A rental project at 1807 Larch St., in Vancouver's Kitsilano neighbourhood was subsidized through the province’s HousingHub program, which required 80 per cent of the building be devoted to middle-income households.Sal Robinson/Supplied
Three years ago, the B.C. government announced they’d partner with a private developer to bring a new apartment building to Kitsilano, in response to the affordability crisis.
“New affordable rental homes” were on the way, said the press release, which would replace a church at the corner of West 2nd Avenue and Larch Street.
Taxpayers subsidized 54 of the units in the building with a low-interest rate $31.8-million construction loan made available through the province.
It was part of the province’s HousingHub program – recently rolled into another program called BC Builds – requiring that 80 per cent of the building is devoted to middle-income households. According to the HousingHub scheme, developers must use their cost savings to keep rents in check.
But as the 68-unit building at 1807 Larch St. project nears completion, set for September occupancy, there is confusion about the definition of “affordable.”
The units are, in fact, at the high end of the current market rate, according to the recent rental rates on the building website. The 393-square-foot studios are being rented on a one-year lease at $2,650 to $2,750 monthly. A 517-square-foot unit rents for $3,275. A 589-square-foot, two-bedroom unit on the top floor with a large patio is available at $4,200 a month. There are 840-square-foot, two-bedrooms with two bathrooms renting at $4,300 monthly. For 10 years, the rents can’t go above market rate.
HousingHub is aimed at middle-income earners, or those households who bring in an average annual gross income of up to $191,910. That is based on a calculation by BC Housing on the 75th percentile of all household incomes in the province. Studios and one-bedroom units are for households without children with an income up to $131,950, and the two and three-bedrooms are for those with children who earn up to $191,910.
The new building replaced a church at the corner of West 2nd Avenue and Larch Street, which was demolished to make space for the development.Sal Robinson/Supplied
There is $2-billion in financing allotted for thousands of new homes for middle-income families, according to BC Housing.
From the get-go, the Larch Street redevelopment was controversial with neighbours. Judy Osburn, an area resident who lives near the new development, said there was a popular daycare in the basement of the former church’s community space.
“But when this announcement came out, I thought, ‘okay, that’s not a bad thing if we are going to have 80 per cent for middle-income affordable rentals,’” she says.
And then she recently looked up the rents and saw they far exceed existing rents in the area.
“I don’t know what planet they are on that calls that middle-income,” she said.
Another area neighbour, Sal Robinson, is also confused about how the province arrived at the numbers.
“Maybe I’m out of touch, but $191,000 to me is not really middle-income,” she said.
Michael Pistrin, vice-president of development for BC Housing, cleared up the confusion. The allowable household incomes have increased since the first announcement, when they were only $99,000.
Also, the main goal is supply.
“The HousingHub program is a supply-based program. It’s not an affordability program,” he said. “The whole intent of the HousingHub was just to build more housing. And it was intended to be market [rate] rental housing,” he says.
It’s in a separate category from BC Housing programs aimed at lower incomes, which are also being built across the province, he said.
Units in the building are at the high end of the current market rate with 393-square-foot studios being rented on a one-year lease at $2,650 to $2,750 monthly. A 517-square-foot unit rents for $3,275.Sal Robinson/Supplied
“It’s not supposed to be below market at all. It’s supposed to be ‘at market’ for the most part. In some cases, we can leverage – through the low-cost financing that we’re able to provide during construction – we can leverage that to force the builder to reduce the rents to slightly below market in some cases, for a percentage of the units.
“But that’s on a case-by-case basis … for the most part it was just intended to put market supply out there.”
The developer for the building, called L2, is Jameson Developments. A year ago, Housing Minister Ravi Kahlon announced that the province would also partner with Jameson on a 258-unit, 28-storey tower at 2528 Birch St., at the old Denny’s restaurant site on Broadway. Again, it was a HousingHub project, with $165-million available to the developer in low-interest financing. The city of Vancouver waived the development cost levy waivers in exchange for committing 20 per cent of the building to below-market housing. The city used its own calculation to determine “moderate incomes,” separate from the province’s methods.
At 1807 Larch St., 14 units will qualify for moderate incomes. To apply for those units, the applicant must directly e-mail the property management company. By the end of the summer, there will be a public website that lists buildings nearing occupancy that will provide contact information, according to city staff.
The city’s aim is below market, which is decidedly different from the province’s goal.
At 1807 Larch St., the goal is in part to keep the units from being converted to luxury rentals.
“And then we put that 10-year covenant in place that then holds those rents,” says Mr. Pistrin.
“What types of renters can actually afford these new units?” asks Andy Yan, director of Simon Fraser University’s City Program. “Aren’t they the ones already serviced by the marketplace?”
The other issue is that the province’s definition of middle-income includes homeowners, which skews the income data. The median renter household income is $66,500, while the median household income for homeowners is $106,000, according to the census data. The city of Vancouver acknowledged this gap in a below-market rental housing report a year ago.
To achieve affordable rental, the province should start by defining middle-income households using median incomes only, which would put rent at around $1,662, not accounting for household size, says Prof. Yan.
As well, if taxpayers are subsidizing construction in the name of supply, then the province could have demanded a share of the equity in return, the way a private lender would, he says.
“Why are taxpayers subsidizing market-rate development, and are they getting value for their money?”
B.C.’s Minister of Housing, Ravi Kahlon, explained the government’s approach in response to an inquiry from The Globe.
“BC Builds is designed to increase the supply of rental housing for middle-income households. It does this by reducing development costs and timelines in exchange for securing rental affordability at prescribed levels for a period of 10-35 years. The purpose of this program is to generate immediate benefits for renters rather than see financial return on investment for government.”