Part 2. Missing Middle Housing, Tenant Protections, and How Missing Middle Upzoning Alone Won’t Solve the Affordability Crisis

NB Please consider this post a “long read”. I appreciate you taking the time to sift through the complexities and nuances. Please share this post with others who also might be interested in understanding the multi-faceted approach the City is taking to addressing the housing crisis.

The City is currently undertaking consultation on a proposal to implement Missing Middle Housing in all neighbourhoods and allow for more inclusive housing forms “as of right”, which means without needing to go through a rezoning process. The Missing Middle Housing initiative is focused on creating more townhouses and houseplexes (including duplexes, triplexes, fourplexes, etc.) to help diversify housing choices. It’s aimed at people who will never be able to afford a single family home in Victoria.

Fundamentally, Missing Middle Housing is about changing the way we regulate land use. Currently, if an owner of a single family home, or a duplex, or triplex wants to demolish that building and build a new single family home, all that is required is to apply for a building permit. Yet if a homeowner wants to demolish their single family home and build a houseplex, it takes a couple of years to go through a political process, with no guarantee of success.

This month, the average price of a single family home in Greater Victoria rose to over $1.3 million. Missing middles homes – family homes in houseplexes or town houses – sell for a lot less than a single family home.

There are rallying cries of support for Missing Middle Housing, some rallying cries against, and lots of people with really good questions, concerns and ideas. In this four part blog series, I’ll address these topics:

  1. The Racist and Exclusionary History of Missing Middle Housing (Dec. 5)
  2. Missing Middle Housing, the Displacement of Renters and How Missing Middle Upzoning Alone Won’t Solve the Affordability Crisis (Dec. 19)
  3. Missing Middle Housing, Design Guidelines and the Protection of Neighbourhood Character (Jan. 9)
  4. Missing Middle Housing and More Inclusive, Climate-Friendly Cities for the Future (Feb. 13)

Victoria Housing Strategy: Focus On Renters

The majority of people who live in Victoria are renters, fully 61%. Renters aren’t a special interest group but are people at all stages and phases of life, from university and college students, to young families, to mid-career adults, to seniors.

Some renters are more vulnerable than others. According to a recent Housing Needs Assessment for the City of Victoria, “Renter households relying on a single income likely struggle to find affordable and suitable housing in Victoria. Renter households led by lone parents or households with at least one senior are the households most likely to be in Core Housing Need in the city (i.e., living in housing that is inadequate, unsuitable, and/or currently unaffordable, and unable to afford the median rent of alternative local housing).” Almost 30% of renters are in core housing need in Victoria.

This precariousness makes fear of displacement and the inability to afford a new home in the city very real. And very stressful.

This is why the City and the Provincial government have put in place new protections for renters and also policies to ensure the creation of new purpose built rental and affordable rental housing. This means that there is more security for renters now, and in the decades to come.

Given that the majority of our residents are renters, the first goal of the Victoria Housing Strategy, adopted after a Mayor’s Task Force on Housing Affordability in 2015, was to focus on renters and their needs. As guided by the Housing Strategy, the City is improving its support and protections for renters by developing policies and taking actions that:

  1. Increase the rental housing supply to create less competition for available units
  2. Create more opportunities for choice in the types of rental housing available
  3. Create and strengthen municipal regulations to protect tenants

Policies and actions implemented to better protect and support renters since 2015

