Affordable housing needs more than just empty homes tax

ABC talks a big game, but the city council majority is yet to make moves to really improve housing affordability

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      The ABC-majority Vancouver city council raised eyebrows last month when it decided to scrap a planned increase to the empty homes tax from three to five per cent. The move, recommended by a staff report, cited “fairness and effectiveness” as reasons.

      Council also voted to apply new exemptions retroactively—giving back $2.4 million from city coffers to developers with unsold empty units, and $3.8 million less in tax revenue overall. Critics say the move goes in the wrong direction, during a time of skyrocketing housing costs and spiralling affordability.

      “We have a party running city council … that took money earmarked for housing, that is desperately needed, and decided to send it back to developers, for what amounts—in the world of developers—to petty cash,” Gabrielle Peters, a disabled writer and policy analyst, told the Straight in an interview. “But we could have built actual homes, for people who have no cash.”

      Since its introduction in 2017, the tax has raised $115 million towards building affordable housing. Just over half of the $28.7 million raised in 2022 was designated to the Community Housing Incentive Program (CHIP) that provides non-profit housing developments with grants, so long as all homes are secured as social housing; $10.1 million was earmarked for “emerging priorities,” and $3.6 million went to staff working on affordable projects. 

      "In the grand scheme of things, [$3.8 million] is a relatively small amount of money that will help keep the costs down... for those who are purchasing or occupying these buildings," ABC Coun. Mike Klassen said, referring to an amount that would have paid workers’ salaries for a year or contributed to a significant chunk of a CHIP grant. (The three grants awarded in 2022 were between $4.8 and $6 million.)

      At the time of print, the Mayor’s Office had not replied to questions about whether the funds would be replaced from another avenue.

      “This is really about who has access and power at City Hall,” Clara Prager, campaign lead at Women Transforming Cities and responsible for their Watch Council program, told the Straight in a Zoom call. “Developers asked if they could get their money back, and they got it back... This shows us whose voices are being prioritized, and it brings us to the question, who is the city council here to serve?”

      The discussion around empty homes tax is a microcosm of a bigger problem: there simply isn’t enough housing in the city, especially for low- and middle-income households. 

      For all the talk around developers and housing in Vancouver, not much of it actually gets built. Data from the Canada Mortgage and Housing Corporation shows that the City of Vancouver had around 4,000 new apartments beginning construction in 2022, compared to 15,000 in the rest of Metro Vancouver. In 2022 council approved 10,800 housing units—only about 18 per cent of which were social housing or below market-rate rentals—which will take several years to build and be liveable. 

      Between 2017 and 2022, 30 per cent of units approved were affordable to people earning below $80,000 per year—well below the city’s 48 per cent target, and not factoring inflation into account.

      For many years, the proposed solution has been simply building more housing, hoping the free market will sort itself out. But Jennifer Bradshaw and Owen Brady, co-directors of Abundant Housing Vancouver, told the Straight that the city’s housing policies don’t reflect current reality.

      “We need much more social housing, and the appropriate places to get revenue for that is not empty homes tax, which is a tiny per cent of all homes, but through things like property taxes,” Bradshaw said. “I find it a bit distracting from what really needs to happen... Tinkering with the empty homes tax is going to have tiny, marginal effects, when we’re going to need big moves to get apartments, to get social housing, co-ops, all those desperately needed [types of] housing built.” 

      Vancouver’s property taxes are low: even a 10.7 per cent hike to the general purpose tax levy announced in March ended with taxes being 0.28 per cent, lower than they were in 2021 (0.29 per cent) due to lower fees going to other recipients.

      Property tax is less than half of what it is in any other major city in Canada. However, CACs—community amenity contributions, which developers pay to build new properties—are relatively high, varying from project to project. Brady said these costs get passed on to newcomers through higher new-build home prices and rents.

      “We’re basically taxing newcomers to avoid having to pay for things that really should be paid for through property tax,” he explained. Social housing “should be paid for out of property taxes, because it’s a societal responsibility. Immigrants and migrants coming here are not causing the need for social housing: we needed the social housing anyway.”

      Currently, 52 per cent of Vancouver’s residential land hosts just 15 per cent of homes. The city’s ongoing “missing middle” plan aims to combat that with gentle density. A recent consultation found 77 per cent of respondents agreed multiplexes should be allowed in all low-density areas across the city.

      Majorities also supported ensuring these homes were family-sized (64 per cent) and possible to purchase at below-market rates (58 per cent). The most recent proposal update recommends allowing three to six units per lot (up to eight if they are rentals) and exploring making one in six units “a below-market homeownership option.” 

      But multiple units (like laneways and basement suites) are already allowed on most single-family zoned land; they’re simply not built in large numbers, due to the costs associated with permits and building more square footage on lots. 

      Meanwhile, the rare areas of the city that are zoned for high-density see market-rate or luxury apartments being built, with small numbers of below-market rate rentals included to satisfy city policy incentives—primarily adding housing that’s only attainable to high-income residents, with scraps for the less well-off.

      On top of that, city reports say building lots of higher-density homes could place more strain on Vancouver’s sewage and infrastructure system. To Bradshaw, this is another sign that the city is shifting tax burdens from residents and homeowners—and the people most likely to vote in municipal elections—onto renters and people moving into the city. 

      “We aren’t charging property taxes high enough to maintain our current infrastructure, so again, we’re trying to use CACs charged on newcomers—who haven’t been using the infrastructure—to help renew and pay for existing infrastructure that needs upgrading,” she explained.

      Affordable housing conversations don’t exist in a bubble. Decades of policy decisions at the municipal, provincial and federal levels have led to the current situation, where housing costs and rents soar while vacancy rates remain low. 

      Peters points to the cessation of social housing funding that happened under Jean Chrétien’s federal Liberals in 1994 as one issue. Responsibility was shifted onto provinces, which did not continue at anywhere near the same pace.

      “The Canadian government removed itself from housing. If we had maintained the rate of building 16,000 non-market social housing [homes] annually... it would have resulted in 464,000 [homes] minimum in the last 29 years,” she said. And that’s assuming the same rate; how could things have been different if the government had committed to building more homes during that time period?

      Focusing on numbers of units, or approving social housing without interrogating whether those units are fit for purpose, moves activists’ goalposts from wanting good homes for all, to begging for (and appreciating) any kind of housing, period. “The discourse around housing… [is] becoming narrower and narrower,” Peters said.

      Ahead of the election, ABC promised to triple the number of housing starts and streamline permitting; increase social and supportive housing investments in line with inflation; and double the number of co-ops. There were no specific promises for secured rental homes, non-market homes, or social housing units. 

      The empty homes tax, as Bradshaw pointed out, is only a small part of the conversation around affordability and housing. But ABC’s willingness to bend on it indicates that the council may not be prioritizing helping those most in need. Changing zoning requirements to allow multiplexes or easing permitting laws may help a little, but in the long run these piecemeal policies will not affect the kind of big change that’s necessary to deal with a huge problem.

      “Developers have always had a cozy relationship with City Hall,” Prager said. “What’s different about this situation is the urgency of the crisis we’re facing. The housing crisis is only getting worse But rather than finding solutions to address the challenge, we’re doing the same thing as previous councils.”