SUPPORTS ITEM NO. 1
P&E COMMITTEE AGENDA
JANUARY 18, 1996
POLICY REPORT
Housing
Date: January 3, 1996
Dept. File No. 3211
TO: Standing Committee on Planning and Environment
FROM: Manager of the Housing Centre
SUBJECT: Neighbourhood Housing Demonstration Program
RECOMMENDATION
A. THAT the Seniors Housing Demonstration Fund be renamed the
Neighbourhood Housing Demonstration Fund, with the purpose of
encouraging housing projects that support CityPlan's housing
affordability and form objectives;
B. THAT Council adopt the following policies for funding
projects through the Neighbourhood Housing Demonstration
Fund:
1) Projects must provide housing that is affordable compared
to alternatives in the neighbourhood;
2) Projects must offer alternatives to single family homes
in the neighbourhood;
3) Priority will be given to non-profit projects;
4) Holding costs for projects will be forgiven for a maximum
of 3 years;
5) Ownership and rental projects on either freehold or City
leased land will be considered;
6) Leases will be for 60 year terms with a prepaid rent of
75% of freehold market value or equivalent;
7) Capital grants may be provided for projects serving core-
need households, with funding provided from the
Affordable Housing Fund; and
8) Proposal development funding to determine project
viability may be provided.
C. THAT the Kerrisdale RS-1 and RS-3 Rezoning Policy be amended
to allow consideration of rezoning applications that satisfy
the conditions of the Neighbourhood Housing Demonstration
Program, and to delete reference to the Neighbourhood
Stabilization Program.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of
Recommendations A, B and C.
COUNCIL POLICY
Council policy encourages the distribution of different types of housing
and housing for a range of incomes among all residential neighbourhoods
of Vancouver. On June 6, 1995, Council approved an interim policy that
a rezoning application should not be justified only on the basis that it
"supports CityPlan neighbourhood centres".
SUMMARY
The Seniors Housing Demonstration Fund has been reviewed in light of the
two projects built under its auspices, and in the context of CityPlan.
It is proposed that the fund's mandate be broadened to achieve
CityPlan's neighbourhood housing affordability and form objectives, in
particular affordable ground oriented housing that could serve families
as well as seniors.
PURPOSE
This report provides Council with the current status of the Seniors
Housing Demonstration Fund, proposes refocusing the fund to achieve
CityPlan housing objectives; and presents revised policies for Council
approval for funding future housing demonstration projects.
BACKGROUND
In a March 1989 memo to Council Mayor Campbell proposed that a Housing
Symposium be held to consider a range of housing issues including the
need for new forms of housing in the City, and in particular for seniors
who wish to move out of single family homes but remain in their
neighbourhood.
At the Housing Symposium held May 8, 1989, Council considered options
for demonstrating new forms of housing for seniors. Council approved
the creation of a revolving fund of $5 Million to be used to fund
seniors housing demonstration projects, and approved undertaking 2
projects on land to be acquired by the City.
THE SENIORS HOUSING DEMONSTRATION PROGRAM
The primary purpose of the Seniors Housing Demonstration Program, also
known as the Neighbourhood Stabilization Program, was to support
alternatives to single family housing for seniors in Vancouver's
neighbourhoods. There are seniors with equity in their homes but with
modest incomes who would move if other forms of housing were available.
New forms of housing in neighbourhoods would provide seniors with
opportunities to free up their capital and use the interest from it to
supplement their incomes. As additional benefits, this could free up
single family housing for families, and preserve neighbourhood
continuity and stability.
At the May 1989 Symposium, two community groups offered proposals for
new forms of seniors housing. The Abbeyfield Houses of Vancouver
Society proposed a project in Marpole, and Tillicum Housing Co-operative
proposed an equity co-operative in Kerrisdale.
a) Hudson House
Abbeyfield houses are well established in England, but a recent
form of seniors housing in B.C. Until Hudson House, there were
none in Vancouver. An Abbeyfield house provides communal living
for 8 to 10 independent seniors with limited services (lunch,
dinner, shopping, cleaning) provided by a live-in house co-
ordinator.
In response to the Abbeyfield request, the City acquired
8264 Hudson, a Class B Heritage Building in early 1990. The site
was rezoned, the heritage building renovated (and designated), and
a coach house constructed to accommodate 2 abbeyfield houses with
18 residents. The total cost of the project, $2,040,000, was
funded from the Seniors Housing Demonstration Fund.
The project was completed in July 1993 and is being operated by the
Abbeyfield Society of Vancouver. Until recently the project
suffered from a high vacancy rate. The Society has recently
reorganized its operation and has achieved full occupancy. The
residents pay approximately $1200 per month for room and board. A
capital grant of $314,425 was provided from the City's Affordable
Housing Fund since the monthly lease payments are only sufficient
to recover $1.7 Million of the project's capital costs.
b) Tillicum Housing Society
Equity co-operatives seek to provide affordable housing by making
units available to their members at cost. The concept is that, by
acting as the developer of their own housing, the members of an
equity co-operative avoid the profit required to compensate
developers for risk and marketing costs, and units can be sold to
members at less than market value. To ensure long term
affordability, units are resold at less than market value as well.
Tillicum asked Council to acquire three RS-1 lots for an equity co-
operative to serve Kerrisdale residents who wanted to move out of
their single family homes. The City acquired 5626 Larch at a cost
of $945,000 in 1989. In 1990, Council amended the Kerrisdale
moratorium on rezonings in single family areas to permit rezonings
under the Seniors Housing Demonstration Fund. The site was rezoned
for 12 units, and leased to the Co-operative for a 60 year term at
75% of the acquisition cost. Construction commenced in 1993.
The contractor encountered financial difficulties, and the lender
has now taken over the project. The construction difficulties
increased costs to complete the project. To ensure the project
would be completed with the least cost to all involved, the lender
purchased and completed the project, renamed Wilson House. The
units are being marketed as condominiums with priority to
Kerrisdale seniors.
Both projects provide housing suitable for seniors who wish to move out
of single family homes. However, both raise issues that need to be
addressed. In addition, it is appropriate to reconsider the focus of
the Seniors Housing Demonstration Fund in the context of CityPlan.
CITYPLAN AND THE LIVABLE REGION PLAN
Housing variety and housing costs are two of the major issues addressed
by CityPlan. Its directions for housing variety include adding new
forms of housing in single-family neighbourhoods. One of the next steps
proposed is to develop demonstration projects for new types of housing
that offer features of single family housing but at higher densities.
For housing affordability, directions include developing incentives and
regulations that allow the market to produce lower cost housing, as well
as continuing to support housing subsidized by senior government
programs.
In this context, it is appropriate to broaden the scope of the City's
demonstration program to include housing forms, in particular ground
oriented forms of housing not available or common in the City's
neighbourhoods. For example low-density multifamily housing can serve
starter families, so that children raised in neighbourhoods have an
opportunity of living there once they move out of their parents home.
These forms of housing could also serve seniors who wish to continue to
live in their neighbourhoods but not in a single family home.
The goals of the Livable Region Strategy recently approved by the GVRD
are consistent with CityPlan's housing goals. Both seek higher density
ground oriented housing within compact urban development which minimizes
infrastructure costs and the loss of the region's open space, and which
supports the provision of services and employment in close proximity of
home.
It is recommended that the Seniors Housing Demonstration Fund be renamed
the Neighbourhood Housing Demonstration Fund, and its terms of reference
be expanded to include projects that demonstrate improved affordability
within new housing forms, whether they serve seniors or others that
would otherwise have few options for remaining in their communities.
A consequential recommendation is to amend the Kerrisdale RS-1 and RS-3
Rezoning Policy to allow consideration of rezoning applications for
projects under the Neighbourhood Housing Demonstration Program.
Currently, only rezonings proposed under the Neighbourhood Stabilization
Program can be considered. The conditions rezoning applications for
Neighbourhood Housing Demonstration Projects must satisfy are set out in
a companion report that proposes policies for rezonings during the
neighbourhood visioning process of CityPlan.
ISSUES
Among the issues raised by the City's experience with the two seniors
housing demonstration projects completed to date are schedule and
timing, holding costs, tenure, and the question of City subsidies and
proposal development funding. The City's policies should be revised in
light of this experience.
Schedule and timing: Demonstration projects take longer to develop than
typical projects, since issues have to be resolved that have not arisen
before. A standard project can take 2 years from start to finish, one
to plan and a second to build. For demonstration projects, the planning
can take longer; up to a year can be required to turn a concept into a
program that can be the basis for a rezoning application or marketing. A
maximum period of 3 years should be allowed to realize a new concept. In
most cases, sites need to be rezoned to accommodate projects
demonstrating new forms of development. Rezonings may also be required
to maximize affordability.
Holding costs: In general, demonstration projects will not be viable if
they have to pay the City interest while the project is being planned
and built. The City absorbs the holding costs for social housing
projects, and absorbing the holding costs is an appropriate City
contribution to achieving the social benefits of demonstration projects
as well.
Tenure: Affordable and innovative housing can be rental or ownership.
For ownership demonstration projects, the land should generally be sold
when the project is completed and not leased. Leasehold can improve
affordability, but it can conflict with homeowner's equity position and
result in marketing difficulties. There may be cases when leasehold
ownership is appropriate, and each project should be considered on its
particular circumstances.
Those demonstration projects on leased City land should conform to the
standard terms for social housing projects (60 year term with a prepaid
lease of 75% of the freehold market value). For some demonstration
projects e.g. Abbeyfield's, innovative lease arrangements may be
appropriate. In these cases the lease payments should be equivalent to
a 60 year lease at 75% of freehold value.
Subsidies: Capital grants beyond holding costs may be appropriate for
demonstration projects targeted to lower-income households, as in the
case of the Abbeyfield project. The Affordable Housing Fund is the
appropriate source of funding for capital grants.
Proposal development funding: For some demonstration projects,
development funding to undertake preliminary design work and feasibility
studies should be provided before a site is purchased. Determining the
viability of a project before committing funds for land limits the
City's risk. As well, more concepts could be explored and potential
opportunities would not be overlooked. Proposal development funding
would be limited, and would be a grant recoverable through the lease if
a project proceeds.
POLICIES
It is recommended that the following policies be adopted for funding
under the Neighbourhood Housing Demonstration Program:
1) Projects must provide housing that is affordable compared to
alternatives in the neighbourhood;
2) Projects must offer alternatives to single family homes to seniors
living in the neighbourhood;
3) Priority will be given to non-profit projects;
4) Holding costs for projects will be forgiven for a maximum of 3
years;
5) Ownership and rental projects, and freehold and leasehold tenure,
will be considered;
6) Leases will be for 60 year terms with a prepaid rent of 75% of
freehold market value or equivalent;
7) Capital grants may be provided for projects serving low-income
households, with funding from the Affordable Housing Fund; and
8) Proposal development funding to determine project viability may be
provided.
PROCESS
The Seniors Housing Demonstration Fund currently has a balance of $3.3
Million. The number of projects that could be undertaken is limited,
and one or two at most could be undertaken at any one time. Potential
projects will be referred to Council as opportunities arise. Most will
arise as CityPlan or neighbourhood planning is implemented. If interest
is great, a proposal call may be required inviting submissions from
interested developers and non-profit sponsors.
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