To date, West Kelowna's June 21 letter has drawn only a
perfunctory one-paragraph acknowledgement from the government, leaving it to
stand as an unchallenged critique of a tax that remains cloaked in murk.
Vaughn Palmer
Updated: August 27, 2018
B.C. Premier John Horgan. DARRYL DYCK / THE CANADIAN PRESS
VICTORIA — Two months ago West Kelowna Mayor Doug Findlater
fired off an open letter to Premier John Horgan challenging the NDP decision to
include his Okanagan city within the reach of its controversial speculation
tax.
Over five pages and an accompanying 24-page brochure the
mayor on behalf of his council outlined “the potentially devastating effects
that this tax could have on West Kelowna” and arguing that its application to
the city was grounded in “incorrect assumptions.”
The New Democrats have yet to provide any comprehensive
rationale for the tax, or indeed any supporting analysis, legislation or
regulation. But West Kelowna mounted a point-by-point attack on what little has
been said publicly and at the official level in defence of the tax.
The tax is intended to force “speculators” — defined as
owners of seasonal recreational property and never-used secondary residences —
to rent out those properties and reduce the vacancy rate. If they do so they
won’t pay the tax.
By way of justification for the inclusion of West Kelowna,
provincial officials have cited the low vacancy rate of 0.2 per cent in the
central Okanagan.
Findlater: “It is important to note that the 0.2-per-cent
vacancy rate that is continuously referred to combines all of the central
Okanagan, not just West Kelowna and Kelowna. Once in-stream rental units are
completed, the rate for the central Okanagan should climb to 2.5 per cent.”
He challenged the Finance Ministry to factor in local
efforts to improve the vacancy rate by encouraging development of purpose-built
rental accommodations, secondary suites and single-family homes for rent.
“They will find that the vacancy rate is much higher than
the 0.2 per cent that ministry staff is using to defend adding West Kelowna to
the tax. For 2018 alone, there will be 240 rental units available to the
market. Of these units, 75 units are not rented out and the developer is
looking for tenants.” Which as the mayor noted, amounts to a 31-per-cent
vacancy rate for that development.
Findlater then turned to suspicions that West Kelowna and
its across-the-lake neighbour Kelowna were targeted for the speculation tax
because of high average house values.
The averages were “extraordinarily high,”
he conceded. But those averages were skewed because of a relatively small
number of beachfront properties valued in the stratospheric range.
“These properties inflate the average cost in West Kelowna
to well over $600,000. West Kelowna has close to 2,000 homes that are valued
under $400,000, with an average value of $315,983. Homes in West Kelowna valued
under $400,000 represent 16 per cent of the city’s market; and, homes valued
under $500,000 represent 36 per cent.”
After noting the neighbouring presence of the Westbank First
Nation — with houses priced in the $330,000 range for sale to anyone who
chooses to live there — the mayor raised the issue of regional fairness.
“Kelowna and West Kelowna will be put at an economic
disadvantage compared to other communities in the region that are not subjected
to the tax,” he wrote. “Non-market growth will decrease significantly, as
developers avoid areas where the tax is applied. Job opportunities will be
impacted.”
Far from being “unaffordable” as the New Democrats implied
with their tax, West Kelowna has so far managed to hold its own. “In fact, West
Kelowna’s growth has been steady for 10 years, at rates similar to the ones in
other Okanagan communities, including those not facing the prospect of the
speculation tax.”
But all that could change with the coming of the tax.
“A recent article in local media, discussing the rising home
prices in nearby Penticton, where the tax will not be imposed, quotes the South
Okanagan Real Estate Board’s president saying that Penticton’s exemption from
the proposed tax has likely brought in buyers who would otherwise have eyed
Kelowna,” the mayor continued.
“We have already received alarming information that a
comprehensive development, which was nearing the final phase of approval, is
being shelved directly as a result of the proposed speculation tax. This
development would have seen 1,000 new homes, a new school site, road upgrades,
transit service, frontage improvements and a vast parkland donation for West
Kelowna. The much-needed increased tax base and development-cost-charge revenue
from this project will be lost.
“Our municipality is only 10 years old and has not had time
to build its reserves to a healthy level, “ the mayor pleaded on behalf of his
city of 35,000. “With the potential that the speculation tax is chasing away
investment, the city will feel the loss of vital municipal revenue, revenue
that can only be made up by taxing its residents.”
He closed with a direct challenge to the premier himself.
“It is best-practice that before a government implements a new tax, an economic
impact study be completed … An economic impact report will be able to determine
the percentage of British Columbians affected and to what degree each area is
impacted.”
To date, the June 21 letter has drawn only a perfunctory
one-paragraph acknowledgment from the government, leaving it to stand as an
unchallenged critique of a tax that remains cloaked in murk.
Moreover, the New Democrats insist that no more information
about the tax will be forthcoming until the legislature sits in October, by
which time more than seven months will have passed since this half-baked
initiative was announced in the February budget.
Is there more to this story? We’d like to hear from you
about this or any other stories you think we should know about.
Leave a comment and share.
No comments:
Post a Comment