Landlord BC | Special Report | Summer 2019 by MediaEdge

SPECIAL REPORT

PM 40063056

SUMMER 2019

UNDERSTANDING B.C.â&#x20AC;&#x2122;S HISTORY OF RENT CONTROLS AND TAX POLICY

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THE KEY Office Hours: 8:30 am to 4:30 pm weekdays Vancouver Office: Suite 1210-1095 West Pender Street Vancouver, BC V6E 2M6 Tel: 604.733.9440 Toll Free BC: 1.888.330.6707

David Hutniak Chief Executive Officer

Victoria Office: 830B Pembroke Street Victoria, BC V8T 1H9 Tel: 250.382.6324 Toll Free BC: 1.888.330.6707

Kimberly Coates Director of Member Engagement

Hunter Boucher Director of Operations

Lisa Henderson Member Services Representative

Erin Breier Events & Communications Coordinator

Taylor Hansen Member Services Representative

Monika Sosnowska Marketing & Communications Specialist

Celia Lin Member Engagement Specialist

Board of Directors Chair Jason Middleton Vice-Chair Claire Flewelling-Wyatt, Treasurer Richard McCarvill Directors Andrew Békés, Nicolas Denux, Michael Drouillard, Jason Fawcett, Claire Immega, Richard Laurencelle, Paul Sander, Kim Schuss, Irene Tiampo, Derek Townsend

CONTENTS 4

CEO’s Message

Ending Tenancy: a High Profile Legal Case

Understanding B.C.’s History of Rent Controls and Tax Policy

Hunter’s Hints

Associate Members/ Corporate Suppliers Mainland

Associate Members/ Corporate Suppliers Vancouver Island

The KEY is published by MediaEdge Communications For any advertising/publishing inquiries, please contact: Dan Gnocato, Publisher, dang@mediaedge.ca or t: 604 549 4521, ext. 223 Publication Mailing #40063056 Magazine Coordinator Erin Breier Content Editor Hunter Boucher Production MediaEdge Communications Cover Photo Monika Sosnowska

Disclaimer: This publication is designed to provide informative material of interest to readers; the opinions of the authors of the articles do not, however, necessarily represent the opinions of the board of directors. The magazine is distributed on the understanding that it does not constitute legal, accounting or other professional advice. Although the published information is intended to be helpful, neither we nor any other party will assume liability for loss or damage as a result of reliance on this material. Appropriate legal, accounting or other assistance should be sought from a competent professional.

SUMMER 2019 | 3

THE KEY and encouraging the private sector to build more rental homes for B.C. families. Operationally, landlords are increasingly challenged to continue to provide high quality homes for British Columbians. In addition to ensuring that we have a legislative environment that is conducive to the provision of the existing high quality rental housing, we need the province and local governments to understand that they cannot continue to say on the one hand that they want affordable rental housing, and then, on the other hand, tax the life out of our industry. This needs to stop!

...landlords are increasingly challenged to continue to provide high quality homes...

CEO’S MESSAGE David Hutniak, CEO, LandlordBC Readers will notice that this issue of The Key is largely dedicated to a single subject: the April 2019 report published by LandlordBC entitled Understanding BC’s History of Rent Controls and Tax Policy to Improve Today’s Rental Housing Crisis. Although we were somewhat constrained by space, you will nevertheless find in the magazine the full text of the report and all the pertinent tables. However, please be advised that the images published in the digital version of the report are only available in the original version. If you would like the digital version, please contact our staff and they will gladly oblige. As you know, LandlordBC is a vocal and passionate advocate for the building of badly needed new secure purpose-built rental housing to alleviate our persistently low vacancy rates. These persistently low vacancy rates impede our progress as a society, stagnate our economy, and place huge and unnecessary financial and emotional burden on our citizens. There are those who subscribe to the notion that it is only government that can solve our rental housing crisis, completely ignoring the fact that government does not have the capacity, financially or otherwise, to undertake a challenge of such scope. At the same time, government itself fully acknowledges that the only way we can end this rental housing crisis is by engaging

4 | SUMMER 2019

On the supply side, the only long-term solution is to build new secure purpose-built rental housing to meet the demand, both current and future. There was a time in British Columbia’s history, throughout the 50s, 60s and into the mid-70s, when we had a growing population, steady immigration, and yet we were able to build the needed rental supply to meet that growing demand. It was a time of no rent controls. Fast forward to today, and whereas many of the conditions are similar to those earlier decades — growing population, steady immigration — we also have the new reality that huge swaths of our population will never be able to own a home. Yet here we are, with a woefully deficient existing supply and construction of new secure purpose-built rental housing nowhere near the scale required! What’s so different today versus those earlier decades? Simply put, today we have an increasingly restrictive legislative and regulatory environment, and more regressive rent controls. This is the reason why we undertook this study. We understand the social benefit in shielding renters from short-term market speculation, but beyond this short-term shield, these interventions harm renters, as we are witnessing today with the dearth of secure purpose-built rental housing. That is why we are calling for the removal of rent controls from newly constructed secure purpose-built rental housing for 20 years, so that rental developers and the lenders who provide them with the financing, will have the confidence to build rental housing in B.C. Furthermore, at such time as we achieve a more balanced market, we look forward to the province beginning the process of phasing out rent controls for all forms of rental housing, so that whether you are a landlord with a single basement suite, or a landlord with thousands of units spread across the province, you can be confident that we will have a strong and vibrant rental housing industry, long into the future. The stakes are very high. We need bold solutions.

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THE KEY

ENDING TENANCY: A HIGH PROFILE LEGAL CASE By Michael Drouillard, Barrister & Solicitor, Harper Grey LLP 2. the landlord did not need vacant possession because Ms. Baumann was prepared to move out for the duration of the renovation and move back in afterwards; and 3. because the landlord’s electrical permit needed an amendment, the landlord did not have “all necessary permits and approvals required by law”.

The Supreme Court’s interpretation of the law created restrictions that were almost impossible for landlords to overcome. Aarti Investments Ltd. v. Baumann Recently, reasons for judgment in the case of Aarti Investments Ltd. v. Baumann were released by the Court of Appeal. This case provided the Court of Appeal with a rare opportunity to clarify section 49(6) of the Residential Tenancy Act which lets a landlord end a tenancy when the landlord has all necessary permits and approvals required by law and intends, in good faith, to renovate the rental unit in a manner which requires vacant possession. In this case, the landlord was the owner of a rental apartment building in Vancouver’s West End that was old and had numerous significant deferred maintenance issues from a time before the current landlord owned the property. Some of the required repairs and replacements to Ms. Baumann’s unit included replacing the water pipes servicing the rental unit as well as the electrical system. The landlord was advised by its insurer that its property insurance for the building might be voided unless this work was addressed. The landlord served a section 49(6) notice on Ms. Baumann to end her tenancy. Ms. Baumann applied for dispute resolution. At arbitration, the landlord’s tradespeople testified that it would take months to complete the required renovations and that vacant possession would be required throughout. At the time of the hearing, the landlord’s electrical permit needed an amendment to encompass a required panel replacement. Ms. Baumann’s legal advocate advanced several arguments: 1. the eviction was in bad faith and primarily intended to evade rent controls. Ms. Baumann paid below market rent because her rent had not been consistently increased by the previous landlord;

6 | SUMMER 2019

The arbitrator upheld the notice to end tenancy and issued an order of possession. The tenant applied for judicial review which was heard last year. The B.C. Supreme Court set aside the arbitrator’s decision because: 1. the arbitrator’s reasons were inadequate. He stated there was insufficient evidence of bad faith without meaningfully addressing Ms. Baumann’s arguments. In doing so, the arbitrator also appeared to have reversed the onus of proof of a good faith intention from the landlord and onto the tenant; 2. the arbitrator should have considered Ms. Baumann’s offer to move out during the renovations. According to the justice, this offer was a “practical” alternative to ending her tenancy; and 3. the fact one of the landlord’s permits required an amendment meant that the landlord did not have all necessary permits and approvals required by law to perform the renovation. The Supreme Court’s interpretation of the law created restrictions that were almost impossible for landlords to overcome. It meant any tenant could potentially defeat a notice served under 49(6) of the Act simply by asserting a willingness to move out for the duration of the renovations. It left questions unanswered such as how a landlord can require a tenant to move out temporarily when the concept of a temporary move out does not exist in the Act, or why a landlord would undergo a substantial and expensive renovation if there was no prospect of cost recovery. The landlord appealed. The Court of Appeal confirmed the decision had to be reconsidered by the RTB. The arbitrator’s reasoning had too many gaps, which meant that the court could not defer to the arbitrator’s decision.

THE KEY However, the Court of Appeal also gave directions which clarified the law and restored practical meaning and use to section 49(6) notices. First, the Court of Appeal found that, where a renovation is expected to be months in duration, offers to move out made by tenants are largely irrelevant. As set out by the Court: The chambers judge’s conclusion [that an offer to move out must be considered] is implicitly based on the proposition that whether the renovation is consistent with continued tenancy hinges upon the tenant’s willingness to return to the premises, even if the tenant is out of possession for months… In my view the plain wording of the Act does not support that interpretation. Neither precedent nor common sense require the arbitrator to expressly deal with the evidence the Tenant in this case was willing to find alternate accommodation for the duration of the work. [emphasis added] Second, the Court of Appeal found that tenants cannot make technical arguments concerning the adequacy of the permits. As long as the landlord has permits and approvals for enough work which requires vacant possession, that is enough, even if a permit needs an amendment to encompass the full scope of the planned work. This is a reasonable finding, particularly since some municipalities will not even issue all necessary permits for a large construction project until it is both underway with the rental unit vacant.

Section 49(6) notices exist because it is unrealistic to expect landlords to perform major construction work without the prospect of receiving cost recovery or compensation for the substantial cost, effort, and risk a landlord takes on when performing a substantial building renovation requiring vacant possession. Although they are controversial in today’s tight rental market (and the law, which has largely not changed since the 1970s, probably could stand to be updated), they are the only way a landlord can end a tenancy for important renovation work requiring vacant possession. The legal test required to end a tenancy for a significant renovation was already strict, did not allow a landlord to end a tenancy in bad faith for an ulterior motive, and did not need to be made restrictive almost to the point of futility when the Supreme Court added additional requirements. The Court of Appeal’s decision to depart from the Supreme Court’s reasoning represents an important outcome for residential landlords. LandlordBC wishes to acknowledge Michael Drouillard, Barrister & Solicitor, Harper Grey LLP for the preparation of this summary. Michael’s practice centres around providing advice and advocacy to owners and operators of investment real estate. His practice is cross-disciplinary in that he provides both transactional and dispute resolution services to his clients.

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SPECIAL REPORT It is generally agreed that today, British Columbia, and in particular the province’s large urban centres, is challenged by a rental housing supply and unaffordability crisis. Understanding that approximately one-third of British Columbians live in rental housing, the magnitude of this current rental housing crisis is widespread and negatively impacts the province’s entire economy. The purpose of this report is to analyze the history of rent controls and tax policy to understand how the province came to be challenged by the rental housing crisis now impacting British Columbia, and what lessons can be learned from this history to improve the rental housing environment today and into the future for the benefit of British Columbians.

RENT CONTROL UNDERSTANDING B.C.’S HISTORY OF RENT CONTROLS AND TAX POLICY TO IMPROVE TODAY’S RENTAL HOUSING CRISIS

SPECIAL REPORT

THE KEY Rent Control (Cont’d) the tax benefits of the program bestowed windfall gains to existing land owners rather than made purpose-built rental housing more attractive. The success of this program hinged critically upon the distinction that virtually all MURB projects were strata titled, and not purpose-built rental, enabling investors to sell the units of such projects into the ownership market to reap their returns. The rental industry was free from rent control and restrictive regulations before the 1970s. Once rent controls and restrictive regulations were introduced into the rental market, investors viewed condominium development as more attractive as it was free of price controls. In fact, condominium prices were supported by a Federal capital gains tax exemption on principle residences. As a result of these factors, purpose-built rental construction plummeted in comparison to condominiums.

