Wednesday, August 16, 2017

Opinion: When is big too big when it comes to towers? Vancouver Courier August 1, 2017



    Someone once asked, “When you are sitting in the bathtub with the hot water running, how do you know when to shout?”
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     This quotation came to mind last week when Vancouver city council approved a rezoning application at Nelson and Burrard.
     The development includes 331 market strata units in a 57-storey tower, 61 units of social housing, seismic upgrades and restoration of a church, and expanded facilities and program space for the church and surrounding community. It will be the third tallest tower in the city, for the time being.
     The development is a partnership between the First Baptist Church of Vancouver and Westbank Project Corp — a company I greatly admire for working with top notch architects and a commitment to design excellence. This architecturally striking tower, intended to resemble a pair of organ pipes, was designed by the late Bing Thom.
     When a CBC reporter asked me what I thought of the design, I told her I thought it was very innovative and would appeal to those wanting to see more variety in Vancouver architecture.  But I agreed with those who thought it was too big for the site and neighbourhood context.
     She said she was surprised by my response. But she shouldn’t have been.
     While I have often sought approvals for taller and higher density developments, in recent years I have become increasingly concerned with the size of some new Vancouver developments. In my opinion, they are simply too big. 
     However, city staff and politicians justify higher densities and heights noting the developments offer promises of greater housing affordability, community amenities and sustainability.
In supporting this development, Mayor Gregor Robertson repeatedly told reporters it would provide much needed social housing units at a time when federal and provincial subsidies were not available. He is correct.
     While council rightly rejected Chinatown’s 105 Keefer St. development, other developments have been approved at greater heights and densities than many planners considered appropriate since they offered public amenities, housing affordability and Community Amenity Contributions (CACs).
They include the Independent at Kingsway and Broadway, and 508 Helmcken, which, at a floor space ratio (FSR) of 17.4, is approximately 10 times the density of a typical Kerrisdale highrise. These buildings are now under construction and time will tell if my concerns were valid.
     The famous American architect Louis Sullivan once said that building form should follow function. In the case of these projects, form follows finance.
     I acknowledge that there are architects, planners and developers who disagree with my concerns. They question whether it really matters if a building is 30 storeys, 40 storeys or 50 storeys. What matters more to them is how the building is designed at the street level. They believe FSR is a blunt instrument that should not be used to assess the likely success of a design.
     I understand and appreciate this point of view. However, it was not that long ago that six FSR was as high as the city would allow for residential development. Today double-digit FSR residential projects, like the Burrard and Nelson development, are becoming commonplace.
     The debate over when is big too big reminds me of a radio interview with the late Arthur Erickson many years ago. In describing his design philosophy, he said it was important for new developments to relate to their surroundings. When the interviewer pointed out that over time surroundings will change, Erickson agreed. But he added that future buildings should relate to his building designs, and so on. 
     As I look around Vancouver and other parts of Metro Vancouver, there is no doubt that many new developments no longer relate to their surroundings. Their designs are formed by the significant density bonuses offered in return for amenities, affordable housing and cold hard cash. 
Each year Metro municipalities are now receiving hundreds of millions of dollars from developers in return for extra height and density. Many will say this is a good thing; it means property taxes will not have to go up so much.
However, I worry that if we continue to allow housing affordability and CAC payments to drive project densities, heights and massing, we may ultimately compromise the quality of the built environment that has made Vancouver the envy of planners from around the world.

geller@sfu.ca
@michaelgeller

© 2017 Vancouver Courier

Friday, July 21, 2017

VanRealEstatePodcast #78 | How Owning a Home in Vancouver Could Land You in Jail with Michael Geller

Recently, I've been delighted to chat with others in the real estate community who offer weekly podcasts. While this episode of the Vancouver Real Estate Podcast followed up on my recent column on tax considerations related to laneway housing and basement suites, we also discussed ideas to create more affordable housing, and concluded with some non-real estate Q&A. I enjoyed doing it with a couple of very intelligent interviewers.

