The Carnegie Centre is seen in the downtown eastside area of Vancouver, B.C., on Sunday, December, 23, 2012. THE CANADIAN PRESS/Jonathan Hayward

VANCOUVER - Herb Varley measures the transformation of Vancouver's Downtown Eastside by the trendy cafes, upscale grocery stores and high-priced salons that are quickly creeping from the city's maze of glass condo buildings toward the notorious intersection of Main and Hastings.

Fifty dollars for a haircut. Ten for sandwich. Three bucks for a doughnut.

An afternoon of that, and Varley, a 28-year-old who's currently living in social housing, would have spent away more than a quarter of the portion of his social assistance money that's set aside for food and other living expenses.

"There's a spa, there's a Brazilian jiu-jitsu place, these boutique shops that don't cater to low-income people," says Varley.

Varley, who was born in Vancouver but whose family is from the Nisga'a First Nation in the province's north, moved to the Downtown Eastside three years ago after a decade of sleeping on relatives' floors and friends' couches. He spent some time at a single-room occupancy hotel, living in a cramped room in a run-down building infested with bed bugs and cockroaches, before finding a suite recently in a native social housing building.

Last year, Varley joined the Downtown Eastside Neighbourhood Council and waded into an emotional debate about the future of the area, which has revealed deep divisions between activists, residents and politicians over how to fix its problems and what kind of community it should be.

"We have a very large, low-income population down here, but developers are trying to upscale the neighbourhood," says Varley. "I don't know where we're supposed to go."

Varley, the neighbourhood council and other activists in the neighbourhood decry the recent push to build condos and attract new businesses to the Downtown Eastside as harmful gentrification, which they argue will increase the cost of living and displace the low-income people who have lived there for years.

Vancouver's city council, the provincial government and developers behind such projects say the Downtown Eastside is going through a rejuvenation that will help the neighbourhood thrive and will actually bring in more affordable and social housing.

The Downtown Eastside is a neighbourhood best known by outsiders through a series of cliches and grim news stories: Canada's poorest postal code, where its gritty streets and alleys are strewn with stories of poverty and addiction. The home of the safe-injection site. The hunting ground of Robert Pickton.

About 18,000 people live in the Downtown Eastside, a relatively large geographic area that also encompasses Gastown, Chinatown, and the residential area of Strathcona. The most troubled part is a section known as the Downtown-Eastside/Oppenheimer District, located between the area around the Main and East Hastings intersection and Oppenheimer Park a few blocks to the northeast.

The unemployment rate in the Downtown Eastside is 11.3 per cent and nearly two-thirds of residents are considered low-income, according to a neighbourhood profile on the City of Vancouver's website. In 2006, the median household income was $13,691, compared with roughly $48,000 for Vancouver as a whole.

The debate about gentrification is, at its heart, a debate about how to help and house the people behind those statistics.

The city's current housing and homelessness plan relies on development to increase the number of social housing units and revitalize the neighbourhood.

Large housing developments within the Downtown-Eastside/Oppenheimer District must set aside 20 per cent of units as "social housing," an imprecise term that includes rental units offered at welfare rates, as well as suites that are hundreds of dollars above that but still considered "non-market."

The spirit behind that plan helped create the Woodward's Building, a massive condo project that rose out of site of the storied Woodward's department store two years ago. There are more than 700 units in the building, including 125 social housing units and another 75 family social housing spaces.

That policy has also driven two of the most controversial projects to come along since Woodward's -- an unnamed, 12-storey development known simply as 955 East Hastings and Sequel 138, a 97-unit building slated to be built right across the street from the Insite safe-injection site. Both received approvals earlier this year, despite protests and sit-ins at city council.

Coun. Kerry Jang says one of the city's only tools to generate more social housing is to create zoning bylaws that force developers to include housing for low-income residents.

He notes a municipal committee is currently developing a new local area plan for the Downtown Eastside, the first major look at zoning and housing issues in the neighbourhood since the city's previous housing plan was released in 2005.

The results of that process will guide future projects, but Jang says the city plans to continue working with developers.

"As provincial money dried up, we had to turn to the developer industry," says Jang, a member of Mayor Gregor Robertson's Vision Vancouver party.

"And there are more coming."

Jang insists the increased development is improving life in the area, helping low-income residents with housing that wasn't there before while fostering a diverse, vibrant community that can support businesses that everyone needs.

Hastings is still lined by a number of boarded-up storefronts and vacant lots, often coupled with crowds of people pushing shopping carts or hawking all manner of items laid out on the sidewalk. Drugs are sold and used in plain view.

But many of the derelict buildings along that street have been renovated in recent years and now house new stores and restaurants, sometimes flanked by private security guards.

