There has been a lot media coverage lately surrounding the return of rental apartment construction in the City of Vancouver, with some even referring to it as a “renaissance”. Many are praising the City of Vancouver for approving incentive programs that have resulted in over 2,000 rental units approved in 2012 and 2013.
Certainly some of this media focus is justified. Since 2009, incentive programs have regenerated interest from developers in rental apartment construction that had been largely dormant in the City of Vancouver for over 30 years since federal tax incentives for new rental apartment construction were scrapped and the condo trend took over.
But how are all these incentives doing in terms of delivering units? Nobody seems to be asking an important question: are rental apartment buildings actually being built under these programs?
Let’s back up and look at the history of the rental incentive programs that have been implemented during Vision Vancouver’s time in power.Shortly after Mayor Robertson took office in 2008 he sought to implement a strategy to address affordable housing in the City. The first step in this process was the creation of the Short Term Incentives for Rental (STIR) program, which was adopted by Council in June 2009.
STIR was developed as a pilot program that offered developers a variety of incentives to encourage the development of market rental housing. The primary incentives included: tax assessment breaks, DCL waivers, parking reductions, density increases and expedited rezoning and development permits. The main caveat was that the rental apartments were to be secured for 60 years minimum.
Because it was only a pilot project, STIR eventually ended in December 2011.After two and a half years, STIR resulted in the application for over 1,600 units of market rental housing in 19 projects. Despite Vision touting the program as an overwhelming success, only a couple of 100% rental projects actually broke ground during that period; one of which was Blue Sky Properties 106-unit building at 1142 Granville Street. Gregor Robertson used that groundbreaking as an opportunity to talk about the effectiveness of STIR, but behind the scenes, there was concern within the City that the majority of applications being submitted were, in reality, condo projects that were seeking to include a portion of rental to achieve some of the incentives in the program, while helping achieve other objectives such as increased density. The City was already looking for ways to address this problem.
After STIR officially ended in December 2011, the City undertook a review of the program and decided to keep the incentives going through a modified policy, now referred to as Rental 100. The main difference in the Rental 100 policy is the City’s stance on ‘mixed’ rental/strata projects. In Rental 100, only projects in which 100 per cent of residential units in the project are secured as rental tenure would be considered. Rental 100 was formally put in place in May 2012. The City projected that Rental 100 would create an additional 3,350 units by 2021.
A preliminary analysis of mixed strata/rental projects and 100% rental projects indicates that there have been over 3,800 units proposed (ie. at some stage of application), and yet only 1/3 of these units have been completed or are under construction, and most of these are in larger condo projects, such as PCI’s Marine Gateway, Intracorp’s MC2 and Westbank’s Granville & 70th.
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(this list is not intended to be fully comprehensive; but if you know of a project I’ve missed, please drop me a line)
Furthermore, only 567 units have been delivered (or are under construction) in 100% rental projects. These are Westbank’s 1401 Comox, Bluesky’s 1142 Granville and Cressey’s Porter.
Suffice it to say that the STIR and now Rental 100 projects have been successful in providing incentives, but the jury is still out on the ultimate success of these programs and whether the approximately 4,000 units will actually be built. The City’s recent decision to set limits on rents for new rental projects as a means of promoting “affordability” will only impede the viability of those projects listed above as well as future applications.
The final results are not in yet. In any event, some of the larger rental projects such as the Aquilini’s Rogers Arena project which is all rental, will ensure that the City can point to an increase in rental construction and ultimately view their policies as a success.
