Tax on empty homes

A meeting took place with the Kelowna Chamber of Commerce, the Greater Westside Board of Trade, the Central Okanagan Economic Development Commission, city officials from the four local municipalities in the Central Okanagan, the Urban Development Institute, the home building industry, MLAs and developers. It’s said the meeting resulted in a unified voice of opposition to the proposed speculation tax. I’m concerned that no voices of support appear to have been heard at the meeting. 

To my knowledge, there’s no advocate in Kelowna that’s uniquely focused on housing or tenants’ issues, groups that do have an interest in housing issues were not invited to the meeting. Following the get-together, the Chamber and the Board of Trade wrote to Minister James asking her to “step back” from implementing the speculation tax on homes in Kelowna and West Kelowna owned by out-of-province residents. “We are writing this joint letter to you today on behalf of our close to 2,000 members representing more than 25,000 employees in the Central Okanagan, asking that your government step back from implementing the ‘speculation tax’ on homes in Kelowna and West Kelowna until the mechanics of how it would be implemented, to whom it will be applied, and how the tax is expected to make housing more attainable in our cities, is better defined and understood. In the meantime, we encourage you to consult with community leaders, developers and construction trades officials in the cities and regions that have been specifically targeted for this proposed tax.”

I think a more comprehensive canvassing of voices would have included the local employers who have long complained that they can’t attract the workers they need because of the shortage of affordable housing, including rentals. The CBC reported that a 2017 survey of 200 businesses conducted by the Central Okanagan Economic Development Commission found that this problem of being unable to attract workers extends to all sectors of the regional economy. It strikes me that the North Okanagan Labour Council, the umbrella group for labour unions in the North and Central Okanagan representing some 8,500 union members, might have competently spoken for both the employers who need workers and the employees and potential employees who need homes had they been invited to the meeting.

But it may not be too late. In their letter to Minister James, the Chamber and the Board of Trade offered to host a round-table discussion in Kelowna on the issue of the new tax. In my view, representatives of all stakeholders should be invited to an event, possibly led by your government, to discuss opposition to and support of the tax. Kelowna’s mayor Colin Basran led the way, heavily promoting the idea that a speculation tax could have a negative effect on the local economy. "Investment from other parts of the country is a good thing’, said Basran, adding it helps stimulate the economy through development, tourism, job creation and helps small business. But that could all be impacted by the implementation of the new tax here.” A week later, he said the tax could have an adverse effect on construction in Kelowna and that could affect jobs.

Justin O’Connor, president of the Central Okanagan chapter of the Canadian Home Builders Association,  likewise focused on the perceived value of out-of-town owners to the local economy, but got rid of the conditional verb tense as he did so. “These developments bring hundreds of thousands of dollars into our community, and the proposed speculation tax will become a huge detriment to our community should this pass. B.C. is home to many vacation areas, all of which rely on these annual visitors to support the local economy.”

Kevin Edgecombe, chair of the Kelowna builders’ Urban Development Institute, followed the same line of thought.  “We are certain that jobs will be lost in the Okanagan, and there is a concern that this tax, while intended to create affordability, will unintentionally harm the tourism sector, many forms of small business and the B.C. economy as a whole.”

Tanis Read, president of the Okanagan Mainline Real Estate Board, elaborated that the local economy will be affected “not because of the intended changes to real estate prices, but due to the unintended loss of revenues generated by those homeowners who take advantage of local services such as car dealers, wineries, restaurants, gas stations and the resulting potential job losses.”

What remains unanswered to me is why out-of-province vacationers would provide greater incentive to build housing units than local workers or families in search of housing. Last month, a local realtor reported “there is a serious shortage of housing available in the Central Okanagan with only 701 residential detached single family homes for sale with 284 of these priced over $1 million.” Meanwhile, the average house price in Kelowna was $762,000. As for the rental vacancy rate, it’s been 0.2 per cent since late last year, the lowest in the country.  In other words, no one needs to look at out-of-province visitors in order to have a reason to invest in and build local housing developments.

What also remains unanswered is how temporary vacationers would contribute more to the local economy than locals who might or who do live here 365 days a year, buying cars, drinking wine, going to restaurants, pumping gas, and so on. Why do any of the people I’ve quoted think that out-of-towners are a fundamental economic driver without which the local economy will take a dive?

I feel strongly that no one should lose sight of what concerns all of us on a good day, which is the existence of housing unaffordability, a near-zero vacancy rate, and the fact that empty homes in Kelowna are widespread.  Last month it was reported in Statistics Canada findings that almost one-quarter of Kelowna’s downtown homes sit empty, not used as a primary residence and not rented on a long-term basis, while 17 per cent of Lower Mission homes share the same status. 

The Union of BC Municipalities’ 2018 report, A Home for Everyone, insists both foreign and domestic speculation places the possibility of purchasing a home out of reach for many British Columbians, in turn creating pressure on the rental stock and increasing competition, “all too often” leading to homelessness.  “People deserve housing options aligned with incomes in their communities,” says the report, and “taxation measures to address both foreign and domestic speculation should be considered to stabilize housing prices.”

Whether the new tax is called a speculation tax or an empty home tax or something else, and whether it's directed at foreigners, out-of-province owners, or British Columbians, the crucial point is that local workers and families need places to buy and rent in Kelowna and local employers need this to happen for the economic well-being of all of us.

Dianne Varga

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