...the Strata Titles Act of 1966 and 1974 gave multi-family residential developers a lucrative alternative: building condominiums. CONCLUSION ANALYSIS While it is widely claimed that the vast majority of purposebuilt rental housing was constructed due to tax benefits prior to the mid-1970s, this paper demonstrates that these benefits of deferred taxation were of far less value than believed. What has been overlooked is that at the same time that the Federal government implemented tax reform, the regulatory environment in which landlords operated drastically changed. Rent control and stringent rent regulations were introduced in the mid-1970s, permanently altering investors’ view of the multi-family rental building business. In addition, the Strata Titles Act of 1966 and 1974 gave multi-family residential developers a lucrative alternative: building condominiums. While deferred taxation offered benefits to the multi-family residential developer prior to 1972, we calculate that the present value of these benefits was less than 7.5% of a wood-framed building’s value and less than 2.5% of a high-rise building’s value. In contrast, today’s lower interest rates offer far more benefits to the multi-family residential landlord. In the 1960s, a typical mortgage rate was about 7.5% and in the late 1970s (at the height of the Multiple Unit Residential Building program) an average mortgage rate was about 10.5%. We calculate the present value of today’s lower mortgage rate (roughly 3.5%) is a least 12% and as much as 62% of a building’s value. Yet, purposebuilt rental housing construction still lags tremendously behind condominium construction. Research shows the tax benefits of the well-known MURB program were capitalized into land values and, as such, the returns on these investments were no different than non-MURB projects. As a result,

10 | SUMMER 2019

Rent controls are incredibly destructive to the rental housing industry for potential rental developers, landlords, and renters. Ninety five percent of economists believe that rent controls have a negative effect on the quality and quantity of housing in the cities that have used them. Economic studies have also demonstrated that rent controls have failed to prevent increased rents and rental housing unaffordability.

RECOMMENDATIONS To create the necessary supply of rental housing to meet the existing and growing demand across British Columbia, without taxpayer subsidies, the following policies are required: 1. Immediately exempt newly built market purpose-built rental buildings from all rent controls. The exemption would only apply to newly built market purpose-built rental buildings constructed after this proposed exemption policy was implemented by Government. Furthermore, it will only apply to those buildings which will be maintained as secure purposebuilt rental housing into perpetuity. The exemption would be guaranteed for a minimum of 20 years; 2. Equalization of land values between condominium and rental development by granting zoning variances for market rental developments including increased density, reduced parking requirements, reduced amenity space, reduced unit sizes, and no community amenity contributions; and, 3. Removal of the tax disadvantages to rental relative to condominium development, and in particular, the Federal GST charged on a “selfsupply” of new rental housing.

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SPECIAL REPORT

THE KEY Rent Control (Cont’d) It has been widely claimed that favourable tax incentives resulted in the vast majority of the market rental housing development in Metro Vancouver during the 1950s, 60s, and 70s. The commonly held belief is that after such policies were withdrawn, rental housing development suffered and that has caused a market rental housing shortage. Many research papers on taxation policy have argued that tax incentives were the main reason for the rental housing construction boom of past decades and their elimination the reason for the dearth of rental housing supply since. And there is ample evidence of the media citing various commentators arguing that tax measures produced most of the affordable rental housing found around Vancouver today. While our industry is very much in favour of efficient tax proposals for market rental housing construction, what these research papers and commentators ignore when analyzing the stunning falloff in rental apartment supply is changes to the regulatory environment. Specifically, rent control. Rent control was introduced in British Columbia, and across Canada, in the mid-1970s and vastly hindered the ability of landlords to recover their cost increases just at the time inflation was spiking. It was a massive change to the business of rental housing and was met with vehement opposition by rental housing providers at the time. In addition, in 1966, the Provincial government had introduced the ability for developers to sell their apartment units as condominiums to end owner-users. This new legislation, modified and updated in 1974, gave real estate developers a lucrative alternative to rental housing construction that was free from price controls. We will show that these two changes to the business environment for housing had a massive impact and were predominant in effect rather than changes to taxation policy, which was secondary and relatively minimal in impact. This paper summarizes the history of taxation policy, rent control and regulation of the rental housing industry in British Columbia (see the Appendix for a simplified timeline). It offers an examination of the policies that led to rental housing construction in Metro Vancouver’s past and the unfavourable policies that have resulted in its diminished new supply. The tax benefits offered before 1972, and during 1974 to 1981 with the Multiple Unit Residential Building (MURB) program, were too modest to be responsible for the substantial rental construction during the 1950s, 60s, and 70s and its subsequent drop off until today. Rather, the absence of rent control and prohibitive regulations were much more responsible for the high level of rental housing construction during that period. The introduction of stringent rent control and regulations in the mid-1970s created a detrimental and uncertain business environment for rental housing providers at the exact time real estate developers were given a more viable and business friendly alternative: building condominiums. As a result, after the mid-1970s the supply of new rental housing diminished drastically and condominium construction flourished. The negatives from rent control and subsequent tax policies biased toward home ownership, and thus favoring condominium development, far outweighed any benefits from deferred taxation to rental developers.

12 | SUMMER 2019

CHANGES TO PURPOSE BUILT RENTAL SUPPLY, HOUSEHOLDS, RENTS, AND THE SECONDARY MARKET Purpose-built rental development averaged approximately 2,000 units per year from 1951 to 1971 in City of Vancouver (see Chart 1). The 20-year period from 1951 to 1971 resulted in the rental housing stock more than doubling from 37,445 to 78,985 units. Between 1958 and 1973, 35,019 rental units were added citywide in Vancouver, which by 2010 comprise 68% of the rental housing stock. In contrast, in the 36 years subsequent to 1973, only 7,121 units have been added to the rental housing pool until 2010, or 13.7% of the total rental pool.1 Also since 1973, Vancouver’s population has increased from approximately 419,000 in 1973 to approximately 631,000 today. That means only 1 new unit of rental housing was produced for every 30 new residents over the 1973-2016 period.

Chart 1: Change in Purpose Built Rental Starts and Renter Households, Vancouver

Source: City of Vancouver Rental Housing Study - Synthesis Report, August 2010 50,000 40,000 30,000 20,000 10,000 50,000 0 40,000 -10,000 30,000

Chart 1: Change in Purpose Built Rental Starts and Renter Households, Vancouver

Source: City of Vancouver Rental Housing Study - Synthesis Report, August 2010

1951-1971

1971-1986

Purpose Built Rental Starts

20,000

1986-2006

Rental Households

10,000

Chart 1 demonstrates rental Starts, housingCanada construction generally Chart 2:that Housing 0 kept pace with rental household growth from the 1950s through the Source: CMHC Annual Reports, 1963-72 1951-1971 1971-1986 1986-2006 -10,000 1970s. Subsequently, rental housing construction fell off dramatically 120,000 Purpose Built Rental Starts Rental Households while rental households continued to grow. 100,000 80,000

Chart 2: Housing Starts, Canada

60,000 40,000 120,000 20,000 100,000 0 80,000

Source: CMHC Annual Reports, 1963-72

1963

60,000

1964

1965

SF / Duplex / Semi-Detached

1966

1967

1968

Rental Apartment

40,000 20,000 0

1963

1964

1965

SF / Duplex / Semi-Detached

1966

1967

1968

Rental Apartment

In the period before rent control was introduced in British Columbia, rental apartments throughout Canada were constructed at roughly the same rate as homes for the ownership market. Chart 1. City of Vancouver Rental Housing Strategy Research and Policy Development, Synthesis Report, McClanaghan & Associates, August 2010, pages 30-32

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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

SPECIAL REPORT4,000 2,000 -

Rental Apartment

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

THE KEY

Condominium

Rent Control (Cont’d)

Rental Apartment

2 demonstrates that between 1963 and 1968, rental apartments accounted for nearly half of all Canadian housing starts.2

Chart 3: Housing Completions, Vancouver Source: CMHC Housing Market Information Portal

14,000 12,000 10,000 8,000 6,000

ChartChart 5: Average Rent Vancouver 5: Average Rent- -11Bedroom, Bedroom, Vancouver

4,000

Source: CMHC HousingMarket Market Portal Source: CMHC Housing Portal

2,000 $1,400

Rental Apartment

Today, the vast majority of apartment units are constructed as condominiums rather than purpose-built rentals. Chart 3 shows housing completions between 1990 and 2017. It’s clear that in Vancouver rental apartments represent a fraction (roughly 21%) of condominium completions since the 1990s. In addition, that percentage has been higher in recent years due to changes in zoning bylaws and regulations at the City of Vancouver (and other municipalities) to encourage market rental housing development.

$1,000 $800

$1,000 $800 $600

$600

$400

$200

$200 $0

8% 7% 6% 5% 4% 3% 2% 1% 0%

$1,200

$0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Condominium

$1,200

$1,400

8% 7% 6% 5% 4% 3% 2% 1% 0%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Average Rent

Growth

A BRIEF OVERVIEW OF HISTORICAL TA X ATION POLICIES FOR MARKET RENTAL 2|Page HOUSING

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Market rental building operators are able to deduct depreciation The increase in rental supply since the 1970s has mainly come from 2|Page claims against income for tax purposes. Prior to 1949, a straight-line secondary suites, none of which are restricted as purpose-built rental basis of depreciation was generally used against income over the units, and which therefore put tenants at risk of displacement when Chart 5: Average Rent - 1 Bedroom, Vancouver useful life of the property. The Capital Cost Allowance (CCA) system the homeowner sells or needs to reclaim the space for family use. The Source: CMHC Housing Market Portal became effective on January 1, 1949 and allowed for accelerated 2016 Statistics Canada Census reports that we have 960,895 private $1,400 8% depreciation such that the amount claimed against income is higher households in Metro Vancouver.3 Of these households, 303,020 are 7% $1,200 in the earlier years of a project and declines over the later years.7 market renter households or 31.5% of total households.4 Table 1 and 6% $1,000 Chart 4 break down these rental households by type. CMHC’s 2016 5% Prior to 1972, CCA on wood framed buildings was allowed at 10% and $800 4% Rental Market Report indicates there are 107,867 purpose built rental on all other buildings at 5%. In addition, excess CCA was available to $600 3% units in Metro Vancouver.5 As a result, 195,153 rental households $400 reduce non-rental taxable income. This is the so-called “flow-through” 2% are $200in the secondary market or 64% of total rental households. 1% provision. No capital gains taxes existed. There were also soft cost Consequently, by 2016, the vast majority of the rental households $0 0% write-offs available for new housing investment. Further, recaptured were living in secondary rental units that are not secured in tenure.6 CCA was deferred if a property in the same class was acquired in the same tax year as the year of disposition for an amount at least equal The data clearly demonstrates rental supply Averagethat Rent new purpose-built Growth to the proceeds of the sale (the “rollover” provision). Otherwise, all of fell off after the 1970s. Since that time rental unit growth has been the CCA claimed on a building is subject to recapture as income (at dominated by the secondary market which is not actually secured as the full income tax rate) when the building is sold.8 market rental housing. The question is: Why did purpose built rental housing construction fall off so dramatically? Was it tax incentives or After the tax reforms of 1972, the flow-through provisions were 2 | P a g e rent control and the regulatory environment or some combination eliminated and investors were no longer able to reduce non-rental of these factors which caused investors to eschew building secured taxable income with CCA deductions from rental property. Capital purpose built rental housing? gains tax was introduced at a 50% inclusion rate for all investments including real estate. However, capital gains tax was exempted 2. Ibid, page 35 for a principal residence providing a massive tax advantage for 3. Statistics Canada Census Profile, 2016 Census homebuyers and, therefore, condominium developers that still 4. Ibid exists today. The CCA rollover provision was also eliminated.9 5. CMHC Rental Market Report, Vancouver CMA, 2016 6. The Statistics Canada Census, 2016 indicated that 32,380 single detached houses were rented as full homes. We believe this data may be subject to a reporting bias because it is likely that these homes are split into units and the units are individually rented out as suites. If that were true, then the number of illegal suites rented out in the secondary market would be two or three times this figure in addition to the 62,045 suited SDH units. It is also worth noting that CMHC estimates the number of rented condominiums as 58,089 units in 2016 (from the CMHC Housing Portal) for Metro Vancouver.

14 | SUMMER 2019

From 1974-81, a tax program was offered called the Multiple Unit Residential Building Program (MURB). The main feature of this 7. The Capital Cost Allowance System, Israel Mida and Kathleen Stewart, 1995, page 1246-1247 8. Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada, Clayton Research, November 1998, page 10-11 9. bid, page 10-11

SPECIAL REPORT

program is that it offered the “flow-through” provision so that investors could offset non-rental income with CCA deductions.10 By 1978 the allowable CCA was reduced to 5% for all buildings.11

In Table 212, we calculate the present value13 of the higher CCA rates prior to 1972 on a $15 million newly constructed rental property to determine how significant the tax advantages were at that time.

