Many vacant properties missed by Vancouver’s new tax

This article was originally published at the Vancouver Observer.

Imagine a home on the west side of Vancouver valued at $3 million. It’s unoccupied. The owners live in the United States, but have declared the home – their only property in Canada – as a principal residence. For them, it’s an investment property.

With a vacancy tax of 1%, the owner should pay $30,000 per year. But under new “empty home tax” rules, city hall will turn a blind eye to all supposed primary residences, and collect nothing.

For every 100 homes like this in Vancouver, the city is losing $3 million it could use to build real affordable housing every year.

According to the city’s recent study, over 10,000 homes are being left vacant all year round, and over 20,000 for 10 months of the year.

But city council has decided against measuring whether a property is actually empty, claiming that audits would be too difficult. Instead, they will be targeting only secondary homes, which may be inhabited.

Council is giving a few other reasons for excluding all supposed principal residences.

They point to snowbirds who live half the year south of the border. But the tax could simply be re-written to exempt homes occupied for more than 6 months of the year.

Ironically, by targeting secondary homes instead of empty ones, city hall will now end up taxing many snowbirds who spend much of their time here but have a principal home elsewhere.

The city also mentions professors who have sabbaticals overseas. But there is already a process for exemptions, and that’s a straightforward exemption.

Why is this important to me? I proposed a vacancy tax when I ran for mayor in 2014. At the time, the other parties did not support the tax. They said it wasn’t possible, that the provincial government would never change the Vancouver charter to allow it.

I’m happy that they have taken almost all my ideas, and I’m even happier if people start to realize that anything is possible if we dream big, organize, and fight for it.

But I’m worried that the program may not succeed. I don’t want this to turn into yet another botched solution to our housing crisis.

Failed city initiatives like Mayor Gordon Campbell’s abortive Vancouver Land Corporation in the 1990s, Gregor Robertson’s tiny Rent Bank, and the unaffordable “rental 100” program, just leave the public cynical about the possibility of tackling the housing crisis.

The NPA is already arguing that the tax is too expensive to administer and won’t generate enough revenue to be worth it.

If the program is too small, and doesn’t apply to enough actually empty properties, it won’t increase housing supply or bring in enough money for the city to build new affordable units.

Meanwhile, many homes will remain vacant, while some people will be taxed for homes that are lived-in. Council has heard testimonies about such cases this week.

The NPA can then point to these shortcomings and promise to cancel the program in the next election. Will support for the tax be strong enough to push back?

If we want an “empty home tax” worthy of the name, we should actually tax all the homes that are empty. If you can afford to leave it empty, you can afford to contribute to the affordable housing fund.

Vancouver may forego hundreds of millions of dollars earmarked for affordable housing

A version of this article was published at the Georgia Straight.

Vancouver city council may forego hundreds of millions of dollars of revenue earmarked for urgently needed affordable housing.

When Vancouver finally gets some form of rapid transit on Broadway, the city will collect a mind-boggling sum of taxes from new real estate developments along the corridor. Current rules say the city must use these taxes for social services like affordable housing.

Recently (Wed Oct 19) Green Party Councillor Adriane Carr asked for council’s commitment to keep the money for housing. But Mayor Gregor Robertson and his Vision councilors struck her motion down, keeping the door open for Vancouver to funnel the money into transit.

There’s no need for the city to let go of this crucial revenue source. The Federal government recently agreed to fund 50% of the capital costs for new transit developments. The Metro Vancouver mayors’ council was absolutely right in 2014 when they told the Provincial government to earmark $250 million in carbon tax revenues for transit expansion — and I would add transit affordability. That’s just common sense.

In Hong Kong, where I grew up, real estate development does help fund their mass transit system. Some people blame Hong Kong for the “development-funded transit” model, touted by real estate developers from New York to Vancouver. But if you look more closely, Hong Kong’s approach is more complicated. They understand that businesses benefit greatly from increased foot traffic around stations, so they are able to fund new transit lines partly by taxing or leasing to these businesses. That’s an idea we could borrow without impacting our ability to fund affordable housing. And let’s recall that because Hong Kong invests heavily in housing, almost half of the homes on the island are affordable public housing.

Why would Vancouver look at diverting city money toward transit at time when housing affordability and homelessness have reached a crisis point of historic proportions?

One reason is that the real estate industry wants City Hall to subsidize condo towers along Vancouver transit corridors. The Urban Development Institute has been lobbying to divert tax revenue away from affordable housing and toward transit stations, increasing surrounding land values and making condo development more profitable. I often wonder if realtors also worry that social housing may reduce those same land values.

It’s worth remembering that Robertson’s party, Vision Vancouver, took millions from the real estate industry last election alone.

When I was COPE’s mayoral candidate in 2014, I proposed that we use these development levies and contributions, along with a vacant property tax and robust Housing Authority, to eventually build 800 of units of real affordable housing each year (as called for in the COPE-led City Council’s 2005 Homeless Action Plan). This would allow the city to seriously tackle homelessness, while providing subsidized options for seniors, indigenous people, young people and working families. Giving Vancouverites this “public option” for housing would also help to keep the private market honest, moderating prices across-the-board.

If Robertson forsakes these development taxes, he will not only tie his own hands, but impair the hands of future councils to turn the tide of housing affordability in Vancouver.