brent granby

I have written before about Short Term Incentive Rental Program (STIR) when staff did a report back to Council.You can read it here . On Tuesday May 15th at the City’s Finance and Budget Committee, staff is proposing a new program to develop more purpose built rental units in Vancouver for Councils’ consideration. The name of the new program is Secured Market Rental Policy Program, perhaps a re-branding of STIR to change to dodge some of the past criticism? Here is the report: Staff report

By not creating more affordability the program will still be framed by many as a failure and as a form of  “give away” to the development industry. If Council would benchmark the starting rent to 30% of the median income of the community for a certain amounts of units, this would give some direct benefit to the community that most folks would see as positive. Rents would then go forward in market fashion regulated by the rules of Resident Tenancy Act (RTA).

My past contention about STIR is that market-based approaches simply are not going to create more affordability for renters.  City staff has been comparing the new purpose built rental units to home ownership as way of arguing that more affordability is being created. But in a city as expensive as Vancouver this does not really mean much.

No doubt one of the solutions to developing more affordability in is to increase the supply of purpose-built rental housing. The “increasing of the supply” of units of available rental housing is a necessary condition to developing affordability in the market, but an increase in supply does not necessarily lead to more affordability. New units that are built will rent for more to cover all the development costs from land cost, construction cost and the capital cost of the project. Market based solutions alone are never going to be a real and viable solution to housing affordability in Vancouver.

Most housing experts advise that households should not spend more than 30% their pre-tax income on housing. In fact, to spend more than 30% is considered to be a risk factor for homelessness. If a household is paying more than 30% of their income on housing it is easy to imagine how they are living pay cheque to pay cheque making difficult choices between food, rent and other expenses. A key point around affordability is that there needs to be healthy supply of rental stock in more Vancouver communities that is accessible to the median income for each particular area of the city.

The larger question on “affordability” for the city is whether there are other tools that city has that could create more affordability and ensure that middle-income residents will continue to live in Vancouver. Does Council have the political will to find and develop these tools?

Rezonings are a huge opportunity for Council to utilize its discretionary authority to dictate what kind of housing priorities the city wants. If there are concerns about an over-heated condo market that is driven by foreign speculation then Vancouver City Council in its rezoning should not even consider building them and build rental housing given that 50% of people who live in Vancouver are renters.

Other tools the city could develop and explore include the creation of a Housing Authority that could seek other stakeholders such as large institutional investors to partner with the city through the Property Endowment Fund to invest in rental units. The city could also get more serious about reducing building cost by re-thinking parking in a creative way and capturing the construction cost saved through a more comprehensive use of inclusionary zoning. These are just some examples, but more tools and methods need to be found to create a Vancouver where more people can afford to live.

The STIR program was designed to fulfill multiple objectives and its ability to create new rental units has been demonstrated. Prior to STIR, on average, only 80 units of rental units per year were constructed in Vancouver. After STIR 550 units on average per year were constructed. Whether this can be achieved going forward in the future is another matter. The approach of only supporting projects where the whole project is rental, as opposed to mixed developments of condo and rental units, makes sense given that they are less expensive to build.