Vancouver city council will soon consider approving more than 1,000 units of rental housing as part of the city’s short-term incentives for rental (STIR) housing program – an initiative that has caused its main supporter, Mayor Gregor Robertson, plenty of headaches.
Robertson told Business in Vancouver February 22 that the city is lobbying Ottawa for help to stimulate development of more rental stock.
“It’s very frustrating to not have federal tax incentives for rental housing given our aging rental stock and the fact that over half of city residents are renters.”
But his lobbying efforts appear to be going nowhere.
James Moore, Ottawa’s regional minister responsible for Vancouver, told BIV March 2 that his government has no plans to institute tax incentives to encourage developers to build rental housing.
He pointed out that the country’s income tax system has prohibited the deduction of capital cost allowance on rental properties for more than three decades “to prevent higher income taxpayers from reducing their tax bill by creating or increasing losses from rental operations. This would only increase the tax burden on other Canadians.
He said the Conservative government has instead encouraged new rental housing “through broader tax reductions,” including lowering the goods and services tax (GST) to 5% today from 7% when it took office. That, plus widespread income tax cuts, put money into people’s pockets, Moore said, thereby stimulating the economy and encouraging rental housing investment.
But Robertson’s not convinced federal actions stimulate rental housing development when recent construction activity shows that builders prefer more lucrative condominium developments.
City statistics show that, since 2004, only 6% of new residential multi-family development has been for rental projects.
That equates to 180 units of rental housing and about 3,000 strata units completed annually in Vancouver.
In the 1970s, when federal incentives were in place, developers built more rental than strata units.
STIR was launched in July 2009 and is slated to end in December.
It provides developers with a number of incentives, including:
- waivers on development cost levies;
- discretion on unit size;
- increased density; and
- expedited permit processing.
Robertson told BIV that if he’s re-elected in November, he’d assess the program to see if it’s worth continuing.
The trouble-plagued program got off to a rough start last summer, when Robertson made disparaging comments about STIR opponents into a microphone that he didn’t realize was turned on.
West End Neighbours member Randy Helten and other opponents were speaking out against a 22-storey tower that Westbank Corp. and Peterson Investment are proposing to build at 1401 Comox Street, where St. John’s United Church stands.
It remains in limbo, as do projects at:
- 1215 Bidwell Street;
- 1418 East 41st Avenue;
- 983 East 19th Avenue; and
- 3068 Kingsway.
Council is considering six other applications and has approved two.
One is a Cressey Development Corp. project for two five-storey rental buildings at a site that bounds 3522 Porter Street, 1896-1898 Victoria Diversion and 3615 Victoria Drive.
The other council-approved STIR project created a different headache for Robertson: a $10 million lawsuit.
Landowner Mohamed Ahmed told BIV in January (see “Downtown development sparks $10m lawsuit” – issue 1107; January 11-17) that the city’s approved project would devalue his 110-year-old building.
Blue Skies Properties Inc. is developing a 106-unit tower next to Ahmed’s building and plans to complete it by February 2012.