Established in 1903, the Winnipeg Real Estate Board is the longest running Board in the country. This not-for-profit organization is a professional and industry association representing close to 1,300 real estate brokers, salespeople, appraisers and financial members active in the local real estate market. It exists to serve its members and to promote the benefits of organized real estate.
The Winnipeg Real Estate Board has earned a well-respected reputation among its peers throughout the country. Ultimately, through the Board’s continued and exemplary efforts to provide the best possible services to its members, the consumer is well served. Just last year alone, over 10,300 sales were transacted through our MLS® system with close to 900 million dollars worth of activity. Consider the other multiplier effects resulting from related services and dollars spent directly as a result of real estate transactions and you begin to appreciate the economic importance of our industry. There are also a considerable number of exclusive sales by REALTOR® members, and Commercial Listing Service (CLS™) sales and leases that are not included in our MLS® total.
First of all, we want to congratulate Mayor Murray for taking the initiative on this discussion paper and putting in place a tight time frame to finalize a comprehensive report. If we have learned anything in the last few years in this new age of Internet, the speed of change is lightning fast and no organization can sit idly by in a world economy that is becoming so intertwined and all pervasive on its impact on local economies. How we as a city position ourselves in a global context is crucial and building a consensus as to where we want to go as a community is just as critical.
Organizations like ours have often complained about the City of Winnipeg having a lack of focus or direction or a strong implementation plan to carry out a well-defined set of priorities. Hopefully, this budget consultation process will lead to a clear set of priorities for the Mayor and City Council to take Winnipeg over the next few years. The alternative of drifting in a sea of change without a rudder is not a pleasant thought.
To follow our own advice of prioritizing and focus, we have chosen to key on specific topics in the discussion paper that reflect on our priorities and are ones that our organization has some knowledge and expertise on. We certainly endorse the title of the discussion paper and believe property taxes must be brought under control and be competitive at least, if Winnipeg is to move forward and prosper in the 21st century. Whether we like it or not, our property taxes are now gaining a negative status similar to the other negative labels which have been attached to our City in recent years by the media across Canada. Investors avoid high tax governments and Winnipeg is seen in that light. Real or perceived, whether its property taxes alone or education levies and school taxes on the same statement; it really does not matter. Something has to be done about it and it has to be sooner than later. We cannot stress enough how stressing and urgent a problem this is!
In a property tax poll (see attached) conducted last summer by the Board, residents in the SE quadrant (eg., St. Vital, River Park South, Southdale, Island Lakes) of Winnipeg placed property taxes as the most important issue facing Winnipeg today. Health and crime were tied as being the second most important issue in this area but was well back in ranking. Interestingly enough, this area of the city is comprised of newer developments with younger, more mobile and higher income households. These are the same individuals and families our industry looks forward to doing future business with and are also the same ones the City of Winnipeg needs to attract and keep for the synergies they bring to the city and economy.
This same survey also revealed that overall respondents with household incomes $60,000 or more were more likely to zero in on property taxes as a key issue. These findings must be taken as a strong "wake up call to the City of Winnipeg." Something must be done by both levels of government to lower Winnipeg’s property tax burden and bring us more in line with other cities. The gap between Winnipeg’s property taxes and cities like Calgary is huge and that hurts Winnipeg’s and Manitoba’s ability to attract business and investment here.
The other important point that came out of this survey was that the majority of respondents, albeit a slim one, felt the Province should remove the education support tax levy from the city tax bill.
Our position with respect to property taxes and the education support levy is outlined in our 1998 position paper that is attached to this submission. Suffice to say, in this report, the Board calls for less reliance on property taxes as the main source of revenue and a shift to alternate sources of revenue. We support raising revenues from user fees on the condition that there is a corresponding reduction in property taxes. In no way should we be seeing new or higher user fees without a proportionate drop in property taxes! It also recommends the education support levy should be removed from our property tax bill. Ideally, we would like to see all school taxes removed from the property tax bill.
We would also like to see the City of Winnipeg seriously consider introducing the concept of a minimum and maximum property tax on residential properties so costs can be allocated more equitably. This will help reduce the number of higher end homes being built outside the perimeter for reasons of property tax savings.
In summary, we support the discussion paper’s objective of ensuring our level of taxation is competitive with other comparable cities. Let’s not fall into the trap where we dismiss cities like Calgary or Edmonton because they have had their capital debt paid off in previous years or have other sources of funding. The fact of the matter is we are competing with these cities to maintain the industries and jobs we have presently and to attract new ones. Just last week, it was announced Winnipeg’s Simmons mattress plant was closed down and that a number of the employees and production will be absorbed by the expansion of Simmon’s Calgary plant.
In specific reference to page 16 of the discussion paper, which addresses the provincial education support levy, we support the stated position to phase out the levy and end export of property tax revenues. As stated earlier, this item needs to be phased out now to bring Winnipeg more in line with other jurisdictions.
Prior to dealing with page 17 on assessment reform, which is another issue the Board makes comment on in its 1998 position paper, we would like to make a few points on the topics discussed from page 10 to 15.
