Opinion: Fixing Vancouver's So-called EMPTY HOME TAX - Business in Vancouver - May 19, 2023

Thank you Kirk LaPointe and Glacier Media for inviting me to write this opinion piece on the EHT.

On May 10, Vancouver City Council passed amendments to the city’s so-called Empty Home Tax (EHT) to improve its fairness and effectiveness. These included reducing the rate from a proposed five per cent to three per cent; eliminating the July 1 deadline by which certain applications had to be submitted or permits issued; terminating the current exemption provided to strata properties with rental restrictions, effective 2024; and allowing developers to claim an exemption for unsold, vacant, new inventor until the inventor is sold or occupied. 

While the latter amendment prompted howls of protest in council and on social media, since developers will receive rebates that could otherwise fund social housing. council’s decision was appropriate. Let me explain why I label this a ‘"so-called’"Empty Home Tax. 

The city first proposed the EHT in 2016. At the time, Mayor Gregor Robertson told residents, “Vancouver renters were in crisis, with the rental vacancy rate hovering over zero for years. The city will not sit on the sidelines as more than 25,000 empty and under-occupied properties are held back from people who live and work in Vancouver. The city needs a tax on empty homes to encourage the best use of all our housing and help boost our rental supply for locals.” 

The first people to complain about the tax were second homeowners who received letters telling them that if they did not reside in their homes for at least six months, they would have to rent them out or pay a one per cent tax. These included Rainer Borkenhagen, a retired doctor who lived in Gibsons but owned a condominium in Vancouver. He objected to the tax and co-founded The Unfair Vancouver Vacant Homes Tax Coalition. He pointed out that people his age wanted to keep ties with their kids, and having a second home in Vancouver was an effective way to do this. His home was not empty. He lived in it four or five months a year. Other second homeowners included Albertans, Americans, and BC residents living in Vancouver for part of the year. 

I agreed they should not be subjected to the tax and wrote so in several Vancouver Courier columns. Readers invariably questioned why these owners were unwilling to pay the tax if they could afford expensive second homes. Others pointed out the injustice of them having two homes when they did not even have one. This prompted a local rabbi to quip the tax might be called a 'Jealousy Tax'. "If I can't afford a home, you shouldn't be allowed to have two." My editor headlined a subsequent column “Is the empty homes tax based on jealousy?” 

In December 2017, media reported on the plight of Jane Macdougall, a Kerrisdale homeowner who had discovered she would have to pay the EHT. But not on her house; on a portion of her garden, since it was a vacant lot. Not only did the EHT apply to owners of second homes, it applied to vacant land. I was subsequently advised this was to discourage property owners from demolishing dwellings to avoid the tax. 

In October 2018, the city proposed EHT program amendments to improve its fairness and effectiveness. However, they did not address second homeowners nor vacant land. 

In February 2019, Council again considered amendments to improve the tax’s fairness and effectiveness. While the mayor had told us there were 25,000 empty homes that could be brought onto the rental market, the accompanying staff report told a different story. In 2017, the number of homes declared vacant without valid reason was only 1,085. In 2018, it was 922. 525 properties were declared vacant for both years. 

The staff report further noted “a significant number of formerly vacant units did return to the rental stock between 2017 and 2018”. How many? 117. Yes, 117. 

Nonetheless, the city expected to receive $38 million from the 922 vacant properties. This was $41,215 per property which equated to an average value of $4,125,000. Even if these dwellings were to become rental, they were not going to be affordable rental. 

In subsequent years, many property owners were unfairly charged EHT. These included a Marpole landowner trying to build rental apartments on vacant land zoned for duplexes. Although willing to rezone, there was no policy allowing a rezoning. Planning staff advised him to wait for neighbourhood planning or zoning changes, which he did. He was subsequently charged the tax since he had not submitted a rezoning or development permit application. 

The city taxed a friend’s Gastown live-work unit in which he operated a film studio for decades because he did not live there. 

A couple building a new house moved out and rented another place since permits were about to be issued. However, the city delayed issuing the permits and then charged the homeowners the EHT. After considerable stress and many sleepless nights, they successfully appealed. But not everyone has been so fortunate. 

