December 3, 2016 12:07 am

Vancouver rental incentive program hurting tenants, benefiting developers, experts say

Some good news for Vancouver taxpayers in the case uncovered by Global News of a $1.5 million dollar waiver the city says was “accidentally” given to a major developer. Tanya Beja has more on that development, as well as a look at the Rental 100 program responsible for the kickback.

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A Vancouver government program designed to encourage developers to build more rental housing is coming under fire, with prospective tenants and even some city councilors saying the program is not doing enough to curb high lease rates and shrinking unit sizes.

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The city’s Secured Market Rental Housing Policy, also known as Rental 100, provides developers with waivers on the development cost levies for new buildings, provided those developments are made up entirely of rental units. It also provides further financial rewards to those who meet other qualifications, including reduced parking areas and higher density quotas.

However, lawyers and city councilors say there are too many loose ends and ill-defined terms in the program that developers can take advantage of, effectively doing away with affordability altogether.

“I don’t think it’s meeting people’s expectations,” said municipal lawyer Nathalie Baker. “It seems to be benefiting developers more than anybody else.”

Reports dating from 2010 to 2015 show Rental 100 developers have saved $15 million in levies.

READ MORE: City of Vancouver’s Rental 100 guidelines

Under the program, successful applicants are required to not exceed average maximum rents as determined by the city for the year 2016.

Yet the maximum rent for a one-bedroom apartment in East Vancouver is set at $1,675 per month, while a similar unit in the western area of the city is almost $200 more, at $1,843 per month. It goes up from there, with a three-bedroom unit in the western area nearly hitting $3,000 per month.

There is no listed incentive provided to developers to set rental rates below those maximum rates.

To make matters worse for prospective tenants, the developer is allowed to hike rental rates far beyond those maximums once the first tenant leaves, which is allowed under B.C. provincial law.

Those rate limits only apply to buildings currently under construction. Many of the buildings that qualified for the Rental 100 program before those limits came into effect are now listing their units as “luxury rentals,” with some of those spaces being listed for $3,000 per month and up for a one-bedroom unit.

Green Party city councilor Adriane Carr says the program is due for an overhaul, starting with the definition of a key term.

“I, for one, think we need to define ‘affordability’ much differently,” Carr said. “If we define it in a different way, so that it is affordable to the average income-earner in this city, we would see rents come in [at] much lower amounts.”

The city also sets maximum unit size restrictions on Rental 100 developments. Under the program guidelines, a one-bedroom unit should not exceed 600 square feet, while a studio apartment can’t be bigger than 450 square feet. Baker says this creates the wrong incentive for developers.

“It encourages [developers] to build a smaller unit, but charge the maximum rent,” Baker said. “That’s not great for renters, especially if what’s being demolished to put these buildings up is larger, affordable, older rental stock.

“That’s not making the problem better. It’s making the rental crisis worse.”

Vision Vancouver councilors say the program still fills the need for rental units in the city, which continues to boast one of the lowest vacancy rates in Canada at 0.9 per cent.

“From the point where we had almost no rental [units] being built…five or six years ago, we’re now getting a thousand units a year,” said city councilor Geoff Meggs of Vision Vancouver. “I gather we’re going to go well above that this year.”

Meggs also said the maximum rental rates as stated in the Rental 100 guidelines are “still within the budget of a mid-range of families, a lot of middle-class families, who could never afford to buy a condominium.”

The Rental 100 program has already come under scrutiny this week, after Global News discovered the developer Onni was given a $1.5-million kickback under the program for their mixed condo/rental building The Charleson, despite not qualifying for the incentive and never having applied for it.

Onni announced Friday it would pay back the money to the city, while the government itself is currently investigating the mistake, giving a full audit to the other 30 approved Rental 100 applications.

WATCH BELOW: Global goes looking for more answers after our exclusive report last night of a $1.5 million dollar discrepancy that benefited a major developer. John Hua has more.

© 2016 Global News, a division of Corus Entertainment Inc.

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