The future is coming to Broadway, but the fate of renters is uncertain

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Mike Hanafin has lived in a three-storey walk-up apartment building in Mount Pleasant since 2017, after he was renovicted from his previous home of a decade-plus, another three-storey walk-up down the street.

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He felt an unpleasantly familiar sense of worry in March, when Vancouver released its draft Broadway plan. His building, he figured, could be a prime site for redevelopment, and the measures in the plan intended to protect tenants like him did not reassure him.

“My initial thought was: The future is coming,” Hanafin said. “But I don’t want us to be collateral damage.”

“I get it. We have to have more homes in the city,” he said. “But how they do it worries me, and I don’t have a whole lot of trust in how it’s going to happen … A lot of people have reason to look at those maps and think: ‘I might lose my home.’”

Those who build and plan cities like to promote “transit-oriented development.” But some academics have another term, meant to describe who benefits and who often doesn’t from multi-billion infrastructure projects: “transit-oriented displacement.”

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With a $2.83 billion subway under construction along Vancouver’s Broadway corridor, city council is set to consider a plan this week to increase the city’s “second downtown” to 128,000 residents from 78,000 over the next 30 years.

Mayor Kennedy Stewart promises this will be different from past plans in Vancouver and other North American cities that featured mass displacement of lower-income renters. That is, the mayor says, if council approves his plan.

The Broadway plan, described as Vancouver’s most important planning decision of a generation, contemplates a future for 500 city blocks that already make up B.C.’s second biggest job centre and are home to one out of five renter households in the city.

Adding 42,000 jobs and up to 30,000 homes — most of which are expected to be market and below-market rentals — means building up. The plan envisions taller buildings for parts of Mount Pleasant, Fairview and Kitsilano. That denser, more urban future is facing opposition, including a rally last week at city hall billed as a “fight for the soul of Vancouver.”

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Stewart campaigned in 2018 on boosting rental housing construction and making life better for renters, who make up slightly more than half of Vancouver households. As he gears up for this year’s re-election campaign, Stewart is trying to rally support for the Broadway plan and making an ambitious pledge, saying this wave of development will not force any renters out of their neighbourhood.

The Broadway plan includes policies that, a city staff report says, means when rental homes are redeveloped, “in most cases” tenants will be able to return to the new buildings at rents equal to or less than what they paid before.

Stewart’s proposal, which he calls “the largest expansion of renter’s rights in our city’s history,” would go further, promising to protect all renters, even longtime tenants paying significantly below market rates. He wants amendments to the plan allowing tenants displaced by redevelopment to opt for a cash payout based on length of tenure or move into a new unit in the new building at the same rent or, in some cases, even less than what they paid before. And developers would be responsible for finding them interim homes and topping up their rent during construction.

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Not everyone believes Stewart’s idea can work. Developers say it would impose “unreasonable” barriers to rental construction, making the housing crisis worse as badly needed homes are not built and old buildings deteriorate. Meanwhile, some tenant advocates call Stewart’s proposed protections “hot air,” expressing skepticism city hall will actually “protect tenants in the face of the profit motive.”

Stewart acknowledges his vision for Broadway differs from what the city has done before. He has said he would, eventually, like to extend such protections across the city.

“In the past in Vancouver, large-scale plans have ignored renters, driving people out of their neighbourhoods with little or no regard. So it’s no surprise that those living along the corridor today are feeling anxious,” Stewart said at city hall last week. “These changes should provide renters peace of mind.”

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Hanafin said this week that he felt “some degree of hope” reading about the extra protections proposed by Stewart.

“However, I am definitely wary,” Hanafin said.

Even if most of council supports Stewart’s amendments, which is not a sure thing, Hanafin said, “I worry that the landlord lobby is going to put a lot of pressure on the city staff, and especially council and the mayor to water those down — even slightly — to allow loopholes to avoid the more costly protections.”

“I’m sure Mayor Stewart has polling that shows him this is a politically wise move to help him get re-elected,” Hanafin said. He likes the idea of staying in his neighbourhood and not paying higher rent, possibly even in a new apartment, he said. “But I wonder: is it a pipe dream? Who’s going to build it?”

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Economics ‘can’t simply be ignored’

When the Broadway draft was released in March, Stewart told Postmedia he was trying to determine whether its renter protections — right of first refusal in the new building, rent discounts and interim rent support — were strong enough. In early May, Stewart unveiled what he called the “strongest renter protections in Canada.”

On Wednesday, staff will present the Broadway plan to council, followed by what’s likely to be several members of the public offering their views for and against the plan.

Council’s eventual decision will be closely watched: Brent Toderian, Vancouver’s former chief planner, described it in a recent Vancouver Sun commentary as “the most important plan in this generation of Vancouver city planning.”

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City hall has touted Vancouver’s recent shift from primarily condo construction to more rental housing, hailing the 2,956 rental units approved last year as the highest number in “several decades.”