The policies most frequently credited for creating rental housing are the accelerated CCA provisions as well as the flow-through provisions such that investors could offset non-rental taxable income with CCA deductions. After 1972, the flow-through policy came to an end until the MURB program in 1974 re-instated them for MURB projects.

The CCA tax deduction represents depreciation on the structural components of a building. These are real expenses which the tax laws permit based upon an accelerated declining schedule. When the CCA rate is higher, real estate companies can claim the tax deduction faster rather than slower. That has a cash flow benefit in the earlier years of an investment. The tax deduction is received faster and, therefore, from a present value basis, is beneficial to investors. The benefit is tempered upon sale of an asset when the CCA deductions for tax purposes are recaptured if the asset is sold for a price higher than the undepreciated cost basis at the time (and that is frequently the case). In other words, the tax benefit typically is a deferral of taxes to later years despite the fact that depreciation is a very real expense. It is almost always the land value that has appreciated on a profitable sale rather than the building’s value. This assumes, of course, that prior to 1972, the rollover provision was not used. In other words, the investor did not repurchase another rental building within the same

ANALYZING CHANGES TO TA X POLICY TAX POLICY PRIOR TO 1972 The most important benefit of the tax structure prior to 1972 was a CCA rate of 10% on wood framed buildings and 5% on high rise buildings as well as the flow-through provision for high income professionals, meaning losses at a rental building could be used to reduce taxable income earned through professional fees. The current CCA rate on all buildings is 4% and the flow through for high income professionals no longer exists. Given that these policies are credited with the creation of thousands of units of rental housing before the mid-1970s, it makes sense to examine them to see what level of financial benefit they provided. 10. An Analysis of the Effects of MURB Legislation on Vancouver’s Rental Housing Market, Anne Patricia Wicks, 1982 11. Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada, Clayton Research, November 1998, page 10-11

12. Table 2 assumptions: 45% marginal tax rate; full recapture upon sale (building sold at higher than original cost); 3.25% discount rate (current 5-year CMHC multifamily residential mortgage rate, excluding cost of mortgage insurance); and, demolition in year 50. Discounted at 7.5%, the values in the table from top down are $1,260,739, $1,087,756, $504,813, $341,407, $282,173, $128,807; and, 8.40%, 7.25%, 3.37%, 2.28%, 1.88%, 0.86% 13. At today’s estimated mortgage rate of 3.25%.

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THE KEY Rent Control (Cont’d) tax year (the rollover provision is essentially the “Never sell” scenario in Table 2).

did note, however, that CCA provisions and soft cost deductions were favourable at the time. Lastly, the flow through provision seems of marginal value given that real estate companies today can use CCA on new rental developments to offset income from other rental properties in their portfolio, giving them the same advantages enjoyed by professionals with high incomes prior to 1972. Yet, these same companies stopped developing rental buildings after the 1970s for their own portfolio as well. MULTIPLE UNIT RESIDENTIAL BUILDING PROGRAM

On a wood-framed building, the benefit is less than 7.25% of the building value if the building is never sold and recapture never paid. However, market for apartment buildings is very robust and Chart 6:the Housing Completions by Intended Market, currently represents annual transaction of almost $3bn per year.14 It Metro Vancouver Source: New rare Housing Summaryto Sheets (CMHC); Apartment is somewhat forActivity an investor hold a building forever. If a woodDwelling Completions Metro Vancouver (CMHC) 1975 - 82 framed building was sold within 10 years, then the tax benefit from a 2,500 10% CCA rate was less than 2% of the building’s value. It is important 2,000 to note that the government reclaims all of the depreciation losses 1,500 and the tax associated with the resulting income at the time a building 1,000 is sold. 500 0

Table 2 also shows tax benefits on high rises buildings that were only allowed a 5% CCA rate (compared to 10% for wood-framed buildings 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 prior to 1972 and 4% today). The tax benefit was marginal in all cases. Private Rental

Condo

Given that high-rise construction did not benefit nearly as much from these tax advantages, we address the question of whether or not high-rise development was common prior to 1978 when the CCA rate was reduced to 5% for all buildings. We have data on Metro Vancouver purpose built rental housing stock, excluding Vancouver, from a May 2012 Coriolis Consulting report prepared for Metro Vancouver.15 The data in that report demonstrates that within Metro Vancouver, but outside the City of Vancouver, the existing rental inventory as of 2012 includes 47,635 units built up to 1979. Of this inventory, 31% was high-rise and the percentage was likely much higher in the City of Vancouver. As a result, the lower 5% CCA rate did not seem to slow development of these buildings.

While the flow through provisions came to an end in 1972, the MURB program was introduced in 1974 and was effective through 1979 and then from late 1980 through 1981. We know that in the two decades that preceded 1972, roughly 2,000 purpose built rental units per year were constructed by the private market in Vancouver. Chart 6 shows that the MURB program succeeded in creating multi-family housing.

Chart 6: Housing Completions by Intended Market, Metro Vancouver Source: New Housing Activity Summary Sheets (CMHC); Apartment Dwelling Completions Metro Vancouver (CMHC) 1975 - 82

2,500 2,000 1,500 1,000 500 0

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Private Rental

Condo

However, while the MURB program allowed for the flow-through provision, the CCA rate was reduced to 5% for all buildings in 1978 during and after which there was significant private rental housing built. As we have seen, the 5% CCA rates was of somewhat marginal benefit compared to today’s 4% rate. Also, the CCA rollover provision was not re-instated for MURB buildings. Lastly, a very informative 1982 study by a U.B.C. Master’s student hypothesized that the “real effect of the program was to create windfall gains for existing owners of multiple family zoned land at the time the legislation was passed…. that tax shelter benefits associated with MURB properties will be fully Additionally, these CCA rates were viewed as accurate relative to capitalized into the value of such properties, thus preventing MURB depreciation timing when they were set. These were not viewed as investors from earning rates of return superior to those earned by a tax incentive. 17 3 | P a g e owners of comparable non-MURB properties.” The study found An important 1998 study indicated that “Until the mid-1970s that the average after tax returns earned for MURB and non-MURB the private market produced substantial quantities of private property investments were essentially equivalent at 12.8% for rented apartments without a visible explicit subsidy for rented MURB properties and 13.2% for non-MURB properties. It concluded, housing. There was no rent control and there was growing therefore, that “future tax shelter benefits associated with MURB demand for rented accommodation from newly forming properties are capitalized into the market values of completed households, including immigrants from overseas”.16 The study MURB buildings and that MURB investors do not earn rates of return superior to those of investors in non-MURB apartment properties… 14. Goodman Report, 2018 Mid-Year Greater Vancouver Rental Apartment Review, July 2018 these results do not support the widely made argument that adverse 15. Metro Vancouver Purpose-Built Rental Housing: Inventory and Risk Analysis, tax revisions (such as reduction in tax shelter benefits) cause inferior Coriolis Consulting Corp., May 8 2012 16. Neth. J. of Housing and the Built Environment, Vol. 13 (1998) No. 3, Tony Crook, page 340

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17. An Analysis of the Effects of MURB Legislation on Vancouver’s Rental Housing Market, Anne Patricia Wicks, 1982, page ii

SPECIAL REPORT

ex ante rates of return in real estate investment. In competitive capital markets, equilibrium comparative returns among alternative investments are not determined by Government subsidies or differential tax treatments….The only way government programs effect differential returns is through any investment risk created by having a fluctuating or uncertain tax or subsidy”.18 While MURBs did increase the supply of housing in an uncertain environment dictated by increasing rent control and regulations, this housing wasn’t actually purpose-built rental housing at all. Virtually all MURBs were strata titled creating a massive distinction from secured purpose-built rental housing stock.19 As has been noted in a 1998 study, “To ensure that their investments could be realized, these small-scale individual landlords needed to acquire dwellings that could be easily sold into owner occupation. Apartment dwellings were much less attractive to these landlords than newly constructed condominiums. This was because apartments would be less easy to dispose of then condominiums and because of the impact that rent regulation had on large apartment blocks.”20 18. Ibid at page 65 19. Rent Control and Decontrol in British Columbia: A Case Study of the Vancouver Rental Market, 1974 to 1989, Celia C. Lazzarin, page 137 20. Neth. J. of Housing and the Built Environment, Vol. 13 (1998) No. 3, Tony Crook, page 336

As a result, the “success” of the MURB program depended heavily on the critical legal nuance that they were really strata condominiums that could be individually sold into the ownership market at any time. CHANGES IN INTEREST RATES While tax deductions from CCA are an important and relevant expense, interest rates have fallen dramatically since the 1960s and should offer a far greater incentive for developers to build rental than the CCA provisions. Table 321 compares the present value benefit of today’s lower interest rates on a $15 million property compared to the mid-1960s and to 1978 when MURB construction was at its height. We assume this $15 million property has a $11.25 million mortgage which is a reasonable loan to cost ratio of 75%. We estimate that the benefit of today’s lower interest rates is at least 7.8% and as much as 40% of a building’s value. Comparing the results with those in Table 2 demonstrates that today’s lower interest rates 21. Table 3 assumptions: 45% marginal tax rate; present value benefits calculated at current CMHC 5-yeaer multi-family residential mortgage rate of 3.25% (excluding mortgage insurance). Scenario analysis: At 7.5%, the present value of the interest benefit from the 1960s is $1,056,413 over 5 years or 7% of the building’s value and $2,433,836 over the 25-year amortization or 16.2% of the building’s value. Similarly, at a 7.5% discount rate, the present value of the interest benefit from 1978 is $1,809,227 over 5 years or 12.1% of the building’s value and $4,302,902 over the 25-year amortization or 28.7% of the building’s value.

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THE KEY Rent Control (Cont’d) are at least as beneficial as CCA deductions prior to 1972 tax reform. The benefits of today’s lower interest rates would be even greater with a typically higher loan to cost ratio of up to 80%.22

Due to unusually high inflation during the 1970s and in anticipation of upcoming changes proposed to the Landlord and Tenant Act, Block Brothers instituted a 25% rent increase in 1973. Other Vancouver landlords acted similarly with rent increases between 10% and 20%. In response, Vancouver City Council passed a resolution recommending (but not requiring) rent increases be limited to inflation, then at 9.2%.26 Between 1972 and 1974, these rental conditions and the strong inflation at the time resulted in a wave of conversions of market rental properties to condominiums made possible by the 1966 introduction of strata-title tenure. A 1990 research paper described the situation as follows: “Data compiled by Stanley Hamilton [at the time, a professor of urban land economics at UBC’s Sauder School of Business] show that a high increase in conversions began in 1971 with 7 projects involving 119 units. In 1972, the figure jumped to 14 projects with 305 units and 114 units the following year. The NDP responded by amending the Strata Titles Act to give municipalities control over conversions of rental to strata.”27

Yet these lower interest rates have not been enough incentive to encourage a significant level of purpose-built rental housing Chart 7: Rent Control vs. CPI, 1974 to 1983 development and new supply is certainly not high enough to offset Source: Rent Control and De-Control in B.C.: A Case Study of the Vancouver Market, 1974 to 1989lower interest rates demand. While it is highlyRental likely that these 16.0% been capitalized into land values, recall that research has have 14.0% demonstrated the same was true for the higher CCA rates and other 12.0% tax benefits from rental development prior to 1972. 10.0% 8.0%

A 6.0% BRIEF OVERVIEW OF RENT CONTROL IN 4.0% 2.0% BRITISH COLUMBIA 0.0%

While it’s1974 true that policy changes the mid-1970s 1975 taxation 1976 1977 1978 1979 in1980 1981 1982 negatively 1983 impacted residential multi-family rentalRent buildings, it was not the only Vancouver CPI Control change that negatively affected the industry. Until the mid-1970s, rent control did not exist in British Columbia and regulations were minimal. In 1969, Vancouver City Council passed a by-law limiting rent increases to one per year and a $25 limit on security deposits among other regulatory changes. The by-law set the stage for the Social Credit government to change the Landlord and Tenant Act in 1971 which incorporated the once per year rent increase limit plus limited security deposits to $50, among other changes.23 In 1971, the Vancouver Tenants Council led a five-month strikeof 15 Wall and Redekop Properties after they had been given 4 | P a gboycott e a 10% rent increase.24 In 1972, the NDP was elected based upon a platform that included some form of rent control and changes to rental regulations. In 1973, the provincial government made one rent increase per year applicable to the premises rather than the tenancy agreement.25

