Mortgages and Financials

Canada’s least affordable markets revealed

A new analysis of Canada’s housing market reveals the cities where affordability is at its worst. Rentseeker has compiled its rankings using data from Canada Mortgage and Housing Corporation together with the Canadian Real Estate Association. It found, unsurprisingly, that Vancouver’s homes are the least affordable relative to average income, when heating costs and property taxes are factored in. A buyer would need to earn $120,297 to buy a home at the average market price of $909,293. The figures assume a 25- year mortgage at a rate of 2.5 per cent with a 20 per cent downpayment.
In Toronto a salary of $87,404 is required for the average $641,617 home cost; in Quebec City $41,809 is needed for a $270,506 home; in Saskatoon $50,904 is needed for a $344,527 average home; in Calgary it’s $65,420 for a $375,619 home; in Halifax it’s $43,908 for a $287,594 home.cities-realestate.jpg
http://www.canadianrealestatemagazine.ca/market-update/canadas-least-affordable-markets-revealed-200830.aspx

I love Calgary! We remain positive despite adversity…

Calgary’s sales buoyed by consumer confidence

The positive outlook of consumers is helping to keep the Calgary housing market consistent with typical levels.
That’s according to a new report from the Calgary Real Estate Board, which notes that the volume of sales in June was only five per cent below the 10-year average for the month and three per cent higher than levels of the past three years.
“We’ve seen less concern from consumers lately,” said CREB president Corinne Lyall. “Consumers who were waiting for wide-spread price declines have been surprised to see that it just hasn’t happened yet, and so they’ve decided to take advantage of the improved selection and lower lending rates.”
June’s sales were 18 per cent lower than the same month last year, new listings totalled 3,122 and prices were essentially flat. The second quarter figures show that the worst may be behind us with year-over-year declines in sales of 22 per cent, down from 32 per cent in the first quarter.
The apartment sector in Calgary is showing the greatest weakness in absorption rates, creating downward pressure on prices, although still 1.65 per cent above last year’s average on an adjusted basis.
Detached homes reached a benchmark price of $515,500, up 0.4 per cent from the same month last year; the year-to-date figure is 3.44 per cent higher than the same period last year.

Calgary condo market took off in 2014

Condominiums dominated Calgary real estate sales and new home construction in 2014 with near-record starts near double the number of a year earlier.
Canada Mortgage and Housing Corp. data show multi-family starts for the Calgary metro area totalled 10,224 units through November compared with 5,701 for the same 2013 period. The annual record of 10,602 multi-family starts was reached in 1978.
Screen shot 2014-11-10 at 2.02.50 PM
Felicia Mutheardy, a CMHC analyst for the Prairies and Territories, said two years of strong migration, coupled with low mortgage rates and limited vacancy locally, has fuelled Calgary’s condo market.
In 2013, net migration to the Calgary area reached 45,168. For 2014, CMHC expects that number to decline 22.5 per cent to about 35,000 newcomers.
“You see more people coming into the homeownership market and you look at the price differential between a multi-family unit and a single-detached unit, it’s quite a bit,” said Mutheardy. “So you’re looking at multi-family being more as an entry level for perhaps first-time homebuyers. You also have more people looking to downsize.
“You also have investors looking to purchase units for investment purposes. All these factors are really helping to push up demand for condominiums, particularly for condominium apartments and that’s what we’re seeing in the Calgary market (in 2014) in terms of new home production.”
The condo building boom is expected to be short-lived, however. CMHC says multi-family starts will dip sharply to 8,000 units in 2015.
Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said 2014 produced annual sales records for MLS condo apartment and condo townhouse categories.
“What we have seen happen, particularly in the single-family sector, is that there’s a lot less product available in those lower price ranges. So for a lot of consumers that are needing to buy in that range really they’ve been turning to the condo apartment and condo townhouse product which generally tends to fall into those price ranges (below $400,000),” said Lurie.
“Ultimately it comes down to what you can afford,” she said.
Real estate board figures show Calgary condo apartment sales rose 18 per cent to 4,742 in 2014, while condo townhouse sales increased at about the same rate to 3,737. Single-family home sales rose 5.5 per cent to 17,185 transactions.
Don Campbell, senior analyst with the Real Estate Investment Network, said the increase in condo demand in Calgary has been trending upward for several years, with demand expected to remain strong.
“Calgary has been attracting a younger population than any other city in the country. They come for jobs and stay for lifestyle.  Many of these younger new residents arrive from regions where condominium living is commonplace, which hasn’t been historically true for Calgary,” he said.
“Condominiums, both new and old, have become the affordable housing or first-timer housing choices. Previous decades it was the house out in the suburbs that allowed people to enter into the housing market. Now this has been partially replaced by the condominium.”
 

