January 24, 2022—My earlier post, “Making Hay or Making Home,” elicited lots of commentary, questions and confusion. In trying to make sense of it, I am proposing what I call ‘Sharing Home.’
Sharing Home—a Modest Proposal
“But why would anyone go through the risk, expense and incredible hassle (including being out of your own house for god knows how long) of taking up the mayor's offer,” asked my friend, Carol. “He's guaranteeing that he will take away an undefined amount of your land lift, i.e., profit for going through this in the first place. You'd end up in a smaller house, with no guarantee of compatible fellow-owners, no big financial payoff, and you would have lost your space and privacy. Why would you do it?"
“That pretty much sums up the responses of existing homeowners who are trying to get their heads around this,” I answered. “Meantime, politician Jean asks, ‘How would this work? Affordable for whom? Rental or ownership? How big? Would the two affordable homes be on the lot with 4 other units or somewhere else? With the money from the land lift going to so many different things (11 listed in motion) how can we know that a decent amount will go to housing? What about the folks in current basement rentals who get evicted for this? Would they have a right of first refusal at their old rent in one of the new units?’ Lots to unpack there,” I added.
“Academic Tom picked up on this, saying ‘The city currently does nothing for basement suite tenants when they are displaced by conforming RS uses (e.g. tear down to mansion), which is unfortunate, as the new uses do zero for affordability. I agree a good use for the land lift would be to provide benefits for displaced basement suite tenants. Because so much of the lift from redevelopment would be captured, this program would mostly serve to change what happens to existing RS homes when they are redeveloped. So I don't see harm, and I do see help, relative to the current RS status quo. Naturally if the city is to add homes with minimal displacement, RS is the place to do so, as these areas have the fewest renters per land area. I don't think this is enough density, but it is far better than the status quo.’ Lots there as well,” I said, rolling my eyes in confusion.
“Let’s try to, first, clarify what’s in Making Home, as best we can.” I paused at the enormity of that task. “Then perhaps we can address the ‘What about this? What about that?’” Carol nodded agreement so I continued.
“Jean and Tom’s comments underline the vagueness of Making Home. The Mayor proposed all-ownership as well as hybrid own/rent combinations, He indicated there would be a fee or Community Amenity Contribution (CAC) payable to the city to capture some of the so-called land lift presumably arising from building up to six homes on a lot zoned RS—unfortunately, that CAC and other city-imposed costs makes homes in the resulting sixplex less affordable than existing condos or townhouses—I covered that in my previous post.”
“And to be clear, the Mayor should know by now that all so-called single family zones in the city already permit up to four homes—a duplex for sale atop a rental secondary suite with a rental laneway home at the rear. So we’re already at 50% own, 50% rent on every so-called single family lot in the city.”
Carol nodded understanding, asked: “Why do you call it ‘so-called land lift’?”
“Well,” I answered, “before we get too far into the weeds, let’s be clear that we are completely unclear about what land lift actually accrues to the redevelopment of a small site. How much is already there because the existing zoning allows up to four homes on a lot? We are only adding two additional homes, so are we talking about land lift on six new homes, or just two additional ones? And what if those two additional are rental, versus sale? What if the whole property becomes a small co-op?” She nodded with knitted brows, understanding the confusion of it all.
“Academic Tom would have the city sell density to small lots, as it already does to spot rezoning all over the city—just in 2020 (last year reported), the city sold an extra 4.7 million square feet of density for an average cost of $65 per square foot. This 4.7 million sf is in addition to what existing zoning would permit in a redevelopment. $65 per sf is a pretty good deal in a marketplace where $1,000 per square foot is considered a ‘deal’ for a condo sale.” Carol still looked confused, so I continued.
“So if $65 per sf is considered good value for land lift, then going from four homes currently permitted on a RS-zoned lot to six, at the Mayor’s average 900sf per home, the land lift value of those two additional homes is $117,000. So if the city wants more than that, then they are proposing to charge small homeowners more than they charge major development companies—hopefully that’s not their intent.” I paused and Carol interjected:
“So if the city implements Making Home in a way that’s as fair to individual homeowners as to major developers, then they would want an extra fee, call it a CAC, of $117,000, maybe even more, each time an owner does this?”
