The Ironies of Vancouver: The Post-Gentrified City

Vancouver       Vancouver in British Columbia, Canada may be a case study of the post-gentrified city.  Average housing prices have dropped all the way down to $1.4 million per house.  The Vancouver Sun reported that a Habitat for Humanity house had sold for $330,000.  ACORN Canada’s office and all of our groups are in the working-class suburbs of Burnaby, New Westminster, Surrey, and other communities.  It is difficult for low and moderate-income families to afford to even think about living in Vancouver.

The government is progressive.  Leadership has been stable with an excellent and forward-thinking mayor in Gregor Robertson for a number of years.  There is no lack of people trying to do the right thing.  There is no confusion at the top or at the bottom of the economic and political ladders that housing is unaffordable.

So, what does Vancouver do to assure that housing is affordable and to prevent the city from just become the living and working space for the rich and elite?

While in the city for the ACORN Canada board meeting and annual general meeting, the next four years city budget for capital or big construction and development projects was published.  The capital budget is big time for the coming four years, $2.6 billion.  Surprisingly though, 55% of that budget or $1.44 billion the Sun reported are “earmarked income from ‘development contributions,’ which are raised by charging real estate developers.”  At first glance, we might say that’s great, “Make them pay!”  At second glance it is hard not to think that the city of Vancouver may be riding the sharks as much as regulating them.  If developer money is funding so much of capital expenditures, then the city also depends on new development, which gives developers a lot of leverage

In fact, when it comes to affordable housing and child-care spaces, which many might argue are the top priorities for lower income and working families in the city, the capital budget is scary.  First, it only provides for 1200 to 1600 nonmarket rental house and 1000 child-care spaces, which annually is only 300 to 400 units per year and 250 child care spaces. That’s way too little.  The fiscal number for the construction was $539 million and the budget says that 99% or $535 would come from development contributions, meaning the city and its taxpayers have zero skin in those projects.  For the $117 million for child-care development contributions are 94%.

The Sun helpfully defines these development contributions.

“Development cost levies…are typically a standard calculation.  Community amenity contributions tend to be individually negotiated between the city and a developer over rezoning for a specific project and can be paid in straight cash or the building of an on-site amenity such as a pool or community center.”

One is a tax and the other is what we would normally see emerge from community benefit agreements, although it almost seems like the developer is driving the decision to benefit their own project, rather than the community or the city.  An amenity would seem to accelerate the rewards for gentrification as well.

It would seem like a rich, gentrified, progressive city like Vancouver could – and should – be doing so much more.

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Payday Lending is All About the Pyramiding the Loan, not the Payday

Little Rock   With the admissions that the bigger-than-God-and-government banks are skimming gazillions in profits from predatory payday loans, some welcome sunlight is shining on the dark caves of financial services for workers trying to stretch the money to make the month or deal with emergencies.  The Pew Research Center released a report on some of the experiences of payday lending consumers that seems to match a similar study from ACORN Canada of practices there more than 5 years ago.

Pew’s summary of their findings is straightforward:

“Pew’s survey results reveal that people choose these loans to avoid outcomes like long-term debt, borrowing from family or friends, overdraft fees, and cutting back further on expenses. But the average loan requires a repayment of more than $400 in two weeks, the typical duration, when the average borrower can only afford $50. When borrowers have trouble paying off the loan, they return to the very same choices they initially tried to avoid.”

Additionally, Pew said that, “the average payday loan is $375. Americans spend $7.4 billion per year on the loans, including an average of $520 in interest per borrower who ends up indebted for five months of the year.”  As terrible as that sounds, the ACORN Canada study found far worse, even though the general legal climate for payday lenders, which we campaigned on aggressively and with significant success in several provinces, is better in Canada.  We found in a more extensive survey that on average it took 14 months for payday borrowers to escape the payday lenders.  The first loan generally initiated a cycle of something akin to borrower “recidivism” that put the loan victim on a yo-yo back and forth with new and adjusted loans before they were bounced out or escaped with loans outside the system.

The Pew figures are bad enough when the reality emerges that interest overwhelms the initial loans.  Reading the study, it would also seem that the Pew figure does not include the additional bank charges and fees triggered through the collection process through automatic bank drafts, NSFs, and surcharges.   At the same time Pew finds that “while payday loans are often presented as an alternative to overdrafting on a checking account, a majority of borrowers end up paying fees for both.”

The industry association claims to the New York Times that the “typical fee” is $10 to $15 on $100 borrowed, which is obviously complete balderdash.

This study, our study, and a million others cannot alter the fact that these loans are predatory, essentially because they can be.  Families desperate for money to bridge gaps and emergencies see no choices and therefore with eyes wide open march to the slaughter of these outfits, until drowning or pulled ashore when forced to confront their own embarrassment.  Nonetheless the industry can lie brazenly, since they and their bankers know no shame.  Predation is the business model.

 

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