With inflation spiking (in 1974, Vancouver’s CPI reach 11.6%28), there was mounting political pressure on politicians to control rents. With this background of intense political pressure, in 1974, rent control came into full force and effect. A rent increase limit of 8% was instituted by the hastily passed Residential Premises Interim Stabilization Act while inflation was 11.6% (see Chart 7). A Rentalsman was appointed to administer the Act and recommended the allowable rent increase be raised to 30% in 1975 to compensate landlords for cost increases from 1972 to 1974 that were not captured in rent increases. Alternatively, he recommended two rent increases of 16% and 21.2%. Both recommendations were refused by government.29

Chart 7: Rent Control vs. CPI, 1974 to 1983

Source: Rent Control and De-Control in B.C.: A Case Study of the Vancouver Rental Market, 1974 to 1989 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

1974

1975

1976

1977

1978

Vancouver CPI

1979

1980

1981

1982

1983

Rent Control

In 1975, the NDP passed the Landlord and Tenant Act with a rent increase limit at 10.6%, while new construction was exempt for five years. The Rentalsman was given authority over future rent increases.30 In October of that year, Prime Minister Trudeau announced a program of wage and price controls to deal with the spiraling inflation of the time. He encouraged the Provinces to implement rent control with the

22. An 80% loan to value ratio, or a $12 million mortgage, results in a present value benefit from the 1960s of $1,245,311 over 5 years or 8.3% of the building’s value and 26. Ibid $3,606,171 or 24% of the building’s value over the 25 year amortization. Similarly, 27. Rent Control and Decontrol in British Columbia: A Case Study of the Vancouver the after-tax present value benefit from 1978 interest rates is $2,133,573over 5 Market, 1974 to 1989, Celia C. Lazzarin, page 101 years or 14.2% of the building’s value and $6,439,579 over the 25 year amortization 4 | P a g Rental e 28. Rent Control and Decontrol in British Columbia: A Case Study of the Vancouver or 42.9% of the building’s value. Rental Market, 1974 to 1989, Celia C. Lazzarin, page 175 23. The Tenant Movement in B.C. from 1968-1978, Bruce Yorke, November 8, 2012 29. Ibid, pages 101-105 24. Ibid 30. Ibid, page 106 25. Ibid

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SPECIAL REPORT

following features: a) limit increase to a fixed percentage, b) increases above the fixed percentage based upon cost increases, and c) new development should be exempt for five years. British Columbia’s legislation at the time already incorporated all three features.31 In December of 1975, the Social Credit party was elected on a platform to keep rent control in place and extended the 10.6% rent increase limit for 1976.32 By 1977, the rent control limit was reduced from $500 to $400 maximum rent and the allowable amount reduced to 7%, a limit that remained in place until 1979.33 The Residential Tenancy Amendment Act of 1980 introduced rent control and review, allowing tenants to request a review of “excessive” rent. The maximum rent increase was limited to 10% in May of that year and remained in place until rent control was removed in 1983. By June 1984, rent review was repealed and rent control came to an end as a means to stimulate the industry during a period of double-digit interest rates and deep economic recession.34

THE ALTERNATIVE TO RENTALS FOR RESIDENTIAL DEVELOPERS: CONDOMINIUMS With the Province having passed the Strata Titled Act in 1966 and amended it in 1974, there was an alternative for residential developers once rent controls and increasing regulations came into effect in the 31. Ibid, pages 82-83 32. Ibid, pages 81-83 33. Ibid, pages 107-108 34. Ibid, page 109

1970s for apartment rentals.35 They could develop condominiums instead of rentals. Innovations in finance resulted in changes to the Bank Act in 1967 that addressed mortgage finance by removing interest rate caps and low statutory loan to value limits.36 By 1967-68, CMHC significantly increased direct lending to homeowners and ramped up their mortgage insurance program.37 By the early 1970s, financing became readily available to condominium developers. Also, by the mid-1970s consumers became more accepting of buying, owning, and living in condominiums. By 1974 a new Strata Titles Act38 was introduced and passed that significantly modernized the 1966 one. Moreover, the 1972 tax reforms enacted capital gains taxes at an inclusion rate of 50%, but exempted principal residences.39 That one change significantly benefited the home ownership market versus the rental market and enabled condominium prices to be higher, reflecting the tax advantage. As was noted in a research report for the City of Vancouver, “The unique capital gains exemption for owner-occupied (principal) residences combined with the advent of 35. City of Vancouver Rental Housing Research and Policy Development Synthesis Report, McClanaghan & Associates, August 2010, page 32 36. Ibid, page 34 37. Ibid, page 34-35 38. Report on Strata Property Law: Phase One, British Columbia Law Institute, November 2012 39. Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada, Clayton Research, November 1998, page 13-14

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THE KEY Rent Control (Cont’d) strata-title condominium tenure created a structural tax disparity between multi-family rental and multi-family condominium creation. The tax-exempt use, owner-occupied condominium units, has an advantage over rental use and consistently out-bid rental in the marketplace for multi-family development sites. Consequently, the disparity in tax treatment has skewed the market to ownership to the detriment of the rental sector.”40 Given that for a multi-family residential development, whether rental or condominium, the land and building structure is equivalent, the real estate developer will always choose to build condominiums. By the mid-1970s it became clear that the regulatory environment for purpose-built rentals would always be onerous, uncertain, and harmful. Governments had implemented rent controls and prohibitive regulations, initially as temporary measures, but it was clear that if rents were to rise and real estate owners made a substantial profit, government bodies would step in and control the revenue stream and implement even more prohibitive regulations to constrain profits. Chart 2 demonstrates this fact because in the 36 years subsequent to 1973, only 7,121 units of permanent rental housing has been built by 2010 in Vancouver, or 13.7% of the total rental pool. Rent controls were temporarily eliminated in 1984 as an incentive during a time of terrible economic recession and double-digit interest rates (In 198241, B.C’s GDP contracted 3.6% and in 1984, the five-year conventional mortgage rate was 13.61%, the unemployment rate in Metro Vancouver was 13.6%, and the vacancy rate 2.4%.) They were eliminated by a Social Credit government that campaigned on a pledge to keep rent controls in place and it was unclear if they would reverse this policy again. The business environment was not conducive to construction but, in addition, the uncertainty created by government intervention into the pricing mechanism for rental apartments meant every rational multi-family developer would choose to build condominiums rather than rental apartments. And that is despite the fact that condominium development is the least tax efficient business given that these developers pay full business income tax on their profits (as opposed to having their income treated as capital gains) without any flow-through provisions or unusual tax deductions or deferrals.

WHY RENT CONTROL IS AN IMPEDIMENT TO RENTAL HOUSING SUPPLY AND AFFORDABILITY In a 2012 survey of academic economists, 95% disagreed42 with the following statement: “Local ordinances that limit rent increases for some rental housing units...have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in the cities that have used them.”43 Paul Krugman has explained in the New York Times, “The analysis of rent control is among the best-understood issues in all of economics, 40. City of Vancouver Rental Housing Research and Policy Development Synthesis Report, McClanaghan & Associates, August 2010, page 37-38 41. Rent Control and Decontrol in British Columbia: A Case Study of the Vancouver Rental Market, 1974 to 1989, Celia C. Lazzarin, pages 173-174 and 181, 184 42. http://www.igmchicago.org/surveys/rent-control 43. http://www.igmchicago.org/surveys/rent-control, University of Chicago, IGM Forum, February 7, 2012

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and — among economists, anyway — one of the least controversial. In 1992 a poll of the American Economic Association found 93% of its members agreeing that ‘a ceiling on rents reduces the quality and quantity of housing’. Almost every freshman-level textbook contains a case study on rent control, using its adverse side effects to illustrate the principles of supply and demand.”44 A recent study on the effects of rent control in San Francisco concluded that: “Landlords treated by rent control reduce rental housing supply by 15%, either by converting to condominiums/Tenancy in Commons, selling to owner occupants, or redeveloping buildings. In the long run, we find rent control increased the gentrification of San Francisco, and the endogenous changes in the housing supply attracted higher income residents, undermining the goals of rent control… Further we find that there was a 25% decline in the number of renters living in units protected by rent control, as many buildings were converted to new construction or condos that are exempt from rent control. The reduction in rental supply likely increased rents in the longrun, leading to a transfer between future San Francisco renters and renters living in San Francisco in 1994. In addition, the conversion of existing rental properties to higher-end, owner-occupied condominium housing ultimately led to a housing stock increasingly directed toward higher income individuals.”45 In a research paper on the rental housing market in San Francisco during the 1940s, economists Milton Friedman and George J. Stigler concluded “Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building…Yet we urge the removal of rent ceilings because, in our view, any other solution of the housing problem involves still worse evils.”46 The Economist magazine has written that “When prices are capped, people have less incentive to fix up and rent out their basement flat, 44. Reckonings; a Rent Affair, The New York Times, Paul Krugman, June 7, 2000 45. The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco, Stanford University, Rebecca Diamond, Tim McQuade, and Franklin Qian, August 24, 2018 46. Roofs or Ceilings: The Current Housing Problem, The Foundation for Economic Education, Milton Friedman and George J. Stigler, September 1946

SPECIAL REPORT

or to build rental property. Slower supply growth exacerbates the price crunch. And landlords who do rent out their properties might not bother to maintain them, because when supply and turnover in the market are limited by rent caps, landlords have little incentive to compete to attract tenants.”47 Swedish economist Assar Lindbeck once asserted, “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing”.48 The Canadian experience has not been any different from that of other countries. A major 1988 study conducted by the University of Toronto on the impact of rent control between 1975 and 1988 found that the “major effects” were: 1. To reduce rents on pre-1976 controlled units, but to increase rents on post-1975 units; 2. To reduce new rental and total apartment construction; 3. To jeopardize the quality and existence of the existing rental housing stock by accelerating deterioration, encouraging conversion of rental residential dwellings to other uses and other tenure forms, and fostering demolitions; 4. To contribute to a severe rental housing shortage; 5. To create the environment for the introduction of key money; 6. To inefficiently and inequitably redistribute income; and 7. To exacerbate the government budget deficit by reducing government tax revenues and inducing increased government housing expenditures.49

mid-1970s is more complex than simply changes to tax policy. Rent control and regulatory changes played at least as important a role if not being the defining reasons that decimated new rental housing supply. The introduction of rent control and restrictive regulations toward landlords changed the business environment for this investment dramatically. Once these changes were made, even though rent control was removed in the early 1980s during a period of recession, the mere anticipation of rent control is enough to have a chilling effect on such investment. And, in fact, investors have been correct to be worried because further rent control and restrictive regulations were introduced in British Columbia in the 1990s, again in 2004 with a revised Residential Tenancy Act, and again after the 2017 election of the NDP government. All of these changes have reinforced the notion in investors’ minds that the market for rental housing is fraught with political obstacles to achieving a reasonable return on investment. Investors are making a sixty to one hundred-year decision when deciding to construct new rental housing and need assurance that their ability to recover profits won’t be usurped by government. Multi-family developers have a unique alternative of building residential condominiums which are free of price controls and subsidized by the Federal government with a capital gains tax exemption on owner-occupied units. As a result, rational investors will choose to build condominiums over market rental housing.

The examples of the negative impact of rent controls on the quantity and the quality of housing are abundant and economists are near universal in their negative views about such policy. As a result, rent controls, and the prohibitive regulations that accompany them, are the problem and not the solution to rental housing affordability. Many states in the United States have come to understand this economic issue and have prohibited rent control as a result. As of 2018, there are only four states with rent control: California, Maryland, New Jersey, and New York and the District of Columbia. Thirty-seven states either prohibit or pre-empt rent control, while nine states allow their cities to enact rent control but have no cities that have implemented it.50 Conversely, price controls are widespread in Canada with the only exception being Alberta which has no rent controls and what is generally regarded as a healthy, balanced rental market.

