Calgary Secondary Suites Debate Heats Up

This post originally appeared on Hayes Homes (http://hayeshomes.ca/).

By Sean Hayes

Recently Andre Chabot wrote an editorial in the Calgary Herald. Andre has always been against Secondary Suites and he recently tried to dispell some “myths”. All his editorial did was show me what he does not know about secondary suites. There has yet to be a logical argument for not allowing secondary suites in Calgary. The city is growing and will continue to grow. We need to provide more density within the city, especially close to transit and the core. I have already done a Hitler video which points out some of the very illogical arguments against secondary suites such as parking, tenant concerns and home values. But now Andre is attempting some fear mongering saying the legalization will only create MORE illegal suites and they need to focus on all the current illegal ones. I want to make my point very clear – THE REASON THERE ARE SO MANY ILLEGAL SUITES IS BECAUSE THE CITY DOES NOT ACTIVELY SHUT THEM DOWN. ONCE THE CITY STARTS DOING THIS, MOST OF THE SUITES CANNOT BE LEGALIZED UNTIL THE ZONING CHANGES.  

So you can skip reading my response to the editorial because that is my main point. The city has turned a blind eye to secondary suites and if they want to start enforcing the rules without changing zoning then they will be removing affordable rental options from the market. Is that the right decision for Calgary in the long term? 

Let me know what you think and if you are interested in receiving a kick ass newsletter on real estate investing email – reiasean@hayeshomes.ca 

(Andre’s article is in black, my response in red)

Editorial from the Calgary Herald – May 7th 2015 

On Monday, a proposal is coming before city council to have a blanket land-use approval for four inner-city wards. Proponents say it will create more affordable housing options and help to legalize the thousands of current illegal and unsafe secondary suites in Calgary.

A blanket land-use approval of secondary suites will not create an influx of legal suites, but may have unintended consequences, such as encouraging more illegal suites to develop because of the belief that land use is what is preventing them from being built.

This will only happen if YOU (the city) let it happen. A false belief comes from poor education. Why are people not educated on land use? I could think of many reasons but maybe it’s because of the complication. Did you know RC1N is discretionary use for a secondary suite, do you know what that means? You might, but a majority of people in my industry do not and they are real estate investors. So I wouldn’t expect the general public or the average realtor to know this. Zoning is typically complicated unless you simplify it and then educate.  The city does an excellent job of providing information via 311 and online but what else can you do to solve this potential issue? Simplification would be the ultimate solution. Edmonton is the best case study to prove this. In Edmonton you can suite almost any detached home if you comply with building code. When this passed many years ago do you think it encouraged more illegal suites?

I think you are making the assumption that people will build without a building permit or any permits (electrical, plumbing, HVAC, gas). The current permitting system in place should catch suites being built that do not have the proper development/building permits. For example, an electrical inspector will see a 220V fixture going in and make the assumption it is for a stove and inform the resident they require a DP/BP to build a secondary suite.

This is also taking the focus away from the most important issue, the tens of thousands of illegal, unsafe secondary suites that currently exist in Calgary, which will not become legal with a blanket land-use approval.

You are right that the most important issue is the illegal unsafe suites. So who is to blame for all of these illegal suites? Who has turned a blind eye for so many years and only acted on “complaint basis only.” The city does not actively shut down illegal suites. Why? It would be so easy to assign one person in city hall to search MLS listings and rental listings online to find literally 100’s of illegal suites. Then you can send out the standard letter informing of an inspection to check for compliance. So why does the city not do this? Edmonton is doing this. Do you know why? Because they have made is EASY for residents to provide safe secondary suites in almost any detached home. They also provide CASH with the cornerstone grant to residents if they keep rents at market rate for so many years.

You’re right that all the illegal suites will not become legal with a blanket permit, BUT a blanket permit will allow all illegal suites to become legal.

In order for council to have an informed debate, we must first dispel the myths that are holding us back from moving forward to find concrete solutions. These myths include:

* The belief that land-use redesignation will create legal suites. All suites are illegal until they comply with the Alberta Building Code, legislation which council has no authority over.

You are right but the problem is a lot of illegal suites are in areas that are not zoned to allow legal suites. So what is your point here? Who is responsible for increasing education on the requirements of a legal secondary suite? How much funding does that department have? Can this funding be increased by council?

I could think of 10 – 15 different CHEAP ways to provide education on this matter. Package this with the rollout of blanketing WARDS 7,8,9,11. I have already offered to help, for free, in an education and a marketing campaign. I am sure there would be other volunteers.

