Every Sunday we recap local lifestyle and culture news that you may have missed over the last seven days. Amid some confusion and a lot of development outrage, the province has clarified and softened the speculation tax. Kelowna's "Good Neighbour" bylaw amendments get a considerate walk-back from the mayor (for now), and the countdown's on for a new, yet familiar downtown diner. We get into all of this and more.
The Reaction to the New Bylaws Leads to Re-examination
Going into the holiday weekend Mayor Colin Basran published a statement on those Good Neighbour bylaws that got tongues wagging this week. Apparently, despite what you read across local news reporting about the amendments having passed with a tight vote, they have not actually been approved, and have only gone through first, second and third readings. Call it miscommunication or even back peddling, but it's possible there's a more participatory vibe at city hall. Basran goes on to outline his desire for more public consultation, especially with the arts community on busking, and offered a fairly genuine mea culpa, for a politician: "Should this consultation have taken place sooner? Perhaps it should have, but it's important to recognize the need to move forward together."
The mayor also points out that these bylaws are not a solution in and of themselves. Clearly they don't want to be considered just a punitive law and order administration, and consider themselves part of a wider, more holistic approach to problems like homelessness. However given their extreme stance against the speculation tax in the face of much study that it could increase housing, perhaps they’re not as focussed on the long view as they say.
Also, we are a society of laws, and it is very important to be clear about what we codify, as the application of such may not always be applied in the pollyannaish fashion Basran assures us it will:
Each situation is fundamentally unique so we want to make sure our Bylaw Officers have an assortment of options and actions to deal with these complex situations. Compliance is the foremost objective, therefore, most conflicts are often resolved through dialogue without further legal enforcement.
Premier John Horgan Visits the Valley
BC Premier, John Horgan is stopping in to the South Okanagan this week. According to their media release, Horgan will be at Penticton’s Lakeridge Homes (1091 Railway St.) on Tuesday at 9:15am to make an announcement that will benefit people living in manufactured homes.
One can only assume this will concern the $306 million the province pledged in the recent budget that'll go to building 2,500 new modular housing units as part of their ambitious home-building plan, supply that will be geared to renters and low-income people.
Over the next three years, the NDP plan includes $378 million for new affordable rental housing, and $306 million to build 2,500 new modular housing units and 1,500 units for women and kids fleeing abusive relationships (Global News).
This is the type of building that represents what can happen when developers and policy makers work together. “Let us celebrate the surge in the purpose-built rental” said Paul Kershaw of Generation Squeeze (he’s also a prof at UBC’s School of Population and Public Health), a lobby group for housing affordability for Canadians age 20-40. He goes on to describe that “it takes 19 years for the typical 25- to 34-year-old to save a 20 per cent down payment on an average home. More and more of us are going to be renters going forward, and we need to build that stock.” While many of the lefties over on the Vancouver real estate Twitter consider him a mouthpiece for the development community and their supply-only side solutions, he does have a point. Especially in cities like Kelowna where the population is only going to keep increasing, and most likely in this demographic, we need to see that not all supply-side solutions are narrow and short-term profit based.
This Week in Spec Tax
A quick round up of what went down this week on the speculation tax front.
It Was Changed
The Finance Minister, Carole James held a press conference Monday that clarified and modified the speculation tax. First off, geographical targets have been changed slightly. For example Parksville and the Gulf Islands are now off, presumably because properties there are hard to rent out year round. See the map below to see who's in.
Regarding the tax amounts, they have been softened too. This tweet from a Vancouver Sun reporter from the James presser announcement sums it up succinctly:
New rate structure for speculation tax. 0.5% for BC residents with 2nd homes in urban centres. 1% for out-of-province owners. 2% for foreign investors.— Rob Shaw (@robshaw_vansun) March 26, 2018
properties worth less than $400,000 exempt. as are long-term rentals, rented at least 6 month of calendar year.
There Was a Rally Against the Tax
Dubbed as a “Town Hall on 'Spec' Tax and Emp Health Tax, Everyone Welcome!” hosted by area MLA Norm Letnick (BC Liberals), what resulted was a gathering of a very partisan, anti-tax crowd. Of course, that on its own, is freedom of assembly pure and simple. And since we know that there are plenty of folks here in the development, real estate, building, and unlicensed mini-hotelier grey market, there’s naturally going to be a strong anti-tax turnout.
Where it got weird was when a couple of attendees asked about how the tax would help the housing crisis here in Kelowna. They were jeered and booed and even told to sit down by bystanders, which is shitty but still not nefarious or deceitful. However, when this happens, and the hosts do nothing to create a more civil discussion – and instead deploy facile and insulting stereotypes to define the “side” against them – we have something that more resembles a Trump rally than a town hall. Rather than fully discussing the issue with the citizens of the ridings they represent, we just might be hearing the beginnings of a populist, fearmongering rhetoric spinning: trying to pit the economic uncertainty of construction workers against the inevitable growth of what was referred to here as the “data people”.
This is not what a healthy democracy looks like. But don’t just take my second-hand account of it, please take a minute to read a moving letter from one of those "town hall" attendees who dared ask about housing affordability in a room with no time for it.
There Was More Real Estate Industry Propaganda
The Vancouver Sun published the results of a poll by realty corporation Royal LePage that surveyed only real-estate professionals. Unsurprisingly it found that 85% of the professionals polled believe “the new tax policies have hurt consumer confidence in residential real estate across the province.” Seemingly all you have to do to get published by the Sun is conduct your own poll – it’s a little more work than a press release, but hey it’s a sure thing apparently.
Voices on the Spec Tax
Since we put a call out for locals to voice their opinion on the speculation tax and/or housing affordability and accessibility in the city, we have received some fascinating letters. We hope to hear more of your voices going forward, particularly in a municipal election year when your concerns are more likely to be heard by city council, so keep 'em coming.
One letter came from someone (they requested anonymity) who had worked for a private vacation-rental cleaning company responsible for looking after a number of units being rented on Airbnb to tourists. Sadly the author could not find a rental to live in themselves and was forced to move out of town. Isn't it ironic, dontcha think? I can relate to this because it sounds like where I live.
Over my time here, at a Sunset Drive condo complex, I have seen out-of-towners wheel in, in Thursday to Sunday and Monday to Thursday segments all summer long. They boat, they party, they hang at the pool and beach, they wine and dine, and in the last week of August, they stop coming. Most units then sit empty for months on end.
There are so many stories that I can tell you about this complex and the way it operates to the benefit of absentee landlords, and the basic toll that a complex like this is having on Kelowna's economy and overall well-being. I can tell you about how the strata council here is largely made up of Albertans, as are 75% of the owners here, and how they invoke various strata bylaws meant to specifically protect their own properties when they're not around.
I can tell you how almost $100,000 a year in strata fees are earmarked for year round security on patrol – owners want their units surveilled around the clock when they're not in them. Or how a 900 square foot unit was rented out in July and August last year at a rate of $7,500 per month – I mean why rent out year-round with that kind of windfall? Or how a family renting here was told, on short notice, to leave their rental unit in May after the owner verbally committed to them that they could stay long term, only to find out that the unit was going to be rented out as a vacation stay at "vacation rates" during the summer. I imagine their story is not unique.
As I write this now, I can tell you about how a unit directly across from me has sat unoccupied with every single light turned on for the last seven days straight, blinds open, 24/7. It's creepy. I literally walked over and peeked in to see if someone hadn't died in there.
This situation is not specific to the resort-style complexes like mine. Even in the more "urbane" Ellis area, a condo owner I spoke with is frustrated with the high off-season vacancy due to the large amount of out-of-province investors taking up units. It's clear that my neighbourhood, not just my complex is largely made up of part-time Airbnb-landlords or vacationer-owners because it's so dead in the fall, winter and spring. And that affects all the local businesses' bottom line.
If this speculation tax is going to curb the current treatment of our downtown condo units by out-of-province owners at a time when Kelowna is desperate for more rental units to hit the market, then it ought to be a win-win for the city. More housing, hopefully falling (or stabilizing) prices, and increased rental vacancies, will attract more full-time residents. In such a more stable and diversified ecosystem, more businesses can emerge that go beyond serving the needs of a transient or seasonal market. If Kelowna's population growth is inevitable, which it is, let's build for it now: ensuring a stable year round consumer base is a great start.
Kerkhoff Construction Wants to Build More Due to Lower Mainland Influx
Kerkhoff Construction, the developer responsible for One Water and 1151 Sunset has recently submitted a proposal to city council set to be voted on when council returns April 10th. The development is slated to be built on Richter between Coronation and Clement, and is requesting that the future land use designation of that block be changed from medium density to high density designation. They are proposing a six-storey, 58 unit rental purpose apartment building with an above ground parkade structure.
This proposal, if approved, will add to the transformation that the Clement Avenue area is set to undergo. It includes the two residential buildings to be built directly across the street and the industrial business park beside it (we wrote about these two developments earlier in the year), the rental housing project on Clement directly across from the new RCMP building, and the recently announced six-storey apartment building planned for the corner of St. Paul and Clement.
This new Kerkhoff development proposal follows after Leonard Kerkhoff, the company's vice-president recently said that almost all of the 200 units in his One Water tower are sold. He also added that a significant number of the units have gone to buyers from the Lower Mainland.
I think there's little doubt that the exodus of priced-out Lower Mainlanders will keep the demand for condos coming. Kerkhoff says Vancouverites are drawn to Kelowna because, real estate here is still fairly inexpensive compared to what's happening near the coast. The Okanagan Mainline Real Estate Board in February put the average cost of a residential home in the Central Okanagan at $678,156, and the Canadian Mortgage and Housing Corporation pegged the average price of a single-detached home at $1,104,941. It's the sheer number of condo units that have been purchased recently that are pulling the OMREBs figure down. Regardless, condos are relatively cheap here – One Water's units start at around $300,000.
And then you have recent stories like this one about how Chinese website juwai.com, a site that markets international property to buyers in the People’s Republic of China and elsewhere, and describes itself as the “No. 1 Chinese international property portal”, is joining forces with online retailer jd.com (basically a Chinese amazon.com) to market real estate in Canada and around the globe, potentially exposing millions of new customers to real estate in Vancouver and the Fraser Valley. Stories like this are certainly convincing that Lower Mainland home prices will not stabilize any time soon, but will very likely drive more and more people to the interior.
Getting back to this speculation tax, I find the argument against having it – construction, jobs, and businesses will suffer, completely baseless. It also means that out-of-province owners who continue to treat their condo units as part time residences are out of touch with the new reality here. Rightfully, these homeowners should be subject to paying more to hold onto their homes if they continue to squeeze out locals for their "resort lifestyle living" breaks. Kelowna can no longer afford to be perceived as just a tourist destination built exclusively for part-timers to come and go as they please. The city has evolved beyond that, and it's time for every out-of-province property owner here to acknowledge this. At the very least, the proposed speculation tax has forced them to do just that.
Instagram of the Week
The countdown's on for a new, yet familiar downtown diner owned by the folks who run Raudz and Micro Bar. While everyone is waiting for Craft Beer Market to finally open, these local food scenesters pop out another restaurant right next door.