Incentives for providing rental housing

[2plan]

I am wondering if any of you good people have any suggestions regarding incentives for developers to provide rental housing. We are in the early stages of a community plan amendment that would allow for the redevelopment of a fairly low-income area of the community, which is currently primarily made up of low-rise, walk-up apartment buildings, many of which provide low-cost rental housing. The plan amendment would allow for development at a much higher density in the form of high rise apartment buildings. The goal is to replace the rental housing at a 1:1 ratio with this redevelopment. We currently use density bonusing in exchange for amenity provision, which can take the form of affordable housing – but density bonusing won’t provide enough funds for a 1:1 replacement, and at this point we are looking at providing market rental housing, not necessarily affordable rentals. Social housing is the Federal government’s job here, and our Council isn’t particularly enthusiastic to spend municipal funds on affordable housing…

Does anyone have any success stories regarding rental housing, or suggestions of places to check out for further information? Really appreciate your help!

[wahday]

I would suggest paying for a market study and even working up a sample pro forma to show developers that they can make a profit in this environment. This is the language they speak and there is no better way to illustrate the potential of your various incentives.

Generally speaking, rental housing is often a good deal for a developer/real estate manager because they can claim depreciation on the property while continuing to bring in consistent monthly cash flow. The challenge comes with the rental market and whether it will bear the kinds of rents needed to cover investment costs. This is where your market study comes into play.

A bigger question to me is what is expected to happen to those folks that currently occupy the low-income units. Are there other options for them? Is the intention to push them out of the area? If the area is primarily low-income and you are trying to entice market rate developers, you may run into resistance in getting those first projects to break ground. You will also likely experience resistance by residents (and their advocates) who may see this as city-sponsored gentrification.

[2plan]

Thanks for the tips! My conversations with developers so far have been more along the line of "rental housing is never worth it". Perception, or reality - I'm not so sure.

I hear you on the gentrification aspect of it all, it makes me quite queasy. Unfortunately, we don't appear to have the political will to really take a pro-active stance on this - I think Council feels that the 1 for 1 rental replacement is as much as the city can do, and the feds should be dealing with the affordable housing. It's going to get nasty if that continues to be the attitude. Anyway, I will wied my powerful influence as a Planning Assistant to the best of my ability

[luckless pedestrian]

It might be different in Canada but you would have a difficult time differentiating in zoning between rental and condo and it's very hard to enforce since municipality would be the last to know when the condo deed showed up from the registry - so I think density bonuses for multi-family in zones where you want it is the best way to go -