Taxation and disincentives creating rental shortage

Greater Victoria’s 0.6 per cent vacancy rate is hurting business’s ability to recruit and retain employees, says the Chamber of Commerce.

Greater Victoria’s 0.6 per cent vacancy rate is hurting business’s ability to recruit and retain employees, according to the Greater Victoria Chamber of Commerce.

It’s well below the four per cent rate the city has declared as being marginally acceptable and much of the fault lies with government.

The City of Victoria’s approval process for a new rental development can stretch a project’s duration to over three years, according to Bruce Carter, the CEO of the chamber.

“You have to go to the city and they demand a neighbourhood consultation. You may need to rezone and then get a development permit. The application process alone takes six months,” said Carter. “If you get bounced back to a public hearing, it’s another six month reset.”

Kathy Hogan of the Urban Development Institute said many civic officials and politicians don’t fully understand the development process. Every delay in approvals raises the costs of the project — costs that are eventually passed on to the renter.

Carter added community amenity charges act as a further disincentive to rental development. The increased property value flowing from the development is calculated and the developer has to pay 70 per cent of that value back to the city. Those monies are earmarked for things like parks, public art, and social housing in the area.

“If I, as a developer, increase the property value by $1 million I have to write the city a cheque for $700,000. I’ve taken all the risk, but they take 70 per cent of the property value improvement,” said Carter.

Community amenity charges are also not consistent. For example, the District of Saanich does not levy an amenity charge.

Victoria councillor Chris Coleman defends the approval process and the amenity charge.

“Rental development has to be sustainable,” said Coleman. “When increasing density in a neighbourhood you have to be sure that the (neighbourhood’s) ‘living room’ can handle it.”

He said he understands the developers’ concerns and is committed to streamline the process and consider other concessions that could help make projects more viable, but maintains it’s “all about finding a balance.”

Disincentives don’t stop at the civic level.

The chamber lobbies the federal government on the issue and are meeting with the Federal Liberal Caucus this week to lobby for changes that may help address some of disincentives to development that originate at that level.

Changes in the federal tax code have eliminated investments in rental property from an earlier capital gains exemption, an exemption that still exists for other business properties.

As well, the rental income generated by a property is not considered as “active business income” and, as such, is not eligible for the small business credit available to other businesses — a move that means creates a starting corporate tax rate (on the rental income) of over 40 per cent.

Even the GST discriminates against rental housing, said Carter.

“Under the regulations, landlords can’t recover tax paid on the money spent on rental properties,” Carter said.

 

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Saanich police officers were one group of dozens that submitted dance clips to the Greater Victoria Festival Society, to help create the Dance Across Victoria video montage. (Youtube/Screenshot)
WATCH: Saanich police, Victoria mayor bust some moves in new Dance Across Victoria video

Montage features submitted dance clips from across Greater Victoria

Former Oak Bay High Grade 12 student Brandon Kip plays the $100,000 Steinway piano in the Dave Dunnet Theatre. (Black Press Media file photo)
Oak Bay High Alumni Association passes torch to new president

The association has given back more than $70,000 in its 16 years

Saanich’s Malia Brodie competed in the Vancouver qualifiers for the 2020 National Championships. (Photo by BC Sport Karate Snaps)
PHOTOS: Saanich teen awarded $1,800 Karate Canada bursary to pursue officiant certification

Malia Brodie, 18, has black belt, nearly 15 years experience in karate

This photo courtesy of Leanne Grover shows the immediate aftermath of the fire at 7987 Galbraith Cres. that caused extensive damage and displaced six residents. (Leanne Grover/Submitted)
Residents of a Central Saanich duplex ‘fortunate’ to escape Sunday morning fire

Damage to the duplex extensive with one resident said to be ‘catatonic’ after escaping building

After more than a year, open forums will resume at a Saanich committee of the whole meeting on April 19 with up to five residents having the chance to speak for three minutes each about any district-related matter. (Black Press Media file photo)
Public input resumes at Saanich council following lengthy suspension due to pandemic

Up to five residents can present by phone for up to three minutes starting April 19

Vancouver resident Beryl Pye was witness to a “concerning,” spontaneous dance party that spread throughout social groups at Kitsilano Beach on April 16. (Screen grab/Beryl Pye)
VIDEO: Dance party erupts at Vancouver’s Kitsilano Beach to the dismay of onlookers

‘It was a complete disregard for current COVID-19 public health orders,’ says Vancouver resident Beryl Pye

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

A syringe is loaded with COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
B.C. to open up COVID vaccine registration to all B.C. residents 18+ in April

Registration does not equate to being able to book an appointment

Pat Kauwell, a semi-retired construction manager, lives in his fifth-wheel trailer on Maxey Road because that’s what he can afford on his pension, but a Regional District of Nanaimo bylaw prohibits using RVs as permanent dwellings, leaving Kauwell and others like him with few affordable housing options. (Chris Bush/News Bulletin)
Rules against RV living hard on Island residents caught in housing crunch

Regional District of Nanaimo bylaw forcing pensioner to move RV he calls home off private farm land

(Black Press file photo).
UPDATED: Multiple stabbings at Vancouver Island bush party

Three youths hospitalized after an assault in Comox

Selina Robinson is shown in Coquitlam, B.C., on Friday November 17, 2017. British Columbia’s finance minister says her professional training as a family therapist helped her develop the New Democrat government’s first budget during the COVID-19 pandemic, which she will table Tuesday. THE CANADIAN PRESS/Darryl Dyck
B.C. finance minister to table historic pandemic-challenged deficit budget

Budget aims to take care of people during pandemic while preparing for post-COVID-19 recovery, Robinson said

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Lord Tweedsmuir’s Tremmel States-Jones jumps a player and the goal line to score a touchdown against the Kelowna Owls in 2019. The face of high school football, along with a majority of other high school sports, could significantly change if a new governance proposal is passed at the B.C. School Sports AGM May 1. (Malin Jordan)
Power struggle: New governance model proposed for B.C. high school sports

Most commissions are against the new model, but B.C. School Sports (BCSS) and its board is in favour

Most Read