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Houses of the Holy: In Vancouver, a union of church and real estate

Dan Fumano & Douglas Todd, Vancouver Sun, March 23, 2019

The city of Vancouver’s places of worship, which sit upon more than $3.4 billion of real estate, are getting into the housing game more than ever before, scaling projects skywards in an attempt to benefit both their congregations and a community facing a housing crisis.

Religious groups have long provided housing. In past generations, those efforts focused on helping vulnerable populations with shelter beds for the homeless, refuges for women and children fleeing abuse, and housing for low-income seniors. But the role of Metro Vancouver’s religious groups in the housing world is changing.

Christian and Jewish groups, in particular, have provided seniors housing for decades. Since the 1990s, it has become more common for churches, often land-rich and cash-poor, to develop small affordable apartment buildings.

But in recent years, as Vancouver land prices have soared, the scale of these projects has increased dramatically along with the range of households they seek to serve. Religious groups are tapping into their equity, unlocking value from both the earth beneath their feet and the sky above their heads.

The B.C. arm of the United Church of Canada is developing 500 units of rental housing spread over five sites in some of the province’s most expensive municipalities.

First Baptist Church is venturing into a grand project with private developer Westbank that includes, alongside public amenities, a 57-storey high-end condo tower designed by the late Bing Thom, one of Canada’s most famous architects.

The latter deal will give First Baptist Church funding for seismic upgrades and restoration on its century-old West End building, 37 child care spaces, and a new seven-storey building of affordable rentals to be constructed by Westbank, in exchange for what’s known as an “air parcel” to accommodate the 57-storey condo tower, said First Baptist’s executive minister Justin Kim. Details of the deal have not been made public.

Vancouver churches have increasingly sold air parcels, which can be worth millions. In exchange for transferring what the city calls the “unused vertical density” above an old two-storey church building to allow a developer to build a higher building at a nearby site, for example, the church typically receives money from the developer for seismic upgrades, heritage building improvements, and other amenities that aid the church’s community service.

Kim rents in the West End with his wife and three kids under age 10, and says he’s keenly aware of the struggles of tenants in this housing market. His own apartment is full of boxes this week, as his family packs up for their third move in five years.

“There’s no way we can get into the market. We can’t buy, so we’re at the mercy of the market right now,” Kim said. “A lot of our friends are actually moving out of the West End. … It’s just tough for young families, and a lot of seniors are worried about their situation, too.”

That’s why, he says, it’s crucial the First Baptist development includes a new affordable rental building of approximately 46,000 square feet, comprising 61 units ranging from bachelors to three-bedroom units, most of which will be available at below-market rent.

The adjacent condo tower, known as the Butterfly, will be one of Vancouver’s tallest buildings. Its rezoning was approved in 2017 by Vancouver’s council.

“With any organization, there are obviously some folks who are concerned about it,” Kim said. “But what’s guiding the church is the opportunity to serve the community. … This is not just for our quote-unquote church people, this is for the West End community. So with all of that considered, yeah, for sure there were people who were concerned. But the congregation had made a decision with a sense of vision around it, and we’re moving forward.”

A ‘will to do mission work’

While Vancouver’s religious groups, particularly Christian and Jewish, are not new to the housing world, the multimillion-dollar First Baptist development is emblematic of the massive scale and ambition of the new wave of projects.

“This has been going on for a long time, but it’s just really heated up lately,” said Simon Davie, chief operating officer of Terra Housing, a local firm that consults on “social purpose real estate” projects, including several with churches.

Religious groups are in a unique position, Davie said, because they have both “a will” and “an asset.” Their “will to do mission work” drives them to serve the community, Davie said, and their asset — land — is the single most sought-after commodity in the development world.

“What’s really changed in the last 10 years … is that asset they have, especially in urban centres, is a lot more valuable,” Davie said. “So the discrepancy between what’s built on site and what’s possible to build has grown exponentially.”

The B.C. Assessment Authority’s “churches and bible schools” category includes all kinds of properties owned by faith-based groups, including gurdwaras, temples, synagogues and mosques. Because of B.C.’s history and demographics, many of the highest-value properties in this category belong to Christian churches rather than other religious groups.

