Van councillor proposes temporary hotels in new rental apartments

VANCOUVER (NEWS 1130) – Allowing temporary, tech-focused hotels in new rental developments could be the solution to building more housing for locals and tourists, according to a Vancouver city councillor.

The motion, put forward by Coun. Pete Fry, wants city staff to look at whether allowing temporary hotel leases inside new market rental buildings, instead of waiving the Development Cost Levies (DCL), would incentivise developers to build rental stock.

Known as tech-hotels, Fry says the spaces wouldn’t have a lobby, would be more reliant on technology, and allow guests to check themselves in and out, similar to how many short term rentals such as Airbnb operate.

“Let’s see if we can use these tech-hotels and use them as an incentive tool on a say 10, 15-year master lease to help give the incentives to developers to build their purpose-built rental,” Fry said. “It gets us out of that short term rental market that right now is thriving because we don’t have enough hotel rooms and at the same time provides an incentive for the developers.”

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DCL’s are used to pay for parks, childcare facilities, infrastructure and non-profit housing, however, removing them means taxpayers are ultimately left with the whole bill.

“Developers are telling us they need incentives to build purpose-built rentals. They’re looking at us to give them DCL write-offs which essentially come out of the taxpayer pockets,” he said. “I’m looking for solutions where the market can subsidies market rentals rather than the public subsidize market rentals.”

With the city in the midst of a hotel room shortage and the increasing fad of tourists to ‘live like a local’, many visitors turning to short term rentals like Airbnb.

Last year, Vancouver introduced new rules that require all short-term rental hosts to get a business licence, and only list their property if it’s their primary residence, however, Fry says the city has had trouble enforcing the new laws. He believes allowing small hotel companies to operate would allow the city to regulate them more easily.

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Fry admits the program would largely impact market-rate rental units, he believes increasing any supply will help increase affordability and give the city more money to build affordable units.

Real estate and urban planning experts, however, say the idea is like trying to have your cake and eat it too.

“There’s almost an element of alchemy trying to claw back the (DCL) revenue that you lose while insisting on purpose-built rental,” economist Tom Davidoff with UBC’s Sauder School of Business said.

Despite believing the city has good intentions, Davidoff believes the better move is to allow developers to build what they want, in this case likely condominiums, and use the DCLs to provide assistance to low-income households.

“If we can get houses built either as rental or condo, but the condos will pay large fees, if the city is so interested in helping people with lower incomes, then why not do it by grabbing those very large fees from developers, taking the cash and providing benefits to people in need?”

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Urban planner Andy Yan is worried the motion could be abused and turn more rentals into “phantom hotels” rather than housing.

“If we can think about lead is the proposal and gold is the ultimate idea of affordable rental on local incomes, I think that’s a pretty sizable leap,” he said. “What happens when that lead stays lead and doesn’t turn to gold?”

Yan says the success of this proposal would be very dependent on its details, such as the number of units allowed, the amount of time they will be hotels, and the cost of the units once they come back on the market.

Many details of the proposal still need to be worked out, and Fry admits it is a long ways from becoming a reality.

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