City’s 2017 budget failed on affordable and social housing

High rises in Vancouver. Photo courtesy Wikimedia.
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.

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