Displaced & Transformed: The Condo Effect on Montreal

Concordia Undergrads Find Rental Housing Decreasing in La Petite-Patrie Due to Condo Conversions

NewsMichael Wrobel — Published January 17, 2014 | Updated January 21, 2014 at 3:36am

Some equate gentrification with the renewal of run-down inner-city areas, while others fear that it transforms poorer neighbourhoods beyond recognition, thereby alienating longtime residents and leading to their displacement as rents and property values skyrocket.

It’s no surprise, then, that gentrification polarizes opinion. In Montreal, the tensions between “gentrifiers” and “gentrified” have sometimes gotten heated, with spray-painted anti-capitalist slogans finding their way onto billboards advertising new condo developments and on businesses’ displays.

Occasionally, reactions to gentrification have been even more extreme. Last November, vandals in Hochelaga-Maisonneuve smashed the windows of four upscale restaurants in the neighbourhood. In 2004, another anti-gentrification group planted six packages disguised as bombs at condo construction sites in the city’s East End.

Last week, 25 Concordia undergraduates and their professor waded into the turbid gentrification debate. They put in roughly 2,000 hours of research last semester to determine how gentrification is affecting the little neighbourhood of La Petite-Patrie. They unveiled their findings at a press conference last Thursday.

A moratorium on condo conversions was introduced nearly 40 years ago, but that hasn’t stemmed the gentrifying tide. The Concordia research study shows a steady decline in the availability of rental housing as more and more triplexes are being turned into condominiums.

The Research

No matter which side you’re on in the gentrification debate, the study’s findings are surprising: they show the proportion of rental units in La Petite-Patrie has decreased from 96 per cent of units in 1991 to 77 per cent of units in 2013.

The study, led by Concordia professor Ted Rutland, also found that gentrification has affected some blocks more than others.

Take St. André St., for example. The proportion of buildings offering rental accommodations dropped from 93 per cent, or 150 buildings, in 1991 to 35 per cent, or 57 buildings, last year.

The students arrived at these numbers by analyzing 3,401 triplexes in the district, using government databases. The study was conducted in partnership with the Comité logement de la Petite-Patrie, a local tenant rights organization.

“[The research project] comes out of the tradition of trying to treat the city as a learning space […] but also contributing to it,” Rutland said.

Not only did the study find a reduction in access to rental housing, it also shows that nearly half of condo conversions in La Petite-Patrie use the undivided co-ownership model, while the other half used the divided co-ownership model.

Under undivided co-ownership, a building is owned collectively by all of its residents, with each resident owning a percentage of the whole building. The units aren’t divided into separate lots, but a management agreement may stipulate which unit is to be used by each resident.

In contrast, divided co-ownership seeks to financially and legally separate each owner. Each resident owns only the specific unit they live in, as well as certain common areas like a backyard. This model is the one typically used in newly built condominium complexes.

Undivided properties were traditionally seen as a riskier investment, as lenders previously offered only one mortgage for the entire building—linking the financial futures of each co-owner.

Today, however, some lenders will provide individual mortgages to each co-owner, and insurance protects the co-owners in the event that one of them should be unable to pay their mortgage. Because taxes are calculated based on the whole property’s value, co-owners in an undivided building also pay lower taxes.

In 1975, the provincial government implemented a moratorium on the conversion of apartment buildings into condominiums using the divided co-ownership model. The goal was to preserve the amount of rental housing available, reducing the vulnerability of renters.

The moratorium remains in place in Montreal to this day, though the students’ research calls into question its effectiveness as government policy. The moratorium does not regulate the conversion of a rental property into an undivided condo building, which is now as common a form of co-ownership as divided properties are.

Rutland said the ease of turning a rental property into undivided condos is one of the mechanisms through which gentrification is taking place in the neighbourhood while going almost entirely unnoticed by residents.

“Most of us who live in a gentrifying neighbourhood would notice if they tore down a bunch of buildings and built new condos, or if they built new condos in a previously vacant lot—it’s very visible,” he said.

“But the conversion to [undivided co-ownership] is something that happens behind the walls of buildings. Sometimes, it’s just a change in legal structure where, all of a sudden, a triplex that was rented out to three tenants is […] in co-ownership and you don’t see anything.”

Martin Blanchard of the Comité logement de la Petite-Patrie says the moratorium currently in place is ineffective because it doesn’t address the undivided co-ownership model.

“A solution would be that undivided ownership stays as undivided ownership, not to create some type of pseudo-divided ownership in undivided ownership,” he said, referring to the protections and benefits that co-owners in an undivided building now enjoy.

“It’s kind of fiscally unfair that people who have a divided condo pay much more tax than people who are in the undivided condos, while [in terms of] the market value, these [properties] are almost the same.”

The Pros and Cons of Gentrification

But should we be truly concerned by gentrification? Opinions are mixed on whether gentrification is a positive or negative phenomenon.

“You’ll hear people talk about gentrification when they’re generally on the negative side of the issue, and you’ll hear people talk about economic revitalization if they’re more positive about it,” says Concordia professor Peter Morden of the rhetoric involved in the debate.

In addition to displacing the residents of traditionally disadvantaged neighbourhoods through higher property values and rents, he notes that one of the negative consequences of gentrification is “greater pressure on the social infrastructure, [such as] ballparks and community centres, when there are a couple of competing groups for those kinds of spaces.”

“Is it the case that not-for-profit youth sports [are] offered? Or is it the case that there are seniors’ leagues for some of the gentrifying population that would be willing to pay for the ice time? These kinds of competitions for scarce public resources can come up as well,” he said.

But gentrification may also have some positive consequences on neighbourhoods, says McGill University urban planning professor Raphaël Fischler.

“It diversifies the economic base of the neighbourhood with different stores, restaurants and cafés,” he said. “A wider range of services becomes available. Some of them are not accessible to the population that was there before because of price differences, but overall, it enlivens the neighbourhood to a certain extent. It brings more people into the neighbourhood, more activity.”

Fischler also noted that gentrification can benefit cities’ coffers, as higher property values lead to more tax revenue. The neighbourhood’s physical infrastructure may also be improved either to set gentrification in motion or to respond to the needs of the population moving in, he said.

Investments in infrastructure should be made regardless of whether or not an area is undergoing gentrification, however, argues Fred Burrill of P.O.P.I.R. – Comité Logement, an association of tenants in Montreal’s Sud-Ouest borough, which includes gentrifying areas such as St-Henri.

“I think that the argument that people make for gentrification is that it brings with it a certain emphasis on green space and a building-up of the neighbourhood in terms of infrastructure, but those are things that should be done anyway,” he said.

“I think it’s important to break the link between gentrification and positive public investment.”

According to P.O.P.I.R. – Comité Logement, the solution to the problems caused by gentrification lies in building more social housing.

“We think that, in fact, the private market can’t solve the housing crisis, can’t meet the needs of the vast majority of low-income people who need housing, and that the only thing that can do that is the widespread construction of subsidized social housing,” said Burrill.

But for Annick Germain, a professor and researcher in the field of urban sociology at the Institut national de la recherche scientifique, the contemporary debate on gentrification and research into the topic largely misses the mark.

She said the term “gentrification” and its French-language equivalent “embourgeoisement” have been co-opted by individuals involved in an ideological debate and are no longer useful as a subject of academic analysis.

“These are notions that help groups make demands, and I find that it’s no longer a concept that is as useful as it used to be for doing research,” she said. “We put under the terms ‘gentrification’ and ‘embourgeoisement’ a ton of phenomena that are very different.”

Historically, she says, a lot of working-class people were indeed displaced by gentrification as other social classes moved into their neighbourhoods and property values rose.

“But today, things are more complicated and it’s reductionist to classify everything that’s going on in formerly working-class neighbourhoods under the term ‘gentrification,’” she continued.