In 1999 Herman Sheer moved a piece of legislature through the German parliament that changed the country, built an industry and moved Germany into a green sustainable future. It was not a top down directorate. It did not require the government to do much at all. It was simply this. "If you put up a photovoltaic collector on the roof of your home, we will pay you more for that electricity than you would pay to purchase that electricity from the state."
In 2000 Germany had 2.4% of it's energy from renewables. In 2015 it was 12.4%.
Simple incentives create results. Convoluted incentives and legislation only make money for the lawyers and accountants.
A Modest Proposal
There are several things that the City of Vancouver can do to create affordable housing. Aside from prosecuting money laundering and restricting foreign ownership which would cool the market, the City can do a few things to make things more livable for the average worker.
1. Density. The city has worked to create corridors of density and the builders have taken up the cause, but they are still building spaces that sell for $1000/sqft. Which is not affordable. The solution is to create integrated affordable rental units in the same buildings as the $1000 psf units. These are not to be rented by drug addicts or the homeless, but rented by people who are depended upon by the rich owners. Put it simply, if you want a teacher for your child, or if you want coffee in the morning at your local coffee shop, you better have somewhere for that person to live. If the priveleged 1 or 2% want to live in Vancouver, they have a responsibility to be part of the solution.
I believe it's caled noblesse oblige - the inferred responsibility of privileged people to act with generosity and nobility toward those less privileged.
Or as I like to call it, being a good Canadian.
In this part of the solution 50% of all new construction would be rental aimed at a level that would amount to 30% of a persons salary. It would be inclusionary rather than exclusionary. It would allow teachers and nurses and barristas to live in the communities they work in.
2. Laneway houses. The City makes a show of encouraging laneway houses, but it really is a show. They haven't been successful in having this contribute to the affordable inclusionary housing that they prattle on about. Here are a couple ideas to make this policy take off.
a.) Tax Holiday. When somebody builds a laneway house the city looks at the added value on your property and taxes you on it, in essence penalizing the homeowner for adding a rental unit into the community. The better response would be to give the original owner a pass on the added tax. The laneway would only show up as an increased value to a property after the person sold their house. Keep the house? No extra tax.
b.) Off the shelf plans. The City makes each home owner run a gauntlet of regulatory flagellation to be able to build a laneway house. Make it simple. The City should have 20 plans that they can give approval on immediately. You walk into City Hall. Choose one. Walk out with a building approval. The plans should be free. City engineers would still have to provide direction on site applicability.
c.) Leasehold Ownership. This is my best idea, and the one that could radically increase the total stock of affordable housing in Vancouver, or other major city. Here's how it would work:
Person "A" leases a portion of their land to Person "B". "B" builds a laneway house. At the end of twelve years "B"'s lease has run out and needs to either start paying rent, or move out. "A" ends up with a laneway house after twelve years and has paid nothing for it. No money changes hands. What's in it for person "B"? If the laneway has been build to a budget, it should work out that "B" would spend substantially less on building the laneway than living in a similar sized apartment in Vancouver. If my calculations are correct it could amount to 4-6 years of not paying rent.
If there is a valid lease, then banks can understand that and will lend money. If there is a lease contract, then things like "A" selling the house before the 12 years would be dealt with fairly within the terms of the lease.
To make this plan work, the province would have to create legislation to allow for people to lease part of their land.
Combining a legal lease, with off the shelf plans and a tax holiday would spark a boom in building.
Don't get me wrong... I'm not naive. I realize that the first people to take advantage of this would be modular builders that would create financial instruments to manage this process. Most renters don't have the knowledge or wherewithal to build a small house. I get that. What would happen is modular builders would work as middle men for this, leveraging their expertise in small structure building, to create opportunity for renters to become leaseholders. The builders would sell their services to homeowners, and then match up renters to the leases. There would be some greedy homeowners and builders, but the leases would protect all sides. And as more and more units come into the market, the prices would be pushed down.
3. Superblocks tiny houses
4. Decentralized work zones. I used to live in Ladner, a small community south of Richmond, BC. Each day I'd catch the bus and commute into Vancouver. Every day I'd waste two hours on transit. And so did every other person in Ladner and Tsawwassen; there simply were no jobs. And it's the same in other communities in the lower mainland. My solution is a graduated distance tax benefit placed on companies.
The concept of tax benefits is easier understood as a carrot and stick approach.
In this solution companies and institutions derive a benefit for every employee that lives within 2 km. Two kilometers is about 10 minutes on a bike or an 25 minute walk. For every employee outside that zone there would be a graduated penalty.
We currently burden home owners with a transit levy, but they are the wrong people to tax.
So how would this work.
Let's suppose I have a company. I have ten employees. Three of my employees live within the 2km zone. Some of them walk, one bikes. They take transit when it's rainy, and sometimes they drive. For each of those employees I get a rebate from Metro Vancouver of $100/year. Four employees live within 10 km, and I get charged $100/year for them. Three other employees live in White Rock and drive the 46km and those three employees cost me $1000 per year. When I have to hire the next employee, I'll be looking for someone closer, or maybe I decide that moving my company to White Rock is the right move.
Don't worry about the exact dollar figures. I'm using them as examples of how you encourage companies to hire people that are local. I believe that one of the direct results of this policy would be to have companies locate their operations in other communities other than downtown Vancouver. Doing this would remove people from the roads, requiring less transit, and shortening people's commutes.
5. Fixed property tax for rental properties. One of the cognitive dissonance inspiring policies of the current City Hall is the increasing property taxes that are all out of whack with their stated goals of affordable rental housing. I used to own an apartment building. Each year the provincial authorities said I could raise my rents by a fixed percentage based on a number of indicators, but for shorthand let's call it inflation. The City, however, said, wow, property values for buildings are shooting up, so your property is worth more, so we are going to charge you more property tax. More than inflation. Just a random number that was bigger every year. So even though I was trying to keep rents at a reasonable rate, the City was pushing higher and higher costs onto landlords like me.
The solution for this is simple. It turns the formula around. Instead of creating an artificial value and taxing that, the City should tax on rent rolls, and it should be fixed forever so that landlords can plan for the taxes they need to pay. It would also have the secondary effect of flattening the need to increase rents. If costs aren't going up, there are less reasons to raise rents. And if the rents are raised, the taxes collected would go up.