Vancouver will be offering developers everything from a fee holiday to permission to build super-small suites to bonus space if they build affordable rental units, as part of a mini-stimulus program meant to get construction going again in the city.
The program, which the city aims to start by July 6 and which will last until Dec. 15, 2011, is not just a first for Vancouver but for Canada, when it comes to a city pushing an affordable-housing agenda.
"I'm hoping we can create 2,000 units," said Councillor Raymond Louie, who is spearheading the initiative at city hall that is being presented in a report going to council today. "It's a pretty good economic stimulus package."
Although cities have bemoaned the lack of new rental-housing construction for 30 years - since the federal government cancelled tax breaks in the 1970s designed to encourage it - no other city has gone this far in offering incentives for building such housing. Instead, they've usually called on the provincial or federal government to do something.
The city's current opposition party, the Non-Partisan Association, has always said the City of Vancouver couldn't afford to take on the role of subsidizing housing because it's too expensive.
But the new Vision Vancouver council made it a priority in their election campaign, and Mayor Gregor Robertson convened a roundtable two months ago to come up with a plan that would both serve his agenda and allay developers' angst over the construction collapse. It attracted some of the city's top architects and developers, something Mr. Louie said is a strong sign the development community is eager to jump on the city's new program.
Vancouver is offering a wide range of incentives suggested at that meeting, including permission to put in less parking and to build suites as small as 320 square feet, along with exemptions from two fees. One is what the city charges for processing applications; the second, the development cost levy, is what it charges developers as their contribution to local services such as parks, daycares and cultural facilities.
That could save developers up to $10,000 per unit. In return, the developers have to build rental units that remain as rentals for at least 60 years.
Mr. Louie acknowledges that even that kind of help won't result in apartments that will rent at rates affordable to the city's poorest citizens, but said the city just can't afford to put in the kind of subsidies that would bring costs down to that level.
"The most affordable housing is out of the city's reach. We're taking on our share," he said.
The program is aiming to reduce costs to $2 a square foot, so that the smallest apartments could rent for around $600 a month.
The report notes that Vancouver's efforts to stimulate even mid-range rentals will have a hefty price tag.
Although the report estimates that 1,600 jobs would be created with every 1,000 rental units built, those 1,000 units would also result in the loss of $9-million in levies and fees normally paid to the city.
As well, the report notes that the program could end up creating some congestion problems at buildings with higher-than-normal density but with fewer parking stalls.
But city manager Penny Ballem notes that "the need for new rental housing and the benefits of sustained development activity for our local employment market justify the program. The city has the opportunity to use its limited resources to increase the housing stock."
City staffer Doug Robinson, who wrote most of the report, also emphasized that the program is designed to respond to a "short-term economic recession that has precipitated a decrease in construction activity with associated costs and challenges to the city."
Vancouver has seen housing starts decline by 69 per cent from last year, losing well over $15-million in revenue as a result.