Financial Crisis and Tax Evasion: Unpacking Vancouver’s Rent Bank

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, 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.

Re-financing the Housing Bubble: Strategies of the Neoliberal State

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.

BOOK REVIEW | One-Dimensional Woman

Nina Power, One-Dimensional Woman, London: Zero Books, 2009. 81 pages. ISBN: 9781846942419

Nina Power’s One-Dimensional Woman provocatively takes the cue for its title and premise from Herbert Marcuse’s 1964 book, One-Dimensional Man. Power invokes Marcuse’s concept of a system of production and consumption that creates ‘false needs,’ flattened social relations, and an illusory sense of individual autonomy. Power frames her own book as a retooling of this critique, intended to address a much more recent rhetoric of consumerism and contemporary feminism which – in similar and new ways – creates a barrier to productive critical thinking about work, sex and politics.

Power is based at Roehampton University, part of the University of London, where she teaches philosophy. In the past year, however, she has been just as likely to be seen taking part in student protests against the recent tripling of tuition fees at UK universities, or at the solidarity camp that sought to prevent the eviction of Irish Traveller families from their land at Dale Farm in Essex, or of course, around the Occupy London Stock Exchange encampment outside St. Paul’s Cathedral. She can also frequently be found among the Guardian’s comment is free pages. One Dimensional Woman is published by the upstart Zero Books as part of a series of readable texts intended as ‘another kind of discourse – intellectual without being academic, popular without being populist.’ While this short book came out before the wave of protests surrounding the Arab Spring and the Occupy movement took hold, we might hope that its message will be more immediately understood as a result of these events. And indeed Vancouver, as the birthplace of Botox — and a city long-preoccupied with cosmopolitan surfaces and spectacle — seems its ideal target.

COUNTERPOINT | Gary Mason’s “Living in Vancouver comes at a price”

This Tuesday, the Vision-controlled City Council struck a developer-run “affordable housing” task force. The public debate surrounding the affordability crisis has begun in earnest – and that is a great thing. Unfortunately, the discussion has been largely limited to pundits in the corporate media and rich people who work in the development industry — none of whom have have direct experience dealing with the affordability crisis. The vast majority of their professional and friendship networks are totally disconnected from the front lines of eviction and tenure insecurity.

As a result, much public commentary has been out-of-touch and condescending. The quality of recommendations has been substandard, the argumentation lazy, all this grounded in a position of apathy. For example, Gary Mason published a piece in the Globe and Mail this morning entitled “Living in Vancouver comes at a price,” which begins by recognizing that we are in the midst of an affordability crisis:

“Most of the world’s major cities are trying to solve this problem – in the most politically palatable way possible. In Canada, the issue is particularly acute in markets such as Toronto and Vancouver, where real-estate prices long ago made home ownership a dream for everyone except the wealthy.”

First we should note that Mason’s main, though concealed, argument here is that Vancouver’s housing problem is no different from that of any other major city. This is decidedly false. The disparity between median income and median market housing price is larger in Vancouver than every other city on the planet except for Hong Kong. But then Hong Kong has 1.2 million units of public housing, which house 40% of the population. Just this week, a report came out showing that Vancouver has the highest rent in Canada. While most readers will know all this intuitively — many of us adapt to the crisis by multiple-subletting and by sleeping in attics, basements, on couches, floors – it’s necessary to cite these figures to remind out-of-touch elites that the crisis is systemic. The situation in Vancouver is not healthy and normal. It is pathological and exploitative.

Mason then addresses some policy approaches he has heard circulating in elite circles: 1) “subsidized” housing on city land, 2) rezone certain areas for more townhouses, and 3) co-op housing.