Vancouver’s Rent Bank

The Vancouver Rent Bank: Background, Operation, Analysis
Oren Newson
August 6, 2013

October of last year saw the official opening of the Vancouver Rent Bank (VRB), one of the latest initiatives undertaken by the City of Vancouver in its struggle with the issues of homelessness and housing affordability. The Vancouver housing environment is characterized by the most expensive rental and ownership prices in the country,[1] the highest provincial average of household debt,[2] and a string of municipal policy initiatives aimed at combating homelessness and supporting low-income residents.

The VRB provides emergency one-time financial assistance to low-income individuals and households in danger of eviction by offering interest-free loans of $500, $800, and $1300 for a maximum of two years. It considers applications for loans to cover rental or utility arrears, past due rent, and needed security deposits or first months rent. The bank, which does not provide loans to Vancouver residents already receiving social assistance, is the fourth of its kind in the province and joins the Prince George Rent Bank, the Fraser Valley Rent Bank, and the Surrey Rent Bank, all of which began operating in the last four years. While figures for the number of loans administered by the VRB will likely be released annually, by January of this year it is stated to have provided 48 loans, and received 58 applications.[3] This comment reviews the economic rationale for the VRB, and contextualizes the Rent Bank as a policy instrument in North America and in the Vancouver market.

 Rent Banks in North American Housing Policy

Emergency financial assistance to prevent evictions originates in recognized and institutional form as the Connecticut Eviction Rent Bank Program in 1989, which preceded similar programs in Virginia, Mid-Maine and New Jersey – all of which are recorded as being successful in preventing the displacement of households and the costs associated with evictions and homelessness.[4]

The first Rent Bank program in Canada was established in 1998 in Toronto as part of the Mayor’s Homelessness Action Task Force and implemented by several community agencies.  The Toronto pilot successfully administered 37 loans with a target demographic of female sole parent households.[5] Though only initially in operation between 1998-2000 (it has since restarted), the Toronto project would influence the development of a rent bank in Ottawa-Carelton, the Ontario Rent Bank Network, and future banks, including three in British Columbia. By 2005 there were 11 eviction prevention programs in Canada offering financial assistance.[6]

The Rent Banks of B.C. all operate similarly to the VRB (with the exception of the Prince George Rent Bank – which offers grants in addition to loans) and are funded by a variety of public and private sources. They have been acknowledged in private research as being cost-effective, having high-levels of client and landlord satisfaction, and contributing to housing stability.[7]

The Rent Bank Strategy

A successful Rent Bank prevents not only displacement and household evictions but also the associated costs. A study undertaken by the CMHC in 2005 estimated the average cost of an eviction to be $2,234 for a household, $6,000 for a landlord, and between $2,500-$10,000 for government service providers involved in housing and homelessness.[8] These figures are often compared to the administrative costs of running eviction prevention programs.[9] [10] The annual administrative cost of the VRB is estimated at $49,000 – separate from its loan fund which has been privately donated.

While a rent bank/eviction prevention program can be supported easily in cost-benefit terms, theoretically they can also serve a specific function within the housing-eviction-homelessness dynamic. Two notable academic studies produced in the late 90s and early 2000s on homelessness in the United States each reported findings that a large percentage of homeless shelter users were homeless for a single episode only (one-time users of shelters), with whole families being the least likely of shelter users to remain homeless for serial or extended periods.[11] [12] This demographic, referred to as the “transitionally homeless”, is recognized as the group most able to benefit from the operation of an eviction prevention program.

Frequently cited factors contributing to a transitional episode of homelessness for an individual include: housing affordability, percentage of income spent on housing, and available sources of credit and small loans in a community. Ideally a Rent Bank is an available safety net for a low-income household not supported by social assistance in the event of a rental arrear.  The successful administration of a rent bank loan prevents a household from experiencing a “transitionally homeless” phase and all of its involved costs to the household itself and the community. In this way Rent Banks serve a distinct policy purpose and can be considered separately from other homelessness or housing initiatives.

A Rent Bank in Vancouver

The proposal for the VRB was unanimously approved by City Council in 2012. Despite becoming operational under the present Vision Vancouver centrist party which enjoy a majority in City Council, a rent bank for Metro Vancouver was originally proposed by the COPE Government of 2005.  The COPE conception of the bank was one that would provide grants in addition to loans.[13]

The City of Vancouver has pledged a total of $149,000 for the bank’s administrative costs over a three-year term. The VRB’s loan fund of $150,000 per year has been provided completely by Streetohome Foundation. Streetohome, established in 2008, is a partnership between the City of Vancouver and the Vancouver Foundation and acts as charitable investment vehicle for some of the business wealth in BC. Leading individuals in real estate, property development, mining and finance comprise its board of directors. The VRB’s operating fund of $150,000 has been provided exclusively by mining billionaire and philanthropist Frank Giustra, who sits on the Streetohome’s board of directors.[14] There have no been no announcements made regarding long-term funding for the VRB past 2015.

The newly opened VRB is not the first Rent Bank to operate in Vancouver. The Ray-Cam Community Centre on East Hastings in the Strathcona neighborhood began providing one-time emergency financial assistance from a $5,000 loan pool in 2008. The Centre advocated strongly for their program, believing the provision of small loans for rent was capable of making a difference within the Strathcona community.[15] The program at Ray-Cam became integrated within a larger initiative coordinated by the Network of Inner City Community Services Society (NICCSS). The NICCSS, who administer the VRB, is an umbrella consortium of community, resident and consumer groups engaged in the delivery of services in Metro Vancouver.  The NICCSS expects the VRB will assist between 150-200 households a year.

