This week City Council will consider a Notice of Motion from Councillor Shane Keating for a study to create new zones for secondary suites and mandatory suites registration process, with a $1,000 fee every two years.
Calgarians for Secondary Suites supports reform that would make it less onerous for homeowners to build safe and regulated secondary suites. We oppose Councillor Keating’s motion because it fails to address the suites bottleneck at Council and it would make the complex secondary suites process even more difficult and dramatically more expensive for many homeowners.
If Council can’t approve secondary suites city-wide, then we call for a plebiscite on this issue in the 2017 municipal election.
The Motion is a Massive New Tax on Homeowners
The new Motion (signed by Cllr. Keating, Cllr. Chu, Cllr. Magliocca, Cllr. Jones, Cllr. Pincott, Cllr. Carra, Cllr. Demong and Mayor Nenshi) proposes a mandatory registration program for all legal secondary suites, with a registration fee of $1,000, subject to renewal every two years. If a homeowner lives in the same house as the suite, then he or she would be eligible for a $1,000 rebate. If a legal suite is not registered it would be subject to a penalty. The City would likely need a new bureaucracy to manage the registrations, fees, rebates and penalties.
In these tough economic times, thousands of Calgarians have lost their jobs and many are struggling to pay their mortgages. Secondary suites provide a market-driven solution to increase affordable housing and to provide a new source of income to homeowners. Cllr. Keating's Motion would result in a massive increased tax burden for any homeowner subject to the fee.
We crunched the numbers and the mandatory housing tax of $1,000 would be equivalent to a 28% tax hike, based on the median tax rate(1). We expect that no Councillor would support such an enormous take hike for Calgarians who are struggling through a bad economy.
The Motion Discriminates Against Homeowners with Income Properties
The Motion discriminates between homeowners who live in the house with the suite and those who do not. This discrimination would lead to absurd results:
If a homeowner rents an entire house there is no fee, registration requirement or potential penalty from the City;
If a homeowner rents out the same house with two suites he or she must register both suites bi-annually and pay $10,000 in fees to the City over 10 years; and
If the homeowner rents one suite in the same house and lives in the other unit, he or she must register the suite, pay the $1,000 fee but is entitled to a rebate at some time.
Cllr. Keating has provided no evidence that the City has the authority to discriminate against non-resident homeowners with an extraordinary 28% tax increase. This discrimination and red tape would likely only encourage more illegal suites.
The Motion Splits Communities With No Consultation
Cllr. Keating drew lines on a map based on “major roadways and physical boundaries” to establish a zone where basement suites are permitted and a second zone where suites are discretionary (requiring City staff approval). Calgarians for Secondary Suites supports increasing areas with legal secondary suites and ultimately city-wide legalization.
A major deficiency in Keating’s proposed zones is that they split neighbourhoods in two based on arbitrary boundaries. Unlike the previous proposal for legal secondary suites in Wards 7, 8, 9 and 11, there has been little to no engagement with the affected Councillors or communities.
The Motion Fails to Actually Address the Suites Bottleneck at Council
Every month, hours of City Council meetings are wasted considering individual secondary suite applications, one by one. Even if Cllr. Keating’s zones were in place, large swaths of the City would still require an onerous application process including in-person presentation at Council. Not only that, more than 85% of new suite applications have been outside of the proposed zones. The hours Council spends wastefully reviewing individual secondary suite applications would continue largely unchanged even if this new Motion were passed.
Of the 26 secondary suite applications brought before Council on April 11, 2016, none were located in the proposed Zone 1 (permitted zone) and only four were located within the proposed Zone 2 (discretionary zone).
UPDATE: Of the 18 secondary suite applications brought before Council on July 4, 2016, none were located in the proposed Zone 1 (permitted zone) and only two were located within the proposed Zone 2 (discretionary zone). See the embedded Google maps at the bottom of this page for more detail.
An increase in extended Council meetings have been costing taxpayers $10,000 per meeting in overtime pay for administration. Only city-wide reform can address this massive waste of Council's time.
It’s time for a Plebiscite on City-Wide Secondary Suites
Calgary City Council wastes hours debating individual suite applications each month and commissioning study after study, instead of permitting secondary suites in all residential neighbourhoods like all other major Canadian cities(2). There is strong community support, massive support from businesses and polling to support secondary suites city-wide. If City Council can’t affect this reform, Calgarians for Secondary Suites supports a separate Notice of Motion calling for a plebiscite on city-wide secondary suites in conjunction with the 2017 municipal election.
(1) Median Tax 2016 $1,780.32
Bi-annual secondary suite registration fee $1,000
New annual effective median tax rate (annualized = $500 / year) $2,280.32 (+28%)
- New effective median tax rate (fee years) $2,780.32 (+56%)
(2) All other major Canadian municipalities permit secondary suites in all residential neighbourhoods, including: Toronto, Ottawa, Montreal, Edmonton, Vancouver and Red Deer.