To combat rising rental rates while encouraging new rental projects, the City of Victoria next week will consider a novel approach to offering rental subsidies to some tenants.
Based on a proposal from Mayor Lisa Helps and councillors Ben Isitt, Jeremy Loveday and Sharmarke Dubow, the city will consider turning a portion of the property taxes it gets from new rental buildings into rental subsidies.
The motion also calls for a property-tax exemption for five to 10 years for rental-building retrofits and a request that Ottawa remove GST on purpose-built rental buildings.
The idea is to encourage redevelopment of tired buildings to create more housing options, while helping tenants displaced by the new construction.
“In a deep housing crisis with not enough rental housing and not enough affordable rental housing, the disappearance of low-end-of-market units for redevelopment is putting pressure both on tenants, on existing rental stock and on all levels of government to build more social housing to fill the gap,” the draft motion says.
It says since new private-market rental buildings with more units and density will generate more property taxes for the city, the city should consider using the extra money to fund rent supplements so displaced tenants pay the same rents in a new building, and to supplement their rents to live somewhere else during construction.
Currently, when developers propose replacing an older rental building with a new, larger project, the city asks them to provide relief for displaced tenants. That can take the form of a right of first refusal on the newly built units — which many can’t afford at market rates — paying moving expenses and helping in relocation.
The new proposal may cost the city property-tax income, but the mayor and councillors point out the city is likely still ahead, given the only way to replace low-cost units at the same rental rate is to look to government-funded, non-profit buildings, which don’t pay property taxes and require taxpayer subsidies to build.
Details of the rental-subsidy proposal must still be worked out, including who would administer the supplements and how tenants would qualify, how long the subsidy would last, and where returning tenants would live during the construction phase.
Landlord B.C., the Urban Development Institute and Together Against Poverty Society have all said they support the proposals, to be considered at Thursday’s committee of the whole meeting.
David Hutniak, chief executive of Landlord B.C., called them an “easy deliverable” for the city.
Noting the current fiscal climate has already resulted in a slowdown in new rental construction, he said the group “strongly” endorses the idea of a five- to 10-year tax exemption for building retrofits and upgrades as an incentive.
Kathy Whitcher, executive director of UDI Capital Region, said the development industry appreciates the city using carrots instead of sticks to incentivize new rental projects.
Douglas King, executive director of the Together Against Poverty Society, said the organization supports the idea of using property-tax exemptions for rental supplements to promote the right to return for tenants.
“We have seen an acute need for new solutions to what have now become entrenched issues with affordability in our housing market, and an urgent requirement to protect low-income renters in Victoria who are residing in aging housing stock,” he said.
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