Vancouver Sun story about Section 19(8) of BC Assessment Act - Derrick Penner- December 2, 2024

In a way, I'd likd to claim responsibility for this story. I discovered this section of the Act by accident several years ago when carrying out an assessment appeal for a Cambie Corridor project. I couldn't understand why the two lots adjacent to the Savoy project had significantly different assessed prices. I subsequently told everyone I knew about the section of the act that allows certain properties to be assessed below market value.

This year I did a couple of interviews about it, and wrote a blog. I mentioned it to Douglas Todd at Vancouver Sun who in turn mentioned it to Derrick Penner. While the November 30, 2024 deadline to make application has passed, there is still an opportunity to seek relief next year. It's just a more convoluted process. Here's Derrick Penner's story that appeared on line today.

Longtime Metro Vancouver homeowners nervously watching their property values rise due to B.C.’s transit-oriented development legislation have an option to avoid being side-swiped by higher property taxes.

The B.C. law that establishes automatic transit-oriented zones within 800 metres of transit stations increases the development potential — and value — of land within them, even if homeowners have no plans to cash in.

B.C. Assessment, however, does give owners the option to apply to have their properties assessed on actual use, rather than potential use.

It has helped homeowners, such as those on Cambie Street who faced dramatic spikes in property value when Vancouver approved its Cambie corridor plan to upzone most of the street to higher-density housing.

For the moment, the development market in areas affected by the transit-oriented zones law has cooled substantially due to uncertainty around how municipalities will enact its requirements, according to appraiser and tax expert Paul Sullivan.

“We’re not seeing changes in land value,” said Sullivan, tax agent and regional leader for the tax-technology firm Ryan. “In fact, we’re seeing substantial declines in land value (in) an environment where there are no presales, high interest rates and high construction costs.”

But Sullivan says homeowners should be aware of the little-known Assessment Act actual-use provision because when the development market turns around, “we’re going to see some pretty spiky upturns in value.”

Long-term residents in a neighbourhood that is changing can apply to B.C. Assessment requesting a special assessment on their properties that recognizes the value of what the property is being used for is less than the “highest and best use” associated with its development potential.

The provision is part of B.C. Assessment’s assessment review process and can be triggered by various reasons, not just new development, according to Bryan Murao, area assessor for the Lower Mainland.

“Even in quite simple scenarios — if you have, for example, a large lot that could be subdivided into two houses,” Murao said. “We have that kind of situation going on every year.”

Who is eligible for a special assessment?

Any long-term homeowner in a changing neighbourhood who owns a property that is less than two hectares in size, is used only for residential purposes and where no more than three families can qualify.

To be considered, the owner or spouse has to have lived in the home as a principal residence for a minimum of 10 years.

Also, the sales history of the neighbourhood has to show that the property has greater value for redevelopment than its existing residential use. Murao said rezoning approvals or provisions of new community plans are often not enough to trigger changes in value.

“The market has to first react to that (change),” Murao said. “We really try to pay attention to at what point are we seeing sales of houses in that neighbourhood not being bought for continued use as a house.”

How do homeowners apply?

Homeowners who are eligible can contact their local B.C. Assessment office to request the application, which is considered under the authority’s property assessment review panel process.

A description of the process on B.C. Assessment’s website highlights a deadline of Nov. 30 to submit applications for an assessment review, but Murao said that isn’t an absolute cutoff for 2025 assessments.

“All that Nov. 30 deadline is is a deadline to get it included in the completed (assessment) roll,” Murao said. “We have an early December cutoff for what you’re going to see on your assessment notice.”

Under the legislation, however, Murao said homeowners have until Jan. 31 of the following year to submit applications, which will be handled a little differently.

“(That) just means we have to process it through the (assessment) appeal process, not that the owner has to appeal,” Murao said. “But (we) put it through that so they can get the benefit, if they meet all the other conditions.”

How big a difference can it make?

Retired architect and developer Michael Geller highlighted on his blog https://gellersworldtravel.blogspot.com/2024/11/how-to-avoid-letting-bills-44-47.html a comparison he came across on the Cambie corridor a couple of blocks from the Oakridge/41st Avenue Canada Line Station. Whereas the duplex at 5407 Cambie St. was assessed last year at just under $4 million for “actual, not potential, use,” the property next door, of a similar size, was assessed at $7.6 million.

“(That) means the taxes are significant and significantly more because of something that people often forget about called the additional school tax,” Geller said, referring to the additional school tax rate that starts to kick in on homes worth more than $3 million.

Geller added that he’s heard the comparison that owning a home in one of these zones is like “essentially winning the lottery.”

“However, if they don’t want to sell and want to stay in their home, then they don’t necessarily want to win that particular lottery.”

depenner@postmedia.com

x.com/derrickpenner

Kerry Gold Globe and Mail - Curv projects seeks approval to remove social housing units - Globe and Mail, November 29, 204

Renderings of the CURV condo project in Vancouver by partners Brivia Group and Henson Group.