HOW TO CREATE MORE PURPOSE-BUILT RENTAL HOUSING SUPPLY As a result of the preceding analysis, the reason for the lack of construction of private market rental housing since the 47. Do Rent Controls Work?, The Economist, August 31, 2015 48. Only bombing would be worse than rent control, https:// www.adamsmith. org/blog/planning-transport/only-bombing-would-be-worsethan-rent-control, Adam Smith Institute , Sam Bowman , January 25, 2012 49. An Economic Assessment of Rent Controls: The Ontario Experience, Journal of Real Estate Finance and Economics, Lawrence B. Smith, Professor of Economics, University of Toronto, 1988 50. Rent Control by State Law, National Multi Family Housing Council, Spring 2018

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THE KEY Rent Control (Cont’d) To create more rental housing supply requires three major changes to the regulatory and business environment: (1) The removal of rent controls and restrictive regulations toward newly built market rental buildings; and, (2) municipal zoning bylaw changes that remove biases against market rental housing and can equate land values between rental housing development and condominium development; and, (3) elimination of Federal GST on a self-supply of rental housing.

WE RECOMMEND THE FOLLOWING ACTIONS TODAY: RENT REGULATIONS 1. Immediately exempt newly constructed purpose-built rental units from all rent controls. The exemption would be guaranteed for a minimum of 20 years. More secure market rental housing supply is the real solution to stabilizing rents, not rent control; 2. Rental housing developers are making 60 – 100 year investments. Government must commit to ensuring legislative certainty for the long haul; 3. Allow more liberal rent increases for existing tenancies to better cover cost of inflation and maintenance. MUNICIPAL ZONING BYLAW CHANGES FOR RENTAL DEVELOPMENT 1. Reduce or eliminate parking minimums; 2. Increase density allowable relative to condominium development; 3. Reduce minimum unit sizes; 4. Fast track application processing and eliminate re-zoning requirement; 5. Eliminate Community Amenity Charges; and, 6. Eliminate inclusionary zoning of below market suites. FEDERAL TAXATION Eliminate the GST on completion of new purpose-built rental construction. The GST was introduced in 1991. While it was not part of this analysis, it is a major cost to rental housing builders who are required to pay GST, currently at 5% (with some rebates depending on unit fair market value), on the completed value of the “self-supply”

of a rental building. It is an impediment which does not exist for the condominium developer and its elimination is necessary to help equate residential land value between condominium and private market rental use. These changes would mitigate the challenging business environment in which rental housing providers must operate and would also equate land values between condominium private market rental housing development. This alone will create the environment in which businesses will build enough private market rental housing supply to satisfy demand.

CONCLUSIONS It is quite clear that purpose-built rental housing has not been built in significant quantity since the 1970s. As a result, it makes sense to determine what changes led to the dearth of supply when demand for these units has not abated. This analysis leads to the conclusion that the introduction of rent controls and prohibitive regulations had a major impact on new rental housing construction since that time. While rent controls were temporarily removed in 1984, the problem is the mere anticipation of rent control is enough to have a chilling effect on such investment. Investors have been correct to be concerned because rent control was re-introduced in British Columbia by the Clark government in the 1990s, strengthened by the Campbell government in 2002/04, and further strengthened by the Horgan government in 2018. When investors make the decision to build market rental housing, they are making a 60 to 100-year decision. They will, necessarily, consider the long-term risks when making that decision. Once this market changed in the 1970s to one which had caught the government’s attention, it changed markedly. This was exacerbated by the introduction of strata title condominiums which gave residential builders an alternative that was free from price controls. Builders chose this alternative in earnest despite the tax disadvantaged of being taxed at full business income rates without any provisions for deferred taxes, rollovers, or flow through income. It is imperative that the government remove rent controls and restrictive regulations toward market rental buildings. These changes as well as modifications to zoning bylaws and regulations at the municipal level, and the removal of Federal GST on a “selfsupply” basis, will restore the market for building new secure market purpose-built rental housing. 9:52 AM Page 1 AD card:q7 12/9/11

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SPECIAL REPORT

REFERENCES An Economic Assessment of Rent Controls: The Ontario Experience, Lawrence B. Smith, Professor of Economics, University of Toronto, Journal of Real Estate Finance and Economics, 1988 An Analysis of the Effects of M.U.R.B. Legislation on Vancouver’s Rental Housing Market, Anne Patricia Wicks, Thesis for Master of Science in Business Administration, University of British Columbia, April 1982 Anatomy of a Crisis: Canadian Housing Policy in the Seventies, Lawrence B. Smith, Professor of Economics, University of Toronto, The Fraser Institute, 1977 City of Vancouver Rental Housing Strategy Research and Policy Development – Synthesis Report, City of Vancouver, McClanaghan & Associates, August 2010 Do Rent Controls Work?, The Economist, August 31, 2015 Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada, Canadian Federation of Apartment Associations, Clayton Research Associates Ltd., November 1998 Encouraging investment in rental properties key to affordability, April 11, 2018, Michael Geller, Vancouver Courier Goodman Report, 2018 Mid-Year Greater Vancouver Rental Apartment Review, David Goodman and Mark Goodman, July 2018 Metro Vancouver Purpose-Built Rental Housing: Inventory and Risk Analysis, Coriolis Consulting Corp., May 8 2012 Only bombing would be worse than rent control, https://www.adamsmith.org/blog/ planning-transport/only-bombing-would-be-worse-than-rent-control , Adam Smith Institute , Sam Bowman , January 25, 2012 Rent Control by State Law, National Multi Family Housing Council, Spring 2018 Reckonings; a Rent Affair, The New York Times, Paul Krugman, June 7, 2000 Rent Control and Decontrol in British Columbia: A Case Study of the Vancouver Rental Market, 1974 to 1989, Celia C. Lazzarin, Thesis for Master of Arts (Community and Regional Planning) University of British Columbia, April 1990

The Role of Secondary Suites: Rental Housing Strategy – Study 4, City of Vancouver,

Rental Market Report, Vancouver CMA, CMHC, 2017

December 2009

Report on Strata Property Law: Phase One, British Columbia Law Institute, November

The Supply of Private Rented Housing in Canada, Tony Crook, Netherland Journal of

2012

Housing and Built Environment, Vol 13 (1998) No. 3

Roofs or Ceilings: The Current Housing Problem, The Foundation for Economic

The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality:

Education, Milton Friedman and George J. Stigler, September 1946

Evidence from San Francisco, Rebecca Diamond, Tim McQuade, and Franklin Qian,

The Capital Cost Allowance System, Israel Mida and Kathleen Stewart, Canadian Tax

December 2017, Stanford University The Tenant Movement in B.C. from 1968-1978, Bruce Yorke, November 8, 2012

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SUMMER 2019 | 23

SPECIAL REPORT

Appendix Summary of Rent Control and Taxation Policy Toward Rental Development Taxation Policy

Rent Control & Regulation

Political Climate

Rental Development

1950 to 1971

CCA: woodframe buildings 10%; other 5%; CCA recaptured on sale but could pool with CCA on other buildings owned.

No rent control or regulations.

Federal government used “market-enabling strategies” including taxation and creation of CMHC to support housing supply.

Rental unit supply in Vancouver increased from 37,445 units in 1951 to 78,985 in 1971 or by 110%

Excess CCA deductions available to reduce non-rental taxable income (“flow-through” provisions).

1966: British Columbia introduced strata-title tenure. Readily available financing to developers not until the early 1970s.

1969: Vancouver City Council establishes maximum of one rent increase per year, three months notice of rent increase; $25 limit on security deposit.

Between 1963-68, rental apartments accounted for almost half of all Canadian housing starts (475,917 of 976,322 housing starts). Source: Annual Report CMHC 1963 to 1972

No capital gains tax in Canada for any investment until 1972.

1967 Bank Act addressed mortgage finance removing interest rate caps and low statutory loan to value limits

1970: New Landlord-Tenant Act; 1971: five month strike-boycott of 15 Wall / Redekop premises which had been given 10% rent increase.

Generous write-offs for new housing investment in form of soft cost deductibility

1967 - 68 CMHC significantly increased direct lending to homeowners and ramped up mortgage insurance program.

1972

No longer able to reduce non-rental taxable income with CCA deductions from rental property. Capital Gains tax introduced at 50% inclusion; exemption allowed on principle residence. CCA pooling (rollover) removed.

1973-88

1974-81: Multiple Unit Residential Building Program (MURB): CCA deductions available to reduce non-taxable income (“flow-through” provision) restored for these developments. Virtu- ally all strata -titled.

1973: NDP made one rent increase per year clause applicable to the premises not the tenancy agreement. Also, set up Law Reform Commission to set rental policy.

1975-78 Assisted Rental Programme (ARP): restrictions on equity returns and rents in return for tax free grants or interest free loans.

1974: Strata Titles Act amended to give municipalities control over conversions of rentals to strata.

NDP elected on platform including bargain- ing rights for tenants and establishment of municipal rent review board (i.e. rent control)

1972: Conversions of rentals to strata condominiums acute problem in Vancouver. 14 projects with 305 units converted in this year.

1973: Block Brothers institute 25% rent increase in anticipation of upcoming new Landord and Tenant Act. Other landlords act similarly with rent increases between 10% and 20%. Vancouver City Council passed resolution providing for concept that rents should be limited to inflation @ 9.2%

Between 1958 and 1973, 35,019 rental units developed in City of Vancouver, roughly 68% of rental housing stock.

1974: Beginning of Rent Control in British Columbia

Time Frame Taxation Policy

Inflation in Vancouver was at 11.6%.

In the 36 years subsequent to 1973, only 7,121 units have been added to permanent rental housing pool in the City of Vancouver, or 13.7% of the total rental pool.

Rental Development

Political Climate

1974: Residential Premises Interim Stabalization Act limits rent increases to 8%; Rentalsman recommended 30% allowable rent increase for 1975 to compensate Landlords for cost increases from 1972-74; alternatively two increases of 16% then a second one of 21.2%. Recommendation refused.

December 1975 Social Credit elected based on platform to keep rent control. October 13, 1975 PM Trudeau announced program of wage and price controls and encouraged Provinces to implement rent control as follows: limit to a % increase; above this increase justified based upon cost increases; new development exempt for five years. Social Credit left rent increase limit at 10.6% for another year (1976)

1982-84: Canada Rental Supply Programme: re-introduced ARP prvision for interest free loans. In return, landlords agreed to 5% dwellings disabled and a third dwellings for low income tenants.

1975: NDP passed new Landlord and Tenant Act with rent increase limit at 10.6%. New construction exempt for 5 years. Rentalsman given authority to set future rent increases. 1976: Social Credit left rent increase limit at 10.6% for another year. 1977: Residential Tenancy Act (replaced Landlord and Tenant Act). New buildings exempt from rent control. Rent control limit reduced from $500 to $400 max rent. By 1978 these measures resulted in approximately 10% of units outside rent control. Allowable rent increase reduced to 7%. 7% limit remained through 1979. 1980: Residential Tenancy Amendment Act introduced rent control and review. Maximum rent increase 10% May 1980 and remained until rent control removed in 1983. Rent review meant tenant responsible for appealing “excessive rents”. June 30, 1984, rent review repealed and rent control came to an end.

1983-84: Rent Control Removed in British Columbia until the early 1990s Sources: The Tenant Movement in B.C. from 1968 to 1978, the Mainlander, November 9, 2012 The Supply of Private Rented Housing in Canada, Tony Crook, Netherland Journal of Housing and Built Environment, Vol 13 (1998) No. 3 Rent Control and De-Control in British Columbia: A Case Study of the Vancouver Rental Market, 1974 to 1989, Celia Lazzarin, U.B.C. April 1990 An Analysis of the Effects of M.U.R.B Legislation on Vancouver’s Rental Housing Market, Anne Patricia Wicks, U.B.C., April 1982 Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada, Clayton Research Associates Ltd. November 1998 Tax Expenditures - Housing, Clayton Research Associates Limited, March 1981 City of Vancouver Rental Housing Strategy Research and Policy Development, Synthesis Report, McClanaghan & Associates, August 2010 Anatomy of a Crisis, Canadian Housing Policy in The Seventies, Lawrence B. Smith, The Fraser Institute, 1977

Understanding BC's History of Rent Controls and Tax Policy To Improve Today's Rental Housing Crisis/ 31

Rent Control & Regulation

1978: CCA reduced to 5% all buildings; 1981: CCA half year rule in the year asset acquired; 1988: CCA reduced to 4% for all buildings.

