VANCOUVER—City councillors have opted not to freeze a rental construction incentive program that had been criticized for failing to deliver apartments that working people can actually afford.

Under the Rental 100 program, developers who build can get a break on development fees, parking or additional density if they agree to put a covenant on the building to keep all the units as rental for at least 60 years.

But with some studio apartments in the new buildings being rented at $1,600 a month, or two-bedrooms at $2,800, some councillors say the program isn’t adding the kind of housing Vancouver really needs.

Councillor Jean Swanson’s motion proposed suspending the ability for developers to apply for the development cost levy waiver. But after hearing from real estate developers that a freeze could lead some developers to build condos instead of rentals, council voted 8-2 to refer the motion to staff, who are already conducting a review of the program.

Earlier in the week, city housing planners presented a 2019 update on housing that showed the city isn’t meeting its own targets for new rental project approvals. While the city aims to approve 2,000 units a year, in 2018 the city approved just over half that number.

Of the total new 3,644 rental apartments completed in the past decade, 2,161 units — or 60 per cent — were built using incentives from the Rental 100 program or a previous program known as STIR.

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Councillor Mike Wiebe voted against referring the motion to staff, because staff are already working on a review of the program that will consider many of the items in Swanson’s motion. Wiebe said he didn’t agree applications for Rental 100 should be frozen. It’s clear the program is helping to deliver more rental housing, and even though rents at the new buildings are high, developers are having no trouble quickly filling the units, Wiebe said.

But the program isn’t delivering on a key need, said Wiebe, who also owns a restaurant in Mount Pleasant and sees his employees struggle to find affordable housing.

The city’s latest housing data shows that while 776 social and supportive housing units were built in 2018 for people who make between $30,000 and $50,000, none of the new rentals built would be affordable to the waiters, barristas and retail workers of Vancouver who make those incomes.

“Everyone’s trying to figure out, how do we build housing for people who work in my restaurant?” he said. “Everyone in my restaurant wants to get a place to live for under $1,000.”

Granting the fee waivers also takes revenue away from the city that could be used for park land acquisition, child care or utilities upgrades, Wiebe said. As city planners review the Rental 100 program, council will eventually have to decide whether adding new rental housing is worth the revenue loss, and whether other incentives like reducing parking requirements could be a better option.

Kay Higgins was one of the speakers at the April 3 council meeting. The theory that adding new supply should make more space in older, cheaper buildings as higher-income people move from older buildings to the newer buildings doesn’t seem to be working in Vancouver, Higgins said.

“The evidence we see is of the lowest income people in the city competing against each other for extremely scarce rentals that are affordable to them,” she said.

Joe Carrera, a developer who builds new rental buildings, said freezing the Rental 100 program would be a mistake at this point. He said his company has assembled land (bought smaller parcels of land to create a larger building site) and has several projects in the pipeline, with the expectation of being able to use Rental 100 incentives.

If Rental 100 was not available, Carrera said, his company may develop some of those projects as condos. Ending the program could also make it harder to get bank financing for new rental buildings.

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When city staff draft reports about Rental 100 projects to council, they try to make the case that the project will be “affordable” in some way. For instance, a building in Kitsilano on Vancouver’s Westside that included three-bedroom apartments renting at $3,700 a month was called affordable because owning a similar home in that area — where even modest houses are valued upwards of $3 million — would cost $8,300 a month.

Carrera said he understands the frustration about calling such projects “affordable.”

“I think it’s hugely problematic. A lot of the speakers ahead of me, and quite rightfully so, are getting angry for calling a $3,000 a month (apartment) affordable,” he said. “For a lot of people that’s not, and that’s an issue.”

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