For many years I was a fan of Inclusionary Zoning which required a developer to build affordable housing, in return for greater development rights. More recently, I've changed my mind for several reasons. For one thing, they increase the price of the non-subsidized units. This in turn can increase the price of existing housing. Also, mixing social housing with expensive market housing often doesn't work, especially in a soft market. And currently we are in a soft market.

Last week Kerry Gold wrote about one such project in the Globe and Mail. Of course I had to tell her what I thought, and appreciate the fact that she slightly 'santitized' my comments! Here's her story.

The Curv tower development in Vancouver’s West End is a case study in investor influence and market dynamics – and the role developers play in delivering crucial below-market housing.

The 60-storey project promised 102 units of social housing on the levels below the luxury condo and market-rate rental suites, a feature that helped them obtain rezoning approval for considerably more density. Presales had been going well. The marketing spokesperson said they had set a record last year, with the sale of a $4,400-per-square-foot unit on one of the top floors.

But the market for presales has gone soft, and the developer has applied to remove the social housing units from the development. Instead, Montreal-based Brivia Group has applied to the city to pay cash-in-lieu, or a community amenity contribution.

The building originally had 50 secured purpose-built market rental units, but that would increase to 174 units, if the city approves its request to forego the social housing.

“I am not surprised to see this,” said developer and consultant Michael Geller, who’s been keeping an eye on the project – touted as the world’s tallest passive house building – since it launched presales in May, 2023.

“I remember going to the project launch and observing that absolutely no mention was made of the social housing units in the building by the marketing team,” he says. “I think every experienced luxury condo developer will tell you that it is fine to include predominantly market rental units in the same building as condos or create social housing units in a separate building nearby.

“But the Curv wants to be super luxury and just the threat of very low-income people in the building, hanging outside, will deter buyers,” Mr. Geller said.

Two months ago, the city amended the West End rezoning policy to allow for cash-in-lieu payments instead of delivering social housing units, to help with “financial challenges and “recent economic shifts,” said Dan Garrison, the city’s director of housing policy and regulation.

“The changes would also align the West End’s housing requirements with the newly approved [provincial] guidelines for transit-oriented areas,” he said in an e-mail.

Such payments should cover costs for off-site social housing, including land and construction, and will be “determined on a case-by-case basis through the rezoning process,” according to the amendment. The West End community would be given priority for the funds.

Because of the market downturn, there are 280 social housing units within three projects that have been rezoned around the Burrard Street corridor that are not getting built, according to the city.

When Brivia Group’s partner Henson Development applied for a rezoning four years ago, the city policy for the area required either 25 per cent below-market housing or one-for-one replacement of the existing rental apartments, whichever was greater. There are 51 units in two older apartment buildings lost due to the redevelopment at 1059-1075 Nelson St. (the addresses have since been changed to 1059-1083 Nelson St.). But the city considered the promised social housing and purpose-built rental units at the Curv a bonus towards their 10-year housing targets.

“The issue of CAC’s being renegotiated when the market goes soft is very problematic – it generates all sorts of potentially bad behaviour,” says Cameron Gray, former director of housing for the city of Vancouver. In the 1990s, Mr. Gray worked in the early formation of CACs, which the city used to finance below-market housing.

When social housing is involved, it usually requires a developer partnering with the city or a non-profit operator, which is more complicated. Mr. Gray said he can understand why a developer would prefer to simplify and instead have 174 market rate rental units to sell off to a pension fund or other investor, or simply hold as an investment.

“But if you allow the CAC to be treated as insulation for the market, then suddenly the city starts taking on the risk,” he said. “So, the city becomes the risk-bearing partner. It can result in a developer coming in and saying, ‘I can offer them a whole bunch, get my rezoning and come back and say, it doesn’t work … bail me out.’”

As well, the cash might not make its way to social housing if it’s not immediately directed there. And cash loses value due to inflation.

“If the city is doing pay in lieu, it has to put the money to work in social housing pretty quickly,” said Mr. Cameron, who is a fan of the city “land banking,” or purchasing properties in a soft market.

“They have to make the money work, because if you stick it in the bank and have it do nothing, at some point it may become reallocated to street improvements or the art gallery or child care, or something. So, you have to be pretty intentional about what you are doing.”

In the four years since council approved the rezoning, wait-lists for social housing have outpaced population growth, according to Metro Vancouver’s housing data book for 2023. The data showed a 27 per cent growth in the number of people in need of social housing, with 18,865 households on BC Housing’s social housing wait-list. That was up more than 4,000 households since June, 2022.

Mr. Geller pointed out that other municipalities, such as Burnaby, are also adjusting their below-market housing requirements now that projects are failing to get built.

The Curv site had been flipped a few times over the past decade, with each flip driving up the value. The apartment blocks were initially purchased by Wall Financial Corp. in 2013 for a reported $16.8-million, with a plan to develop a tower. They then sold the site in January, 2016 for $60-million, a share sale to a group of Chinese immigrant buyers, as reported by the South China Morning Post. Only a month after the purchase, the consortium then flipped it for $68-million. In 2021, Montreal’s Brivia Group purchased the site for an undisclosed sum and proposed the luxury mixed residential tower.