Mario Toneguzzi, Calgary Herald

Alberta retail sales growth leads country…

Alberta shoppers spent big in September, shelling out a record $6.7 billion, Statistics Canada said Tuesday.
Screen shot 2014-11-27 at 10.10.05 AM
The 7.4 per cent improvement from a year earlier was the highest annual growth rate in the country. Across Canada, retail sales grew to $42.8 billion, up 4.5 per cent from September 2013.
“If lower oil prices are a potential problem for Alberta’s economy, they don’t appear to be slowing down shoppers in our province,” Todd Hirsch, chief economist with ATB Financial, said in a note.
Hirsch said it was in September that global financial markets and commodity prices began to weaken, the price of crude falling more than $5 a barrel during the month.
“But Albertans seemed unfazed. Retail sales are a strong indicator of consumer confidence in their employment and income expectations, and normally sales start to level off or decline if the economy is stressed. That did not happen in September,” he said.
Alberta sales numbers have retailers looking to move into the Calgary market. The latest is Quebec-based fashion retailer La Maison Simons (Simons), which said it will open a Calgary store by March 2017 in the downtown Core shopping centre as part of a national expansion. Simons now has nine Canadian stores — one in Edmonton and eight in Quebec.
Chief executive Peter Simons told the Herald the Calgary store will open in about 100,000 square feet.
“The biggest thing was the location at the Core,” said Simons. “We like the building — the heritage building on the corner there and the possibilities for design and architecture in the store.
On a monthly basis, Statistics Canada said retail sales — on an upward swing since early 2014 — rose by one per cent in Alberta and by 0.8 per cent in Canada.
Canadian sales were buoyed by higher sales at motor vehicle and parts dealers, it said.
The 3.4 per cent increase at motor vehicle and parts dealers was the largest sales gain among all subsectors. Sales were up 3.3 per cent at new car dealers, on the strength of higher volumes of sales of light trucks, said the federal agency.
Benjamin Reitzes, senior economist with BMO Capital Markets, said the solid September sales results suggests that “consumers remain relatively upbeat, even if it was driven entirely by autos.”
 

Farm Report 2014

farm
 
The price of farmland in most Canadian markets has either held steady or increased this year, following a period of strong year-over-year growth. Mirroring the trend in residential and recreational property values, lower crop prices, floods and challenging winter weather conditions have failed to significantly impact the Canadian agricultural real estate market.
 
There is significant variation in price and productive capacity of farmland across Canada. Macroeconomic factors impacted prices to a degree; however, practical considerations such as the proximity to a processing facility or prospective buyer’s existing operations drove individual transactions.
 
The real estate market in western Canadian markets remained strong, with prices in parts of British Columbia both the highest and lowest in the country. Dairy farms in the Chilliwack-Fraser Valley area sold for up to $63,000 per acre, while bare land in Peace River North—which is closer to Yellowknife than it is to Vancouver—sold for between $750 and $1,550 per acre.
 
In Alberta, short supply left many family farmers ready and willing to make a deal at a moment’s notice. Tile drained land sold for as much as $10,000 per acre in southern Alberta, which represents a 20 per cent increase over the previous year. The value of scrubland and other non-productive land in Canada’s most prosperous province also climbed, buoyed by demand from well-off urbanites seeking the tranquility of the countryside.
 
Demand was softer moving through Saskatchewan and Manitoba. Although challenging growing conditions jeopardized profitability for farmers, sale prices actually rose modestly to between $950 and $2,200 per acre. Listings have stayed on the market for months and in some cases, years.
 
