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THEN AND NOW | In January 1971 (top) there was a sense of community in the Little Mountain housing project, but by 2009 it was boarded up prior to demolition

Public land ideally suited for affordable housing is being sold off at record rates. As British Columbians struggle to cope with the highest housing costs in the nation, is it time for governments to rethink their cash-grab strategy?

 

Ingrid Steenhuisen was an infant when she and her family moved into their 750-square-foot unit at Vancouver’s Little Mountain—also known as “the projects.” But Steenhuisen didn’t think of her home as low-income housing that would, over the decades, earn a reputation as the rundown and ugly-looking complex off Main Street, at 155 East 37th Avenue.

Little Mountain—one of Canada’s oldest social housing projects—was a joint effort by the three levels of government that opened in 1954. Operated by the Canada Mortgage and Housing Corporation (CMHC), the 37 buildings and 224 multifamily housing units were filled with kids just like Steenhuisen—playing in the grassy oasis that was the big lawn surrounded by their apartment buildings, hidden away from passersby. They had it good, their community of nearly 700 people, even though they were, to outsiders, considered poor kids.

Little Mountain 1972IMAGE BY: BRIAN KENT/VANCOUVER SUN
Photo from January 1971 shows the neighbourhood once home to about 600 people

The units were spacious and bright, with funky 1950s-style kitchens and hardwood floors. Steenhuisen’s dad worked on the railway when her family moved into their unit in 1957. By 1979, he was on disability insurance due to a series of strokes, and by then, he had five kids. But the family had the support of a tightknit community.

On a sunny afternoon stroll through the empty grounds this past summer, the only evidence that hundreds of people used to live there are the old concrete sidewalks. The crown corporation BC Housing, whose mandate is to provide affordable housing for the province, took over the property in 2007 and immediately made plans to sell it off. After putting out a call for bids, BC Housing entered into a cash-and-property deal in 2008 with Holborn, a Malaysian development company that is a subsidiary of a charter bank, selling 6.2 hectares for $300 million plus 234 non-market housing units. The residents were evicted, but a handful fought hard to stay; by the fall of 2009, only 10 remained, including Steenhuisen and her mother.
Ingrid SteenhuisenIMAGE BY: NIK WEST
CHILDHOOD HOME | Ingrid Steenhuisen grew up at Little Mountain Housing Project

In an effort to appease a riled community, Holborn built a 53-unit seniors residence off to the south side of the property while they waited for rezoning of the full property. That finally came in July of this year, when the City of Vancouver approved rezoning for 1,400 units of market housing and 282 units of social housing, with Phase 1 to begin in 2017. Holborn’s Vancouver-based CEO Joo Kim Tiah says the controversy surrounding Little Mountain, plus a lengthy public consultation process, is responsible for the lengthy delays (they started the approvals process in 2010). He adds that he was never forced to deliver the one social housing building that was completed in 2015—the one that Steenhuisen lives in today.

“I did it out of goodwill—I didn’t have to [build it],” says Tiah. “Because it was a tough situation, politically. Everyone was going to look bad. The city was going to look bad. The province was going to look bad. I just said, ‘I’ll do it then.’ People always paint developers as evil. I am here for the long term, and I want to build a good brand. I sympathize with the situation.”

Still, for almost a decade the property once home to about 600 people will have sat largely empty—this at a time when the need for affordable housing has become more urgent by the day. Home prices have soared in the past decade: in 2006, only 19 per cent of Vancouver houses were over the $1 million mark, compared to 91 per cent in 2016. Average rental rates are also way up—UBC economist Tom Davidoff forecasts a 20 per cent increase this year alone—while the vacancy rate approaches zero. And now the future of affordable housing in Little Mountain’s central, highly walkable Mount Pleasant neighbourhood rests with an offshore corporation instead of the provincial government.

“I’ll be honest with you, I would have hoped we got this rezoning a lot earlier,” says Tiah. “But thank God the market worked in our favour.” As to whether the condos will be priced as affordable for local incomes—which average $76,000 per household—it doesn’t look promising. “The market housing will be priced to where the market is,” he says. “That’s all I can say.”

Steenhuisen, now 59 and on disability insurance, lives with her infirm mother in the new seniors facility. The home, run by the More Than a Roof non-profit, can’t compare to what she once had at the original Little Mountain, says Steenhuisen. She misses the camaraderie of coffee with her long-time neighbours. More importantly, she wonders what, exactly, is the point of selling off what you could never afford to buy in today’s market. “If we can’t meet current housing needs with public lands that we have that are fully paid for, then how on earth do we meet the future housing needs if we sell it all off?’”

