September 22, 2015

Minefields on Granville Street

From today’s Sun:

The buyer is Hui Xiang International Realty Developments Ltd., a B.C. incorporated company with directors who list their address in Wenshan, a city in China’s southwestern province of Yunnan, which borders Myanmar, Laos and Vietnam. It’s also the location of their Wenshan Huixiang Real Estate Company, a former auto parts maker turned property developer.
The sale offers a more detailed glimpse at one example of the oft-referenced but faceless mainland Chinese investor at the heart of the debate over Vancouver housing affordability.
It also set the bar for other land assembly sales on this part of Granville Street, said Macdonald Realty agent William Lew, who is listing a row of “up to 11 houses” farther south between 49th and 52nd Avenues. To the north, Dexter Associates Realty agent Surinder Holat is offering a block of six homes between 45th and 43rd Avenues.

The City and its leaders are faced with an unpalatable choice:
On one hand, it makes sense for the City to consider rezoning this arterial for higher density housing – indeed, it’s a stated strategy, and there are already precedents elsewhere along Oak and Granville.
But if the City accedes to a request to do so here, after the properties have been assembled at high prices, it will facilitate speculation throughout the city.  Worse, it unleashes a xenophobic reaction: ‘zoning in Vancouver is now being directed from China!’
If it says no to considering a rezoning, as the planning director has done, then the properties may simply be held vacant and decaying.
Overgrown lots will then remind thousands of passers-by everyday that housing is being bought and sold by speculative interests outside the city who seem only to care for the highest dollar and little for local values.  They will be constant reminders of the affordability crisis.  They will be an indicator that Vancouver is a pawn in a global property game.  And if they remain unmaintained, evidence that City Hall cannot even enforce its own bylaws and Council is unable to do the minimum we expect of it.
That is disastrous politics, and opens the door to those who would exploit the underlying prejudices not very far below the surface.

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  1. How about they upzone enough property to ensure the speculators lose money? Then we can both have more housing, have lower costs of living, and indulge in our pretensions of punishing the wicked

  2. In a decision between increased density along arterial roadways and xenophobia, I know where I’d like the City to land.
    But I suspect the options are not as cut and dry as that makes it sound.
    Vancouver’s real estate is certainly subject to forces from outside the city, province, and country. There’s no sense pretending otherwise. The decisions that are made must take this context into consideration.

  3. the City is full of buildings with foreign investors. Concord Pacific? In the past the city took advantage of foreign investment by making building sites available.

  4. Private enterprise should not be restricted. However, it needs to be taxed appropriately. It appears that single family homes in good locations in the Lower Mainland owned by non-residents or for re-development or speculation purposes are not taxed high enough.
    Land transfer prices should be 1% per $1M of value, to 15% or $15M so the city or province would capture value twice: on sale to the developer and on resale when rebuilt.
    Simply by tieing property sales to income tax reporting would achieve this. BC resident tax payers would get a rebate over the current 2% mark for the first house (presumably an owner occupied home), whereas everyone else does not.
    Property taxes could also be 3-5x higher with a similar rebate for BC residents over and above the current level.
    This two pronged approach would not affect BC residents looking to live in their homes, but it would monetize the desire of non-BC residents to own or develop property here, creating much needed revenues for the homeless, social housing, new buses or subways.
    Unclear to me why the province does not see this ? Taxing income or goods & services is one thing, but properties are not taxed high enough if they are held for mere speculation and profit making !
    The provincial tax mix has to shift to recognize this big-desirable-city phenomena as it exists not only in Vancouver but also Toronto, Boston, New York, San Francisco, LA, London and a few other cities where Chinese (but also Russian, Iranian, Saudi, S-American or US) money is parked, often tax free or grossly under-taxed such as in BC !
    This makes far more sense than raising PST 0.5% !

    1. We levy parking fees and fines in downtowns to disincentivize people from using/abusing what might be otherwise free street parking. No-one seems to argue with this fact. The parker is simply covering some measure of the externalities created by their car’s presence.
      A money parking fee is little different. If someone is a resident, or uses their property, they are spending money and paying taxes and covering some/all externalities. If a property is sat upon, vacant, it isn’t related to spending, it isn’t creating taxes, and is displacing someone who would otherwise be doing so. There are a litany of properties around the city which are fallow, weedy lots near to otherwise vibrant and expensive places. The calculus to their staying this way must be that they are worth more empty and fallow then used.
      Fallow and weedy helps no-one. It creates externalities which are unbalanced by taxes. Parking fees/fines should therefore be levied.

    2. What’s particularly appealing about this approach is that Thomas has said here that he’s the owner of multiple properties and is thus calling for massively increased taxes on himself. While I often disagree with him, I have to respect anyone willing to shoulder a bigger load.
      Tying property taxes to income taxes sounds very interesting, but I don’t see how to deal with properties registered to companies, trusts, other family members, etc.
      If you jack up the rate across the board and offer income tax credits you’re effectively forcing every land rich, cash poor Canadian to sell their home or take out a reverse mortgage to pay the bill.
      If there’s an exemption or credit for the land rich, cash poor, then overseas investor simply installs a family member here in Canada with no local income who is then land rich, cash poor and exempt from the very taxes you’re trying to impose.
      Imposing such taxes (provided there were no loopholes) would drive rents upward as every home not occupied by the owner would be subject to huge tax increases.
      Sorry if I appear to be doing nothing but poke holes in others’ ideas, but I haven’t come up with a workable plan myself.

      1. What if there wasn’t a necessary penalty simply on multiple owning, but on multiple vacant owning. If you can prove you rent out the property, you don’t pay additional taxes. If you can’t prove you rent it, you do. At least a ‘parked’ local family member lives and pays taxes, just not income taxes.
        (the free sending of money to family members can be addressed by other means)

  5. Vision Vancouver specializes in spot zoning when it wants too. It really is where the party derives its funding. The question really is, who is Vancouver planning expertise, and who are the decision makers, now that Jackson and Ballem are out, or is it just, “density, towers, OK go ahead, build it”.

    1. From Frances’ article on Brian Jackson, in the Globe:
      “Mr. Jackson claimed that Vancouver has had fewer rezonings than Surrey, Burnaby or Richmond and that, contrary to the misinformation spread around the city, there have been only three spot rezonings in the past five years.”
      If they are specializing in it, they appear to be doing it about every 20 months. Doesn’t sound like a reliable revenue stream.

  6. I don’t think these speculators on Granville are thinking about townhouses. I think they are thinking of 6 storeys like Cambie. Setting a prezoned density of say 1.0-1.2FSR would ultimately settle the land value down where it belongs and see townhouses developed, as we are seeing on Oak Streeet south of 41st. Developers on Oak Street took about 10 years to reach this conclusion after the 1995 Oakridge-Langara Policy Plan was adopted, noticing that Council was standing firm on that density.
    THs are much more needed than more apartments, and certainly more acceptable to inboard sfr neighbours in terms of scale. This is how a quicker win could be achieved, both for the City and families, if not for speculators. That, and no CACs and perhaps reduced parking requirements on transit arterials.

  7. As long as housing is mainly governed as a way to make money rather than provide homes to people, this is hardly surprising or newsworthy.

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