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A rendering of proposed development on 2538 Birch St., Vancouver,On behalf of: Jameson Broadway & Birch LP/Courtesy of Jameson Broadway & Birch LP

The City of Vancouver approved a record number of housing units last year, according to a city staff report, but still made the province’s list of municipalities that need to step up their housing game or deal with the consequences. Nicknamed the “naughty list” by the media, the growing list includes municipalities that aren’t delivering housing at a pace to suit demand.

Under the NDP government’s new Housing Supply Act, the province announced housing targets for 10 municipalities, but a government order-in-council later revealed that 47 municipalities would likely have to ramp up production of housing. The first batch included Vancouver, North Vancouver, Delta, Port Moody, Kamloops, Abbotsford, Victoria, Oak Bay, Saanich and West Vancouver. Targets will be announced later in the summer and municipalities will have six months to show they’re making progress.

If they don’t, the province could potentially step in and rezone entire neighbourhoods, such as opening up areas currently restricted to single-family homes to more density. When drawing up the list, the province measured the need for housing and the unrealized capacity within those jurisdictions to build more homes.

The city has made rental housing its focus. According to an annual progress report on the city’s housing strategy, presented to council in April, the city approved 12,800 purpose-built rental units over the past six years. In 2022, there were 4,260 purpose-built rental units that got the green light, the highest number in the past decade. While the vast majority were market-rate, those approvals also included 619 below-market units.

Condo approvals also jumped up since a record low year in 2019. That year, there were 1,930 approvals for condo projects, and in 2022 there were 4,406 approvals. The city’s target is to approve at least 3,000 units a year.

But the high volume of approvals still hasn’t translated into enough affordable supply. The report states that over the past six years, the city approved 43,000 housing units and less than 28,000 were completed (rental and condo combined).

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Andy Yan, director of Simon Fraser University’s City Program, questions whether policymakers are addressing the actual problem and whether the lack of supply is chiefly a zoning issue, as the provincial law suggests.

He says the concern should be the type of supply that each market needs. That means the policy should look at not just approvals, but the number of construction starts and completions, as well as the number of affordable units lost due to redevelopment.

“This list [of municipalities] makes so many assumptions about housing supply that it misses the point of housing fairness and diversity,” he said. “You have rental versus ownership, and the type of unit. And what is the intended population you are trying to produce a stock of housing for?”

The city report says the number of units approved for development fell below targets to serve those people with low to moderate incomes, or below $80,000 per year in household income. The vast majority, or 70 per cent, of rental homes were intended for those renters making more than $80,000.

And approvals don’t necessarily lead to completions, according to developers. This year there is relatively little construction underway and not many new condos for sale.

An example of how approvals alone don’t lead to housing is the case of the old Denny’s site at West Broadway and Birch Street, where Jameson Development first obtained approvals five years ago to build a rental tower. In 2020, council approved them for another 11 storeys, despite neighbourhood opposition.

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But then the project appeared to stall. Last November, the province stepped in and provided mortgage financing of almost $165-million, which Housing Minister Ravi Kahlon announced this month. The City of Vancouver is waiving development cost levies valued at about $3-million. Mayor Ken Sim embraced the province’s directive to generate more supply. At the press conference for the announcement, he said every type of housing is needed and promise that Vancouver would lead by example.

The support will help the developer build 200 market-rate units and 58 moderate income rental units, for those households earning $30,000 to $80,000.

“That exactly illustrates the problem of how approvals alone may not be the proper unit of success,” says Mr. Yan.

Hani Lammam, executive vice-president of Cressey Development Group, said higher interest rates and additional costs such as city fees have pushed up how much it costs to build new housing. People can only pay so much, particularly in rent, he says.

Taken together, he said that means a lot of projects that have been approved can’t move forward.

“The problem is that the formula to build housing doesn’t currently work,” Mr. Lammam said.

“There has been a lot of housing approved. Unfortunately, what has happened over the past couple of councils is the city got really aggressive with negotiating community benefits, to the point where these projects became not feasible. So it only took a blip in interest rates to throw everything off, so nothing works now.”

Mr. Lammam adds that approvals aren’t a measure of the right supply.

“I’ve been telling the housing staff at the city they have to stop publicizing their approvals, because it doesn’t matter; you can’t live in an approval,” he said. “They’re approving projects that can’t get built, or else they aren’t the right product.”

Matthew McClenaghan, senior vice-president of development at Edgar Developments, says that approvals aren’t the biggest issue right now. The company, which built the Duke rental building on Main Street, is also working on a proposal to rezone a shopping mall in downtown New Westminster for eight towers. In a few months, they start construction on the Portwood in Port Moody, a 23-acre mixed-use community that will deliver 2,200 homes. But generally, there isn’t much going up. He cited the pandemic as having an impact, as well as record high interest rates and costs.

“There won’t be much completed in 2023,” Mr. McClenaghan says. “If a developer stopped their presales or stopped construction, now you are feeling the ripple effect of that.

“Our industry is now taking a second look at our [calculations] and saying it’s costing more to build, it’s costing more to lend,” he said. “And there is a threshold in regards to what a purchase price or sale price can be. So there’s a bit of a pause in the market right now in regards to starting construction.”

Approvals can take time, depending on the municipality, he adds, but it’s not the whole problem.

“Just because it’s approved doesn’t mean it will get built, and that’s where we are at today,” he says.

Meanwhile, they will use this pause to continue to get future projects approved.

“We can’t do nothing, because things take time, so we’ll work for rezoning and development approval,” he said. “Just because we are a little nervous now does not slow us down from advancing future projects.”

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