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REPORTING · 30th July 2013
Walter McFarlane

Kitimat City Council discussed a potential policy for Strata Conversion. Strata Conversion is the conversion of rental units, such as apartments, townhouses and such to property lots and sold as condos. A memo to Council contains the recommended policy.

The memo explains there is high demand rental units right now in Kitimat because rental vacancy rates have declined and housing prices have gone up. Affordable housing is becoming harder to find for low income families.

“Many of Kitimat purpose built rental units were built in the 1950’s and 1960’s and may require significant upgrading to maintain their use. No new rental stock has been built since the early 1980s,” wrote Ron Pole, CAO in the memo to Council. “Rental housing fills a role in the housing continuem, providing housing for people who are unwilling or unable to engage in the ownership market. With the current increase in housing prices, there is a possibility that owners of rental buildings will convert their buildings into strata title properties.”

The memo suggests that if the buildings were converted, it could leave Kitimat without rental stock because the rental stock would not likely be replaced. Regulations were laid out: The building must be compliant with the building code, the building vacancy must be above 5%, applicants must give tenants notice and 60% of the tenants have to be in favour, the applicant must create a plan to help tenants purchase and/or relocate and have to give the tenants a 90 day opportunity to purchase the unit before giving them notice to vacate.

However, Council was told they could limit, discourage and even prohibit strata conversion. A suggested amendment to a current bylaw would make it more difficult for strata conversion as it would prohibit conversion during times of low vacancy.

Council was asked to provide comment. Councillor Corinne Scott made the motion and it was called and carried. It will come back on August 16th for first and second reading.

Councillor Mario Feldhoff expressed he was concerned with some of the challenges in the rental market because there were hurdles in the way of owners trying to upgrade and modify them. “I would prefer to see us do something to encourage affordable [new] rental housing be constructed,” said Feldhoff.

Councillor Phil Germuth suggested they look at communities similar to Kitimat which have gone through similar challenges. For example, Dawson Creek has had 8 apartments built in the last couple of years. He was told in Dawson’s Creek, they were not building rental buildings, they were building strata buildings. He was also told there was a tax scheme in place which building owners could take advantage of at the time, but it is no longer in place.

“What [landowners] are doing now, is they’re looking for markets like Kitimat where there is an up market, housing prices are moving upwards. They can buy existing rental buildings at a relatively low value, low cost per unit, make some purpose and then get their money out by converting those condominiums and selling them,” said Community Planner Gwen Sewell.

She expressed the concern was this could lead to the elimination of rental units.

Germuth asked administration to look into communities which have gone through the same thing or have been going through it for years to see how they coped with it. He was told the administration did look at Dawson Creek and some small communities.

Feldhoff stated buildings which are going strata might not be taken off of the rental unit list because an investor could choose to buy it and rent it out. “As far as our challenge, people for many, many years have enjoyed very low rents, somebody might even say they have been spoiled. Now it’s swung in the other direction and there is an element of the community that there has been no doubt, has been challenged. We do have land in our community and I believe there is land that has been earmarked for the District for purposes of housing,” said Feldhoff. “There are things we can do to facilitate to put the conditions in place to make it attractive for a developer to develop rental housing for those that are in need, as opposed to tying the hands of the people that are renovating older stock.”

He was told the District is taking steps to stimulate low cost housing in Kitimat. “The reality is, if you total up the number of units which are undergoing renovation now, we will not have sufficient funds and there will not be, I don’t believe, a non-profit housing society formed to construct the same number of units,” said Sewell.

Councillor Edwin Empinado wanted the local apartment owners input in this matter and wanted to know the current rental vacancy. He was told the rental vacancy was at 4.7% at the beginning of the year. It was at 5% in 2012 and was at 20% a few years ago. A recent check showed there were only two rental units available in Kitimat as of the time of the meeting. One was furnished and the other unfurnished. This makes the vacancy rating .3%.

As for the owners, he was told Council was being asked first to start the conversation.

Councillor Rob Goffinet stated the conversion of apartments to Strata is a possible future which might not come to pass. By discussing policy, they could precipitate or further what is already happening. He said the work being done is nothing more than renovation, creating better quality buildings so the owners can charge more rent. This has nothing to do with conversion to strata and will not come into play until rental vacancies increase. He stated they will probably see a higher vacancy rate because future developments will put a greater strain on the rental markets. Goffinet added he expects to see the rental vacancy rate go lower and lower and lower.

He was told the policy aimed to stop the stratification of apartments. He was also told there is nothing preventing apartment owners from coming to Council with applications for strata conversion and Council do not have a policy to deal with it.

Councillor Mary Murphy thanked administration and looked forward to the involvement. Germuth stated he was trying to figure out how this would bring in lower rent housing. He was told they want to have diversity in housing availability. Germuth expressed apartments were based on supply and demand, if someone was willing to pay a lot of money for an apartment, they could do that. He was told the Sandpiper Apartments are 120 units which are already strata. Council is not needed to build a strata building, but it is needed for strata conversion.

Council also discussed whether rental lots, like in a trailer court, could also be divided up but were told this was not in the policy.

Mayor Joanne Monaghan explained there is a developer who is looking at low cost housing by making the apartment sizes smaller than usual. She explained this is what is going on in Vancouver. There were no further comments. Monaghan clarified the planners received all the information they needed.