If current trends continue, the city of Vancouver can expect to build roughly 700 new housing units this year. That’s far less than the city’s goal of building 2,000 new housing units annually and a sharp decline from the roughly 1,100 units it developed last year.
The Columbian recently reported on the drop in new construction in Vancouver and the factors contributing to it, including tariffs on steel, aluminum and lumber which are driving up construction costs.
Earlier this month, Vancouver’s Economic Prosperity and Housing Director Patrick Quinton outlined several steps the city council could approve to spur new construction. They include eliminating off-street parking requirements for new affordable housing and deferring the collection of fees from developers for market-rate housing.
Quinton joins us to talk about these proposed changes amid a housing shortage in Vancouver and the region.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Jenn Chávez: This is Think Out Loud on OPB. I’m Jenn Chávez. The city of Vancouver is on track to have about 700 new units of housing built this year. That’s less than the 1,100 units they built last year and way less than their yearly goal of 2,000 units.
“We need to do something,” Patrick Quinton told city councilors recently. He’s Vancouver’s Economic Prosperity and Housing director, and he has some ideas. He’s with us now to talk more about the drop in construction in his city and some of the solutions he’s proposed. Patrick Quinton, welcome to Think Out Loud. Thank you for being here.
Patrick Quinton: Thank you for having me. It’s great to be here.
Chávez: I talked through some of what the housing shortage is looking like in numbers, in Vancouver, your city. From your view, how is this shortage in new housing construction negatively affecting your city and the residents there?
Quinton: It’s affecting us in a variety of ways. Certainly, we have a very high percentage of households that are cost burdened, if you will – paying 50% or more of their incomes on rent or housing costs. So that’s kind of one of the major metrics in terms of affordability. But we obviously have people living on the street. We just know there’s a lot of housing insecurity as a result of this and we know it relates primarily to the lack of housing supply. So we see it both in the data and we see it in real life.
Chávez: I want to get into what some of the problems are that might be causing this. One, like we’re seeing in so many other industries, is the uncertainty being caused by tariffs playing a role here. How is this factoring into thinking by housing developers when it comes to taking on new projects in Vancouver?
Quinton: Uncertainty is not a good thing to have when you’re in a development business. So developers are already facing high construction costs. They’re facing high interest rates. They’re trying to make projects pencil, as they say. And then you add into that the possibility that their costs, whether it be steel or lumber, could all of a sudden rise overnight, halfway through a project. That just adds another element of uncertainty to a project that could cause a developer to say it’s just not worth it to proceed at this time.
That’s an element that, in previous recessions, didn’t exist. We’ve been through this high interest rate, high cost environment before. But I don’t think we’ve been through it before with this kind of threat looming over the real estate business.
Chávez: You spoke to some of the other problems that are causing this high interest rate. I think it’s a great point that this is kind of a long game for these developers. And changes that you can’t anticipate really throw a wrench into things. So you have proposed several changes that you and your colleagues in Vancouver hope will help alleviate this decline in construction. One of them has to do with parking for new affordable housing. What are the changes you’re hoping to make there and why?
Quinton: We’re proposing to eliminate parking minimums for affordable housing. Parking minimums have historically been a standard part of the zoning regulations in any city. And a lot of cities around the country are addressing parking minimums. So Vancouver has been taking a look at it. We know that probably the best place to start is by removing any parking requirements for affordable housing projects. That simply means that the city won’t require a specific number of off-street parking spaces with any new development. That just allows individual projects to decide how many off-street spaces they need for a project.
There’s been a lot of studies, both regionally and nationally, that assign a cost-per-housing unit to these types of regulations. So we’ve long known that this is adding cost to projects, so we feel like the best place to start is just relieving our affordable housing projects of this requirement. Hopefully, that will remove enough cost from some projects to help them move forward. Then we can look at parking minimums more broadly at a later date.
Chávez: I want to stay on affordable housing for a second beyond the parking requirements. What are the barriers to getting more units of affordable housing built, compared to getting more units of market rate housing built?
