Vancouver is being forced to consider renting its controversial social-housing units at the Olympic Village to the "barely needy," as arguments continue to mount that selling is not a viable option.
Many people familiar with the village say it's doubtful whether the city could get back the $110-million it spent on the units if it tried to sell them.
And, with the city already economically strapped, few are willing to say it should make those units affordable for the lowest-income residents through subsidies, thereby giving up millions in future rent.
That means that the least-painful alternative for the city is to rent to higher-income residents who will need only a small subsidy, although other options are still being tossed around.
"It comes down to how much money we have to create affordable housing," said Councillor Raymond Louie. "We can do core need, shallow need, low end of market, or market."
City staff had calculated last year that Vancouver would have to forego getting back $77-million of its construction costs if it wanted to provide the highest level of subsidies for the lowest-income families.
A four-bedroom apartment that would rent on the market for $2,156 a month would need to be rented out for $1,275 to make it affordable to a low-income, or "core need," family.
However, only $35-million in subsidies would be needed if the units were rented out at close to market rates. Many social-housing projects try to include some people who pay what is called "low end of market" - only about 10-per-cent less than market rates. Renting only to that group of people would reduce considerably the subsidy the city has to provide.
Options to rent the units are being considered by the city mainly because just selling them on the market as condos is looking less and less viable. A report by city staff was supposed to come out before Christmas, but there is still no clear answer and no recommendation to council is expected until after the Olympics.
People inside and outside City Hall say it's unlikely the city could get what it paid for the units, which cost an average of $437,000, or about $500 per square foot of living space.
Stuart Lyon, the architect who designed all three of the social-housing buildings inside the enormous complex, said much of the extra expense was created by the city's demand that the project be low-rise and that it be built to high "green-building" standards.
Those requirements, which entailed installing special heating systems inside and more expensive cladding outside, are not the kinds of features that buyers are likely to pay extra for.
"Dumping them on the market, the city would be losing an enormous asset," said Mr. Lyon, who noted that they are built more solidly and with far more energy-saving features than standard condos. "If they keep them, they'll recover their operating costs in a very short time."
As well, City Hall insiders say there are potential legal problems if the city tried to sell the units. Millennium Development Corp., which bought the land for the market condos, bid a price based on the assumption that there would be social-housing units built in the village, not other competing condo units.
Condo marketer Bob Rennie, who has worked with Millennium throughout, suggests the city should rent out the units at full market rates and then turn them into subsidized units later on, once some of the construction costs have been paid off.
But Councillor Geoff Meggs said he thinks it's difficult politically for the city to abandon any immediate attempt at affordable housing.
"We're going to take a loss regardless. And I'm concerned about this council being the first in memory to concede on affordable housing."
Special to The Globe and Mail
Frances Bula