Criticisms

Independent Vancouver media outlet “The Mainlander” has criticized the VRB as being a demand-side solution which does not truly promote housing stability in the context of Vancouver’s small rental housing stock and its high-priced rents. The online publication additionally attacks Streetohome/Frank Guistra’s Radcliffe Foundation as the VRB’s primary funding vehicle, citing tax evasion as Guistra’s overriding motivation.[16]

Similarities can be drawn between the VRB and British Columbia’s Rental Assistance Program (RAP) – a grant available to low-income households which covers the missing difference between what they can afford to pay for shelter and what the cost of their rent is. The RAP has been questioned as an effective policy to promote housing stability by the Canadian Centre for Policy Alternatives (CCPA). The CCPA has documented concerns regarding the RAP’s fixed allocated amounts to households which do not adjust to rent increases, its lack of availability to households earning $35,000 or more, its under-advertised state, and claims that in low-stock rental markets it can act as a direct transfer to landlords as households compete for housing.[17]

Special thanks to the Department of Economics for aiding with the preliminary research for this comment.


[1] Rental Market Report — Canada and Provincial Highlights. Rep. no. 64667. Ottawa: CMHC, 2012. 1. – https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?lang=en&cat=59&itm=24&fr=1370930986710

[2] BMO Financial Group. Corporate Communications. BMO Household Debt Report: Half of Canadians Expect to Be Debt-Free by 2017. Bank of Montreal, 6 June 2012. Web. <http://newsroom.bmo.com/>. – http://newsroom.bmo.com/press-releases/bmo-household-debt-report-half-of-canadians-expec-tsx-bmo-201206060796364001

[3] “Report Card Shows Vancouver Exceeding Housing Targets, on Track to Meet Homelessness Goals.” Mayor of Vancouver. City of Vancouver, 12 Feb. 2012. Web. <http://www.mayorofvancouver.ca/>. – http://www.mayorofvancouver.ca/housingreportcard

[4] Laplante, Marie-Claude, Barbara V. O’Connor, Caroline Andrew, and Tim Aubry. Needs Assessment for a Rent Bank Project in the Region of Ottawa-Carleton Final Report. Rep. Ottawa: Faculty of Social Sciences, University of Ottawa, 1999. 2. – http://www.socialsciences.uottawa.ca/crecs/pdf/RentBank.pdf

[5] Ibid, 10.

[6] Cost Effectiveness of Eviction Prevention Programs. Rep. no. 64906. Ottawa: CMHC, 2005. 2. – https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?cat=44&itm=75&lang=en&fr=1370931680632

[7] Bowles, Paul. Evaluation of Rent Banks in British Columbia. Rep. N.p.: PEB Consulting, 2011.

[8] CMHC, Cost Effectiveness, 3.

[9] Laplante et. al, 37.

[10] CHCM, Cost Effectivness, 5.

[11] Burt, Martha. “Homeless Families, Singles, and Others: Findings from the 1996 National Survey of Homeless Assistance Providers and Clients.” Housing Policy Debate 12.4 (2001): 747, 750. Urban Institute. Association for Public Policy Analysis and Management. – http://www.homelesshub.ca/library/homeless-families-singles-and-others-findings-from-the-1996-national-survey-of-homeless-assistance-providers-and-clients-20088.aspx

[12] Culhane, Dennis P., and Randy Kuhn. “Patterns and Determinants of Public Shelter Utilization among Homeless Adults in Philadelphia and New York City.” Journal of Policy Analysis and Management 17.1 (1998): 41. Selected Works of Dennis P. Culhane. Penn Libraries. – http://works.bepress.com/dennis_culhane/39/

[13] Davidson, Jill. Revised Homeless Action Plan. Rep. no. 4933.4659. Vancouver: City of Vancouver, 2005. – http://vpl.bibliocommons.com/item/show/1286559038_homeless_action_plan

[14] Carman, Tara. “Philanthropist’s Funding to Help Start Vancouver Rent Bank.” The Vancouver Sun.14 Oct. 2011: n. pag. Vancouversun.com. Pacific Newspaper Group Inc., 14 Oct. 2011. – http://www.vancouversun.com/business/Philanthropist+funding+help+start+Vancouver+rent+bank/5552326/story.html

[15] Bula, Frances. “Vancouver Program Will Give Loans to Poor People Facing Eviction.” The Globe and Mail 21 Mar. 2012: n. pag. http://www.theglobeandmail.com/. Globe Media Group, 21 Mar. 2012. – http://www.theglobeandmail.com/news/british-columbia/vancouver-program-will-give-loans-to-poor-people-facing-eviction/article536246/

[16] Crompton, Nathan, Andrew Witt, and Tristan Markle. “Financial Crisis and Tax Evasion: Unpacking Vancouver’s Rent Bank.” The Mainlander. The Mainlander Writing Society, 16 Oct. 2012. – http://themainlander.com/2012/10/16/financial-crisis-and-tax-evasion-unpacking-vancouvers-rent-bank/

[17] Klein, Seth, and Lorraine Copas. Unpacking the Housing Numbers: How Much New Social Housing Is BC Building? Rep. Vancouver: Canadian Centre for Policy Alternatives, 2010. – http://www.policyalternatives.ca/publications/reports/unpacking-housing-numbers

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