Construction failed to start this year because the developer has had problems selling its 358 luxury strata units in a market downturn.

Before the downturn, the marketer for the project, Jacky Chan, said many of the buyers were super wealthy, seasoned investors and holders of large property portfolios. More recently, he said the higher interest rates and China’s own housing downturn were having an impact on the Vancouver market.

In B.C., developers must show they’ve got the financing in place to start construction within 12 months of filing a disclosure statement with the BC Financial Services Authority. Lenders require about 70 per cent of the project is presold.

“We still need another $100-million,” Mr. Chan said in June. “We have filed a new disclosure statement that gives us another year to work on it, because of how big it is. We were able to retain 95 per cent of the buyers. … People want to stay in and continue to see this building come through.”

Brivia Group did not respond to a request for an interview.

Frances Bula's Globe and Mail story about the province's Shared-Equity Program - November 28, 2024

I have been a longsgtanding fan of the concept of 'Shared Equity' housing programs in which a portion of a homebuyers cost and appreciation is shared with another individual or organization. In September 2024, the provincial government announced such a program to considerable fanfare. 

There was just one problem. While over the long term real estate prices always go up, they don't always go up in the short term. While the premier talked about how this program would help people buy, he never once discussed the fact that if someone had to sell within a relatively short timeframe, and the price went down, or the home wasn't worth as much as they had paid for it given all the upfront costs associated with buyng a new home (GST, PTT, legal fees, etc.) the homebuyer could lose a lot of money, including some or all of their downpayment.

So when Frances Bula called me to ask my opinion of the provincial program, I had to mention this. Here is her Globe and Mail story.

B.C. shared-equity housing plan prompts both hope and skepticism

Imagine buying a brand-new studio apartment in a prime location on Vancouver’s west side, close to the city’s major hospitals, to schools, and to a spectacular city garden park, for $372,000.

Or a two-bedroom apartment for $780,000 – an amount of money that normally would get you no more than a small one-bedroom in the less-pricey east Vancouver neighbourhoods, a two-bedroom townhouse in the southern suburb of Surrey, or a house with yard in Chilliwack, an hour’s drive east of the city.

No, the time machine hasn’t rolled back to 1990. That’s what the provincial government is offering B.C. residents who are in a targeted middle-income bracket through a new affordable home-ownership program that was announced just before the recent election.

Premier David Eby said those prices would cover 60 per cent of the cost and the province would provide a second mortgage for the other 40 per cent, payable only after the buyer sells or has lived there for 25 years.

In that announcement, the deal was limited to the 2,600 new homes being built by Vancouver’s powerhouse Indigenous development group, MST Development, in what is called the Heather Lands development just off Oak Street near Eric Hamber high school and Van Dusen Gardens.

It’s something the local Indigenous nations in MST had lobbied for since the early days of development planning.

“Through offering the opportunity of homeownership to more people, we are aligning our cultural values of caring for the people who live in our territories, while also delivering economic benefits to our community and the next seven generations,” said Chief Jen Thomas from the Tseil-Waututh Nation.

During the election campaign, Mr. Eby also said it would be expanded to the rest of the province. (Details are still to come on that with his new, smaller, and very different group of NDP MLAs now in charge at the legislature.)

In the meantime, the first promise is set to roll out in 2025, according to the original news release from October.

Vancouver's Heather Lands development near Van Dusen Gardens, was limited to the 2,600 new homes being built by Vancouver’s powerhouse Indigenous development group, MST Development.

CANADA LANDS CO.

And that program – a novelty for B.C. – is prompting a mix of hope, skepticism, and interest among both locals and people across the country as the province tries out a new strategy that has been undertaken in Ontario for many years by philanthropic or non-profit private organizations, not government.

“From the point of view of individual families, it’s awesome,” says John Fox, a lawyer who is one of the country’s pre-eminent specialists in this type of housing strategy, often called shared-equity home ownership. “You have security of tenure and, if the underlying value goes up, that benefits them.”

Mr. Fox, with the Toronto firm Robins Appleby, also noted that the program was likely conceived not just to benefit those individual families but to create a healthier city. It makes room for middle-income families with children in a neighbourhood that they would otherwise be shut out of, rather than having to move an hour or more away to get the same value for money.

“It does create diversity in a neighbourhood and that can be a positive. And it’s a wonderful thing to have nurses close to the hospitals. Those are important aspects.”

But he and others noted that a program like this can have some pitfalls. As well, it provides only a very limited strategy for one small piece of the much larger housing crisis in B.C. and Canada that has resulted in everything from homelessness and a sense of massive housing insecurity for lower-income renters to double-income professional households finding themselves forced to either buy far from where they want to be, squeezed into tiny spaces if they stay central, or confined to renting indefinitely at high prices.

Mr. Fox noted that, for someone to buy the two-bedroom units, which the province estimated would go for $1.3-million, the buyers would have enough to qualify for the $780,000 that would still cost. That means a household income around $168,000, but it can’t be too much more than that or it exceeds the province’s limit on income that is part of its effort to make sure the right group is buying in. That limit would be $191,000.

