Christopher Reynolds, Vancouver Sun
July 12, 2012
Metro Vancouver says it has no money to replace its aging stock of apartment buildings, which provide affordable housing for thousands of people throughout the region.
The Metro Vancouver Housing Corporation operates more than 50 apartment buildings and many of those will need to be torn down and replaced within 10 to 15 years, said New Westminster Mayor Wayne Wright, chairman of Metro’s housing committee.
Wright said there is no immediate need to replace the buildings, but “it is looming, it will come …. It’s going to come back and bite us.”
The 3,600 Metro-run units provide housing to 10,000 residents throughout the region. Some tenants pay market rents, subsidizing the remaining 30 per cent of residents — 3,000 people — who constitute low-income tenants.
With an annual operating budget of $36 million, the system has worked well over the years, Wright said. Roughly 90 per cent of building maintenance and operations costs were covered by revenue from the market-rate suites, making for a nearly self-sufficient enterprise, according to Metro’s 2012 budget.
But Wright said Metro does not have a long-term capital budget to replace those buildings outright when the need arises, he added funding for redevelopment should come from the provincial and the federal governments.
“This is not a municipal responsibility in the first place, I have no idea how we got into it. This is a provincial-federal responsibility …. It’s just a business that we should not be in, that’s what it comes down to,” he said.
Wright said there were no plans to sell housing land to private investors, although one option includes leasing sites to developers, who would be obligated to build the same number, or more, of subsidized units that would be torn down.
That solution is in the inquiry phase at the housing committee, Wright said.
A planned redevelopment of Metro’s Heather Place townhouse complex in Vancouver near Vancouver General Hospital offers a similar model for reconstruction that may be suitable for neighbourhoods with high real estate values.
Its proposed replacement would be a mixed-use project built by a private developer, where extra density and modest rezoning would allow more market-priced as well as affordable housing units, said Don Driedger, maintenance superintendent for the Metro Vancouver Housing Corp.
He said the site provides an example of where projected repair costs compel complete reconstruction. Repair estimates for Heather Place are more than $7 million, due largely to water damage, Driedger said, whereas the annual capital improvement budget for all 50 Metro buildings is $10 million.
Construction at Heather Place would be phased, allowing some residents to stay on-site during redevelopment. Other low-income residents would be provided with shelter, while market-unit tenants might have to find their own accommodation, Wright said.
Meanwhile, BC Housing is investing $300 million in a partnership with the city of Vancouver to build more than 1,500 new supportive housing units for mentally and psychologically challenged residents, with four of 14 planned buildings already open. But the province is virtually absent from affordable rental housing efforts.
No one from BC Housing nor Rich Coleman, the minister responsible for housing, could be reached for comment.
The need for affordable housing is more urgent in Vancouver than almost anywhere else in the country, said Karen Leibovici, president of the Federation of Canadian Municipalities, who spoke out on the topic last week.
“When you’re looking at the median rent … for a two-bedroom apartment, Vancouver is at the top for costs at $1,400 [a month],” she said. The next closest market — in Halton Region, Ont., — is $325 cheaper, while the Canadian median was $883 in 2011.
Driving Vancouver’s high rents is a low vacancy rate, which the Canadian Mortgage and Housing Corp. predicts will decrease to 1.1 per cent this year from 1.4 per cent in 2011, according to a recent report by the federation.
A healthy rental market — defined loosely by the CMHC as a three per cent vacancy rate and less than 30 per cent of household income spent on rent — is an “often overlooked” component of Canada’s housing system and the country’s economy, the report says. Nearly 40 per cent of households in the city of Vancouver spend more than 30 per cent of their income on housing.
The original funding for Metro’s affordable housing construction came from the federal government about 30 years ago. But past initiatives like provincial or federal tax incentives for developers to build and manage rental housing have disappeared, along with abundant new rental units, making low-cost apartment units increasingly rare.
“It’s totally uneconomical [to build rental apartments],” said David Goodman, a principal at HQ Real Estate Services.
Vancouver has imposed a moratorium on the demolition of private rental apartment buildings — unless new rental units are to rise in their place — leading to 60- and 70-year-old complexes being maintained with growing inefficiency, Goodman said.
He estimates it would cost an average of $9 million to replace each Metro Housing complex, totalling more than $450 million to replace them all.
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