Howard Rotberg has a new book out on November 5th called Exploring Vancouverism: The Political Culture of Canada’s Lotus Land
In the Georgia Straight review (here), some of these ideas are highlighted.
Number one on his list is for the city to require developers to pay as a condition for the approval of large projects a sum into either a community-housing trust or an affordable-housing fund. The idea behind these models, which city leaders can choose from, is quite simple: titles to housing units built will have “restrictive covenants” with respect to either the selling prices or rents, thus “preserving future affordability”.
This is a different way of creating a pool of funds for building community housing from what I have proposed, but the concept of local control of funds is critical. Without a sense of ownership – of the process and the resulting units – by the residents who will end up living in the units, a real sense of community cannot develop.
A common question about Social Offsets is how to determine pricing – what will people be willing to pay?
Offsets are priced and marketed to individuals rather than developers. For simplicity, the offset is priced at 1% of the purchase price of the unit.
[An alternative would be to mandate that developers match funding. However this approach would require legislation. The idea behind social offsets is to develop a program that does not require government intervention]
This percentage would be consistent across development styles, and ideally across Canada. The selling price and building cost per unit will vary by region but should vary in proportion to each other.
As an example, in Vancouver, if offsets will be sold at a rate of 1% of total project revenues for new condo developments, this translates into $5000/unit given the average price according to real estate board for condos in Yaletown are $500 000.
According to CMHC Housing Marketing Information August 2008, there are approximately 1600 units being built in 2008 in Vancouver – Downtown and an estimated 1760 being planned for 2009. Therefore in two years the social offset fund will have $16.8 million dollars. Social offset funds will leverage additional grant funding at a rate of 2:1 and $320,000 is needed for each unit thereby funding the creation of 158 units of affordable housing in the city of Vancouver.
The model attached shows the impact of changing these variables and allows some basic price sensitivity analysis and assessing the feasibility of Developer matching funds
Social Offsets Pricing