Affordability Political

Apartment Demolition Moratorium – Letter to Victoria City Council

Victoria City Council

Victoria City Hall

21 June 2017

Re: Apartment Demolition Moratorium

Dear City Councillors,

I am writing to speak for the 53 households that will be deprived of needed housing if the City prevents demolition of the Beacon Arms apartments, and the much larger number of future residents who will be harmed if the City imposes a proposed blanket moratorium on older apartment demolitions.

Demolition of the 34 unit Beacon Arms Apartment will allow construction of 83 new rental apartment units plus four rental townhouses, a net increase of 53 units. This represents a trade-off between the interests of a smaller number of existing residents (the 15-25 households that would find it very difficult to obtain equivalent housing) and a much larger number of future households, including the additional building occupants, plus many non-occupants who will benefit if increasing supply drives down rental prices city-wide.

These future beneficiaries are generally unaware of their interests, so their needs are often overlooked. It is much easier to identify the interests of existing occupants, but if you care about overall future affordability it is important to implement forward-looking policies that significantly increase housing supply, rather than policies that simply protect older housing without responding to growing demands.

Some people claim that since new housing is generally more costly than what currently exists, it does not increase affordability, but housing economists point out that new housing that increases total housing supply tends to free up units, which drives down prices for all housing, a process called “filtering”, as discussed in this recent column, “Urban Myth Busting: New Rental Housing and Median-Income Households.” Here is a recent Seattle Times article concerning how increasing supply is reducing rental housing prices, ‘Turning Point’ for Seattle Rent Hikes? Some Hot Areas See Rents Drop, and evidence from other cities, In Some Cities, the Housing Construction Boom is Starting to Pay Off.  The year-to-year effects may seem small, but they should continue as long as a community increases supply relative to demand.

Since for decades Victoria built too little housing to serve growing demands we have a shortage of thousands of moderate priced units. Fortunately, current high prices motivate developers to fill this gap, including many in the moderate price range (e.g. $300,000-500,000 condominiums), but most are downtown highrises so we still have a major shortage of moderate-priced mid-rise (3-6 story) units in neighborhoods. Current high housing prices are therefore good for long-run affordability if the city allows developers to build the thousands of infill units needed.

Because higher priced units are generally most profitable, restrictions on development density, and minimum parking requirements, cause developers to build fewer affordable units. Reducing such restrictions and regulations is essential to increasing both market and subsidized affordable housing supply.

For these reasons, Cities for Everyone recommends that the City implement policies that allow more infill, in which older housing is replaced by newer, denser housing, with support for displaced households, rather than simply prohibiting demolitions.

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