Policy & Planning
January 20, 2020

Property Taxation: The Best of Intentions and the Worst of Outcomes

I do hope that those advocating tax relief for ‘small business’ understand that the proposal from the provincial government is a lot muddier than it looks.

The province says the interim legislation would allow municipalities to exempt a portion of the value of a subset of commercial properties from taxation, easing the tax burden for tenants responsible for property taxes through their commercial leases.

If I understand the intent, the City would be able to exempt or reduce the tax on that part of an assessed parcel which has not been developed – the so-called “unused airspace”.   If the zoning allowed a ten-storey building, but there was only a one-storey storefront on the site, presumably the City would reduce the assessment or forgive the amount valued on the ‘unused’ part.

A few things to keep in mind:

The exemption directly benefits the property owner, not the tenant, unless the latter also owns the property.  Presumably ‘small’ businesses (whatever they are) would see a drop in their ‘triple-net leases’ from the landlord which includes the property taxes, though in fact it’s the owner who pays the property tax directly to the City.  And it’s the owner who could well see the market price of the site increase as a result of this exemption of unused density.  (Also, listen to the “This is Vancolour” interview with Tom Davidoff, who explains how our low residential property tax rates have contributed to our unaffordability.)

It may also encourage further speculation since the holding costs will go down as the asset value (hopefully) goes up.  The lower those holding costs, like property tax, the longer the speculator has to appreciate the increase in capital gain, the less need to redevelop the underutilized land, and the more desirable the property for speculative purposes.

Secondly, there is a reason why the ‘unused’ part of a site is included in the assessment: it’s a very real part of the value.  ‘Density’ (or FSR) is not measured by current use but as potential development, whether realized or not.  No owner of a property is going to sell at a price lower than what the market would pay because the site hasn’t been built out to the maximum possible. Nor is a buyer going to get away with offering less since what is being bought and sold is that potential, not just current uses.

The Assessment Authority determines what the market will pay on a given date when it evaluates the property’s worth.  That’s the whole point of a market-based assessment system, which has very significant benefits with respect to objectivity, simplicity and transparency.

If the City accepts the Province’s offer, it’s going to be in the subjective (and probably not very transparent) business of deciding what is ‘small’, what is ‘legacy,’ what is ‘unused,’ not to mention who it will tax (or what services to cut) to make up the difference.  It will get ugly, and there will be unintended consequences.  (If a business has ten employees, does it become big when it has eleven?  If it has two outlets, does it becomes a chain at three, and hence just another Starbucks?)

At the moment, the City can pass off the subjectivity and complications of assessments because it doesn’t do that job.  It’s the reason why we have a separate provincial authority to set the value of each individual property, since it’s less subject to political pressure.  The City’s job is to set the overall tax rates, which vary by class of property (commercial, residential, industrial, etc.) but not to vary the tax rate within a class.

Now it looks like it is going to wade into this very messy territory, which will soon begin to feel more like quicksand than an attempt to drain the swamp.

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It’s not often that a political columnist will delve into the details of urban and regional planning.  Those are weeds too thick for most readers.  

But Sun Victoria correspondent Vaughn Palmer did so today, perhaps because he got fed a report on what could be, in fact, a pretty big deal: a direction for the urban and economic planning of British Columbia. 

If taken seriously, backed up with action and able to survive changes in governments, it could be for the province what the first regional planning was the GVRD (now Metro Vancouver) in the 1970s.  That is from whence came the Livable Region Plan, or ‘Cities in a Sea of Green.’   We adopted it, stuck to it, and a half century later can the results.  It worked out pretty well.

This ‘economic framework’ is more the structure on which such a plan could be built.  It seems to be a result of departmental thinking aligned with the priorities and strategies of the government – in other words, not just an NDP political exercise to justify what they wanted to do anyway. 

Following are excepts from Palmer’s column, found here in its entirety.

 

An economic framework recently distributed by the provincial government outlines strategies to accommodate future population, trade and business growth. Key elements of the plan include developing Surrey as a “second downtown” for Metro. ECONOMIC PLAN CALLS FOR DISPERSING GROWTH

The John Horgan government has adopted an economic plan to shift growth and investment away from Vancouver and toward less congested parts of the province.   … Key elements will promote the development of Surrey as a “second downtown” for Metro Vancouver, anchoring a “growth corridor” extending into the Fraser Valley.

Part and parcel of that push will see development of an updated transportation and regional land-use plan in co-operation with local governments.

While the plan mentions few specifics, it does quote favourably from a recent B.C. Business Council paper, which called for “a new Fraser Valley innovation corridor anchored by a commuter rail system running from Chilliwack to the city of Vancouver.”

“Squamish, the Tri-Cities, Delta, Tsawwassen, Langford” (yes, Horgan’s hometown) “and others offer significant advantages for technology startups or satellite office locations …  “Kamloops, Rossland, Nelson, Canal Flats, Campbell River and many others are seeing transformational growth in the technology sector from businesses and workers purposefully seeking out the cost and lifestyle advantages of a smaller community, while staying connected to their B.C. and global customers through high-speed internet.” …

To help persuade investors to locate operations in the north, the province cites access to “B.C.’s clean affordable hydroelectric grid that can power industrial development.”  The latter pitch depends in part on successful completion of the hydroelectric dam at Site C on the Peace River. The New Democrats discounted the project as unnecessary during their opposition days, but it now dovetails conveniently with their new economic strategy. …

Also in the works is “a regional inventory of investment-ready opportunities, including transportation, energy, educational, internet connectivity, community and other infrastructure needed to support quality economic growth.”

But the inventory is no more public than the plan itself, which, as noted here Tuesday, was crafted mainly for the eyes of the public service and selected stakeholders. …

As to the rationale for all this, the plan notes that the province is scheduled to add a million people over the next 30 years. …

“B.C.’s population grew by close to a million people, with much of the population increase concentrated in the Lower Mainland.”

The region was unprepared for growth of that scale.

“Demand for housing, public services and infrastructure exceeded supply, with particularly acute impacts for housing affordability. Higher demand led to sharp increases in the cost of rental and market housing, and those with lower incomes were squeezed out — or sometimes forced out through ‘renoviction’ — of housing they could no longer afford. Families moved farther away from their work in order to find housing within their means, resulting in longer commute times and growing congestion problems.” …

The fallout from runaway and unplanned growth is one reason why the New Democrats picked up 10 seats in Metro Vancouver in the last election and the B.C.

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Vancouver fashion at zero degrees:

Calling on our long-time relationship with outdoor recreation, we know how to dress well when the temperature is on either side of zero.

We accommodate a mild coldness, kind of like our temperament, and perfect for the puffy jackets we wear all winter long for every occasion.

Notice the black-and beige combo on everyone.  With the well proportioned backpacks. And a spot of colour.

 

 

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Another intriguing one from Maps on the Web:

Have you ever wondered what the world’s richest people studied in college? If you guessed that many of them have degrees in business or economics, you’re right. But there is actually a surprising amount of diversity in the types of degrees that today’s wealthiest individuals hold. We dug into the data in order to create these maps to show the college degrees of each country’s richest person: 
. Click through for each continent – but here’s North America (click on title of post): . . Fun fact: Canada’s richest guy, David Thompson (at $37.5 billion), is one of only two of the billionaires with a history degree.  Not sure what to conclude about him, Canada or billionaires. . Read more »

It is not often that a  Vancouver person’s  working life has a half century of documentation and film.  In 1964 Vern Frick was documented in this YouTube video which was produced for CBC and described his daily work as a postman. In the video he stops on Granville Street for his morning coffee. The original postal station D was on Broadway close to Fir Street, and you can see the Fir Street off ramp for the Granville Bridge in the video below. You also see a different Vancouver, with wooden houses, front porches, and a mailman who knows everyone on his route.

Vern Frick later worked as a postal inspector and ended up in safety management with the Post Office. Although he retired over 20 years ago from the post office, he kept on with his second job which was as an usher with the PNE (Pacific National Exhibition). And what a life he experienced with that job. This  2018 article by Susan Lazarek with the Vancouver Sun describes Vern as the “longest-serving employee of the PNE, who has been on shift as a part-time usher for virtually all the shows at the annual exhibition venues since the summer of 1963, is working his last shift on Labour Day.”

