Rental 100 Red Flag
Summary: Mechanistic citywide rental criteria for new construction threaten to add windfall incentives for developers to swarm into East Vancouver with outrageously unaffordable rental projects. The City of Vancouver’s hasty and careless response to a fall 2013 lawsuit against STIR and Rental 100 seems to have opened a loophole that already produces unintended consequences.
Unaffordable Housing. That’s the name on the freight train that the Vision Vancouver bloc at city hall says it hopes to slow down with a makeshift handbrake. So the smoke billows and the atmosphere stinks.
Through diversionary haze, all a careful observer can make out is tons of public money being shoveled into the firebox of a developer juggernaut. No bottom line. No accountability. No results.
The “affordable rental” scam has surrounded Norquay, as already mapped out in Encircled by STIR. Rental 100 is now attempting to stomp an especially abusive footprint straight into Norquay and East Hastings.
A lot of the latest problem seems to trace back to a patch-up job that City of Vancouver slapped onto a defective Vancouver bylaw in December 2013. That dodgy maneuver specified a citywide set of maximum “affordable” rents. One effect of that hasty “affordability” tweak is to sic the developer wolfpack onto local areas that offer the greatest margins for exploitation. East Vancouver turns into a killing ground where lowest costs can be paired up with highest payback.
Case Study: Banditry at 2768 Kingsway
A rezoning application for 2768 Kingsway seeks to charge downtown rents for heavily subsidized new construction, rather than proceed with the kind of development anticipated by the 2010/2013 local area plan.
In every respect, this application looks like a ripoff. The only apparent motive is maximization of profit at the expense of both Norquay and all taxpayers in Vancouver. The comparability data is absolutely grim.
First — Anticipated rental costs sit at the top of the current allowable scale. Per square foot costs of $2.41 to $3.11 translate to $1400 for a studio, $1500 or more for a one-bedroom, and $2000 for a two-bedroom. These rents are not appropriate to the area (see table appended below).
Second — The developer pushes the envelope on already bloated provisions for building size (FSR) by attempting to obtain a 3.91 that would disrespect the Norquay Plan. This greed seeks to exceed the FSRs of the largest Norquay developments over the past decade: 3.6 at 2300 Kingsway at Nanaimo [built], 3.8 at 2711 Kingsway / Skyway Towers [under construction], 3.8 at 2220 Kingsway / Kensington Gardens [being marketed].
Third — The developer seeks waiver of the fees (DCL and CAC) that are supposed to fund amenity increase in step with population growth, a balance promised in the Renfrew Collingwood Community Vision. Accelerated regular new development has so far brought Norquay no public realm improvement beyond routine maintenance.
What Is Going On?
Compared with the STIR project at 4320 Slocan Street (FSR 2.14), 2768 Kingsway thinks it is entitled to rents that range from 49% to 61% higher on a square foot basis. Compared with the Rental 100 project at 1568 East King Edward Avenue (FSR 3.79), 2768 Kingsway computes as 41% to 86% higher. Something is clearly out of whack.
It’s hard to believe that the location factor could justify higher rent for 2768 Kingsway. 4320 Slocan is on a quieter street, is closer to a park, and lies a short walk from the East 29th Avenue skytrain station. 1568 East King Edward offers much better shopping, is closer to a park, and provides handy connection to three bus lines.
Time frame (January-February 2014) is similar when 2768 Kingsway is compared with Rental 100 applications for 7350 Fraser Street (FSR 2.61) and 3501-3523 East Hastings Street (FSR 4.00). The 2768 Kingsway rents run 34% to 73% higher than 7350 Fraser, while variance from 3501-3523 East Hastings Street is small. Conclusion: The two higher-FSR proposals are trying to zip through the same loophole. Meanwhile, 1568 East King Edward and 7350 Fraser show that more reasonable developers plan for a more reasonable return on investment.
When the first incentive program to construct rental housing began in 2009, it was called “short-term.” From the outset, no effective conditions or limits were placed on the “market-affordable” rents that could be charged. In part, developers were thought to need a handout because the economic system they so intertwine with took a big hit in the 2008 downturn. Why not extract money from hard-pressed taxpayers and use it to prop up teetering developers?
Although the 2009-2011 STIR (Short Term Incentives for Rental Housing) policy was executed by Vision Vancouver, it was developed under the preceding NPA administration.  Four years later, Daniel Fontaine, an NPA kingpin of that party’s 2005-2008 reign, was crowing that Vision Vancouver had put NPA developer-friendly policy “on steroids.”  One developer party carried forward the policies of another without blinking an eye.
As short term turned into long term, STIR spawned a daughter named Rental 100. Only five months after specified-term STIR came to an end, this new program emerged to prolong giveaways for developers.
A little over a year later, in September 2013, West End Neighbours filed a lawsuit against the City of Vancouver, in part because “for-profit affordable rental housing” lacked definition.  In response, the City of Vancouver scrambled to amend its related bylaw.  Ahead of the 3 December 2013 amending, West End Neighbours issued a press release that their lawsuit would proceed to B.C. Supreme Court because the tweaks would fail to address their complaint.  Frank Luba reported estimated cost of waivers under STIR and Rental 100 to stand at more than $13 million.  The case went to two-day hearing on 9-10 April 2014, and a decision remains to be handed down. 
The Bigger Picture
The existence and affordability of rental accommodation in Vancouver has become an ever hotter topic over the past decade. In spring 2014, impending bad news about a sharp spike upward in the annual street homeless count follows right on the heels of years of a highly contentious 30-year plan for the Downtown Eastside.
A prominent feature of the Downtown Eastside plan is intended disappearance of SRO accommodation. It seems no coincidence that affordable SRO is evaporating at the very same time that the plan is being adopted. Speculators and profiteers promptly pounce on emerging opportunity.