“That appears to be correct,” I answered, “BUT, and it’s a big but, none of this answers politician Jean’s concerns about renter protection and increasing rental supply. I think the answer to her concerns actually lies with rethinking our priorities for small lot densification, favouring rental over ownership but allowing both. This could be accomplished with some simple tinkering with the existing zoning.” Carol waited for me to continue.
“Most existing RS zoning allows a character home on a 10m (33’) lot to be replaced with a for-sale duplex, a rental secondary suite and a rental laneway—a maximum of four homes in total.” She nodded agreement as I had already mentioned that.
“Let’s take an existing character home, where the owners don’t wish to tear down and replace—there are still lots of very small or poorly maintained homes that should come down, but many more are well maintained and livable.” She gestured to me to keep going.
“Having done this myself with our character home, adding a secondary suite for rent, usually the basement, is straightforward—well, as straightforward as anything in the city.” She smiled at that. “And I can add a rental laneway home as well. All that can happen with minimal disruption of the existing owners, and if they already have a secondary suite in the basement, well, they just keep that—no tenant displacement.”
“What if we allowed a second laneway home behind a house, but in recognition of that additional income, we required the (now) two laneway homes and the secondary suite be placed on a rental registry such that the three rental homes could not be either sold or kept vacant.”
“Sounds interesting, but what does it mean financially?” Carol asked, quite reasonably.
“Well, using the same cost figures from my previous Making Home analysis, the construction cost of converting a basement to a suite and building two 600-square foot one-bedroom laneway homes would be a bit over $400,000—add in financing costs, design fees, development, building and trade permit fees and contingency for the unknowns and we’re still below $500,000, which as a mortgage is $1,000 per month, $1,500 per month if rates go up 1% as currently predicted.” I paused to catch my breath.
“So now we have one owned character home and three rental homes on a 10m (33’) lot. The owner would pay probably $2,000 more per year in property tax, $1,000 more per year in insurance, for a total of $250 per month more than before—utilities and such would be covered by the tenants.”
“Bottom line,” I barrelled on, “the total carrying costs of these three one-bedroom rental homes would be $1,750, even at higher forecast interest rates. That compares pretty well with the $1,800 per month forecast rent for just a single studio in this neighbourhood—that’s what’s suggested as an affordable rent at the Broadway & Alma project Council recently approved. In fact, with the three rental homes’ carrying costs being covered by the rent from just one of the three rentals, the other two could have below market rents, even more affordable, and the homeowner would still have a steady income from sharing their lot with others.”
Having made a few notes as I was talking, Carol now weighed in. “I see two things missing from your thoughts: off-street parking; and any fee or Development Cost Levy to the city—I think you calculated just over $100,000 in DCLs in your previous analysis.”
“Well spotted,” I responded. “In terms of parking, I’m suggesting firstly, that the trade-off for that second rental laneway home be elimination of off-street parking to create more rental homes in the city, plus registration of all three rental homes in a rental registry to prevent them being kept vacant. After all, is housing cars more important than housing people? And secondly, if the city really needs additional DCLs to foster the creation of affordable rental housing elsewhere in the city, well, there are other ways to do that.”
Carol looked again at her notes. “I get the attraction of the character home transformation—what about the tear-down replaced by a duplex?”
“That’s where the potential for helping affordable rental elsewhere in the city comes in. It also goes to your initial comments about the confusion of Making Home. I’ve probably seen the same posts as you, the ones where a $2 million home (lot value) is replaced by two-$2 million duplex homes on the same site.” She nodded. “In that case, if the city wants to charge more for land lift, then perhaps that’s where to focus. If the existing owner keeps one side of the duplex and sells the other half while retaining ownership of the three rental homes, they will have recaptured most or all of the value of the lot while still living on it and probably be able to finance the costs of their new half-duplex just with the net rents. And if the city wanted to permit secondary suites or laneway homes to be strata-titled, as Making Home suggests but I disagree with, then sure, they should extract an additional significant fee—just not from renters.”
