Cities are blocking new housing in Metro Vancouver: government panel

2021 artistic rendering of Senakw, which is on a Squamish First Nation reserve. As it is on reserve, it does not need to follow the City of Vancouver's regulations and application processes. (Revery Architecture/Westbank/Squamish First Nation)

A recent report jointly commissioned by the federal and provincial governments has identified municipal government policies as a major barrier for improving housing affordability and supply in British Columbia, especially in Metro Vancouver.

And if there is to be any real change, the provincial government would need to use a heavy hand to bring municipalities in order to create a coordinated and effective approach on catalyzing housing. The BC government would have to exercise its powers on cities, which are commonly referred in policy circles as “creatures of the provinces,” given how municipalities are under direct provincial jurisdiction.

See also:

The study’s authors recommend the provincial government enact statutory time limits to all stages of the property development process for all types of development. Currently, rezoning processes, particularly for larger developments, can take years and be a “fraught process” from competing policy objectives by municipal staff and city councils.

A policy shift mandating deadlines on municipal governments to review proposals would follow in the footsteps of the provincial governments of Ontario and Alberta.

Ontario passed legislation in 2019 that limits official plan amendments (OCPs) and subdivision applications to 120 days, and only 90 days for rezoning applications. Alberta’s legislated timelines approved in 2020 are even more aggressive, with a 20-day limit to determine application completeness, a 60-day limit for subdivision applications, and a 40-day limit for development permit applications.

Currently, proposals can also be quietly rejected by city staff during the pre-application process, which are initial, exploratory discussions, often informal, with the bureaucratic level. The report suggests a new level of transparency on city staff’s pre-application process, which was a step taken by Vancouver City Council this past spring after it discovered city staff had put in limbo 70 pre-application rental housing proposals since 2020. City of Vancouver staff are now required to update a pre-application list on a quarterly basis for city council’s eyes only.

Artistic rendering of a rental housing tower replacing the parkade at 1075 West Georgia Street’s rear at the corner of Dunsmuir Street and Thurlow Street. The formal rezoning application was submitted earlier in Summer 2020, after initially being rejected by City of Vancouver staff in pre-application. (Reliance Properties)

Some of the issues municipalities face with reviewing applications in a timely manner is an issue of the lack of the appropriate technology required to process proposals. To tackle this, the report suggests the provincial government should develop a province-wide digital development permitting system to meet municipality and industry needs in a streamlined, timely, and cost-efficient fashion.

But the report also paints a picture of how municipalities are also intentionally making certain processes more complicated and time intensive, adding layers of steps to squeeze more revenue from developers.

Although a new neighbourhood plan approved by a city council in this region may call for greater densities and new mixed uses, in some cases municipal governments have opted not to pre-zone the sites in advance.

The City of Vancouver has adopted a number of new major neighbourhood plans over the past decade, but without pre-zoning the land to match the already approved changes.

Instead, the City of Vancouver relies on spot rezonings when applications come forward, which potentially allows it to secure more community amenity contributions (CACs) from developers when CACs are not pre-determined based on fixed rates based on floor area.

To its credit, Vancouver City Council approved some changes to the city’s CACs policies last year that improve timeliness and transparency, following the recommendations of a consultant report commissioned by city staff and after hearing complaints from the development industry. Although there are area-specific target rates, CACs are very much determined by negotiation with city staff.

“Going forward, the City is committed to working with the development industry to expand upon our existing internal process for resolving disputes that may arise during the CAC negotiations, whereby an escalation process will be considered so that decisions can be made to help determine a fair CAC offering from rezoning applicants,” reads a City of Vancouver staff report in January 2020.

“The principle of negotiated CACs is to capture a portion of the increase in land value as a result of the rezoning to help fund growth costs. After taking into consideration development risks, public interests and a reasonable developer profit, CACs generally represent 75% of that increase in land value resulting from the proposed rezoning.”

Cities are increasingly becoming independent on CACs to fund new community centres, libraries, recreational facilities, public parks, childcare, transportation infrastructure, and social housing. The City of Vancouver asserts funding these assets through developer revenues is preferred over hikes in property taxes, but the federal and provincial government’s panel report suggests the municipal government has gone too far to the extent that there are unintended detrimental effects.

2020 model of the Plaza of Nations redevelopment. After negotiating with Vancouver city staff, Canadian Metropolitan Properties will provide $325 million in CACs, including 380 units of social housing, a new community cente with an ice rink, a childcare facility, and large public plazas and open spaces. (B+B Scale Models)

Prior to the pandemic, the City of Vancouver, for instance, had a 2019-2022 capital plan that called for $2.9 billion in new and improved facilities and infrastructure, with $1.63 billion dependent on developers, including $953 million from cash CACs and development cost levies (DCLs) combined, and $570 million from in-kind CACs from developers completing a specific amenity or benefit instead of contributing cash.

“CACs are often negotiated between property developers and local governments, without clear indication of how long the process will take or the exact conditions for rezoning approval in advance of project proposals,” reads the government panel report. “Such delays not only add costs, including carrying costs of land and staff, but also risk reducing the number of projects that would otherwise be proposed.”

