West Kelowna city council says the province’s new speculation tax will hurt all its residents, not just those who the tax is aimed at—out-of-province owners of homes in the city.
That’s because West Kelowna officials believe development will be reduced as the market for homes drops and, as a result, development cost charge revenue dries up for the city.
DCCs are used to help pay for municipal infrastructure and that reduces the burden on taxpayers. The city relies on DCCs to help deal with what Mayor Doug Findlater describes as West Kelowna’s “infrastructure deficit.”
Without the current level of DCCs, Findlater predicted annual property tax hikes that have run between two and three per cent over the last nine years in West Kelowna could jump to five or six per cent.
On Tuesday, council was presented with a report from city chief administrative officer Jim Zaffino that said if development is reduced, the city may have to rethink its entire financial plan.
Since the tax was announced in the B.C. budget three weeks ago, there has been a massive outcry from the public in both West Kelowna and Kelowna, the only two cities in the B.C. Interior where the tax would be applicable. It also affects Metro Vancouver, the Fraser Valley, and the Victoria and Nanaimo areas on Vancouver Island.
Th city says it has received 238 letters about the new tax, all but 19 opposed.
Findlater said damage is already being done to the West Kelowna economy as many property owners are either in the process of selling, or are planning to sell, rather than be faced with paying the new tax. It’s rate is pegged at $5 per $1,000 of assessed value this year and rising to $20 per $1,000 of assessed value in 2019.
Zaffino’s report estimates 600 properties are directly affected in the city and the total additional tax bill for owners could amount to $10.3 million.
In his presentation to council, Zaffino said the B.C. government appears to think of those who own second homes are both property and income rich as the tax credit to offset the tax for British Columbians affected would only kick in for high-earning residents.
But he said in many cases, second properties that British Columbians own may not have been bought when the value was as high as it is today.
“These (owners) are not necessarily rich people,” he said.
Because of the urgency of the issue for the city, council is demanding an immediate meeting with Premier John Horgan to make its case against the tax.
Prior to its discussion Tuesday, council was told by Kevin Edgecombe, president of the Okanagan chapter of the Urban Development Institute the tax has already had a chilling effect on developers in the Central Okanagan.
He said the developers of both the One Water Street residential development—featuring two condominium towers—and the planned 33-storey hotel in Kelowna are both concerned.
Edgecombe said he has been told some buyers are now trying to get out of contracts to purchase condos at One Water Street and Westcorp, the Alberta-based company planning to build the hotel hotel on Kelowna’s downtown lakeshore says it’s doubtful its development will go ahead if the tax is implemented. That building is slated to have 49 condominiums as well as 179 hotel rooms.
“Damage is already being done,” said Edgcombe.
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