This year’s Vancouver homelessness count showed that more people than ever are living on the streets in BC’s largest city. Housing across BC is about to face even more strain with the expected mass expiration of funding for existing social housing. In the next 20 years, over 36,000 units of non-profit housing in Greater Vancouver, including co-op housing, social housing and senior housing, are set to lose their funding. Over 45% of these units will lose their funding in the next six years and the majority of them – 17,000 units – are located in the City of Vancouver.
In the four years since the financial crisis of 2008 brought a North American-wide collapse in housing prices, the Canadian government has successfully taken measures to bring real-estate prices back to their pre-crash levels. Following in the tracks of the American effort to rescue financial capital, the past four years have seen a joint effort by all levels of Canadian government to re-inflate the housing bubble by deregulating finance, extending new lines of direct investment into real-estate and lowering interest rates. The Canadian government has effectively called on the real-estate industry to lead the economy out of the recession, facing down typical historical patterns in which real-estate is the last industry to recover from system-wide crisis. Next to resource extraction, the only real growth industry in Canada since 2008 has been real-estate.
Yet today, as in 2008, the real-estate bubble is reaching a “tipping point,” according to a recent report by Canada’s Royal LePage. In cities like Vancouver and Toronto, housing prices have climbed to unprecedented levels, with Vancouver prices reaching up to 11 times the city’s average family income. The Bank of Canada has identified the Vancouver market as “ground zero” for the coming financial crisis, and from its perch at a distance, The Economist observes Canadian housing is “more overvalued than it was in America at the peak of its bubble.” All forms of debt are multiplying, but household debt in particular is currently higher in Canada than it was in the United States prior to the subprime crisis, with debt-to-income ratios reaching 153 per cent.
Federal exit from recession
In the two years following the global recession, federal banks across the world lowered interest rates in an effort to loosen the credit crunch and stimulate new rounds of investment. In September 2010, Mark Carney and the Bank of Canada lowered interest rates to 1 per cent, where they have since stayed. By the summer of 2011, the Canadian housing economy was showing obvious signs of escalation, and by June local prices moved well above their pre-recession peak. Having not only stimulated but “over-stimulated” the housing economy, Carney began issuing strong warnings about the unprecedented risk-exposure of Canadian mortgages. In reality, the central bank actually did everything in its power to continue the growing flow of cheap, low-interest money into the real-estate economy. Out of fear of exacerbating the underlying weakness of the recovery itself, the Bank of Canada took the position of searching out ways to buoy housing finance.
The already dire housing crisis in Vancouver is about to worsen with the mass expiration of funding and operating agreements for twenty-five thousand social housing units. By 2033, 99% of operating agreements across the country will have expired if current austerity measures are not reversed, amounting to $3.5b of reduced government expenditures annually. Presently there are no federal or provincial plans to initiate new or extend existing operating agreements. The forecasted federal funding for non-profit housing providers in BC for the year 2030 is zero. This process of funding-expiry has already begun, with tenants experiencing the first wave of this unprecedented withdrawal of public housing funds. Unless a popular struggle takes shape, the entire country will move in the direction of a massive loss of public housing.
Neoliberal policy makers and urban think tanks have framed this mass expiry in optimistic terms. The disappearance of funding is presented as an “emerging opportunity,” to quote a recent report by the BC Non-Profit Housing Association.  In the report, the Association explores how the opportunities of austerity can be “capitalized” upon, paving the way for the implementation of disaster capitalism. As it has often been proven under neoliberal governments, the deployment of a shock becomes the necessary grounds for the introduction of market reforms, with the ultimate goal of privatizing public assets and services. In the case of affordable and non-market housing, the disaster comes in the form of a funding expiry, for which the recommended strategies of “ensuring future viability” entail the introduction of market reforms. In a drastic change in direction, not-for-profit housing operators are slated to be phased out to make way for pro-market operating bodies.
The Mainlander is featured in the civic politics segment every Tuesday morning between 7am-8am on Vancouver Co-op Radio 102.7
This Tuesday Dec 13 2011, The Mainlander’s Tristan Markle spoke about:
a) Holborn Group’s recent plans for the redevelopment of Little Mountain
b) Mayor Robertson’s appointment of multimillionaire developer Olga Ilich as co-chair of the city’s affordable housing task force
Click here to listen
The new plan for the redevelopment of Little Mountain neighbourhood in East Vancouver has been released to the public. The plan calls for wholesale gentrification of the Riley Park-Little Mountain neighborhood. The 15-acre site that previously held 224 units of social housing will be replaced with 2,000 units of market condominiums.
In exchange for a zero-percent increase in the amount of affordable housing on the site, the neighborhood will be transformed by luxury condos and retail, putting upward pressure on local property values. Like in other working-areas of Vancouver, this new high-end development will usher in rent increases, more renovictions and even more demolitions.
In Vancouver, there are on average two home demolitions per day. The Little Mountain plan ensures that the rate of demolitions will be particularly high in the Riley Park area. In addition to the demolition of Little Mountain social housing, the city has its sight set on demolishing all single-family homes at the north-east corner of the Little Mountain property.
Even though evictions and displacement are systemic throughout Vancouver, the city has not conducted a social impact study to understand the possible social effects of these demolitions and mega-projects. When asked at Thursday’s press conference whether the City plans to conduct such a study, Senior Planner Ben Johnson said “No,” claiming that there are no impacts because “homes are going for $1million in the neighborhood.” According to the city, the renters who make up large part of Little Mountain, Riley Park, Kensington-Cedar Cottage, Sunset, and Mount Pleasant are not part of the equation.
The new plan announced by the private developer, Holborn Group, consists of sixteen towers of luxury condominiums. There are nine towers planned at ten to fourteen stories, while the rest of the density is spread out between four to nine stories. It is assumed that Holborn bought the property from the provincial government for a price fixed to existing levels of zoning, at four stories, while committing to replace the 224 units of social housing.
This “one-for-one” deal is a coup for Holborn because on a mega-project of this size, the city would normally apply its mega-project housing policy requiring that 20% of all units be social housing. The planned 2,000 units would normally accompany at least 400 units of social housing, but in this case the Memorandum of Understanding (MOU) signed between the City and the Province assures Holborn that only 224 units are necessary. Furthermore, low-income tenants have been forced into the precarious waiting room of history. The first phase of the project will now not be completed until 2017 at the absolute earliest, even though all replacement housing was promised to be completed by 2010 at the latest.
When Holborn bought Little Mountain, the land was zoned for four stories. Holborn claims to have paid an above-market rate because the Province promised that the land would be upzoned in the future to allow more condo units. Of course, rezoning is a City power, outside the Province’s jurisdiction. If the Province indeed made a guarantee to Holborn that the land would be rezoned, then the Province was on the one hand attempting to undermine the local community planning process (including the existing Riley Park Community Vision), and on the other hand seems to have misrepresented the Province’s powers to Holborn. However, there is no reason to feel sorry for Holborn. Holborn has more than enough lawyers to know exactly what they were getting into. The most likely scenario is that the Province and Holborn colluded to strong-arm the City and undercut local planning processes.