(Peninsula News Review files)

West Kelowna candidates weigh in on controversial speculation tax

Every week, the Capital News will ask candidates questions until the election

Every week, during the run-up to the Oct. 20 election, the Capital News will ask West Kelowna candidates a question about a local issue. This week’s question is: What impact will the speculation tax have on your city and what would you do to mitigate or capitalize on the effects?

RELATED: West Kelowna keeps pressure on to scrap speculation tax at UBCM

Joe Gluska, council candidate

The City of West Kelowna is being unfairly placed under the umbrella of the provincial speculation tax. The uncertainty has already caused concerns and difficulties for council and staff in West Kelowna. The staff put together a solid argument against the tax, which was presented to the provincial government but dismissed. West Kelowna has had a decline in revenue as projects have been put on hold or just outright cancelled. The decline in revenue will impact the infrastructure and other projects that are on the table to be started. Also long time property owners since the 1950s are unfairly lumped in as speculators. Lobbying the Green Party to vote against the tax is still an option at present. It is difficult at present to propose a plan as the uncertainty of the tax prevents any mitigation. Also it is very difficult to capitalize on a tax that is punitive nature against British Columbians and Canadians in general.

Gordon Wiebe, council candidate

The speculation tax has already negatively affected West Kelowna. A large residential development on the south side of the city has been scrapped. More will likely follow, and the city will forego millions of dollars in revenue from lost development construction costs (DCC) fees and unrealized property taxes

Further, the tax will needlessly cause financial hardship for hundreds of property owners – many of them fixed income retirees who will be unable to fund the onerous tax. Landlords may be forced to raise rents. Everyone loses.

At the last UBCM conference, municipalities voted unanimously to overhaul this policy. The Finance Minister was unmoved (“Municipalities vote in favour of changing B.C. speculation t

ax” The Vancouver Sun, Thursday, Sept. 13,.).

Mitigating the effects of this tax locally would be difficult. The city might consider renting the affected properties monthly, on paper and for a nominal amount (i.e. a dollar) if it would satisfy the “speculation” criteria.

Fact is, there is no simple way for citizens and the city to soften the effects of this legislation. The provincial government needs to repeal it. It’s their mess.

Finally, with the imposition of this tax, West Kelowna has been uniquely targeted. Peachland, Penticton, Lake Country and Westbank First Nations were all spared – giving them an advantage when attracting development. It’s difficult to know why “Speculators” there are afforded a free pass.

Jayson Zilkie, council candidate

The speculation tax is already impacting West Kelowna. There are legitimate home owners who are being affected by the speculation tax. I am close with several individuals who are being penalized by this tax. The impact is not only affecting homeowners but affecting developers and builders as well. There was a developer who pulled out of a project in West Kelowna claiming it was due to the speculation tax. The full impact is not known yet, but there is seemingly less interest to take on projects that may be affected by purchases affected by the speculation tax.

To mitigate the effects there are several things I would do:

Continued efforts to communicate and pressure John Horgan and the NDP government.

Write letters to John Horgan and request in person meetings, some of which have been done, but be relentless until the issue is resolved.

Rally large groups of residents, developers, builders and the like to address the issue and have the speculation tax removed or revised.

Work on a revision of the speculation tax that aligns with its intended purpose and is cohesive with local municipalities.

For West Kelowna in particular developers aren’t seeing the speculation tax as the biggest issue for halting existing projects or starting new projects. There are overall challenges they have with the City of West Kelowna with how difficult and how slow the process is compared to Kelowna and other municipalities. This by no means marginalizes the effects of the speculation tax, but clarifies why some developers may not want to do business in West Kelowna. Development in West Kelowna is not solely related to the speculation tax.

