Finance Committee on Dec. 3rd, 2007

[James Mitchell]

I would like to see the capital gains rollover on real property, yes.

[Denise Savoie, NDP, Victoria, BC]

Okay, thank you.

You mentioned allowing “landlords to apply capital cost deductions at a rate that will foster significant reinvestment in upgrading and maintaining”, and I gather that's for rental property. Would you see that measure linked to maintaining affordable rents in any way, and how could you do that?

[James Mitchell]

I think that's a great idea. Yes, I certainly can see them being linked together. How that would actually happen, at this point I have no idea.

[Denise Savoie, NDP, Victoria, BC]

I would like to address a question to Mr. Goodacre as well.

I know from my former role as a city councillor that we worked very hard on heritage tax incentive programs. And like Vancouver, we counted on the senior levels of government to come to the table. What types of problems are resulting from the federal government's absence basically in this area? I remember some specific examples that we faced in Victoria. But in a more general way, can you discuss that?

[Rick Goodacre]

Certainly. In Victoria, in June of this year, a consulting report commissioned by the city pointed out that while the city's tax incentive program and its grants program had been working very well, the gap between a project that is a go and a no-go is widening because the cost of purchase of properties is going up. While buildings may have second and third and fourth storeys empty, the retail level on the street is still going pretty well. That means that the purchase price of property is high. And of course we all know that the cost of construction is skyrocketing. So the developer is facing greater and greater expenses. The city is trying to meet that shortfall on these projects on its own.

At the same time, this past summer, with the City of Vancouver, a staff report to city council pointed out that with the incentive program it brought into place in 2003, the city has invested over $91 million through tax incentives, grants, and measures like density bonusing and transfer, which have attracted over $400 million in investments in Gastown, Chinatown, and the East Hastings quarter--some pretty tough real estate.

That program now is strained to the point that they're having to put more and more density in terms of bonuses into a project to make them go. The city has agreed on a stack of recommendations to put that program in suspension while it looks again at its density transfer approach and whether or not it's creating too much density. That means that all development is on hold right now. There are developers with buildings ready to go with money financed already that are just now brought to a halt.

The first reeve report--

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. Goodacre, thank you.

Mr. Dykstra, for seven minutes.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Chair.

It's interesting to see the comparison between the chamber's view on the initiative of homelessness and yours, Mr. Mitchell, in terms of presenting your proposal, or at least your request.

I have a couple of questions for both of you. I'm not going to pick one or the other. I just want to say a couple of things and then get your thoughts.

There's the issue of investments and expenditures that the federal government would make in this area to hopefully alleviate homelessness and obviously move in a direction that gets us into that position. I look at the numbers. The minister actually just announced another $79 million to create more than 1,100 affordable new housing units in Ontario. I look at $1.4 billion in new funds for the creation of affordable housing. This is on top of $2 billion that our government will spend through the year, through the Canada Mortgage and Housing Corporation, in support of some 630,000 low-income residents. And I also look at the 2006 budget, which allocated $800 million for additional investments in housing. Specifically, British Columbia would receive $106 million in general for that, and for off-reserve aboriginal housing there's an additional almost $51 million.

I don't throw these numbers out here to try to impress everyone and say the problem is gone. It obviously isn't. We're dealing with it. You mentioned, Ms. Renault, that there's obviously an issue that Victoria is dealing with just a couple of blocks away from this hotel. But the reason I bring it up is that it would seem to me that there has been a substantial amount of investment into this, and there has certainly been, from a federal government perspective, a continuing will to try to alleviate homelessness.

I didn't necessarily hear anything specific, Ms. Renault, in terms of trying to address the issue.

I wondered if both of you could comment on a need for an understanding of where each of the provinces needs to go—and I obviously speak specifically of British Columbia because we're here—in trying to address this. In your comments, you both addressed issues from a very local perspective, but obviously the federal government deals with things on a broader basis than having to get assistance from the municipalities and from the provinces in order to deal with it.

I'd just like to get at a couple of things that we could include specifically that would address.... I know money is always an issue, but I'm not so sure that all of those recommendations have to include more money. Maybe we just need to spend some of this money a lot more wisely.

[Shannon Renault]

I could make a bit more of an elaboration on that.

I don't address this locally. I give a local example and invite you to take a walk, but this certainly is not a local issue. This is an issue clear across the country, as everybody knows, and it is something that has been supported by the Canadian Chamber of Commerce. We presented this as a policy initiative in September, and save for the “no” vote of I think two members out of 296, it was supported by chambers across the country, because every city and town, large and small, is seeing an increase in their own community. So I don't address this as a local issue by any means.

[Rick Dykstra, Conservative, St. Catharines, ON]

I didn't mean to infer that.

