Fast-Tracking Rental Housing – Residential Rental Districts Update

Great. Thank you so much. Hello, Mayor and Council. I'm Maggie Moore, a planner in housing policy. Today, I'm sharing the proposed changes to the residential rental districts.

I will start with an overview of the recommendations you have in front of you today. Then I'll talk through the current state of the city's housing targets, the city's policy objectives that relate to this proposal, as well as where we're at with our current residential rental districts. Then we'll get into today's recommendations, which are the proposed updates to these districts. I'll talk through engagement and what we've heard as well as a summary and next steps. So looking at the recommendations you have, recommendation A includes changes to the RR2 and RR3 district schedules, including removing below-market rental requirements for fully residential development, removing or reducing requirements in mixed-use developments, and allowing up to eight stories in the RR2 districts to be compliant with TOA legislation. Recommendations B and C include applying the district changes to four current in-stream projects. Basically, we're slotting these four projects into the correct district schedule to support their development viability. This also includes terminating their existing approval and principle. And then recommendations D and E include consequential changes to the secured rental policy and other bylaws and policies, including the subdivision bylaw and the signed bylaw.

So looking at the Vancouver housing targets, one of the values of the Housing Vancouver strategy is for housing to respond to the diversity of people and households that call Vancouver home. To measure this, the 10-year housing targets outline the specific type and quantity of housing planned. The overall goal is for 83,000 units. Today, we're focusing on these two middle categories of rental housing that are highlighted here. The purpose-built below-market rental and purpose-built market rental, representing 43% of the city's overall target. And while we've been very successful in developing new units and enabling supply through zoning, there's been difficulty in the market delivering deeper affordability, especially in these low-rise districts. We'll share data throughout this presentation on what types of projects we've seen approved and make it to construction in the residential rental districts. Overall, we've seen that delivering below-market rental through private development in these low-rise zones can be very difficult and only shows viability in certain types of projects in certain areas of the city. Delivering more of these types of projects could require a greater investment from different areas of government, and we need to continue to work on partnerships with other levels of government on the ability to deliver below-market rental units.

So looking at what's been approved so far, close to 50 projects in the residential rental districts have been approved since the districts came online in 2021. These projects include close to 3,500 secured rental units. However, only 5%, which is a very small portion of these units, are below market. The status shows that the secured rental policy in the RR districts have been really successful in delivering market rental, these low-rise, middle-density housing options, but it's been difficult to get the below-market rental units. We've also seen a couple of projects canceled and many other projects coming to the city asking for added support and reduction in below-market rental units. There are a few reasons why this has been the case, including increasing costs of development. This slide is not showing any new information. We know that there have been rising costs of construction. These rising costs are making it increasingly difficult to deliver the secured market rental housing, and even more so for projects that have the below market rental included. And as mentioned on the last slide, while units have been approved, we're seeing the rising costs of construction continue to make it difficult to deliver these units. Since 2021, no BMR units have been delivered from the residential rental districts. And while some, close to 50 units, are currently under construction, many others are failing to get to the construction phase.

So looking at it from a policy context, based on the data and the projects we've seen, we're proposing changes to the residential rental districts to ensure that the projects can continue. These changes are being proposed under the secured rental policy developed in 2019 to promote the development of secured market rental housing and the development viability report, which was brought to council in December 2025, which proposed a set of measures to address immediate development viability challenges, including this one.

In December 2021, Council approved amendments to the secured rental policy to create new rental residential districts near shopping and transit. Similar to other standard zoning districts, the RR zone set regulations such as permitted use, density, and height limits while allowing for a range of building designs. All residential uses in the RR zones are secured as rental tenure and no stratification or sale. of individual residential units is allowed. These requirements are secured through housing agreements. And the RR districts include options for four to six-story fully residential and mixed-use developments. The aim of allowing these projects is to develop complete communities, including the options on retail streets that allow for retail on the ground floor and apartments above to support these neighborhoods. When the zones were created in 2021, all six-story projects and arterials were required to provide below-market rental units based on the financial testing done at the time.

