Date: June 3, 1997
   Dept. File No. 3043
   C.C. File No. 2602

   TO:       Vancouver City Council

   FROM:     Manager, Housing Centre in consultation with the Director of
             Legal Services, Director of Central Area Planning, the
             Director of Land Use and Development and the Director of
             Community Services

   SUBJECT:  Regulating the Conversion and Demolition of SRO Hotels


        A.   THAT the Provincial Government be requested to amend the
             Vancouver Charter  to enable the City to regulate the
             conversion and demolition of SRO hotels providing residential
             accommodation generally in accordance with Appendix A.

        B.   THAT staff be instructed to initiate public consultation on
             the implementation of these powers once the Vancouver Charter
             has been amended.


        The General Manager of Community Services RECOMMENDS approval of
        the foregoing.


        The City Manager RECOMMENDS approval of the foregoing, noting that
        there is a short window of opportunity for Provincial approval
        during this legislative session.  The Charter amendments would 
        provide the City with additional powers.  Council can subsequently
        decide how to implement these powers after full  public discussion
        with the various stakeholders.


   On May 8, 1989, Council adopted policy to maintain and expand housing
   opportunities in Vancouver for low and moderate income households, with
   priority being given to Downtown lodging house residents, elderly people
   on fixed and limited incomes, the physically and mentally disabled and
   single-parent families.

   On May 16, 1991, Council reiterated its intent to ensure one-for-one
   replacement of Single Room Occupancy (SRO) units in Downtown South and
   endorsed the principle of developing new social housing, constructing
   unsubsidized SRO replacement projects, and retaining and upgrading the
   existing SRO stock, as required in the absence of new replacement
   housing, with priority given to housing the existing long term Downtown
   South residents.


   The City is facing a major challenge for low-income housing in the
   Downtown.  In the past, non-market housing development has kept pace
   with the loss of SRO hotel units.  However  additional tools are needed
   as a result of both increased development pressures and reduced senior
   government housing funding.  This report recommends that the City
   request Provincial enabling legislation which would give Council the
   ability to better regulate the SRO hotel stock. 


   There has been a history of increasing City involvement in the
   regulation of SRO hotels.  After the urban renewal clearance schemes in
   the early seventies, the focus of public concern switched to improving
   the safety and quality of the remaining SRO stock.  The City revised and
   more rigorously enforced its codes, including the Lodging House and the
   Standards of Maintenance By-laws, and the Fire By-law.  At the same time
   there were increased efforts to replace demolished or closed units with
   better, more livable units in the form of subsidized non-market housing. 

   Efforts in the late 1970s and early 1980s brought about the
   rehabilitation of SRO hotels through comprehensive by-law enforcement,
   including an inspection program, together with Federal government
   assistance through the Residential Rehabilitation Assistance Program
   (RRAP) which the City administered.  In the mid eighties, just prior to
   Expo, Council was concerned about evictions related to Expo and in
   February 1986 passed a resolution requesting the Province to introduce
   legislation to temporarily control rent increases and evictions. No
   action was taken on this request.  It has not been possible to
   definitively establish how many units were converted to tourist use for
   Expo.  One study estimates that 700 to 1000 residents were displaced
   during Expo and that almost all the hotels switched back from tourist
   use by the following year.
   When the Downtown South Plan was prepared, Council passed a policy
   stating the intent to provide one-for-one replacement of SRO units.  The
   methods of providing this replacement were through non-market housing,
   density bonuses, and development cost levies.

   The 1995 draft Victory Square Concept Plan, which Council has received
   for information and is still under public discussion, indicates the need
   to take further action to ensure SRO upgrading or replacement and
   includes the following recommendation:

   " Discourage the demolition of SRO units or conversion to tourist uses
   or condominiums by:

        -    Defining "SRO" more precisely, to discourage conversions; for
             example, distinguishing SRO hotels from tourist hotels in the
             Zoning and Development By-law.  Conversion to tourist hotel
             would thereafter require a development permit, and current
             hotel parking standards would apply.

        -    Considering Vancouver Charter and/or Zoning and Development
             By-law amendments to require one-for-one replacement of SRO
             units which are demolished or converted to non-SRO uses."

   In July 1995  Council endorsed the initiation of a Housing Plan for the
   Downtown Eastside, Chinatown, Gastown, Strathcona areas.  A draft plan
   will be tabled with Council this summer and discussed with the
   communities during the summer and early fall.  Staff are working with
   the communities on three major topics:

        -    the future of the 6000 SRO hotel rooms;
        -    the role of small suites; and
        -    the appropriate housing mix.