Others complaining about the EHT included developers required to pay the tax, not on empty homes, but on unsold inventory. Which brings us to the recent May 10th Council decision. 

Council wisely eliminated the city’s annual July 1 deadline by which development applications needed to be submitted or permits issued. This should help address the unintended consequences resulting from city delays in accepting or issuing permits. 

The decision exempting developers’ unsold, vacant, new inventory until sold or occupied was also a wise decision. Although this outraged opposition councillors since the city is returning money to developers earmarked for social housing, this too was the right thing to do. 

The purpose of the EHT was not to raise money for social housing. It was to encourage the owners of 25,000 vacant or underutilized properties to make them available on the rental market. As we have discovered, the actual number was significantly less. 

There is a significant difference between an empty home that could be rented and a developer’s unsold inventory. The provincial Speculation and Vacancy Tax, introduced after the EHT, recognized this. Now the two taxes are aligned. The money being returned to developers should never have been collected in the first place. 

While the May 10 amendments did not address the unfair treatment of second homeowners, hopefully future amendments will. 

Unfortunately, when first drafted, the EHT bylaw cast too wide a net. The new ABC-dominated Council prudently decided to approve amendments to improve its fairness and effectiveness. 

As a colleague recently pointed out, the amendments approved by Council are common sense. Unfortunately, common sense is no longer as common as it should be. 

Michael Geller, FCIP, RPP, MLAI is planner, real estate consultant, and retired architect. He is also an adjunct professor in SFU’s Centre for Sustainable Development and School of Resource and Environmental Management (REM). He writes a blog at www.gellersworldtravel.blogspot.com and is active on twitter @michaelgeller.

Vancouver City Council considers changes to the Empty Home Tax (EHT)

Today Council considered a staff report recommending changes to the EHT program. https://council.vancouver.ca/20230510/documents/cfsc2_000.pdf

While I support the city's desire to encourage owners of vacant homes to either sell them, or rent them out, I have not been a fan of the program since it inception. For one thing, it effectively disallows second homes, and its application can be grossly unfair. For example, a couple who were building a new house moved out of their home since they thought approvals to start construction were imminent. However, they were delayed, so they had to rent another place. To add insult to injury, the city charged them the EHT on top of the inconvenience caused by the city's delays and the rent they were having to pay to live in another property.

I have been assisting someone who had been trying to redevelop three vacant lots in Marpole. Yes, although it's called the Empty Home Tax, it applies to vacant land!

This gentlemen wanted to build rental suites but the lots were zoned duplex. He tried to rezone them only to be told there was no policy to allow rezoning. But there could be, so just wait. He waited and was then charged the tax. It has been a Kafkaesque nightmare for him, and for me!

So I went to Council this morning with a prepared text. Unfortunately, I could only deliver a fraction of it, but below is what I wanted to say! 

Full text of Geller presentation to Vancouver City Council regarding proposed Empty Home Tax program modifications. (Note, only excerpts were delivered given the 5-minute time limit.)

I thank the city for undertaking this review. I also acknowledge and thank staff for interviewing me during the preparation of this report.

I’m not opposed to a 5% tax on people who deliberately keep dwellings empty.

However, since first speaking out and criticizing this program, based primarily on its negative consequences for those maintaining second homes in Vancouver, I have become aware of many other unintended consequences and situations that highlight the unfairness and inappropriateness of the tax. That’s why I’m here.

The recommendations before you are a good starting point, but more needs to be done. 

If I could take you through some of the specific cases with which I’m aware, including one case I currently have under appeal, I am confident you would agree this tax is oftentimes Kafkaesque, and grossly unfair.

1.      Lack of coordination between EHT Office and Planning.  Homeowners are being charged the tax for not getting approvals by a certain date even though the delay was caused by the planning department due to Covid, short staffing, etc. My client is being audited even though we submitted a formal enquiry. We had to file an appeal. Why didn’t the EHT contact the planning department?

The elimination of the July 1 date will partially address this, but there needs to be a more equitable review process to adjudicate such situations before having to resort to the courts. I’d like to see an ombudsperson.

 Inappropriate application to vacant land.

