The B.C. government is scrambling to explain how only 14 of 68 units at a government-subsidized housing development in Vancouver’s Kitsilano neighbourhood are being rented at below-market rates, despite it being touted as an “affordable rental” project.
The developer of 1807 Larch St. received $31.8 million in low-interest loans through the HousingHub program, which was designed to provide below-market rentals for middle-income households.
But a recent Globe and Mail article said the going rate for a studio apartment in the building is just shy of $2,600, while two-bedroom units are being listed for $4,200 a month.
This prompted outcry from Green Leader Sonia Furstenau, who accused the government of “using an eyedropper to put out a fire” by handing developers large loans in exchange for only a few units of affordable housing.
In an interview Friday, Housing Minister Ravi Kahlon said that “without this type of program being available, either these homes don’t get built, or they do get built and people just rent them at market rates, or, in some cases, stratify them and sell them.”
Higher-than-expected rents in some buildings and projects running into problems with financing have meant the program has become a lightning rod for criticisms of the government’s housing plan.
HousingHub was launched in 2018 by the B.C. NDP government as part of its promise to create 114,000 new housing units in 10 years. It was designed to provide incentives for developers to keep new units at prices affordable for families with an annual household income of $75,000 or less.
“Building affordable homes for middle-income people is key to tackling the housing crisis, and we have to work together to get it done,” then-premier John Horgan said following the program’s launch.
The program’s first four projects were a partnership with the B.C. Conference of the United Church of Canada. Combined, the projects were expected to “build more than 400 new affordable rental homes for individuals, families and seniors” at churches in Vancouver, Richmond, Coquitlam and Nanaimo.
The projects in Coquitlam and Nanaimo have opened. A third, at Brighouse United Church in Richmond, has been cancelled after project delays forced the closure of the church in 2021. The developer has since been sued for breach of contract.
In the following three years, the province continued pushing forward, with spending on HousingHub projects, not just in the Lower Mainland and on Vancouver Island but also in places like Revelstoke, Quesnel and Salmon Arm.
By 2021, the government was touting the success of the program, which it said had succeeded in opening or funding 3,400 homes geared toward middle-income renters.
To keep the program running, then-housing minister David Eby allocated an additional $2 billion to new developments.
“It provides profit and non-profit developers with loans with much lower interest rates than would otherwise be available,” Eby said at the time. “These homes will help people stay in the community where they live and work, something that everyone deserves.”
But problems began to mount last year when it was discovered that units in many of the buildings funded through HousingHub projects and described as “affordable” by the province were being rented at well above market rates. Some also ended up on Airbnb as short-term rentals.
One example is Olympic Villas in Merritt, which received $16.6 million in loans. In return, the developer was expected to offer 45 of the building’s 75 units at affordable rates.
Instead, according to reporting by the Merritt Herald and the real-estate news outlet Storeys, all of the building’s units were rented at market rates and the building is now being foreclosed on due to Olympic Villa’s failure to repay the government the loans.
“We have provisions in place that says that if they don’t pay the loan, then the province is going to step in and take the building over,” Kahlon said. “And this building is still financially viable. No one in the building will be affected and their rent will stay the same.”
Eby announced in February that the HousingHub program is being wound up and the $2 billion in funding has been shifted to the new B.C. Builds program, which is expected to help build middle-income housing on government-owned land.
BC United finance critic Peter Milobar accused the NDP of simply renaming the existing program.
“We have billions and billions of tax dollars going into these programs and we have very few units on a per unit cost,”Milobar said. “It’s simply not sustainable and and it really does feel like they’re just desperately trying to change language to get them through the election.”
Furstenau added that she believes the public is losing faith in the government because of the discrepancy between what is promised and what is delivered.
She said the government needs to focus on co-op and non-profit housing and not rely on the market to fix the housing crisis.
“The market isn’t geared to delivering affordable housing and where we have jurisdictions, countries, cities around the world, that have successfully kept housing affordable, it is because of significant investment from governments into non-market, not-for-profit, social and co-operative housing,” she said.
Tom Davidoff, executive director of the UBC Sauder School of Business’s centre for urban economics and real estate, said he agrees with the underlying premise of the HousingHub program, but believes it is a waste of public funds to support projects in new market buildings in places like Kitsilano.
He said for low-income people in these areas, the government should instead be focused on increasing the overall housing supply and on boosting rental subsidies and other supports for low and middle-income residents.
“Paying down rents in brand-new buildings in A+ locations is far from the most efficient way to deliver improved affordability,” Davidoff said.