While prices across Ontario have started to level off, the value of farmland in some pockets rose significantly. North of the Greater Toronto Area, agricultural land slated for development reached $54,000 per acre. In Chatham-Kent, excellent soil quality boosted the price of farmland up to $25,000 per acre—representing a surge of as much as 40 per cent over the previous year.
 
While this represented a boon for sellers, it was a barrier to expansion for some buyers. The rising prices led to a small migration of farmers, particularly Mennonites, northeast to areas including Quinte and Renfrew County where comparable land sold for between $8,000 per acre and $12,000 per acre.
 
Nova Scotia’s Annapolis Valley experienced modest growth over the first nine months of 2014. The relatively small market has seen an increase in the number of vineyards, which have played a role in boosting prices to $10,000 per acre in some areas.
 
For a detailed report, Click Here!

Secondary suite debate returns to city council

Screen shot 2014-09-22 at 1.25.11 PM
The groups in favour of allowing secondary suites in all Calgary neighbourhoods include the key organizations for post-secondary students, businesses, poverty issues, conservative libertarians, home builders, developers and economic development.
Groups on the debate’s con side? That appears to be the exclusive domain of community associations, whose volunteer leaders regularly come to public hearings to persuade councillors an extra basement unit would worsen problems like parking, and that one may lead to many more where they don’t really belong.
These final bastions against citywide suite reform aren’t speaking with one voice — far from it.
Community associations have been more likely to support than oppose rezoning applications for suites in 2014, city records show.
“Overall there is actually — I’m not going to say support. I think people have come to accept them in the community,” said Murray Ost, president of Glenbrook Community Association.
“Four years ago, we would have had a different conversation. It’s quite a dramatic change.”
The issue returns to council Monday. Planners and inner-city councillors are offering separate proposals to take approvals on individual suites out of politicians’ hands and into planning staff’s. Both proposals bid to ease the affordable rental shortage and end the time-consuming process of council vetting one suite at a time.
The pitch by councillors would only lift zoning prohibitions in inner-city wards and near major transit stops.
The suburban majority on council has long opposed suite reform in existing stand-alone housing districts, largely influenced by protests from neighbours and community leagues.
But as homeowners seek zoning changes for suites, many community associations don’t put up resistance.
Of the 27 proposals that have gone to Calgary Planning Commission — the step before council hearings — only seven have received letters of concern from community leaders. Eight were supported or faced no objections, while the rest received no comment from the volunteer associations tasked with considering development changes.
In Cedarbrae, secondary suites have long existed legally in some zones and illegally, said Paul Bowen, the community’s past president. He views giving homeowners a path to creating legal, safer suites as a “win-win.”
“We haven’t had the issue come up in a big way, so sometimes silence may be more acceptance than anything,” said Bowen, who used to work for city hall’s affordable housing unit.
In Glenbrook, most of the neighbourhood has always been zoned for suites. Ost, the west-end community’s longtime president, said some opponents remain, but they’re a minority among homeowners.
“They see that the fears of the impact are often larger than the impact itself,” he said.
Directly south of Glenbrook, the community president in Glamorgan sees it differently. More homes there are zoned RC1 or R1, the land-use zone that doesn’t allow suites — and comprise 53 per cent of all residential properties in Calgary.
“People buy R1 because secondary suites are not a permitted use,” said Glamorgan’s Beryl Ostrom.
Neighbours do not want to be forced to allow short-term rental suites, when there are many areas that already permit them and the city could push for provincial rent caps or lower utility bills to improve affordability, she said.
“The more transient a community becomes, and the more rentals there are, the less vested interest people have in their community