2.Most people are not aware that this tax applies to vacant land. This is because the city wanted to discourage demolition of units by owners trying to avoid tax. I appreciate this is not the place to attempt to resolve specific files, but…

I am advising a property owner of duplex zoned lots who has been wanting to build rental housing for years. He hired two architects to prepare plans, but they couldn’t be approved under the existing zoning and there was no applicable policy to allow a rezoning.  The owner was told to await new zoning or program changes.

After working with two architects over five years, he was then charged the tax. We have filed appeals, but so far they have been rejected since the property owner didn’t submit a development application. He couldn’t submit an application.

When I complained about this Catch-22 situation, one planner responded “you could have built duplexes under existing zoning”. 

He was right. But this program is intended to increase the supply of rental housing, not compel people to build duplexes!

We did eventually file a preliminary rezoning application under the Policy Enquiry Program in 2021 and it received a go-ahead. But by then the project was no longer feasible. Now, even though we submitted an application, the property owner is being audited for 2021! Why didn’t the EHT office call the planning department and ask if an application had been submitted?

3.      Inappropriate application to second homeowners. When this program was first introduced, my major concern was its application to second homeowners. As a rabbi said to me, it should be called a jealousy tax since second homeowners are being criticized by those who can’t afford even one home!

Ironically, we should be encouraging people to keep second homes in Vancouver. They support restaurants, theatre, and don’t place demands on the school system. They don’t need year-round garbage collection!

They’re told they can have a second home. But they should rent it out for the time they are not living there. This is completely unrealistic.

As the tax increases, these homeowners are selling their homes, often to end-users. They are not creating more rental units. But then they are renting. The result is a reduction in the rental housing stock. The opposite of the program’s intention. 

Many Vancouver units are owned by Americans who cannot be here for more than 6 months. Just like we can’t be out of the country for more than 6 months. Many are seniors. I would like to see 6 month and a day reduced to 4 months. Since many of these homeowners are seniors who want to see family, etc. Start with an exemption for those 55 plus, or 65 plus.

If changes are not made, the US government may well start to tax those Vancouverites who have second homes in California or Arizona!)

4.      Applying empty home tax to Live/Work units! A Vancouver documentary film maker who made two films about the DTES and Woodwards projects purchased as a live/work unit decades ago in Gastown and used it as a studio/office.

He was recently charged the empty home tax on his office! Since the BC Property Assessment classification is residential for the entire project, which is the case for live/work projects throughout the region. 

The tax didn’t turn his office into a rental unit. On a lawyer’s advice, he changed the BC Assessment classification. Some might say, great, he’s paying more tax. But now developers are reluctant to create live/work units, even when encouraged by city zoning.

5.      Inability to communicate with auditors by email or phone.

6.      Harassment and lack of trust. While there is no doubt that many homeowners are going to extraordinary lengths to avoid paying the tax, including renting to family members or friends, there is often a high level of mistrust that results in property owners feeling harassed. 

To conclude, I’ve worked in this city for 5 decades. I know that I’ve often been a vocal critic of city zoning policies, planning procedures, etc.

However, many of the zoning and program changes for which I have argued have finally gained currency:  portable modular housing for the homeless; multi-family along arterials; laneway housing, fee simple rowhouses, gentle density!

(Hopefully policy changes to allow balcony improvements will soon happen.)

Now there’s a need for the city to make this EHT program fairer and more equitable. And avoid the unintended consequences.

·         It’s wrong to tax people because they’ve been waiting for permits

·         It’s wrong to tax someone who wanted to build rental suites but was being told by staff to wait for zoning changes.

·         It’s counter-productive to force Americans, Albertans, and people from around the province to sell their condos and start renting units since they can keep rental units vacant 6 or 8 months a year!

That’s why I’m here today. I hope this has been helpful.

From a Frances Bula Globe and Mail story.

