Rental housing: More incentives needed to meet Vancouver's need, review finds
Condos and apartment buildings are seen in downtown Vancouver, B.C., on Thursday February 2, 2017. THE CANADIAN PRESS/Darryl Dyck
An external review has found that Vancouver's incentive programs have so far been successful in delivering purpose-built rental housing, but more needs to be done to meet the city's need.
According to a study prepared by CitySpaces Consulting, the city's rental incentives have resulted in the approval nearly 8,700 new rental units since 2009, a significant increase to Vancouver's rental supply.
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But the study also acknowledged that rental units remain in short supply.
"There continues to be a significant shortfall of rental supply throughout the region, created by decades of very limited new construction," the report read. "While the City of Vancouver and other municipalities in the region have turned the trend away from a net loss of rental units towards a net gain of new starts, the cumulative shortfall remains considerable."
One of the main barriers remains the financial attractiveness of condos over rental units.
A separate financial review conducted by Coriolis Consulting found that under the current model, developers will continue to prefer condos over purpose-built rentals on fiscal grounds.
"Even with the existing incentives … market rental apartment development only generates an estimated profit margin in the range seven per cent to 11 per cent at the sites that were tested," Coriolis wrote.
"This is significantly lower than the typical profit margin required by most multifamily developers to obtain construction financing and proceed with a new project. It is also lower than the profit margin that can likely be achieved through strata development (under existing zoning)."
CitySpaces' key findings include the need to rectify "inconsistencies" across Vancouver's incentive programs and policies, adding that these have resulted in "additional risk, confusion and complexity for developers."
The review also says that lengthy processing timelines for rezoning applications may be deterring some applicants interested in developing rental housing.
The city's Moderate Income Rental Housing Pilot Program encourages development proposals where 100 per cent of the residential floor area is secured rental housing and where at least 20 per cent of the residential floor area is made available to families earning between $30,000 and $80,000 a year.
Incentives under the program include allowing height and density beyond what's normally permitted under current zoning, waiving the Development Cost Levy and reducing parking requirements.
While these are all necessary and effective, CitySpaces said the city also needs more incentives.
"The current programs and policies are necessary to facilitate new market rental housing, but they are not adequate at delivering the targeted number of new market rental units or at supporting below market rents," the review read.
The study also found that Vancouver's rental housing efforts could benefit from expanding incentive programs to different kinds of development projects instead of those that are 100 per cent rental oriented as well as expanding rental incentives into low-density areas and those currently zoned for single-family homes only.
The studies' findings were presented to City Council on Wednesday.
In a statement issued later in the day, the city said it looks forward to exploring the opportunities identified in the review.
"The review identified important opportunities to deliver more market rental housing in lower density areas to broaden the range of options and improve the diversity and equity of housing choice for renters in Vancouver," the city said.
"Further opportunities to address equity and increase rental supply in RS/RT areas will be explored through the City-wide plan process."