   This report deals with one component of the first topic.  The City may
   not have sufficient zoning powers to effectively regulate the conversion
   or demolition of SRO hotels.  There is uncertainty about how the courts
   would apply the non-conforming use sections of the Vancouver Charter. 
   Provincial legislation is required to avoid uncertainty, possible
   litigation, and ensure regulatory power is secure.  This issue is being
   raised now because it may be able to be dealt with in the current
   legislative session.


   1.   Description of the problem

   Single room occupancy (SRO) housing is an important part of the City of
   Vancouver s low-income housing stock.  In 1996, there were 13,193
   low-income housing units in the Downtown Core.  SROs accounted for the
   largest portion.  There were 7481 SRO units, 4710 non-market housing
   units and 1002 units in special needs residential facilities. SRO hotels
   are comprised of residential hotels and rooming houses.  The
   distribution of the 172 SRO hotels in the Downtown Core is shown on Map


   These SROs house, on a monthly basis, mainly low-income people who have
   few other housing choices.  A 1991 survey of residents showed the
   average income to be $763 per month. Traditionally the market rent has
   been set by the shelter component of social assistance (GAIN), which is
   at this time $325 per month.  Recently the rents have been increasing
   and tenants typically pay in excess of 60% of their income for housing. 

   In the Downtown Eastside area, the average resident is 47 years old. 
   Over eighty percent of the residents are men and the average overall
   length of time living in the area is 14 years.  Almost 40% of the
   residents are disabled.

   If the SRO housing stock is lost, experience in other cities has shown
   that homelessness increases.  Information from the United States
   indicates that New York has lost 30,385 units or 60% of its stock. 
   Seattle has lost 15,000 units.  There is much evidence that homelessness 
   contributes in a profound way to a person's physical, mental and
   emotional health problems.  Homelessness has a negative effect not only
   on those people who suffer from lack of shelter, but also on nearby
   businesses and residents.  Public costs are also increased as people who
   are without adequate shelter are more likely to use emergency health
   clinics, ambulance services and longer term counselling services. 
   Beyond the financial costs, homelessness is  contrary to a variety of
   City policies and many citizens  sense of Vancouver being a humane and
   livable city. 

   There has been a significant loss of SRO stock in the Downtown Core.  In
   1970 there were 13,400 SRO units in 436 buildings.  As shown in Figure
   1, by 1996 this stock had shrunk by 5900 units to 7500 units in 172
   buildings.  Over the twenty-six year period, this represents a 44%
   decrease in units, a 61% decline in the number of buildings, and an
   average loss of 228 units a year.  This rate of loss has declined over
   the last ten years to 80 units a year.

   Housing programs from senior governments combined with previous City
   policies and actions have stabilized the number of low-income housing
   units in the Downtown Core. As also shown in Figure 1, in 1970 there
   were about 13,900 of both SRO and non-market units compared with 12,200
   of both SRO and non-market housing units in June 1996. 

   Two significant factors have changed which point to the need for
   additional action by the City.  The first is the withdrawal of federal
   government housing programs in the early 1990s, which  reduced by
   two-thirds the amount of funding available in B.C.  Because the Province
   has modified its participation to stretch the available funds, the
   federal withdrawal has not resulted in a two-thirds reduction in unit
   allocation.  Nonetheless fewer units have been allocated.  In the ten
   years prior to the federal government withdrawal (1984-1993), the
   Downtown Core received an average allocation of 215 non-market housing
   units.  Since the federal withdrawal the average annual allocation has
   been reduced to 150 units for this area.


   The second factor is the continuing development of areas in and adjacent
   to the eastern Downtown core where the majority of  SROs are located.  
   These developments are consistent with the City's Central Area Plan and
   area-specific plans.  They include Downtown South, False Creek North,
   International Village, Gastown and City Gate.  Currently plans are being
   developed for Victory Square, Thornton Park, and the Trillium site south
   of Strathcona.   A new Trade and Convention Centre is under review and a
   decision may be made later this year. Without new or additional controls
   or incentives, development pressures would likely lead to both
   conversion and demolition of  SRO stock.  The tables below show the
   reasons for SRO stock  losses between 1970 and 1996. Of the 5900 units
   lost, 44% were demolished, 44% were converted to other uses and 12% were
   closed.   Of the demolitions, 69% were for private redevelopment or
   parking/vacant lots.  Of the conversions, 73% were for private
   development.  Conversion to tourist use accounted for 28% of these. 
   This type of conversion is increasing.  In the 1970s there were 140
   units converted, in the 1980s 170 units, in the first six years of the
   1990s 240 units, for a total of 550 units.  The City is aware of
   possible conversions of an additional 300 units over the next few years
   including the Dominion, Niagara and Cambie Hotels.

