The Vancouver Business Thread

[fredinno]

Originally Posted by whatnext

No more corprate welfare! The industry did just fine without the NDP or BC Liberals extending credits.

Apparently not...?

Originally Posted by jlousa

Couldn't agree more, the government needs to get out of the market of picking winners and subsidizing any company. Lower taxes to all companies and let them fight on an even playing field. These tax cuts are as bad as NFL owners playing cities against each other to get new stadiums. We need the WTO to ban this practice globally otherwise no jurisdiction wants to give them up because someone somewhere will.

Well, unless the WTO can ban governments from setting their own tax rates...

I mean, we have lower tax rates on small businesses, should we increase taxes to put them on a 'fair playing field'?

[LeftCoaster]

Originally Posted by jlousa

Couldn't agree more, the government needs to get out of the market of picking winners and subsidizing any company. Lower taxes to all companies and let them fight on an even playing field. These tax cuts are as bad as NFL owners playing cities against each other to get new stadiums. We need the WTO to ban this practice globally otherwise no jurisdiction wants to give them up because someone somewhere will.

But therein lies the problem, were in a race to the bottom and if we don't do it we WILL lose those jobs. Look at what happened to BCs music industry following Ontario's tax credits that BC did not match.

[misher]

Originally Posted by LeftCoaster

But therein lies the problem, were in a race to the bottom and if we don't do it we WILL lose those jobs. Look at what happened to BCs music industry following Ontario's tax credits that BC did not match.

Pretty much. We're small players and we can't dictate policy. We can stay on our high horses and pretend we're better than everyone else as the economy burns around us or we can get down and dirty and play the game everyone else plays.

[Migrant_Coconut]

Originally Posted by misher

Pretty much. We're small players and we can't dictate policy. We can stay on our high horses and pretend we're better than everyone else as the economy burns around us or we can get down and dirty and play the game everyone else plays.

There's a limit though. These are supposed to be incentives, not bribes.

I say we stay the course until we get to a point where we don't need tax breaks, and studios just flock here by default because that's where the money is.

[fredinno]

Originally Posted by Migrant_Coconut

There's a limit though. These are supposed to be incentives, not bribes.

I say we stay the course until we get to a point where we don't need tax breaks, and studios just flock here by default because that's where the money is.

Even California has incentives for the entertainment industry, though.

[mezzanine]

WRT digital/film subsidies I agree that BC should hold the line or it will be a straight run for the bottom.

The govt "picking winners" is highly risky but I can see good bets (eg. funding research into building taller wood-based buildings) but film work and especially digital work is increasingly commoditized and highly mobile, and these companies will move in a heartbeat if they can get a tiny tax break in another jurisdiction.

If anything the value of the Canadian dollar would be the biggest factor for digital work coming to BC and our proximity to los angeles a big plus in our column. And just making Vancouver/BC a nicer place to live would also be a big draw. Vancouver did not offer Amazon any incentives for HQ2 yet many of those jobs are coming here.

But the most notable Canadian study on the issue has never been publicly released and is rarely discussed. The Ontario government’s Ministry of Finance conducted a detailed review of the issue in 2011, delivering a sharply negative verdict on the benefits associated with spending hundreds of millions of dollars each year in tax credits. It recommended eliminating a 25 per cent tax credit for foreign and non-certified domestic productions that would have saved $155 million per year.

A copy of the presentation to cabinet, obtained under the Freedom of Information Act, identifies at least four major problems with the provincial film and television tax credit approach.

First, rather than encouraging increased spending, government subsidies represent the majority of financing for film and television production. In 2010, tax credits, grants, and other public funding mechanisms subsidized approximately 60 per cent of all Ontario-based film and television production spending. Moreover, the corporations that claim tax credits pay no tax at all, with the total value of the tax credits being 6 times greater than the total tax income of domestic claimants.

