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Every year the Fraser Valley Real Estate Board has an opportunity to make a presentation to the provincial government's select standing committee on finance and government services. This year as the board vice president and chair of government relations I had the privilige of making the presentation. Here it is.
Provincial Pre-Budget Presentation
9:05 am,
Thursday, September 16, 2010
Tynehead Ballroom 1,
Sheraton Guildford Hotel
Presented by:
Scott Olson, Vice President & Chair, Government Relations
Fraser Valley Real Estate Board
To:
Select Standing Committee on
Finance and Government Services
Province of BC
MLAs on the committee:
- John Les (Chair & MLA, Chilliwack, Liberal)
- Doug Donaldson (Deputy Chair & MLA, Stikine, NDP)
- Norm Letnick (MLA, Kelowna-Lake Country, Liberal)
- Don McRae (MLA, Comox Valley, Liberal)
- Michelle Mungall (MLA, Nelson-Creston, NDP)
- Bruce Ralston (Opposition Finance Critic & MLA, Surrey-Whalley, NDP)
- Bill Routley (MLA, Cowichan Valley, NDP)
- John Rustad (MLA, Nechako Lakes, Liberal)
- Jane Thornthwaite (MLA, North Vancouver-Seymour, Liberal)
- John van Dongen (Government Caucus Whip & MLA, Abbotsford South, Liberal)
Thursday, September 16, 2010
Thank you Mr. Chairman, and members of the committee, for the time to highlight the Fraser Valley Real Estate Board’s recommendations. Your dedication to the consultation process is appreciated.
My name is Scott Olson. I’m the Vice President of the Fraser Valley Real Estate Board and a REALTOR® from Surrey. I represent nearly 3,000 REALTORS® who live and work in North Delta, White Rock, Surrey, Langley City and Township, Abbotsford and Mission. I am here with Debbie Jay, Communications Coordinator of our Board.
As you may be aware, REALTORS® devote a significant amount of time each year to meeting with all levels of government on issues affecting the public and our profession. When there are elections, we also support local chamber of commerce all-candidate meetings to encourage people to vote and highlight issues of interest to our communities and profession. Exchanging information and working with stakeholders on solutions together allows us to make a positive impact on our communities. Participating in the provincial pre-budget consultation process each year is only one of the ways in which we communicate with government.
We'd like to start by thanking you for supporting investments which improve the Quality of Life of British Columbians. We are pleased when governments make decisions which support growth that encourages economic vitality, provides housing opportunities and builds better communities with good schools and safe neighbourhoods. This year, we applaud you for supporting investments to expand the SFU-Surrey campus, build the Surrey Outpatient facility and Surrey Memorial Critical Care Tower, fund the Gateway Program and continue to invest in the LiveSmartBC program. LiveSmart offers financial support to households for energy audits and energy efficient building retrofits. Decisions like this, along with commitments to work with municipalities to bring down the cost of housing and offer a new property tax deferral program for families with children, will benefit many individuals and families in the Fraser Valley. Thank you.
Now I'd like to share some ideas with you that would make more affordable and safe housing available to all British Columbians.
Fraser Valley REALTORS® share your concerns about the affordability of housing in this province, where buyers face the highest housing costs in Canada. Housing is essential for everyone and a fair system of taxation and a thriving economy will help everyone in BC enjoy a Quality of Life that is the envy of other provinces.
Provincial shelter taxes, namely the Property Transfer Tax (PTT), and the Harmonized Sales Tax (HST), place an unfair burden on homebuyers. The following recommendations are intended to make housing more affordable now and in the future.
We understand that tax competitiveness is a cornerstone of your policy, and considerable reductions have already been made in corporate and personal income tax rates. However, the PTT stands out in a negative way. The effectiveness of low personal income taxes to attract and retain workers is offset by the high cost of owning a home, which is intensified by the highest provincial land transfer tax in Canada.
The structure of the PTT has not changed since the tax was introduced in 1987, despite significant changes in the housing market. When the PTT was first introduced, the average home was nearly $102,000 and the 2% portion of the tax was expected to apply to only 5% of sales. In 2009, the average home in BC was over $465,000 and the 2% portion of the tax was charged on 86% of the homes sold in BC. The PTT is no longer a wealth tax. Many hard working people are now paying the tax on an average priced home.
I think many of you would agree that homebuyers in BC deserve a fresh start. If the PTT is to remain in place, as every government since 1987 has indicated due to the tax’s contribution to the provincial revenue, then it is time to restructure the tax to reflect today’s market conditions.
We join the BC Real Estate Association in recommending that you 1) Increase the 1% PTT threshold from $200,000 to $525,000, with the 2% applying to the remainder of the fair market value. And, we suggest that you 2) Index the 1% PTT threshold of $525,000, using Stats Canada’s New Housing Price Index, and make adjustments annually. Homebuyers will benefit from these recommendations. In 2009, more than 83,000 homebuyers – or about 75% – would have paid less PTT if the 1% threshold had been increased to $525,000. If the PTT had been indexed when it came into effect, the current imbalance would not exist. The housing market is dynamic and shelter taxes must take that into consideration.