* Blanket approval will not empower anyone to bring illegal suites into compliance. The city currently has more than 80,000 properties that have the appropriate land use for secondary suites, and yet many of these properties currently contain illegal suites, which is evident from the fact that there are less than 500 legal suites in Calgary. This demonstrates that it is not the land use preventing secondary suites from becoming legal.

You are right, there is no incentive for landlords to bring suites up to code. I have spent LOTS of money legalizing our properties and all I got was a hard time from inspectors and headaches at city hall. So how are YOU going to change this? Like I said, the city operates on a complaint basis only. If speeding laws were not enforced do you think everyone would go the speed limit? Even when landlords get illegal suites shut down by the city most of them have them up and running again the next day. The system is BROKEN but in order to fix it you must give landlords the opportunity to bring suites up to code and the biggest challenge there is the ZONING.

* In addition, all new R1 subdivisions are zoned for secondary suites, and even though there are no impediments for the development, there have been very few development permit applications to develop legal and safe secondary suites in these areas.

Maybe people in the suburbs do not want a secondary suite? They seem to be popular close to transit and downtown. Mainly in wards 7,8,9,11…..

* Secondary suites will not create an influx of housing options. Based on the current market absorption for secondary suites, Calgary has more than a 240-year serviced land supply for secondary suites and only 2.5 years of serviced land supply for new homes. This lack of serviceable housing supply for new homes is contributing to the increase in housing costs.

Density is the solution to housing supply. Just look across the pond at most major European cities. We can’t keep sprawling out towards Airdrie. Secondary suites are an easy way to provide density in certain areas around transit and the core. They also allow people to have a mortgage helper that can’t afford a $500,000 house.

* Affordability is not directly tied to legal secondary suites. In fact, the opposite is true. Affordability is tied to illegal, unsafe suites. Legal suites are typically rented at market value due to the significant cost to comply with the Alberta Building Code.

That statement holds no fact and I can prove it with my portfolio. The market and the condition of the suite will dictate the rent of the suite. Having a second furnace and being legal has not got us more rent BUT an updated kitchen and bathroom does.

* Applying for a secondary suite is not going to be less expensive with a blanket approval. Last year, the city waived the $7,000 land use redesignation and development permit fees for secondary suites. The greatest cost for secondary suites is associated with complying with the Alberta Building Code.

The fees waived are for people applying with zoning that is not permitted or discretionary use. As an investor I would not purchase a property that I would have to get the approval from city councillors to put in a legal suite. TIME is money for a real estate investor. Typically a Development permit and building permit takes us 8 -12 weeks for a RC-2 property. A land use redesignation can take up to a year and has a lot of risk. So you are wrong here, a land use designation change will be less expensive and more attractive for investors.

* You don’t have to plead your case before council. Many people voluntarily choose to come and inform council of their intent for a land-use redesignation — this is not a requirement. A lot of properties have received approval from council without anyone coming to present on behalf of the application.

Pleading in front of council or having council spend time on approving basement suites is a colossal waste of time. The process should be used on larger developments that actually have impact on a community. If the parking is available and the suite meets proper building and fire code then it should be allowed. The RED TAPE in place now is ridiculous and it takes much too long.

* Applying for a secondary suite is already straightforward. If you already have the appropriate land use, you can immediately apply for a development and building permit. If you don’t have the permitted land use, you can apply free of charge for a land-use redesignation and development permit.

Yes the process is straight forward but not easy. There is still a lot of red tape that could be cut.

* Additionally, this past March, council unanimously supported my proposal to create an 18-month amnesty, whereby properties that already have the permitted land use do not even have to apply for a development permit and can go directly to a building permit. This is in conjunction with creating an online public database promoting where legal suites exist, making it easier for renters to identify and find safe suites.

So this proposal points out how much red tape was in place. A process that would have taken us a minimum of 8 weeks will soon only take ONE DAY! I almost fell off my chair when I heard about this.

Therefore, I believe that council should first try to encourage property owners to convert their unsafe, illegal secondary suites or build new suites in areas that are already appropriately zoned prior to opening up the land use to established single-family residential areas.

I agree council should encourage property owners to convert unsafe and illegal secondary suites. The MAJOR PROBLEM is that most of them are in areas that have zoning that does not allow it. Council does not have any incentive for landlords to convert them AND not everyone if going to want to put a suite in. I am an active real estate investor who HUNTS for properties I can put legal suites in. There is NOT a lot of selection out there.

There needs to be changes with zoning if city hall wants to start actively shutting down illegal suites. STOP stalling a situation that Calgary is already light years behind. If you want legal suites in Calgary then you MUST change the zoning and then educate and inform.

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