The not-so-hidden costs of Vision's social housing experiment are mounting
In the second part of this series, Michael Geller explores some of the more recent events to take place regarding the Olympic Village social housing units. He reveals that a number of decisions by the current Vision Vancouver administration will end up costing taxpayers a bundle of money. To read Part I of this series, click here.
2010. Notwithstanding the Mayor's earlier position, Council rejected the concept of selling the units as condominiums. Instead, it voted to retain the status quo with half as social housing, and the other half as rental housing. The only changes it did agree to were to increase the rents to market rent, rather than 'the lower end of market rent', which was exactly what the housing industry experts warned the City not to do. Council also voted to adopt my idea to give priority to city emergency workers and school teachers. However, they would have to be renters, not owners. On this basis, Council estimated the subsidy requirement at $64 million and agreed to find or borrow $32 million, in addition to VANOC’s $30 million and $2 million in Development Cost Charges, to subsidize the units.
However, at a media briefing following this decision, the Mayor and City Manager proclaimed this decision as a major compromise in the interests of fiscal responsibility. Subsequently, under newspaper and radio headlines claiming that the social housing was to be halved, the Mayor was quoted as saying that financial realities were forcing the City to scale back on the amount of social housing. He blamed the mismanagement of the past Council in containing costs. Only Councillor Geoff Meggs made it clear in a subsequent radio broadcast that it had always been intended that only half the units be rent-geared-to-income and the balance rented on the open market. However, he insisted that the market rental units were not being subsidized. He was wrong.
What none of us knew at the time was prior to the Council decision informal discussion had taken place between the City and the Province regarding an alternative funding arrangement for the social housing. While the Province was not prepared to provide the City with capital funding or operating subsidies, it appears it may have been prepared to take over the project. While City and Provincial officials have different recollections on this matter, once again the City continued with the project on its own.
The Province did play a subsequent role assisting the City with the selection of non-profit organizations to purchase and operate the units. However, as we now know, only a few submissions were received, including one from the Portland Hotel Society, an organization acclaimed for its work providing supportive housing for the homeless and hard-to-house. All of the proposals were rejected.
The City subsequently decided to proceed on its own with an alternative plan involving a cooperative housing organization. It agreed to enter into a long term lease to operate some of the housing as a cooperative, and serve as an ‘interim manager’ for the remainder of the units until another longer term solution could be found.
2011. This brings us to today. According to the most recent Receiver's report, 144 of the 252 social/rental housing units are still vacant, more than one year after the Council decision to keep, rather than sell this housing. The Receiver’s report does not set out how much the City has lost, or is paying each month. However, given interest and holding costs, and lost revenues, it could easily be in the order of $200,000 a month.
The Coop is having difficulties leasing the units due to the complex income restrictions in place, and the very factors the industry experts warned the City about in November 2009. The rents for many of the units are too high for the unit sizes and features being offered.
While some City officials are pleased with the progress being made in leasing up the units, others privately worry that it may take a long time to fully lease up these buildings. Ironically, and most sadly, rather than populate the village with new residents to reduce the 'ghost town' feeling, the exact opposite is happening.
While the debate continues over just how much money the city is going to lose on the Olympic Village, and there are repeated calls for a Public Inquiry, I believe the City needs to find new solutions to fill this housing. Options might include revising the Coop’s income restrictions, reducing rents, or upgrading some finishes. Some prominent signage visible from around the site might also help.
The City also needs to initiate a comprehensive review of its other social housing programs. As we have recently witnessed, providing temporary shelters is a costly and poor solution for the longer term. Furthermore, the longstanding policy of requiring 20% social housing in larger developments no longer works in the absence of adequate senior government subsidies. While new projects are proceeding on 12 City-owned sites, they are very expensive and not always housing those in greatest need.
The empty social/rental housing at the Olympic Village is a social and financial tragedy. It is also a testament to bad decision-making by the current and past city administrations. It is now time to identify more rational and fiscally responsible solutions since we simply cannot afford to continue as we have done over the past few years. Moreover, we cannot afford not to house many of those currently living on Vancouver’s streets.
- Post by Michael Geller. He is a Vancouver based architect, planner, real estate consultant and property developer with four decades’ experience in the public, private and institutional sectors. Follow @michaelgeller or @CityCaucus on Twitter. He also regularly appears every Tuesday on the Bill Good civic affairs panel on @cknw radio in Vancouver.