OP-ED: UBC's Workforce Housing Model
By Nancy Knight
Like the city, the University of British Columbia (UBC) has been grappling with this issue for almost 20 years. The neighbourhoods next to our campus have always had some of the highest house purchase prices and lowest rental vacancy rates in the region and consequently, the university was viewed by many as a relatively isolated commuter campus.
To address these challenges, as well as our sustainability goals, we created UTown@UBC, with its new on-campus residential community consisting of eight emerging neighbourhoods. This is a new venture that is complemented by the institutional student, faculty and staff residences that have historically been provided by the university and continue to be provided today.
The policies guiding the development of UTown@UBC include specific obligations, established in our official community plan (OCP), for rental housing and “non-market housing.” The primary means by which OCP obligations regarding non-market housing can be met is by building workforce housing. Accordingly, half of the rental units in our neighbourhoods are non-market. UBC also created a subsidiary, UBC Properties Trust, to implement the plans in our new neighbourhoods as well as key policies with respect to workforce housing as this was a new area of business for the University.
The principles of UTown@UBC are to build a sustainable, diverse, unique, university community. A key element of UTown@UBC is developing a mix of housing options with a variety of benefits. This includes everything from large condominiums and family housing to traditional dormitories for students. Affordable rental and leasing options are also available for faculty, staff and students. And shops, services, recreational and cultural facilities create a more complete, inclusive community with a stronger social fabric.
The opportunity to build UTown@UBC is due to the long-term thinking of the provincial government when it established the university. Using the model of land-grant colleges in the United States, the government provided UBC with a land endowment which was to be used to fund generations of research, teaching and learning.
Since land is an expensive part of any housing project in our region, costs are reduced by building affordable rental housing on land we already own. This reduces our borrowing requirements and improves our access to financing. We borrow money through the provincial government for student dormitory housing and from the private sector (often using Canada Mortgage and Housing Corporation programs) to pay for the construction of rental properties.
The rental income is used to pay down the mortgage on the property over time. At a certain point, rental properties start generating revenue, part of which is then used to finance the construction of new rental properties. Using a portion of existing UBC land for rental housing allows us to more quickly generate a positive cash flow.
Half of the rental units in our new neighbourhoods are non-market. Creating non-market rental options ensures that you do not price your “workforce” – or in our case a community that includes students as well as faculty and staff – out of the housing market.
UBC has identified on campus housing choices as key to attracting the best students, faculty and staff. We are providing the capacity to house 50 per cent of our full-time students by 2030, with 2,500 new dormitory beds becoming available in the next five years. This will help us meet our goal of providing a first-year housing guarantee to new students. We also have the planning objective of housing twenty per cent of our full-time faculty and staff on campus.
Currently, UTown@UBC has one of the largest stocks of rental units in the region, with nearly 750 apartments and townhomes in our family neighbourhoods. This number will grow through the first half of this decade as more rental units are developed in the UTown@UBC neighbourhoods. What UBC has learned is that there is a return, both monetarily and socially, on investing in rental housing. It generates a cash flow that goes on in perpetuity, while building housing opportunities to foster a community. This is a model that could be adopted by many municipalities who have significant land holdings.
But affordable rental is not the only form of affordable housing development at UTown@UBC. We wanted to create a mix of housing options to attract a diversity of residents to our on-campus communities. For faculty and staff in particular, ownership models are often more appealing than rental.
A proactive UTown@UBC policy aimed at staff and faculty was co-development. In this equity model, staff and/or faculty form a company to undertake the development of a multi-unit residential building which will be converted to individually owned strata units. UBC Properties Trust, an income trust whose beneficiary is UBC, provides the project management to the co-developers. The co-development company takes out a loan to buy the property, and hires architects and the construction team.
This model can bring the cost of new housing down by as much as 20 per cent. UBC has also built in disincentives for those looking to earn quick money and flip a home, so that families commit to being part of the fabric of their campus neighbourhood.
Contrary to what many might think, these policies have not had a negative impact on UBC’s credit rating. We consistently receive the highest credit rating of any North American university. We have created financial benefits for the university through family housing developments which grow our endowment to fund research and scholarships.
The creation of UTown@UBC has been a significant financial success and enabled the University to add significantly (to date over $280 million) to the University’s endowment to support its academic mission. The innovative affordable housing solutions help us create a diverse university community that is an attractive place to live for high calibre students, faculty and staff.
UTown@UBC is leading the way in how land use and endowment policies can work together to create a positive community reality.
Nancy Knight is UBC's Associate Vice President, Campus and Community Planning.OP-ED articles do not necessarily reflect the opinions of Think City. To make a submission to the OP-ED section of the Think City Minute, please email firstname.lastname@example.org for details.