Tracy Sherlock, Vancouver Sun
June 25, 2012
At least one player in the city’s real estate game is not happy with Monday’s interim report from the City of Vancouver’s housing affordability task force.
David Goodman, principal at HQ Real Estate Services, which sells commercial land and multi-family rental apartment buildings, says the city should tender its land to developers rather than offer it on long-term low-cost leases.
“[This plan is] predicated on the city subsidizing the land and that’s where I have a big problem. This city is owned by the citizens of Vancouver and the ratepayers,” Goodman said Monday. “It’s a legacy that the city has. If the city takes a $10 million piece of land [and] writes it down to zero to turn it over to an organization to provide rental housing, [it] smacks of heavy socialist trapping.”
He says that allowing greater densities in existing areas with low-rise apartment buildings such as South Granville or the West End would ease the rental affordability crunch. “I’m of the belief that the development community here in the city of Vancouver can fill the void if they’re left alone to do it,” Goodman said. “Now the city is saying we can do it better than the development community and I don’t agree. They’re creating layers of bureaucracy and I think it’s going to be a costly boondoggle.”
Goodman would prefer to see the city sell off some properties to developers, who would build rental housing if they could make a profit.
“If you give developers enough density, they could build purpose-built rentals. The developers would do it if they could at least make a few dollars,” Goodman said, adding that typically, one-third of condo developments end up in the rental supply.
A moratorium on demolishing rental buildings established five years ago means the city’s existing rentals are in aging buildings that need repairs, Goodman said.
“Their idea was noble — they wanted to protect rental housing, but what they’ve really done is they’ve thrown the baby out with the bath water,” Goodman said. “Instead, on the backs of the private sector, they’ve said you cannot build a 12-storey highrise because we want to protect our rentals.
He said he thinks this plan could end up as a bad deal for the city.
“This is a repetition of Olympic Village, where you had people with very good intentions who dropped the ball, and it turned into a debacle,” Goodman said. “Now the city is getting heavily involved in the housing issue again.”
Goodman said he thinks there should be a referendum on the proposal to use city land to provide affordable housing.
“I think the taxpayers and the rate payers should decide what they really want for the city,” Goodman said.
The interim report also calls for some alternative funding models, including possible investment by unions, pension plans and other non-profit organizations. Both Goodman and Concert Properties CEO David Podmore, who was involved in a similar plan between the city and VLC Properties in the 1980s, said investors would likely get an annual return near four or five per cent.
“I think in the current environment where there are such low interest rates, and it’s very difficult for the plans to generate income with some reasonable returns, there is potential certainly for pension funds to come up with some innovative ways to support the development of affordable housing,” Podmore said. “When VLC was conceived, interest rates were very high, but we’re in a different environment today and I think most plans would look very favourably on what would be considered very low returns historically.”
Goodman agreed that pension funds could expect a good return on their investment.
“Housing is a good investment anyway you cut it. It’s a conservative investment, they make a good yield over a long period of time,” Goodman said. “It’s just a question of whether the stakeholders — namely the taxpayers — embrace and support this use of their land for social housing?”
Meanwhile, the Urban Development Institute, which represents the province’s development industry, supports the proposal and the task force, into which they have had input.
“At UDI, we agree with the position that we need to increase supply to improve affordability,” said Adrien Byrne, communications manager at UDI. “The task force has identified row houses and low-rises [as a way] to do that and we think that’s good, along with a mix of other types of development. We think the long-term land leases are good, because they provide another option.”
In May, The Sun reported that Aquilini Developments and Construction will include several hundred rental units instead of condos as originally proposed for the residential component of three new highrise towers planned beside Rogers Arena.
Click here to download the PDF version of the full article in The Vancouver Sun June 26, 2012.