The STIR Program
The City of Vancouver instituted the STIR program (Short Term Incentives for Rental Housing) in 2009 to address the need for rental housing by encouraging the development industry to create it. The program includes two streams: a simple stream and a negotiated stream, but in general, the program aims to increase market rental units secured as rental for the life of the building or 60 years, whichever is greater.
The STIR incentive package includes:
- Rental property assessment (on rental units only)
- Development Cost Levy waiver (on rental units only)
- Parking requirement reductions (on rental units only)
- Discretion on unit size Increased density
- Expedited permit processing
The official City website on the Short Term Incentives for Rental Housing (STIR)
Part of the intent of the program was to encourage continued development activity during the uncertain economic times of late 2008 and early 2009. (It turned out the development industry recovered much more quickly than was anticipated.) The City hoped that the incentives offered would create new rental housing stock and would assist with housing affordability.
The Short Term Incentive Rental Housing (STIR) program was intended to give incentives to developers to build affordable rental units. Instead the STIR projects are saving developers millions of dollars in the construction of massive market-rate rental buildings that over-ride existing City planning documents and West End zoning and development guidelines.
In November 15, 2011, WEN released information about legal advice obtained about the STIR program and wrote to the council stating that WEN Challenges STIR and further that the STIR program controversy: Legal framework flawed, program must be scrapped says West End Neighbours.
STIR expired in December of 2011, but any “in-stream” applications are still eligible for consideration.
In May of 2012, City Council adopted a new program called “Secured Market Rental Housing” (SMRH) which continues with most of the aspects of the previous “short term” rental incentives program.
Rental housing is a good thing, and encouraging purpose-built rental housing is a worthy goal. But it needs to be done in a balanced way and the package of incentives needs to be defensible and acceptable to the public.
Some points to consider with STIR and SMRH and their impacts on the West End:
- These developments will add to the burden on public infrastructure but not contribute funds to improve it despite the extra burdens of increasing the population. The Planning Department does not appear to be reviewing the cumulative impacts of the projects. Yet our only elementary school is already full to capacity and has no room to expand. Our library is at a capacity. Recreation and community centres are aging and overloaded.
- The STIR program was rushed through very quickly in June 2009. Developers played a major role in formulating the program, but communities had no chance to provide input, or even hear about it — no one was asked and no staff or proponents of the program mentioned the dramatic implications on OUR community. The SMRH was dealt with in the same way.
- In effect, the STIR and SMRH programs are acting like a Trojan Horse to justify extreme changes to zoning (e.g., increasing the height at 1401 Comox by almost 400% when currently zoning permits a maximum 6 stories, and increasing the density by 500%). None of these rezoning applications in the West End would even be considered without the STIR program. None of these issues were discussed in the development of the STIR program.
- There is no proof that these particular projects will lead to more affordable housing. There is only a hypothesis by some proponents. If rentals are in short supply, there are other ways to add more rentals. Consider empty units in the city, purchased as investments but kept empty? Should these units be subject to a new tax to encourage them to be rented? What the hundreds of units created at the Pacific Palisade project (Robson and Jervis) recently created from converted hotel units, or the more than three hundred units proposed to be created through the conversion of a major local hotel (Coast Plaza at Denman and Comox)? There are other ways.
- Hundreds of letters, comments, and questions have already been submitted to the Planning Department against these proposals, yet most of them have not yet been answered.
- A neighborhood cannot stay the same forever, but there are key questions to ask: How should change happen? Should it be directed by development companies? By politicians? By public servants? Or by the affected community? Perhaps a bit of each. Should changes be imposed haphazardly, site-by-site? (As Vision Vancouver is now doing in the West End.) Or should change proceed with a comprehensive plan? Is it possible to create a plan for the West End? Answer: One already exists. Obviously it was possible. To update a community plan through an open and transparent process takes time and effort and such an approach is what a “visionary” city like Vancouver deserves. Our city is supposed to know how to do good planning. But Vision Vancouver’s de facto lot-by-lot rezoning policy in the West End will eventually cost everyone (including politicians and developers) much more.
Is the STIR program creating “affordable” rental housing?
STIR is offering incentives to the development industry to provide some of the most expensive rental housing in the region. For example, developers should not receive incentives to create the type of units, such as the water view townhouses, proposed for Beach Towers.
The legal basis for waiving development charges that would apply to any other project is “affordable rentals”, but there is no functional definition for “affordable” other than that the units are rental. A STIR rental unit at $3000 a month is deemed “affordable” for the purpose of the program.
Rents proposed are inconsistent with new rentals currently being marketed in the neighbourhood. The Pacific Palisades complex at Robson and Jervis is currently renting one bedroom units of 602 Square Feet starting at $1500 per month (without insuite laundry), yet the City suggests that an average rent for a one bedroom at 1401 Comox Street will be $1,340 per month (with insuite laundry). The reality is that the rates for rentals at 1401 Comox Street will be priced at what the market will bear.
The comparisons of proposed rents to the neighbourhood and to the downtown area (page 14) include all rental tenancies – this would incorporate long term tenancies where rents may be below the expected rents for new tenancies.
The draft version of the Staff Report (June 2010 attained through FOI) indicates that the City Manager had determined “that there will be a measure of affordability within the context of market rental.” The current staff report instead indicates that the City Manager “…has determined this rental housing proposal to be affordable as proposed in the rezoning application.” WEN has challenged this definition and without a clear definition of targets, the City Manager does not have the authority to deem market rental units to be “affordable.” For more information see WEN Challenges STIR.
STIR’s definition of “affordability” is flawed, and the proposed waiver of DCL’s is inappropriate as the proposed units do not meet the test of “affordable rentals.”
Was the public consulted about the STIR program?