What happened at Little Mountain is not unique: all across the Lower Mainland, various levels of government have been dumping public land—land ideally suited for affordable housing—to make a quick buck. A year ago, the province dispensed with 150 hectares at Burke Mountain in Coquitlam—sold to developer Wesbild Holdings for $43 million less than the appraisal price of $128 million. The province also unloaded 15.7 hectares of prime property at Jericho Lands last April as part of a $480-million deal with three First Nations. Before that sale, the federal government sold half its 21-hectare share of Jericho to the three First Nations for $237 million and transferred the other half to its crown development corporation, Canada Lands Company.

Cameron Gray worked for 25 years as the city of Vancouver’s director of the Housing Centre before retiring in 2009. Since council passed the Vancouver Property Endowment Fund in 1975, the city’s practice has been to grow and hang on to assets and long-term leases in order to get a return on those investments. “The province could have done a 99-year lease if they wanted to, just like UBC and SFU,” argues Gray. “It would have worked in terms of redevelopment opportunity. But for whatever reason, they wanted to sell it and try to maximize the dollars with a view to reinvesting that money back into social housing. Their attitude has been, ‘maximize the financial return and reinvest.’”

UniverCity
LAND LEGACY | SFU has leased some of its property on a 99-year term to developers at UniverCity, which will eventually house 10,000 residents

Universities aren’t allowed to sell freehold properties according to provincial law—though two Vancouver-area institutions have successfully combined housing projects that sell at market and non-market prices. UBC has its Properties Trust while SFU has UniverCity—both of which partner with developers to build homes on prepaid leasehold land for 99-year terms. Gordon Harris, CEO of UniverCity, is overseeing a four-phased project that is building out SFU’s lands to a planned population of about 10,000 (this summer, they housed their 5,000th resident). Harris is a big believer in leasehold, and he’s tried to convince politicians of its merits.

“Over our 150-year history, there were certain lands deemed sufficiently important to hang onto,” he says. “And I’m not sure that’s changed. Let’s ask what will we have left that is strategically located—publicly held lands that could be used to the greater good? If we squander that now, it’s gone.”

Outside university lands, one doesn’t have to go far to see the benefits of preserving public land. False Creek South is the internationally renowned low-rise neighbourhood adjacent to Granville Island. It offers affordable co-op, rental, nonprofit and strata housing to families, seniors and immigrants; it also happens to be highly walkable and with ocean and mountain views. False Creek South was built during the heyday of the 1970s, when all three levels of government were committed to the cause. At the time, the land around Granville Island was an unremediated industrial site—hardly desirable in a suburbanized city where the single-family house was still the preferred tenure. To build multi­family dwellings was considered edgy, progressive and—almost unbelievably now—“dense.”

False Creek SouthIMAGE BY: DAVID DRUCKER
CO-OP CREEK | The multi-family housing of False Creek South was considered edgy and progressive in the ‘70s

The downside of leasehold land, of course, is that leases come up for renewal—and property values diminish as that date approaches. Landlords could choose to not renew and buy the units back and rezone the area; they could also jack up leases to a market rate. The 5,000 or so False Creek South residents are dealing with those concerns now as the first of their leases come up for renewal, starting with Marina Housing Co-op in September 2021. (Most of the land is city-owned, with a small amount of properties owned as freehold.)

Consultant and former city planner Nathan Edelson is currently helping residents work out a deal with the city. “Here you have one of the best communities in the world, as a planned community—it put Vancouver on the international planning map,” says Edelson. “We have housing built 40 years ago that is enormously affordable, and virtually all the co-ops are well managed. The challenge now is: How do we update it for the new century?”

Mukhtar Latif, the city’s chief housing officer, says it’s too early to offer specifics on the upcoming plan for False Creek South. City officials are still trying to hammer out the current values of the leases, he says, but adds that they are considering a mix of housing so that people can age in place. There is also potential for infill, as well as redevelopment of existing housing.

“Coming from London, I see the same challenges: limited supply, pressures on housing,” says Latif, who moved to Vancouver three years ago. “Everyone is really struggling to find the funds to support the range and amount of need. We can create new supply, but that takes time. We can create a certain level of affordability, but we need other levels of government to help.” Earlier this year, Latif submitted a proposal to both the province and the feds to help develop 20 city-owned sites; the city, which has announced a target of 2,500 affordable new homes by 2021, rezoned four of them this summer.

