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SOURCES: VANCOUVER SUN, INTERNATIONAL MONETARY FUND, WEALTHINSIGHT, FINTRAC Drugs will submit a proposal to the city later this year. A big incentive for develop- ers and landowners to convert empty commercial space into a community garden is the substantial tax break. "Proper- ties just aren't ready for develop- ment, and developers are seeing this as a way to lower cost," says tax consultant Paul Sullivan, a principal at Vancouver-based commercial real estate appraisal •rm Burgess Cawley Sullivan & Associates Ltd. The non-pro•t that created the Alma and 10th garden, Shifting Growth, manages seven temporary community gardens in the Lower Mainland, including one on Coquitlam's Burke Mountain. Each contract includes a removal clause so the garden can be cleared out within 30 days. No developer has had to take advantage of that clause, says executive direc- tor Chris Reid. More often there are delays as developers wait for permits, •nancing, construction or just ideal market timing. It's been a banner year for conversions to gardens and parks, according to City of Vancouver data. For the 2017 tax roll, 15 properties were converted from class 6, or com- mercial, to class 8—community garden or public park use. In a town that often blames developers for escalating prop- erty costs, a community garden is good public relations, Sullivan says. Rather than force the neighbours to endure a scrubby lot for years on end, the owner can make nice by o˜ering them something attractive—and useful. It also often takes two to three years, or longer, to obtain devel- opment and building permits, especially if rezoning is required. In the meantime, carrying costs, especially taxes, can be a strain for a smaller developer. But bigger players enjoy the tax break, too, notes Sullivan, who often recommends the land-use change to unnamed developer clients. He's •ghting to change tax legislation so empty properties slated for future resi- dential density are taxed at the even lower residential rate. It isn't just developers using the tax break; so do property owners who can't get permits to build or can't a˜ord the taxes or redevelopment costs. If a Vancouver property changes use from class 6 to class 8, the developer pays about one third of the taxes they'd otherwise owe, Sullivan explains. Environmental consulting •rm Hemmera, which helped create the Davie Village Com- munity Garden, told the Globe and Mail in 2011 that it saved the developer Prima Properties 70 per cent in taxes, amounting to $240,000 a year. Sullivan contends that with- out the temporary change of land use, homebuyers would have to absorb the hefty carrying costs of a higher tax rate. "When you tax density that's to be built as residential at commercial tax rates, and it takes two to •ve years to get a permit to build, you add $10,000 per unit to the cost, which then gets passed on to consumers," he says. "So this practice of taxing residential density at a commercial rate is not doing anybody any favours." Urban planner Andy Yan, director of the City Program at SFU, is one real estate expert who doesn't buy Sullivan's argu- ment, especially in a city where people pay $1,500 a square foot without blinking. "We are rewarding land hoarding and subsidizing it through these community gardens," Yan says. "We are losing tax money to subsidize this thing that looks good—and all we're getting in return are really expensive taxpayer-subsidized tomatoes. They are the most expensive tomatoes in North America." Those 15 Vancouver proper- ties converted from class 6 to class 8 in 2017 had an assessed value of $191.7 million, which meant $1.5 million in overall tax losses, according to the city's "Distribution of Property Tax Levy" report. Sullivan shrugs o˜ the nay- sayers. "Sure [developers] make money," he says. "But they also take a lot of risk." THEM'S THE BREAKS For Vancouver property owners, a garden or park on an empty lot equals big tax savings. Take this example of a 15,000-square- foot lot with a maximum floor space ratio (FSR) of 3, or 45,000 square feet, valued at $22.5 million. That's how many Canadian businesses are subject to reporting require- ments under federal laws against money laundering. They include banks, accounting •rms and the fast-growing •ntech industry, the main focus of companies in the emerging regulation technolo¢y sector—like Vancouver's Trulioo, whose identity veri•cation systems help businesses prove they aren't helping hide dirty money. But after Postmedia Network Inc. revealed that more than half of some 220 B.C. real estate compa- nies examined by the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC) from 2012 to 2016 didn't adequately report suspicious transactions, regtech may •nd a big new local market. "It's an interesting use case," says Trulioo GM Zac Cohen, a speaker at the Money Laundering in Canada forum, in Victoria from September 11 to 13. "If you are fully identi•ed, and we know who you are, it lessens the incentive to do something you shouldn't be doing." by Melissa Edwards Follow the Money NUMEROLOGY 31,000 SOURCE: BURGESS CAWLEY SULLIVAN & ASSOCIATES *LAND USE 2017 PROPERTY TAXES CL ASS 1 – RESIDENTIAL* $57,486 $279,663 $94,889 CL ASS 8 – RECRE ATIONAL / NON-PROFIT* CL ASS 6 – COMMERCIAL + OTHER * 16 BCBUSINESS SEPTEMBER 2017

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