Milton Bogoch, Executive Director of the Calgary Apartment Association
and Past President of the Canadian Federation of apartment Associations
spoke to the recent general membership meeting about the benefits of the
Federation. The following is the text of his speech, edited with
his pernission for length.
Owners and managers of residential rental are a quiet bunch. If they speak out, if anything goes wrong, they become a target. Three levels of government, the media, and the public zero in on them. And yet, despite their silence, owners of residential rental property are amongst the best citizens in Canada.
We have committed to Canada, our province, our city and our neighborhood.
If something goes wrong with a stock market investment we can pick up the
phone,
and that investment is gone with a few words. But if
anything goes wrong in the apartment business, we cannot pick up our
money and run. We live with our
decision, twenty four hours a day, seven days a week.
So we care about our political environment. We obviously care locally and provincially because Canadian owners and managers created some 18 local organizations to deal with local and provincial issues.
I am politically active, and I have heard repeatedly that "all politics" are local. That may be true, but it is also true that until 1995 there was no national organization to truly represent the interests of apartment owners and managers.
From confederation to 1995 there was no organization to
represent us. In particular, in the 60 years since Federal activism
in the housing industry began with the onset of WW II, nobody has legitimately
spoken for us. No one spoke for us throughout the major changes to
the marketplace wrought by the actions of CMHC. No one spoke during
the great tax changes of the 1970's. There was no one to speak when
the Canadian Radio and Telecommunications Commission began it's inroads
into our property rights, and nobody spoke for us when the GST took a permanent
bite of our gross revenue.
The conclusion, we needed a national organization. No single apartment association or individual can create the impact that a national organization creates. So we formed a new organization, the Canadian Federation of Apartment Associations. We now have 17 paid members representing more than 600,000 suites nation wide. We are the sole national voice of our industry.
For the first two years of the CFAXs existence we spent our time growing our membership and learning what we could from each other. Once we became larger and financially viable, it was time to seriously begin looking at federal political issues.
There were no shortage of problems.
So we began by focusing on two key issues, the federal tax treatment of rental property and the deregulation of telephone and cable TV ordered by the C.R.T.C. As an industry we are nearly 30 years late in dealing with the tax issue and at least five years late in dealing with the C.R.T.C. We are playing catch up with both. Additionally we are watching new issues develop, including a dangerous renewed interest in government involvement in rental housing.
Today I want to focus my remarks on the tax issue.
In our business we recognize the special tax problems that we alone have to suffer. They are a combination of:
- the inability to qualify as a "small business"
- the inability to qualify as an "active business"
- the loss of the tax-free rollover in the 1980's,
and
- the discriminatory GST practises that only
owners of rental property suffer.
Alarmed over the adverse affects these tax practises were having on our industry, Tex Enemark, Executive Director of the Rental Housing Council of BC approached the Hon. Paul Martin to outline his concerns. The Minister's response was a curt - "prove it".
Tex's reaction to the Minister's challenge was to do just that. He undertook to find a way to fund a serious research project to prove what we all know. Initially supported by the Greater Vancouver Apartment Owners Association, the CFAA approved the project it it's annual meeting in July 1998.
The CFAA commissioned Clayton Research Associates Ltd., a respected real estate research firm that specializes in housing issues in Canada. Clayton's research, contained in the report titled "The Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada" proved a direct connection between the changes in federal tax law since 1972 and the problems in the residential rental industry.
It proved that that there is a powerful reason behind conversions of rental to condominiums. It proved the tax reason for the locked in, unhappy aging owner. It proved serious tax discrimination against new residential rental construction. Implicit in the Clayton report is that if you hit an industry enough times over a twenty five year period, it will stop functioning properly.
In September 1998 the report was released at a press conference in the
Press Centre of the Ontario Legislature. At that time CFAA President
Philip Dewan
announced the reports findings to the media which resulted in substantive
stories in both the Globe and Mail and the National Post.
The next step was to present the reports findings to senior officials
at CMHC where we were well received.
CMHC were interested in our research because it led to conclusions
that the problem with rental housing in Canada was at the doorstep of the
federal, provincial
and municipal governments and not the private sector.
Officials at CMHC concluded that while we had made our point, further
research was needed.
Heartened by our visit to CMHC, we headed for a meeting with the Assistant Deputy Minister of Finance. An amazing discussion followed. While the Deputy Minister talked about perfection, clarity and unity of the tax system, we spoke about the painful results of the tax system, both for owners and tenants. We left this meeting disillusioned. Nevertheless it was clear that we were making arguments the rental housing industry had never advanced before.
After our discouraging meeting with Finance, we next went to Parliament Hill to appear before the House of Commons Finance Committee. Tex Enemark made an excellent case. We were questioned extensively by the committee members. We also met privately with the Leader of the Opposition.
It is clear however that much more work needs to be done to convince the Liberal Government and the civil service. Follow up meetings have been held with several Members of Parliament and with a Liberal Senator. Tex Enemark has met again with officials from both CMHC and Finance as well as with Paul Martin's executive assistant.
We believe this issue crosses party lines and we will continue to bring it to the attention of all national parties.
But there is much more work to be done. There is a growing wave of interest in homelessness in Canada. At the moment few people understand the connection between this growing problem and the govemment's poor housing tax policies. We will work hard to show that homelessness is part of a cruel tax regime that makes it more profitable to tear down older buildings than to repair them.
Of course, all of this has cost money, about $32,000.00 to date. We believe that to see the process through to conclusion will likely take about two more years and a further $30,000.00. To do so we need your financial support. To date we have received contributions both large and small from donors all across Canada. Today I am asking for your support. Will you please consider making a contribution to this most worthwhile CFAA program.
How many property managers does it take to change a light bulb? None. That is a tenant's responsibility.
How many property managers does it take to change Federal tax laws? Thousands of us. Please lend us your support.