Jul 15, 2014

Calgary's Housing Challenge

While we wait for the 2013 civic census results, it is a good bet that YYC had another banner year. In 2012 the growth was about 30,000, a bit over our predictions but keeping us within our long term forecast. The influx of new residents highlights the strength of our economy and the opportunities this city presents. It also brings challenges. One of these challenges is housing. While I realize the housing challenge goes much deeper than the work outlined below,  I wanted to take this opportunity to highlight some of the initiatives we are doing to help create the opportunities for the private sector investment in creating more housing.

Calgary’s housing challenge is reflected in the low rental vacancy rate which is estimated to be somewhere on either side of one percent (meaning at any one time only one percent of the available housing is on the rental market

We are issuing lots of permits for new housing units of all types. Single family homes, town homes and multi units. Our totals this year are on pace for approximately 11,000 units. We are seeing new unit construction all over the city, in greenfield areas, established communities and the downtown.  Many builders are calling looking for new opportunities including infill projects near transit.

But not all our current or new residents can afford to purchase new or resale housing.  Calgary housing is expensive and not everyone can afford, or choose to take on the debt of a new home. For many the goal is to find a place to rent.  We have been discussing with rental housing providers their challenges. While the market in Calgary is strong, financing for rental high rise development can be daunting. For example, if a builder decides to finance through Canada Mortgage and Housing, their rental rate guidelines can be a hurdle here given the real rental rates and the cost of land exceeding  $1.3 million + per acre outside of the downtown.

Carrying costs can be prohibitive as well. While our Municipal Development Plan (MDP) establishes areas where multi unit housing can locate for example, it may be that local plans passed prior to 2007 may not line up with the MDP, resulting in a long process that might make the difference for a new rental project.

There are many groups in The City working on the housing challenges, particularly for citizens who may be struggling.  One group often overlooked, are the working residents who are on the bubble, meaning it is difficult for them to either save for a down payment on a condo or house, or their wages make renting even difficult close to where they might work. 

There are lots of opportunities to increase the supply and as has happened elsewhere, the affordability of both for sale and rental housing.  A big challenge is what tools are available to The City beyond our current authority.  While I will focus on some of those things we can do now through land use, the subject goes further as I have discussed previously regarding inclusionary zoning (required contributions for affordable housing) for example.

A big incentive for people developing land, is providing certainty.  This is no different than a homeowner wanting to know what they can use their property for.  Time does mean money in the land business, as financing property while it goes through the approval process is a major expense. While Calgary is better in approval times than many cities, it still takes time especially when long discussions take place and appeals occur.

Here are some things we are working on to help out the housing challenge. 

    This alley house in Killarney-Glengarry is a good example of
    how the many lanes of Calgary might be used to create new
    rental and ownership housing in areas already served by
    transit, infrastructure and services, while adding to the
    customer base for local businesses. 
Lane way housing – Council has raised this subject in conversations about the commercial | residential interface along many of our busier streets. Is there an opportunity for units over garages, or a stand alone building along the back of a commercial or residential property overlooking the lane | alley. This type of housing uses existing infrastructure, provides added security to lanes, offer cost effective housing as the land is already there and actually be  a condo with separate owners. They can also bring new consumers into a neighbourhood to help strengthen local businesses. 

An emerging idea is to identify a form of alley house that could easily be defined by a building envelope, then allow that in specific parts of the City.  Last month in the Hillhurst | Sunnyside neighbourhood there was a weekend charette with residents, builders and others to look at a many opportunities surrounding  laneway housing.

Corridor HousingCouncil has also endorsed our idea to look at how to get more housing and services located along our busy corridors, indentified in the MDP as Neighbourhood Corridors. We have begun work with three neighbourhoods to pilot our Corridor Program, which is about looking at the 24 neighbourhood commercial corridors in an intensive exercise where resident, property owners and commercial operators all work together to think about how the corridor and adjacent lands will evolve. Our goal is to work with communities along with economic analysts to get some idea which corridors may see development in the near term, vs. Those where development is a longer way off.  Then creating regulations that work to provide everyone with the certainty of what can be built.

Land ownership patterns in some of these areas is a challenge.  We want to avoid building expectations for new street life where the marketplace may not be robust enough to make it happen. Parts of Edmonton Trail for example have lots facing the side streets rather than the road itself, which is the pattern for most of Centre Avenue south of 32nd Street. To redevelop along these places land assembly would have to occur.

Walking with the Crescent Heights folks last year, they mentioned a desire to see some new retail opportunities in this area. Yet the ownership pattern means over $6 million just to acquire the land, and to make it work economically means going higher than four floors, maybe six, in order to generate the revenue for redevelopment and new housing and retail to happen. This is one reason we are undertaking the economic analysis of each corridor to determine which corridors could be rezoned to provide the certainty to everyone.

As Calgary ages, like many other cities the reuse of the small houses facing the busy streets becomes challenging given the amount of traffic. Uses often shift to small commercial like professional offices or also provide rental housing. And like other cities, Calgary will look to alternate uses to maximize the potential of these corridors to serve current and future Calgarians.
There are many busy corridors in the city that might be candidates for infill housing
like townhouses or small multi-unit buildings. Corridors like Edmonton Trail present
issues with lot layout facing flanking streets creating land assembly challenges. 

Just south of the above photo, also on Edmonton Trail, at the top of the escarpment are
two new multi-unit buildings. While not everyone agrees on the architecture, they do
provide examples of the type of new multi-unit construction that could front along
Edmonton Trail, a busy north-south link.

Large Sites –It can take two years to get the approvals in place for a project to go ahead. Calgary has many large sites near transit that could begin to see new housing construction quickly, if the regulatory framework were right. We know where these sites are and the building industry is exploring many of them, including older commercial sites and car dealerships which are land intensive. Administration is looking at how we can advance some of these locations sooner, rather than later.

The NW LRT Corridor is gaining interest with the development
industry with its large lots, terrific access to transit and low 
assessment of building value to land value, meaning the value
of the land i much greater than the buildings on it. 

This mixed use building was recently approved on the Trans-Canada Highway NW,
and is a good example of the type of infill that can help transform the Trans-Canada
Highway corridor into a vibrant mixed use corridor that serves that adjacent
community with enhanced services.

This six floor wood frame building is a good example of the
type of construction for multi-unit buildings permitted under
the B.C. Building Code. Around North America, this type of
building has become very popular as financing for multi-unit
buildings became scarce during the housing bubble south
of the border.
There are a number of other initiatives we could pursue. We have spoken often about a building code change to increase the height of wood frame constructed buildings.  Alberta is behind B.C and Ontario and most of north America in permitting wood buildings up to 6 floors.  Given the cost of land in Calgary, increasing the height of wood buildings to six floors could be the difference between a profitable rental housing building and choosing not to build.

Our housing challenge is a social issue first, a business issue second. Having rented here for over a year and moving twice, I can attest to the difficulty in finding accommodation.  We also are aware of the difficulty potential employees are having, one recent hire taking two months before they could find accommodation. If employers cannot attract people because of rental scarcity and cost, the competiveness of the City suffers. There are many cities where the availability of reasonably priced housing has become a factor in business location and the attraction of labour.

As we embark on a dialogue about new ideas to answer to the demands for housing in the City, we welcome everyone’s ideas on how to move ahead.

No comments: