Municipal tax hikes make housing less affordable

A city of taxes

Taxes in Kelowna might be going up again.

While this may be good for services (if used appropriately), the only guarantee is that this increase would increase the cost of housing.

The City of Kelowna only has two major means of collecting taxpayer dollars to pay for services — taxes on the construction of new housing and property taxes.

Let’s start with property taxes. Under Mayor Colin Basran, municipal property taxes have increased approximately 22%. Property tax increases cost homeowners more money each year, and it costs renters more money as these increased costs are often passed on to renters from landlords. However, property taxes are essential in ensuring we have the kinds of services that residents rely on.

On the other hand, new development is a cash cow for local government. The city receives tens of thousands of dollars from each new home through various charges (taxes) to offset costs of increased service requirement. While these taxes are needed to fund transportation, sewage, water and more — new development is also a critical step to increasing the affordability of housing. Canada has some of the least affordable housing in the world and coincidentally has the lowest number of homes per capita in the G7.

One of the new development taxes utilized in Kelowna is a parks development charge. This tax is used to secure new park space throughout the city. However, in 2019, Mayor Basran and council voted to double the existing parks development charge from $7,000 a unit to $14,180 a unit. However, whether the city needed a substantial increase in parks funding given their existing holdings is likely debatable (see ‘City is a real estate mogul’).

The most recent proposed tax increase is to development cost charges (DCCs). The proposed increase varies depending on the development type and its location within the city ranging from 7% to 32%. To put this into numbers, a new single-family home’s DCCs in the north of Kelowna would increase about $10,000 and in southwest Mission it would increase about $7,000 under this proposal.

So how does this make housing less affordable? It’s well-established that these tax increases are put back onto homebuyers and reflected in the cost of a new home. Increase DCCs or parks charges by $10,000? The price of that new home just increased by $10,000.

This means that if the proposed DCC increase goes through that the price of a new home north of the inner city will have increased by $17,180 over the last two years just due to tax increases, without accounting for increases in land costs or building materials. Overall $43,344 of the price of that home will be made up of DCCs, parks charges, water charges, wastewater charges, and drainage charges. This also doesn’t include the cost of applying for getting a zoning amendment if required, which comes at an additional substantial cost that will be passed on to the buyer.

The point of this column is not to argue one way or another on the proposed DCC increases. DCCs play an important role in building a sustainable and well-serviced city. However, often absent from the public discussion is who pays for these increases. At the end of the day, these are taxes paid by homebuyers. There’s nothing inherently wrong with increasing flat-rate taxes as inflation changes over time, however, to do so without being upfront on the impacts to the cost of housing during a housing crisis would be disingenuous.

In order for the city to justify increasing taxes on new developments and thus increasing the cost of new homes, municipal officials must be positive that the revenue they’re currently collecting is being spent efficiently and effectively — without waste — and yet is still unable to cover costs of adequately servicing new developments.


To combat vandalism, ban election signs on public property

Sign of the times

My sign was cut in half. My sign was stolen. My sign was graffitied.

Every single election, whether it be federal, provincial or municipal we hear the same complaints from candidates. It’s almost a race to see whose sign gets defaced first, because each media outlet will write one story on it — so if you’re first, you get the article and can play the victim, get the free coverage, and then move on.

As much as we can say it’s illegal to damage signs, at the end of the day with the number of signs scattered across the city and the heightened political animosity we see in elections, we can’t monitor the signs to arrest people for defacing and damaging them.

The City of Kelowna, like many Canadian cities, allows political signs on public property and on private property.

The one thing you’ll learn if you ever work on a local political campaign is the mantra that “signs don’t vote, people do”. Nevertheless, you’ll then be told there’s a sign team of 10 people who will go out every day putting up and repairing those same signs that “don’t vote”. You then end up with a streetscape littered with signs of the various party colours, which are simply an eyesore.

But I will admit that I do like signs sometimes. They do help you memorize the candidates in whatever election it may be. This isn’t as big of a deal in our federal and provincial campaigns when there’s usually no more than four or five people on the ballot. However when it comes to local municipal or school board elections - that ballot can have forty people on it.

So I’ll admit that having the signs placed around town does help you memorize some of the candidates, and may remind you to go home and google them. They can also make you think that certain candidates have large community support, whether not that’s actually true or not.

Okay, so signs are an eyesore, they get damaged, but they are kind of useful in a way. There must be a better way right?

Well, there is. Some municipalities in Canada only allow political advertising signs on private property.

In this case, you can’t put up your signs on public property, but if you can convince the family down the street from you that you’re the best candidate and that they should put a sign with your name on it in their front yard - go for it.

If we only allow signs on private property, when you see the signs around town it will actually show support. It will also drastically reduce the number of signs we see, reduce the number of environmentally unsustainable signs that get made, and likely lower the amount of sign vandalism since private property is better watched than public.

Many candidates would likely support this change since it frees up campaign money and volunteer time. But until signs are actually banned on public property, they’ll keep putting them up, because even if a candidate opposes them, they don’t want the only signs on the street to be their opponents’.

Let’s ban signs on public property, and make our city a little bit prettier and a little bit more environmentally-friendly come the next election season.

City is a real estate mogul

Over the last week we’ve learned that the City of Kelowna is a large residential property holder and real estate investment firm.

I’ll forgive you if you didn’t know this, but the City of Kelowna owns and rents 34 residential properties to the highest bidder. That’s right. The city takes your tax dollars, buys properties, and rents them out to make money, while holding the property in case they want to use it for some civic purpose later.

In the middle of a pandemic, in one of the most unaffordable cities in the country, our city continues to rent out these properties to the highest bidder. Apparently, no one has thought to rent these properties out below-market rates to those in need.