  • Tenant Assistance Policy – Support for renters in the form of relocation assistance, moving expenses, and financial compensation when required to move because their building is rezoned for redevelopment.
  • Rental Retention or Replacement Policy – Official Community Plan (in place since 2012) requires 1:1 replacement of rental housing in instances where more than four rental units are being redeveloped or demolished and discourages developers from redeveloping aging rental to condo developments.
  • Renters Advisory Committee – Gives renters the opportunity to provide advice and recommendations to staff and Council on rental housing and tenant related matters.
  • Tenant Planner – A new permanent position in the Community Planning Department to work with tenants and developers to implement the City’s tenant policies and related housing programs. 
  • Tenant Engagement Toolkit – Guidance document to support fulsome tenant participation in City engagement.
  • Rental Property Standards of Maintenance Bylaw  – Ensures minimum maintenance requirements for landlords of rental units are upheld to protect interests of renters. 
  • Greater Victoria Housing Security and Rent Bank Program – Provides loans and grants to tenants at risk of homelessness. The City supported it’s development, provides funding, and staff sit on the advisory committee. 
  • Short-term Rental Policy – Designed to regulate short-term rentals and keep more units in the long-term rental housing market. Taxes collected from short-term rentals are directed to the Victoria Housing Reserve Fund.  
  • Residential Rental Tenure Zoning – New rental only zoning to protect existing rental housing from conversion to strata. Applied to nine new projects to date.  
  • House Conversion Regulations – City regulations updated these regulations to encourage more house conversions and to provide incentives where projects create new rental units as well as affordable rentals.
  • City Land for Affordable Housing – City has purchased land and used City-owned land for close to 600 units of affordable housing currently in development, to be operated by the Capital Regional Housing Corporation and Pacifica Housing, to be affordable in perpetuity.
  • Regional Housing First Program – City led movement at Capital Regional District for $120 million housing program to create up to 2000 units of housing currently in development, including up to 400 units that rent at $375 per month, to be publicly owned in perpetuity.
  • Provincial Changes to Residential Tenancy Act – Effective July 1, 2021 gives more protection to renters from displacement during a renovation of a rental building. The City advocated strongly to the Province for this police change since 2017.

For the past six years – and well before addressing Missing Middle Housing – the City has taken substantial action to help ensure more security and certainty for our residents who rent. There is still more work to do and we will continue. And, at the same time, we now need to also turn our attention to Missing Middle Housing, which is meant to address a shortage of available ground-oriented homes (where front doors open up onto the street) for families.

Some people rent by choice. But increasingly, with the high cost of home ownership – and in particular homes for families – many are stuck renting, unable to afford to purchase a home. This is putting additional strain on an already tight rental market.

Missing Middle Housing is part of fixing the entire housing ecosystem in the city. This means that as more reasonably priced ground-oriented housing for families becomes available, some people will be able to move from rental housing to home ownership. This will free up rental units for others. This has already happened in Victoria with the Vivid building on Johnson Street. This is a below market condo building financed by the BC Housing Hub and it provides entry level home ownership for working people in Victoria. Close to 70% of people who purchased homes in the Vivid moved out of rental housing in Victoria, into the Vivid.

Tenant Protections and Missing Middle Housing

As we move forward with Missing Middle Housing, it’s important to keep the same focus on renters that the City has had for the past six years. We need to ensure as much predictability and as little disruption as possible for existing renters through the new land use approach that we are taking with Missing Middle rezoning.

The majority of renter households (81%) live in apartments buildings, and will not be impacted by Missing Middle zoning. Of the remaining 19%, 8% live in houses with suites (whether in the main house or suite), 7% in rowhouses or side-by-side duplexes and 4% rent single family homes. This means that the implementation of Missing Middle zoning has the potential to impact 19% of tenants over the next few decades. (It is anticipated that new missing middle housing forms will be built gradually over a long period of time, not overnight.)

Even so, the fear or worry about displacement is real and can create unnecessary stress for already stressed renter households.

This is why City staff have been asked to be as creative as possible to find a way to have some form of tenant assistance built into the Missing Middle zoning. This could include a monetary contribution by missing middle home builders to the City’s Housing Reserve, which could then be used to provide assistance to tenants in the same way the Tenant Assistance Plan currently does at the rezoning stage.

Rezoning to allow Missing Middle Housing throughout the city will make it easier to build homes that are less expensive than single family homes, but there will be tradeoffs. We need to use the full extent of the City’s authority to ensure that these tradeoffs don’t disproportionately negatively affect existing renters. We also need to ensure that with everything we ask of missing middle developers – in terms of provisions for existing tenants, other amenity contributions, etc. – that these projects still make financial sense and can actually be built.

The Missing Middle resource page has a quick fact sheet with information about the financing of Missing Middle Housing. And also a more detailed analysis that digs in a bit deeper to the issue. Please see “Documents” in right hand sidebar. Staff have engaged consultants to do additional financial analysis as part of this round of engagement that we are currently in.

One key element of Missing Middle zoning that will benefit renters in the long term is that all forms of Missing Middle Housing (houseplexes and townhouses) will allow secondary suites. This will likely substantially increase the number of suites in the city over the next few decades, as people opt to build suites to make their mortgages a little bit more affordable.

Upzoning and Affordability

“Planopedia” provides a simple definition of upzoning as “a commonly used term in urban planning that describes an alteration to a community’s zoning code to allow new capacity for development.”

This thoughtful piece in the Tyee by Brian Doucet, Canada Research Chair in Urban Change and Social Inclusion at the University of Waterloo, dives into the issue of housing supply, demand and the need to curb speculation. Its worth a read and points to the complexity of resolving the current housing crisis in Victoria, British Columbia, and Canada. While regulating speculative demand and curbing the financialization of housing are important jobs for the provincial and federal governments, cities need to use the tools available to us to do our part. Zoning is one key tool.

Doucet argues that, “While there are many good reasons to upzone, there is little research indicating that on its own, market-driven upzoning produces the types of housing cities need in sufficient quantity to tackle affordability problems.” He goes on to say, “To make cities affordable, upzoning will need to consist primarily of new social housing and other forms of ownership such as co-ops and rent-controlled apartments that are off limits to speculators.”

There has been so much talk about upzoning and Missing Middle Housing, that we haven’t been discussing the first upzoning that Council is proposing to make, even before we get to Missing Middle Housing later this year.

Early in 2022, staff will be bringing a report to Council to recommend that we upzone the entire city to allow for affordable housing if the housing is owned and operated by a non-profit housing society or the Capital Regional Housing Corporation, and is affordable in perpetuity.

This is a really big move. And it directly addresses affordability. What it means is that affordable housing can be built anywhere in the city if it fits within the Official Community Plan and adheres to design guidelines. It means that the entire approval process for affordable housing will be delegated to staff and will take far less time than the current process. With escalating construction and labour costs, this means affordable housing can be built faster, reducing costs and therefore keeping rents as low as possible.

Equally important, prezoning the entire city for affordable housing means certainty for non-profit housing providers when it comes to funding. Usually federal and provincial funding is confirmed only after zoning is approved. Removing the need for rezoning makes it more likely more money will flow into Victoria to provide more affordable housing which is much needed for families, seniors, low-wage workers and people currently experiencing homelessness. Only after we upzone for affordable housing (subject to a decision of Council early next year), will we turn our minds to Missing Middle upzoning.

The research and economic analysis undertaken as part of the City’s Missing Middle Housing initiative demonstrates that when only a certain portion of a city is upzoned, land increases in value and can drive speculative demand. It also shows that rezoning the entire city to allow for missing middle housing forms in all neighbourhoods will not have this same effect.

Yet it’s also true that Missing Middle zoning, and increasing the supply of ground-oriented family housing, will not create more affordable housing. As noted above, we’re approaching affordable housing from a different angle. Missing Middle Housing will make home ownership more attainable for people we rely on to provide essential services in our communities like teachers, nurses, firefighters, a young dentist or doctor starting out in Victoria, and many others too.

By delegating the approval process to staff, we save time and create certainty. What this means is more predictability for homebuilders and the banks that finance them. And it also results in lower housing prices, in two ways.

First, zoning that allows Missing Middle Housing as of right (without a need for a lengthy political process) provides certainty that makes it easier for a would-be builder of missing middle housing to secure financing, including through BC Housing’s Affordable Home Ownership Program, or other senior government programs that support co-operative ownership. This creates below-market home ownership opportunities for qualifying buyers – people who would not be able to afford to buy a home without a subsidy or some financial support.

Second, saving time in the development process saves construction costs and makes housing prices lower than they would be otherwise. Here are two examples. In their original project estimate, a home builder building missing middle housing in Esquimalt had planned to sell units at $520,000. In the time it took to go through the approvals process, the cost of labour and materials increased, and the units will now sell closer to $650,000. In Victoria, a townhouse project which has been in the public consultation phase for over two years, originally had units for sale at $750,000, with no down payment required. Now, because of the time the political process is taking, labour and materials have increased in costs, and these same units will likely sell for around $900,000.

The whole point of Missing Middle Housing is that rather than considering one sixplex at a time, or one townhouse development at a time, Council will (hopefully!) make one big decision at a public hearing to rezone the whole city all at once. This is why we’re undertaking an extensive public engagement process right now. It’s also why Council will be asked to approve Missing Middle Design Guidelines (see Documents sidebar bottom right hand side) to preserve and enhance the character of existing neighbourhoods (more on this in next post).

After making these important policy decisions early in 2022, Council can then get out of the way. This will make it as easy to build a $650,000 home as it currently is to build a home that costs on average $1.3 million, a home that few people who live and work in Victoria will ever be able to afford.






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