                    Table  1: SRO  Units Losses by
                           Demolitions       2600      44%

                           Conversions       2600      44%
                           C l o s e d        700      12%
                           Total             5900     100%

                    Table  2:   Demolitions
                    by Type  (Units)
                           P r i v a t e     1800      69%
                           P u b l i c        800      31%

                           Total             2600     100%

                    Table  3:   Conversions
                    by Type  (Units)
                           P r i v a t e     1900      73%

                           P u b l i c        700      23%
                           Total             2600     100%

                    *other includes renovations and  other
                    net changes within existing stock

   Replacing the lost SROs is costly for the public.  If non-market housing
   were the only tool to replace all the SROs, a conservative estimate of
   the capital cost is $750 million.  The annual cost to replace the
   average historical loss is about $23 million.  In the last 3 years, the
   Province has committed the equivalent of about $15 million per year in
   capital construction for non-market housing in the Downtown Core. The
   shortfall could amount to about $8 million per year.   In addition to
   the provincial funding, the City has $2.5 million through the 3 year
   capital planand one time payment of $1.1 million received from
   International Village in pay-in-lieu funds.    This will be helpful in
   replacing some of the SRO stock, but cannot be relied upon solely to
   deal with the expected increase in stock losses from development

   In short, the pressures on the SRO stock will be bigger than in the
   past, and there are fewer public funds available to replace the units
   that are lost.

   2.  The issue

   Currently there is uncertainty about the City s ability to control the
   conversion or demolition of most SRO hotels. (The City does have power
   to regulate conversions to strata-title  and this type of conversion is
   effectively controlled by existing legislation). SRO hotels can be
   classified as rooming houses or hotels.   The majority of the
   residential hotels are classified as  hotels  which are defined in the
   Zoning and Development By-law as  premises providing temporary
   accommodation...  which implies occupants have another place of
   permanent residence.  However, for most SRO residents, it is their only
   residence.  The hotels are typically providing residential rental
   accommodation, not transient accommodation.  However many of them may
   have provided transient accommodation at some point in the past.
   Residential hotels which change to tourist hotels do not apply for a
   development permit for a change of use.  Under existing City powers, new
   use terms could be introduced which distinguish residential hotels from
   tourist hotels and require a permit to change from these uses.  However
   there is uncertainty about whether the new terms and permit requirement
   for change of use would only affect new hotels and not existing hotels,
   which are the ones where regulation is needed.  It is not clear whether
   the existing hotels would have  non-conforming use  status and would be
   able to carry on as they have, which includes providing either transient
   or residential accommodation, or a mix, as the owner choses.

   In the case of demolitions, the City has limited ability to set
   conditions under which demolition could occur.  The City currently
   charges a fee for the demolition of residential accommodation ($1,000
   per unit) and regulates the timing of demolition (all permits must be in
   place before demolition of residential accommodation can occur). 
   However the City may have limited powers to go beyond this. 

   To regulate SROs with secure and definitive legislative authority, staff
   recommend that changes be sought to the Vancouver Charter to
   specifically and expressly empower the City to regulate the conversion
   and demolition of SRO hotels.

   3.  Proposed solution

   Staff have investigated how the City could control conversions and
   demolitions of  SRO hotels which are providing monthly accommodation. 
   The provinces of Ontario and Quebec have legislation which covers all
   residential rental accommodation, including residential hotels.   The
   cities of  San Diego and San Francisco have by-laws regulating
   residential hotels which rely on state legislation.  The charter
   governing the City of Montreal also has enabling authority and that City   has passed a by-law which regulates conversions and demolitions similar
   to what is proposed in this report.

   The proposal is for City Council to request amendments to the Vancouver
   Charter to give City Council the power to approve or refuse applications
   to convert or demolish SRO units.  The Charter amendments would also
   provide Council the ability to establish conditions for considering the

   If  the City wishes to further regulate the residential hotels, there
   are three steps:  

   1)   City to request enabling legislation from the Province. 
   2)   Province to pass the legislation which would result in changes to
        the Vancouver Charter giving the City the authority to regulate
        hotel conversions and demolitions. 
   3)   City Council to pass one or more by-laws to implement the authority
        and to set  the  conditions under which conversions and demolitions
        could and could not occur (this has similarities to the condominium
        conversion regulations which are currently in effect).