30 /Understanding BC's History of Rent Controls and Tax Policy To Improve Today's Rental Housing Crisis

Time Frame

HUNTERS HINTS By Hunter Boucher, Director of Operations, LandlordBC Over the last two years, the rental housing industry has seen what many consider to be unprecedented legislative change. More changes occurred in the last 18 months than in the 14 previous years of Residential Tenancy Act’s existence. And with the recently released report from the provincial government’s Rental Housing Task Force, more changes are likely to come into effect over the next few years. While LandlordBC and our constituents, who operate within the rental housing industry, must wait to see how these potential changes unfold, we are able to provide more details and updates about the recent changes and how these changes impact the rental housing industry.

CHANGES TO FIXED-TERM TENANCIES AND VACATE CLAUSES On October 26, 2017, the Honourable Selina Robinson, Minister of Municipal Affairs and Housing, introduced Bill 16. This bill, an amendment to the RTA, covered many sections of the Act and addressed significant industry concerns as well as some minor matters regarding the interpretation of the existing legislation. The bill included limiting the use of fixed-term tenancies with a vacate clause and limiting situations where a landlord can apply for rent increase that is above the set guideline announced by the Residential Tenancy Branch (RTB) on an annual basis. With near zero vacancy rates and rapidly increasing rents in various markets across British Columbia, there were instances where an unintended loophole in the RTA was being abused and utilized as a method by some rental housing providers to increase rents for existing tenancies. These increases often went well beyond the maximum allowable increase prescribed in the Residential Tenancy Regulations, accompanied by the very real threat of tenants losing their housing. Using the vacate clause to circumvent rent control and inflict a significant rent increase on tenants was widely viewed as misuse and abuse of the RTB process and did not keep with the spirit of the RTA. Leading up to the 2017 provincial election, both the Liberal government and the NDP opposition received significant pressure from tenants and tenant advocacy groups to make amendments that would eliminate these loopholes. This became an election issue for both parties. One of the first orders of business following the formation of the newly elected (NDP) government was the introduction of this amendment and a single allowable exemption — that a landlord may utilize a vacate clause when they or a close family member are moving into the rental unit at the end of the fixed term. This is the only situation where a vacate clause can be enforced. The RTA defines close family member as a spouse, child, or parent of the landlord. Coincidental with these changes, the government announced a $6.9 million funding increase (over a three-year period) for the RTB, and the formation of a Compliance Unit within the RTB mandated to address any significant abuses of the RTA that can occur from both landlords and tenants. This change strengthens the existing framework for administrative penalties and provides the RTB with greater investigative powers, allowing them to address issues pertaining to serial abuse of the legislation. The Compliance Unit has hired its leadership and is currently finalizing its terms of reference

and overall structure. LandlordBC is hopeful that it will become operational in early 2019.

THE LEGALIZ ATION OF CANNABIS As we entered 2018, the focus of the rental housing industry shifted to the topic of cannabis legalization. Landlords and property managers were concerned as to how the growing, cultivation, and smoking of legalized cannabis and cannabis products would impact their rentals. Specific concerns brought to the attention of LandlordBC included property insurance issues, health concerns, damage to property as a result of personal grow operations, and the infringement on the quiet enjoyment of tenants who may find the use of cannabis disruptive. These concerns were addressed on April 26, 2018, in section 160 of Bill 30: Cannabis Control and Licensing Act. Bill 30 included an amendment to the RTA that outlined significant protections for landlords against the growing of cannabis in their rental units for existing tenancies, regardless of what was outlined in the original tenancy agreement. This protection also extended any existing prohibition against the smoking of tobacco to include cannabis. These protections are in place for tenancy agreements entered before the Cannabis Control Date of October 17, 2018. For tenancy agreements entered on or after October 17, 2018, landlords must include terms that explicitly prohibit the growing, smoking, and vaping of cannabis in their rental units and on the residential property. It must be stressed that this applies to written residential tenancy agreements; clauses agreed to verbally are not enforceable. Interestingly, the standard agreement provided by the RTB does not address these topics. However, the proprietary residential tenancy agreement provided by LandlordBC for our members was amended in early 2018 to include these protections, henceforth ensuring that our members were mitigating their risk and prepared for the incoming change. LandlordBC worked with both the Honourable Mike Farnworth, Minister of Public Safety and the Solicitor General, and the B.C. Cannabis Secretariat to ensure that the rental housing industry’s concerns were properly represented and considered as part of the legalization process, and we were pleased that they were. The changes to the RTA struck a balance in terms of protecting a landlord’s right to mitigate damage to their rental unit and ensured tenants living in smoke-free environments could continue to do so.

ENDING TENANCIES AND ADDRESSING “RENOVICTIONS” As 2018 continued, we saw another amendment to the RTA. On May 17, Bill 12, which was introduced on April 12 by the Honourable Selina Robinson, received Royal Assent. This bill included changes to an existing notice to end tenancy and the creation of a new notice to end tenancy. While the freshly created four-month notice to end tenancy was new, the situations to use this notice were not and had previously existed on the two-month notice. Most significantly, these situations include cases where the unit must be vacated to allow for repairs, renovations, or demolition.

SUMMER 2019 | 25

THE KEY Hunters Hints (Cont’d) Ending tenancies in order to complete major repairs or upgrades to a residential rental building, often referred to as “renovictions” in the media, typically make the headlines. However, the fact remains that on occasion, landlords need to end tenancies for major repairs, renovations, upgrades, or demolition. Bill 12 aims to provide further protections for tenants who are facing eviction for superficial renovations or when the landlord is not acting in good faith in terms of what repairs are required. Bill 12 included the following:

advocacy groups, including LandlordBC, and accepted written submissions from stakeholders.

• an extension of the notice period from two months to four months

1. Change the rent control formula from inflation (2.5 per cent for 2019) + 2 per cent, to inflation only, thus removing the addition of the 2%. This early recommendation was accepted by Premier Horgan and Minister Robinson and was quickly followed by a change to the Residential Tenancy Regulations that resulted in the 2019 rent increase being reduced to 2.5 per cent.

• an increase to the dispute deadline to 30 days from 15 days • an increase in the penalty for serving a notice in bad faith that includes up to 12 months of additional compensation • a newly introduced right-of-first-refusal provision specific to buildings of five or more units. On the surface these changes appear significant. However, there are protections for landlords that were also included. Prior to this amendment, landlords who did not follow through on the repairs or property upgrades provided as the reason for issuing the notice to end tenancy could face a penalty of two months of additional compensation. This penalty could be issued regardless of the rationale or reasons the development plans fell through. Under the amended RTA, an arbitrator can consider the circumstances that lead to a landlord’s decision to halt or delay the project. Additionally, the right of a tenant to return to the unit after repairs or renovations have been completed is contingent on market rent. This gives landlords a viable way to recoup the labor and materials costs.

THE RENTAL HOUSING TASK FORCE On April 10, 2018, Premier John Horgan announced the formation of a new task force that would evaluate rental housing in B.C. This led to the development of the Rental Housing Task Force, chaired by MLA Spencer Chandra Herbert, and included MLA Adam Olsen and MLA Ronna-Rae Leonard . The task force’s objective was to engage with landlords, tenants, advocacy groups, and industry associations to seek feedback on how the legislation and RTB processes could be improved to better serve all those involved in the industry. The task force findings were to be reported back to Premier Horgan and Housing Minister Robinson by the fall of 2018. The Rental Housing Task Force met with stakeholders throughout the summer of 2018 and hosted 11 town hall meetings in communities across the province. Additionally, they met with

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This first recommendation and change that came as a result of the Rental Housing Task Force findings was released in September 2018 following the RTB announcement of a 4.5 per cent maximum allowable rent increase for 2019. This maximum increase was widely reported as the highest increase since 2004 and, in response, the Rental Housing Task Force released the following suggestions:

2. Improve access to above-guideline rent increases when significant work, such as repairs or renovations, have been completed by the landlord. The process of updating the legislation and regulations to reflect this change is still pending and LandlordBC continues to be active in the development of this new policy. The task force’s final report included a list of 23 recommendations and was released on December 12, 2018. From LandlordBC’s standpoint, the findings of the report are fair and work to strike a balance between a tenant’s right to secure, sustainable rental housing and a landlord’s right to protect their rental property and operate their business in a financially feasible manner. Many of the recommendations strengthen pre-existing legislation, provide a clear interpretation of industry processes, and increase enforcement against those who continue to attempt to operate outside the legislative framework. Additional recommendations include ways in which the Residential Tenancy Act and Residential Tenancy Branch processes can be modernized, such as allowing email as a method of service and recording RTB dispute resolution hearings. It is LandlordBC’s opinion that one of the most notable of the recommendations was that rent will continue to be tied to the tenant and not the rental unit. LandlordBC successfully advocated that tying rent to the unit would have a negative impact on the development of new purpose-built rental stock across British Columbia and deter landlords from investing in repairs and upgrades for existing buildings. The Task Force agreed, and landlords can continue to consider the market when they enter into a new tenancy upon turnover. The ability to do this is especially important given the change to the rent control formula to inflation only.

BIG CHANGES, BUT VALUES INTACT Over the past year and a half, unprecedented change has taken place within B.C.’s rental housing industry. Furthermore, with many of the Rental Housing Task Force recommendations still needing to be considered, more change is on the horizon. Some of the recent or proposed changes are significant, yet the core rights and responsibilities of landlords and tenants remain, for the most part, true to the values originally intended when the RTA was introduced. LandlordBC is working diligently to advocate on behalf of the rental housing industry, while also providing resources, education, and support to those operating as landlords and rental housing property managers. Article first printed in REIBC’s Input Magazine, Spring 2019

ASSOCIATE MEMBERS/CORPOR ATE SUPPLIERS - MAINLAND ACCOUNTING D&H Group LLP, CPAâ&#x20AC;&#x2122;s Michael Louie (604) 731-5881 www.dhgroup.ca

Sparkle Solutions Corp

Remont Construction Ltd.

Smythe CPA

Trail Appliances

Jamie Dosanjh (604) 992-7124 www.trailappliances.com

BUILDING REPAIR & RENOVATION Nuwest Contracting Ltd. Debra Gettling (604) 525-6145 www.nuwestcontracting.com

Daniel Lai (604) 687-1231 www.smythecpa.com ADVERTISING & PROMOTION Places4Students.com Laurie Snure (866) 766-0767 www.Places4Students.com APPLIANCE - RENTALS Coinamatic Canada Inc. Jack Ursaki (604) 813-7805 www.coinamatic.com Sparkle Solutions Corp.

Connie Goldman (604) 396-3184 www.sparklesolutions.ca APPLIANCE - SALES Penguin Appliances Sales & Services Sam Sangha (604) 451-4411 www.penguinappliances.ca Rona Inc.

Brad LeGrow (604) 314-1366 www.rona.ca

Connie Goldman (604) 396-3184 www.sparklesolutions.ca

WestCoast Appliance Gallery

Byron Loucks (250) 888-3799 www.westcoastappliance.ca APPRAISAL - INSURANCE Normac Appraisals Ltd. Margarita Carlos (604) 221-8258 www.normac.ca APPRAISAL - REAL ESTATE Cushman and Wakefield Phil Joubert (604) 608-5955 www.cushmanwakefield.com

ASBESTOS REMOVAL Phoenix Restorations Ltd. John Wallis (604) 945-5371 www.phoenixrestorations.com ServiceMaster Restore of Vancouver

Sean Kennedy (604) 435-1220 www.svmvancouver.ca

APPLIANCE - SALES & SERVICE Coinamatic Canada Inc. Jack Ursaki (604) 813-7805 www.coinamatic.com

BIOHAZARD REMEDIATION 1st Trauma Scene Clean Up Ltd. Brian Woronuik (604) 598-8887 www.traumascenecleanup.ca

Handy Appliances Ltd

Phoenix Restorations Ltd.