 

 

Vancouver Sun May 6, 2023 The beleaguered balcony is wide open to a rethink

 

When Vancouver Sun journalist Doug Todd sent me an email asking if I knew someone who might want to participate in a story about whether balconies are used, I knew just the person. Ralph Wettstein had a balcony he rarely used, due to the nearby SkyTrain noise, and wind, and rain impacting his 19th floor balcony at the east end of False Creek. But then he installed fully retractable glass panels on the inside of his existing railing and everything changed. You can read more about this below:

Douglas Todd: The beleaguered balcony is wide open to a rethink

Many apartment balconies expose householders to harsh weather, traffic noise, pollution, vertigo and the eyes of strangers. Here are some ways to redeem them

It’s hard to find anyone who believes Metro Vancouverites take full advantage of their balconies. Architects, developers, planners and ordinary residents tend to agree that, with notable exceptions, the balconies of most apartment buildings end up as weather-beaten places to store a bicycle or stick a struggling plant.

Still, most householders hold on to fantasies of stepping out onto their own private outdoor space.

That feeling was boosted during the pandemic when government restrictions isolated people more than usual. Some took to balconies to taste the wider world, as well as to bang pots for health-care workers.

Despite hundreds of thousands, if not millions, of balconies existing across this country, it’s virtually impossible to find a statistical study of how much time people spend on them.

Anecdotes about good intentions are rife, however, with Canadian architect Rodolphe El-Khoury becoming known for his quote: “The balcony may indeed be the architectural equivalent of the NordicTrack machine.”

The reality in Metro Vancouver is that, with glistening new condo complexes constantly being erected, balconies are increasingly controversial.

“Balconies are the appendices of Vancouver residential towers — vestigial organs with no remaining purpose,” says architectural writer and curator Trevor Boddy, one of many who notes how rarely they’re used, particularly in luxury highrise neighbourhoods like Yaletown and Coal Harbour.

The popularity of apartment balconies lies largely in real-estate marketing, Boddy maintains. “Like those no-function abdominal organs, balconies may do nothing, but we insist on having them, or rather our real-estate brokers insist our unit cannot be re-sold without them.”

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Most apartment blocks built in Metro Vancouver before the 1970s don’t have balconies, mainly because municipalities at the time insisted on including their square footage in interior floor space. PHOTO BY MICHAEL GELLER /Handout

Architect Michael Geller says most apartment blocks built in Metro Vancouver before the 1970s don’t have balconies, mainly because municipalities used to insist on including their square footage in interior floor space. But now most municipalities encourage, and even mandate, balconies.

But why do so many end up looking as stark as a concrete jail cell?

“Balconies may do nothing, but we insist on having them, or rather our real-estate brokers insist our unit cannot be re-sold without them,” says Vancouver architect Trevor Boddy. PHOTO BY LUMON CANADA INC. /Handout

B.C.’s cold and wet weather does not exactly work in favour of a comfortable balcony experience.

And experts cite many other negative factors — particularly the way most balconies are too noisy, too polluted by vehicle traffic, too high above the ground, too windy or too exposed to the eyes of strangers.

Given the empty-balcony phenomenon, some developers, like Lanterra’s Christopher Wein, largely want to stop building the projecting platforms. They say balconies leak energy, because every door creates a thermal break in a building’s structure. That leads to extra carbon emissions.

Balconies also add five to 15 per cent to the cost of construction. Thus, builders going the no-balcony route promise, at least in theory, to pass on the savings to owners and renters.

In the end, though, it’s not necessary to be either-or about balconies. There are options between the extremes, which consist at one end of throwing up yet more of them without thought. And, on the other hand, just not bothering with them, which is the norm in urban East Asia and the Middle East.

Even while experts are far from agreeing on what to do about balconies, policy experiments and design changes are underway.

The benefits of full-glass retractable panels

Ralph Wettstein realized he and his wife had a problem when they moved into their otherwise stunning 19th-floor apartment with its “exciting” view of Science World, B.C. Place Stadium, downtown Vancouver and the yachts of False Creek.

The trouble was their 120-square-foot balcony was awfully loud because of the busy traffic below on Quebec Street and the grinding sounds of the constantly running SkyTrain.

Geller was among those who recognized early on there is a downside to Metro Vancouver’s push to build residential towers around transit and other transportation hubs.

“The irony is Metro Vancouver is now building more and more buildings next to SkyTrain stations and busy streets. And these are the worst places, in some respect, to have balconies.”

What to do? The Wettsteins began working more than five years ago with Geller and others on obtaining permission from Vancouver city hall to install retractable full-height glass panels on the balconies of about 17 units in their condo tower, called The National.

The decibel level on Wettstein’s balcony soared into a sound-meter’s red zone when his glass panels were in their retracted position, snuggled against the exterior wall. The decibel level went down by 15 per cent when he drew the panels around the balcony railing, a process that took about a minute. The Wettsteins say they now use the balcony at least eight hours a week, in all kinds of weather.

“The beauty of them is that they just roll away,” adds Keith Morgan, a building neighbour who also uses retractable glass. He notes the panels make people, especially children, feel safer when they’re high in the sky. Research, in addition, suggests glass panels surrounding balconies reduce energy loss by five to 15 per cent.

And the transparent panels, which cost Wettstein $18,000, are virtually invisible from the street below. That means they don’t add a sense of “bulk” to a building’s overall look, something which planners worry about.

Ralph Wettstein retracts the glass panels on his Vancouver balcony, which overlooks False Creek. They help overcome the downside to Metro Vancouver’s push to build residential towers around noisy transit and SkyTrain hubs. PHOTO BY DOUGLAS TODD /jpg

Despite planners’ fears that glass-shrouded balconies will be exploited as extra bedrooms, Geller said it rarely happens, in part because there are narrow spaces between the panels that continually allow in fresh air.

Despite their effectiveness at sound reduction and softening the harsh impact of weather, Geller, who consults for Lumon Retractable Balcony Systems, says there are still only about 2,000 balconies in Metro Vancouver fashioned with the glass panes.

While Geller says almost all Canadian municipalities allow retractable panels around balconies, as long as a strata council supports them, the city of Vancouver has been among the least co-operative.

“At the moment, as long as the city of Vancouver does not allow glass panels unless the balcony area is included in floor-space-ratio calculations, an apartment dweller can only install panels if their particular building is not built to its maximum allowable size, or is located in a zone where so-called enclosures are permitted,” he said.

Wettstein and other condo owners had to fight hard with Vancouver city hall.

“Eventually he received permission for a ‘demonstration installation,’” said Geller, “and I obtained approval for additional installations, since it turned out their building had a zoning that allowed enclosures.”

In contrast to Vancouver, Geller noted, there are already millions of glass-panelled balconies in Europe.

They are not the only way to redeem the beleaguered balcony, however.

Many tiny, apparently disused, balconies. PHOTO BY WIRESTOCK /Getty Images/iStockphoto

Balconies can contribute to emotional health

More effort is needed to render balconies truly livable, say designers at Happy Cities, a Canadian organization devoted to healthier urban spaces.

Project coordinator Madeleine Hebert says research shows people living in multi-storey buildings, and especially in small units, tend to gain the most from balconies. The way they can extend a unit’s living space is most important for families with children or pets.

“People who have access to balconies and porches are less likely to report feeling lonely,” said Hebert, since they feel more connected to neighbours.

“Balconies on the first three storeys can allow social connection with friends on the street. They can boost social ties and vibrancy. However, above the fifth storey, they offer no social connection with the street whatsoever.”

Even while the psychological deck is stacked against balconies that hover above five storeys — including because of what Boddy calls the often-unspoken fear of vertigo — the design of a balcony always matters.

Qualitative studies, including from Poland, confirm balconies are not only enjoyed more in low and medium-rise buildings, they’re also more appealing when they open onto a courtyard, and, to the surprise of some, when they face north.

“Balconies on the first three stories can allow social connection with friends on the street. They can boost social ties and vibrancy. However, above the fifth storey, they offer no social connection with the street whatsoever,” says Madeleine Hebert. PNG

Significantly, balconies get more use when they offer both quiet and a sense of privacy. But that’s hard to realize when far too many urban balconies in residential towers are exposed to hectic thoroughfares.

Still, at least some sense of enclosure or privacy on balconies can be obtained through the use of opaque or frosted glass, screens, lattices, plants or trees, says Hebert.

Designers at Smart Density maintain balconies should also not be too small — or too long and narrow. Their size needs to correlate with how many people are expected to venture onto them. Families, for instance, need to be able to sit around a small table.

