This fall, British Columbians saw leadership changes in both municipal and provincial governments. Making good on what new leaders have said they’ll do will be intriguing to watch.
On the October 15 election day, some municipalities witnessed huge changes, others more of the same. The transition in provincial leadership was expected, and David Eby, the 37th premier of B.C., was anointed on November 18.
City of Vancouver: What’s up for rental
Watching one of the first meetings of the City’s new Council showed fresh councillors finding their footing. A super-majority will benefit decision-making, though such power brings great responsibility. Amid the many issues Vancouver contends with, the previous Council’s excuses of fracturing will no longer be acceptable. From many residents including property owners, we’ve heard cautious optimism.
One interesting new motion from last week requires City staff to report back on opportunities for fixed-rate community amenity contributions (CAC)s in the first quarter of 2023. In our view, so long as there are no CACs for rental projects (remember, rental itself is a CAC!) and Council resists exorbitant rates, this should help unlock housing faster.
Our hope is that the new mayor and council will consider our previous suggestions – most importantly, to bring a suite of new incentives to emancipate the thousands of rental units stuck between approval and construction start. Additionally, programs that encourage the development of 4 to 6-storey projects such as the Secured Rental Policy (SRP), be further expanded into more areas of the City. We have supplementary thoughts on the implementation of the Broadway Plan and welcome the opportunity to speak to those (Ken Sim – give us a call!). More certainty and less red tape are needed.
The provincial level: Housing news
Provincially, the Vancouver Sun has reported that $1 billion in commitments were already made within the first week of Premier Eby’s new role. On apartment buildings, our first positive news is counterbalanced with a significant concern to flag for owners, as follows.
The positive: Timeline targets
The Housing Supply Act (Bill 43) was announced on November 21 (details here). In short, municipalities already deliver housing needs reports but will now each be required to set, with the province, a housing approval target to be met within a certain timeline. Should they miss it, the province now can address the shortfall through various means. Some municipalities have supported this bill, others not. For municipalities that don’t pull their weight, we advocate implementation of negative consequences for continued non-action.
Potential negative: Right of first refusal
For the apartment building sector, our apprehension stems from the new premier’s campaign promise to provide a right of first refusal for the purchase of existing rental buildings.
Having had direct experience with these types of impediments during a transaction, a right of first refusal can be complex for both buyers and sellers. Many of our clients sell for reasons such as death, sickness, divorce or other difficult situations. The idea that a deal is only a deal when a government or like entity decides whether they will waive their right or not, could have major implications for timeline, liquidity and value. No details so far, but in our minds, impositions on how, when and to whom a property owner sells, does not sit well.
Further, the waiving party would require significant staff hours, funds and legal fees to review every real-estate opportunity and administer this program. Could this time, taxpayer money and energy be better spent elsewhere? Finally, ample product is currently listed for sale. There’s no need for a leg up, as any buyer with funds can offer right now.
Please watch this space as we hope owners will have the opportunity to discuss this type of policy and provide feedback.
Need for leadership ahead
For commercial real estate, the final two-thirds of 2022 have been tumultuous. Goodman has been fortunate to continue conducting business and assisting clients, recently closing two large Westside transactions.
Our 35-year study demonstrated that in every downturn, government interference has been a factor. With inflation stubbornly high, the global economic outlook worsening and recession looming, incentives and sound policies are needed. With new leaders in place, planning for economic growth, increasing the supply of new rental housing options and ideas for bringing positive opportunities to British Columbians, would be a great start.