“Then you put more of your money into policing,” Ostrom said.
Elbow Park’ development committee chair wrote the city to warn of deeper parking issues if a suite was allowed near the Glencoe Club. She also expressed concern about changing the neighbourhood “vibe” and setting the inner-city enclave on course for more suites, which “would change the designation of the R-C1 neighbourhood and make the term ‘single family home’ meaningless.”
Community associations don’t seem to have much company among organized groups with opinions on suite zoning prohibitions. Pro-reform groups include the Calgary Chamber of Commerce, Calgary Economic Development, the Manning Foundation think-tank, Vibrant Communities Calgary, the Canadian Home Builders Association, Urban Development Institute, and Calgary’s two university undergrad student associations.
Community groups aren’t always successful in persuading council, which this year to date has approved zoning changes for 16 homes and refused suites in six — with more to come this fall, like the proposals in Glamorgan, Glenbrook and Cedarbrae.
Earlier this month, councillors voted 9-5 to allow a suite in Elbow Park, over the community group’s protests. In Woodlands — in the ward of Diane Colley-Urquhart, a convert to the reform cause — the community association had no objections to the proposed suite but council refused it 8-6.
“If this becomes a plague, obviously we don’t want to see 100 basement suites put in the next year, but I find it difficult to take a stand against one suite,” community president Cec Jahrig said in an interview. Neighbours around Woodpark Close S.W. organized themselves and petitioned council against that one suite, successfully.
Shane Keating, one of the councillors who spiked that proposed suite, said the views of surrounding neighbours matters more to him. “Community associations don’t always have a finger on the pulse of all the residents,” said the southeast member, one of nine who’s against blanket rezoning to allow suites in all districts.
Coun. Druh Farrell isn’t confident the 15-member council will shift its view Monday, and said she may push to further delay her colleague’s motion.
Where council stands on suites
In favour of zoning to allow suites in all single detached house districts: Druh Farrell (Ward 7), Evan Woolley (8), Gian-Carlo Carra (9), Brian Pincott (11), Diane Colley-Urquhart (13), Mayor Naheed Nenshi.
Opposed: Ward Sutherland (1), Joe Magliocca (2), Jim Stevenson (3), Sean Chu (4), Ray Jones (5), Richard Pootmans (6), Andre Chabot (10), Shane Keating (12), Peter Demong (14).
 
By Jason Markusoff, Calgary Herald September 22, 2014 10:11 AM

Snowbirds bringing cash to Florida

Screen shot 2014-09-19 at 12.06.57 PM
Canadian buyers continue to snap up Florida real estate, says a recent survey of foreign buyers produced by the National Association of Realtors on behalf of the Florida Realtors association.
The survey tracked foreign buyers for a 12-month period from mid-2010 to mid-2011.
“For that period, one in four Florida homes was purchased by a foreigner, and the largest single country represented was Canada,” says John Tuccillo, chief economist for Florida Realtors. “Canadian sales represented 10 per cent of all home sales in the state during that period.”
Canadian buyers were looking for bargains with the median price of homes purchased at a little over $151,000 US.
More than 90 per cent of those deals were completed strictly with cash.
Almost two-thirds of Canadian buyers targeted homes in five locations — Tampa St. Petersburg-Clearwater, Miami-Fort Lauderdale Miami Beach, Orlando Kissimmee, Naples-Marco Island, and Cape Coral-Fort Myers — all in the southern half of the state that was hit particularly hard by the housing downturn.
The price of a typical south Florida condo has fallen by 45 per cent since 2005, says Tuccillo.
“There’s still strong demand at both ends of the price spectrum,” he says. “We’re seeing a lot of activity on the part of investors with a long-term view in the lower half of the market. The demand for higher-priced properties has also held up reasonably well.”
Canadians represent about 30 per cent of buyers in Naples, a popular Gulf Coast destination.
“We’re smaller than Miami and the beach is very accessible,” says Tom Doyle, a realtor with Sun Realty in Naples. “There’s no retail area blocking off the waterfront — you can’t get a tattoo on Naples Beach.”
Doyle says Canadians typically snap up two-bedroom condominiums built in the late 1980s and early ’90s near the beach at an average of $150,000.
Right on the beach, though, “it’s a sellers market, with homes going for up to $22 million,” says Doyle.
Naples housing prices are stabilizing as demand rises, he says.
“Our inventory is half what it used to be and anything worthwhile gets snapped up, most of it in cash transactions. You can’t buy anything at the price it sold for last year.”
The Fort Lauderdale super-luxury market is also rebounding, says Kelly Drum, partner in that city’s family-owned Drum Realty.
“The market was a little flat, but it’s coming back with properties in the $4 million to $20 million range in our listings,” he says.
Drum notes that property owners in the Fort Lauderdale luxury market are under little pressure to sell.
“These are typically people who have an interest in simply putting their money someplace else,” says Drum. “Properties that might have attracted $15 million in 2006 and 2007 may only sell for $10 million today, so the challenge is getting the owners to list the property to reflect the reality of today’s markets.”
In June of 2010, Drum sold a property to a Toronto buyer for $7.64 million.
“It was a spectacular property with water on three sides — like its own private island,” he says. “The gentleman purchased it just for the land and tore down a 15,000-square-foot house to build a new 18,000-square-foot home.”