“Because zoning-based revenue tools such as CACs discourage local governments from updating zoning codes to better reflect Regional Growth Strategy and Official Community Plan (OCP) priorities, a fourth challenge stemming from these tools is that they risk undermining the participatory planning process. For example, if a community has already consented to the creation of more density along a major new transit corridor, it arguably follows that zoning and servicing infrastructure should be rapidly updated to reflect this priority, rather than reflecting the pre-OCP consultation status quo.”

For rezonings within Vancouver’s major neighbourhood plans, such as the West End Plan and the Cambie Corridor Plan, CACs are very much determined on a case-to-case basis, resulting in years-long review and negotiation processes for applications.

In contrast, the City of Surrey, for example, sets its CACs based on area-specific fixed rates — charged on a per square foot basis for apartments, and on a per dwelling unit basis for single-family homes and townhomes.

As an area-specific example, CACs within Surrey City Centre are currently $30 per sq ft per apartment, and $11,250 per single-family home or townhouse. These rates will increase to $40 per sq ft and $15,000 per dwelling unit, respectively, starting in 2022.

Surrey’s clear predictability with CACs also more easily allows new and smaller entrants in the homebuilding industry. Some developers who are active in Metro Vancouver’s suburban municipalities previously told Daily Hive Urbanized they are reluctant to do business with the City of Vancouver due to its complex, if not archaic, processes.

The City of Burnaby has a negotiation process for its CACs, but it differentiates from Vancouver’s system as there is a time limit to conclude negotiations. More time for negotiations may be permitted with city council’s approval.

“Long approval timelines, uncertainty and conflicting program criteria all add costs, in both time and money, to program applicants. Such costs can restrict the pool of potential applicants, as those without the budgets or staff to navigate approvals are prevented from participating in the program altogether,” reads the report.

Moreover, the study also suggests the provincial government should phase out CACs, and instead expand DCLs to cover a wider list of infrastructure and amenities tied to growth. But it notes any added costs to developers should be proportional to the new amenity or infrastructure requirements directly generated by the new development. Development fees should not be used to fund “an exhaustive list of desired amenities” akin to a wish list.

Additionally, it is suggested that if a municipal government is dependent on development-driven fees such as CACs, the provincial government should conduct a full review of the municipal government’s revenue sources and spending responsibilities, and explore a shift to capture land value through taxation instead of new construction.

Cities could also be motivated to approve more housing if the federal and provincial governments establish a program that financially incentivizes municipal governments to approve more housing.

And in exchange for federal and provincial funding for infrastructure investments, it is suggested that municipal governments could be required to change OCPs, zoning bylaws, and other local policies to allow for increased density and a mix of housing. This is already mandated in exchange for senior government funding for the region’s current two SkyTrain projects, with the City of Vancouver pursuing added density to the Broadway Corridor, under the forthcoming Broadway Plan, in exchange for the Millennium Line Broadway Extension, and the City of Surrey pursuing added density in Fleetwood, under the future Fleetwood Plan, in exchange for the Expo Line Surrey-Langley Extension.

The City of Surrey’s proposed land use for the Fleetwood area under the Fleetwood Plan, anchored by three new SkyTrain stations as part of the Expo Line Surrey-Langley Extension. The plan would add over 100,000 residents to Fleetwood, nearly quadrupling its existing population, exceeding the combined population growth under the City of Vancouver’s Cambie Corridor Plan and the City of Coquitlam’s City Centre Plan, despite each of the two plans having comparable land areas. (City of Surrey)

But Vancouver, being Metro Vancouver’s core for jobs and concentration of opportunities and activities, is particularly problematic with its pace in catalyzing new housing.

The report zeroes in on the low-density, suburban-like nature of the neighbourhoods that surround the downtown Vancouver peninsula. It has identified the unusual pattern where densities further out, in the adjacent municipalities, are greater than in locations between downtown Vancouver and the municipal borders with Burnaby and Richmond.

“This pattern of housing completions in Metro Vancouver leads to a situation where even areas relatively close to the region’s primary business district (downtown Vancouver) have relatively low densities. Further out, meanwhile, density increases with distance to a level that is higher than predicted. This pattern suggests that the housing supply system is altered by factors other than the simple impact of commuting time and costs,” states the report.

“[The] fundamental factor cited throughout the industry consultations conducted by the panel is the continued prevalence of single-detached housing close to the regional urban core… The preponderance of single-detached housing corresponds very closely to what is allowed to be built according to zoning laws. Single-detached housing covers areas where the unrestricted price of land is very high, suggesting it could support much higher density.”

Metro Vancouver housing types. (UBC Sociology Zoning Project)

Metro Vancouver density and land uses. (UBC Sociology Zoning Project)

City of Vancouver density and land uses. (UBC Sociology Zoning Project)

This results in either longer commutes for workers living further out or forces them to try to search for jobs closer to home, but this would inhibit the efficiency of the region’s labour market, given the economies of scale that exist with the Central Business District and its peripheral areas in the downtown Vancouver peninsula, and the Central Broadway Corridor.

