Vancouver approves short-term co-op lease

Summary#

Vancouver City Council unanimously authorized staff to negotiate and sign a short-term, below-market lease with Northern Way Housing Co-operative for the City-owned property at 675 East 5th Avenue in Mount Pleasant. It also authorized changing the rent charged for the period since the previous lease expired in 2024. The stated goal is to keep the co-op’s 60 homes affordable while the City and co-op plan for possible redevelopment.

  • The Director of Real Estate Services may negotiate a five-year lease with two one-year extension options, under the City’s co-op lease methodology and the terms described in the staff report.
  • Staff may amend rent for the period from June 1, 2024, until the new lease starts, using that same methodology.
  • The rent reduction is treated as a grant. No legal rights or obligations arise from Council’s decision unless both sides sign and deliver the legal documents.
  • Northern Way Co-op must maintain the building. City staff will continue to explore and plan redevelopment with the co-op, then report back to Council; this decision does not approve a redevelopment.

What it means for you#

  • Northern Way Co-op and its members: The co-op can negotiate a new lease at below-market land rent. The rent calculation is based partly on household incomes and affordability. The 60 homes include 22 rent-geared-to-income households and 38 other households. The exact housing charges members will pay are not set out here.
  • Northern Way Co-op: It remains responsible for maintaining the building. The City has agreed to let it secure another mortgage against the lease to pay off about $609,238 in existing debt; this decision does not say the mortgage amount.
  • City residents: The property remains in use for co-op housing for the short term, while the City and co-op explore redevelopment. This decision does not determine what any future redevelopment would include.

Money#

The decision approves below-market rent, with a transition grant estimated at $2,740,651 across the overholding period and proposed lease term.

  • Staff forecast rent after the grant of $954,921 for the five-year lease term and $118,795 for the overholding period.
  • Staff estimate the market value of a five-year lease at $4,920,754. This is an estimate, not the rent Council approved.
  • Staff say the grant is intended to slow increases in housing charges. The separate cost of staff time or any later redevelopment is not stated.

What is unclear#

  • The supplied material refers to Appendix A for the lease terms but does not include it. Details beyond the terms summarized in the report are therefore not available here.
  • The lease and rent changes are not yet final: the legal documents must be signed and delivered. The start date is not stated.
  • Staff say member incomes will be confirmed before the lease is signed. The resulting rent calculation and any changes to members’ housing charges are not given.
  • The co-op’s Canada Mortgage and Housing Corporation subsidy agreement reaches its term in Year 2. Whether it will be extended is unclear; staff say that without an extension, more City land rent would go toward subsidizing rent-geared-to-income households.
  • The scope and timing of redevelopment planning, and what might be built, are not decided by this motion.

Case for#

  • City staff say the lease will let the co-op continue providing affordable housing while the City and co-op plan for the site’s redevelopment potential.
  • Staff say the time-limited transition grant can slow increases in housing charges and help avoid destabilizing the co-op’s mixed-income community.
  • The lease uses the methodology Council adopted for co-op lease renewals, which links land rent to the affordability provided by the co-op.

Case against#

  • The estimated $2,740,651 grant means the City will receive less rent than it otherwise would under the methodology before the grant. Staff estimate the market value of the five-year term at $4,920,754.
  • The short-term lease does not settle what redevelopment will happen or when. The decision gives no details about the future homes or how current members would be affected.
  • If the co-op’s CMHC subsidy is not extended, staff say more City land rent would go toward subsidizing rent-geared-to-income households; the materials do not say whether the agreement will be extended.