He was at the Beatles concert as an usher in August 22, 1964 (which ended after twenty minutes when fans rushed the stage).

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Via Kris Olds and Croakey.org this story is from Gemma Carey who lives in Canberra Australia and is an associate professor in the Centre for Social Impact at the University of South Wales.

Professor Carey writes that the smoke enveloping Canberra has shown the need “for better health warning systems, especially around hazardous air pollution, and for equity considerations to be foremost.”  

In her city “the unprecedented fires which began on New Year’s eve brought a thick ‘fog’ of smoke across the ACT (Australia Capital Territory) and parts of New South Wales. Canberra, where I live, is perhaps worst hit with particle readings of up to 1800 2.5PM. The limit for hazardous levels is 200 2.5PM in the ACT, according to the ACT Government.”

Professor  Carey wrote in December that women being  pregnant in a climate emergency meant they are stuck indoors. “At that time, dangerous particles of 2.5 micrometres or smaller (‘2.5PM’) were at 100-300 – ranging from serious to hazardous.”

The air in Canberra is ten times over the hazardous level and is the poorest air quality of any city in the world. Air with this type of particulate creates complications for people with lung and breathing issues, and can impact heart disease and cancer rates. Research shows that the longer the exposure to these particulates, the higher the incidence of disease. Couple this with research showing that pregnant women exposed to these particulates appear to have babies that are premature, weigh less, and can be miscarried.  What is not being calculated is that families in Canberra are also experiencing direct stress due to the fire disasters as well as the long term implications of particulate exposure.

Poorer areas in the city have worse air. Professor  Carey states “We have no precedent in the scientific literature for the health implications of what is currently happening in Australia.”

Clean air is costly~“Since New Year’s, nowhere indoors is safe. Shopping malls, libraries and national monuments – where many were seeking refuge – are filled with smoke. Air conditioning systems are simply not designed for this level of pollution.”

Even air purifiers which cost 500 to 800 dollars are not affordable to many people and there are none left in Canberra or its suburbs. Indoors people wear high grade pollution masks. “I take it off only to shower and eat.”

The  air particulate mask is only good for 100 hours and costs 50 dollars. Again as in the air purifiers, there is an equity issue of who can afford and access them. The masks  available at hardware stores are not designed for the particulates that are raining down on Canberra.

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Last Fall Consumer Reports revealed that although most Americans killed in car crashes are male, data shows that it is fact women that are at a greater risk of death or serious injury in a car crash. A female driver or front row passenger with a seatbelt is 17 percent more likely to die, and 73 percent more likely to have a serious injury.

Crash researchers have known for forty years that the bodies of male and female react differently in crashes,  but automotive research still stubbornly clings to the “50th percentile male” which is understood to be a 171 pound 5 foot 9 inch dummy  first developed in the 1970’s. And that crash test dummy has not substantially changed, despite the fact that the average American man weighs 26 pounds more.

It was not until 2003 that the National Highway Traffic Safety Administration (NHTSA) used a scaled down male dummy to represent a woman. This dummy was so scaled down that it also could double as a 13 year old child. It is a 5th percentile crash dummy as even to  1970’s standards it represented only 5 percent of women.

Crash tests do not recognize that  half the drivers in the United States are now female. The 5th percentile female crash dummy rides as a passenger, not a driver. As Consumer Reports writer Keith Barry states “Because automotive design is directly influenced by the results of safety testing, any bias in the way cars are crash-tested translates into the way cars are manufactured. So if safety tests don’t prioritize female occupants, carmakers won’t necessarily make changes to better protect them.”

Automotive safety relies on regulation to do the right thing. Using crash dummies that are not smaller models of male dummies is the first step, along with recognizing that women’s  structures are different than men’s. Today’s average female is five inches shorter and 27 pounds lighter than the average male, and wear seatbelts differently and sit closer to the steering console.

While there is a new generation of dummies coming, there is still no plan to build an average female for crash tests. Called THOR (Test Device for Human Occupant Restraint) these new models are due to be used in Europe this year for testing and will collect more data than previous crash test dummies.

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