For 30 years, the city has clung to a cherished goal of a social mix for residential megaprojects, requiring that one out of every five units be reserved for low-cost housing.
This week, planners are recommending that goal be temporarily suspended for the final phase of development on the old Expo 86 lands after Concord Pacific, the Expo landowner, offered a special deal.
That deal: The city gets two chunks of Concord Pacific land in the Downtown Eastside, one a controversial half-block on Hastings Street that became the epicentre of a campaign to stop gentrification and of protests during the Olympics over a shortage of affordable housing.
In exchange, Concord Pacific won't have to reserve space for social housing in its market-condominium development in the northeast sector of False Creek.
It's the first time the city has allowed a developer to go around the affordable-housing policy, acknowledged Dave McLellan, the city's community services manager.
"But with this deal, we get two great sites. And with one of them, it's a relatively large site where we could do a variety of things."
Mr. McLellan said the deal seemed like the most reasonable solution in the case because there was no obvious separate site in Concord's northeast False Creek land for social housing.
That meant that, if the city wanted social housing, it would have had to come up with money to finance some units in one of the planned market-condo towers. That wasn't workable, since the federal government stopped funding social housing 16 years ago and the provincial government only provides a limited stream of money for housing very needy people.
But the land swap and the city's possible future plans for that larger site at 58 West Hastings are already kicking off a hot debate in this expensive city about how to achieve social mix and affordable housing.
Downtown Eastside activists want the site reserved for subsidized social housing, saying it's desperately needed as the area, traditionally home to the city's poorest residents, slowly gentrifies.
But Mr. McLellan said that's not necessarily going to happen, because the city is going to look at alternative, more market-driven ways of providing low-cost housing since there is so little government money available.
That could mean seeing low-cost but unsubsidized rental units built on the site or even some low-cost units for sale, which would bring a mix of incomes to the project and neighbourhood.
Urban-planning and development experts are encouraging the city to do that, saying that having only social housing would just entrench the neighbourhood's existing ghettoization, as well as reducing social mix in other areas of the city.
"If we continue to default to having all the social housing in the Downtown Eastside, that's a problem. Then we end up with all the social problems in one place because it doesn't have any diversity," said development consultant Bob Ransford. "And it lets other neighbourhoods off the hook."
Councillor Suzanne Anton, who is the lone representative of the city's centre-right Non-Partisan Association, has another solution.
Like Mr. Ransford, she's worried about income segregation, both in the Downtown Eastside and in the newly social-housing-free Concord land.
But she would have preferred the city asked for $13-million in cash - the value of the two lots Concord has offered - and use that money to build social housing for the neediest on sites the city already has reserved in other phases of the Concord development.
Councillor Geoff Meggs, with council's ruling Vision Vancouver party, said the proposed land swap has crystallized the city's big dilemma.
It has a goal of social mixing for its new neighbourhoods, but money from senior levels of government that was available to make that a reality 30 years ago has mostly disappeared.
As a result, a mega-development like that of Concord Pacific, where 20 per cent of the units were to be aimed at low-income households, now only has 13 per cent of units on its sites that fit that category.
And what's still being provided is targeted only to the very neediest, not the families or working poor who used to have access to social housing.
He would like to see the city develop new ways to create affordable housing inside the mega-developments. But, unlike Ms. Anton, he'd like to see some of it aimed at those working poor.
"I am concerned [about this swap]" he said. "It's a sign that affordable housing is going to be a huge challenge."
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