Do We Need Government Support of Purpose-Built Rental Housing?
January 25, 2024
Incentives may be needed to Increase the Supply of Purpose-Built Rentals in Canmore[JK1]
Why?
To level the playing field between market rental development and condominium development, municipalities across Canada have demonstrated that incentives are an effective tool in increasing rental supply. Financial modeling which demonstrates positive returns are, and will continue to be, necessary to secure construction and long term financing, which will ensure the long term viability of entities specializing in purpose built rentals within what is a very competitive and risky industry.
Collaborative Relationships across All Levels of Government are Necessary
As municipal governments are limited in the type of incentives that can be offered, it is key that municipalities engage with federal and provincial governments, to develop housing policies that support purpose-built rentals, enabling industry to respond accordingly. A healthy market will deliver a variety of housing types, and with varying levels of assistance from government, all levels of affordability can be addressed (Figure 1-1).
(City of Vancouver Rental Incentive Program Review prepared by CitySpaces Consulting dated July 2019)
It is incumbent that all parties involved strive for partnerships that collectively acknowledge hurdles and roadblocks to the delivery of more purpose-built residential; that flexible policies and associated support provided with the objective of reducing risk for developers.
How Can Canmore Increase Purpose Built Rental Housing
1. Investigate underused municipal lands that could accommodate housing in central areas of Canmore.
2. Allow increased building height to permit more units on each site, utilizing properties to their highest and best use in context with neighbouring zones and uses.
3. Accelerated Development Permit and Building Permit processing i.e., priority processing for purpose-built rentals.
4. Relaxation of minimum unit sizes i.e., min as low as 320 sq ft provided the unit meets liveability criteria.
5. Parking relaxations (parking is often underutilized by as much as 35 to 50%) but must be balanced between market need and cost savings.
6. Allow additional density without increasing the cost of development by eliminating requirements for additional community amenities. Purpose built rental should be considered a community benefit. [JK2]
7. Development Permit fee waivers or reductions in securities or permitting the utilization of bonding.
8. Property tax refinements to the property tax assessment methodology to assess affordable rental housing to better address the reduced rents received by the housing providers.
9. Property tax deferral or exemptions.*
*On the face of it, property tax deferral programs may seem like a viable incentive, however such programs may unfairly penalize those that can barely afford their own property taxes. There are positives and negatives to these programs that require a sound policy with ample public debate to be held prior to going down this road.
Purpose-built rental housing is a key source of secure, long-term housing for households earning a broad range of incomes. It should be built to include market rent revenues as well as secured rental housing where the building is secured as a rental tenure through legal agreements for a specified length of time (60 plus years or for the life of the building). Secured Rental policies target low to moderate income households; are just one type of housing along the housing spectrum.
The availability of specific housing types impacts the affordability of all housing types; so do choices of incentives as each possess risks and opportunities to be investigated, weighed on merit and considered by elected officials of the day.