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A construction site on the 1400-block of West Broadway at Granville in Vancouver on April 22.JENNIFER GAUTHIER/Vancouver Freelance

The City of Vancouver has approved a potentially transformational plan aimed at providing tens of thousands of new rental apartments along its new subway line.

Mayor Kennedy Stewart is trumpeting the plan’s unprecedented protections for existing renters. But it’s that feature – combined with the current economic turbulence – that is making developers dubious about whether they will jump in to start building.

Jon Stovall, one of Vancouver’s major developers, says he will move ahead with a 460-apartment project on Broadway at the former Mountain Equipment Co-op site. But he said he won’t proceed with another site that has 30 existing tenants.

“It just doesn’t make any sense,” Mr. Stovell said. “Anything with existing rental will be way too problematic.”

Canada: The land where any plan to build more housing risks being studied to death

The Broadway Plan was approved Wednesday night after three years of development and consultation and weeks of public hearings. It is aimed at adding enough housing, in a 480-block swath along the extension to the subway line now under construction, to accommodate 50,000 people by 2050.

The mayor and councillors approved 27 amendments, including precedent-setting requirements for renter protections proposed by Mr. Stewart. Those include requirements that all existing renters have the first right-of-return to an apartment in the new building at their current rent or 20 per cent below market rate, whichever is less.

As well, the developer will be required to top up their rent at whatever place they live in during construction if that rent is higher than what they were paying.

Reluctance on the part of developers to start a building boom will be welcome in some quarters: Opponents of the plan worry that wholesale development of leafy neighbourhoods of single-family homes and low-rise apartment buildings will transform their community into a forest of towers.

The approved plan is unfolding as Canada’s federal housing agency issued a report saying the country needs to more than double its housing construction by 2030 – from the status quo 2.3 million new homes to 5.8 million – to accommodate new residents and maintain affordability.

In addition to the Broadway Plan requirement for subsidizing some renters, B.C. developers are also facing increased borrowing costs as interest rates climb; bank rules that require developers to provide 50 per cent of the financing on their own; an ongoing shortage of construction materials and labour; and a potential provincial decision to limit their next allowable rent increase to less than the rate of inflation.

As a result, Vancouver developers could opt for less-complicated sites, like low-rise retail along Broadway or older homes along arterials like Fraser Street where high density will be allowed. Those areas could see a development boom.

But the new housing that city planners said they hoped would be gradually developed among the blocks north and south of Broadway will be much less financially appealing, they said.

“I’m delighted the plan is going ahead but they took so many nicks and cuts that they won’t get the amount of housing they wanted,” Mr. Stovell said.

“At this stage, there’s not going to be a mass change around Broadway,” said Cynthia Jagger, whose company Goodman Commercial Inc. specializes in apartment sales. “It’s a hard time to consider rental now with construction costs and other things.”

Jennifer Darling, who works with the brokerage firm Colliers, said buyers she is hearing from are very hesitant about trying to redevelop any current rental-only buildings.

“Definitely, the rental requirements are going to cause challenges. And there’s a rate-of-change policy also that covers secondary rentals, too.”

She’s currently working to sell a low-rise apartment building at 12th Ave. and Burrard St., but she said a redevelopment there is only possible because it’s a strata building that doesn’t currently allow rentals, so there wouldn’t have to be the heavy compensation required for a building housing renters.

Ms. Darling said the buyers interested in the Burrard St. site are mainly interested in redeveloping it as rental because of the incentives the city is offering. Any builder will be able to get much more density than is currently allowed if 20 per cent of the units rent below market rates.

The fierce debate over the plan at council promises to ripple into the Oct. 15 civic election, with the vote clearly defining the differing stands of the many parties running – and even the differing stands of councillors in the same party.

The plan was supported by the mayor, OneCity Councillor Christine Boyle, the three councillors from the new ABC party – Sarah Kirby-Yung, Lisa Dominato, and Rebecca Bligh – and two of three Green Party councillors, Pete Fry and Adriane Carr.

It was opposed by Councillor Colleen Hardwick, whose new TEAM party has carved out a distinct brand opposing many recent development projects in Vancouver. It was also opposed by Councillor Melissa De Genova from the city’s long-standing centre-right NPA, Green Party Councillor Michael Wiebe and Councillor Jean Swanson of the veteran left-wing COPE party.

The plan went through a massive number of changes as various councillors introduced new amendments on the fly, some of them so sweeping that city staff said the plan would essentially be scuttled if they were passed.

The major ones that were accepted were the mayor’s on renter protections, one from Ms. Boyle aimed at ensuring a place for bike lanes on Broadway and one from Ms. Kirby-Yung that reduced the minimum frontage a developer would need for a project from 150 feet to 99 feet.

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