So I'm going to go into a little more detail on what the districts look like and what the proposed changes are. The RR2A, RR2B, and RR2C district schedules currently allow apartment buildings at four, five, or six stories. where all dwelling units are secured as residential rental tenure. The six-story option requires 20% of residential floor area to be secured as below-market rental.

Focusing just on the five and six-story option, the RR2B and RR2C, we've seen close to 30 projects approved since 2021. However, we've seen over 10 times more projects come in under the five-story option without BMR units than the six-story RR2C option. And while we've seen some five-story projects completed, we haven't seen any of the six-story projects completed or even have their zoning enacted. Because the five-story option is being opted for a lot more frequently, we're losing out on that six-story of rental units. If all of these five-story buildings had been approved as six stories, we could have seen up to 400 more rental units approved in just a few years.

Moving on to the mixed use RR3 district. There are currently two options, four stories at 100% market rental and six story with a below market rental requirement. Looking at what we've seen in the mixed use projects, we've seen a different trend than in the fully residential projects. Overall, we have not seen a lot of these projects and many are struggling. There have been no projects in this district that have been completed and some have asked for adjustments to the below market rental inclusion. As you can see from this map, we are seeing a majority of projects opt into doing six stories with the BMR requirement. However, three times as many are doing this on the west side of the city. And the only four story projects we've seen have come in on the east side of the city. An important part of complete communities is to ensure we're getting these mixed-use projects and we're not getting a lot of uptake. Current conditions are making this even more difficult. We really want to make sure we get the retail. Through our financial testing and the projects that are coming in, we've seen that the BMR units are more viable on the west side of the city, although they still face some difficulties for delivery. The difference between east and west could be from a variety of factors, including lot size differences across the city and the going market rents that are feasible for those market rental units.

So looking at those changes specifically to the RR3 districts. We are proposing removing the below-market rental requirement in six-story buildings on the east side of the city, where they're more difficult to deliver, and reducing the below-market rental requirement on the west side from a 20% discount below CMHC average rents to a 10% discount. This would allow us to get more mixed-use rental buildings throughout the city, contributing to those complete communities. So looking at an overview... THIS IS WHAT WE PROPOSED THE THIS IS WHAT WE PROPOSED THE DISTRICTS TO LOOK LIKE WITH THE DISTRICTS TO LOOK LIKE WITH THE CHANGES HIGHLIGHTED IN PURPLE. CHANGES HIGHLIGHTED IN PURPLE. SO IN THE RR2A, THAT FULLY SO IN THE RR2A, THAT FULLY RESIDENTIAL DISTRICT, WE'RE RESIDENTIAL DISTRICT, WE'RE LOOKING AT A FOUR STORY OPTION LOOKING AT A FOUR STORY OPTION AND A SIX STORY OPTION WITH NO AND A SIX STORY OPTION WITH NO LONGER BELOW MARKET RENTAL LONGER BELOW MARKET RENTAL REQUIREMENTS IN SIX STORIES. And then three mixed-use districts, a four-story option and two separate six-story options with different levels of affordability requirements based on location. So removing the below-market rental on the east side of the city.

And some other proposed changes consistent with simplification approaches implemented with new district schedules. Updates are recommended to the existing RR2A, RR2B, and RR2C district schedules and the RR3A and RR3B district schedule. This includes removing design guidelines and relocating affordable housing requirements. And then in order to be compliant with provincial legislation, we've added in an eight-story 3.0 FSR option for RR2B sites and transit-oriented areas for existing in-stream projects.

So looking at recommendations B and C, based on these proposed zoning changes, there are four in-stream projects that have been approved for rezoning to an RR district that we're proposing moving to the appropriate district. This includes two projects currently in RR2C, which we're repealing, and two mixed-use projects on the east side. Recommendations B and C include changing the approval for these four projects to align them with the correct district. There are also a number of in-stream applications for residential rental districts. Staff will continue to process all in-stream rezoning inquiries and applications. This applies to all projects which have already submitted a formal rezoning application or a formal rezoning inquiry prior to the date this report is brought to council. Staff will begin accepting new development permit applications after enactment.

So looking at the engagement we did and what we heard from November 2025 to January 2026, we connected with residents in the development community through online information sessions and surveys. Engagement included a Shape Your City page and virtual open houses. From the public, we heard support for building more six-story buildings that feel human scaled and fit well into existing neighborhoods. We've heard a lot of support from the development community on streamlining development and implementing these changes as soon as possible.

