Vernon council displeased with inclusion in speculation tax

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“For us, I can see some significant questions: we have areas that are pre-set, pre-zoned to allow this kind of activity, so I was concerned,” Cumming told council.

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He added he believed the “brush was too broad” as Vernon does have developments and resorts specifically designed for people outside the province to own.

“Predator Ridge, Outback, future resorts, the Rise. These are ones, even the Strand, that were developed with the idea of short term rentals already built in. Our C10A Zoning (Tourist Commercial and Residential) has this as a given, so these things fly in the face of what we’ve already previously done and commitments that therefore had very very substantial investments from individuals, et cetera.”

Cumming suggested staff be tasked with reporting back on the areas that are zoned for tourist commercial and residential use and the impact the tax will have on area properties. He also said he would write a letter opposing the implementation of the tax in Vernon to the Minister of Finance and the Minister of Housing.

Councillor Kari Gares felt the tax being rolled out in Vernon, Coldstream, Lake Country and elsewhere in the Okanagan and the province was inevitable.

“When [the province] implemented the speculation tax, specifically down on the Lower Mainland, which is where they were having the magnitude of the problem, they created a significant cascade of events which had some serious unintended consequences for places like Lake Country and Vernon,” Gares explained.

“We were seeing investors not purchasing in those areas and they were coming into those locations where the speculation tax and the vacancy tax wasn’t applicable and that actually drove up a lot of demand within our housing sector which, with that uptick in demand, we saw an uptick in housing process.”

Gares added that she expects the tax being put in place in Vernon would see “the can kicked down the road” with investors looking to other nearby communities, such as Armstrong, where the tax base and infrastructure is not available to manage the increase in attention from investors looking to buy properties.

Gares said the tax could have some positives but added “it’s definitely not taking a holistic approach and it’s undermining local government.”

Councillor Brian Quiring said the speculation tax, on top of cracking down on short term rentals, would be a “double whammy” on Vernon and its tourism industry.

“If you didn’t mess with the short term rental regulation and you imposed a speculation tax, people could likely still live with it because five per cent of a house that’s assessed as a few million dollars is still only $10,000 in a speculation tax, and these houses are renting for $5,000 to $8,000 a week so that would be a little bit of a pinch or their prices would just go up,” Quiring told council.

“But the fact that it’s a combination is just stifling and it’s going to hurt. Such a significant amount of our economy here is based on tourism and it’s going to absolutely hammer us in terms of our local economy.”

Gares, Quiring, and Councillor Brian Guy all agreed that Cumming should write the letters to the province, with Guy adding he should follow up with phone calls to discuss the matter further with the ministers of housing and finance.

Councillor Teresa Durning agreed that the speculation tax should not be implemented in Vernon, saying she was “absolutely appalled by the government overreach” in this case.

“The impact on tourism alone, for them to do this is absolutely astronomical for an area like Vernon and I’m completely disappointed,” Durning said, adding she would support Cumming’s earlier motions.

Gares added the province’s plan does not really align with the goal of freeing up housing for the general public, saying the properties owned for investment purposes would not qualify as affordable and claiming this was a tax grab.

Councillor Akbal Mund said the province stated resort communities would be exempt from the speculation tax, but inquired as to what would qualify for that designation.

“If any person from the government came up here during the summer, they would realize that half the people here are from Alberta, they’re visiting” Mund stated.

“We’re a resort community. The entire Okanagan is.”

Mund also agreed with Gares’s point that investors will look to where the speculation tax is not in place, such as Armstrong and Enderby, and buy properties there until the province decides to include them in the speculation tax.

Council agreed to have staff compile a report for a future meeting and to have Cumming write the letters and follow up with phone calls.

Councillor Kelly Fehr was not present for Monday’s meeting.