For local developer Michael Geller, who created the shared-equity home-ownership program at Simon Fraser University when he oversaw housing programs there, the risk for the buyer is that prices might go down – an almost unheard-of event in recent Vancouver history but still not outside the realm of possibility. Then buyers who might have to sell for various personal reasons, especially if it’s shortly after they purchase with all the attendant extra fees and “new-car” premium, will end up losing a lot. They’d have to pay back the province the 40 per cent of the original selling price, not 40 per cent of whatever their unit might sell for in a down market.

“It’s often difficult, if you have to sell in the first couple of years, to recover the initial cost,” said Mr. Geller.

Others who have been involved in running Ontario’s successful shared-equity home-ownership programs, the province’s offer to cover 40 per cent is much higher than anything they have done. It means that it will take a lot of money to run the program for a limited number of buyers. The province committed $672-million for the Heather Lands supports.

As well, the province’s program is different in another way. It is saying the program will only be an option for the first generation of buyers at the Heather Lands (and presumably elsewhere in the province). Once those buyers sell and the province makes money on its 40-per-cent equity share, it won’t necessarily be ploughed back into that same development or even a project in another location. Instead, the province is promising that it will going into housing, in general, somewhere, somehow.

The 40 per cent “is a significant amount,” says Heather Tremain, who was the CEO of Ontario’s Options for Homes program for a decade, where about 3,400 homes have been developed in 14 different projects since it started more than 20 years ago. “That money won’t go far.”

Another difference: in the B.C., the equity profits won’t be recycled back into a similar program.

That’s what Options, which takes any money it makes on its portion of the shared equity, typically 15 per cent, and puts it immediately back into new projects.

“If we lend someone $15,000, when they sell in five to 10 years, if it has doubled, we receive $30,000. When people pay it back, that allows Options to buy more land and fund early stages of construction,” said Ms. Tremain.

Options is also different from the B.C. program in that only some of the homes in the projects it builds are offered to buyers with the shared-equity option. The rest go to regular buyers who get no special help.

That’s the way it has operated since 1994, when the original founder simply bootstrapped a small incentive program together. The profits from the equity increases helped fund everything after that, which has included projects in various parts of Toronto from the Distillery District and The Junction to suburbs like Markham and Weston.

At Trillium Housing, also in Ontario, the program operates on a slightly different model by using donated money from foundations or private investors wanting to create some social impact with their money.

There, one of the directors, Joe Deschênes Smith, said he has the leeway to provide more than 15 per cent in special cases where he thinks it’s needed and will work out financially for the family. As well, if the market goes down, the organization shares in that.

“We decided we set up Trillium 10 years ago that we’ll take more of the downside,” said Mr. Smith. As well, Trillium doesn’t charge a set interest rate on its part of the mortgage, but makes most of its profit from the equity appreciation over the years.

Ultimately, he, like Ms. Tremain, believes shared-equity programs are a powerful tool for a particular group of people who just need a small boost to get into the housing market -- similar to the one that some first-time buyers get from their parents, to get into the housing market. They’re often households headed by single women, immigrants or non-white people.

They’re working, they’re financially stable, they just can’t quite get over all the current hurdles to get to ownership.

In spite of the differences, Mr. Smith thinks B.C.’s program is strong and promising.

“I’m excited that they’re doing it. I think we need governments like B.C. taking these first steps.”

He’d love to see big investors, particularly union pension funds that should have an interest in providing housing to their members, participating in these kinds of programs.

“It would leverage a lot more support. B.C. needs to figure out how to attract those institutional investors.

The Uglification of Metro Vancouver quickens with mass upzoning - Douglas Todd Vancouver Sun - November 30, 2024

For several years, Vancouver Sun columnist Douglas Todd has taken a personal interest in the future planning of Vancouver. He has often written about urban issues and in recent months has written extensively about the Broadway Plan. 

https://vancouversun.com/opinion/columnists/kitsilano-neighbourhood-braces-23-new-towers

https://vancouversun.com/opinion/columnists/renters-fear-broadway-plan

This past weekend, he wrote another story that has attracted considerable attention. The fact is, while Vancouver City Council was well-intentioned in wanting to create a lot more rental housing in the hope that it would make rental housing more affordable, the significantly higher FSRs that staff said were necessary have only accomplished two things so far. 

They have resulting in a most unfortunate juxtapositioning of 17 to  20 storey towers amongst 2 storey duplexes and older lowrise rental apartment buildings along charming leafy streets, Secondly, they may have increased property values by up to 50% based on prices paid for recent land assemblies. And this is just the beginning. Here is Mr. Todd's most recent column in which I struggle to explain FSR in terms a lay person might understand.

The Uglification of Vancouver Quickens with Mass Upzoning 

https://www.msn.com/en-ca/news/canada/the-uglification-of-metro-vancouver-quickens-with-mass-upzoning/ar-AA1uVV35?ocid=BingNewsSerp

Advocates of higher density housing in Metro Vancouver often challenge opponents by demanding they look at how the West End, with its scores of residential highrises, has turned out pretty well.

