City’s 2017 budget failed on affordable and social housing

This article originally appeared in the Vancouver Observer.

On December 7th, Vancouver City Council presented the 2017 budget that revealed a scandalous failure to bring real affordable and social housing to Vancouver.

The budget report shows that over the past three years not a single unit of supportive housing has been approved. You can’t blame the previous NPA council, which put aside 14 sites for supportive housing.

What, then, has this council been doing? The budget claims 1,626 units of “social housing” have been approved. But these homes are not really social housing. When the public finds out why, they will be shocked.

Through a sleight-of-hand, the Vision-led council has redefined “social housing” in the most bizarre way: They ask a developer to build, say, 100 apartments. If 30% of the units are slightly below market rents, the city actually counts those 30 units as social housing.

Then it gets really illogical: they also count the remaining 70 units as social housing even if they charge market rents. Imagine I sold you a large quantity of rice that cost millions of dollars, but only 30% of the contents are rice and the rest is sand. You’d call CBC Go Public right away, wouldn’t you?

This is a scandal, not only because it’s misleading. It also has very real implications for people in our city. A study by local researchers [Gabe Boothroyd and Jean Swanson] found that only 92 of these 1,626 so called “social housing” units are guaranteed to be affordable to people on welfare. This is the real reason why Vision failed to keep its promise of ending homelessness by 2015.

This Vision-led council has also misled the public about what “affordable housing” means.

According to CMHC, “affordable housing” is defined as costing less than 30% of before-tax household income. This definition is a widely recognized standard. Meanwhile Councillor Jang was famously quoted for saying affordable housing is simply “something that somebody can afford…” while people have to go to food banks to get their groceries or go hungry.

Fix the Vacant Property Tax

Despite the slow progress on new taxes to help fund affordable housing, this year’s budget is silent on exactly how the “vacant property tax” will help.In the last municipal election campaign, I proposed a plan for a vacant property tax that some councillors said wasn’t possible. I’m pleasantly surprised that council has taken strides toward implementing a portion of my proposal, the part I called the “stick”. But this budget should include projections regarding how much revenue will be raised from the empty property tax, how many real affordable homes will be built with this money, and at what rents?

Furthermore, the first part of my plan – “the carrot” – is missing. We could incentivize owners to rent-out vacant properties to increase rental supply.

The public should also know that the city’s current plan is not really a vacant property tax — it’s a secondary property tax. Principal homes that are barely occupied, if at all, are not included. Nor are vacant commercial or industrial properties.

The city will not in fact be measuring whether properties are occupied, and will surely lose-out on potential tax revenues. I have little doubt the City of Vancouver could reach an agreement with the province and BC Hydro to audit the occupancy of properties without infringing on privacy.

By taxing all properties unoccupied for more than 6 months, of course with reasonable exceptions, this would allow the city to generate more funds to build social and affordable housing.

New taxes on Luxury Property and Property-flipping

I also think it’s time to consider two new ideas. First, a luxury property tax on the value of homes exceeding $2 million. There were over 10,000 of these properties in Vancouver in 2013 [according to CMHC data]. A luxury tax on these properties of only an extra 0.1% would raise an additional $15 million per year, which could be used to create real social and affordable housing. A 0.2% luxury tax would raise over $30 million, and so on.People over 65 could still defer their taxes using the BC homeowners grant. In a city that is becoming increasingly divided between the rich and the poor, the rich and non-residents must do their part or we won’t have a city at all — we’ll have a resort town. Coal Harbour already is one. It’s dead at this time of the year.

Second, we need a tax on property-flipping. I believe housing is for living, not flipping for profit. When investors buy a property, then flip it for a good return, it reduces the housing supply and puts upward pressure on prices.

We can learn from some European cities where the longer an owner holds onto a property, the lower the flipping tax. If they sell it within a year, they pay 25% tax. Hold it 25 years or longer, it’s 0% tax, with reasonable exemptions of course.

It’s time for the city to define social housing honestly. And to generate revenues to build real affordable and social housing, the City of Vancouver should improve the vacant property tax, and implement luxury property and property-flipping taxes.

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.