Article content

As a result, the trend across the region is “toward loosening these requirements,” Waters said.

Article content

“Vancouver and Burnaby have both eased their rules in the past two years as projects stalled. That direction of travel is itself evidence that the original requirements were set above what the math could bear.”

Article content

The changing market reality across Metro Vancouver is that while some rents remain exorbitant, the vacancy rate for purpose-built rental units, of 3.7 per cent, is the highest it’s been since 1988, as migration levels into Metro and other major Canadian cities are down.

Article content

In the past few years, many developers have taken advantage of governments’ various incentives to venture into new rental projects. Housing analyst Ben Rabidoux found that in the second quarter of this year there was a record 218,000 rental units under construction or in the pipeline.

Article content

But one of the major problems with “inclusionary zoning” programs, Waters said, is that the renters who are supposed to receive a discount are subsidized by other renters in the same building.

Article content

“If a developer concludes market renters won’t pay those higher rents, the building doesn’t get financed,” she said. “So the real-world sequence is the math doesn’t work at today’s rents, so nothing gets built. Without inclusive zoning, the math would have worked years earlier, and rents across the board would not have risen so much.”

Article content

Article content

The Broadway corridor is “the live example,” she said. “And Vancouver is now rolling the requirement back. That math didn’t pencil, so very few sites went under construction (in the Broadway corridor). In 2026 the city effectively conceded the point.”

Article content

Vancouver is easing up its expectations within the massive Broadway plan, she said, after initially requiring builders to make 20 per cent of residential floor area below-market, by which it meant about one-fifth under median rents. Burnaby, she added, started out by requiring 20 per cent of units to be below-market, but has now dropped that to 15 per cent.

Article content

Beginning in February, Vancouver also began to let most “below-market” rents be “set at the CMHC citywide average, rather than 20 per cent below it,” she said. “And it waives the residential development cost levy for qualifying projects.”

Article content

A secondary flaw with inclusionary zoning is about equity, she said. It lies in who decides who gets to enjoy reduced rents: “Thousands could qualify. In Metro Vancouver, the choice typically falls to the building’s owner/manager.”

Article content

Article content

Cameron Gray, former head of housing for Vancouver, has also pointed to the predicament that city councillors fabricated by requiring landlords to make the decision on who gets subsidized rentals. He suggested favouritism can occur: “The devil is in the details.”

Article content

Economist Marc Lee of the left-wing Canadian Centre for Policy Alternatives has proposed more direct ways to provide lower-cost rental housing, including by supporting agencies like the B.C. Rental Protection Fund, which establishes non-market housing projects with “integrated management.”

Article content

Some of Waters proposals are similar. Instead of asking developers to set aside some units as “below-market,” she recommends cities require builders to pay fees to organizations like the Fund and other non-profits that build dedicated non-market housing developments.

Article content

Article content