BC Business
Tornados are famously random. A twister will destroy a home while leaving its neighbour untouched, like a perverse, divine reminder of the unfairness of life.
But an earthquake is different. A quake is like a ruthless prosecuting attorney—probing, seeking out wrongdoing, searching for weaknesses and uncovering hidden evils. The evils are structural. Recent earthquakes in Taiwan and New Zealand revealed catastrophic architectural flaws. Vancouver and Victoria are both expected to go on trial someday. Homeowners are warned about this regularly. But what about renters?
Public buildings and schools are the government’s responsibility; private homes and condos, the responsibility of the owners. Unlike owners of private homes and condos, renters have no equity and thus no financial stake in seismic upgrading. “Renters have little or no incentive to invest capital to upgrade homes that they do not own,” says Mike Ursel, owner of QuakeSafe Retrofits in Victoria. As for landlords, they are understandably reluctant to engage in major retrofits that might make the property a net liability.
After some hard bargaining, Los Angeles came up with an agreement whereby landlords and renters would share the cost of retrofitting via rent increases up to $38 per month spread over a 10-year period. But David Hutniak, CEO of LandlordsBC, says that’s unlikely to fly in B.C. Under the Residential Tenancy Act, rent increases are limited to two per cent annually, plus the CPI. There is a provision that could allow a B.C. version of the L.A. formula, but the process requires proof of expenditures, tenant sign-off and the approval of a Residential Tenancy Branch arbitrator. Landlords are rarely if ever successful, so few bother with the process, says Hutniak. “If there were some blanket requirement that every older apartment had to have major seismic upgrades, it would definitely have a significant negative impact on the industry.”
The issue of seismic upgrading dovetails with that hottest of hot-button issues: affordability. Vancouver’s 2007 Rate of Change bylaw prevents demolition of older rental properties. Landlords and developers say this blocks new construction that would create more units. Hutniak notes that we need increased density to house current citizens, let alone the tens of thousands moving to B.C. over the next 20 years. “If this is a major factor in preventing us from being more prepared for an earthquake, it is a real problem,” Ursel says, “and after the event we will look back with incredulity at the unintended consequences of this law.”
Meanwhile the inability to build new properties creates another financial impediment to major structural upgrades. Much purpose-built rental stock is 40 or 50 years old, with the land holding the real value of the property, not the physical structure. Ursel believes seismic upgrading should be an easy sell even for those who rent. Renters have enormous interest in living in homes that have been upgraded, and he expects landlords renting seismically upgraded homes could charge a premium. “I also like to think that landlords could get buy-in from informed tenants to raise rents in exchange for safer homes.”
“The vast majority of purpose-built rental stock is well maintained,” Hutniak insists. Standards of maintenance are defined in the tenancy act and by municipal regulations, which he argues provide a significant measure of confidence in the safety of older structures. “The majority of owners have continued to make the necessary investments to maintain their buildings because the asset has continued to appreciate and investments in things like energy efficiency will reduce costs elsewhere in the business model.”
“My experience is there is no shortage of rentals and owned homes that have not had basic, effective and affordable upgrades,” says Ursel. “I could upgrade two homes per week for the rest of my career and still only deal with the tip of the iceberg.”
One positive sign: the mild quake that hit in December woke some people up, Ursel says. “That little shaker has kept us busy for months,” he says. “Hopefully it represents a trend to growing awareness.”