Balconies that are recessed into a building often provide more weather-protection and shade, especially from southern exposures, adds Smart Density.

Life without balconies

What is it like to not have a balcony? It’s an option some developers are starting to promote, particularly since it’s already the practice in many metropolises around the world.

Gary Paterson and Tim Stevenson have lived for decades in a 14th-floor rental apartment without a balcony in Vancouver’s West End, overlooking English Bay.

“I wouldn’t want to sacrifice floor space for a balcony. And if I did I’d definitely want a large balcony to hold chairs and a table and plants and possibly a barbecue,” said Stevenson, a former Vancouver city councillor. “Most of the balconies on almost all the buildings in our neighbourhood are small, and totally useless. No one ever uses them. So if you offered me a small one, I’d reject it.”

Although Paterson, a retired United Church minister, sometimes fancies growing flowers on a balcony, he’s largely satisfied with going downstairs for walks to experience the West End’s gardens and parks.

“We are also lucky to have a shared top-of-the-building garden, a common space with lots of room to have a meal, an evening drink and a conversation with a view.”

In a somewhat similar vein, Vancouver architect Bruce Haden believes the future for balconies lies in design flexibility. When new apartment buildings go up, Haden would like to see developers provide “generous, sunny, wind-protected balconies for fewer units.” But no balconies for other units, since inhabitants likely won’t use them.

Some developers favour this approach. Lanterra is constructing apartment blocks with fewer private balconies and more communal terraces, enhanced with tables and gardens and barbecues.

Whether a shared terrace will solve householders’ continuing yearning for outdoor living space remains to be seen, since the industry-wide belief across North America continues to be that most apartment dwellers still, in their minds at least, prefer a personal balcony.

The potential for balconies is huge, but so far it’s been hard for most to overcome their pitfalls.

You can find a link to the article here: https://vancouversun.com/opinion/columnists/douglas-todd-the-beleaguered-balcony-is-wide-open-to-a-rethink

dtodd@postmedia.com

@douglastodd

 

May 3rd. A special day for Michael Geller & Associates Limited

 Today is a special day. Forty years ago, on May 3, 1983 Michael Geller & Associates Limited was incorporated as a BC company. Over the past four decades, the company has been involved with a number of significant projects, as illustrated below. I also spent 7 years at SFU, and most of a year travelling around the world with my wife Sally. 

I think birthdays and anniversaries are special and worthy of celebration. So I will be celebrating this anniversary with longstanding friends, clients and business associates. Hopefully some of you will join me at the 50th anniversary on May 3, 2033! :-)

Attention North Shore residents and businesses - Delightful Horseshoe Bay Office Space for Lease!

Tired of working from home? Looking for a delightful, small office space with a remarkable view?

I recently learned about a space for lease in Horseshoe Bay, overlooking the park and waterfront. Horseshoe Bay is going through a transformation and this property is ultimately slated for redevelopment. However, it is available for a minimum three-year term with a potential extension. Lease terms are negotiable. For more details, contact Blake Newton blake.newton@cbre.com or 604 662 5575.

Tell him I sent you and he might buy me lunch at Trolls restaurant next door!

My presentation to the Urbanarium Debate on why we need to rethink the DTES Plan - March 28, 2023

On March 28, I participated in a debate organized by the Urbanarium Society, on whether it was time to rethink the Downtown Eastside Local Area Plan approved by Vancouver City Council in 2014. I was joined by former city councillor Suzanne Anton. While I could not understand why anyone would believe the plan is working and need not be rethought, Nathan Edelson and Tanya Fader argued the plan need not be rethought. Some of their reasoning can be found here. http://gellersworldtravel.blogspot.com/2023/04/opinion-its-time-to-rethink-dtes-local.html

The following is the slide deck I presented in my opening arguments. I hope this presentation will help us continue this conversation. The plan is not working. It's evident to anyone who walks around the community. What is needed is a much more diverse population that will 'normalize', yes 'normalize' the Downtown Eastside Oppenheimer District so that it can remain a low-income community, but a more attractive community with new buildings and residents, but without all the vacant, boarded up storefronts and overall sense of despair.