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An apartment building proposed by developer Ian Gillespie in Vancouver?s West End is facing opposition by angry neighbours.

Ian Gillespie didn't go out looking to become the lightning rod for a public brawl over the right way to create rental housing in Canada's most expensive city.

It all happened by accident.

But along the way, Mr. Gillespie's effort to build apartments to rent, instead of sell, and the City of Vancouver's ambitious effort to promote rental-housing construction through incentives to developers have become an object lesson for every city in Canada about what not to do.

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That lesson: If you're going to give extra density to developers to build rental, don't just tell the public it's a good thing. Explain why cities need to have a healthy stock of purpose-built rentals.

Vancouver didn't do that. As a result, both Mr. Gillespie and city councillors have been vilified by angry residents of the city's West End who claim he and other developers are getting windfall profits, that there is no rental-housing shortage and therefore no need for incentives to solve it.

That kind of backlash is common to single-family neighbourhoods, as they rebel against the introduction of renters whom they view as nothing but trouble: transient, lower-income, not homeowners. But 80 per cent of the 40,000 residents of the West End are renters themselves.

Rueful councillors and Mr. Gillespie now say the city made mistakes.

"I think everyone admits they did a bad job of communicating the goals and benefits. That's where some people in opposition have a legitimate complaint," said Mr. Gillespie, who is now pondering what to do about his project. A revised design had been headed for a public information meeting, prior to public hearings and a rezoning, but that was cancelled in late July.

City Councillor Raymond Louie also says he learned that, while people in the policy world understand the need for purpose-built rental housing, the general public doesn't.

Even renters often don't understand how bringing new rental apartments to the market, even if they're priced at the high end, helps create supply and reduce pressure on older, lower-priced apartments.

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The whole drama started a year ago, when Doug Goodwin, the executive secretary of B.C.'s United Church conference, came to Mr. Gillespie asking if he'd be interested in buying a property in the centre of the city's attractive downtown neighbourhood. The pastor specified that the church, unused after two congregations had amalgamated, would be sold to someone who would provide something beneficial to the neighbourhood once it was torn down.

Mr. Gillespie agreed to provide community-centre space on the ground floor of the building for gays and lesbians, who make up a big part of the neighbourhood. He also decided to make the whole 22-storey tower a rental building - a rarity in Vancouver and, in fact, in most of Canada.

As everyone who's studied the Canadian housing market knows, rental-apartment construction boomed in the 1960s and 1970s. But it slowed to a trickle after the federal government changed tax laws and incentive programs at the same time that condo ownership was given a legal framework. Developers quickly moved to building condos for quicker and easier returns.

Housing advocates, municipal planners and even occasional business groups have lobbied intensively since then to revive rental-housing construction. They say that even new rental apartments charging relatively high rents help provide a form of affordable housing and reduce pressure on older, cheaper apartments. Rental housing is also key to healthy economies. A good pool of rental housing makes it easier for people to move around to where jobs are.

Mr. Gillespie wanted to put up a rental building for all kinds of reasons besides saving the economy.

Interest rates were at historic lows, making it feasible. He and his business partner, Benjamin Yeung, wanted some rental in a portfolio that had none, although the pair, who have developed Woodward's, the Fairmont Pacific Rim and the Shangri-La in Vancouver (where all the condos sold immediately), held other types of real estate in the industrial and commercial sectors.

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And, most important, the city of Vancouver had just developed an aggressive new policy to encourage developers to build rental housing to create more affordable options.

A new council had decided to offer developers a mix of more density, faster processing times, relaxed parking requirements and other incentives if they would build rental apartments that would be legally guaranteed to stay as rental for the life of the building.

Mr. Gillespie thought it was a good idea. Although the West End had been protected for years from any wholesale demolitions or conversions of its big supply of existing rentals, the neighbourhood had been in an uproar for the past few years about a different kind of change. Landlords of older builders were evicting their long-time tenants, fixing up the apartments and then re-renting them at much higher rates.

He saw his building, which he projected to rent at about $2.30 a square foot, or $1,380 a month for a modest 600-square-foot one-bedroom unit, as providing a solution. "It would force all the other landlords to stop abusing their renters because there's competition."

So much for good intentions.

The city's Short Term Incentives for Rental (STIR) program has provoked one of the most energetic resident uprisings in decades. And, although Mr. Gillespie is not the only developer making use of the program, his building provoked some of the strongest reactions.

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That's in part because the West End hadn't seen any new buildings built for decades, thanks to the moratorium. But it's also because Mr. Gillespie's project is the tallest, and it was granted the largest increase in density. And the church site has an attractive garden popular with neighbours.

The city's real-estate department insisted that the density granted was no more than what Mr. Gillespie needed to make building the rental units and community centre financially viable. Mr. Gillespie said the project was calculated to produce a minimal return of five per cent a year on its cost to build. But residents refused to believe those assurances and, lacking any detailed financial information from the city, it was impossible for anyone in the public realm to judge the deal.

Now, everyone is waiting to see what Vancouver will do with its STIR program - stick to its guns or fold under pressure.

In the housing world, they're hoping it's the former.

"They put in a lot of effort. They've done all the things that people have talked about as the right things to do," says Don Littleford, housing manager for Metro Vancouver, the collection of 22 municipalities in the region, including Vancouver.

"The question we have to ask is where is the collective voice of all the individuals and families who need this housing? If there are renters out there, why aren't they speaking out?"

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Rentals vs. condos

3,593: Number of rental units built in Vancouver, 2005-2009

59,854: Number of condo units built in Vancouver, 2005-2009

5,659: Number of rental units built in Toronto, 2005-2009

66,305: Number of condo units built in Toronto, 2005-2009

Figures include social housing units

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Source: Canada Mortgage and Housing Corporation

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