There are about 2,400 properties in this category in B.C., excluding 152 cemeteries, according to data provided by Landcor Data Corporation. The City of Vancouver alone has 323 religious properties with a combined assessed value of more than $3.4 billion. Many of those religious properties occupy prime real estate. The assessed value of the three most expensive Vancouver properties in the “church” category, for example, has increased by 44 per cent over the last three years alone.

That total of 323 Vancouver religious properties doesn’t include some high-profile — and high-value — sites that have been rezoned for recent or future development, such as First Baptist’s Burrard Street site, with its 2019 assessment of $125 million, and a recently completed 22-storey mixed-use development on Thurlow Street, a partnership between local Presbyterian churches and Bosa Properties, assessed this year at $81 million.

Under the B.C. Assessment Act, places of public worship are generally exempted from property taxes. However, other property owned by a religious organization, including parking lots, offices and even vacant lots slated for future development, may be subject to property taxes.

If an old church can find a way to sell air space or otherwise join with a developer to create new housing, while also unlocking funds to renovate the church and potentially build new amenities like a senior centre or daycare, “it seems like it’s a win for the church, for the developer, and for the city,” said Landcor CEO Jeff Tisdale.

While people may believe any affordable housing has to come from government, Tisdale said, religious groups have potential to “be a key piece to unlocking part of that puzzle.”

‘Yente the matchmaker’

B.C.’s housing minister wants the government to foster partnerships between religious groups and real estate developers.

A major pillar of the B.C. government’s HousingHub program, launched last year to develop homes for households with average incomes between $50,000 and $100,000, was inspired by religious groups that said they need a facilitator to connect them with developers.

“HousingHub is sort of like Yente, the matchmaker,” B.C. Housing Minister Selina Robinson recently said, referring to the character from Fiddler on the Roof.

“Her job was to bring families together who had shared values and a shared purpose, to make a successful marriage,” Robinson said last month on The Vancouver Sun and Province’s Housing Matters podcast. “And that’s what the HousingHub does.”

In the past year, HousingHub staff have met with 16 groups representing several different faiths.

One of the program’s first major projects is a partnership with the United Church, which is converting five old church properties into mixed-use buildings that will provide 500 units of purpose-built rental housing, some of which will be subsidized, for people of all beliefs.

“The old is done and the new is not yet here,” said Terry Harrison, who is leading more than half-a-dozen multimillion-dollar housing projects under the auspices of the B.C. region of the United Church of Canada.

Working with HousingHub, Harrison is developing 75 rental units at Como Lake United in Coquitlam, another 140 units at Brighouse United in Richmond and 100 at Lakeview United in east Vancouver. The United Church of Canada will maintain ownership of the five properties, she said, while the congregations will gain a modern new church space and a stream of rent revenue.

In addition to the HousingHub projects, Harrison has helped United Church congregations in Vancouver and Burnaby partner with developers to provide hundreds of units of market-based condominiums.

With its declining membership, the United Church struggles to hold on to its ranking as the largest Protestant organization in the country, and is assessing what legacy it can leave future generations. It is finding a significant part of its endowment will be various forms of housing.

“Many of our buildings are at the end of their lives,” said Harrison. The generations of United Church members that built the edifices, she said, have largely failed to counter secular culture and pass on an active Christian faith to their children or grandchildren.

“There has to be death before there can be resurrection,” said Harrison, who is upfront about how most United Church congregations in B.C. are struggling, even if a relative few are thriving. “Something has to give to let something new emerge from what has been happening.”

The B.C. arm of the United Church of Canada has been arguably the most active of any religious group on the West Coast in turning church properties into various forms of market and subsidized housing. But it’s definitely not alone.

Some downtown Vancouver congregations have entered into projects that have led to construction of luxury skyscrapers. The city’s tallest building, the luxurious 62-storey Shangri-La, was completed in 2009, after the adjacent Coastal Heritage Church provided air space in exchange for developer Westbank providing $4.4 million for the church’s building restoration and $1 million toward social housing in the city.