At the other end of the rental housing spectrum, the upper end, the City of Vancouver since 2008 has been shifting millions of dollars into the pockets of developers and landlords. Incentive programs reduce the costs. A big item is direct waiver of the fees (DCL and CAC) that are supposed to provide citywide infrastructure and local amenity.
This backdoor depletion of public realm parallels the flood of speculative global capital that is being permitted to “invest” in Vancouver real estate — while housing no one.
What Is to Be Done?
First — Hopes ride on the outcome of the lawsuit pending against the City of Vancouver.
Second — City of Vancouver staff need to recognize looming disaster and modify policy before East Vancouver gets further trashed by this loophole. Citywide policy on affordable rent levels must factor in real land values, and not enable windfall handouts.
Third — Rental data needs to be incorporated into online information about every rezoning application that seeks subsidy from the City of Vancouver. Every incentivized project should be required to provide detailed and comparable financials. Developers who rake in millions from the public purse should not expect to maintain a veil of privacy over their profit levels. Profit beyond reasonable return on investment should be clawed back by the City of Vancouver.
Fourth — The applications in process for 2768 Kingsway and 3501-3523 East Hastings Street need to be closely monitored and spoken to with vigor at every opportunity for formal public input.
The next opportunity is an open house for 2768 Kingsway on Thursday 1 May 2014 5:00 pm to 8:00 pm at George T. Cunningham Elementary School (Activity Room), 2330 East 37th Avenue.
The City of Vancouver web site for Rezoning Application — 2768 Kingsway also provides a link for online comment.
 Joseph Jones. The Ugly Story of Short Term Incentives for Rental. Vancouver Media Co-op (26 Aug 2010)
 Daniel Fontaine. EcoDensity on steroids triggers neighbourhood opposition. 24Hours Vancouver (21 Aug 2013)
 Carlito Pablo. City of Vancouver to amend STIR and Rental 100 bylaws after legal fight. Georgia Straight (19 Nov 2013)
-A Development cost levy by-law amendments to the definition of for-profit affordable rental housing
-B [Staff presentation]
 WEN rejects City of Vancouver’s bylaw tweaks on STIR/Rental 100 (1 Dec 2013)
 Frank Luba. West End group ready to sue. Province (2 Dec 2013) A8
 Bob Mackin. West End Neighbours society wonders what is affordable. Vancouver Courier (10 Apr 2014)
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About the Table
Rental data for each development proposal was obtained from the relevant project planner by telephone. This information is not included in the materials that City of Vancouver temporarily posts on its rezoning application website.
The starting point was the Norquay application for 2768 Kingsway. A search for Rental 100 East Vancouver comparables led to those at 1568 East King Edward Avenue, 7350 Fraser Street, and 3501-3523 East Hastings Street.
Available data on two near-Norquay STIR projects is appended. STIR (Short Term Incentives for Rental Housing) was a 2009-2011 predecessor program.
Address 2768 Kingsway Application 28 Feb 2014 FSR 3.91 Total Units 38 Studio units= 8 avg= 450 sq.ft rent= $1400 = 3.11 /sq.ft 1 Bedroom units= 13 avg= 587 sq.ft rent= $1500 = 2.56 /sq.ft 1 BR+Den units= 7 avg= * sq.ft rent= $ * = * /sq.ft 2 Bedroom units= 10 avg= 829 sq.ft rent= $2000 = 2.41 /sq.ft 3 Bedroom units= 0 [ * avg= & rent= included in 1 Bedroom ] Address 1568 East King Edward Avenue Application 24 Dec 2012 / 4 Mar 2013 FSR 3.79 Total Units 77 Studio units= 34 avg= 450 sq.ft rent= $ 750 = 1.67 /sq.ft 1 Bedroom units= 24 avg= 525 sq.ft rent= $ 900 = 1.71 /sq.ft 2 Bedroom units= 19 avg= 700 sq.ft rent= $1200 = 1.71 /sq.ft 3 Bedroom units= 0 Address 7350 Fraser Street Application 9 Jan 2014 FSR 2.61 Total Units 96 Studio units= 0 1 Bedroom units= 76 avg= 582 sq.ft rent= $1047 = 1.80 /sq.ft 2 Bedroom units= 18 avg= 757 sq.ft rent= $1362 = 1.80 /sq.ft 3 Bedroom units= 2 avg= 992 sq.ft rent= $1786 = 1.80 /sq.ft Address 3501-3523 East Hastings Street Application 11 Feb 2014 FSR 4.00 Total Units 87 Studio units= 25 avg= 452 sq.ft rent= $1443 = 3.19 /sq.ft 1 Bedroom units= 38 avg= 603 sq.ft rent= $1517 = 2.52 /sq.ft 2 Bedroom units= 24 avg= 829 sq.ft rent= $2061 = 2.49 /sq.ft 3 Bedroom units= 0
Address 4320 Slocan Street FSR 2.14 Total Units 41 Studio units= 5 avg= 400 sq.ft rent= $ 770 = 1.93 /sq.ft 1 Bedroom units= 32 avg= 640 sq.ft rent= $1020 = 1.59 /sq.ft 2 Bedroom units= 4 avg= 900 sq.ft rent= $1455 = 1.62 /sq.ft 3 Bedroom units= 0 Address 3068 Kingsway FSR 3.65 Total Units 30 Studio units= 0 1 Bedroom units= ? avg= ??? sq.ft rent= $1275 = ???? /sq.ft 2 Bedroom units= ? avg= ??? sq.ft rent= $1700 = ???? /sq.ft 3 Bedroom units= 0