According to U.S. real estate information specialist Trulia, the median price of all properties sold in the Fort Lauderdale market was $160,000 during the quarter ending in September.
That’s up almost 12 per cent over the same time last year, but down slightly since the previous three months.
Drum doesn’t deal in distressed real estate but notes that foreclosure sales are still common in the lower-end market.
“If I was a Canadian buyer, I’d come down with cash,” says Drum.
“A cash buyer competing with a mortgage contingency buyer could still walk away with a property at a discount, even if that buyer was willing to pay list. Cash commands very attractive deals in this market.”
Although geographically part of south Florida, Key West is a market all to itself. Expect to invest hours in travel time from the mainland, either by car, air or ferry.
In Key West, all real estate is in the high end,” says Cory Held, a realtor with Preferred Properties/Coastal Realty in Key West.
Stately luxury homes ranging to about $10 million grace the community’s Old Town, while renovated homes ranging from $500,000 to $2 million are found in New Town.
The community remains under a Rate of Growth
Ordinance that sees few new properties entering the market and limiting supply.
“High-end properties used to move much more quickly,” says Held. “Now properties selling at $2-million may remain on the market for a year or two — bearing in mind that might be a small house on a small property in Key West.”
Two years ago, Held sold a 5,400-square-foot home “that looked like Tara” with pool, two guest houses and beach access for $1.76-million. It had previously sold for $5.4 million.
By comparison, a similarly appointed 3,440-square-foot home, with two guest houses, four bedrooms, four and a half baths, pool and library has been offered at $2,999,999.
“I’m currently working with a couple out of Toronto who own a condo unit here and they’re looking at buying something else,” says Held.
“I’m encouraging them to hold onto it as an income property and to buy an additional property. I’d advise any Canadians entering this market to come with a certification of funds and to buy literally as high as you can afford.
“Key West remains very desirable and prices will definitely bounce back.”
There are bargains to be found throughout Florida, although it might mean looking beyond your ideal location.
Tuccillo’s advice to Canadian buyers: “Look for a lower-priced home in a good location that’s accessible to water and golf courses. If you can’t afford a location like Naples, move a little north to the Fort Myers-Cape Coral area to find bargains.”
 
 
By Peter Kentner, Postmedia News

Simple Ways to Get Rid of Pests

Pest infestations not only cause damage, they can also take a chunk out of a homeowner’s wallet. Here are a few ways to prevent critters from calling your house “home.” Remember, for large infestations, always call a professional.
Screen shot 2014-08-12 at 10.16.03 AM
Ants follow the trails left by scout ants. If you find a trail of ants in your kitchen, clean the area with soapy water, household cleaner or a 50/50 solution of water and vinegar. To avoid an infestation:
• Keep sweets and food in tightly closed containers.
• Plant spearmint around your house.
•Place strips of cucumber, citrus peels or borax near
any openings where you’ve seen ants.
Termites
While no home is safe from termites, it is possible to reduce the chances of an infestation.
• Termites thrive on moisture. Survey your home’s foundation, and look for water leaks.
• Schedule a pest inspection. Termites are crafty critters that only make their presence known through the damage they cause. Schedule a pest inspection every couple of years to catch an infestation early and help you avoid making costly repairs.
Roaches
The easiest way to prevent roaches is to keep your kitchen spotless—clean up crumbs, wipe down the sink and sweep the floor. But, if you’ve already seen them in your kitchen, here are other options:
• Sprinkle catnip or bay leaves in areas where roaches lurk, such as behind the refrigerator, under the oven and under your sinks.
• If you see a roach, spray it with soapy water. The soap will slowly suffocate it.
• Set traps with baking soda and sugar. Roaches love sugar; however, the baking soda will dehydrate them.
Rodents
Rodents can wreak havoc on your home. While traps are effective once the rodents are in the home, here’s how to keep them out in the first place:
• Keep your kitchen clean. Wipe down the counters and sweep the floor before you go to bed.
• Ants aren’t the only vermin that hate mint. Mint keeps rodents at bay as well.
• Place steel wool in holes on the exterior of your home.
• Put trays of used cat litter outside near where you think they could get in. Rodents will smell the cat and scurry in the other direction.
Fleas
Pets can give us a lot of things—love, attention and fleas. Although chemical pet treatments can get rid of the fleas on your pets,
they often don’t get rid of them in the house. For that, try these suggestions:
• Sprinkle salt, borax or baking soda on the carpet and upholstery. Let it sit for a few hours, and vacuum afterwards.
• Get a dehumidifier. Fleas love humidity. If you keep the humidity in the room under 50%, you may be able to get rid of adults fleas and their larvae.
• Clean your bedding and your pet’s bedding regularly.
• Comb your pet’s coat with a special flea comb, and clean it in a glass of soapy water.
Pest Facts
* Ants are the #1 nuisance pest.
* 56% of homeowners have had problems with ants in the past year.
* 67% of homeowners are most concerned about pests during the summer months.
* Homeowners who sought professional pest control did so to get rid of ants, spiders, termites and cockroaches.
* 53% of homeowners are concerned about pest damage to their homes and property.
© 2014 Buffini & Company.