Second, the sector is becoming more dependent on government support. In 1998, film tax credit expenditures constituted six per cent of production costs. Ten years later, there were fewer productions in Ontario, but the film tax credit expenditures were responsible for 30 per cent of the costs.

Third, the mounting government expenditures might be justified if it resulted in the creation of long-term high paying jobs. However, the Ontario government study found that film sector wages were below the provincial average and that many of those jobs were temporary, project-based ones.

Fourth, evidence suggests that other factors beyond tax incentives play a key role in determining the location of production activity. For example, the Ontario experience over the past two decades shows that foreign production is typically highest when the Canadian dollar is low relative to the U.S. dollar.

http://www.michaelgeist.ca/2015/04/race-...its-for-film-and-tv-production-dont-pay/

[whatnext]

Another tale of businesses being pushed out of Vancouver by high costs, this time focusing on automotive service. Despite what planners would have you believe, the city still has plenty of autos and those need repairs. Sad to see the diversity of jobs leaving this town:

Vancouver’s independent garages disappearing amid skyrocketing industrial land prices
Six auto repair shops from Cambie to Kingsway are going under, or moving elsewhere

At 60, Chang’s livelihood now hangs in the balance. His repair shop, H U Automotive, closed in late March after 29 years at Cambie and 17th. Chang’s building was sold in late January and his lease wasn’t renewed. The subsequent redevelopment is pushing Chang out and casting six employees adrift.

Chang has given himself a year to find another location in the neighbourhood. A life-long Vancouverite, he wants to stay near Cambie or Main to remain close to his clientele.

Chang estimates he’ll lose more than $100,000 as that year-long countdown progresses. His eyes well up when asked what happens if a new location isn’t found.

“I’ll have to do something else. I’m not ready to retire yet — I’d like to keep going for a little while longer,” Chang said. “Right now, I’m losing a lot of money. I don’t have anywhere to store all the hoists and equipment so I’m practically giving it away very cheap.”

The situation Chang faces isn’t unique. In a two-week span, the Courier learned of five other automotive shops that are being forced to move or close altogether. Most of the shops are independent and have been neighbourhood fixtures on Cambie, Main and Kingsway for decades.

One constant binds them all together: Vancouver’s industrial land base is disappearing rapidly and being sold for ungodly sums of money...

https://www.vancourier.com/news/vancouve...keting-industrial-land-prices-1.23789264

[retro_orange]

One of the comments made a good analogy of how small businesses are taxed on property in vancouver:

It would be like CRA saying to a new graduate from University "well you are only making $70k a year but you have the potential to make $200k so we will tax you on that. "

Vancouver staff: Don't shift property taxes from business owners to homeowners

Some advocates who had been calling for the two-per-cent shift to give some tax relief to small businesses are blasting the report by City of Vancouver staff to council.

Joanne Lee-Young
Updated: April 23, 2019



Vacant store fronts are now a common site

Small business owners in Vancouver, and those who have been mourning the loss of beloved bakeries, bars and dry cleaners unable to keep up with rising property tax bills, have been hoping for some relief.

In December, city council voted to explore shifting two per cent of property taxes from commercial to residential owners. It would be a way of supporting local retailers, mom-and-pop businesses who have seen their costs go up by double-digit percentages, mainly due to rising land values.

But now, council will hear a staff recommendation against making the shift, in part because of the greater burden some homeowners face from the province’s tax on more expensive homes that are over $3 million in value.

“Implementation (of this new, provincial ‘additional school tax’) … would add (around) $100.7 million to the overall tax levy for the residential property class,” read an April 8 report from the city’s director of finance.

“This represents a 30-per-cent increase in the (existing) provincial school tax and 12 per cent to the overall tax levy for residential properties, a significant year-over-year increase in 2019.”

The report to council also concludes that a “blanket two per cent shift from commercial to residential (owners) does not effectively target the (around) 21 per cent of commercial properties impacted by assessment volatility arising from development potential.”