“Why does this seem so much simpler than Making Home?” Carol asked.
“Well,” I concluded. “Creating rental housing should be easy and be incented—and it should be protected by some sort of rental registry to keep it available for renters. If the city wants to pad its coffers, then it should be clear about taking a land lift cut of duplex homes for sale, rather than character homes to be retained and the creation of new rental homes.”
“One last question,” asked Carol. “Academic Tom says Making Home doesn’t add enough density to the city—where does your take on Making Home fit in?”
“He’s dead wrong—it’s just easier and more lucrative for developers and city hall to spot rezone chunks of the city than do the heavier lifting of smaller scale granular work in the city’s many neighbourhoods. I’ve been doing a database of spot rezonings in the ‘pipeline,’ as city staff call it in weak moments—I’ve had to do my own database as staff hide that data from residents, even from City Councillors. I’ve not completed the database (it’s tedious) but so far there are more than 90,000 homes in the rezoning pipeline, mostly high density high-rise, about half in the early stages, unaffordable by even the simplest cost calculations. This in a city historically growing at less than 7,000 residents per year—in fact, last year our population declined by about that much.”
“Meanwhile, the Mayor estimates there are 68,000 so-called single family lots in the city. City staff say half already have secondary suites and that there are about 5,000 laneway homes so far. Let’s assume homes with a suite or laneway already stay as they are. If all of the remaining homes each did their allowed secondary suite and two laneway houses as I suggest, that would total more than 160,000 new homes, all rental in the scheme I describe above. Of these, 100,000 are already permitted in our so-called single family zones—the other 60,000 are the second laneway homes I’m suggesting be permitted. Now, of course not everyone will do a suite and two laneways, but we’re talking about more than 20 years total housing supply sitting in our back yards, all rental. Not to mention the 30,000+ additional ownership homes available through existing zoning duplexing.”
“We have more than we need for the foreseeable future in our existing zoning without Making Home and without most of the ‘pipeline.’ All we need is the political will to implement what I call Sharing Home.”
This is the second part of City Conversations about affordable home ownership in Vancouver.
Brian Palmquist is a fully vaccinated Vancouver-based architect, building envelope and building code consultant and LEED Accredited Professional (the first green building system). He is semi-retired for the moment, still teaching and writing, so not beholden to any client or city hall. These conversations mix real discussion with research and observations based on a 40+ year career including the planning, design and construction of almost every type and scale of project. He is the author of the Amazon best seller “An Architect’s Guide to Construction.” He is also a member of team for a livable Vancouver, a new political party dedicated to restoring a livable Vancouver starting with the 2022 civic election.
Making Home or Sharing Home—Choose One
I appreciate your coverage of this proposal. But we are still thinking too small! Please no more laneways and basements, these have poor light, feel cramped, and too close to garbage collection and often ugly lanes. No family of four aspires to live in either.
What is wrong with adding density and giving people the dignity to live in an apartment or townhome of 1400 sq ft? In my opinion this is the minimum space to be comfortable with a family of four - others may have other numbers but I think this one is right.
Think of stacked flats in London - a lower ground floor that is not fully below grade so it gets nice light and can have a patio, and 3 or 3.5 storeys above. a footprint of around 1500 sq ft and some small setbacks and outdoor space on each floor. Total max 6000 sq ft on a 33 ft lots gives FSR of 1.5. with three parking spots in the rear plus two street spots that is 5 for 4 units. Or alter the configuration so not all flats take the full floorplate and have up to 5 or 6 smaller units. Still I think we need more family sized houses so 4 x 1500 sq ft is ideal.
This can be set up as a coop or with an owner and some rentals or as strata. Variety is important, people want different things from their home. Think BIG! Zoning is needed but currently WAY too restrictive.