Greater Vancouver Board of Trade says more housing needed near SkyTrain stations

Aug 8 2019, 12:40 pm

The Greater Vancouver Board of Trade (GVBOT) has provided its own analysis of the state of Metro Vancouver’s housing market, specifically on how the federal government can help address the ongoing affordability and supply issues.

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According to a new report released today, local business leaders want to see the federal government leverage its housing and transit investments in the region by creating additional incentives and requirements to encourage the development of more housing near SkyTrain stations.

It calls it a “carrot and stick” approach in “unlocking additional homes of all type and tenure” by integrating the framework of the $22.8-billion National Housing Strategy (NHS) and the public transit investments made under the $25.3-billion Invest In Canada Plan.

“Given that these issues fall under local and provincial authority, the federal government has traditionally chosen not to influence these policies,” reads the report.

“That said, they have not been shy in some other areas of policy to seek to effect provincial or local affairs. Given the gravity of the housing situation, in Greater Vancouver and some other urban centres, Canada should reassess their hands-off approach.”

This would supplement some municipal and regional land use plans that already encourage greater densities — creating transit-oriented areas — around major public transit services.

Specific policies could relate to requiring rental housing funding be allocated to projects near frequent transit services and even a “more aggressive approach” of mandating certain housing targets be met adjacent to federally-funded rapid transit projects.

Exemption of GST from new rental housing construction costs

Besides catalyzing densification near public transit, GVBOT also recommended changes to eliminate GST on the construction cost of purpose-built rental housing.

As an example, according to the board, a 41-unit purpose-built rental project that has its GST removed for construction costs could lead to a reduction in monthly rents of between 3% and 6%, depending on the overall cost of the project.

“Removing the GST could meaningfully assist in making purpose-built rental projects economical and provide lower rental rates for affordable housing projects,” continues the report.

“If the government was not inclined to remove the GST entirely, it could consider removing the GST on the land value and instead only apply to the new building/housing units.”

A number of tax-based incentive measures could also be considered, including the inclusion of GST input tax credits on the ongoing operation of rental housing and the deferral of capital gains tax and recaptured capital cost allowance on the sale of a property and re-investment in new rental housing.

More homes within current zoning

Revised federal taxation measures could be designed to encourage more homeowners to build or renovate their homes to include a rental secondary suite or laneway house. This would be achieved through a tax credit or loan to homeowners for such additions and renovations.

Stipulations to ensure the effectiveness of this policy may include requiring a minimum timeframe for the suite’s usage as rental housing, maximum rental rates, and targeting incentives to areas with a low rental vacancy rate.

“In addition to relieving pressure on vacancy rates and providing more availability of rental stock, the program could have the added benefit of ensuring that rental income is reported to taxing authorities,” the report adds.

“Any program would need to be carefully designed and studied to ensure good taxpayer value for forgone revenues.”

Using federal lands for new housing

Supplementing the NHS’ $200-million Federal Lands Initiative of making surplus federal land available for affordable housing, GVBOT wants the federal government to request its departments to “justify why under-utilized properties should not be transferred instead of land needing to be declared ‘surplus’ by the department.”

As a result of this process, more federal properties could be made available for affordable housing projects.

Low-cost or free land is necessary to create affordable homes, with the GVBOT citing a Metro Vancouver Regional District study that found that it was not possible to build units at affordable rents for the region’s median income of $75,000 unless the cost of land is largely subsidized and/or removed from the rental cost recuperation.

Furthermore, profits generated from federally-involved redevelopments should be directed towards the region’s housing needs. The board specifically names the redevelopments of the 21-acre old RCMP headquarters on the Heather Street Lands and the 90-acre Jericho Lands. Both projects are owned by a partnership formed between federal crown corporation Canada Lands Company and local First Nations.

State of housing and the economy

According to a recent GVBOT survey, 73% of employers are reporting that housing affordability is impacting their ability to recruit and retain employees, and 37% of business are considering relocating from the region, with larger businesses more likely to leave.

As well, 41% of businesses with over 50 employees have considered leaving the region over the same reasons.

“The Greater Vancouver Board of Trade believes that if our region cannot provide secure and attainable housing options for residents and prospective residents, the future of our economy and social cohesion will be at risk,” reads the report.

A Fall 2018 report by Canada Mortgage and Housing Corporation found that high demand for rental housing — a vacancy of 1% — has led to a 6.2% increase in average rents.

Moreover, rental housing supply has not kept up with population growth; the region grew by about one million people since 1991, but since then 6,000 purpose-built rental units have been lost.

It is estimated about 6,000 new rental units are needed annually to satisfy demand, but only 1,896 rental units were built in 2018.

Currently, 5,629 rental units are under construction across Metro Vancouver.

When it comes to laneway homes, about 4,000 permit approvals have been granted over the past decade by the City of Vancouver. It is estimated there are between 60,000 and 70,000 single-family dwelling lots where laneway homes are permitted.

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