The city wants to build its own market rental housing. Is that a good idea?

What happened: To say this is a radical departure from the norm would be an understatement — Mayor Ken Sim, along with his ABC councillors, announced a plan to turn city land into market rental housing, according to the Vancouver Sun. 

• The city will develop five properties, with two already submitted at 54 and 40 storeys, that would see more than 1,100 market rental apartments built. They are located at Pacific and Hornby Street. 

Why it’s controversial: The decision to build market rental housing, in the context of what other cities doing, could be considered an odd choice for a few reasons. There are already many rental housing projects in the pipeline. Most cities get involved in rental housing by focusing their limited resources on below-market rental projects to help those who can less afford rent.

• From a profit generation standpoint, the city is likely to make money, according to the Globe and Mail, because rather than having to purchase and develop the land, they already own it. However the city will need to hire many people with expertise in building, which could get expensive. 

Zoom out: Burnbay, rather than building market rental housing, has launched a municipal housing corporation called the Bunraby Housing Authority, which will build units that are 50 per cent below market rents. This compares to Vancouver, which is building more expensive market rental units. The mayor of Burnaby said it “doesn’t make any sense” for their housing authority to focus on market rental buildings, , according to The Tyee. 

International example: Vienna is a popular example of a city that’s figured out how to make housing more affordable. They own their own apartments, roughly 220,000 of them but rather than viewing it as a mechanism to generate revenue for the city, the policy goal is to keep inner city housing affordable, according to the Guardian. 

Yes, but: Looking outside municipalities, the city’s plan is a little less unique. The province has, through its BC Builds project, moved into developing market housing on land that it owns. The province says they’re interested in hearing more details about the project, according to the Globe and Mail. 

What it means: There are potentially a few reasons why the city is doing this. ABC believes that building any sort of home building is good for affordability and that by building more, home prices and rents will go down for everyone. The city also likely sees this as an opportunity to make more money. Why let developers pocket the profit when the city could?

• Secondly, as Sim noted in the new release, they’re focusing on middle-income housing. It’s an area that makes sense for them electorally, as people making between $90,000 to $120,000 per year are more likely ABC voters.

Yet, while the city may generate revenue, there is finite land. Each decision to build market rental housing takes away from building other types of developments.

What it means: Most experts quoted in the coverage about the policy questioned the city’s plan to build housing this way. Innovative solutions are not a bad way to approach a project. But there are valid questions about whether the city should be investing in market rental housing instead of below-market rentals, and whether it has the expertise long-term to execute this complex project.