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B.C. city eyes crackdown on ‘hotels’ taking advantage of farmland tax loophole

A home is pictured in Richmond, British Columbia on November 23, 2016. Richmond’s planning committee has voted unanimously to look into options for dealing with the issue by the end of January, after an investigation by The Globe and Mail that found farmland has been gobbled up by extremely large luxury homes, some used as hotels, despite being protected by the province’s Agricultural Land Reserve.

Ben Nelms/The Globe and Mail

A city in the heart of some of the most arable land in British Columbia has taken the first step toward preventing enormous houses from being erected on valuable agricultural land by investors and speculators, who enjoy a tax subsidy despite having no intention of farming.

Richmond's planning committee has voted unanimously to look into options for dealing with the issue by the end of January, after an investigation by The Globe and Mail that found farmland has been gobbled up by extremely large luxury homes, some used as hotels, despite being protected by the province's Agricultural Land Reserve. At the same time, the owners of those properties exploit tax exemptions designed to allow farmers to pay very little property tax.

Councillor Harold Steves said he expects whatever Richmond comes up with will spread across the region.

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Read more: On B.C.'s farmland, mega-mansions and speculators reap the rewards of lucrative tax breaks

Read more: Richmond, B.C. looks to address megahomes built on farmland

Gary Mason: B.C. tax loopholes turn farming into foreign investing

"If Richmond does it, everyone will do it," Mr. Steves, a farmer, said on Wednesday.

"The chances are very good that we will bring a bylaw in. Now the whole world is aware of how bad [the issue] is, with the bad press the city is getting because of it. It started with The Globe."

The Globe and Mail analyzed 122 properties located in Richmond farmland, most in the Agricultural Land Reserve, that changed hands between last August, 2015, and July of this year. Speculators and investors were behind at least 73 – almost 60 per cent – of the purchases.

The provincial government has already promised to address the property-tax exemptions to ensure they are not exploited by investors. If that happens, it would be the latest in a series of measures aimed at cooling the region's real estate market and protecting it from speculators, most notably a tax on foreign buyers in the Vancouver region.

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In Richmond, municipal staff will now review options for controlling the size of houses on farmland and report back by the end of January. Mr. Steves said the report, due with a relatively tight deadline, will set off a process of review and debate that will end with a bylaw that could go to a council vote early in 2017.

Mr. Steves brought the motion to the planning committee, which voted on Tuesday. He said the unanimous support from the council committee reflects the public's appetite for change.

"That's the message there," Mr. Steves said.

Councillor Carol Day said the situation is "out of control," though she acknowledged any new rules the city introduces will not be retroactively applied.

"Once something has been decided and approved, you can't go back and say, 'Well. I unapprove it.' We'd be setting ourselves up for a lawsuit. All we can do is move forward."

A handful of municipalities in the region, including Delta and Port Coquitlam, have already passed bylaws restricting house sizes on farmland, but Richmond's mayor has said previous attempts to introduce similar rules weren't met with broad support. Mayor Malcolm Brodie has suggested the B.C. government should implement provincewide rules, but the province says it's a municipal issue.

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Chanel Hsu is described online as the host for a 4,000-square-foot home at 11171 Granville Avenue in Richmond that is classified as a farm. That means the owner has maintained farm class status by submitting receipts for the 1.3 acre farm showing income of at least $10,000 a year. (Farms over 2 acres only need to earn $2,500.)

But, as Ms. Hsu noted in an interview this week, the six-bedroom home also provides accommodation to up to 18 visitors with bedding, cleaning supplies and air conditioning provided. In an interview, Ms. Hsu said the property was "booked up" in the summer, and has also been busy now, in winter.

There's an $888 deposit for access to the property and prices range between $439 and $796 per night, according to a website promoting the enterprise.

She said there is a blueberry farm at the back of the property, and "customers" can pick the crop. "This is [a] free service, since I want them to have fun," said Ms. Hsu.

She also said apples, pears and other plants naturally grow there.

Ms. Hsu said she was not worried about a crackdown by the City of Richmond. "I am not worried as long as I follow the laws," Ms. Hsu said.

Ted Townsend, director of corporate communications and marketing for the City of Richmond, said there is no business licence on record for the property.

"Bylaws have received no prior complaints on this property, but we will be investigating," he wrote in a statement.

With reports from Kathy Tomlinson and Xiao Xu

Editor's Note: An earlier version of this article incorrectly said a farm with a hotel is 3.5 acres. In fact, it is less than two acres. This version has been corrected.

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About the Author
B.C. reporter

Ian Bailey is a Vancouver-based reporter for The Globe and Mail.  He covers politics and general news. Prior to arriving at The Globe and Mail, he reported from Toronto and St. John’s for The Canadian Press.  He has also covered British Columbia for CP, The National Post and The Province. More


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