I can't bring myself to listening to it, but some of you might find it interesting!

Matt and Adam welcome Architect and SFU Adjunct Professor Michael Geller to the podcast for a chat about the recently implemented City of Vancouver Vacant Homes Tax and other policy changes that could unwittingly affect homeowners in our city and across Canada.

 http://www.vancouverrealestatepodcast.com/vrep-78-owning-home-vancouver-land-jail-michael-geller/

Opinion: Vancouver Courier: New rules could turn Vancouver home owners into criminals July 20, 2017



Could Vancouver’s housing and taxation programs turn otherwise law-abiding citizens into potential criminals? Sadly, I fear they might.
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     Be it laneway houses, secondary suites, the Empty Home Tax, or the latest Airbnb restrictions — all have complex legal and tax implications, which are often not known or fully understood.
     In sharing these observations, I should note I am neither a tax accountant or lawyer. Rather, I am an architect and real estate consultant who has long advocated for the legalization of basement suites and laneway or coach houses for rent and sale.
     While I oppose taxes on vacant dwellings for philosophical and administrative reasons, I support new regulations on Airbnb and similar programs since they have negative impacts on available rental housing, condominium living and the hotel industry.
     Many owners of empty or “under-utilized” dwellings also oppose the Empty Home Tax on the grounds it is inappropriate and/or unfair, and intend to sign creative, and in many cases fraudulent leases, to avoid paying the tax.
     However, owners of laneway houses and basement suites could soon be found to be inadvertently or deliberately evading taxes, due in part to the recent Canada Revenue Agency (CRA) decision requiring Canadians to report the sale of a principal residence on their income tax returns, starting in 2017.
     This new rule was meant to reduce tax evasion by closing a loophole exploited by real estate speculatorswho often bought and sold properties tax-free as principal residences. 
     Most Vancouver residents who rent a laneway house or basement suite know they are required to report net income from rentals. However, few understand the GST implications of building these dwellings, or the income tax implications when the property is sold.
      The Real Estate Board of Greater Vancouver and CRA have prepared documents setting out these tax obligations. Many accounting firms, including Grant Thornton, have also prepared useful tax advice.
     GST considerations related to laneway houses vary considerably depending on whether the house was built for long-term or short-term rentals, or a family member.
     Without going into all the details, if a property owner builds a laneway house to be rented to others, and is not registered for GST, he or she must self-assess GST on the fair market value of the laneway house and the land associated with it. Yes, that’s right. It is not just based on the cost of the laneway house. The valuation must include the associated land.
     Determination of land value could be difficult, especially since the laneway house cannot currently be sold. But if the CRA deems it to be say a quarter of the total lot value, even though the owner may be entitled to Input Tax Credits and certain tax rebates, the tax consequences could be significant.
     These rules apply because the homeowner is considered the builder of the laneway house for GST purposes. This is not the case if he or she purchases a property that already includes a laneway house.
      However, if the laneway house is built for a family member, the tax consequences are quite different; the owner may not be required to self-assess GST.
      But here is where it gets interesting. If that owner subsequently decides to rent the property, he or she will not have to self-assess the value of the laneway house and associated land because the status of the property will have changed to a “used residential complex.”
     Consequently, first occupancy of a laneway house by a related person provides the best outcome for the owner in terms of GST liability.
From my discussions with homeowners who have built laneway houses and contractors, few appreciate these GST tax implications. More importantly, they are not aware of what will happen when the property is sold.
     The principal residence rules are very complex, and most property owners should consult their accountants. But the key point is the laneway house is not eligible for the same principal residence tax exemptions as the balance of the property. Any deemed increases in value will be treated as taxable capital gains.
     Somewhat surprisingly, similar tax consequences could apply to basement suites that have been ‘structurally altered’ to meet city building codes. But this is another story for another day.
geller@sfu.ca