Businesses in downtown Vancouver are particularly impacted by the regional labour shortage for service and hospitality-based positions, resulting in curtailed business hours, operations, and services.

“This pattern of restricted housing supply for local geographies in Metro Vancouver poses challenges to workers and businesses,” reads the report.

“Workers may curtail their search for jobs in Vancouver if they cannot find homes close enough to the workplace, or if faced with longer commutes. For those willing to tolerate longer commutes, more time may be spent in traffic, leading to greater pollution and greenhouse gas emissions. These challenges are likely to be particularly problematic for younger workers and their families who may need the living space that is only available in suburbs.”

The report specifically highlights the Squamish First Nation’s Senakw redevelopment as an example of the housing potential near downtown Vancouver, when housing plans align with market demand rather than the City of Vancouver’s regulations and permitting process.

On the 12-acre reserve at the south end of the Burrard Street Bridge, the First Nation will be building four million sq ft of floor area in towers up to 59 storeys (564 ft) to generate about 6,000 homes, with the vast majority being market rental units. This will be enough to house as many as 9,000 people on an area about 7% of the entire size of False Creek South (between Burrard Street Bridge and Cambie Street Bridge), but with roughly twice the population.

“This more relaxed regulatory environment has enabled the development to have several features that would not be allowed under current City rules, including higher building densities and parking spaces for only 10% of the units,” reads the report.

“In this regard, the Senakw project offers one vision of the possibilities associated with a less restrictive land development system.”

Artistic rendering of Senakw and the bus exchange on the Burrard Street Bridge. (Revery Architecture/Westbank/Squamish First Nation)

While below-market rental housing supported by not-for-profit organizations and governments are needed for a certain segment of the population, an infusion of market rental homes is critical to integrate long-term affordability into the market rental housing supply system.

Some housing advocates in Vancouver are known to have a strong preference for new government-backed, secured below-market housing over private sector-driven market rental housing, but in practice both are necessary.

Rental homes that now offer rents that are considered affordable were previously higher-priced or even luxury rental homes when they were first completed decades ago. But a dearth of new rental homes between the 1980s and 2000s ended a cycle termed as “filtering,” whereby apartments and homes gradually depreciate from age.

When the original residents move on to newer or larger homes, the older units become available for individuals and families further down the income or property ladder.

“Sufficient increases in the supply and mix of new homes help reduce price and rent pressure on existing homes. Conversely, insufficient increases in the quantity and mix of homes in a market can hold up the filtering process, leading to higher rents and purchase prices for aging homes,” reads the report.

Metro Vancouver housing statistics. (Government of British Columbia/Government of Canada)

The “filtering” process is impeded when higher-income households compete directly with lower-income households for a limited supply of homes, effectively placing an upward pressure on rents for even older homes.

“For the filtering process to be effective, new units should not simply replace older units that are more affordable on a one-to-one basis, but rather should add to the total stock of housing and do so at all price brackets. It is also important that the supply of newly constructed units responds to the evolving demand for housing. The filtering process is less likely to succeed if, for example, households earning higher incomes do not get access to better quality homes, or if aging households cannot move into appropriate smaller units,” adds the report.

As an analogy, in layman’s terms, building more market rental housing is like adding another chair in each round of a game of musical chairs, with players scrambling fot a limited number of chairs. Whenever more chairs are added to account for the increase in the number of players, the game takes on a more leisure pace. On the other hand, building more below-market rental housing is equivalent to adding in chairs reserved for the comparably smaller pool of players that might otherwise be left without a chair, or without a suitable chair.

Altogether, the federal and provincial government’s report by an expert panel made 23 recommendations on improving housing affordability and supply in BC. It also called on municipal governments to implement more meaningful public consultation processes that are more representative of broader interests, instead of placing a disproportionate weight on NIMBYism, which is typically a vocal minority.

The panel was chaired by Joy MacPhail, a former longtime BC NDP minister and MLA for the Vancouver-Hastings riding, and former leader of the opposition. She is currently the chair of ICBC’s board of directors.

Other members of the panel include Jill Atkey (CEO of BC Non-Profit Housing Association), Jock Finlayson (Executive Vice President and Chief Policy Officer at the Business Council of BC), Brian McCauley (President and CEO of Concert Properties), Sue Paish (CEO of Canada’s Digital Technology Supercluster), and Helmut Pastrick (Chief Economist for Central 1 Credit Union).

To develop its findings and recommendations, the panel consulted with academics, government bureaucrats and officials, non-profit organizations, and developers.

broadway commercial megatowers safety nimby sign

Over the past year, some residents in the Grandview-Woodland neighbourhood have placed “No Megatowers” signs on their lawns to show their opposition to the proposed redevelopment of Safeway next to Commercial-Broadway Station into three towers up to 30 storeys with 415 market rental homes and 235 condominiums, plus a new grocery store, retail, and restaurants. (Kenneth Chan/Daily Hive)

See also: