The Streetohome Foundation has officially launched its new Rent Bank program with a $366,000 three-year loan from Streetohome board member Frank Giustra of the Radcliffe Foundation. Smaller administrative costs totalling $49,000 per year will be paid by the City of Vancouver, although the program itself will be administered by the non-profit Inner-City Community Services Society.
One-time loans from the rent bank will average $835 and can reach up to a maximum of $1300 for an individual, with a repayment plan spanning up to two years. To qualify, tenants perform an assessment either online or over the phone. Tenants are issued a loan if the rent bank judges that they can afford the repayment plan, and if the tenant agrees in advance to repay the loan through automatic withdrawals on their bank account.
Both the rent bank policy and the Streetohome organization were born under previous NPA and COPE municipal governments. The City’s 2005 Homeless Action Plan, drafted under COPE’s last term in office (2002 – 2005), called for the rent bank to disburse both loans and grants to low-income renters in short-term crisis. The current version is less ambitious and removes the grant option, following instead the path set out under NPA’s pro-business term (2005 – 2008). The NPA formed Streetohome in an effort to incentivize the real-estate sector to solve homelessness through philanthropy and charity.
Vision Vancouver city councilor Kerry Jang, who has taken the rent bank under his portfolio, gave highly skewed numbers to the media the week of the project’s launch. The Georgia Straight and 24hrs quoted Jang as saying that the rent bank will prevent 1,600 evictions each year. On the same day the director of the rent bank admitted that it will lend to 150 to 200 households per year, which is the more accurate figure according to the rent bank’s own business plan: Streetohome has said it will lend $150,000 per year, which at an average of $850 each will pay for about 150-200 loans — not 1,600.
The person in charge of Streetohome’s fundraising for the Rent Bank is global mining giant Frank Giustra. Significantly, Giustra did not recruit funds from anyone other than himself, announcing that he will be using his own Radcliffe Foundation for lending to low-income renters. In the mining world it is common-knowledge that Giustra owns the world’s large mining companies through a series of shell corporations. One of the Giustra’s mining shells is the Radcliffe Foundation, a Canadian-based operation that is tax exempt due to its status as a charity. The Radcliffe Foundation is now funding the large majority of the City of Vancouver’s Rent Bank.
Through Streetohome, Giustra will be lending — not donating — his mining profits while preserving their tax free status. The Radcliffe Foundation has already been caught for tax evasion and fined by the CRA for “excessive corporate holdings” in 2010. The Canadian government allows investors to use charities as a business investment vehicles, but only up to 20 per cent. For example, the law allows Giustra to use Radcliffe for ownership of up to 20 per cent of the shares in Sky Ridge Resources Ltd., a mining company. Giustra illegally owned 50 per cent in that company through his Radcliffe charity, which he said was “no big deal.” Noteworthy is the fact that Guistra is also the man behind Vancouver’s scheme of allowing developers to use temporary urban farms for tax evasion purposes.
While it may be shocking that the rent bank doubles as a tax evasion scheme for Giustra, these accounting practices — yielding large profits with and rarely-enforced federal penalties — are by no means limited to Giustra and Radcliffe. There are almost 5,000 private foundations in Canada that hold nearly $12-billion in total assets. It is not just due to CRA loopholes, however, that 75% of the world’s largest mining companies are based in Canada. Among Canadian cities, Vancouver in particular is a favorable tax haven for the corporate elite. The Vision tax shift helped bring Vancouver down to the lowest corporate tax rate in the world through 2010-11. According KPMG’s global Focus on Tax study, Vancouver is still on the podium but with a silver medal, dropping down to the second-lowest tax rate in the world.
From Personal Credit Crunch to Global Financial Crisis
For Giustra, the Streetohome Foundation acts as a subsidiary tax haven for the Radcliffe Foundation. But in a sense it really is “no big deal,” because since 2008 Vancouver more generally has served as a haven for the state-backed insulation of wealth. This wealth, sheltered from the devaluations of the ongoing global financial crisis, has been the subject of ever-more protections by local and provincial governments. Since the housing crash of 2008 and the subsequent scramble to position Vancouver’s real-estate market as “a very safe place to invest and park money,” to quote Bob Rennie, the local state has taken all measures to re-inflate the housing bubble and property market.
This endless inflation is nonetheless reaching a breaking point, if measured in relation to the key underlying source of value in Vancouver’s market: the ability for workers to pay for their housing. Just this week Canadian household debt-to-income levels have reached new heights at 163%, exceeding debt levels in the United States prior to the subprime crisis. One does not need to know the history of the subprime crisis nor read the biography of Alan Greenspan — the figure who will be remembered for using the lending powers of the government to match those sub-prime loans, issuing unprecedented low-interest debt at a time of faltering demand — to recognize that the current situation is reaching an American-style boiling point. Currently, more than 15% of Vancouverites pay more than half of their income on housing costs. Rent extraction is reaching its internal limit.
In this context of layer upon layer of debt, it is absurd to propose a ‘rent bank’ as a solution to the housing crisis. The picture worsens when we realize that the rent bank is only a small part of a whole raft of policy decisions taken since 2008 to solve the housing crisis from the “demand side,” including rent supplements used by BC Housing in place of actual public housing construction. These solutions only serve to further inflate the housing market.
In the midst of climbing rents, stagnating wages and astronomical housing costs, private capital is foreseeing a limit to its own liquidity. When Vancouver incomes are stretched to their limit, serious limits to capital accumulation make themselves apparent. As Bob Rennie himself said in 2009, the housing market is “at the mercy of local incomes.” As a rule of history, speculation in land has to be supported by a future legal claim — upheld in British Columbia by the RTA — to the wages and rents of workers. As David Harvey wrote long ago, when land is treated as a “pure financial asset…what is traded is a claim upon future revenues, which means a claim upon future profits from the use of the land or, more directly, a claim upon future labour (wages).” But today these wages are only decreasing or have flattened at best, compensated with ever more layers of consumer debt and “personal” financial crisis.
The rent bank is presented as a solution for individuals experiencing “temporary financial crisis,” but the real financial crisis on the minds of the urban elite is the looming downturn in the local housing market in the face of declining wages and a deepening crisis in the global economy. This is the real meaning behind the repeated claims by Vision politicians and NDP politicians like Spencer Chandra Herbert that the rent bank program will benefit landlords. Herbert told the Straight: “Landlords would also benefit from rent banks as they get their rent, and don’t face eviction costs which a CMHC study recently pegged at $6,000.” On the one hand the fund is far too small to save landlords from the current system of debt accumulation, and of course will only deepen the problem. But in the context of Vancouver’s broader policy framework, the hope is defer the crisis in hopes of sustaining Vancouvers’ breakneck levels of rent.
The problem with Chandra Herbert and Vision’s “micro-loan” quick fix is that it helps elide real underlying problems. The housing crisis in Vancouver is marked by exorbitant rents, growing debts, arbitrary enforcement of tenancy standards, stagnating wages, careless permitting of renovictions and aggressive private property rights. A short-term financial solution does nothing to address the real, long-term financial crisis that has befallen not only Vancouver but the entire global economy. On a more human level, this is evident in India where there has been a “suicide epidemic” due to the pressures exerted by creditors through micro-loans.
To understand both this human cost and its underlying economic logic, it might help to walk through the process of receiving a micro-loan from Streetohome. If a renter cannot pay their rent, Streettohome may — in the case of 150 renters per year — step in to abate the crisis with a one-time loan. The value of the underlying property will remain the same or even increase, while the renter continues to pay rent. Yet, through the multiplication of transactions and loans a new variable has been introduced to the equation. A new layer of finance has been added to the process, a new link has been added to the chain in the extended chain of debt payments. The debt has allowed the asset to continue its upward climb, but only atop an ever-teetering mountain of debt and finance. In the name of repayment, rent for the tenant will be at least $50 more expensive per month and those payments will be automatically withdrawn from the tenant’s bank account. Clearly this is not a solution, and it is obscene that this precarious situation is now being used as an opportunity for the global and local elite — from Giustra to Rennie — to represent themselves as generous redeemers of the housing market.
Streetohome is a place for Vancouver’s financial, developer and institutional elite to coalesce around Radcliffe’s Christian evangelical mission of charity and mega-profits, but also to lend an air philanthropy and corporate benevolence to defuse charges of indiscriminate theft perpetrated by these same players in the Vancouver housing market, global mining scene (as with Giustra’s Goldcorp), and so on. Streetohome’s list of board members alone should be enough to plant obvious suspicion, comprised of those who have a vested interest in perpetuating the housing and affordability crisis. Its donors include the who’s-who of Vancouver’s financial-class: Michael Audain of Polygon Homes, Bob Rennie of Rennie Marketing Systems, UBC Sauder School of Business, Chip Wilson of Lululemon, Colliers International, Goldcorp Inc., Silver Wheaton Corp, Penny Ballem, Mike Harcourt, as well as VPD police chief Jim Chu — to name only a few.
The rent bank is being used as a political tool by Vision to gloss over their inadequate efforts to provide real solutions for Vancouver’s tenants. Added to that, the Radcliffe Foundation and the rest of Vancouver’s elite are using Streetohome as a tax-haven.
Under the current system, evictions will be blamed on tenants, monthly housing costs will increase, the economic elite will not have to pay tax on their super-profitable mining corporations, and the political establishment will continue to shift the blame away from those who profit from the housing crisis the most: landlords and banks.
Until the City and Province challenges the private market instead of rewarding it through tax breaks, rents will continue to rise and landlords will continue to evict tenants.
 Barbara Gunn, “Let the property games begin, Bob Rennie encourages brokers,” The Vancouver Sun, March 27, 2010
 As stated succinctly in a report by the BC Non-profit Housing Association, “Demand-side housing programs such as rent supplements fail to address the underlying causes of unaffordability — such as market pressures and low vacancy rates — and therefore offer a solely short-term solution to the problem” (pg. 14).
 Bob Rennie, UDI Speech 2009
 David Harvey, The Limits to Capital, 4th Edition (London; New York: Verso, 2006) p. 347