As painful as it may be to admit defeat, sometimes it opens up the only way forward. We believe that is the situation the city now finds itself in on the Olympic Village social housing project.
As Olympic Village costs spiralled out of control, the city was forced to step in last January and rescue the project with a $750 million bailout, making the controversial development the subject of intense public and media attention. Since then, the city has managed the project reasonably well, and may indeed recover most of our money when all is said and done.
However, the social housing component of the project stands out because the city is directly exposed to all cost overruns, as the developer. In February, city staff reported the cost of building the 252 units of social housing in the Olympic Village had almost doubled from $65 million to $110 million. After you add in the $40 million in land that the city provided, those 252 units are costing taxpayers about $595,000 each, or about $540 per square foot.
Comparable new social housing is being built elsewhere in the city for less than half the cost of the Olympic Village units. For example, the Portland Hotel Society is building 80 units of supportive housing on Station St. at a cost of $21.6 million or about $270,000 per unit. The Pender Apartments at 337 W. Pender St. will comprise 96 units at a cost of $21.2 million, or about $221,000 each. In both cases the city is providing the land, just as it has done for the Olympic Village project.
The city has other sites designated for social housing – but lacks the money to build on them. What if Vancouver sold the Olympic Village social housing, recovered as much money as possible, and used that money to build social housing on other city-owned sites?
It is not unreasonable to think we could end up with at least twice as many units of social housing – maybe more if the city can use this money to leverage contributions from provincial and federal governments. The idea of being able to extract the city from this financial quagmire and also provide housing for at least twice as many people is both socially and fiscally responsible.
Think City believes the city should explore all options to sell the 252 social housing units, either as freehold or leasehold condominiums. We believe the city should recover the value of its land, plus as much of the construction and development costs as possible. Vague promises of funding future social housing will not be good enough – the money raised must be segregated and held in trust to finance social housing on other city-owned sites.
Obviously, the social housing units at the Olympic Village will not sell for as much as Millenium Water’s market condos. The locations, views, finishings and fixtures are of a lower grade but it is reasonable to assume they could sell for 70 to 80 per cent of the market prices on a per square foot basis. If the units sold for an average price of $320,000 the city could expect to recover $80 million.
There will be objections and outrage from some quarters if council attempts to sell these social housing units. The need to bring social housing units on-stream immediately is one objection – and a valid one.
However, social housing is a long-term public asset with a lifespan of 50 to 60 years. The benefit of maximizing the number of units with the resources available grows with every passing year. In contrast, a short-term decision to cut the ribbon on these 252 units in the next three months will impose a long-term cost for decades to come.
Another objection is the symbolism of selling social housing. It might send a message the city’s commitment to social housing is weak and set a dangerous precedent that future social housing developments could also be for sale.
In politics, symbolism is often a double-edged sword. The symbolism of the city spending $600,000 per unit of social housing – possibly the most expensive social housing in the world and far more than the average Vancouver family could afford – could not possibly be worse. In a time of widespread economic hardship and deep civic budget cutbacks, it is a high-profile boondoggle our city can ill-afford.
It is important to recognize all solutions to the housing and homelessness problem require long-term, sustained commitment of resources. Maintaining public support for affordable housing is therefore essential, and profligate spending on $600,000 social housing units threatens to undermine that support.
Think City believes it’s time for the city to swallow the bad news, accept defeat, and recover as much of our investment as possible. This money should be held in trust and used to develop social housing on other city-owned sites, as quickly as possible.
We believe this approach will maximize the number of units of social housing we can provide – probably doubling the number of units. This public policy goal must ultimately take precedence over the understandable desire to house individuals as quickly as possible.
With as much grace as we can muster, let’s admit defeat and resolve to move forward.