Rocky Mangat (604) 879-1555 www.handyappliances.ca Midland Appliance

Gary Braun (604) 278-6131 www.midlandappliance.com Midnorthern Appliance The Brick Commercial Sales Division

Sherry Madden (604) 587-6658 www.thebrick.com

John Wallis (604) 945-5371 www.phoenixrestorations.com ServiceMaster Restore of Vancouver

Sean Kennedy (604) 435-1220 www.svmvancouver.ca BUILDING ENVELOPE Remdal Painting & Restoration Inc. Dan Schmidt (604) 882-5155 www.remdal.com

Robert Szpakowski (604) 837-8813 www.remontconstruction.ca

BUILDING, MAINTENANCE Rona Inc. Brad LeGrow (604) 314-1366 www.rona.ca COMMUNICATIONS/ ENTERTAINMENT Telus Michelle Mydske (604) 230-2658 www.telus.com CONCRETE WORK Nuwest Contracting Ltd. Debra Gettling (604) 525-6145 www.nuwestcontracting.com

ELEVATOR City Elevator Ltd. Heiner Marnet (604) 299-4455 www.cityelevator.ca Metro Elevator Ltd.

Preet Binning (604) 569-2977 www.metroelevator.ca ENERGY EFFICIENCY & CONSERVATION Enerpro Systems Corp. Steven Roka (604) 982-9155 www.enerprosystems.com FRESCo Building Efficiency

Jordan Fisher (250) 590-9440 www.frescoltd.com

Wyse Meter Solutions Inc.

Jessica Lewis (416) 869-3003 www.wysemeter.com Yardi Systems Inc.

Sam Jaishankar (888) 955-7900 www.yardi.com

CREDIT REPORTING AGENCY RentCheck Brenda Maxwell (800) 661-7312 Ext. 221 www.rentcheckcorp.com

ENGINEERS FRESCo Building Efficiency Jordan Fisher (250) 590-9440 www.frescoltd.com

DECKS Duradek Canada Ltd. Kim Smallwood (604) 591-5594 www.duradek.com

Read Jones Christoffersen Ltd.

DRAINAGE & SEWER Cambie Roofing Paul Skujins (604) 916-9090 www.cambierooring.com DUCT CLEANING Air-Vac Services Canada Ltd. Brent Selby (604) 882-9290 www.airvacservices.com ELECTRICIANS Evanson Electric Ltd. David Evanson (604) 657-7957 www.evansonelectric.com

Jason Guldin (250) 213-2520 www.rjc.ca

ESTATE & SUCCESSION PLANNING Monarch Financial/ Manulife Securities Inc. Richard Laurencelle (604) 681-2699 FINANCIAL PLANNING, Mortgage Financing CIBC - Wood Gundy Gilbert Lam (604) 603-2889 www.cibcwg.com/ raymond-shum FIRE PROTECTION & MONITORING Vancouver Fire & Radius Security Elaine Giesbrecht (604) 232-3488 www.vanfire.com

FLOORING AND CARPETING Mira Floors and Interiors Deverow Walters (604) 856-4799 www.mirafloors.com FURNITURE, MATTRESSES, ELECTRONICS Midnorthern Appliance - The Brick Commercial Sales Division Sherry Madden (604) 587-6658 www.thebrick.com HEATING FUELS Columbia Fuels Dave Young (877) 500-4328 www.columbiafuels.com INSPECTIONS Canadian Tenant Inspection Services Ltd Jim Garnett (778) 846-9125 www.ctiservices.ca INSURANCE AC&D Insurance Services Ltd. Scott Jamieson (604) 982-1039 acd.insurebc.ca BFL Canada Insurance Services Inc. Shirley Timmins (604) 669-9600 www.bflcanada.ca Capri CMW

R. Folkins (604) 294-3301 www.cmwinsurance.com Megson Fitzpatrick Insurance Services

Mike Nichol (250) 519-2300 www.megsonfitzpatrick.com INTERCOM REPAIRS & INSTALLATION, SECURITY & INTERCOM SYSTEMS Vandelta Communication Systems Ltd. Hugh Rae (604) 732-8686 www.vandelta.com

This list is intended for use by the members of LandlordBC. It is distributed with the understanding that it does not constitute a recommendation or guarantee from LandlordBC. Rather it is consolidation of recommendations received by LandlordBC from its individual members. Although the information is intended to be beneficial, neither we nor any other party will assume liability for loss of damage as a result of reliance on this material.

SUMMER 2019 | 27

THE KEY ASSOCIATE MEMBERS/CORPOR ATE SUPPLIERS - MAINLAND INTERNET LISTING SERVICES Yardi Systems Inc. Sam Jaishankar (888) 955-7900 www.yardi.com

PAINTING SERVICE Prostar Painting & Restorations Ltd. Jonathan Moorhouse (604) 876-3305 www.prostarpainting.com

INVESTMENT & RETIREMENT PLANNING Monarch Financial/ Manulife Securities Inc. Richard Laurencelle (604) 681-2699

Remdal Painting & Restoration Inc.

LANDSCAPING - LAWN & GARDEN MAINTENANCE BUR-HAN Garden & Lawncare Robert Hannah (604) 983-2687 www.bur-han.ca LEGAL SERVICES Haddock & Company C Grant Haddock (604) 983-6670 www.haddock-co.ca MEDIA MediaEdge Communications Dan Gnocato (604) 549-4521 www.mediaedge.ca MORTGAGE FINANCING Citifund Capital Corporation Derek Townsend (604) 683-2518 www.citifund.com First National Financial Corp

Russ Syme (778) 327-5712 www.firstnational.ca

MORTGAGE INSURANCE CMHC Robyn Adamache (604) 731-5733 www.cmhc.ca ONLINE PAYMENT SERVICE Yardi Systems Inc. Sam Jaishankar (888) 955-7900 www.yardi.com PAINT SALES Cloverdale Paint Inc Dave Picariello (604) 551-8083 www.cloverdalepaint.com

Dan Schmidt (604) 882-5155 www.remdal.com

PEST CONTROL Assured Enviromental Solutions Brett Johnston (604) 463-0007 www.assuredenviromental.ca Solutions Pest Control Ltd.

Jason Page (855) 858-9776 www.PestSolutions.ca

PIPE LINING/ RE-PIPING Allied Plumbing, Heating & Air Conditioning Lance Clarke (604) 731-1000 www.allied-plumbing.ca CuraFlo of BC Ltd. Randy Christie (604) 298-7278 www.curaflo.com Victoria Drain Services

Dave Lloyd (250) 818-1609 www.victoriadrains.com PLUMBING - SUPPLIER & MANUFACTURER Moen Inc. Darren McMullen (604) 679-8914 www.moen.ca PLUMBING/HEATING/ BOILERS Allied Plumbing, Heating & Air Conditioning Lance Clarke (604) 731-1000 www.allied-plumbing.ca BMS Plumbing & Mechanical Systems Ltd

Tamara Merchan (604) 253-9330 www.bmsmechanical.com Cambridge Plumbing Systems Ltd. John Jurinak (604) 872-2561 www.cambridgeplumbing.com Montalbano Plumbing Services LTD.

Giovanni Montalbano (604) 444-0222 www.montalbano.ca

28 | SUMMER 2019

Viessmann Manufacturing Co. Inc.

Century Group Lands Corporation

Hugh & McKinnon Realty Ltd.

Xpert Mechanical & JK Lillie Ltd.

Cherry Creek Property Services Ltd.

Hume Investments Ltd.

Coldwell Banker MacPherson Real Estate Ltd.

Lantern Properties Ltd.

Randy Stuart (604) 533-9445 www.viessmann.ca

Kerry West (604) 294-4540 www.xpertmechanical.com PRINTING Citywide Printing Ltd. Gordon Li (604) 254-7187 www.citywideprint.com

PROPERTY MANAGEMENT Advent Real Estate Services Ltd. Michelle Farina (604) 782-6478 Aedis Realty

Azi Hosseini (778) 881-4414 Ascent Real Estate

Susan Colosie (604) 431-1800 www.ascentpm.com Associa British Columbia Inc.

Katie Khoo (604) 501-4417 www.associabc.ca

Austeville Properties Ltd.

Andrew Abramowich (604) 216-5500 www.austeville.com

Bayside Property Services Ltd.

Lynda Creamer (604) 432-7774 www.baysideproperty.com Beacon Hill Suites Ltd.

Tess Imhoff (250) 590-1775 Bill Henderson

Robert Kollen (604) 789-9600 Bolld Real Estate Management

Leo Chrenko (604) 671-0293 www.bolldpm.com Brightside Community Homes Foundation

Jan Robinson www.housingfoundation.ca CAPREIT

Cody Neal (604) 210-7257 www.capreit.net Century 21 In Town Realty

Klaus Rode (604) 760-5856

Tina Thygesen 604.948.3832 www.centurygroup.ca Laurie Weitzel (250) 427-7411

Rob MacPherson (778) 882-0211

Copper Ridge Court

Genny Sturhahn (604) 430-5624

Custom Realty Ltd.

Jolene Foreman (604) 916-6345 www.cpsreatly.ca Dexter PM

Kevin Skipworth (604) 689-8226 www.dexterpm.ca Dorset Realty Group Canada Ltd.

Ron Schuss 604-270-1711 ext. 111 www.dorsetrealty.com DPM Rental Management Ltd.

Jane Dennison (604) 982-7059

EasyRent Real Estate Services Ltd.

Sean Rafati (604) 662-3279

FirstService Residential

Judith Harris (604) 689-6975 www.fsresidential.com Green Door Property Management

Ben Green (250) 688-0362

Bruce Robinson (604) 541-5244 www.hughmckinnon.com Sally MacIntosh (604) 980-9304 www.humeinvestments.com Jeffrey Hayes (604) 220-5333

LI-CAR Management Group

Lita Powell (250) 785-2662

Macdonald Commercial R.E.S. Ltd.

T. Letvinchuk (604) 736-5611 www. macdonaldcommercial.com Maclab Properties Group Ltd.

Carola Espinoza (604) 939-0221

Macro Properties

www.macroproperties.com Imran Jivraj (416) 789-0858 Mainstreet Equity Corp.

Hanna Archutowska (604) 582-0131 www.mainst.biz

Maple Leaf Property Management Apartments

Dali Janic (604) 925-8215

Maxsave Real Estate Services

Linda Stacey (250) 562-6228

Metro Vancouver Housing Corporation

Stacey Hammond (604) 451-6504

GWL Realty Advisors

Murray Hill Developments Ltd.

Holywell Properties

Oakwood Property Management

Tarek Shoukry (604) 713-3162 www.gwlrealtyadvisors.com Adam Major (604) 885-3460 www.holywell.ca

Homelife Peninsula Property Management

Doug Holmes (604) 536-0220 www.penpm.com

Hope Street Management Corp.

Shamon Kureshi (403) 462-6200

Barry Wiedman (780) 488-0288 Carol Dobell (250) 704-4391

Pacific Quorum Properties Inc.

Lyn Stoll (604) 634-3039 www.pacificquorum.com Porte Realty Ltd.

Daniel Bar-Dayan (604) 732-7651 www.porte.ca

ASSOCIATE MEMBERS/CORPOR ATE SUPPLIERS - MAINLAND Prospero International Realty Inc.

Sutton Max Realty Property Management

Multifamily Real Estate Services Corporation

Cambie Roofing Contractors Ltd.

Raamco International Properties Canadian Ltd.

SwiftRent Team

RENOVATION & REPAIRS Remont Construction Ltd. Robert Szpakowski (604) 837-8813 www.remontconstruction.ca

Penfolds Roofing & Solar Jonathan Manca (604) 254-4663 www.penfoldroofing.com

Jeff Nightingale (604) 669-7733

Kimm Zbierski (201) 567-5991 www.raamco.ca

RE/MAX Management Solutions

Mark Shillington (250) 717-5010

Re/Max Sea to Sky Real Estate Ltd.

Shankar Raina (604) 932-2300

Wallis Lee (604) 726-5988 suttonmaxrealty.com Reza Khatami (604) 239-0911 www.swiftrent.ca TPM Properties

Debbie Hunt (250) 383-7663 Turner Meakin Management Company Ltd.

Stella Boiser (604) 736-7020

Real Property Management

Unique Real Estate Accommodations Inc.

Realstar Managemen

Valley Realty

Kap Hiroti (604) 678-4696

John Phipps (604) 970-2444 www.realstar.ca

REMAX Professional Rental Management

Richard Van (604) 273-6801 www.professionalrentals.ca Rize Alliance Properties Ltd.

Katherine Lui (604) 630-1636

Roboson Holdings Lt

Sarah Hill (604) 657-0069 www.rennie.com

Rowan Property Management Ltd.