Winston Wammer, council candidate

In my opinion this is not the way to fix rising home costs if that is the sole purpose of this tax. It is an erroneous approach. It may be appropriate to tax foreign ownership but not Canadian residents. There are big differences between the cost of housing in the Lower Mainland versus the Okanagan and non-resident ownership. The absentee owners in the Okanagan are predominantly vacation home owners and bring considerable revenue to our tax pool, pay for utilities, buy at local businesses, and add significantly to tourists revenues. The impact would be dramatic. We are limited in ways to mitigate this tax but extremely strong resistance and pressure from our councils with valid statistics should continue. An Insights West survey indicates that there is increasing favouring of this tax but the results have a stronger representation from the Lower Mainland. This survey may also have opinions from a demographic that may not be cognisant of the effects of this tax.

I’m unsure , since this idea is in it’s infancy, about being able to capitalize on this plan. I don’t believe it will benefit Kelowna and West Kelowna.

Rosalind Neis, council candidate

If anyone has tried to find rental accommodation in West Kelowna you will find many options (suites: legal and non-legal) homes, condos and town homes. Prices range from $600 – $3,000 and up. Purchasing also has a massive price range that is more than some areas of our country and less than others. This is called supply and demand. For the BC government to impose a tax to mitigate this is not the way to create affordable housing. We know that the speculation tax is retroactive and punitive and will apply to unoccupied residential properties within West Kelowna. What we don’t know is When will the tax be due? How will the province gather data to enforce? The number of properties in West Kelowna that do not have homeowner occupancy is roughly 2500 (1935 from B.C., 576 from out of B.C.). Are most of these rented? – I believe they are. The others may be properties that owners want to come to when ever they want, be it one week or one month. You can’t do this if you have renters – and it may be that owners report false rental income, which will be cheaper than the imposed tax.We have already seen the impacts that are putting developments on hold in our community, slowing growth and reducing revenue for the city. This will result in a loss of jobs and slowdown in the economy of West Kelowna. Perhaps we should now be insisting that the province comes to the table to pay for rental units or that they bring in larger first time homeowner grants .

Carol Zanon, council candidate

The speculation tax has already had an impact on West Kelowna; however, I am encouraged by news that the provincial government will look at modifications and exemptions during the Fall legislative session. West Kelowna council has made the government aware of its disagreement with the assumptions that led to our city being included in this tax:

1. The vacancy rate is stated at 0.2 per cent. That rate is for all of the Okanagan and is based on available purpose-built rental accommodation, not single-family or secondary suites. In 2018 there are 380 rentals available or under construction.

2. Average cost. Yes, it’s high but taking out the beachfront properties, 36 per cent of homes are valued under $500,000.

3. Uneven playing field. The tax only applies to two Okanagan cities, not Vernon, Peachland or Westbank First Nation. It appears that there is detrimental effect on home sales and some buyers are going to Penticton rather than Kelowna or West Kelowna.

4. Municipal revenue and economic damage. A comprehensive development of 1000 homes has been shelved, and we have been told it’s due to the proposed tax. This would have increased the tax base and provided revenue for a new school site, road upgrades, transit service and parkland donation.

To mitigate, members of the new council should continue to request an economic impact study, ask that the assumptions be corrected, and request to meet with the Premier and MLA Weaver before the tax becomes reality. Also, the city must look for new economic opportunities.

Rick de Jong, council candidate

I do not support the B.C. Government’s speculation tax as I believe it will harm the City of West Kelowna. Unfortunately, there is very little that West Kelowna can do to prevent the provincial government from proceeding with this new tax. While on city council, I have supported local lobbying efforts asking the province to reconsider this tax or at least to make it optional for individual municipalities. As your local government we have ensured that the Minister of Finance and the Premier have the correct facts for housing affordability and availability in West Kelowna. We have to make sure, to the best of our abilities, that the province is making an informed decision.

If the B.C. government delivers on their promise of a speculation tax that includes West Kelowna, local growth could slow down dramatically. We have already seen housing developments put on hold as a direct result from the promise that this tax is coming in the fall. Your Council will have to be responsive to the new economic realities of a slowing economy if the B.C. speculation tax becomes a reality later this fall.

RELATED: Worry mounts in West Kelowna over speculation tax

Doug Findlater, council candidate

Seven months after the provincial government announcement of the speculation tax, West Kelowna is already seeing negative results. The proposed tax has curtailed growth in our city. The creation of an entirely new neighbourhood, which would have seen hundreds of affordable multi-family housing units, a school site, frontage improvements such as curbs, gutters, sidewalks, and many acres of new parkland adjacent to RDCO Parks has been cancelled. In addition, in the first half of 2018, single family housing development has dropped 40 per cent in West Kelowna, and multi-family housing the most affordable option for new homes, has dropped 45 per cent. Revenue from increased tax base and development charges will be reduced in future years, making for tougher budget decisions.

I as mayor have led the opposition to the speculation tax on a provincial level and other municipalities have looked to me for leadership and have spoken out on the tax’s negative impacts. That being said when I spoke with Premier Horgan recently he told me that he is looking at ways to make the tax “more palatable” and they are considering exemptions.

In the meantime, the city is looking at ways to raise new revenue such as selling gravel from the Bartley Road property and also will tighten the budget in 2019.

Gord Milsom, mayoral candidate

The proposed speculation tax is not good for the community of West Kelowna.

It is an unfair tax on many British Columbians and Canadians from other provinces whom are fortunate enough to own a second home within our community and whom have made the conscious decision to not rent their property out. Many of these people have owned their West Kelowna second homes for years (many with the intent of retiring here full time) and have paid their property taxes each year. It is wrong for the Province to apply this tax on these families whom have supported our local economy and have contributed to the success of our community over many years.

The tax places West Kelowna at a competitive disadvantage in the housing market compared to Central Okanagan communities not subject to the tax. It has already curtailed growth, has had a negative impact on local business and employment, particularly in the construction and tourism industries.

To mitigate the negative effects of this tax, I will continue the fight to ensure that the province knows that the West Kelowna community wants to be excluded from the tax and that we want to take ownership and responsibility for both home affordability and rental accommodation matters within our community.

Home affordability can be improved by increased housing supply and diversity, including multi-family units. The demand for rental housing can be met by purpose built rental accommodation, single family home rentals, secondary suites, carriage houses, and B.C. Housing partnerships.

Jason Friesen, council candidate

I believe that the speculation tax will have somewhat of an impact on the growth of West Kelowna. Even with the current uncertainty, we have heard of a some developers either cancelling or delaying investment with the speculation tax being the driver for the cancellation or delay. What the magnitude of the financial impact may be is yet to be determined, however, with a market driven slow down also affecting growth and development it may be difficult to fully extrapolate what portion of decrease can be attributed to the tax itself.

If the province is making it more difficult to do business within our City, we need to ensure that we are counteracting that by doing whatever we can to ensure we are making it as easy as we can to do business here. We need to de-risk as much of the potential investment for developers and investors by reducing the development process time to offset some of the additional risk that they believe may be looming. In addition, we need to show the developers and investors that we as a city will do our part in attracting investment even with the potential tax. One option may be to offer a municipal tax credit to out of town homeowners which could offset some of the speculation tax. This would show both potential investors and homeowners that we as a city are grateful for their choice to support our community. Other options such as DCC credits could be made available with certain conditions that may be based on the type of development (mixed use, rental, multifamily, high density, affordable housing), the rate of development, value of properties, etc. that would encourage investment but also have the reciprocal effect of supporting the city through growth.

Stephen Johnston, council candidate

The speculation tax puts a lot of negative economic pressure on West Kelowna and has created an environment with geographic winners and losers. The fact that neighbouring jurisdictions like Peachland, Westbank First Nations, Lake Country and Penticton are not affected by this tax means West Kelowna has more to lose. We now have a situation where out of province Canadians are penalized for purchasing in one area of the west side but not the other. It makes it difficult for developers to be competitive in a market that favours one geographic location over the next, in many cases from one side of the street to the other. This tax could stall positive growth and sustainable development and has already impacted potential developments within our city. Healthy growth and development creates new opportunities for the community and provides much needed new revenue streams, which allow a city like ours to continue to provide quality services and keep taxes low. I would like to see the province commit to properly engaging stakeholders and issuing a thorough review of the proposed tax. I believe the merits of the tax are well intended but the application serves to hurt more than it helps.

