Kelowna’s housing affordability issue is like a chronic disease that gets worse every year.
Benjamin Dachis, from non-profit policy research organization C.D. Howe Institute, made the comparison Tuesday at a lunch presented by the Okanagan chapter of the Urban Development Institute.
“The only way to cure this chronic disease is to allow more construction so there’s more housing inventory and more competition that will push house prices and rents down,” said Dachis, who is the institute’s director of public affairs.
Dachis was on the housing affordability panel that spoke at the event at the Coast Capri Hotel with developer Scott Butler of Kelowna-based Highstreet Ventures and Lyndon Thomas of LTA Consultants in Kelowna.
“The solutions governments offer, like more subsidized housing, really only addresses symptoms,” said Dachis.
“The real solution is allowing additional construction by making more land available for development, reducing development cost charges, speeding up approval processes and spreading taxes out so a broader population pays rather than developers and new homeowners.”
As a prime example, Dachis cited the City of Kelowna’s new park development cost charge that adds a $7,000 levy for every house, townhouse, condominium and apartment built in the city.
Developers have to pay the fee, but the reality is the cost is passed on to the homeowner or renter, making housing and rents more expensive overall.
Butler’s issue with the bolstered park development cost charge is that the same $7,000 applies to a $1-million house as to a $200,000 micro suite.
“It should be prorated,” said the developer behind the huge rental complexes Mission Flats on KLO Road and Carrington Ridge in West Kelowna.
“In fact, all development cost charges should be revamped to a rate per square foot so someone building a mansion pays more than someone trying to get into an affordable condo.”
Part of the reason Highstreet built a much-needed 280 rental units in its Mission Flats apartment and townhouse development was the City of Kelowna’s 10-year tax exemption on new rental construction.
“But with the new park development cost charge, it’s like the city is giving with one hand (tax exemption) and taking away with the other,” said Butler.
Butler said municipalities have to change their culture, right from city council to city management and city staff, to provide permitting for development quickly rather than stall it while the meter’s running.
“Kelowna is pretty good. Penticton is the best, and cities like Nanaimo and Comox are really bad,” he said.
Even with the recent boom in apartment construction, the added inventory isn’t enough to meet all the demand and make rents more affordable.
“We need to build housing at a sustainable rate and tax it at a progressive and prorated rate,” said Butler.
“Housing is an essential need. There’s no need to overtax it.”
Butler said while it may not be a popular suggestion to the business sector, he’s in favour of the B.C. minimum wage going higher than its current $13.85 an hour.
“In Alberta, it’s $15 an hour, which means a couple, each of them earning full-time minimum wage, can afford a new rental apartment,” he said.
A whole tangle of factors has contributed to the unaffordability of housing in Kelowna and most of Canada.
“Over the past 25 years, the cost of construction and materials has gone up about 240%, yet real salaries have only gone up 100%,” Butler said.
“That’s reality and it’s caused a real affordability issue. The solution, too, is complicated, but definitely includes allowing more construction and lowering taxation on new housing.”