Over staff objections, City of Vancouver council has recommended a policy change that the city admits could reduce the value of affected commercial property by up to 30%.
In November 2019, council proposed to add C-2 zoned properties – which mix commercial use with residential rentals – to Vancouver rental housing stock regulations that require all existing rentals to be replaced if the building is demolished or redeveloped.
About 80% of the properties affected by the proposed amendment are small retail buildings with 10 or fewer residential rentals.
“For property owners who are intending to sell or redevelop their properties, the impact will include a reduction in land value of approximately 10% to 30%,” according to a city report on the policy. “A reduction in land value in some cases may result in a current or future owner’s ability to access credit/financing and current and future redevelopment potential.”
The policy would mean that nearly 400 city property owners could not redevelop a building for pure commercial use or sell the land for residential strata development without replacing all of the existing rental apartments and securing them as rentals for 60 years.
Submissions to a city survey on the proposal, originally scheduled to end October 5, have been extended to October 19, according an email from a city spokeswoman.
If council approves the amended bylaw, it will come into force in early 2021.
“This may require a separate air space parcel from the rest of a new development, as well as separate ongoing management of the replacement rental units,” according to city documents.
Mark Goodman, a multi-family specialist with Vancouver’s Goodman Commercial Inc., said the policy is being considered despite the robust creation of rental units in C-2 zoned areas.
City documents show that, over the past 10 years, 497 new rental units have been built in C-2 zoned areas of the city, while just 77 rental units have been lost due to strata development or property renovations. Currently, C-2 zoned areas account for approximately 4% of the city’s residential rental inventory.
During a marathon 13-hour city council meeting last November 26, city planners cited this increase in rental units and the negative impact on C-2 property values in urging the city not to proceed with the amendment.
“For these reasons staff are not recommending this policy,” said Vancouver city senior planner Edna Cho.
Anne McMullin, president and CEO of the Urban Development Institute, which has been fighting the amendment since last year, said the deliberate devaluation of property could drive some owners out of business because they would be restricted in financing their property for renovations or improvement.
The policy would reduce the number and quality of rentals, she said, which is “the exact opposite of what the city is trying to achieve.”
When asked if she believed the amendment would be approved, McMullin said, “I would hope not, but with, this city council, what goes into the wash is very different from what comes out.” •