   Generally, the approach taken by the City in making requests for
   legislation is to keep the recommendation broad-based and general, and
   for detailed legislative wording to be worked out during the process
   with provincial staff. And in this case, many of the implementation
   details, including what conditions would be used in considering
   applications, would be the subject of a subsequent Council report on
   specific by-law changes.  The main points of the proposed Charter
   changes are in Appendix A.  These have been discussed with Provincial
   government staff.

   4.   Description of proposed changes

   a) Properties Affected

   Type and location of properties: 
   The Charter amendments would empower Council to define SRO
   accommodation.  The precise definition would be part of the third step
   and reported back to Council.  One possibility is to develop a list of
   properties which have sleeping and housekeeping units and which are now
   used as residential.    Information from B.C. Assessment Authority and
   other sources could be used to develop the list. 

   The Charter amendments would empower Council to designate an area or all
   of the City where the regulations would be in effect.

   The Charter amendments would empower Council to exempt properties from
   the by-law.  The precise exemptions would be part of the third step and
   reported back to Council. 

   b) Changes which would be regulated

   The City would be empowered to use a permit or licensing system as a
   trigger for a conversion or demolition approval system.  Further the
   City would be empowered to:
        -    require owners to apply for a permit or license to demolish or
             convert SROs to a different type of business;
        -    establish conditions for approving an application;
        -  approve or deny an owner's application; and
        -  issue a permit.

   With these powers the City could regulate conversion of SRO hotels to
   tourist uses as well as upgrading of rental accommodation to apartments
   and live/work accommodation.  Conversions to office or other commercial
   could also be included.  Demolitions could also be included as they have
   been a source of loss of the low-income housing stock.

   c) Conditions to be used by Council in considering applications

   Once the provincial enabling legislation is in place, Council would
   approve by-laws and guidelines describing the conditions for approval
   and how they would be implemented.  Approval of applications would be by
   motion of Council.  This is similar to the condominium conversion
   process. This is part of the third step of this process and will be the
   subject of a report back to Council.

   5.  Public consultation

   Once the legislative changes have been made, Council can determine the
   best way of using the powers.  At that stage a full public process can
   be initiated with various stakeholders including property owners and
   residents.  Staff will report back on the results and implementation

   The City is clarifying a distinction which is obvious to most people but
   not adequately reflected in our zoning bylaws, i.e. the Hotel Vancouver
   is quite a different land use than the residential hotels in the
   Downtown Eastside.   SRO hotel owners have previously enjoyed a much
   wider scope of business operations than most other land uses in that
   they could be both commercial and residential.  The proposal can be seen
   as bringing the same amount of rigour to hotel definitions as we
   currently have to most other uses.  In addition, many of the hotels have
   benefited for many years through a type of public investment in that
   much of the rent comes from provincial government welfare funds.  In the
   1991 survey, 72% of the tenants reported their income as from some form
   of government assistance.

   6.  Proposed Controls are part of Comprehensive strategy for Affordable

   This proposal is not an isolated action, but is part of a comprehensive
   strategy that the City has for affordable housing, not just in the
   Downtown, but throughout the City.  Appendix  B  contains a list of
   other City housing initiatives which provide a context for this specific

   Regulating SRO hotels is consistent with the provincial government
   affordable housing strategy.  Appendix C illustrates how this proposal
   fits in with provincial housing goals.


   Increasing development pressures and reduced senior government housing
   funding means that the losses to the SRO hotel stock will likely be
   greater than what it is possible to replace in a timely way. 
   Homelessness could increase as has occurred in other cities where the
   SRO stock has been lost.   Provincial government enabling legislation is
   required before the City could regulate the conversion and demolition of
   that stock.

                         *      *      *      *      *
   DRAFT                                                         Appendix A


   Amend the Vancouver Charter to add the following:

   279D(1) The City may make by-laws regulating the conversion and
   demolition of a building  providing single-room accommodation and for
   that purpose may

        (a)  define what constitutes single-room accommodation, whether by
             description, by location  or a combination of both

        (b)  exempt from the operation of the by-law,

             (i)       different classes of building,
             (ii)      different classes of persons, and
             (iii)     different classes of business or activity,

        (c)  designate an area of the city where the by-law will be

        (d)  provide that an approval is at the sole discretion of Council,

        (e)  prescribe terms and conditions and make it an offence for any
             person to fail to comply with such terms and conditions,

        (f)  without limiting the generality of clause (d),  require, as a
             condition of approval,  one or more of the following:

             (i)  the provision of alternate residential accommodation at a
                  similar rent, 
             (ii) the payment to the city of an amount of money as
                  specified in the by-law, which money must be paid into a
                  reserve fund for the provision of replacement housing and
                  used only for that purpose, 
             (iii)     substantial compliance with applicable City by-laws,
             (iv)  compliance with such other terms conditions which
             Council deems will encourage the supply of low-cost housing. 

