Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

Director of the Housing Centre

SUBJECT:

Rental Agreements: 2111 West 11th Avenue, 2630 Arbutus Street, 2680 Arbutus Street and 2065 West 12th Avenue

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

The CityPlan direction for Addressing Housing Costs includes maintaining a stock of rental housing.

PURPOSE

This report seeks Council approval to enter into rental agreements with Bastion Developments, the owner of the Tribeca (2111 West 11th Ave.), Arbutus Outlook North (2630 Arbutus St.), Arbutus Outlook South (2680 Arbutus St.) and the Sydney (2065 West 11th Ave.). The rental agreements would limit the 129 units in the four projects to rental

tenure for 10 years commencing January 1, 2003. The agreement would prohibit the sale of residential units in the buildings. The residential units would have to be operated as rental housing.

PROPOSED RENTAL AGREEMENTS

Bastion Development Corporation have developed 4 buildings in the Arbutus/12 Ave. area which they want to operate for rental housing. A requirement of the lenders financing the projects is that they be stratified, as the lenders want to be able to sell units in the case of a default. Strata titling, however, generally results in residential properties paying higher property taxes than if they were unstratified rental housing. Unstratified rental housing pays property taxes on the basis of the rental income generated by the property, not on the basis for what they can be sold as owner occupancy.

Bastion has asked that the City enter into rental agreements with them that will require the residential space in the four buildings to be operated as rental housing. BC Assessment Authority advised that only if the City enters into rental agreements with the owners of the buildings can they assess the buildings as rental. Otherwise they must assess the buildings on their highest and best use which is typically as condominiums sold to owner occupiers. Currently, rental housing in this location is generating a relatively high assessed value so the savings to Bastion as the owner of the four buildings would be relatively small, but over time the difference in the value between units available for owner occupancy and units restricted to rental may increase resulting in a greater differential in property tax. It is to protect themselves from this risk that the owner wants to put in place the rental agreements with the City.

Rental housing is in short supply in the City, especially on the west side. Vacancy rates in Kitsilano in Oct. 2001 were 0.5 %. A healthy rental market would have a vacancy rate of at least 2%. The rental agreements would provide an incentive for the buildings to be operated as rental housing for at least 10 years. Currently the property taxes act as a disincentive to the development and operation of rental housing.

It is recommended that the City approve rental agreements for the four properties to restrict the use of their residential area to rental housing only. Two of the buildings have commercial space on the ground floor, and the commercial space would be excluded from the rental agreements.

Rental Agreement Terms:

· legal descriptions:

· a ten year term
· buildings may be stratified but residential units cannot be sold separately;
· the rental restriction will apply to the residential units only; and
· the rental restriction cannot be cancelled prior to January 1, 2013 except by a lender in the event of foreclosure.

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ag021022.htm

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