May 5, 2021

How NOAH might save Vancouver from the Amazon Flood

 

The Post, currently under construction on Georgia, will open in 2023 as the largest office building downtown.  Inside will be about 6,000 Amazon employees in a building over a million square feet, some relocated from buildings nearby.

Says Mayor Kennedy: “The City of Vancouver is so excited to see Amazon creating an additional 3,000 well-paying jobs for people who want to work and live in our city.”

Just the kind of well-paying jobs needed to afford Vancouver’s housing costs, assisted by a generous grant that Amazon gives its employees for initial accommodation, along with the services of a ‘head-hunter’ who tracks down available apartments.

You can guess where this is going.  Great if you’re an Amazonian on the upper floors, not so promising if you’re a barista in the lobby, disastrous if you’re tenuous low-income tenant in, say, the West End.  And Amazon isn’t alone in attracting educated workers from all over the world, taking advantage of Canada’s immigration policies, close to the mother ships in Seattle like Microsoft.

So what should the city and province be doing now in anticipation of this flood, especially to mitigate the impacts on those in the low end of the market? Perhaps this:

From Fast Company:

New possibilities are emerging with the Biden administration’s agenda, and this may be the most opportune moment in decades for cities to start filling their affordable housing deficits. There are several promising models—both longstanding and cutting edge—that show how. It starts with cities taking literal ownership of the problem by buying more of the housing within their borders.

“I’m going to go radical on you,” says James Stockard. A former longtime commissioner of the Cambridge Housing Authority, in Massachusetts … “If we really want to solve the housing problem in this country, we have to get as much of the private housing stock as we can out of the hands of for-profit owners and turn it over to nonprofit owners and public owners,” he says. …

Low-rent housing developments on the open market are a straightforward way for cities to buy and preserve affordable housing. In King County, Washington, the housing authority has created or preserved 7,000 units of housing since 2000. …

Some cities in the U.S. now have the legal framework to make it easier to buy up housing. In Washington, D.C., a right-of-first-refusal law gives the city or a development partner the ability to buy properties at market rate when they come up for sale …

The Province of BC has been purchasing hotels to house the homeless, but that stock is limited as well community tolerance for bits of the Downtown East Side to be imported to their neighbourhoods.  But more totally non-market housing doesn’t address the needs of the tranches above.  Many low-income tenants are located in the part of the market called Naturally Occurring Affordable Housing (NOAH): older and hence more affordable apartment buildings – affordable, as always, being a relative term.  But there are options to government funding:

The private sector is starting to fill the void, and it’s reaping benefits. In Charlotte, North Carolina, where growth is putting pressure on the housing market, social impact investors have funded an effort to buy and preserve naturally occurring affordable housing for the next 20 years.

And in Arlington, Virginia, the nonprofit Washington Housing Conservancy plans to preserve or create 1,300 units of affordable housing near the new Amazon HQ2, using below-market financing from Amazon’s new $2 billion Housing Equity Fund. These efforts are successful as much for their innovation as for the slow pace of action at the city level.

Did someone just say Amazon?

Amazon’s involvement came through its recently established Housing Equity Fund, a $2 billion pot of money dedicated to preserving or creating 20,000 units of affordable housing near its main office locations—the region around Amazon’s Seattle headquarters, in the Arlington area, and in Nashville, Tennessee, where the company has a large operations center.

To try to counteract pressure on the housing market, Amazon has taken the unusual step of financing the purchase of a market-rate apartment complex next to HQ2 that will be preserved for 99 years as affordable housing.

Does Vancouver anticipate Amazon’s buying or building housing for its employees?  One can already here the concerns: “… for local governments and residents already feeling the housing-market effects of big corporations coming to town, there may be at least some hesitance in giving companies even more sway over the fate of their communities.”

American corporations do love that part of the Canadian psyche: government funds health-care directly, for instance, and doesn’t require employers to provide basic insurance. Yes, taxes are higher, but the Amazons of the world have their ways of shifting taxable profits.  In other words, acceptable of more government intervention takes a lot of pressure off the private sector.

Nonetheless, an Amazon-induced housing crisis is hardly in their interest if their employees are scrambling for the same housing already occupied by less affluent tenants.  And they won’t be able to pass the buck they don’t provide if the City is caught in the squeeze play between creating significant opportunities for new rental housing and resistant neighbourhoods (hello, Grandview).  Then there are the voracious private-equity investors who target the existing rental stock and price it up.  (That’s why the reception for the Squamish’s Senakw proposal has been positive – so far.  It promises a new housing stock aimed exactly at the Amazon market, without the NIMBY backlash.)

So there are effective responses, as the NOAH purchase-strategy illustrates. There just isn’t a lot of time before the water rises even higher.

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Comments

  1. Does not the expression “Naturally Occurring Affordable Housing” contain some indications as to its creation? If it is naturally occurring, it ought to occur without intervention. In reality it’s usually just older buildings, and they are created by building new buildings that then get old. So government investment might be better put into keeping a steady stream of new buildings hitting the market.

    I mention this because buying a significant chunk of housing would be absolutely cost prohibitive. The cost of just the hotel purchases has been very high.

    And we ought to welcome the Amazon flood, not fear it. First of all, it isn’t much of a flood yet, only a few thousand jobs. And our housing market has already substantially decoupled from the underlying economy. The only economic indicator that actually influences prices is interest rates, and the rest of the boom is just market sentiment or bubble mentality. Rents are more tied to income than house prices, but even that isn’t too much to fear. The higher paid workers won’t be looking in the older buildings in the West End. They like things like dishwashers and in-suite laundry. What we really need to do is make sure that there are other West Ends coming up in the future.

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