But David Hutniak, CEO of the industry association LandlordBC, says that recent boost in rental construction could be jeopardized by rising interest rates and higher construction costs. Municipalities adding “unreasonable demands” — such as stronger tenant protections — will only add to the challenge.

Hutniak supports the Broadway plan, calling it a “once-in-a-generation opportunity for the city.” But he’s worried by Stewart’s proposed tenant protections.

“The economics of rental housing can’t simply be ignored and my sense is that’s what he’s chosen to do. Doing so will mean both current and future renters will suffer the significant unintended consequences,” Hutniak said. “If everything went through as the mayor is proposing, nothing will get redeveloped.”

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LandlordBC also believes below-market homes should be subject to income-testing, Hutniak said, to ensure they go to those who need them most and not only those who have lived in one apartment the longest.

Wesgroup CEO Beau Jarvis said his company has about 1,000 rental units under construction in Metro Vancouver, about 200 of which are below-market units. He said construction costs and interest rates mean none of those projects would be viable if they were starting today.

“Lots of things need to line up for rental to work,” Jarvis said. “All of a sudden, the stars are becoming not aligned for a whole bunch of rental to occur.”

Stewart’s proposal, Jarvis said, could add another obstacle to adding more rental homes to a market with a chronically low vacancy rate.

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Zack Ross, chief operating officer of family-owned developer Cape Group, said allowing tenants to return to new units at their old rents will impede redevelopment: If expected rental income is not enough to cover all costs of redeveloping a property, lenders will not lend and projects simply will not happen.

“Projects need to be above-water in order to be lendable,” Ross said. “Even the CMHC or B.C. Housing won’t give you money to build these … if the project doesn’t show that the value is more than cost.”

“We’re very compassionate to the renter, because that’s our core business, providing rental homes at affordable pricing. We have tenants and buildings that have been there since we opened the building in late ’70s,” said Ross, the third generation of his family to work at Cape. “But at the same time, you need to be able to build more units. … It’s a very, very tough problem.”

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It’s hard to predict what Stewart’s tenant protections could mean for the viability of every property in the Broadway plan area, because details vary so much from site to site, Ross said. It is possible, in theory, to make the numbers work, he said, if a builder can add enough new market-rate units to cover the costs of the permanently below-market ones — but that would require significantly bigger buildings, and a lot of math is required to determine if the densities proposed in the Broadway plan will make that viable.

“Anything is possible,” Ross said. “We put people on the moon, we should be able to figure out how to do this.”

‘People are going to get evicted, no matter what’

A new city analysis by real estate consultant Coriolis predicted the Broadway plan would bring significant short-term residential and commercial development in areas near subway stations, where towers up to 40 storeys are contemplated. Coriolis predicted development will be slower on side streets dominated by older mid-rise apartment buildings, as fewer of those properties will be viable for redevelopment with the affordability requirements, tenant protections, and the densities proposed in the plan.

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“That’s quite a deliberate strategy,” said Matt Shillito, Vancouver’s acting director of special projects.

The Broadway plan was crafted to create a lot of rental housing and job space near transit stations, Shillito said, where few residents would be displaced, while creating a pathway for existing rental buildings to be redeveloped, but “not creating a major incentive” for a rush of development in those existing apartment areas.

The side streets of Mount Pleasant, Fairview, and Kitsilano include many three and four-storey walk-up apartment buildings, which provide much of Vancouver’s stock of relatively affordable rental housing. City hall doesn’t want them lost quickly, as in Burnaby’s Metrotown where many older, more affordable apartment buildings were demolished to make way for condo towers.

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The Broadway plan envisions towers of up to 20 storeys in these currently medium-density apartment areas, but city hall expects the affordability requirements and tenant protections will slow down redevelopment there, limiting displacement.

Some renters are skeptical about that. The Vancouver Tenants Union is planning a “tenant resistance movement against the Broadway Plan’s transit-oriented displacement.”

Tenants Union organizer Mazdak Gharibnavaz said Stewart’s tenant protection proposal is “not worth the paper it’s printed on.”

“We do not believe that the municipal government will protect tenants in the face of the profit motive,” Gharibnavaz said, adding that he believes the city doesn’t adequately enforce existing tenant protection policies, “let alone these new so-called protections.”

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Others are more hopeful. Kit Sauder, a renter in Mount Pleasant and co-chair of Vancouver’s renters’ advisory committee, said while it remains to be seen how Stewart’s proposal will work out, the city can’t afford to miss the opportunity presented by the Broadway plan.

Apartment buildings in these neighbourhoods are only affordable because of their age, Sauder said. City staff report 83 per cent of purpose-built rentals in the Broadway area are more than 50 years old.

“Whether the plan goes ahead or not, those buildings are going to have to either be torn down to the studs, or demolished and replaced, which means that people are going to get evicted, no matter what,” Sauder said. “The question is: Do we build housing in the same neighbourhoods that they can then move into? Or do they end up having to move likely out of the city entirely, to find more affordable rents?”

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