The fifth in a series by John Whistler:
One of the prime reasons for a fixed link to the Sunshine Coast is the perceived economic benefits. While resource development has potential, the ability to achieve this benefit is questionable as it will be subject to satisfactory arrangements with the local First Nations. There would also likely be some economic benefits for tourism and other businesses associated with increased automobile access.
Clearly, the most significant economic benefit would be to real estate. So what is the potential scale of this benefit?
The census notes that there were 16,498 residences in the Sunshine Coast Regional District (SCRD) in 2011 (Powell River Regional District not included). The July 2014 MLS Benchmark dwelling price for the SCRD was $353,900. This gives a ball-park estimate of $5.8 billion for the total value of residential real estate in the SCRD.
If it is assumed that a fixed link, over a period of 10 years, will cause an increase in property values of 50 percent and will stimulate construction of an additional 50 percent more residences, the potential benefit would be $7.25 billion in additional real estate value.
One question that may not be asked enough: Is it desirable to increase property values by 50 percent and to stimulate a 50 percent increase in residences?
This would depend who you are. It is clearly a benefit for property owners and developers. It may not be a benefit to existing residents who do not own property and are struggling with housing affordability.
A high number of residences are second homes or recreational properties – 22 percent in the SCRD compared to the BC average of 9 percent. Increasing the stock of recreational homes is unlikely to benefit existing renters who are negatively impacted by low vacancy rates.
My nephews are a good example of who may lose out. They grew up in Sechelt and are now in their twenties. They have found work locally in the trades – work that is important to support increasing the housing stock and for resource development. This career choice excludes them from the Metro Vancouver real estate market. Today, it is possible for them to buy real estate in their home town, though a stretch financially. They would be priced out with a 50 percent increase that could occur from a fixed link.
Another question: If real estate will be the significant economic benefit from a fixed link, how would it be paid for?
One option would be a surcharge to the Property Purchase Tax, similar to the recent surcharge implemented in Metro Vancouver for foreign buyers. This would directly target the increased values generated from the fixed link.
Another option would be a regional development cost levy. This would directly target new developments that are stimulated from the fixed link.
A regional PST surcharge could be a possibility and would capture the materials associated with new developments. Unfortunately, because of the complexities of BC’s PST regime, this option would likely create a bureaucratic nightmare and unintended consequences.
Tolling is a frequently discussed option. The BC Government is silent on this issue as it would apply to the Sunshine Coast. Given the current government strategy to only toll new highway infrastructure that has a no-cost alternative, this option is a wild card.
Of course, there is the historical precedent used throughout BC’s colourful history of highway building, to pay for it from general revenues.
Regardless of the financing option(s) that will be used, it is unexpected that this project will be subject to a local referendum. Christy Clark has made it clear: referendums are for public transit projects only.