Broken promises, but no fix, for Downtown Eastside condo building
Toronto Star
By Jen St Denis  StarMetro Vancouver
03 May 2018

The Sequel 138 building on East Hastings Street sparked marches, a construction site sit-in and a raucous development permit meeting that saw people forcibly ejected from a room at city hall when it was going through the approval process in 2011–12.
(Jennifer Gauthier for StarMetro)

VANCOUVER—The developer of Sequel 138 promised his building would provide social housing, affordable home ownership, an arts centre with community programming and a lane leading to Chinatown through the site in the city’s Downtown Eastside.

Two years after the building’s completion, the lane is now locked off behind a gate, four retail spaces sit empty, there is no arts centre or programming, and BC Housing acknowledges some homeowners rented out or put their units on Airbnb, abusing a housing covenant that was supposed to prevent real estate speculation.

Despite meeting few of the community benefits that were promised to the vulnerable Downtown Eastside community when the proposal was going through approval in 2011, both the City of Vancouver and BC Housing say they have no power to compel the developer or current owners to deliver on those commitments.

‘We tried our best, but nobody’s perfect,’ developer Marc Williams said. ‘Overall the plan worked — a huge number of people were able to buy who otherwise couldn’t.’  (Jennifer Gauthier)

The six-storey condo building at 138 East Hastings St. includes 76 condos and 18 social housing rental units. It’s squeezed between two single-room occupancy hotels — the Regent and the Brandiz — and is surrounded by the street life, homelessness and drug use that marks the Downtown Eastside.

The project in the heart of the impoverished neighbourhood sparked marches, a construction site sit-in and a raucous development permit meeting that saw people forcibly ejected from a room at city hall. Activists and residents feared the building would push poor and drug-addicted people out of the neighbourhood, and called for a building with all social housing at welfare rent rates instead.

Marc Williams, who developed Sequel 138, said all the residential and commercial strata units have now been sold. In the end, he said, he did not make a profit from the project.

“We tried our best, but nobody’s perfect,” Williams said. “Overall the plan worked — a huge number of people were able to buy who otherwise couldn’t.”

Covenant fails to stop selling
Marketing for the building describes the innovative affordable home ownership model that was offered to buyers: people who made under $85,000 were eligible to buy one of the tiny, 450-square foot one bedroom units for around $260,000, which at the time was 10 per cent below market value.

BC Housing designed and administered the legal agreement — called a covenant — that was supposed to ensure buyers lived in the units themselves and did not rent them out, except in cases of financial hardship. The covenant was in place for two years after the initial purchase, and the provincial housing agency verified the income cut-off through income tax statements.

BC Housing Covenant
The deal did not require buyers to be first-time homebuyers, which BC Housing now says was a mistake. It’s a loophole they would close for any future affordable homeownership covenants, Susan Hancock, a spokesperson for BC Housing, said in an email.

Some of the original owners have now sold their condos for over $400,000; current listings show prices ranging from $399,000 to $449,900.

There were also titleholders who already owned high-value properties: for instance, land title records show one buyer bought a one-bedroom Sequel 138 unit worth $264,320 in 2011, but has also owned a duplex in Kitsilano since 2009, currently worth $1.8 million. The titleholder declined to comment for this story.

BC Housing said when abuses came to light, the agency sent letters to homeowners and then monitored Craigslist and short-term rental sites. But the agency did not explain how even with the restrictions in place, buyers were able to so easily break the rules.

A rental listing for a unit in Sequel 138 describes the Downtown Eastside neighbourhood as “gentrifying” and “street life is lively and gritty.”  (CRAIGSLIST)

“We acknowledge that the restrictions put in place to ensure affordable home ownership at Sequel 138 were inadequate,” Hancock said, adding it was the first time the agency had designed a home ownership covenant.

Tom Wanklin, the city’s planner for the Downtown Eastside, said a building that includes market condos would not be allowed today in the area. The development application for Sequel 138 was processed while a new plan for the area was being formulated.

The current plan for the Downtown Eastside, passed in 2014, requires any new development to be at least 60 per cent social housing and 40 per cent market rental, meaning market condos are no longer allowed to be built in the area.

High rental turnover
Charly Jarrett, who bought one of the condos with the intention of living in it, said units were rented out almost immediately, while several were listed on Airbnb.

“We expected people to honour the contract that they had signed,” Jarrett said, “and we expected people who bought would understand where they were moving.”