And, at first glance, they seem to have a point. The West End is livable not only because it borders on the beaches of English Bay, the promenades of Burrard Harbour and the wonders of Stanley Park, one of the world’s greatest urban forests.

The West End is also a pretty attractive place because most of the towers there fit into the neighbourhood. Tens of thousands of West End renters and condo owners are the beneficiaries of enlightened city policies that go back 20 to 50 years — when politicians were far more demanding of property developers.

Back then, when city councillors granted builders the profitable right to construct towers higher than permitted under existing zoning, they were legally required to include amenities such as expansive gardens, courtyards, open entryways, trees and parking spots.

Through a negotiating process called “conditional zoning,” Vancouver politicians up until the mid-2000s also made sure highrises didn’t replace all the character homes and older apartment buildings in the West End. Such progressive density policies applied as well to Kerrisdale, South Granville, Grandview, Kitsilano and elsewhere.

In addition, Vancouver politicians of decades ago demanded that companies that built major highrise developments had to significantly finance new parks, playing fields, seaside promenades and community centres. Residents today get to enjoy them.

Author and illustrator Michael Kluckner , who has made a career of drawing Vancouver’s changing streetscapes, isn’t exactly enamoured with the towers, old and new, that pepper many neighbourhoods. But at least, he says, older highrises “usually blend in with their surroundings quite well. When I look at the West End and Kerrisdale, I see ensembles, not jumbles.”

Over the past half century Metro, an international gateway, has grown into the fourth most dense region in North America . But proponents of even higher density fail to acknowledge that the city-enhancing policies that guided the relatively esthetic development of the West End and elsewhere are largely gone.

And it’s not just nostalgia to miss them. There are lessons to be drawn from how, compared with the past, there is precious little open ground left on tower sites, while sidewalks grow tighter.

This residential tower, proposed under Vancouver’s upzoned Broadway plan for leafy 14th Avenue, comes with no green space at ground level. That’s unlike earlier highrises. It’s typical of 22 other towers slated for east Kitsilano.

Even though the “conditional zoning” schemes of the past haven’t been entirely abandoned in Vancouver, they have weakened so much that now many 45-storey-plus glass and steel residential towers are being crammed with smaller units onto tinier lots.

And that’s because of an unintended consequence of politicians’ ostensibly well-meaning efforts to reduce housing prices, which are among the most expensive in the world.

Politicians have been convinced developers will be able to charge cheaper home prices and rents if they’re given the green light to build more units on less land — and provide fewer amenities.

The idea seems to make sense on the surface. But, tragically, it’s incorrect.

“It is counterintuitive. That’s part of the political and policy problem,” said Patrick Condon, a professor in the department of architecture at the University of B.C.

What many don’t realize is that when the city slashes its requirement for green space and other benefits on property that has been drastically upzoned, it simply increases the cost developers have to pay for the land. They then have to pass that on to homebuyers.

The upzoning therefore mostly makes landowners and speculators richer. It doesn’t lead to lower housing prices.

It’s worth taking a few minutes to absorb this lesson in housing economics, which especially impacts residents dealing with the sweeping upzoning the city has rammed through with the Broadway plan and the province has imposed within 800 metres of transit-oriented developments.

As Condon puts it slightly more technically, legislating mandatory upzoning without asking for major amenities from developers “merely increases the ‘land price residual,’ which is the amount the developer can afford to pay for the land after all other projected costs are calculated.”

When the city and province reduce expectations that highrise developers have to contribute to the public good through such things as attractive design and green spaces, Condon said, “you sadly increase the market cost of the ‘land price residual.’ That puts money that would have gone to public benefit into the pocket of the land speculator.”

In other words, the price of the land wouldn’t be as high if everyone knew beforehand that politicians were going to be requiring developers to provide green space and other amenities.

With the incredible rise in global and domestic property speculation in Metro, Condon says Vancouver councillors and the B.C. government “have forgotten the time when development more than ‘paid its way’ — and no one was hurt, not the home purchaser, nor the taxpayer.”

The escalating uglification dynamic, which in Vancouver has led to fast-rising property taxes, is explained well in Condon’s important new book, Broken City: Land Speculation, Inequality and Urban Crisis.

That’s where he eloquently describes how the City of Vancouver once led the way in North America in “capitalizing on the engine of its rapid development in order to deliver social benefits.” But that golden goose, of creative conditional zoning is now largely cooked.

This typical Vancouver rental apartment highrise, built several decades ago, comes with far more green space than new taller towers. It rises 14 storeys at 5815 Yew St. in Kerrisdale.© Douglas Todd

Community planner Michael Geller , a lecturer in Simon Fraser University’s environmental department, puts the problem of today’s “overbearing” residential towers in the language of square footage.

In the 1990s, Geller says, developers in Vancouver were often getting approvals to build highrises, like in Kerrisdale, with a floor-to-space ratio (FSR) of two-to-one. That meant the buildings could have two times more floorspace than the lot area.