In respect to labour cost containment, we agree there is a real opportunity for the City of Winnipeg to not only contain but also reduce salaries and benefit costs through attrition. One area we suggest you need to look at immediately is the cost of overtime in your operations. Can that not be reduced?
We encourage you to pursue alternative service delivery options more vigorously while emphasis on getting out of non-essential services or services which the alternate provider can deliver more cost efficiently. In identifying new candidates for ASD review, it is important you do a full cost accounting of your service delivery so a fair comparison can be made with an alternative service delivery.
Finally, with respect to the savings from the civic employees’ pension plan surpluses, we believe the windfall should go back to the taxpayer in the way of property tax reductions. One suggested way that is sustainable over many years is using the surplus to pay down the City’s exceptionally high and burdensome debt. The money saved from reduced interest payments on the debt should go directly to property tax relief.
With respect to assessment reform, we welcome the opportunity to serve on a task force to evaluate and recommend to Council changes to the assessment system. We made a submission to the assessment inquiry headed up by John Scurfield in 1996 and still think a number of the points we made then are valid today (see attached). In addition, a number of our members and the Board served on the 1998 reassessment advisory committees to provide valuable input to the city property assessment department and many Board members are participating again on the 2002 reassessment advisory committees.
Referring specifically to the points outlined under the proposed mandate of this task force, the Board offers these insights. First, surveying and evaluating progressive forms of assessment in other jurisdictions is worthwhile from a standpoint of accuracy, efficiency (e.g. cost of administration) and fairness. Can one assessment authority do the whole province as is done in British Columbia on a more current basis? Are some cities working hand in hand with organizations like ours to understand market value and apply it fairly?
This leads us to comment on the option of going with residential market value ranges in increments of $20,000. We believe this proposal is misguided at best. The move towards a range of market value assessment looks to us to be an attempt to fix the problems within the assessment department by diluting the process. The range of value is nothing more than an attempt to give the assessment department a lower bar to jump over. We believe the current market value system already allows for some range of plus or minus on assessed value. You will still invite challenges under the proposed range system from properties on the extreme edges of the ranges that are set up.
If we are still maintaining a fair assessment system where taxation is based on the value of your property, is it fair to lump someone with an $80,000 home with one at $100,000? Should someone with a property assessed at $100,500 pay considerably more than the one at $100,000 since we can only assume big ranges will also mean some significant differences in the level of taxation one range would pay over another. Also, this option does not offer the taxpayers of Winnipeg a better and more transparent way to assess their properties and hence determine what their property taxes should be. An important criterion of property assessment is fairness and it is left out of the equation under this range option. In short, we believe the range system will exchange one set of problems for another.
In terms of eliminating the business tax, we support that move in order to remain competitive with other cities. However, the recapture of this revenue lost by new business expansion and attracting new industries will not happen over night. If therefore an adjustment is needed in the mill rate, it should be on the commercial mill rate, not spread across the entire mill rate.
The Board supports the option to establish the value of commercial property for taxation purposes by determining an income stream, actual or projected. This is a long accepted appraisal method of determining value of commercial buildings and we were of the opinion that the Assessment Department is using the income method to determine value. This method should only be based on a net rental rate, not the gross rental rate. Incorporating property taxes and common costs into the income stream is by its very nature regressive and in fact a tax on taxes.
In respect to the housing tax credit program, which includes the designation of Housing Improvement Zones, something along this line, is necessary to restore inner city housing stock. The Board’s involvement and ongoing support of the Housing Opportunity Partnership or HOP as it is referred to is paying off dividends in Winnipeg’s West End. HOP is now beginning to ramp up its number of acquisitions and renovations. It has six properties alone on one block of Home Street. The primary goal of this housing initiative is to restore these dilapidated homes by completely refurbishing them and then sell them to first time homeowners who will take on the responsibility that comes with homeownership to maintain their newly renovated homes and encourage others in the neighbourhood to do the same.
A final point to note here is the Winnipeg Real Estate Board has set up a rent control committee to look into the effect rent control has had on real estate in Winnipeg. A number of our members go so far as to say rent controls have had a devastating effect on maintain our housing stock and the value of our commercial multi-family tax base. There was a strong initial sentiment to seeing rent controls removed. We will be glad to apprise you of our findings as we progress and share with you our final report which will be presented to the Provincial Government.
Our call on one-stop shopping for property and development is that the whole process must be much more transparent and understandable to the applicant. There should be a clear point of entry and easier access into the system. We propose more enablers if you will that could include designated city officials assigned to assist an applicant with their application and questions they may have. The idea of setting a number of neighbourhood storefronts in the proposed decentralization model appears to us to be a very expensive one that will end up duplicating services. More automation and Internet-based solutions should help in your two-way communication efforts without having set up a number of new physical entities.
Last but not least, we have attached for your benefit our recently completed report on mixed-use development for the downtown as well as our capital region submission that was made at last year’s hearings. They relate well to your discussion on page 33 through to 35.
The Winnipeg Real Estate Board thanks you for the opportunity to present its concerns and comments on your budget discussion paper. It looks forward to being involved in any further consultations and to seeing the final results of this consultation process.