Finding the right precedent to follow and knowing which ones are flawed.
Chris
Nov 21, 2019
Last month I discussed my participation in a review process of short-term accommodations (STAs) in the municipality of Northern Bruce Peninsula (NBP). The verdict is still out on NBP as the review process moves to Phase 4 of the milestones. In this phase Council holds an “Update Meeting”; consultants draft a “Recommendations Report” using input accumulated during a “Public Workshop” (which yours truly attended and participated in); complete a “Final Summary Report”.
At the public workshop held in August, worried owners complained about disturbances (previously addressed as not being a valid argument considering that these disturbances cannot be exclusively blamed on short-term rental guests) to much sympathy but little compromise from home-sharing owners. It certainly falls short as being evidence for the need to regulate how owners use their properties for residential purposes. That public workshop also encouraged responsible homeowners to speak up about the ludicrous suggestion that they were all raking in so much dough that they could afford a licensing fee or additional taxes.
In addition to my response (Part I) to the Bruce Peninsula Press’s opinion column written by the Publisher of the paper, I found another rebuttal I found to be an engaging read. The link to that response can be found at the end of this article. I am happy to see I was not the only reader who found the original op-ed to be disingenuous.
This rebuttal discussed how ‘village myths’ fueled the attack on STAs in NBP and highlighted some reality about the area including: how the initiative to review STAs sprouted from receiving a minuscule number of filed complaints over a two year period, the amount of taxpayer funds required to cover the consultants working on the review (and the redundancy that threatens to encourage), how NBP is vastly different from some of the other communities that have opted into Ontario’s suggestions for regulating STA markets, and other corrections about misinterpreted statements used in the original Bruce Peninsula Press opinion article.
The Government of Ontario states within their “Housing Action Plan” a focus on finding new housing opportunities including repurposing existing housing to fit the demand of long-term renters and to drive down rental costs. Part of their action is to take homes that are being used for STAs and convert them to long-term rentals by placing burdens on the property owner and regulate how they use their own private property.
Are the properties currently being used as STAs really the ideal long-term rental property? To my knowledge, it is the condominium units and boutique-style homes in big city centers attracting tourists to stay. In rural Ontario, it is lakefront cottages and seasonal log cabins. As stated by Ontario in the Housing Supply Action Plan, “Large homes and tiny condos only work for some people. We need a mix of housing types – such as multiplexes, low- and mid-rise apartments – and sizes, like condos that are large enough for families.” Therefore, shouldn’t the focus be on building economical, modest homes and apartments?
I encourage you to review the Home Sharing Guide for Ontario Municipalities for yourself to witness the suggestions that the province recommends for municipalities in terms of licensing, regulation, and tax collection, as well as which municipalities in Ontario (or Canada) are currently implementing such policies. Consider the differences between the Municipality of Northern Bruce Peninsula, and these regulated municipalities like The Blue Mountains, Niagara-on-the-Lake, Vancouver and Toronto and why implementing similar regulations may be short-sighted.
Even so, I am following the appeal process undertaken by landlords in Toronto, as reported in a recent Toronto Star article, Provincial Tribunal Upholds Toronto Bylaws for Airbnb, Other Short-Term Rentals. The group of Toronto landlords argued that renting is “just like any residential use of a home” and I concur this has merit. A short-term renter would not be performing any activities within the rented space that any other “owner” wouldn’t participate in. Though the appeal was lost, it did stall the implementation of zoning bylaw amendments which were to take effect in January 2018 including:
1) STAs prohibited outside of a landlord’s principal residence
2) Maximum 180 nights per year for an entire house or apartment (you may rent up to 3 bedrooms year-round)
3) Basement apartments prohibited for STA use by the homeowner (but approved for the permanent resident)
4) Rental platforms like Airbnb, Expedia and Kijiji would be responsible for a one-time license application fee of $5,000 plus $1 for each night booked through the company
5) Plans to enforce bylaw that requires landlords to register rentals with the city for a fee of $50 plus a 4% Municipal Accommodation Tax (MAT) on rentals less than 28 days
So, where does a “Municipal Accommodation Tax” go? This tax was implemented in April 2018 pending the enactment of the short-term rental by-law – perfect, we created a tax in preparation for this control tactic to be approved. Toronto claims a portion will go to Tourism Toronto (because I am sure Tourism Toronto can’t get ahead with their earnings on overpriced hotels, sports games, stage shows and restaurants) as well as support program and services utilized by tourists such as Road Repair, Transit, Police, EMS, Economic Development, Culture, and Parks & Recreation.
The MAT tax will be charged equally to large chain hotels, as they are to private property owners who operate STAs for vacationers and mobile workers. Not everyone will be subject to this four-percent penalty; multiple exceptions exist as is found on the City of Toronto’s website explaining the usage, collection and other information about MAT. The list of exemptions is here:
- Summer camps
- Hotel and motels used by the City or its agents for shelter accommodation purposes
- Condo guest suites or rooms
- Tents or trailer sites supplied by a campground, tourist camp or trailer park
- Any accommodation purchased by a person or entity listed in s. 268 of City of Toronto Act, 2006
The Crown (every agency of the Crown)
Every board as defined in subsection 1 (1) of the Education Act (any District School Board or school authority)
Every university in Ontario and every College of Applied Arts and Technology and post-secondary institution in Ontario, whether or not it is affiliated with a University
Every hospital maintained under Minister of Health and Long-Term Care under Public Hospitals Act and Private Hospitals Act (or Oversight of Facilities and Devices Act)
Every long-term care home
Such other persons and entities as may be prescribed
In addition to having to pay this newly created tax, the government will double dip and charge you HST which is payable on the MAT portion of a customer’s invoice. Get used to being taxed on tax, Canada!