“But now the 20-storey towers set to be automatically approved along even the quiet residential streets of the Broadway corridor come with a ratio of up to six-to-one.” That will make them appear far more massive.

At the risk of offending anyone, I trust you'll agree this gentleman looks quite different at 150 pounds, compared to 300+ pounds. Similarly an 18 storey 2 FSR building looks very different than an 18 storey 6 FSR building.

While some suggest not getting hung up on floor-to-space ratios, Geller says they matter: “Look at a person’s weight. At six feet tall, I would look quite different at 150 pounds compared to 300 pounds.”

Indeed.

No matter which way you describe it, as the requirements diminish for appealing buildings, green spaces and social benefits, so does the city.

dtodd@postmedia.com

How to avoid letting Bills 44 & 47 increase your property taxes

Last year the province approved Bill 44 which permits 4 or 6 homes on most single-family lots without a need for rezonings and public hearings. It also approved Bill 47 allowing higher densities near transit stations and bus loops. At the time, many questioned whether these Bills would increase property assessments and taxes.

Bill 44-Multiplexes. Government officials responded that since Bill 44 was so widespread, it was unlikely to have a significant impact on property values. I agree. However, I also expect some single-family lots, especially larger lots located in areas where multiplex developments might be popular, and where there have been recent sales at higher values, will go up in their assessed value. As a result, property taxes will increase.

Bill 47-Transit Oriented Development. Similarly, many single-family properties near transit stations will likely increase in value. This will likely be evident on your 2025 Assessment Notice, especially if there have been nearby sales of single-family zoned lots at higher values. A good example is along the Broadway and Cambie Corridors. 

While this may be good news for certain owners, it will not be good news for those who have lived in their homes for many years and have no intention of selling to a developer or homebuilder. For them, increased assessments will simply lead to an increased property assessment and higher property taxes.

Fortunately qualifying owners of these properties can do something to avoid higher property taxes. They can make an application under Section 19(8) of the BC Assessment Act before November 30th.   

This section of the act applies to residential properties that have been owned and occupied continuously for 10 years by the present owner. Instead of being assessed higher, they can be valued on the basis of their present single-family residential use, even though they may have a higher alternative use and greater value. 

Examples would be single-family dwellings on land that can be subdivided into smaller parcels or developed with multiplexes or multi-family/apartment or commercial use. 

To illustrate how this works, look at these two identical side-by-side properties on Cambie Street.

If you look carefully at the bottom of the 5407 Cambie assessment you'll see this note.

Assessed Value only reflects actual not potential use. Assessment Act. s 19(8)

If single-family houses near your home have been selling at higher prices due to Bills 44 & 47 or other Official Community Plan or zoning changes, you should check this out.

Eligible owners must apply annually by November 30th. All applications should be submitted by this date.​

NOTE: You will not know for certain whether you assessment has gone up until January 2025 when the new assessments come out. If you miss the November deadline, you can make application up until March 15 of the following year. However, if you can make the application this year, it will be easier to ensure that your assessment does not increase due to the zoning changes. 

A common question is whether property owners who take advantage of this provision will have to pay back the taxes they saved if and when they sell at  a higher price. The answer is NO.

You can find more details and the application form here: https://info.bcassessment.ca/Services-products/property-classes-and-exemptions/section-19-8-of-assessment-act-special-assessments-for-certain-long-term-residents

BROADWAY PLAN Redux - Douglas Todd Vancouver Sun November 23, 2024

Last week, Douglas Todd, a columnist with the Vancouver Sun invited me to follow up on some of my earlier concerns about the Broadway Plan. Below is the result. 

While I might have rephrased some of the things I said so that it didn't appear that I believe all the applicants are speculators, and all land deals are between $100 and $150 psf...(in fact some developers and speculators are paying more), overall Douglas Todd quoted me most accurately.

I am curious what Jennifer Podmore and others associated with the Senakw development think of my expectation that rather than leave units empty in such a highly visible location, the Squamish Nation and QuadReal will rent their market suites at rates below what other developers are hoping to achieve, namely $5.50 to $6 per sq.ft. per month or more , depending on whether it is a studio or 3-bedroom unit. o or 3-bedroom unit.

Tens of thousands of Vancouver residents and beyond live in fear of being displaced or their communities distorted by colossal property development, including within the upzoned land of the Broadway plan.

That’s where “realtors are having a field day,” says Michael Geller, Vancouver community planner and property developer.

The same fears exist within the B.C. government’s transit-oriented-development zones — that is, property within 800 metres of SkyTrain stations and transit hubs, not to mention in the vicinity of scores of more highrise proposals peppered throughout Metro Vancouver.

Residents within the Broadway zone and around SkyTrain stations aren’t only afraid they’ll be forced out of their rentals, many are also wondering whether it’s simply time to move away from the coming chaos.

Their resistance will be on display Saturday at 1 p.m. at a “Pause the Plan!” rally on the north side of Vancouver City Hall, where citizens will urge city council to rethink the mammoth Broadway plan.

Paradoxically, in the midst of the turmoil caused by the city’s and province’s dramatic upzoning to address extreme unaffordability, not much new building is actually going on.