There was no public consultation on the STIR program adopted by Council in June of 2009. At no point did the city notify the general public that this policy was about to be passed. At the time, Neighbourhoods for a Sustainable Vancouver wrote to Council outlining their concerns: NSV letter to Mayor Gregor on STIR, 17-June-2009. When concerned citizens expressed the view that the STIR program did not include public consultation, the answer of elected Councillor Geoff Meggs was “The consultation was the election and this was the delivery.”
The suggestion that there has been public consultation for the new program is untrue. The general discussions on housing (“Talk Housing to Us”) were not oriented toward a new incentive program and should not be described as consultation leading up to this new program.
The City’s summary of STIR and the reports to Council on recent projects read more like justifications of the program, rather than an objective analysis of pros and cons.
Are there limits to height and density in the STIR program or is it open-ended?
One of the most serious problems with STIR is the lack of guidance on height and density bonuses. Staff’s review of STIR indicated that density bonuses on STIR projects ranged from “zero” (e.g., no bonus was necessary to create rental units) – to a 185% increase in density for the combined condo/rental project at 1215 Bidwell Street. Moreover, the STIR project at 1401 Comox Street includes a density bonus of 395%. See slide 35 at this link.
The new rental incentive policy does not address this deficiency, and instead makes comments like “increased density, as appropriate” and “modest increases in density” can be considered.
The incentive program cannot be left open-ended.
Do STIR projects provide developers with a “land lift” and what are the implications for the community?
Real Estate Services staff have indicated on each STIR rezoning that there is no “land lift” on STIR projects, therefore no applicable Community Amenity Charge. Yet, the project at 1142 Granville Street experienced a significant increase in land value between 2009 and 2011 after the rezoning for STIR rental units.
The project at 1142 Granville Street included a rezoning to increase density from 3.5 FSR to 5.53 FSR. A Council Report for that project stated that “Staff reviewed the applicant’s development proforma to identify whether the rezoning generated a sufficient increase in land value or land lift, to warrant a Community Amenity Contribution (CAC) offering. Staff concluded that after factoring in the costs associated with the development of market rental housing units, there was no land lift and, therefore, no CAC offering applicable.”
For the STIR project at 1142 Granville Street:
- Site area: 8,993 sq. ft.
- Price paid for land: $3.47 million
- FSR under original zoning: 3.5
- Existing permitted floor area: 31,476 sq. ft.
- Proposed FSR: 5.72
- Unit Count: 106
- Total buildable sq. ft.: 51,439
- Cost of land per sq. ft.: $386
- Cost of land per buildable sq. ft.: $67.46
Summary: Developer paid $386 per square foot of lot area, or $110 per “buildable” square foot under existing zoning. Developer requested a 63% density bonus to accommodate STIR rental housing, lowering land costs to $67.46 per “buildable” square foot of floor area and built 106 STIR rental units.
A review of the assessed land values for the Granville site shows the following progression:
- 2009 Land Value Assessment: $3,465,000
- 2009 (Sept.) Property Sale at $3,500,000
- 2010 Property Re-zoned to accommodate STIR rental development
- 2011 Land Value Assessment: $6,435,000
- 2012 Land Value Assessment: $8,207,000
Either the city deems an increase in land value of $4,742,000 (137%) to be “no land lift” or the BC Assessment Authority is incorrect.
There is no documentation as to why the proposed density at 1401 Comox Street is necessary – only that the developer requested it. The suggestion that it is necessary to increase density to allow for the construction of purpose-built rental units may have merit, but there must be an analysis of the amount of density increase necessary to justify rental feasibility.
In the words of the City, how can neighbourhoods “finance growth” when there is no opportunity obtain resources to build libraries and improve parks associated with the development of these rental units?
How can the city encourage increased density and rental while respecting neighbourhood planning guidelines and objectives?
Many residents are upset by projects like 1401 Comox Street that request large density increases to accommodate buildings that over-ride local planning objectives. If the city wishes to encourage density and rental housing in a way that can achieve public “buy-in”, it should be working harder to create policies with public input and programs that allow for modest and acceptable increases in building height and density. Not imposing unwanted projects thought divisive and time-consuming public hearings.
It took us 30 years to get us into the rental housing creation problems we have now – it’s not unreasonable to take some time to get the current incentive package correct and so it will allow the neighbourhood to move forward in ways that balance neighbourhood and municipal objectives. The development industry creates the housing we all live in, but this industry should not be the only voice suggesting municipal incentive programs.
Is the 1401 Comox proposal in compliance with the STIR program conditions?
A STIR program objective is to support the City’s sustainability goals to encourage rental housing along commercial arterials, neighbourhood ‘high’ streets, and transit centres. Staff have stated that all projects must be located along arterials, neighbourhood ‘high’ streets, or transit centres.
The 1401 Comox Street is located on a site that meets none of these criteria.
Is the West End the appropriate place for STIR projects?
In the West End over 80% of households are rental tenure so it seems odd that STIR would not be used to encourage rentals in areas with a larger “deficiency” of rental housing than currently exists in the West End. By developers’ own admissions the costs of land affect the feasibility of rental projects, so perhaps STIR rental projects would make more sense in other neighourhoods with lower land costs.
Will the City follow-up to ensure that rental subsidies are working as anticipated?
The STIR program is providing generous incentives to the developers to create what is deemed to be “affordable” housing. The definition of “affordable” has not been clear or consistent. And there are no limits on the rents that will be charged on these market rental units.
The City needs to conduct regular post-occupancy surveys to determine who these buildings are serving and the amount of rent charged for the units. Under the open-ended STIR guidelines, the proposed units could be operated as furnished executive rentals and do nothing to assist existing rental housing objectives. If that is the outcome of any of the STIR rental projects, the City and residents need to know this, and the City needs to use this information to balance housing objectives, developer profits and neighbourhood impacts.