In the case of Toronto, if the landlords do not request a review of the decision from the Associate Chair of the LPAT (Local Planning Appeal Tribunal) or appeal to the Divisional Court within 30 days, the above regulations could take effect in the next couple of months. Worse, this could become precedent for other municipalities in the province.
In response to the appeal by landlords, LPAT adjudicator said the regulations “represent a reasonable balancing… ensuring housing is provided for residents, that a full range of housing is available including STAs, and that the business and tourism economies are supported.” Translation: You can rent your home out short-term, but we better get a cut! Mayor John Tory praised the decision and also suggested the outcome is a “balance” between home sharers and the Toronto housing market. These new regulations, when they are launched, have the potential to return 3,000-5,000 of the 21,000 Airbnbs to the long-term rental market.
What right does the government have to tell you how to rent out your (personal) investment property? Are investors (even of the small variety, perhaps owning only a second property for rental purposes and to supplement income or provide a future for heirs) not fiscally coherent to know how best to make the most of their property (long-term or short-term, how to keep it maintained, how much to charge)? What has government ever achieved better, more efficient, or with more innovation than the private sector or people taking a risk with their own hard-earned money, as opposed to governments taking a risk with taxpayer owned finances?
Are they blaming a housing issue on capitalism as opposed to looking at the many of factors why people cannot afford homes in the city of Toronto? If the demand was not there for short-term rentals, these owners would not rent out their properties that way. If the market was overly competitive, many of these STAs would opt for long-term renting in order to not be left with unused inventory (empty units).
We should not be surprised that Toronto has approved regulations that coincide with an additional tax revenue stream. The Municipality of Toronto is arguably one of the most over-populated government bodies filled with representatives looking for the next ‘gravy train’ (to put it in the words of Doug Ford).
Under Mayor Rob Ford, the cost of government was reduced by making government smaller and being more transparent about spending by councilors, committees, and managers. Since 2016, John Tory’s City Budget has increased each year, currently at $13.47B for the 2019 period (2020 budget to be finalized in December). Perhaps the implementation of additional taxes will help pay for the added spending in Tory’s budget, any appeals to this tax grab silenced by his sunshine list friends on the LPAT.
Who are the Local Planning Appeal Tribunal?
Under the Ministry of the Attorney General, this independent administrative tribunal hears applications and appeals on municipal and planning matters. These matters can include zoning bylaws, subdivision plans, official plans, consents, and minor variances under the Planning Act, land compensation matters under the Expropriations Act, and objections to municipal proposals to borrow to finance capital works under the Municipal Act and other legislation. The Lieutenant Governor in Council determines the number of members, makes appointments to the tribunal and designates the chair and vice-chairs positions which have no maximum term. A Member earns just shy of $111K, a Vice-Chair just shy of $137K and an Associate Chair just shy of $175K annually, plus benefits and work-related expenses.
Large government = large spending = large control of your tax dollars to pay for that spending.
A potential appeal by a company or an individual homeowner would be considered, “unreasonable, selfish, and a detriment to the public interest” according to a pro-regulation coalition of advocates, community groups, academics, and hoteliers that are involved in the appeal process. Shocking! That hoteliers would have something to contribute to an overhaul of an entrepreneurial industry in home sharing that successfully competes with traditional hotels on both cost and experience. LPAT suggests that people can still rent out a room short-term or offer rentals longer than 28 days in consolation, so don’t worry folks… they have your back!
Silver lining for those in the Bruce can be found in LPAT’s finding that nuisance complaints were insufficient to prove STAs come with issues of noise, parking, and garbage and therefore I move for NBP Council to cease using this argument in the review on our own municipality for the many reasons I have exhausted herein and previously.
Following in the footsteps of the City of Toronto is not how I envision residents of Northern Bruce Peninsula mimicking their legislation after. We are not Toronto. Our tourism is not like Toronto, our communities are nothing like Toronto, and our economic innovation should stem from what makes Northern Bruce Peninsula a special place to visit and an even better place to live. I would suggest Council learns from the conflict and heartache felt in Toronto. The Municipality of Toronto has proven an inability to provide affordable housing solutions and instead want to put that burden on the backs of private entrepreneurial citizens who choose to provide a tourism service, not a housing service.
To the City of Toronto: take responsibility for the effect of large government, red tape, and costly procedures and salaries, and do your job to develop a solution that meets the needs of the long-term housing market in Toronto which has been failing since before the insurgence of the short-term rental and tourism market.
To the Municipality of Northern Bruce Peninsula: Do not take example from Toronto, that neither has proved to demonstrate appropriate action on housing nor reflects the values and priorities of a rural gem like Northern Bruce Peninsula.
Bruce Peninsula Press, Opinion Letter: Short Term Rentals (STRs) and Village Myths
Ontario Housing Supply Action Plan
Toronto Star: Provincial Tribunal Upholds Toronto Bylaws for Airbnb, Other Short-Term Rentals
Municipal Accommodation Tax (City of Toronto)
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