We also heard concerns about the six-story building heights fitting into existing neighborhood character. Six stories is already allowed in most sites through the current RR rezoning process, so this isn't being added to those areas. However, the eight stories is new in these, but this is consistent with the TOA legislation. In addition, we heard concerns about reducing the requirements for below market rental housing units. This is being proposed due to current economic conditions and decreased viability of requiring the below market rental units in these low rise districts. We've seen this through the numbers of what's being developed. Existing requirements have produced minimal below market rental units, approximately 5% of the approved units so far. The proposal maintains requirements for the below-market rental units in areas where the market is more likely to deliver them.

So, in summary, the changes we're proposing today to the residential rental districts would improve development viability of secured market rental housing and simplify some of the regulations in these districts. I'll also note that there were report revisions on May 15th to clarify some mistakes that were made in the report, including FSR allowances, BMR rates, and heights in TOAs. If this is approved, the bylaws would be brought forward for enactment in June, and new applications using the updated district schedules could come in after that date. Staff will continue working through implementation of existing in-stream applications. And staff will also continue intergovernmental conversations on the tools available to the city for delivering below-market housing. And that's my presentation.

I'm going to invite Edna to come share.

Morning, Council. I'm Edna Cho, Senior Planner in Housing Policy. The answer to your question is no, we didn't do that analysis for this work. We were looking at what was financially feasible in terms of these projects.

I would say that we are focused on preserving the affordability where it works. That's why we're preserving the mixed-use option for BMR at 10% discount because that shows to still be feasible.

And then as Maggie alluded to in her presentation, we have other mechanisms to try to get to gain affordability. And we also know that we're going to have to step up our efforts to do more advocacy with senior governments to try to get more deeper levels of affordability.

Again, we're preserving the below market rental where it works in the mixed use projects. As we show through the data, primarily we're getting almost all market rental projects right now. So... You know, to change the five-story to six-stories will ensure that those projects continue to be viable and to ensure that we get, you know, we get that extra story, that extra, you know, could be 400 units on the table.

Yes, that's correct. In the fully residential projects. Okay.

Because it doesn't work. If we layered a BMR requirement to the five stories, it wouldn't be feasible. Then we wouldn't be able to get any of the development.

Counselor, Dan Garrison, Director of Housing Policy and Regulation. Just wanted to jump in on that question. Really, if you'd take a step back and you look at what we're doing here. I'm sorry, we're at time. Okay, thanks. Counselor Kirby Young.

yes thanks counselor dan garrison housing policy and regulation um i i think the review that's coming up we're going to look holistically at where we're doing inclusionary housing and what's the best way to deliver the the deepest level of affordability as well as looking at how the city deals with our other infrastructure and public amenity needs So I think if you look at BMR, what we're proposing here, of course, is to remove the BMR requirements from lower density development, which will then largely start to pay things like development costs, levies, etc. The higher density development, like in TOA areas in the Broadway plan, is the area where we still think more inclusionary housing, more BMR, etc., is possible. In the short-term review, we're going to be looking at mostly legislative compliance with the new Bill 16 requirements.

In the short-term review, we are mostly looking at legislative compliance. We're sort of taking what our existing constructs are and making them comply with the legislation. We are also looking at launching the major inclusionary review where we do look at exactly what you're talking about. Really, the market has changed fundamentally from where it was when most of our inclusionary housing policies and zoning were adopted.

We're looking at launching that essentially immediately, and it's probably going to take us a little bit of time. It's not going to be in June or July. It's going to be probably in 2027.

Yeah, I think that's one of the really key pieces that we're doing is shifting our development approvals approach towards more certainty, more clarity. And that happens with the district schedule approach. So this work that we're doing right now is sort of that middle ground where it's a rezoning, but directly to a district schedule that's already established. When we come forward with the villages, which planning program, which this work is really aligned with, that's going to be the next major step in pre-zoning proposals where we do look at that certainty. So, you know, I think actually the pre-zoning approach creates a real opportunity around particularly development viability where there's more certainty. The processes of approval are faster. There's sort of less money involved in that process. So I think that's an important step.