The old Save On Meats butcher shop, with its neon pink pig hanging out front, re-opened with an expanded diner, which is often filled with hipsters and art students from the Simon Fraser University campus in the Woodwoord's building. Across the street, a "tasting room" serves handmade sausages and sells craft beer by the growler. Half a block from that, a "modern baby furniture" store.

Jang admits some of the newer stores and restaurants are out of reach of the area's low-income residents, but he points out others, like grocery markets and drug stores, can now sustain themselves and serve everybody.

"They call it gentrification -- I tend to call it a lifeline," says Jang.

"It's the only way to keep the area alive, because it doesn't work otherwise."

Both 955 East Hastings and Sequel 138 will include some form of social housing. Of the 353 units at 955 East Hastings, 70 will be city-owned social housing. At Sequel 138, nine units will be rented out at social assistance rates and nine others will be rented at higher rates set by BC Housing.

Sequel 138 developer Marc Williams bills the project as an arts-and-housing project, with an art space and an urban farm built into the design. Aside from the 18 rental units, many of the remaining condos are aimed at people making less than $67,000 through an affordable home-owner program backed by the Canada Mortgage and Housing Corp.

Williams says the mix of social housing and working-class incomes will add to the fabric of the community, and he says his fiercest opponents wouldn't be happy with any project he proposed.

"We wanted to be as sensitive as possible to the surrounding area and bring some positive change," says Williams.

"There are a small group of ideologues that maintain a very hard line. No matter what the proposal would be, they wouldn't be satisfied."

However, housing activists in the Downtown Eastside say those modest increases to social housing units will be offset by the effects of gentrification, as higher property values fuel rent increases at single-room-occupancy hotels and other housing for the poor.

"The model of getting a few crumbs out of new development doesn't work, because it causes rents to go up nearby and it causes land values to go up and we can't get the land we need for low-income housing," says Wendy Pedersen of the Carnegie Community Action Project.

"(Sequel 138) could be a model that opens up our Downtown Eastside to more like that, which could overwhelm the low-income community."

Pedersen says the effects of gentrification are easy to see.

Her group releases yearly reports tracking the number of single-room, low-rent hotels in the Downtown Eastside. In 2011, 10 private hotels with a combined total of 398 rooms were either upgraded or were in the process of upgrading, which often leads to rents increasing to up to $1,000 a month, the group says.

Such single-room hotels are the primary source of housing for low-income residents of the Downtown Eastside. There are roughly 3,600 units in privately owned buildings, says Pedersen, with another 1,400 in buildings owned by the provincial government or non-profit groups.

The city and the province have partnered to build 14 supportive housing projects. The provincial government also purchased two dozen existing single-room occupancy hotels in recent years in Vancouver, mostly in the Downtown Eastside.

But Pedersen says that housing still isn't keeping up with the need, and she argues new development should be restricted exclusively to social housing.

Pedersen says the goal should be to ensure the Downtown Eastside remains a healthy, low-income community, where residents have the housing and services they need and feel comfortable among their neighbours.

To do that, she wants the city to buy land in the Downtown Eastside and the provincial government to use that land for housing. Right now, she says both levels of government are failing.

"What we want is our housing first, and maybe then you can squeeze in some condos. But not before."

B.C.'s housing minister, Rich Coleman, lets out a laugh at the suggestion his government isn't doing enough to ensure the poor can find housing.

He points to the new supportive housing projects and the province's decision to buy single-room occupancy hotels. He says there are other provincial programs, such rent subsidies, that allow low-income residents to find places to live without the need to create new housing from scratch.

"Some of them want to have government build and operate all housing in B.C., and that's just nonsensical," says Coleman.

As for the Downtown Eastside, Coleman doesn't see the accusation of gentrification as an accusation at all.

"Gentrification by itself isn't a bad thing," says Coleman.

"There's nothing wrong with people who are in an intermixed community. You can't just say, 'Put everybody in one place and put a fence around it.'"

Karen Ward was among the first tenants to move into the social housing portion of the Woodward's Building two years ago.

Ward, 38, has bipolar disorder and post-traumatic stress and currently lives on disability payments. Before Woodward's, she was living in a single-room unit -- with no bathroom, no kitchen and walls that were a stone's throw from loud railway tracks -- on the edge of the Downtown Eastside

Ward is being pulled at from both ends of the debate. On the one hand, she's benefited enormously from moving to her new home at Woodward's. On the other, she, too, is convinced such developments are gentrifying her community.

"When I moved from my last place into Woodward's, I could go home and shut the door and no one's going to bother me -- I could feel safe again," says Ward.

"That being said, the effects are in a complete circle around Woodward's. All of the businesses around us, the grocery store -- they're not for low-income people."

News from © The Canadian Press, 2012