In other words, many residents might have more time than they think before the demolition crews, excavators, orange fences and construction cranes move in and transform their normally quiet streets and neighbourhoods.

There are many reasons for the plodding pace.

One is that this year brings a general slowdown in housing construction in Metro, partly due to higher interest rates.

A more specific reason related to the Broadway corridor and Vancouver is that it’s mostly real estate “speculators” who are making the initial moves for more towers, said Geller.

Most of the entrepreneurs trying to get in on the city’s radical new density allowances aren’t developers, says Geller. They’re investors who wish to get councillors to approve their projects in the hopes that they can then sell them to developers.

More than 120 tower proposals have been made with the Broadway plan. Credit: Screenshot of interactive map by Stephen Bohus

They’re speculating on big profits on land that has suddenly become much more expensive because governments have unilaterally approved towers in the 20-storey range on city blocks on which there were once just low-rise multiplexes or detached homes.

Bob Moore of Dexter Realty acknowledges many of those behind the projects are being “somewhat speculative or opportunistic.”

While land assemblers are buying up many housing lots to turn them into highrise sites, Moore believes other applications are by long-term owners of older, three-storey rental walk-ups.

“These owners believe they can secure a 20-storey allowance themselves, so they can sell to a developer for a higher price,” said Moore. “But … this strategy does not appear to be working out so well.”

The many towers being proposed under the Broadway plan will forever change some character streets like this one on East 10th between Fraser and Main. Photo by Arlen Redekop /PNG

In other words, the profit margins aren’t looking promising, including for the pension funds and real estate investment trusts (REITS) expected to eventually buy and run the purpose-built rental towers.

“(Building) starts are likely to be muted for the next little while,” said University of B.C. business professor Thomas Davidoff, including because of the understandable but “onerous” Broadway plan requirement that builders must support displaced tenants.

“A combination of high interest rates and weakened rents — likely from a weaker economy and reduced immigration — currently makes both rental projects and condos less profitable than they were awhile ago,” said Davidoff.

Population-based demand for housing in B.C. and Metro will likely decline in the short-term, concurs Bryan Yu, chief economist for Central 1. While B.C.’s population had been growing at the record rate of 3.3 per cent a year due to international migration, Yu expects it to slow to “one per cent per annum in the coming two years.”

There is something else causing developers to worry that they can’t make enough profit building inside the Broadway corridor or around Vancouver subway stations, said Geller.

And that is the giant Sen̓áḵw project, Geller said — the new rental skyscrapers under construction by the Squamish Nation on reserve land at the western end of the Burrard Bridge in Kitsilano.

Senakw’s initial 3,000 highrise units haven’t “faced the same financial challenges as most other projects since there is no land cost, compared to a land cost of $100 to $150 per square foot of buildable area for other projects,” said Geller.

“When they are finished I expect the Squamish Nation and Quadreal (an arm of the B.C. Pension fund) will not want to allow them to sit empty too long. I predict that they will rent for less than other projects, especially since there is no parking. And that could upset the market a bit.”

The Squamish Nation’s 3,000 rental units next to the Burrard Bridge will be less expensive than those built under the Broadway plan “since there is no land cost, compared to a land cost of $100 to $150 per square foot of buildable area for other projects,” says Michael Geller. Photo by Arlen Redekop /PNG

Moreover, the retired architect said, the Sen̓áḵw highrises were able to start construction quickly because two years ago Prime Minister Justin Trudeau announced a “massive, $1.4-billion, low interest loan” for the project, which could eventually provide 6,000 units.

Other builders aren’t able to get such favourable loans, Geller said.

Despite other expensive efforts by federal, provincial and civic governments to stimulate the building of houses, Moore laments an additional problem: Governments themselves often get in the way.

“Developers look for a stable and predictable environment. The last 2½ years has been anything but,” he said, with abrupt cost increases in not only interest rates, but also in taxes and building code demands.

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These expenses “were not known two years ago when many developers put Broadway plan sites under contract,” Moore said. For instance, he said, the B.C. government is now “mandating accessibility standards for all new homes” in large condo and rental projects, “which reduces the number of units in a building.“

Despite Vancouver city council adopting the Broadway plan 2½ years ago, Moore also noted it was only this month that politicians got around to approving the first project: “It will be another 2 1/2 years before the first 20-storey rental building is ready for occupants.”

In other words, there is little doubt a juggernaut is marching toward the Broadway corridor and other neighbourhoods.

But it’s moving slower than expected.

dtodd@postmedia.com

CKNW - Why Developers are Going into Receivership.

This week, news broke that a major Surrey developer Thind Properties https://thind.ca/ was put into receivership by its lender Kingsett. At first there was just one project in Surrey with 90% of the units already presold. This seemed quite odd, since presales are often the key to getting a project's construction underway. But in this case, the presales occurred some time ago and the Building Permit had not yet been issued.

Then we learned that there were two other major projects in Richmond and Burnaby by the same developer also in trouble. In total, the lender was owed over $300 million. And then it was reported that the developer had misappropriated funds and failed to pay money owed to the government.