Lower carrying costs, less uncertainty, less risk involved in development. So certainly we think at that point we're going to be seeing improvements in development viability through that approval approach.

I'll invite Edna up to answer this one.

Thanks for the question. So there's been changes to our public hearing rules from the provincial legislation. And so under the new rules, a public hearing is prohibited if a project is consistent with the ODP. where the changes are primarily residential in nature. And at least 50% of the residential gross floor area, the buildings will be for residential. So because these changes fall within, meet all those three criteria, a public hearing is prohibited. And so that's why this report is being brought to Daytime Council today.

We are. The ODP governs land use, but it also governs housing policies.

Okay. Yeah.

So we are being consistent with the application of the new rules.

In terms of city tools, this is what's available to us in terms of land use tools. Yeah.

Well, this is... We didn't model that? In the low-rise, like we're already up to six stories, so there's really no room to go in the low-rise form. Otherwise, as Dan mentioned earlier, you know, we can do the below-market rental in the high-rise developments, which we are doing through Canby and Broadway and in the... the r5 district schedules and these projects already get 100 dcl waivers for the bmr so that's already in play so i think you know it's just a very difficult time right now in the market with the construction costs and the uncertainty in the environment around around tariffs as well you know we are seeing um new rental rates falling which is great news for renters but that does mean it's a little bit it's even more challenging for the projects to work So within the tools we have available within the six-story form, this is what the city can do. But however, we agree that preserving affordability is really important, and that's why we're preserving it in the mixed-use option on the west side, because that's still looking to be feasible.

The testing results show that even if a new project were to go forward today, the five stories is also challenged. It's more challenging than it was in 2021. What we're talking, but a lot of these projects that we were showing in the pipeline, they're ones that were approved previously or in the system already. So there are challenges that are being faced by new projects, but right now those ones, because they're proceeding, they look to be viable. And as you can see, there's a lot more of them than the below market six-story option, which the testing results show they're not viable.

I think when we put these changes in place in 2021, we were very hopeful that we could get, you know, the diversity of the... And I'm sorry we're at time, but I'm sure Councillor Maloney would love to hear that answer.

Oh, okay. In 2021, when we put forward the policy, you know, we really wanted to see the full spectrum of the different forms as well as the affordability. And so that was the intent. And I think, you know, with the experience we have now, it's showing that the BMR was a really great idea on paper, but it's just not penciling out. So we are, you know, we're getting 97% of the market rental. That's working really well. But we're getting very few projects in the below market rental. So it's really... kind of on paper at this point.

Marie Linehan, Development Planner. So the building code changes have been made to allow the single egress steers So these apartment buildings can make use of that. They can choose to do the single egress stairs. I think the change you're mentioning is allowing apartment buildings on smaller lots, and that's coming through with the R3, with the update to R3, which will come with the villages, because we anticipate that the single egress stairs has the most benefit on these smaller lots for efficiency. So that's coming forward with the villages' work. Wonderful.

That's correct.

That's correct. Yeah. We're hearing projects running into difficulties and applicants coming back requesting changes.

That's correct. If it doesn't get built.

Additional supply can increase the vacancy rate, which means there's more competition for renters, more choice, and it brings down the rents. And we're already seeing a reduction in rents, I think 1.4% down from last year. So it is happening. Rents are still high, but with a sustained pipeline, that trend will likely continue, that decrease in rents.

Yes, we do. We think that that's really important. A sustained pipeline is really important. We have, you know, 10,000 units under construction, but beyond that, you know, there's lots in the pipeline, but unsure where they will go. So having more units go into the pipeline will be really important so that we're not, you know, making great changes now, but then there's a stop and then, you know, we're back to where we were 10 years ago.

then the rents will rise again and there will be less choice for renters and there will just be a tighter market.

So within the city's power, we have our land use tools. So we have density. We can offer density, DCL waivers. We can look at land use, different forms of development. So those are our main tools. And then, yeah, waiving DCL charges. Yeah, those are the city's main tools.

That's correct. We'll have more choice for renters and for owners and more diversity for households. Thank you.