Victoria Adams

STRs another Fairytale from Fantasyland

Pamela Roth’s article on Victoria’s short-term rentals dilemma presents a balanced view of this controversial topic; however, it fails to consider why STRs appear to be exacerbating the housing crisis in every major city around the globe.

The Context for our Tale

The new internet-based, unregulated ‘sharing-economy’ business model lies at the heart of the issue. Few governments have been able to exercise their regulatory control or taxation authority over this online lodging-booking platform. The massive expansion of the deregulated global economy over the past two decades, proliferation of off-shore tax free-safe havens, and the rampant growth of investment in a highly speculative asset class such as real estate, has concentrated wealth in fewer and fewer hands; this has eliminated the possibility of earning the decent living required to put a roof over one’s head without assuming intolerable debt levels.

Before Airbnb, (the premier “online marketplace and hospitality service” established in 2008), all bed-and-breakfast operators in the City of Victoria were required to obtain a commercial business license to operate as a lodging supplier; and, to pay appropriate taxes as hoteliers do. The disruptive digital technology home-sharing enterprise said their business model was simply an intermediary tool to link property owners willing to rent unused space to guests interested in alternative, if not cheaper accommodations, than those provided by hotels. At the crux of their argument is this: data on host properties and transactions is confidential information which cannot be shared with any regulatory agency. Consequently, if said authorities wish to exercise control over the home-sharing economy, they must assume the costs of regulating and monitoring the property owners and housing units listed.

The convergence of a new technology offers the means to book temporary use of a room or a home offered by property owners to guests at a suitable price; this, together with the rapid growth of new high-end condos downtown, serves the interests of developers who sell the units as income-generators. And, prospective owners stand to benefit, especially those who seek a financial investment property and part-time personal use. To suggest that Council , who approved the downtown development permits over the past decade, were unaware that the new units were being used for this purpose, is at best a red-herring. Or, perhaps just another excuse, like the Johnson Street Bridge fiasco, to remind everyone of their incompetence.

Victoria’s Spin on the Home-Sharing Tale

For several years, senior city staff and Council have refused to obtain STR data by any credible third-party monitoring service. In fact, they’ve relied on a brief, cursory real estate development report by Vancouver-based Coriolis Consulting Corp. suggesting that STRs were an inconsequential factor in the housing market. These same parties had nothing to say about the City’s 3,450 unoccupied dwelling units which, according to the 2016 Census, were likely used on a short-term accommodation basis, and comprised 7% of the city’s total housing stock. No wonder one of Union Building condo owners was dismayed at the sight of “a wall of black windows…altering the structure of the City”.

This was done to justify doing nothing to assess the potential negative impact on housing from other non-homesharing downtown condo owners, hotel operators, or renters who comprise 60 per cent of the City’s households—in a City with a near zero vacancy rate. Unlike many other cities facing STR regulatory issues, Victoria ignored the problem, and did not bother to conduct any extensive community-engagement surveys, public workshops, etc.

 All this took place while two Council members and the Mayor recused themselves from Council discussions to consider the matter, or listen to concerned citizens speak to the issue of noise and security concerns in buildings where STRs were operating. While few Councilors addressed these matters in public, the Mayor had no difficulty speaking as a panel member and featured speaker in a real estate investment network meeting held in early 2017 to promote real estate investment in the City, particularly short-term rental properties.

There is no level playing field in this City when property ownership determines the entitlements and benefits in the real estate game – be it corporate or individual owners; while tenants simply don’t count. Almost 80% of the STR units are for entire residences; and more than half of all listings are operated by multi-unit commercial operators. These are from the much media-hyped, social-enterprise fairytale that was being spun about a Fernwood single-mother using her spare bedroom as a mortgage helper.

There are more than 3,339 lodging units in the Inner Harbour and downtown area (Catalyst Consulting, July, 2017). When you add in the estimated 1,500 short-term rental listings to the mix, this means STRs represent 31 per cent of the total accommodation sector, whereas they comprise only 14 per cent of the total rental units in Victoria.

Last year, 16,661 purpose-built rental apartments existed in this City, 361 more than in 2016 (CMHC Fall 2017 Market Rental Report). Currently 12,693 condo units exist in the City, 140 more than in 2016—most of the stock built over the past 15 years. The same CMHC report reveals that 25.6 per cent of the condo stock, or 3,253 units, are in a rental pool. What the report does not indicate is what proportion of these housing units are rented on a short-term versus a long-term basis.

