West End Community Plan (2013) preceded huge increase in property values, putting renters at risk

Broughton Apartments at 1370 Davie in 2019

Broughton Apartments at 1370 Davie Street

We have just passed five years since City Council adopted the West End Community Plan (Nov 2013) and then pre-zoned major sections of the West End (Jan 2014) for significant increases in density and towers particularly along the corridor streets.

West End Neighbours has called on the current council to review the impacts of the WECP. Is it producing the promised results (specifically “deepening affordability”)? We feel this review is important not only for the West End, but also for the entire city as it embarks upon a citywide planning process. When Council adopted the WECP, did Mayor Gregor Robertson and Council, planning department and professional planners consider these consequences?

WEN estimates that thousands of renters have been forced out of their relatively affordable long-term older rental units due to demolition and redevelopment for towers, as actually encouraged by the WECP, and we think the City needs to do a tally and consider how to better protect renters and businesses.

An article in the Vancouver Sun today provides some information about impacts of the WECP and risks for both renters and rental building owners. It’s worth a read. Below are excerpts, plus a link to the full article online.

*****

“The ‘ticking time bomb’ threatening affordable rental homes”
By Dan Fumano, in the Vancouver Sun, 25-Feb-2019

Excerpts:

… The intricacies of B.C.’s property assessments are meeting the realities of Metro Vancouver’s property market in a way that discourages the operation of long-term affordable rental housing in favour of the development of new condos, landlords say.

In other words, the system seems to incentivize the opposite of the outcome our leaders say they want.

…  Older rental homes are, as expected, more affordable. CMHC data show Vancouver apartments built between 1975 and 1989 are, on average, 40 per cent cheaper than those built since 2005. But longtime landlords say the current system threatens their ability to operate the older rental apartments that form a crucial part of the city’s housing stock.

Consider the Broughton Apartments in Vancouver’s West End. In 2015, the property taxes for this 40-year-old, 47-unit rental building on Davie Street were assessed at $854 per unit, said a representative of the owner, Cressey Development Group. For this year, the assessment is expected to be around $2,620 per unit.

That represents a property tax hike of more than 200 per cent over four years.

… As property values in the West End have soared faster than the city-wide average in recent years — particularly since the approval of the West End Community Plan in 2013 and the subsequent flurry of development activity — the corresponding skyrocketing property taxes have been blamed for the deaths of several mom-and-pop businesses, everything from beloved neighbourhood pubs the Dover Arms which pulled its last pint in 2017, to retail fixture Chocolate Mousse Kitchenware, which closed its doors last week after facing a 400 per cent property tax hike over a three-year period.

Many small Vancouver businesses have been hammered by the B.C. Assessment Authority’s practice of assessing based on “highest and best use.” That means a property’s value, upon which its taxes are based, isn’t assessed based on its actual use — whether a single-storey neighbourhood pub or a three-storey rental apartment building — but on the use “that would return the highest value.”

Those businesses have been taxed to death because their commercial landlords pass those escalating property tax bills to their tenants.

But unlike commercial property owners, residential landlords can’t pass on soaring property tax bills or other increases directly to their tenants — they’re restricted by rent control measures.

And long-term tenants in buildings like the Broughton often pay well below market rents, said Tom Johnston, vice-president of asset management for Cressey, the Vancouver real estate company which operates the Broughton and several other local rental buildings.

…. Those cost pressures, Johnston said, also include the city-wide 4.5 per cent property tax increase for 2019, and increases of 9.7 and 11 per cent for water and sewer rates.

But the property tax is the big one, and that’s based on the assessment. And those assessed values are based on a number of factors, including highest and best use, but also whatever rents the market can bear — regardless of what rents are actually being charged.

.,.. The pressures at the Broughton are far from unique in B.C., said David Hutniak, CEO of LandlordBC, which represents the rental housing industry.

“Yes, this is what we’re hearing,” Hutniak said. “Anybody with a three-storey walk-up or a smaller building is facing this exact same dilemma.”

… Smaller landlords, like a family operating one apartment building for generations, tend to have fewer options, Hutniak said. As their margins tighten, they might decide the best option is to sell the property.

And when those longtime landlords cash out, it can mean bad news for long-term tenants paying below-market rents: Vancouver staff recently noted that mass eviction notices often follow new owners buying a building….

Full article here: https://vancouversun.com/business/real-estate/dan-fumano-the-ticking-time-bomb-threatening-affordable-rental-homes

 

This entry was posted in Uncategorized. Bookmark the permalink.