A possible solution to create more affordable housing in Kelowna lies within the Agricultural Land Reserve, says a UBC economics professor.
Ross Hickey says development encroachment within the ALR and relaxing Development Cost Charges on housing projects until after the profits have been realized are admittedly “out of the box thinking” solutions.
“But the question here is do we really want to find a solution to the housing situation in Kelowna or not?” asked Hickey.
He was the keynote speaker at the Okanagan chapter of the Urban Development Institute luncheon Thursday at the Coast Capri Hotel.
Hickey said the ALR actually restrains development and drives up land prices.
“Do the impoverished in the community really benefit from urban apples?” he asked. “I’m sure there are developers who drive around Kelowna and look at ALR properties and think, ‘Gee, I could make something there?’”
Hickey acknowledged the “yes in my backyard” philosophy to living next to ALR land would have to be addressed, and that someone living sleeping their car can’t get a movement organized to support a development proposal in the same way a neighbourhood of residents can form a coalition to oppose it.
“I feel if you appeal to people’s sensibilities and how you are doing a good thing for others, people would respond more positively,” he said of the ALR option, which one UDI member described as “somewhat out there” as a solution.
Asked if allowing development on Crown land is another alternative, Hickey said he hasn’t looked at that option in detail, but suggested such lands generally tend to be on the periphery of a community while ALR land is more readily found close to an urban centre and amenity services such as transit.
“I would suggest that the ALR option, pardon the pun, offers lower hanging fruit,” he added.
Hickey said the provincial government’s speculation tax to address affordable housing is well intended but poorly thought out for potential unintended consequences, and offers a blanket solution for a diverse problem that requires community-specific alternatives.
He says out-of-town owners of empty homes can avoid the tax, ranging from .5 to two per cent depending where you reside, by renting out their properties for a minimum of six months a year, the theory being that will help generate more rental market options.
But he says it could also drive down housing development in Kelowna, while satellite communities like Peachland or Lake Country, where the tax would not be applied, will generate more interest.
That, he says, creates a situation in Kelowna where development is being driven away from the area where people want to live and be near the urbanized services the city can provide and newcomers moving here seek out.
“The reality is we don’t really know what will happen if the speculation tax comes into being,” Hickey said. “We could end up seeing the cost for housing go up and the quantity of supply go down where that tax is being applied.”
Related: Proposed speculation tax already doing damage to West Kelowna
He said bad taxation policy can have an enduring negative affect, citing the window tax adopted in European countries during the 18th century to generate tax revenue.
“So what people did is fill in their windows to avoid the tax. When I was in Europe I kept noticing what looked like window openings at one time covered over by concrete and thought that was strange. I eventually realized that concrete covering was a long-lasting legacy of bad policy,” he said.
“I would disgree with finance minister Carole James that land speculation is necessarily a bad thing. It helps bring efficiency to the housing market.”
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