Both Paul Sullivan, https://ryan.com/about-ryan/leadership/paul-sullivan/ generally regarded as one of the most knowledgeable appraisers and real estate consultants in town and I were invited by CKNW to comment on the receivership and why it might have happened. Paul spoke to Mike Smyth. A day earlier, I had spoken to Jas Johal. Neither of us knew the other was doing the interviews but if you can take the time to listen, you'll hear us saying essentially the same things.

Paul Sullivan on Mike Smyth Show CKNW How does an $85 million project go down the tubes The Mike Smyth Show | Global News

MG on the Jas Johal Show. https://www.iheart.com/podcast/256-the-jas-johal-show-31081170/episode/why-are-big-vancouver-developers-going-240525450/

In case you don't have time to listen, here are some key takeaways.

The presale markets have dried up. In order to arrange project financing lenders want to know whether there is a market for a project. When I first started in this business, good lenders undertook research to assess whether a market existed, the prices the units would sell for upon completion, and then make a decision whether to lend on the project or not, and if so, what percentage loan would be acceptable.

That's not how we do it today. Instead, in most cases, developers are required to set up presale programs, usually in a purpose-built presentation centre, with models mock-ups of a kitchen and bathroom, and sometimes a full suite or two. Virtual reality displays show the views from each suite and related marketing information. The cost of all this is usually six figures and often seven.

Until the last couple of years, most presale buyers were investors intending to rent out the completed unit, or younger households willing to purchase three or more years before the project was completed. Families with children or empty nesters were generally not major market segments. Although certain projects in established neighbourhoods like Kerrisdale, Dunbar, West Vancouver were designed and sold to empty nesters, who could plan a move three years later.

New tax programs are major culprits. Unfortunately, government taxation programs have completely changed the presale marketing of projects. The Foreign Buyer Tax, and subsequently the ban on foreign buyers removed them from the market. Then the Speculation and Vacancy Tax and Empty Home Tax discouraged those wanting to purchase a condominium as a second home. To add insult to injury, the prohibition on short-term rentals further exacerbated the situation.

While many applaud the governments for introducing these taxes, they haven't thought about a significant, unintended consequence. A lot of projects are simply not able to meet their presale target and get underway. Others are not even trying. If you need proof, just look at how many projects have been approved in recent years along the Cambie Corridor that have not proceeded. It is also estimated that there are 44,000 units in Surrey that are in the approval process, or already approved, that are unlikely to proceed. 

On top of all of this, as Jas Johal pointed out, there are a substantial number of completed and unsold condominiums. Furthermore, there are many units, especially high-end luxury units that sold a couple of years ago at very high prices, oftentimes in excess of $3,000 psf, that are nearing completion. Units in these buildings are now being offered for sale as assignments, oftentimes well below the original price paid. 

Travelodge Receivership. When I spoke with Jas Johal, he referenced Coromandel's high profile receivership that we had discussed last year. He wondered whether the Thind receivership was likely the last one we would see for a while, or just the beginning. Unfortunately, I thought it was just the beginning adding that earlier this year, theTravelodge Motel redevelopment in North Vancouver being undertaken by Marvel Group, for which I had been the Development Manager for three years, was put into receivership by its lender Atrium MIC. 

Although I had obtained the rezoning that created the value, and oversaw the Development Permit Application, at the time of the receivership, I was owed a substantial amount of money. Whether I get any of it back remains to be seen.

There will be more Receiverships. Sadly, I expect more receiverships in the year ahead. In addition to detriorating market conditions, project costs have increased considerably.since projects were first conceived and received preliminary approvals.  Three key increases are construction costs, interest rates, and municipal fees. Looking at two projects I'm involved with along Cambie Street, construction costs are substantialy higher than five years ago. Although prime rates interest rates are coming down, developers are often paying substantially higher interest rates. In the case of Thind, their loans were at 10% and 12%. While some people may be pleased to read about developers going broke, sadly a lot of small people get hurt too.

Municipal fees and timing are serious concerns. Both Paul Sullivan and I pointed out that unfortunately the higher municipal Community Amenity Contributions and Development Cost Levies that were approved when times were good are seriously impeding new developments from proceeding. In the case of the Cambie street projects, the municipal fees, including engineering requirements total $9 million, for a 61-unit project. This is 90% higher than for a similar project completed across the street a year ago. Furthermore, while we constantly hear project approvals are being sped up, and in some instances they are, they still take much too long. It often takes months to get an answer from staff on what fees might be payable.

To conclude, as more high profile projects go into receivership, lenders become increasingly cautious. As a result, it is likely that many more projects with prior approvals and obligations to pay substantial fees payable to the city, are not going to proceed. The market simply is not there right now.  

Crying Wolf. Developers have often complained in the past about the difficulties making projects work financially. But this time they are not crying wolf. Sadly, the unintended consequences of projects not proceeding will be serious. A lot fewer people will be working, and as I and others have written, the affordable housing crisis is not just about the cost of housing. It is also about BC's low incomes. Canceled projects will not help.