Because Protestants and Catholics were by far the largest religious organizations to settle and build places of worship in southwestern B.C. a century ago, their congregations are often tearing down old churches while collaborating with developers to construct “mixed-use” buildings, blending new worship space with housing for all kinds of people, regardless of their religion.

Jewish groups, whose members also have long roots in the province, have provided seniors’ homes for decades, and have more recently expanded into other types of housing, especially for lower-income Jewish families.

Most Vancouver synagogues are less land-rich than some of their Christian counterparts and their properties have less redevelopment potential, said Shelley Rivkin, vice-president of community affairs for the Jewish Federation of Greater Vancouver. More, like the Tikva Housing Society founded in 2006, have a mandate to provide housing for the Jewish community rather than the general population.

Representatives of some other Vancouver-area religious groups said their communities are not involved in large-scale housing projects now — often because their places of worship are more modern — but that could change in the future.

Cautionary tales

Not all high-stakes housing collaborations between faith groups and developers have gone well in the past. There are several cautionary tales involving clergy who dive into agreements with powerful developers, said Harrison.

“There’s a DIY (do-it-yourself) culture in many congregations,” Harrison said, which can be a downside in the complex world of real estate, especially in a high-priced market.

In late 2014, a United Church congregation in the Okanagan demolished its church building, only to have their envisioned “$20-million arts, worship, retail and condo complex” fall apart, the United Church Observer reported. The parishioners were left without a church, and the fiasco caused acrimony within the congregation.

Such real estate developments often inspire “very lively debates inside those congregations,” said Jonathan Bird, a past member of Metro Vancouver’s steering committee on homelessness who has consulted with several Vancouver churches on housing plans over the last 20 years.

“They’re deciding: ‘What do we do? Do we redevelop? … Is this a developer we can trust? Is that the name we want to be associated with?’ All of those are important questions, and it’s often not a straightforward answer to them,” said Bird. “Without naming names, I’ve had some qualms about projects in the last 10 or 15 years where I think: ‘Gee, that looks to me like it’s primarily a business decision, not a mission decision.’ For a Christian organization, or really any faith-based organization, I think the mission comes first.”

If an organization can subsidize affordable homes — such as for seniors or low-income families — that provides a clear benefit for the community. But with the realities of Vancouver’s housing market, with a near-zero rental vacancy rate putting pressure on all kinds of families and not only the most vulnerable, even the addition of new apartments at market rents can be helpful, said Bird.

Churches working to deliver market housing for middle-income families is “an emerging trend,” Bird said. “It’s only starting now to happen.”

Since last year, Bird has served as the church engagement specialist for the Union Gospel Mission, a Christian society that focuses, as it has for almost 80 years, on homeless shelters and transitional housing, the bottom end of what Bird calls the “housing ladder.”

Those efforts are crucial, Bird said, “but at the same time, if that’s all we ever do, we’re never going to end homelessness. Because there is a housing ladder, and if you’re only reinforcing the lower rungs, you’re going to get people displaced from higher up, landing down on the heads of those below them.

“Gentrification, in other words, is one of the primary drivers of homelessness,” he said, “And if you’re not constructing purpose-built rentals for the middle class, then eventually, they are going to displace the people in the SROs. And that’s exactly what we’re seeing.”

That’s because it’s increasingly difficult for the private sector, on its own, to build housing for an increasingly large proportion of families in Metro Vancouver, where housing prices have far out-paced median household incomes, pegged in the last census at around $72,000 a year. Many middle-income British Columbians, earning in the $50,000 to $100,000 range, “have been priced out of housing in communities across the province,” says the HousingHub website, and the provincial government sees partnerships with non-profits — including religious groups — as a way to provide affordable homes for those families.

“You certainly could make a theological case and an ethical case for offering housing to people in that income bracket,” Bird said. “There is a demonstrable need there.”

“The Bible never specifies a minimum or a maximum level of appropriate income … it always talks about relative wealth and relative poverty. … In a variety of ways it says, in both the Old Testament and in the New, if you have two coats and someone comes to you who doesn’t have any and asks for one, you should give them your spare.

“Out of this ethic of abundance, you give what you have, give what you can,” said Bird. “And I want to see that kind of ethic happening in the way we treat our real estate.”