The building location and small unit sizes haven’t stopped owners from trying to charge top dollar: one recent listing advertises $2,200 a month for one of the tiny 450-square-foot, one-bedroom units.

Rental turnover has been high, Jarrett said, leaving much of the building feeling strangely quiet. In contrast, the 18 units of social housing on the third floor have been constantly occupied with long-term tenants, making it a real asset to the building, Jarrett said.

Those who did live in the building often seemed “angry” that the neighbourhood wasn’t changing fast enough, Jarrett said. Living beside the Regent, a notorious single-room occupancy hotel, comes with its own special challenges. Regent residents often throw used syringes, garbage and human waste onto the Sequel 138 courtyard. Jarrett said someone once shot at and broke the glass of the Sequel 138 elevator tower with a BB gun from a room in the Regent.

From February 2015 until building completion, BC Housing also provided a $21.8 million loan to the developer at 1.24 per cent, a low rate the agency normally provides to non-profit housing agencies who are building social housing.

BC Housing’s low-interest loans to private developers for other projects that are a mix of market and social housing have come under fire in the past: In 2017, Attorney General David Eby, who was then a member of the Opposition, criticized the government for two complicated deals with private developers in which BC Housing provided low-interest financing.

Eby questioned whether private developers should have been eligible for the financing, especially since for one of the projects, the BC Housing loan provided bridge financing to help the developer start work on the market condo portion of the project.

Commercial spaces sit empty
Most of the commercial spaces facing East Hastings are rented to social service providers and government agencies. But the three commercial spaces facing the courtyard and the back alley — which is often busy with people taking drugs, sleeping, or using the space as a toilet— are empty.

Two of the commercial units have entrances off the back alley of Sequel 138 remain empty.  (Jennifer Gauthier)

Vancouver psychiatrist Raymond Liang owns two of the units; StarMetro left messages at his psychiatry office over a period of three weeks. His secretary said he was overseas but confirmed he had received the messages. He had not responded to interview requests by publication time. The owner of the third commercial unit could not be reached for comment.

According to the Vancouver Sun, Liang has bought and flipped several condos in Vancouver’s Trump Tower, and several years ago was issued a fine by the Canada Revenue Agency for failing to pay tax on several condo flips.

The city is still hopeful the empty commercial spaces will be rented out eventually, spokesperson Ellie Lambert said.

The arts centre and community programming promised during public hearings and to the development permit board never came to pass. Williams claimed that was because of a “lack of support” from the Downtown Eastside community, which fiercely opposed the development.

“We just didn’t want the gentrification,” said Jean Swanson, a member of the Carnegie Community Action Project.

Arts centre promise can’t be enforced
The arts centre was originally supposed to be operated by an organization called the Canadian Foundation for Creative Development and Innovation. The society was headed by Sean Kirkham, who at the time was the proponent of a plan to memorialize murdered and missing Indigenous women with a series of bronze plaques.

But according to media reports from 2013, Kirkham never followed through on his plaque project. He failed to pay people who had been contracted to produce the plaques, and faced numerous fraud and theft charges in B.C. and Quebec. Kirkham died in 2016.

Detritus thrown out of the windows of the Regent Hotel often lands on the courtyard of Sequel 138.  (Submitted)

The city said it can’t do much when it comes to the arts centre promise. Unlike the requirement that the building’s paint colours echo the Pantages Theatre, a heritage building that once stood on the site, “there was not a requirement for events to take place,” Lambert said.

“The best recourse for anyone who wanted to challenge whether a permits condition had been met would be to file a complaint with the Property Use Inspections Branch. If the inspector determined that there was a discrepancy between the requirements and what was delivered, the city would follow up with the owner to satisfy the condition.”

Swanson said it’s unfortunate the arts centre never materialized: several arts spaces in the Downtown Eastside have recently been lost, such as a space in the recently sold Jubilee Hotel, and the Red Gate Arts Society, which must vacate its East Hastings location by the end of May.

In the time since the building was completed, homelessness has only grown worse in Vancouver, while an opioid overdose crisis has pushed life expectancy down in the Downtown Eastside.

no place for low income people to go

“There’s no place for low income people to go,” Swanson said. “They’re just finding any spot where there’s an overhang that’ll keep the rain off, and there’s a few of those in front of Sequel 138.

“So a lot of people sleep there.”

top  contents   chapter   previous   next