But that’s not all.

Last week the city put up both the former McDonald’s property off Highway 97 and the nearby former Husky Gas station for sale for $11.275 million. The proceeds from the sales will simply go back into the city’s land sale reserve to buy more properties. In terms of what the city is looking for in a purchaser, they want to see architectural significance. Yes, you read that right – architectural significance. Not 30% affordable housing or a new arts space or child care spaces. Just nice architecture and a wad of cash.

Residents pay taxes to the city, taxes which have gone up 22% since Mayor Colin Basran was elected to create public goods for the community. With increased taxes we expect things like four-laning Glenmore Road North, fixing the City Park walkway, redeveloping the Apple Bowl, building sidewalks on Lakeshore, building affordable housing, and more – all things that haven’t happened. Instead, the city is seemingly using our taxpayer dollars to buy and hold real estate, competing with the private market, to make more money without delivering the public goods we desperately need.

Let’s put just those 34 residential properties the city rents out and these two lots the city is selling into context – not dealing with all the other property the city owns.

This week the Kelowna Gospel Mission announced that over the last three months, they typically count 40 people sleeping outside each night.

The city has its 34 residential rental properties – which likely all have more than one bedroom – therefore the city owns enough homes to house our homeless population. Done. Homelessness solved.

Well, of course, not exactly, that would be imperfect and, of course, have a multitude of issues that I won’t get into. But it certainly puts things into context. So what about the two properties for sale?

In Surrey, the province and the city teamed-up to build a 40-unit supportive housing project that opened this year. The project required a $10.3 million grant to build, land to build on, and an annual operating budget from the province of $1.2 million.

We know the city thinks it will get $11.275 million from the two properties and owns several other pieces of land around town. That means if the city wanted to house the 40 people sleeping outdoors each night, they could use the sale money to build 40 supportive housing units on other city-owned land, and work with the province to provide the operating funding. If Surrey can do it, why can’t Kelowna?

At the end of the day the city should not be a real estate investor or market-rate rental housing provider, when our infrastructure needs investment and our housing remains out-of-reach for many.

With the property the city already owns, they could house our homeless, sell some land on the condition of providing affordable housing, or rent out their residential properties at an affordable rate.

Or they could just do all of the above.


Council fields dissent

Earlier this month, Kelowna city council issued a rare defeat for new housing, by opposing a proposal that included 67 single-detached homes, improvements to connecting pathways, and a half-sized soccer field in the Kettle Valley neighbourhood.

By a vote of 5-4, and for the second time in five years, council defeated a development proposal for an undeveloped portion of land currently home to a full-sized soccer field, and was once going to be the home of a School District 23 school.

When residents first bought into the Kettle Valley neighbourhood, they were told this land would be the home to a new school, which was even included in the marketing materials for the development. Buyers purchased homes alongside the school site believing that they would be backing onto the school with its corresponding playing fields and condensed form. However, SD23 only had an option to purchase the land – and when the time came to exercise that option, the school district passed and the land effectively returned to the developer to do with it what it wanted.

In the meantime, the lands were turned into a full-sized soccer field surrounded by undeveloped lands, which is leased to the City of Kelowna at a price of $1 per year.

Of the many issues raised by local residents, two in particular were notable. The first was that the proposal would result in the community losing half of its current sports field. In the developer’s eyes, and in some of council’s eyes, the community never ‘had’ this field as it belonged to the developer, so in their interpretation the community was gaining half a soccer field. In reality, the community has had access to the full-sized field for over 20 years.

It’s not as though the developer couldn’t develop the lands and keep the full-sized field either – the earlier proposal that was rejected in 2016 actually had 20 more homes and still kept the full-sized field.

The second issue was that this proposal did not stick to the vision or footprint of the original master-planned school site. Some on council dismissed comments related to the original school footprint by stating that the school is not coming back – which no one suggested it would – yet, the fact remains that residents bought their homes on the basis that they would back onto a school and not another subdivision.

Coun. Gail Given, who supported the development, asked what dissenting voices want the developer to come back with. I believe the answer is relatively simple. Future proposals should address two key points: (1) develop a proposal that better resembles the initial school footprint and (2) keep the full-size soccer field.

Some on council wrongfully suggested that something is better nothing.

Kelowna doesn’t have to settle, developers want to build homes here. Coun. Charlie Hodge rightfully said that Kelowna is a world-class city and we should demand world-class developments. There is nothing wrong with rejecting proposals because they’re not good enough. Though Kelowna does need more housing supply, this proposal was a very unique circumstance – and because of that, council owes it to the residents to ensure the future of the site resembles the vision they were sold as closely as possible.

People should control the future of their communities, not developers.

Over 900 residents signed a petition asking council to oppose this development, based primarily on these two reasons. It’s good see that five councillors agreed with the community; it’s a shame they all didn’t.

More Wilson on Water Street articles

About the Author

Adam Wilson is from Kelowna and has an educational background in urban planning, where he published his research on the politicization of cycling infrastructure in the Journal of Transportation Geography. 

Adam was named as one of Kelowna’s Top 40 Under 40 in 2017 for both his research into cycling infrastructure and a number of political interviews he had done with Macleans, the National Post and CBC News. 

He previously worked as a lobbyist in Toronto where he focused on provincial and municipal issues. Adam then joined the office of Ontario’s Minister of Municipal Affairs and Housing, where he worked as the Issues and Legislative Affairs Manager before becoming the Minister’s Director of Communications. 

Adam has since moved back home to Kelowna where he lives with his partner and French bulldog in south Kelowna. 

[email protected]


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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