It said these 3,000 or so commercial properties would be better served if there was a way to hive off their “development potential” from their “existing use” value calculations, and then use a “split assessment” to set a lower rate. There is an effort underway to establish this by a working group that includes various provincial ministries and municipalities.

Currently, the strain comes from commercial properties being taxed on “their highest and best use” or the maximum development that zoning will allow on a piece of land.

Some advocates who had been calling for the two-per-cent shift blasted the report.

“Seven per cent of (commercial) properties pay 45 per cent of the (property) tax bill,” said Paul Sullivan, a senior partner at Burgess, Cawley, Sullivan and Associates, who has consulted with the City of Vancouver on property tax issues. “In my opinion, you don’t need to go beyond that thought.”

He said there has not been a tax shift from commercial to residential owners since 2012.

He added that “we have a growth rate ratio of 28 to 1. We build 28 residential properties for every one commercial. You are never going to convince me that that’s reasonable.”

City “staff have a built-in bias against business,” said Sullivan, echoing others who have noted that people elect government officials, whereas businesses do not.

He said that in December 2018 when Coun. Rebecca Bligh brought a motion for the city to ask the province to repeal the new tax on homes over $3 million, “businesses were there and they backed (her) because we knew when it comes time to shift this levy, this would be a problem.”

“It’s disappointing that staff aren’t proposing measures to shift taxes from small businesses and small property owners in the hot spot under-developed areas outlined by the city,” said Amy Robinson, executive director of LOCO BC, which supports local businesses. “I’m concerned that the current range of policies, options and programs underway at the City are inadequate to meet the intensity of pressure on small businesses.”

https://vancouversun.com/business/commer...taxes-from-business-owners-to-homeowners

[fredinno]

Originally Posted by retro_orange

One of the comments made a good analogy of how small businesses are taxed on property in vancouver: https://vancouversun.com/business/commer...taxes-from-business-owners-to-homeowners

I'm going to just post this here again: https://en.wikipedia.org/wiki/Land_value_tax

There are significant benefits to taxing based off land value, which basically revolve around this very effect small business are experiencing (incentivised redevelopment). Maybe they should also campaign for homeowners' land to be upzoned as well. Unfortunately, this is not the City, and businesses don't have a vote in municipal elections.

[whatnext]

Originally Posted by jollyburger

Well they said it was down $108 million last year. They've also made several huge capital infusions to finance the project last year.

https://bc.ctvnews.ca/parq-vancouver-reports-losses-of-108m-so-far-in-2018-1.4187498

Come back money launderers!

Parq Vancouver risks payment default within a year, says S&P

...For Parq, one of the province’s largest-ever private developments, the clampdown came at a delicate time. The plan was to replace costly construction financing with cheaper debt after opening but business picked up slower than expected amid the new restrictions. It lost nearly C$153 million ($114 million) in 2018, according to a March 28 Dundee filing. Now Parq’s in a race to refinance debt in order to make an interest payment this week on a second-lien loan, according to S&P Global Ratings.

Loan Payment

Parq Holdings LP has a $150 million second-lien term-loan that was arranged by a syndicate of financial institutions led by Credit Suisse Securities in 2014, according to data compiled by Bloomberg. The amount of interest isn’t disclosed, but Parq had deferred an interest payment by one month to April 30 and its ability to pay hinges on the company refinancing its debt, S&P said earlier this month when it downgraded Parq Holdings LP to CCC, eight notches below investment grade, from B-...

https://www.bloomberg.com/news/articles/...irty-money-crackdown?srnd=premium-canada

[misher]

Originally Posted by whatnext

Come back money launderers!

Parq Vancouver risks payment default within a year, says S&P

...For Parq, one of the province’s largest-ever private developments, the clampdown came at a delicate time. The plan was to replace costly construction financing with cheaper debt after opening but business picked up slower than expected amid the new restrictions. It lost nearly C$153 million ($114 million) in 2018, according to a March 28 Dundee filing. Now Parq’s in a race to refinance debt in order to make an interest payment this week on a second-lien loan, according to S&P Global Ratings.

Loan Payment

Parq Holdings LP has a $150 million second-lien term-loan that was arranged by a syndicate of financial institutions led by Credit Suisse Securities in 2014, according to data compiled by Bloomberg. The amount of interest isn’t disclosed, but Parq had deferred an interest payment by one month to April 30 and its ability to pay hinges on the company refinancing its debt, S&P said earlier this month when it downgraded Parq Holdings LP to CCC, eight notches below investment grade, from B-...

https://www.bloomberg.com/news/articles/...irty-money-crackdown?srnd=premium-canada

According to the NDP’s report there’s not that many so it’s likely just regular customers annoyed at the regulations and big spenders who don’t want to be wrongfully accused.

In January 2018, the government-owned British Columbia Lottery Corp., responsible for managing casinos in the province, hastily implemented new measures requiring gamblers to provide a bank receipt on the source of funds for any buy-ins amounting to C$10,000 or more within a 24-hour period. It also hired Ernst & Young to audit three years of transactions at River Rock but concluded in February that "there was no systemic pattern of money-laundering activity."

[whatnext]

Vancouver City Coucnil voted to give business owners a 2% break on taxes and shift more of the tax burden to residents. This is good, it brings us in line with most other jurisdictions.

https://www.vancourier.com/news/vancouve...k-to-business-property-owners-1.23806814

[GlassCity]

I don't live in Vancouver so I don't care either way, but interesting that it was against staff recommendations.

[SpongeG]

Vancouver's Hootsuite lays off workers
By Tyler Orton | April 30, 2019

What happened: Vancouver-based Hootsuite Inc. is laying off an undisclosed number of workers

Why it matters: The local tech darling has been the centre of speculation over an initial public offering for years

A workforce shakeup is afoot at Hootsuite Inc. after the Vancouver-based tech company confirmed it’s laying off workers.

The company specializing in social media management would not disclose the number of workers or which of its global offices were facing cuts.


“Today Hootsuite communicated organizational changes in order to drive greater alignment with our growing company’s strategic priorities that best serve our customers,” the company said in an April 30 email to Business in Vancouver.

...

https://biv.com/article/2019/04/vancouve...78NsepYIAPZ0OengrcmNSiX_2sjuMkkx8PNKdQvU

[queetz@home]

^^ THe more things change, the more they remain the same...

And good on CoV for shifting the 2% tax from homeowners to business! Its about bloody time the CoV stop using business as their favourite whipping boy! Frankly it is the city staff that keep on picking on businesses that should be laid off, not those Hootsuite people...

[jollyburger]

Reports are 10% of the staff so over 100 jobs.

[fredinno]

Originally Posted by whatnext

Vancouver City Coucnil voted to give business owners a 2% break on taxes and shift more of the tax burden to residents. This is good, it brings us in line with most other jurisdictions.

https://www.vancourier.com/news/vancouve...k-to-business-property-owners-1.23806814

The Greens supported this?

[SpongeG]

someone tweeted that the city just gave walmart a tax break with this move. I think she was a green councillor. I can't find the tweet now.

[officedweller]

Originally Posted by SpongeG

someone tweeted that the city just gave walmart a tax break with this move. I think she was a green councillor. I can't find the tweet now.

Stupid comment. I saw that on TV too.
The complaint is that it benefits all businesses equally, even those that are not small businesses.
But bigger businesses and chain stores still bear a similar tax load (i.e. it's proportional to square footage)
- look at all the chain stores that fled Robson Street.

[fredinno]

Originally Posted by officedweller

Stupid comment. I saw that on TV too.
The complaint is that it benefits all businesses equally, even those that are not small businesses.
But bigger businesses and chain stores still bear a similar tax load (i.e. it's proportional to square footage)
- look at all the chain stores that fled Robson Street.

Robson St. was never upzoned, though.
also:

Stupid comment.