Mary Mandarino, mayoral candidate

The Speculation tax is designed to encourage people to save taxes by renting houses they own that are sitting empty. Thus increasing the number of rental properties available. Those affected are:

1. Foreign owners who don’t pay taxes to B.C. and who don’t live in the home or rent it out for a minimum of six months out of the year, will be taxed at 2 per cent.

2. Out of province homeowners who own a home in BC that they don’t live in or rent out for at least six months of the year will be taxed 1 per cent of the value of the home.

3. A resident of B.C who owns a home they aren’t living in, will be taxed 0.5 per cent of the value of the home unless it is worth less than $400,000.

As this tax will only apply if the home is worth more than $400,000, the types of houses in this bracket are mostly too expensive for all but a few renters to afford.

And, to offset this tax, if you are a B.C. resident, you will be eligible for a tax credit of up to $2,000.

The speculation tax will not affect 99 per cent of residents and homeowners in British Columbia…. Or so it is said.

The scaremongering currently circulating regards the speculation tax is causing hesitations in development industries and affecting trades people. The impact on the value of recreational homes in the areas where it is enforced is as yet uncertain, as is the affect on tourism.

Employment in the building trade and tourism are important in the Okanagan. Tourism especially, is already under pressure from the increasing impact of wild fire season smoke on the valley.

Rusty Ensign, council candidate

The potential impact of the speculation tax on West Kelowna is very serious. It can potentially devastate the housing market. This would result in homeowners losing significant net worth in their homes, potentially tipping the debt to equity ratio on their homes past the comfort of banks that are lending demand loans and bringing construction to a halt. The repercussions of the loss of construction jobs will reverberate through the entire economy. Ironically all rental housing construction will cease in turn preventing the free market from addressing the need for housing. The city of West Kelowna will lose much needed DCC revenue in turn slowing or preventing much needed road and parks improvements for our citizens.

We must continue to pressure the B.C. government for West Kelowna to be exempted from the tax. Regardless West Kelowna must strive to become a competitive jurisdiction in order to attract investment. The recommendations of the development services review, that I brought forward, must be implemented. We must reduce the application timelines, set benchmarks and reasonable deadlines for OCP amendments, rezoning, subdivision, development permit and building permit applications. Permit requirements that are issued need to be consistent with absolutely no changes afterwards. The image of West Kelowna in the development and construction industry is not good. In order to mitigate damage from the speculation tax this must be improved.

Philip Akins, council candidate

The Province’s rationale for the proposed speculation tax is that it will bring vacant homes onto the market and thereby increase the supply of housing in areas that are experiencing low vacancy rates and high rental and house prices. West Kelowna could conceivably benefit if the tax were to nudge would-be speculators into renting or selling their homes, or generate revenue that could be used to implement strategies for addressing unaffordable housing and homelessness. As currently conceived, however, there is a very real concern that the negative impacts of the tax will outweigh any potential benefits: already we are hearing reports of a chilling effect on construction, affecting jobs and, ultimately, diminishing our fiscal capacity to invest in the community. A big part of the reason for the high housing prices in West Kelowna is that we are an attractive vacation destination – something that we want to preserve and promote rather than discourage. Most of those affected by the tax, moreover, won’t be foreign speculators but British Columbians and other Canadians with second homes in West Kelowna. Mayor Findlater was right to ask for an economic impact assessment to justify our inclusion in the tax area, but assuming the Province goes ahead without it the incoming Mayor and Council must press for an ongoing assessment to ensure that the tax is having the desired effect. If it is not, we should insist that we be exempted from the tax area and permitted to implement a housing policy that works for us.


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