   Appendix B                                                  Page 1 of 2 


   The City encourages the retention and development of affordable housing
   in all areas of the City.  The hotels in the Downtown Core are at one
   end of the chain of housing and are affected by the supply of affordable
   housing elsewhere in the City.  Some of the relevant City-wide
   affordable housing policies and programs are:
   -    Encouragement of secondary suites in neighbourhoods where there is
   -    Condominium Conversion Review
   -    Non-market housing land lease
   -    20% non-market housing requirement
   -    Assured moderate rental housing program
   -    Neighbourhood Demonstration program

   Downtown Affordable Housing Policies and Programs
   - Operation of a non-market housing portfolio
   - Affordable housing fund
   - Downtown South development levies and density bonusing
   - Downtown District low cost housing bonus

   Specific Neighbourhood Plans in the Downtown
   The City is currently working on a Housing Plan for the Downtown East
   side Chinatown Gastown and Strathcona area.  A draft plan for the
   Victory Square has been prepared and will be forwarded to Council later
   this year.  These initiatives contain the objective of maintaining and
   expanding the supply of affordable housing.  A key component is the
   regulation of demolition, conversion and renovation of SRO hotel units
   which is subject of this document.  However this is only one component
   of a overall strategy.  The other components of the Draft Victory Square
   Concept Plan are:
   -    Adjust zoning to facilitate housing objectives

   -    Encouraging new non-market and low-cost market housing by:

        Continuing City land leasing for social housing projects

        Encouraging Provincial housing programs for low-income singles
        Using payments-in-lieu, if as a last resort these are available,
        from major projects

        Using development cost levies

   -    Facilitate upgrade of SRO units

        Better inform owners of alternate seismic requirements for SRO
        upgrading for rehabilitation programs

        Continue City purchase and SRO hotels

   -    Discourage demolition or conversion of SRO units

        Raise demolition fees

        Assist managers of hotels to deal with issue in their buildings

        Establish Council policy to deny request for Council approval of
        stratification for SRO buildings unless replacement units, with
        similar rent levels, are provided nearby.

   -    Recommend expansion of the provincial government allocations of
        rent supplements to permit people with special needs to acquire
        housing in the area and other parts of Vancouver and the Lower

   The Housing Plan is under development and will likely include many of
   the same policies.  In this area there are 6000 hotel rooms which need
   to be retained, upgraded or replaced.  Over time it is expected that the
   majority will be upgraded or replaced through new social housing, public
   or privately funded upgrading and possibly some small suites.  However
   time is needed to put these alternatives into place.  If social housing
   were built at the rate at which it has been in the last 5 years, it
   would take 60 to 100 years for the 6000 hotel rooms to be replaced.  The
   controls discussed in this document will give time for the public and
   possibly the private sector (small suites) to provide alternatives. 

   Appendix C


   In April 1996 the Province published its  Strategy for Affordable
   Housing .  The conversion/demolition/renovation controls relate to three
   of the five goals contained in the strategy. 

   Building Partnerships to Broaden Participation

   The strategy speaks to how local government has considerable influence
   over housing and gives encouragement to local governments for innovative

   Preserve and expand the stock and variety of moderately priced rental

   The strategy recognizes the issue which the City of Vancouver is
   addressing with this initiative by noting that many older buildings are
   being converted, particularly the older hotels in the downtown areas
   where many low-income singles live in SRO hotels.  Indeed one of the
   goals is to preserve and maintain existing market . . "rental stock"

   Promote a range of housing options for individuals with special needs.

   Many of the people who live in SROs have special needs.  Forty (40)
   percent have a physical disability and the same percentage assess their
   health as poor or fair.  The provincial housing strategy is to "promote
   a range of housing options for individuals with special needs".  

   In 1996 the Province also published "Nowhere to Live" which contains
   recommendations of a task force established by the B.C. Minister of
   Housing, Recreation and Consumer Services.   This report provides much
   information about the SROs and recommends
   "Protect existing SROs through:

        -    the establishment of demolition and conversion controls,
             either at the local or provincial level
        -    a one-for-one replacement policy requiring a suitable
             replacement for every lost unit, or pay-in lieu fees, which
             adequately mitigates any loss of housing for existing