[Shannon Renault]

Yes, the federal government is spending money. I also don't mean to say they're not. In April, the minister responsible did announce $256 million specifically for the housing partnership initiative, which is a portion of the housing strategy.

I think it's useful to take a look at what percentage of the funding allocation is actually going into capital costs, at how many units are actually being created. You can take an example of where we're having a place open up in Victoria with 45 beds for the absolutely homeless. In actuality, that's only an increase of 16, because it's a rebuild on a place that was smaller. In really looking at those numbers, how much is each one of these units costing us? Maybe there's a more effective way of doing it. And what percentage of the housing partnership initiative funding is going toward programming, as compared to actually putting units in the ground?

Again, I know it's really complex and that there is a lot of overlap and interplay between the provinces and the municipalities. We have examples in the province of B.C. where there's federal money and there's provincial money on the plate, and the municipalities are saying, “Not in my backyard”. Maybe there needs to be a contingency attached to the money that's given by the federal government, so that it has to go to places where there is zoning in place.

In some ways, I do think there is some evaluation to be made of the efficacy of how the money is spent, but I cannot get away from stressing that, in comparison to our neighbours south of the border, we just don't have a big enough plate on the table.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

I have one minute. I did want to ask Mr. Goodacre a question, but I'll have to do that afterwards.

Go ahead, Mr. Mitchell.

[James Mitchell]

I agree with everything Ms. Renault has said. We do acknowledge that the federal government has put money in place to address issues of homelessness. A lot of that is actually being funnelled through public projects--some places are being built; they're providing services. What we're trying to encourage is more apartments to be built by the private sector. We cannot meet the need with just publicly funded units. We need to have the private sector building apartments, and we need to increase the incentives so that they'll actually build rental apartment buildings rather than condos.

As an example, here in Victoria, numbers from CMHC show us that the cost for building a rental apartment per door is three times as much as building a condo. So the private developers in the city who get the land are building condos, which is taking a lot of units out of the market. If we could change the tax structure so that we could get more private developments going, then we can increase the number of apartment units in Victoria and keep the prices down.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you. Thank you, Mr. Dykstra.

I have a quick question.

I think everybody was shocked to see that you had affordable housing in your brief, Ms. Renault, from some of the questions you got. In terms of practicality, do you work with Mr. Mitchell's organization, seeing that as you were speaking, Mr. Mitchell was agreeing with some of the things you were saying? If you were to present a joint brief or a joint statement, wouldn't that help your cause?

[Shannon Renault]

The chamber doesn't sit on the Housing Affordability Partnership, but we're certainly well aware of it, and we often consult on our positions on submissions that concern housing. So, no, formally, not together--

[The Vice-Chair, Liberal, Massimo Pacetti]

But if you were to, would there be a problem with that? We see this issue across the country. It doesn't just pertain to Victoria. I mean, we have the problem everywhere.

[Shannon Renault]

No, there would not philosophically be a problem with that.

[The Vice-Chair, Liberal, Massimo Pacetti]

Mr. Mitchell.

[James Mitchell]

No, it would not be a problem from our side. I would see this more as a recent convergence of interests that many organizations in Victoria, through efforts of many groups, are now seeing the issues of homelessness and housing and affordable housing in a similar way. The community is starting to come together, and you're going to find a number of organizations here saying the same things.

[The Vice-Chair, Liberal, Massimo Pacetti]

Great. It's good to see. If we can get some of that cooperation, then I think some of the politicians can start cooperating as well.

Mr. Goodacre, just quickly, in your brief, I think you listed 20,000 to 30,000 different heritage properties. I think that's only in B.C.

[Rick Goodacre]

When I mentioned the number 20,000, that's the number that under the historic places initiative across Canada--

[The Vice-Chair, Liberal, Massimo Pacetti]

Oh, across Canada.

[Rick Goodacre]

--have been designated and identified.

[The Vice-Chair, Liberal, Massimo Pacetti]

Correct me if I'm wrong, but in your brief there are no dollar amounts.

[Rick Goodacre]

On the dollar amounts, in the United States such a program was set up in 1981. There have been about 29,000 projects that have gone through that tax incentive program down there.

With the historic places initiative in the early days, we estimated that the number would be about 6% to 10% of that in Canada, and that's over a 25-year period. You're down to maybe 30 or 40 projects per year. The dollar amount would depend, of course, on the amount of dollar value for each of those projects, but you're talking about in the tens of millions, I think.

The commercial heritage property incentive fund was a $30 million project at the outset in 2003.

[The Vice-Chair, Liberal, Massimo Pacetti]

How would you run it? Would it be based on priority? Would it be based on PPP where there's a public portion, a private portion? In your vision, how would that work?