Earlier this year, the province also stepped up—matching a $150-million federal contribution as part of a program to create new affordable housing and renovate existing housing; it has also committed $350 million to the Provincial Investment in Affordable Housing program to create 2,000 rental units throughout B.C. On the federal side, the 2016 budget included $200.7 million over two years for 5,000 low-income seniors housing units. The feds have also started an Affordable Renting Housing Innovation Fund to encourage the construction of affordable housing and are offering $500 million in loans to developers and municipalities over the next five years.

But in both governments’ case, holding onto public land seems a less important part of that overall housing strategy. Neither the provincial minister responsible for housing, Rich Coleman, nor the federal minister in charge of housing, Jean-Yves Duclos, agreed to be interviewed for this story. A federal spokesperson, when asked about the government developing federally owned land, said: “The minister will be working with the minister of public services and procurement to conduct an inventory of all available federal lands and buildings that could be repurposed, and making some of these lands available at low cost, or no cost, for affordable housing.”

Meanwhile a provincial spokesperson, on the sale of public land, wrote: “Non-profits have asked the province to transfer housing assets to them for many years because owning the land will help them to improve long-term planning and to secure the financing they need to be sustainable.”

However, all those transfers go into housing vulnerable groups, as opposed to housing those whose incomes no longer match local housing costs. As a result, the affordability crisis has fallen onto the shoulders of municipalities—which, in the case of Vancouver and other cities, rely upon private developers to incorporate non-market housing into their re-zoning projects as a trade-off for height or density. So far, in Vancouver, the ratio of affordable housing to market-rate housing being built is dismally low: according to the city, only 133 units of social housing—intended for those with low incomes—were built in 2015. Meanwhile, 2,719 market-rate rentals, condos, townhouses and duplexes were built that same year, according to CMHC.

Penny Gurstein, director of UBC’s School of Community and Regional Planning, thinks the unwillingness of senior levels of government to get back into the business of affordable housing is about politics, not policy. “It is very short sighted of governments to try to solve budgetary problems and download housing delivery totally to the private sector,” she says. “It appears to be an ideological decision rather than a long-range policy decision, which is needed to address housing.”

Canada has been without a housing policy for so long—the feds got out of social housing in 1993—that there’s a whole new generation unaware that government used to consider affordable shelter a top priority. “People have trouble conceiving of a world in which the government, through active policy, encourages the significant construction of rental housing or builds leasehold housing—initiatives that would bring the cost of housing down,” says David Eby, NDP MLA for Point Grey and his party’s housing critic. “Instead of learning from False Creek South, it’s as if we are going backwards. People assume the little affordable housing in our city that exists is just there, somehow, through a lucky break. But that housing only ever came about because of deliberate policies by government.” 

Vancouver Quadra Liberal MP Joyce Murray was disturbed enough by the lack of public consultation in the Little Mountain case that she put together an ad hoc committee of citizens to share their vision for Jericho lands post-sale. “I see the Jericho lands as being probably the most significant development site in Canada for its size and location—it’s a jewel for the city. If we were Copenhagen or Paris or Amsterdam and there was this amazing site, the citizens of those cities would not be content to wait for someone else to tell them their plan. They would want to be included with their interests and vision.”

Murray is a proponent of hanging onto public lands and selling leases instead. But Jericho is a hot enough political potato that she’s focusing only on the process. She won’t comment on what she’d like to see happen with the Jericho lands specifically—sensitive to the fact that there are several stakeholders involved, including the three First Nations. It’s a hopeful sign that Canada Lands, the crown co-owner, has to consider repurposing the site for social good as part of its mandate.

While many continue to argue that the province and feds should step up—and pony up—other socially minded groups aren’t waiting for that to happen.

Robert Brown is a developer who has come up with some creative ideas to develop small but affordable rental housing projects—partnering with nonprofits and civic governments that have developable land. His Catalyst Community Development Society is working with Oakridge Lutheran Church as partners to develop their site at 585 West 41st Avenue into a six-storey building with 46 units of social housing. The church contributes the land; Catalyst offers investment and development expertise. Together they will own the building, including a ground-level retail space that will be rented at market rate, with revenue from the retail subsidizing the housing.

But each Catalyst project, he says, is different. His aim is to supply workforce rental housing, defined as housing for people who earn between $25,000 and $60,000 a year. He’s got partnerships in New Westminster, Port Moody, Victoria and Vancouver. The City of New Westminster is selling Catalyst and a nonprofit partner one of its properties for $1 to develop three workforce rental units and three units for disabled people. It will have a covenant on the title saying it can never be sold for market value.

“You’re not getting that big capital infusion at the beginning, but you are also not transferring a bunch of publicly owned land into the market that’s never coming back,” he says. “That’s the trade-off. The cost of development will be a challenge at the beginning. But 20 or 30 or 40 years down the road, when these workforce rental-housing units are producing revenue, we can start providing a cash flow. There are so many ways to cut it.”

