Vaughn Palmer: Premier David Eby’s housing announcement a rush job that leaves many questions
Vaughn Palmer
The Vancouver Sun
Opinion: Even government seems unable to say how many units could be acquired under $500M plan that has an overly ambitious timeline
Premier David Eby on the balcony of a suite at the 115 Place Housing Co-operative in Burnaby, following the announcement of rental housing protections, on Thursday, January 12, 2023. Photo by Jason Payne /PNG
VICTORIA — The NDP government is backing non-profit housing societies with a $500-million fund to keep rental properties out of the hands of real estate trusts and other “predatory” investors.
“It’s a very exciting day,” Premier David Eby said Thursday and, caught up in the moment, he predicted the fund will protect “thousands” of renters from gouging and worse.
The premier’s enthusiasm was a bit overstated, judging from information in his own news release.
Eby made the announcement at a Burnaby co-op, saying it was typical of the kind of rescue work the fund will be doing.
The 425-unit building was acquired by a non-profit last year with the help of a $132 million grant from B.C. Housing. The provincial share, $310,000 a unit, was a fair price given the housing market in Metro Vancouver.
On that basis, Eby’s half-a-billion-dollar fund would bankroll four similar buildings or about 1,600 units — maybe twice as many if a second source of financing is assumed. Eby said non-profits should be able to attract additional financing from foundations, local government and other sources.
But when pressed, he admitted “it’s very hard to put a firm number on how many units we’re going to be able to realize.”
Thus, the premier committed half a billion dollars to a rental housing protection fund without a business plan or an acquisition target that he is prepared to make public.
Eby was asked whether provincial backing might simply plunge non-profits into a bidding war with the real estate investment trusts and others.
Not likely he maintained.
The fund will be managed at arm’s length from government by a Housing Protection Society, made up of the B.C. Non-Profit Housing Association, the Cooperative Housing Federation of B.C. and the Aboriginal Housing Management Association.
“The fund will have safeguards to ensure that government expectations are met around accountability,” said the premier.
“It will be part of the structure of the fund that there are fixed grants per unit, that the business case has to make sense and the building needs to be self-sustaining without continued funding. … So that will be a limit on the amount that the society will be able to pay.”
Besides, he predicted, “in many cases we’re going to see sellers preferentially selling to the non-profit sector.”
That’s a big assumption — that property owners won’t sell to the highest bidder simply because the government wants them to favour non-profits.
Eby also discouraged the notion that real estate investment trusts could drive a bidding war.
Earlier he blamed them for a “predatory model that leads to evictions and rent hikes, and can lead to homelessness.”
Now he said “real estate investment trusts — they have a business model, too. They see the investment upside and they are working within those constraints as well, so it is not like they are going to pay unlimited amounts.”
Maybe they aren’t so predatory after all?
Another concern raises from the government insistence on one-time funding to acquire rental buildings with no additional financial assistance provided afterward.
“The building needs to be self-sustaining without ongoing funding,” said Eby.
Many purchases will be older rental buildings. The owner may have let the property slide in anticipation of a sale to an investor for redevelopment.
Eby himself acknowledged cases where “an older rental building needs significant capital repairs and the non-profit may come to the conclusion that it needs to be redeveloped, that there can be new rental units built and there can be a larger building built on the site.”
Would that not entail rent increases to pay for the renovations, same as if a private owner were doing the work?
Eby insisted that the main purpose of the fund is to keep rental housing “permanently affordable (and) one of those key expectations is that tenants are protected.”
Hard to square with his insistence that there will be no followup funding to help with maintenance and upkeep.
Returning to the theme of the bidding war, the premier was asked why didn’t B.C. follow the lead of Quebec and legislate a right of first refusal for non-profits.
“It is something we are actively looking at,” said Eby. But the proposed change will not be ready to introduce “in the upcoming legislature session.”
Missing legislation, guesswork on the housing targets, wishful thinking on the bidding war … it all left the impression of a rush job.
So it was, judging from the last sentence of the media release: “The fund will be financed before the March 31 end of the financial year.”
The March 31 cutoff ensures that the $500 million will be provided from the estimated $6 billion surplus for the current financial year.
Eby says it also “means that the purchase of rental buildings could start as soon as the next 60 to 90 days.”
He may be getting ahead of himself.
Just getting the housing protection society running with the right staffing and guidelines will be enough of a challenge in the next few months.
I expect it will take longer before the society is ready to begin buying up buildings.
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