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A 7-4 decision by Vancouver city councillors to reject a proposal for a 21-townhouse rental project in Vancouver’s upscale Shaughnessy neighbourhood has set off a shock wave of recriminations and dire warnings about the city’s inability to act on its housing crisis.

But Vancouver Mayor Kennedy Stewart, who was one of the minority voting for the project, said he believes the decision was an “outlier” – one that was affected by the opposition from people involved with a hospice next door – and doesn’t represent a change in council’s prevailing trend of approvals for rentals and other projects.

“It is a little bit of a warning, but the pattern has been approval,” Mr. Stewart said.

But the mayor does worry that so many councillors voted against the 3.5-storey stacked townhouse proposal on Granville Street on Tuesday because they thought the units were unaffordable, with one bedrooms at $2,000 a month and three bedrooms at $3,500.

Mr. Stewart said that, obviously, those aren’t affordable to people making less than $80,000. But they are needed.

“These are affordable for people who desperately need homes in this city. Only 16 per cent of our police officers live here. I could see two police officers with their twins living there,” Mr. Stewart said.

The proposal generated backlash for more than a year, as people who run the eight-bed hospice next door said it would have to close during construction and that the large number of households next door would erode the peace and privacy of people coping with death.

The developer made some changes early in the process to mitigate impacts on the hospice, but even though all councillors supported the idea of a good-neighbour agreement to ensure minimal disruption, the majority still voted against the project.

All three Green Party councillors, three of five Non-Partisan Association councillors and council’s one COPE representative voted against it, with some urging the developer to come back with something more appropriate.

“To me, it did not meet the litmus test of attaining community support,” NPA Councillor Colleen Hardwick said. “I would like to send this back to the drawing board and ask the applicant to come up with something more suitable.”

The Green Party’s Adriane Carr said she was concerned about the lack of affordability and the fact that the project was “not a fit,” while Rebecca Blight of the NPA said she was also influenced by the fact that the townhouse project would damage the “iconic look” of Granville Street with its large single-family homes and tall hedges and oak trees.

While Shaughnessy residents and hospice supporters were relieved at the council’s decision, the news set off a barrage of warnings elsewhere about what kind of message this was sending.

Former NPA councillor Gordon Price blasted those voting against it on his blog.

“The most important message coming out of council, whether deliberate or not, is this: ‘No matter what we as councillors say, no matter what policies we pass, no matter what support you get from staff, no matter how great the need we acknowledge, none of that really matters. If enough of the residents complain, we will protect the status quo.’ ”

A local rental-housing developer, Aly Jiwan, said he doesn’t see the decision as an outlier, but as a disturbing trend. He said the city is far behind its normal level of approvals for projects compared with other years and Tuesday’s decision added a kicker to that.

“This decision adds risks to rental housing builders such as ourselves. Even after a proposal for much-needed rental housing has been vetted and supported by staff and complies with the area plan and with city policies, council rejects it in a public hearing. We will definitely factor that risk into our decision-making.”

Ron Rapp, the interim chief executive officer of the 1,100-member Homebuilders Association Vancouver, also said the decision sends a bad signal to the development community about whether they should bother taking a chance on rental-housing projects.

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