June 10, 2019
Dear Mayor & Council,
RE: Residential Rental Tenure Zoning
Richmond is truly an amazing place to base one’s business, but businesses are facing significant housing related challenges. A recent survey by the Richmond Chamber (RCC) confirmed that employers are reporting rising stress due to the city’s cost of housing and its impact on their ability to recruit and keep workers. 87% of business owners indicated that housing affordability has moderately or significantly impacted their ability to recruit talented workers. This represents a 25% increase from the RCC’s 2016 Housing Affordability survey.
The RCC recognizes Council’s recent intent to preserve and expand affordable housing stock in Richmond using the new provincial Residential Rental Tenure Zoning. While well intentioned, we believe the initial proposal would have had an adverse effect on the current situation, and we greatly appreciate that Council hit the pause button to consult with builders, landlords, and other key stakeholders to ensure the intended outcomes are achieved.
We would agree that more rental homes are urgently needed in Richmond to address the 0.7% vacancy rate and have spent a significant amount of time consulting with key stakeholders to explore how the RCC can best support the building of more rental housing supply.
From our consultations, key stakeholders are supportive in principle of the Local Government Statutes (Residential Rental Tenure Zoning) Amendment Act, as long as this new tool is used as an incentive to up-zone property to stimulate the building of more rental homes. However, it has become evident that this new tool is being used heavy-handedly by local governments to arbitrarily down-zone properties.
By applying rental tenure zoning without the addition of substantial density, it will devalue properties at the expense of the owners. In the case of Metro Vancouver and other large investors, it makes it more difficult to leverage existing assets to build new rental buildings. Additionally, rental housing stock is already well protected under the recently strengthened ‘1:1 policy’ which ensures any replacement units “have the same built form and number of bedrooms as the existing market rental units.”
The Residential Rental Tenure Zoning should act as a carrot, and not a stick. For example, in areas near schools that have low enrollment, developments could be eligible for a significant bump in density and be encouraged to construct an economical multi-level ‘wood frame’ structure, while also implementing the new residential rental tenure zoning. In this fashion, this new tool can be used in a positive way to reinvigorate our City and create the affordable rental stock we need. We could create rental housing that supports the families and young people needed to keep our schools and local neighbourhoods viable and vibrant.
Downzoning is a critical concern for our members because they rely on a stable regulatory framework in which land is not devalued arbitrarily by governments. This is a key factor in their ability to obtain funding for projects. If rental-tenure zoning is imposed without substantial incentives and a stable regulatory framework, it will discourage investment in new rental homes – the opposite of the desired outcome.
While density is the most effective incentive for rental provision, it cannot always be provided in sufficient quantities due to Richmond’s unique height and depth constraints. Other incentives, such as lower parking minimums could be used to support more rental development.
Metro Vancouver recently released a parking study that shows an average of 41% of parking stalls across the region were unused. If Richmond were to allow a reduction in parking requirements by similar margins for developments near transit, this additional space could be dedicated for market rental housing, and significantly increase supply in a short period of time. Ultimately every square foot built for parking, is a square foot that could serve as much needed market rental space.
In closing, there has recently been a major shift in the real estate market. It is crucial that municipalities across the region recognize this change when crafting policies that could unintendedly strain the viability of desired projects. It is imperative that bold incentives be provided to rental builders if Richmond wants to aggressively achieve its goal of building more rental homes. For over 30 years, the development of new rental housing has fallen behind demand. There simply aren’t enough economic incentives to building purpose-built rentals over market housing. However, Vancouver, Seattle and Kelowna have all recently used substantial incentives to tip the scales in favour of more rental stock, and that has worked very well. Richmond should follow suit.
Thank you for your time and consideration,
Chair, Richmond Chamber of Commerce
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