Albertan's say "yes" to pricey wedding…

Canadians plan to spend an average of $15,000 on their weddings: BMO study

_DSF2544
Canadians planning to tie the knot expect to spend an average of $15,000 on their big day, but many don’t think they’ll be able to foot the entire bill, according to a new study.
The BMO InvestorLine survey of 500 adults revealed that nearly 40 per cent of respondents believe their ideal wedding is out of reach.
Canadians surveyed expect to cover 60 per cent of the costs associated with their wedding by drawing on investments or other savings. For the remaining costs, they predict they’ll rely on parents and gifts from friends.
BMO InvestorLine CEO Julie Barker-Merz said she was “quite shocked” at how little respondents would allocate for a potential wedding.
“I think retirement falls into that category where people will typically underestimate what they’re going to need to spend and then they get surprised. And I think in this case what this study showed was a very similar pattern of behaviour,” she said in a phone interview Wednesday.
Barker-Merz was also surprised by respondents who said they’d rely on credit cards and/or lines of credit.
“Typically, lines of credit and credit cards when it comes to weddings is for those unforeseens, things you didn’t plan for and anticipate. The fact that the people surveyed have that as part of their plan just points to the need of really getting smart on how to plan, how to budget, how to save money and plan for what you can afford.”
For her spring 2010 wedding in Edmonton, Melissa Gorman initially planned to spend between $20,000 to $25,000.
“Then, when I started talking to venues and started to talk to caterers, then the price of the dress, the invitations, favours, the cake, all of the components, I realized that my budget wasn’t realistic — so my budget did go up,” recalled Gorman, editor of Wedding Obsession, a Canadian wedding blog dedicated to the modern bride.
In the end, the final tally was about $33,000 for approximately 150 guests.
“I planned far in advance so that I was able to make the money to pay for it, but essentially, yes, you could say I did dip into my savings — but I didn’t go into debt,” said Gorman. “Basically, money I had allotted for other things I used to pay for my wedding.”
Gorman said one reason her budget surged was underestimating the cost of feeding guests.
“You’re looking at spending anywhere from $25 to $75 per person for food. And then not just that, there’s also alcohol involved,” she said. “Depending on whether you want an open bar, limited bar, drink tickets, all of that stuff adds up.”
Barker-Merz suggested individuals start putting together a budget and setting aside money monthly for an affordable event. She recommends a tax-free savings account as a good investment vehicle.
To help scale back on costs, Gorman took on a lot of do-it-yourself projects such as packaging her own favours. But as she reflects on her day four years on, she admits she would approach the process differently today.
“I loved my wedding and I have no regrets. But if I could have gone back I would have scaled it down, I would have made it more intimate. And I think a lot of things I worried about and wanted to spend money on probably weren’t really worth it.”
The online survey of 500 adults who are not currently married but at least somewhat likely to get married in the future was conducted for BMO InvestorLine by Pollara between April 11-15. The margin of error is plus or minus 4.4 percentage points, 19 times out of 20.
 
