The long, long road to building rental housing

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The Moscone brothers grew up four blocks away from the Poor Italian Ristorante, at the corner of Rupert Street and East 1st Avenue, a single-family Vancouver neighbourhood that is a retail desert, except for a couple of gas stations.

They purchased the aging, non-descript one-storey building and large parking lot about 15 years ago and fell into the restaurant business to help a friend. Their actual business is a successful third-generation commercial landscaping business, with major developers for clients and large-budget tower projects such as Brentwood, Olympic Village and Oakridge Centre.

The restaurant has done well in the 12 years since they hired a chef and Sandy Moscone began managing it, a place where they regularly entertain friends and family. They are old-school Italian-Canadians who want to give back to the neighbourhood. They went to school at Vancouver Technical Secondary. The singer Michael Bublé is their first cousin once removed. Their father’s dying words were to hang onto the real estate, and they own several apartment buildings.

But they are paying a staggering tax bill of around $33,000 a year to own the restaurant site, which makes no sense considering the revenue it brings in. As well, they’re constantly doing repairs on the old building.

“The property taxes are insane,” says Sandy Moscone, the younger brother. “We are getting killed.”

They don’t want to become developers. They just want to redevelop this one under-utilized aging property and then manage it.

“Our father came here in the forties, and the old Italians they bought a lot of land, stuff like that,” Sandy says. “He died fairly young, and the last thing he said was, ‘Hang onto the land. Keep it in the family.’ We have a lot of rental properties, and we take care of our tenants.”

Adds Michael: “We want to put a beautiful piece of architecture in Vancouver, keep it well maintained you know, keep it well cared for – a little peach amongst the thorns. We will keep it in the family.”

Four years ago, they approached architect Alan James and asked him to come up with a design for a rental project. Mr. James brought in Cornerstone Architects principal Scott Kennedy, an engineer with many years experience developing these types of mid-rise, mixed-use buildings in the city.

Since 2018, the Moscones say they have spent more than $200,000 in consultancy reports, design and other fees, and they still don’t know if they will get permission to rezone the commercial site for low-rise rental. The last they heard, their proposal wouldn’t be considered because of a new area study that encompasses two rapid transit stations several blocks away. They are incredibly frustrated by the lack of action and what they say has been a lack of communication. They simply wanted to build a rental project, and the city needs rental housing.

In Vancouver, it’s now cheaper to own than to rent

“We aren’t putting up an 80-storey tower. We are putting up a five-storey building,” Michael says.

Why the Moscone project is taking so long to get approval is something of a mystery, but it’s a lesson to anyone who thinks it might be simple to build rental housing. The site at 3296 E. 1st Ave. is eligible for rezoning under the city’s secured rental policy, according to the city. Their plan was to build a five-storey, energy efficient, Passive House building with 51 rental units and two commercial units at grade, including the restaurant. There would be 15 two-bedroom units, 20 one-bedrooms and 14 studios, and a rooftop with raised garden beds.

These projects are a fairly common sight in Vancouver. At the corner of East 12th Avenue and Clark Drive, a lot that has been empty for at least a decade now has a plan for a six-storey rental building with retail at ground level. That corner is also a retail desert, with gas stations and single-family housing around it.

The Moscone’s architect and engineer say they’d been in a long discussion with a rezoning planner who had been giving them preliminary instructions on what they needed to do before submitting a formal rezoning application. There had been a council decision that preliminary rezoning applications were no longer required, so they didn’t submit one. By September, 2021, they’d completed a lengthy checklist for rezoning requirements, including a geotechnical study and a sound study to determine traffic noise levels, as well as a neighbourhood survey to get feedback from neighbours and various design changes, including a requirement for commercial at the ground level. By September, 2021, Mr. James and Mr. Kennedy were told that they should submit the formal rezoning application along with a $60,700 fee. However, their point of contact suddenly stopped communicating. Many weeks later they discovered the rezoning manager had quit. They were left in a bureaucratic limbo and nobody would give them answers.

Earlier this year they were told about the Rupert and Renfrew Station Area Plan to study two existing SkyTrain stations. They were told they’d have to wait until the plan was complete – at least another year. The plan is part of the city-wide Vancouver Plan, aimed at adding retail on arterial roads and mid-rise and high-rise housing within a 10-minute walk of SkyTrain stations. The city document outlining the Rupert and Renfrew Station Area Plan, dated May, 2022, cites economic opportunities with Musqueam, Squamish and Tsleil-Waututh First Nation developers, who own the BC Liquor Distribution site within the study area. A November, 2021 city staff report to council outlines the purpose of the study, and includes an interim rezoning policy that will establish the types of rezoning applications to be considered. The plan will look at the types of buildings and the scale.

Unfortunately for the Moscone brothers and their design team, their timing is off, and they now fall within the plan. The Moscone site is on the very edge of the study area.

Mr. James wrote a letter in June to senior staff, with a “respectful request” that “an exception be made for our Affordable Housing Project and that you intervene on our behalf to have our rezoning application for 3296 E. 1st Avenue reinstated and that we again be treated as a ‘rezoning in progress.’”

When reached for a response, the city said the Moscone proposal basically doesn’t exist.

“There is no application to reinstate,” says the city, in an e-mail response. “There was nothing submitted in writing or an application fee paid to the city.”

The city said that if it receives a rezoning inquiry or application with the fee, it would be assigned to a planner. The applicant would be informed of any updated regulations or pending zoning changes, and whether their project would be grandfathered, said the statement.

Although they had been going through the process of applying, because they had not yet made the formal application and paid the fee, they weren’t informed of the area plan. Their four years of back and forth with city staff appears to have been for naught, and the project is now stalled.

These mid-rise mixed-use residential buildings are Mr. Kennedy’s “bread and butter,” as he puts it. He says he can handle that policies change, and staff leave, but it’s the long gaps in communication that has made this job so difficult.

“Our issue wasn’t so much that we were not informed of the moratorium. It was that staff ignored us and refused to even suggest a remedy. … We got absolutely no direction.”

Developer and consultant Michael Geller said their situation is not uncommon.

His client has tried to develop rental housing and it took more than a decade to get “support in principle” for the project. But now, the project is no longer financially viable due to market conditions. He’s still trying to decide what to do. People might think that because they’re offering to build much-needed rental housing units, doors will open a little easier for them, but it’s not so simple. There is considerable upfront work required for a rezoning application, and if your point of contact leaves, or there’s a policy change, it can drag out the whole process.

“This is by no means a unique situation, because I’ve been through it,” Mr. Geller said. “My guy has had three different architects over 10 years. Like the Moscones, he also wanted to build a rental apartment building, but the zoning wouldn’t allow it. Staff said, ‘if you can just wait, we are introducing a new policy or a new plan.’ In my guy’s case, first it was the Marpole plan, and then it was the interim rezoning plan, and on and on.

“The point is, while it seems astounding that someone would take four years and still not make an application, it does happen.”

Mr. Geller suggests an internal ombudsperson that can review such cases so that applications can be properly assessed.

As for the Moscones, now they know firsthand why so many developers are complaining about the length of time it takes to get housing built. They’re hoping the new mayor and council make changes to expedite the process.

“People are getting frustrated,” Michael says. “Hopefully the new people in there will pick up on this and fix this.”