Another innovative approach can be seen at Toronto’s Regent Park. The 28-hectare Cabbagetown site, built in 1948, had deteriorated over the decades into an isolated, crime-ridden slum. In 2005, the Toronto Community Housing Corporation—the city’s housing arm, created in 2002—marked Regent Park as its first regeneration project. As TCHC’s chief development officer at the time, Mark Guslits wanted to do something outside of the usual deal with a private developer, who might supply a few social housing units. The land would be worth more to the city if it controlled the development, he thought, so they brought on a developer-builder partner—the Daniels Corporation.

Regent ParkIMAGE BY: VIC PAHWA (LEFT); TOM ARBAN (RIGHT)
WHAT NOT TO BUILD | Regent Park before demolition and after redevelopment

TCHC put up the land, waived the usual development and infrastructure fees and guaranteed construction loans—which meant the developer didn’t need a high level of presales in order to get financing, according to Guslits. TCHC formed a legal partnership with the Daniels Corporation, in which the developer promised to build about 5,000 units of housing—including the 2,000 or so units of social housing that needed to be replaced.

That left about 3,000 units of market housing. “At the end of the day, the developer didn’t have to unilaterally pay for and own the land upfront, but he got to benefit from the proceeds,” says Guslits, who is an architect by trade. “And because TCHC was willing to take some risk, [TCHC] got 40 to 60 per cent of profits on market housing, depending on the phase. They used that profit to cross-subsidize the building of their social housing. And the more money made off the market housing, the more money TCHC made to assist in rebuilding their promised subsidized housing.”

Occupancy of the new units started in May 2009. They’ve finished three of the five phases, with completion on track for summer 2020 or 2021, according to Guslits. The last of the units will be the priciest since they’ve increased in value now that the location is desirable. “What doesn’t work is to take poor people and put them on undesirable land,” he says. “You don’t give up the possibility that you have housing for low-income people in the heart of an upscale community. You will never get that back again. So hang onto it, and develop it in a creative fashion.”

He concedes that Vancouver has a different set of problems from most cities, due to its world-class land values. “That being said, I guess the decision the government has to make is: Is it going to use its assets, like land, to be a catalyst for revenues—or is it going to use it as a catalyst for change?” 

How the Little Mountain Deal Was Structured

Joo Kim TiahDetails of the deal between the province and Malaysian developer Holborn–announced in 2008–were kept secret and remain so to this day. “I can’t tell the terms of that deal. It’s confidential,” Holborn CEO Joo Kim Tiah said in an interview with BCBusiness. It’s estimated that he agreed to pay $300 million for the Little Mountain site, which he would not confirm nor deny. But the belief among many in the development community is that Holborn only paid a 10 per cent down payment to hold the property until it was rezoned. And total payment could be many years off: a BC Housing spokesperson said the balance owing by Holborn will be paid incrementally, as each phase of the Little Mountain project is completed.

While Tiah would not confirm any of the numbers, he did offer an illuminating explanation as to how such a negotiation might have worked. “Without saying too much, let’s say the price is $300 million. The guy is not going to cut you a cheque for $300 million on Day One,” says the 36-year-old developer, whose other properties include Trump Tower, opening this fall, University Heights in Squamish, which is in presales, and a heritage property at Dunsmuir and Richards. “There are certain ways to structure deals… Say the vendor is cash-strapped: If the price is $300 million, and one guy says, ‘$150 million cash—do I have the property?’ the vendor might say, ‘OK.’ But if the vendor is like, ‘I don’t need the cash. I need it progressively—the bigger number is more important to me over time.’ He might prefer this structure. The vendor and the buyer have to structure a deal that works best for both parties. And we managed to do that.”

Michael Geller worked as a consultant on behalf of Vancouver-based Polygon, one of the other developers that bid on Little Mountain. “Holborn blew everybody out of the water,” he says. “I personally was very disappointed because, knowing this was the first major rejuvenation of a BC Housing project, I thought it was really important it went very well. Polygon and no doubt others had some creative ideas in terms of how to accommodate a broad mix of households. And instead the bid had been won by someone with no track record.”

Tiah rejects suggestions that Holborn, having held the land for seven years, will now try to resell it for a handsome profit. “I have every intention to develop the project. I’m happy with the real estate [market] as well, but I’m not going to count my chickens before they hatch. Look, there are risks involved. If, God forbid, the market tanks 50 per cent in the next eight years, what happens then? If the market goes down, do I get a refund? I don’t.”