Arthur Allan (250) 748-9090

Royal LePage Cascade Realty

Nina Ferentinos (604) 984-7368

Jennifer Lal (604) 755-4055 www.valleyrealtyabbotsford. com Vancouver Rental Group

Seva Roberts (604) 537-4399

David Mak (604) 436-1335 www.sunrealty.ca

Sutton Group - West Coast Realty

Cindy Hamel (604) 807-1105

John Jurinak (604) 872-2561 www.cambridgeplumbing.com Manna Plumbing Ltd.

RESTORATION Phoenix Restorations Ltd. John Wallis (604) 945-5371 www.phoenixrestorations.com

Sarah Liu (604) 648-1866 www.wesgroup.ca

REAL ESTATE SALES Cushman and Wakefield Phil Joubert (604) 608-5955 www.cushmanwakefield.com CBRE Limited

Goodman Commercial Inc.

Sunstar Realty Ltd.

Cambridge Plumbing Systems Ltd.

Wesgroup Properties

S.A.H. Properties Ltd.

Marianne Miller (778) 878-7304

RE-PIPING Brighter Mechanical Mike Pearson (604) 279-0901 www.brightermechanical.com

Chris Kobilke (604) 710-3908 www.mannaplumbing.com

Angela Thomaidis (416) 552-6144

Lance Coulson (604) 662-5141 www.cbre.ca

Salesforce Marketing Limited

RENTAL MARKET INFORMATION Cushman and Wakefield Phil Joubert (604) 608-5955 www.cushmanwakefield.com

Vertica

Anthony Boos (250) 719-5454

Leslie Pomeroy (604) 926-6947

Seth Baker (778) 235-9293 www.multifamily.ca

Mark Goodman 604.714.4790 www.goodmanreport.com Jones Lang LaSalle Real Estate Services Inc. (JLL)

David Venance 604-998-6054 www.jllmultifamilybc.com Macdonald Commercial R.E.S. Ltd.

Dan Schulz (778) 999-5758 www.bcapartmentinsider.com Marcus & Millichap

Maulen Kalau (604) 675-5240 www.marcusmillichap.com

Prostar Painting & Restorations Ltd.

Jonathan Moorhouse (604) 876-3305 www.prostarpainting.com Remdal Painting & Restoration Inc.

Dan Schmidt (604) 882-5155 www.remdal.com

ServiceMaster Restore of Vancouver

Sean Kennedy (604) 435-1220 www.svmvancouver.ca Superior Flood & Fire Restoration

Blaine Booth (604) 601-8206 www.superiorrestoration.ca ROOFING Bond Roofing Daniel Fajfar (604) 375-2100 www.bondroofing.ca

Paul Skujins (604) 916-9090 www.cambierooring.com

ROOFING MEMBRANES Penfolds Roofing & Solar Jonathan Manca (604) 254-4663 www.penfoldroofing.com SOFTWARE - PROPERTY MANAGEMENT Pendo Rental Software Inc. Josh Heppner (604) 306-5947 www.pen.do/partners/ landlordbc

WINDOW REPLACEMENT/ INSTALLATION/ RENOVATION A1 Windows Ltd. Rob Elliott (604) 777-8000 www.a1windows.ca Retro Teck Window Mfg. Ltd

Wilfred Prevot (604) 291-6751 www.retrowindow.com

WINDOW & DOOR MANUFACTURING Centra Windows Lana Gordin (604) 882-5010 www.centrawindows.com

Yardi Systems Inc.

Sam Jaishankar (888) 955-7900 www.yardi.com

SUPPLIES - HARDWARE Rona Inc. Brad LeGrow (604) 314-1366 www.rona.ca TAX PLANNING D&H Group LLP, CPAâ&#x20AC;&#x2122;s Michael Louie (604) 731-5881 www.dhgroup.ca UTILITIES/ NATURAL GAS Absolute Energy Inc. / Bluestream Energy Kirby Morrow (778) 340-1580 www.absolute-energy.ca FortisBC Energy Inc.

Chris Alionis (604) 592-7985 www.fortisbc.com

UTILITY SUB-METERING QMC James Easton (604) 526-5155 www.qmeters.com WASTE/ RECYCLING Waste Connections of Canada Inc. (Formerly Progressive Waste Solutions) Rob Barr (604) 834-7578 www. WasteConnectionsCanada. com

SUMMER 2019 | 29

THE KEY ASSOCIATE MEMBERS/CORPOR ATE SUPPLIERS - VANCOUVER ISLAND ADVERTISING & PROMOTION Places4Students.com Laurie Snure (866) 766-0767 www.Places4Students.com

CREDIT REPORTING AGENCY RentCheck Brenda Maxwell (800) 661-7312 Ext. 221 www.rentcheckcorp.com

APPLIANCE - RENTALS Coinamatic Canada Inc. Jack Ursaki (604) 813-7805 www.coinamatic.com

ELECTRICAL SERVICE Rushworth Electrical Services Inc. Dustin Rushworth (250) 361-1231 www.rushworthelectric.ca

APPLIANCE - SALES Rona Inc. Brad LeGrow (604) 314-1366 www.rona.ca APPLIANCE - SALES & SERVICE Coinamatic Canada Inc. Jack Ursaki (604) 813-7805 www.coinamatic.com APPLIANCE - SALES & SERVICE Trail Appliances Jamie Dosanjh (604) 992-7124 www.trailappliances.com APPLIANCE - SALES & SERVICE WestCoast Appliance Gallery Byron Loucks (250) 888-3799 www.westcoastappliance.ca BIOHAZARD REMEDIATION 1st Trauma Scene Clean Up Ltd. Brian Woronuik (604) 598-8887 www.traumascenecleanup.ca CLEANING - CARPET & UPHOLSTERY Island Carpet & Upholstery Inc. Ron Gould (250) 590-5060 www.islandcarpetcleaning.ca CLEANING - JANITORIAL SERVICES Select Janitorial Inc. Sherry Gruber (250) 360-0666 www.sjivic.com COMMUNICATIONS/ ENTERTAINMENT Telus Michelle Mydske (604) 230-2658 www.telus.com

30 | SUMMER 2019

ENERGY EFFICIENCY & CONSERVATION FRESCo Building Efficiency Jordan Fisher (250) 590-9440 www.frescoltd.com Yardi Systems Inc.

Sam Jaishankar (888) 955-7900 www.yardi.com

ENGINEERS FRESCo Building Efficiency Jordan Fisher (250) 590-9440 www.frescoltd.com Read Jones Christoffersen Ltd

Jason Guldin (250) 213-2520 www.rjc.ca

HEATING FUELS Columbia Fuels Dave Young (877) 500-4328 www.columbiafuels.com INSPECTIONS Canadian Tenant Inspection Services Ltd Jim Garnett (778) 846-9125 www.ctiservices.ca INSURANCE AC&D Insurance Services Ltd. Scott Jamieson (604) 982-1039 acd.insurebc.ca BFL Canada Insurance Services Inc.

Shirley Timmins (604) 669-9600 www.bflcanada.ca Capri CMW

R. Folkins (604) 294-3301 www.cmwinsurance.com

Megson Fitzpatrick Insurance Services

Mike Nichol (250) 519-2300 www.megsonfitzpatrick.com INTERNET LISTING SERVICES Yardi Systems Inc. Sam Jaishankar (888) 955-7900 www.yardi.com LEGAL SERVICES Haddock & Company C Grant Haddock (604) 983-6670 www.haddock-co.ca MEDIA MediaEdge Communications Dan Gnocato (604) 549-4521 www.mediaedge.ca MORTGAGE FINANCING First National Financial Corp Russ Syme (778) 327-5712 www.firstnational.ca MORTGAGE INSURANCE CMHC Robyn Adamache (604) 731-5733 www.cmhc.ca ONLINE PAYMENT SERVICE Yardi Systems Inc. Sam Jaishankar (888) 955-7900 www.yardi.com PIPE LINING/ RE-PIPING Victoria Drain Services Dave Lloyd (250) 818-1609 www.victoriadrains.com POWER WASHING Island Carpet & Upholstrey Cleaning Inc. Ron Gould (250) 590-5060 www.islandcarpetcleaning.ca PROPERTY MANAGEMENT Advanced Property Management Inc. Lorri Fugle (250) 338-2472 www.advancedpm.ca Brown Bros. Agencies Limited

Blane Fowler (250) 385-8771 www.brownbros.com

Complete Residential Property Management

Dennie Linkert (250) 370-7093

Concise Strata Management Services Inc.

Beth Kauwell (250) 754-4001 www.concisemgmt.com

Cornerstone Properties Ltd.

Jason Middleton (250) 475-2005

Countrywide Village Realty Ltd.

Tracey Forest (250) 749-6660 David Burr Ltd.

Cindy Lam (250) 384-9335 davidburr.com/ Devon Properties Ltd.

David Craig (250) 595-7000 www.devonprop.com

SOFTWARE - PROPERTY MANAGEMENT Pendo Rental Software Inc. Josh Heppner (604) 306-5947 www.pen.do/partners/ landlordbc/ Yardi Systems Inc.

Sam Jaishankar (888) 955-7900 www.yardi.com

SUPPLIES - HARDWARE Rona Inc. Brad LeGrow (604) 314-1366 www.rona.ca UTILITIES/ NATURAL GAS Absolute Energy Inc. / Bluestream Energy Kirby Morrow (778) 340-1580 www.absolute-energy.ca FortisBC Energy Inc.

Duttons & Co. Real Estate

Chris Alionis (604) 592-7985 www.fortisbc.com

Equitex Property Management

WASTE/ RECYCLING Waste Connections of Canada Inc. (Formerly Progressive Waste Solutions) Rob Barr (604) 834-7578 www.WasteConnectionsCanada. com

David Logan (250) 389-1011

Cynthia Blank (250) 386-6071 Kahl Realty Inc.

Jason Kahl (250) 391-8484 Meicor Realty Management Services Inc.

Laurie Sims (250) 338-9979

Pemberton Holmes Property Management

Claire Flewelling-Wyatt (250) 478-9141 Proline Management Ltd.

Kelly Whitney (250) 475-6440 www.prolinemanagement. com Raamco International Properties Canadian Ltd.

Kimm Zbierski (201) 567-5991 www.raamco.ca TPM Properties

Debbie Hunt (250) 383-7663 Widsten Property Management

Lindsay Widsten (250) 753-8200

A refreshingly simple way to manage your properties

Property management software for smaller portfolios Multifamily | Commercial | Mixed Portfolios

YardiBreeze.ca | 888.569.2734

NEW

UNDER CoNTRACT

Mountview Apartments 2182 West 39th Avenue, Vancouver

Nelson Plaza 1019 Bute Street, Vancouver

The Georgian 1554 George Street, White Rock

21-suite well-maintained apartment building.

16-suite West End apartment building with infill

17 suites. High-density development site or hold as

One block to Kerrisdale Park.

development potential. Corner lot.

rental building.

$12,980,000

Call for price

$8,125,000 SoLD

Geo-Ann Apartments 310 East 13th Avenue, Vancouver

Landsdowne House 1537 Burnaby Street, Vancouver

Walnut Court 8770 Selkirk Street, Vancouver

26-suite Mount Pleasant apartment building—

24 suites close to English Bay — currently

26-suite Marpole rental apartment building—

large corner lot only one block east of Main Street.

under renovation.

17,076 SF corner lot. Across from Ebisu Park.

$11,100,000

Call for price

Sold $8,400,000

SoLD

Rental Development Site 4750 Granville Street, Vancouver

Three Lane Manor 1935 Cypress Street, Vancouver

Dogwood Apartments 6831 Arcola Street, Burnaby

100’ × 175’ (17,500 SF)

10-suite apartment building in Kitsilano. Corner lot

13-suite South Burnaby apartment building.

Rezoning application submitted to city.

just off West 4th Avenue—5 blocks to Kits Beach.

3 blocks to Highgate Village shopping centre.

$5,900,000

Sold $4,995,000

$3,800,000

David Goodman Direct 604 714 4778 david@goodmanreport.com

Mark Goodman

Cynthia Jagger

Personal Real Estate Corporation

Direct 604 714 4790 mark@goodmanreport.com

Direct 604 912 9018 cynthia@goodmanreport.com

Goodman Commercial Inc. Office: 604 558 5511 560–2608 Granville Street Vancouver, BC V6H 3V3