Mayor Kennedy Stewart releases results of survey showing grim economic impact of pandemic on Vancouver residents
The City of Vancouver can expect to lose a lot of revenue as a result of COVID-19.
That's one of the takeaways from an online survey conducted by Research Co. on behalf of the Vancouver mayor's office.
Another takeaway is that city residents have been hit hard financially by the economic contraction.
Only 68 percent of homeowners surveyed said that they could cover their full mortgage payments last month.
Research Co. reported that only 55 percent said they will be able to do this in May.
Ominously for the city's finance department, 25 percent reported that they will pay less than half of their 2020 tax bills. Six percent plan to pay no property taxes when they become due.
“The research is clear—the city’s finances are going to be negatively affected by COVID-19 due to lost revenues and hard-hit homeowners defaulting on their property taxes,” Mayor Kennedy Stewart in a news release. “It’s illegal for Vancouver and other local governments to run deficits, so the only way we can stay afloat is with the help of the federal and provincial governments.
"Otherwise, local governments will be forced to take drastic measures that will hurt residents and businesses, and significantly slow any post-pandemic economic recovery.”
He pointed out that the city already expects to lose up to $189 million this year due to the pandemic.
Property taxes rose seven percent this year
Many of the city's revenue generators—such as street parking and parking lots, recreational facilities, civic theatres, and even library fines—will not come close to expectations due to the shutdown of services and less traffic.
The city has a $1.6-billion operating budget and a $502-million capital budget this year. The largest portion on the operating side is policing, at 21 percent of the operating budget.
Vancouver's 2020 budget included a seven percent property-tax hike and a $111-million increase in spending over the previous year.
In December, Stewart described the spending increases as "critical investments in core front-line services like fire and rescue, police, libraries, community centres, homelessness and housing, while reducing or delaying spending in nonpriority areas".
Today, Stewart said that if 25 percent of residents default on property taxes, that could result in an additional $325-million revenue shortfall, causing more than a half-billion dollars in red ink.
He claimed that the city would have to liquify assets and exhaust reserve funds just to avoid insolvency.
Rent results differed from national survey
The Research Co. survey found that a quarter of all households faced a "significant decrease in income". And it noted that only 70 percent of renters paid their full rent in April, with only 63 percent expected to do this in May.
This finding on rents contrasted sharply with a national survey of landlords conducted this month by SVN Property Advisors Inc.
The Burlington, Ontario–based brokerage estimated that 85 percent of Canadian tenants paid rent in April—and 90 percent in Vancouver.
It was based on the responses of 284 small-building owners with about 2,400 suites and more than 10 calls to large landlords with 5,000 to 50,000 units across Canada.
Those owners with Class C buildings suffered the most, whereas those with A and B buildings in higher-income neighbourhoods saw few defaults, according to the company.
While 15 percent didn't pay, only 0.5 percent of residents called in advance.