Opinion: City of Vancouver seeks profits from housing it's obstructing | Daily Hive

Opinion: City of Vancouver seeks to generate profits from a housing market it is actively obstructing

Concept for the Vancouver Housing Development Office site of 1402-1460 Burrard Street, 900 Pacific Street, and 1401-1451 Hornby Street, Vancouver. (Diamond Schmitt Architects/City of Vancouver)

Written for Daily Hive Urbanized by Mark Goodman and Ian Brackett, who are brokers at Goodman Commercial, which specializes in the sale of rental apartment buildings and development sites in Metro Vancouver. They also publish The Goodman Report.

Mayor Ken Sim and his ABC Vancouver party collaborators promised to bring a businesslike ethos to the management of the City of Vancouver’s affairs.

Perhaps it should be no surprise, then, that they are taking steps to turn the municipal government into a profit-seeking corporation in direct competition with the private-sector developers over whom the City holds so much power.

Those developers are currently knocking on the door at Vancouver City Hall with proposals to build more than 15,000 much-needed market-rental units in the Broadway Plan area alone. Yet, so many of these projects are rendered unfeasible in the face of ever-increasing municipal fees, lengthy approval delays, and the onerous requirement to include below-market housing — policies that are under the direct control of this mayor and City Council.

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The City faces no such roadblocks in the market-rental project at Pacific Street and Hornby Street that it formally announced last week — 1,136 units in two towers, 40 and 54 storeys tall, on a landmark 1.8-acre site at the north end of the bustling Burrard Street Bridge. This property is addressed as 1402-1460 Burrard Street, 900 Pacific Street, and 1401-1451 Hornby Street.

1402-1460 Burrard Street 900 Pacific Street 1401-1451 Hornby Street Vancouver Burrard Bridge tower

Concept for the Vancouver Housing Development Office site of 1402-1460 Burrard Street, 900 Pacific Street, and 1401-1451 Hornby Street, Vancouver. (Diamond Schmitt Architects/City of Vancouver)

The market for these suites? “Middle income” earners — those making between $90,000 and $194,000. Which is to say, people who have the resources to compete, even in Vancouver’s brutal and inappropriately compressed housing market.

And the purpose of the project? To make money. Or, per the City’s news release, to “generate financial returns and non-tax revenues.”

So, the City is elbowing its way to the front of the line, intent upon creating profit from one of the most desirable sites in the downtown core without having to fuss with any of the inclusionary housing or other bureaucratic obstructions facing every other developer.

Rather than dive into the for-profit development game (in a massive way!), the City should focus on providing core services and setting conditions that allow Vancouver’s world-renowned developers to do what they do best.

Concept for the Vancouver Housing Development Office site of 1402-1460 Burrard Street, 900 Pacific Street, and 1401-1451 Hornby Street, Vancouver. (Diamond Schmitt Architects/City of Vancouver)

In defence of the City’s proposed project, it is quite beautiful, featuring thoughtful design by a world-class Canadian architectural firm on an under-utilized site that badly needs revitalization. But, even aside from the City’s regulatory self-dealing, its business case rests on artificially high returns propped up by what is, practically speaking, a land cost of near zero dollars. The site is a gem among the 440 parcels in the City’s $6 billion Property Endowment Fund.

But what of the opportunity costs for that piece of property? This highly coveted, high-density site, zoned for 942,000 sq ft of development, could easily fetch $200 million. Given the prime location, you might even get more if you added in some market strata units.

Even without land costs, the budget for such a project easily hits $700 million, likely more; building tall towers in the downtown core is notoriously expensive. Projects like this are often more about the prestige of owning a shiny new building in a high-profile location than the financial returns, which take decades to realize.

How much good could be done, instead, by selling this trophy site and investing the $200 million (plus the construction costs!) in services that residents of Vancouver actually want, like a new aquatic centre? Better yet, rather than competing with developers building market-rate housing, the City could be doing a job not suited to private industry: investing in non-market housing where the need is most desperate.

Concept for the Vancouver Housing Development Office site of 1402-1460 Burrard Street, 900 Pacific Street, and 1401-1451 Hornby Street, Vancouver. (Diamond Schmitt Architects/City of Vancouver)

If the City truly wants to expand housing availability, the proceeds from selling this one trophy property could pay for 10 perfectly serviceable sites outside the downtown core.

By building below-market housing on these lots, the City could lift the inclusionary housing burden from private sector projects — spurring the construction of many times the 1,100 units planned for this expensive City-led project.

In addition to taking appropriate responsibility for non-market housing, the City could make less prominent properties available as swing sites, where tenants temporarily displaced by new development could be housed until replacement units are completed. Such safe and modern government-operated housing would relieve a massive obstacle to new development and remove the uncertainty and disruption these tenants endure.

We’re all in favour of the City managing its affairs in a businesslike way. But it should stick to its own job rather than use its resources and regulatory weapons to take unfair advantage in a market that, right now, it is actively obstructing.

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