Judging from the presentations to Council by some higher-end lodging operators, there is a growing market for temporary accommodation: executives; contract employees; consultants working on major projects in the City; health care professionals on locums; foreign students; families awaiting completion of new home construction or renovations; respite care individuals, and winter snow-birds. Competition between diverse and expanding housing accommodation-user groups, favours the higher-profitability short-term guests over long-term tenants—many of whom are city workers, students, and modest-income retirees.

Little exists to suggest that the City is serious about addressing the growing displacement of thousands of long-term tenant population; this, due to costly renovations, demolitions and replacement with condos, or the conversion of older hotel properties into owner-occupied units or high-end rentals. The City’s own Market Rental Revitalization Study is already earmarking 10,000 aging purpose-built rental units (more than 35 per cent of the City’s rental housing stock) for potential demolition or costly energy and seismic upgrades. Who will benefit from these renovated or replaced housing units? Visitors willing to pay premium short-term rental rates? Or long-term residents in need of affordable accommodation?

Who Benefits from this Fairytale?

Question—why is Council turning homes into micro-enterprise hotels, rather than providing much needed accommodation for those who live and work in this City?  Answer?— for developers, real estate investors, financial institutions, and building contractors who stand to reap the lion’s share of the booty from the booming housing economy, in which STRs play a starring role.

Taxpayers are about to spend $500,000 a year to monitor about 800 short-term rental property owners and hosts who want the right to conduct business untaxed, without regard for neighbours, or the health, well-being and sustainability of the City in which they live and do business. Are these citizens entitled to more than their fair share of the pie? Should we support and subsidize their home-occupation business?

Or, are we just the unwitting recipients of the so-called “unintended consequences” of elected officials and senior staff who will be long gone when the irreparable and harmful impacts of these ill-conceived plans and measures are felt by us all?

“Semper Liber”, (Latin for “always free”), may be the motto of our royal fairytale city, but the proverbial “free lunch” is available only to those who own a piece of property in this island paradise of privilege.

Panis Angelicus 

Gene Miller’s New Year’s article – “Panis Angelicus – poses a question: Could Victoria be a civilizational lifeboat in these crazy, conflict-prone times?” Miller suggests that St. Thomas Aquinas, author of “Panis Angelicus” (Angel’s Bread), puts forward the notion that the answer to the proverbial question, ‘Why?’ is ‘God.’ Perhaps Miller should have added that the secular world’s answer to the same question comes from economist Adam Smith, for whom the invisible hand guiding all things is ‘The Market.’

Mr. Miller suggests that what defines, describes, and sets Victoria apart from other places he has inhabited is its “genius for inertia”. It would appear that Mr. Miller, a long-time supporter of the current Mayor, has been wearing his rose-coloured glasses far too long.

While Miller, an ex-pat American, offers a modest criticism of the star-spangled celebrity TV personality in the White House, he paints an altogether different fantasyland picture of B.C.’s capital city. Perhaps in reference to Victoria’s imperial legacy, he calls the City as a “commonwealth”, a place where “all is shared,” where “we champion community” and “nurture social belonging.” 

But, “a civilizational lifeboat?”  “Social belonging?”

Anyone on minimum wage who struggles to pay soaring rents or save for a down-payment on an unaffordable home would be hard-pressed to agree that we all share weal and woe in the same boat. Victoria now boasts of being a “world-class” City; home to a new multi-million dollar mega-yacht marina to which we do not belong. Victoria is a paradise of privilege for a growing population of affluent citizens and tourists. Our municipal government and its processes are but a fig-leaf to justify the power, status and wealth that rules this City. Plundering the public treasury is part of the game, as is carving up the cake in ever larger portions to those deemed “worthy,” while those who are vulnerable without a home are expelled to fend for themselves on streets, in parks, or in unticketed cars.

The fundamental question is what really matters. What are the measures of a healthy, just, and sustainable place to live? Does this City have a heart, or a moral compass?  Before adopting Mr. Miller’s chaste slogan as the city’s motto: ‘Victoria, Where You Belong,’ we citizens should take a long look in the mirror—at ourselves and our City.

We live in a country of abundant resources and talents. We have the means to address even the most difficult matters before us. Facing issues squarely, with an open, honest, and fair mind, means relying on courage and compassion to admit shortcomings and errors, to right what may be wrong, to reconcile past injustices, and embrace fully our differences. It is not easy and there are no quick fixes. This is our dilemma as much as our destiny as human beings.

Are we Victorians prepared to say and to do what is necessary? Are we prepared to make sacrifices, provide support and care to everyone and a place to call home? This is the gift we can give not only ourselves but to succeeding generations who rely on us to bequeath them our City as a healthier, more vibrant, and sustainable place we can all inhabit. In this way, Victoria will become, ‘where you belong.’