By Lauren La Rose, The Canadian Press April 24, 2014

Homeowners lose out under 'tax room' plan

Business groups are cheering on a city hall proposal that would push property taxes higher for homeowners so council can ease the pinch on industrial land, office space and retailers.
In the “tax room” debate, a controversial exercise that’s become common for council, city administrators will Monday ask to raise $27.6 million in extra taxes from residences – and then redirect $17.8 million of that to lower the city’s tax take from nonresidential properties.
Chief advocates for building owners and small businesses support such a rebalancing of the taxpaying pie, but many councillors aren’t sure what they’ll decide Monday.
Coun. Shane Keating was a key swing vote in council’s decision last year to take an extra $52 million of what the city calls provincial “tax room” and spend it on transit expansions. This time, he’s sympathetic to the protests from Calgary businesses that they’re disproportionately overtaxed, but isn’t sure he can sell this idea to his southeast Ward 12 residents.
“I’ve heard many times from people: ‘I’ll pay you the taxes if you show me the service,'” Keating said Thursday. “This doesn’t do that. It raises the taxes without the service.”
In the years before Mayor Naheed Nenshi took office, council normally approved the city’s side of property taxes, regardless of how that would combine on tax bills with what the provincial government was requisitioning in education property taxes.
But in recent years, council has decided the blended rate should match the approved city tax increase, so it adjusts the municipal tax hike to offset anything higher or lower on the provincial side of the bill.
This year, the Alberta government’s request amounts to a 1.5 per cent decrease in education property taxes for residences. By treating that gap as tax room to be occupied, finance staffrecommend that council hike homeowners’ municipal taxes to 9.0 per cent, to create a 4.8 per cent overall increase.
For non-residential properties, the province is requesting 14.2 per cent more in land taxes than it did last year, based on assessment bases throughout Alberta. So to balance that out, council is being asked to lower the city’s non-residential tax hike to 2.0 per cent.
It means two-thirds of the revenue raised from the city’s extra residential hike must go to paper over the revenue loss of a lesser tax hike to business properties. It leaves the city with $9.8 million in extra discretionary spending money every year, rather than the $27.6 million extra residents would be paying.
To Richard Truscott of the Canadian Federation of Independent Business, it sounds like a good idea. “Businesses are sick of being treated like a cash cow,” he said. “City council definitely should try to rebalance the rates to offset any big hit to non-residential property taxpayers, since they already pay such a disproportionate share of the property tax burden.”
City documents show that businesses account for 27 per cent of the total $255 billion assessed value of all of Calgary’s taxable properties, but contribute half of all the property tax – on top of licensing fees and the business tax, which the city has begun gradually phasing out.
If city officials’ proposed tax manoeuvre lets businesses shoulder less of the total taxes, “good on them,” said William Partridge, president of Building Owners and Managers Association of Calgary.
He said there’s some truth to Nenshi’s common statement that new suburbs don’t pay for themselves.
“There’s a reason for that – you’re not taxing them enough. They’re not covering their costs,” Partridge said.
Coun. Peter Demong, who has opposed past “tax room” votes, doesn’t want to exacerbate the tax imbalance between homeowners and business property owners. But he’s against using the spring’s tax rate finalization debate to fix that.
“These kinds of decisions need to be done at budget time (in November), not outside,” Demong said. His northeast colleague Jim Stevenson is more likely to support the tax proposal. The city should look for ways to ease the high non-residential taxes in Calgary, he said.
“This curveball that the province is throwing us on the business tax would really put it up at, I think, an unreasonable amount.”
If council leaves the municipal property tax increase at the 4.8 per cent it budgeted for, the combined provincial-city tax bill increase would total 2.3 per cent. If council does the same for non-residential properties, that sector’s combined tax hike would amount to 7.0 per cent, according to the finance department.
If council makes the same tax room decision it made last year, the typical homeowner pays $23 more on their city tax bill this year, thanks largely to a one-time rebate council approved to soothe anger over the $52 million hike.
Not counting the rebate, it’s actually a $123 increase.
 

Jason Markusoff, Calgary Herald

Published: Friday, March 28, 2014