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The Globe and Mail

Amid Calgary’s prosperity, Mayor Nenshi senses housing crisis

Last year, nearly 30,000 people arrived here, drawn by the scent of money. The Stampede City is in full boom again, with the oil patch bestowing six-figure salaries on many of those inhabiting the industry's gleaming downtown office towers.

Tony restaurants along Stephen Avenue and elsewhere are packed. Luxury automobiles are flying off the lot. Prosperity abounds – for most but not all. The downside of all this upside is the pressure it has put on the city's affordable-housing market. It becomes scarcer by the day. And the mayor can sense a crisis on his hands.

"It's the No. 1 issue for us right now," Naheed Nenshi said in an interview. "It, along with the continual concern over transit expansion. The two go together in many respects."

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The situation is so dire the mayor is considering some unusual measures and expanded powers – such as forcing developers to build affordable housing, and legalizing secondary suites in homes.

Before last year's floods, which damaged many parts of the city, Calgary's vacancy rate was 1.7 per cent, the worst in the country, said the mayor. Now, he believes it's likely closer to zero. For years, developers showed no interest in building rental housing because there was no profit in it. In fact, the city lost thousands of apartment units – almost 7,500 between 2001 and '09, according to the University of Calgary – to condo conversions.

But because rental rates have soared in the past few years, developers have shown a new interest in this area. There are 12 rental towers in the works now, compared to only three that were constructed over the previous two decades, according to the mayor.

Still, it's not enough to meet demand.

Mr. Nenshi is now experiencing the kind of problems cities like Toronto and Vancouver have been dealing with for years. Since becoming mayor in 2010, Mr. Nenshi has had a somewhat rocky relationship with the city's developers. He's being sued by one to whom he referred to as the "Godfather." Now he's trying to persuade this same group to add a component of affordable housing to the market towers they are putting up around the city.

Moral suasion has so far not worked. Mr. Nenshi now favours bringing in mandatory inclusionary zoning, which effectively compels builders to apportion a percentage of the units they build to affordable housing (between 5 and 20 per cent).The city doesn't have the power to enforce this type of zoning restriction at the moment but may soon seek the power from the province to do so.

"I think this kind of zoning must be part of the solution," said the mayor. "You don't want to interfere too much with the private market but you want to make sure something is in place. This is something where regulation is required. A total free market doesn't work."

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Those are words that will undoubtedly make developers skittish, but something has to be done. Many can't afford the sky-high rents that exist – the average two-bedroom unit is nearly $1,300 a month. Mr. Nenshi has heard stories of people placing "for rent" ads and getting more than 1,000 inquiries the first day. This has incited an unfortunate spiral.

Rents are so high, many people can't afford them and so are looking for subsidized accommodation options. There is a waiting list for social housing that measures in the thousands. This pressure is bumping more people into shelters or out on the streets.

"So the whole system kind of works its way down," Mr. Nenshi said. "We have to have market solutions to build rental housing and entry-level attainable home ownership so we can clear out the system. But right now there's very little political will, especially federally and provincially, to make that happen."

Secondary suites in homes could also be part of the solution, yet at the moment they are illegal in certain areas of the city and subject to rezoning in others. The mayor would like to see them made legal throughout the Calgary region, which would open up thousands of additional opportunities for people to rent.

"We're just getting the conversation going about some of the possible solutions," said the mayor. "But we have to get it moving along quickly because we have a real problem on our hands that is only going to get worse unless we do something about it quickly."

Follow me on Twitter: @garymasonglobe

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