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Opinion: Rental-only zoning could end up a damp squib

Experts say policy is a good idea in theory but in practice will only work in tandem with other incentives
RENT rental policy panel May 31 2018 Radisson Hotel Richmond
At the Radisson Hotel in Richmond on May 31, 2018, journalist Frances Bula (left) moderates a panel on rental-only zones with (l-r): Lisa Spitale, City of New Westminster; Raymond Kwong, BC Housing; Noha Sedky, City Spaces; and Robert Brown, Catalyst.

The B.C. government’s recently announced policy allowing municipal governments to dictate rental-only zones has been met with a mixed reaction that has left many wondering whether it’s a good or bad idea.

On the one hand, city mayors and affordable housing advocates have warmly welcomed the autonomy to choose whether to impose strict zoning rules in order to create more rental housing. Vancouver mayor Gregor Robertson publicly supported the flexibility of the program, noting that what works in Vancouver may not work in Victoria, and SFU City Affairs program director Andy Yan has described the policy as “innovative.”

On the other hand, the idea has been met with predictable caution by the development industry, which in general seems not opposed in principle, but concerned about how “downzoning” land to rental-only could make building on such land financially unviable, or create rental “ghettos” that could become undesirable over time.

Not knowing what to think, I headed to the BC Non-Profit Housing Association’s one-day Regional Education, Networking & Tradeshow (or “RENT” – how cute) on May 31, to listen to what smarter people than I had to say about it. At an eye-opening panel discussion, moderated by venerated journalist Frances Bula, four housing industry insiders shared their thoughts on whether rental-only zoning will work in the real world.

It was unanimous that the policy was a good idea in theory, with none of the panellists taking Bula’s bait to criticize it, and all refuting the “ghettoization” theory. Robert Brown, president of non-profit housing provider Catalyst, joked that Vancouver’s rental policies of the 60s and 70s created a “horrendous ghetto, known as the West End” – now, of course, a highly desirable neighbourhood despite its high proportion of rental. BC Housing’s Housing Hub director Raymond Kwong added that if developers were so concerned about ensuring a healthy mix of housing tenure, why was that not already being created? Both fair points, and both solidly in favour of the new policy.

However, further discussion about how the rental-only zones would be implemented yielded a number of caveats. Noha Sedky, community planner with CitySpaces, observed, “With this policy, [municipalities] don’t have to have 100 per cent rental. You can have a mix, you can determine what you want – 10 per cent, 20 per cent... In some cases it might be best to have 100 per cent, especially where you’re replacing existing rental stock… But you may choose to have a mix, if you’re concerned about that potential of change over the long term.”

So what does that mean for the usefulness of rental-only zoning? Municipalities already dictate certain percentages of rental stock within their community plans, and in negotiations with developers by offering them more density (and therefore more money-making market condos) in exchange for adding rental units to their project. So then, what’s going to change under the new policy?

‘All a negotiation’

Lisa Spitale, chief administrative officer with the City of New Westminster, said, “The most strategic way of using this tool is as part of a neighbourhood masterplan… This just becomes another appropriate tool for land use in a masterplan and neighbourhood context. When we are dealing with development applications at that scale, it’s all a negotiation. All of it… We’re really comfortable with density negotiations [in exchange for rentals]. Do I see that changing with rental-only zoning? Not necessarily.”

Sedky added that it was “unlikely” that a city such as Burnaby, with high-density community plans already in place, would add a layer of rental-only zoning to those communities – such as Metrotown. “It would be a contradiction of the process that they’ve gone through, and… they would also have to go through a zoning bylaw amendment and a public process.”

She continued, “It will probably only apply as ‘downzoning’ existing multi-family areas, as you couldn’t apply it to single-family neighbourhoods, I don’t think the legislation allows that. And that’s where you have to see if it’s going to work – are you going to see the pick-up of rental projects [by developers], or are you going to prevent homes being built? That’s where you might have to have additional incentives to make it work.” Sedky added that if municipalities wanted to build non-market affordable rental, not just market rental, even more incentives would need to be put in place.

‘The elephant in the room’

Brown agreed, “Downzoning is the elephant in the room, that’s where the conflict is going to come, particularly in the development community. But this could be handled with potentially the use of [offering] additional density [to developers].” He also said that NIMBYism and public pushback against new rental-only zones could make it not worthwhile for municipalities to pursue at all, and that non-profit housing providers would still never be able to compete with market developers to buy land.

Kwong said, “[The policy] is a good idea, but how do you implement it? That’s where everything hits the fan, and the devil is in the details… These tools need to dovetail with what other levels of government are doing… The provincial and federal governments need to also provide tools to assist in the ability to create that.”

All of which seemed to say that, although the new rental-only zoning policy seems like a good idea in theory, the practical application of it may be far trickier. It could either end up so watered-down, there would ultimately be very little difference from the status quo in terms of rental stock, or developers would get so much incentivization to make all this additional rental viable, that land values would remain astronomical, and there won’t be any additional below-market rental housing. We can hope that increased market rental supply would at least be enough to help with affordability and vacancy rates, but that remains to be seen.

More to come on this, no doubt.