Quinton: Obviously, the interest rate environment and the construction cost environment impacts all housing projects. So affordable housing projects face the same challenges there. But affordable housing projects rely on different funding sources, different financing sources, and a lot of it is subsidy from federal, state and local sources.
Those sources are, right now, quite limited. We know how much is available on any given year and that doesn’t meet the need that we know we have in our community. Then we’re also facing, once again, some uncertainty at the federal level, as to whether or not we’re gonna continue to have federal subsidy sources.
But the bigger picture is, there just isn’t enough public funding to meet the need for affordable housing. And in Washington state, our estimate from our vantage point is that we probably need about twice the amount of public subsidy that we currently have to meet what we know is the affordable housing need for not just our community but for communities around the state of Washington.
Chávez: I want to go to another proposal that you recently presented to city councilors. You’ve proposed the waiving or delay of multiple fees developers pay on new projects. What are you suggesting there and why is that so key in these efforts to incentivize new housing construction?
Quinton: One of the other proposals, as you mentioned, is for us to delay payment of what can be called System Development Charges [SDCs], or impact fees. They’re basically the fees that cities charge to address the impacts on things like the street network, or the water system, or parks and whatnot. And I think it’s been an active conversation in Portland as well as here. These fees are pretty significant on multi-family projects. So the conversations obviously happening in Portland are about waiving those fees.
The way we’re approaching it is simply, let’s delay the payment of those fees until after the projects are ready for occupancy, meaning ready for people to live in. What that does is it could save up to two years of interest cost. Not to get into finance speak here, but if we ask developers to pay those fees at the beginning of construction, they basically have paid those fees two years in advance of collecting any revenue on a project. So by letting them pay at the end, we let them save that financing cost, if you will.
And while there are conversations, like I mentioned, about waiving those fees here in Vancouver, we think the right balance is to let developers pay that at a time when it’s much easier for them to make that payment, rather than waiving those, which has long-term impacts on our ability to continue to fund new parks and new roads.
Chávez: So what happens next with these proposed changes? Do they need to be approved by the city council? What will it take to put them into effect?
Quinton: The way that we operate here is we present things to our city council in discussion sessions. We call them workshops. The council gets a chance to weigh in before we finalize them. Then each of them has their own separate actions. Most of them reside in our city code and the code needs to be changed. So we’re moving forward individually on all the things that we’ve spoken about.
The parking minimum topic should be finalized in a week. But some of these others will take the next month to month-and-a-half to work their way through city council. We hope to have them all in place by the end of the summer. So developers, with projects that are on paper right now, can get some certainty fairly soon on these changes and how that might benefit their ability to move forward.
Chávez: Lastly, in April, the city of Vancouver approved its first ever five-year economic development strategy. A lot of it relates to things like building up the workforce, promoting entrepreneurship, generally supporting business development in Vancouver. Housing is not really an explicitly stated focus of the plan, but it does tie in. How do you think housing relates to your broader economic goals in Vancouver that you’re working toward, as a city employee?
Quinton: Thanks for bringing that up. We do think they’re related. And it was in an explicit conversation with local employers and others who are working on economic development here. When you talk to employers, housing comes up right near the top of the list. So it’s not that we ignore the topic in the strategy. We just knew we were taking action on another front. But yeah, employers worry a lot about where their workers are going to live, whether they’re gonna be able to afford to live in this community, and attracting new people who want to move here. So it’s a big deal for employers.
And then the other side of it is that in order for people to afford to live here, we need to keep creating living wage jobs. So a big focus of our strategy is to try and raise income levels here. That will help with that side of the equation, so that as housing prices go up, we at least know that employees will be making a wage that can afford it. And that really hasn’t been the case in recent years.
Chávez: Patrick, thank you so much for joining us today and best of luck tackling this problem.
Quinton: Thank you, really appreciate the opportunity to talk about it.
Chávez: Yeah, thank you for being here. Patrick Quinton is the Economic Prosperity and Housing director for the city of Vancouver.
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