Another idea we’d like you to consider is to change the HST before it adds to the heavy tax burden on homebuyers. As you may know, the current provincial new home rebate for the HST is available at 71.43% of the BC portion of the HST, to a limit of $26,250. We understand the rationale for this structure was so most (about 75%) of buyers of new homes would pay no more tax under the HST. However, unless the threshold is indexed, a higher portion of buyers will have to pay HST on new homes and the amount of HST charged will go up as average home prices rise. Based on a 20-year average annual growth rate of 1.8% in the New Home Price Index, by 2025 new home prices in all the markets examined will exceed the maximum rebate threshold. Experience with the PTT provides an excellent case study for what would happen to the HST new home rebate threshold if it is not indexed.
We join the BC Real Estate Association in recommending that you index the HST new home rebate threshold – currently set at $525,000 – using the New Housing Price Index, and make adjustments annually. We urge you to be proactive now and save future buyers of new homes from paying more tax.
The last issue we’d like to bring to your attention today is illegal drug operations (IDOs). The following recommendations would help address the safety of homes that were used to grow marijuana or produce other controlled substances. We’re concerned about IDOs because these homes were never designed to accommodate drug production and drug houses pose serious health and safety risks to the public even after they’ve been shut down. Fires, tripping, booby trapping and shock hazards can often be found in them. Unsafe and illegal structural changes, high humidity and mould issues are also concerns. People living near IDOs will also tell you that violence in their community is also common. Sometimes criminals will visit a former IDO and mistake it for an active IDO, impacting the lives of future occupants and existing neighbours.
That’s why we feel strongly that if an individual wants to buy or occupy a home in BC, it should be possible to find out from the local municipality if there is a record of the home as an IDO. And, if it was and records show that it was remediated, people should have the confidence to move into the home, knowing that the health and safety issues related to its drug production past have been addressed.
Unfortunately, when simple questions are asked, local authorities are not responding consistently. At times, responses are slow. When information is not provided, rules intended to protect personal privacy are often cited as the reason for the lack of disclosure. This leaves unanswered questions about the safety of a home for the future occupants as well as its potential value. Compounding the problem is a lack of consistency or a standard in the way IDOs are remediated in this province. Municipalities have different requirements and often it’s left up to the property owner to get the job done. They may hire someone who is qualified, not qualified or choose to do the work themselves. We’ve talked to REALTORS® and boards across the province and learned that the challenges we face on the reporting and remediation of IDOs is not unique to the Fraser Valley.
The good news is, we’re starting to make some progress in the Fraser Valley. Since 2007, our Board has conducted research, met with experts and brought stakeholders together in a forum to draw attention to the impact of illegal drug operations on housing. Now we’re talking to stakeholders on a task force about practical solutions. We’re getting direct input from REALTORS®, elected officials and staff from our seven local municipalities and fire and police officials. We’re also talking to staff from the Ministry of Public Safety and Solicitor General office and the BC Real Estate Association. Just recently, we came up with consistent processes for reporting and remediating IDOs that could be implemented by our local governments. We would appreciate it if you could help us take these processes across the province.
On reporting, we have recommended that our seven local municipalities adopt a set of operational guidelines which are enclosed with our pre-budget submission. The guidelines would assist municipalities in responding consistently to questions from the public and REALTORS® about properties and whether they’ve been identified as IDOs. Adopting these guidelines would implement a process that would protect future buyers and occupants from the health and safety risks associated with former drug houses.
To assist us in our efforts, we are recommending that you encourage all BC municipalities to adopt these reporting guidelines. This would enable anyone wishing to buy or occupy a home in BC to make an informed decision about former drug houses based on key facts.
On remediation, we are pleased to inform you that the City of Surrey is amending their bylaws to include input from consultations with stakeholders, including other cities, the remediation industry and REALTORS®, on how the city’s remediation procedures could be improved. This new remediation process will also reference recommended practices from the Lower Mainland and other areas such as Alberta.
Len Garis, Fire Chief for the City of Surrey, and Adjunct Professor of the School of Criminology and Criminal Justice at the University of the Fraser Valley, released a discussion paper in April this year which describes the new remediation process. A copy of this paper is enclosed with our pre-budget submission. We are pleased with this latest development as Len has been a longtime supporter of our initiative on illegal drug operations and he sees the benefits of implementing a new remediation process to ensure that all former IDOs are fully remediated and made safe for future occupants.
A summary of the process is included in our submission. Basically, the new process would require an environmental consultant to oversee the remediation of an IDO from start to finish and hire the professionals needed to complete the work. Records related to the remediation project would be kept at the municipality. Currently, an environmental consultant may not be involved in a remediation project in this way depending on the municipality or project. The individuals hired to remediate or oversee the remediation of a property may not even be certified. When the City of Surrey has successfully implemented a new remediation process, they intend to share the tools, including the amended bylaw, with the other municipalities through our task force.
We are recommending that you encourage all BC municipalities to adopt Surrey’s new process for remediating IDOs, or develop a provincial standard for all BC municipalities to follow based on Surrey’s new process. This would ensure that these types of properties are fully remediated and made safe for future occupants.
Please join the Fraser Valley Real Estate Board and other representatives from the real estate profession in helping to make homes in BC more affordable and safe. For more details on our recommendations for this year, please refer to our written pre-budget submission and the other materials we are sharing with you today.
Thank you for listening to our presentation.
