proposed tenant protections and the suggestion that “the builders” will pay for these protections. LandlordBC endorses the notion of renter supports, but the economics of rental housing, both the operation of existing and construction of new, cannot simply be ignored. Doing so will mean both current and future renters will suffer significant unintended consequences. We want to protect people not buildings, but the cost to do so has to be shared by the broader public. We welcome having this conversation with all stakeholders. In this context, we offer the following commentary on the BAP.
BAP is a once-in-a-generation opportunity but there’s a risk that very little new rental will be created if the economics don’t work. We are very much focused on ensuring that we have a viable rental housing ecosystem for renters and the social and economic well-being of the broader community. As such, it is our view that the following broader policies are required both independent of and in the context of the BAP:
- Removal of stringent regulations that inhibit a landlord’s ability to recover exponentially increasing costs to operate and improve a rental building, including the critically important ability to adjust rents on turnover of a rental unit.
- Equalization of land values between condominium and rental development by granting zoning variances for rental developments including increased density, reduced parking requirements, reduced amenity space, reduced unit sizes, and no community amenity contributions.
- Removal of the tax disadvantages to rental construction relative to condominium development; in particular, the Federal GST charged on a “self-supply” of new rental housing.
BAP Pace of Change Is Concerning: LandlordBC is concerned that the pace of change being proposed for the renewal of older rental housing is injudiciously measured considering the City’s own reporting that 83 per cent of the purpose-built rental buildings impacted by the BAP are over 50 years old and will reach the end of their functional life within the course of the 30-year Broadway Plan.
Implementing a timeline that promotes tenants living in buildings that are old and near the end of their functional life, lacking modern seismic and energy efficient construction, does not serve to protect people over the buildings themselves. There is a risk of needing to make costly upgrades to buildings reaching the end of their functional life with forthcoming building code for existing buildings, and CleanBC 2030, requirements. In addition, the pace of this change will fall behind the needs of new residents coming to the City and job growth. Given the tenant protections already in place by the City, and additional tenant supports proposed in the BAP, tenants will be provided full support during the redevelopment period to enable this redevelopment to take place.
Eventual redevelopment is needed at a greater height and density to make projects viable and to offset the required below market housing requirements. Inclusionary zoning policies need to be accompanied by sufficient density increases and a flexible approach – one that is focused on protecting tenants, not buildings, by substantially increasing the floor area of rental projects.
It may also be necessary to adjust the percentage of below market housing provided for specific sites where there are additional constraints to ensure the delivery of new rental housing. Flexibility in an inclusionary zoning approach would enable greater project viability over the long run. This is especially important given that rental development has not always been financially feasible. It is therefore a key risk to the plan that rental might again go through a period where it is not feasible (starting to happen now with increasing interest rates), resulting in significantly less housing than desired in this critical and central part of the region.
Income testing on below-market rental units: LandlordBC believes it is critical to protect tenants and ensure there are secure rental homes available for the future. We are supportive of the proposal for displaced tenants to have the first right of refusal to rent any below-market rental unit in the redeveloped building. However, these units should be subject to income testing, not only to ensure project viability, but to ensure these units are being occupied by tenants that need them most. LandlordBC recommends that eligibility for below-market rents be subject to income testing. This ensures that support is targeted at those who need it most, given the current housing crisis, this is even more critical.