Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 442

Three quick and unrelated things for today's post:

1.

A handful of years ago, before the pandemic, Bullpen Consulting , Slate Asset Management , and AD HOC STUDIO started a somewhat irregular basketball meetup for Toronto's development industry called City Builder Ball. It, of course, fell off the rails during the pandemic, but as of this month we are officially back at it! We played over the weekend and I can't tell you how much fun it was to run around a gym for an hour and play basketball very poorly -- so much fun. The next meetup will be in January and if you'd like to join, drop Ben Myers of Bullpen an email to get on the mailing list. It is open to all.

2.

A few months ago I wrote about a passion project that I am working on with a friend, called Unlyst. The idea is to see if there is a way to leverage the " wisdom of crowds " to determine the current market value of housing. And the way it works is that we feature a home on the website, people (or the crowd) get 14 days to input what they think it's worth, and then we come up with something we are calling an "unlysted value." There's a lot of evidence of this sort of thing working exceptionally well for other markets, so we're very curious to see if it can work for housing. If you're interested in contributing your home and/or just seeing how it works, check out unlyst.com .

3.

World Cup Finals. What a game! A huge congratulations to Argentina and, of course, Messi. I should, however, come clean and say that I know virtually nothing about football, I don't know why the field is so big, and that my overall impression of the game used to be mostly consistent with this Simpsons' take (albeit with more sensationalized flopping by men with faux hawks). But since Canada qualified this year, I felt it was my duty to watch -- at least some bits and until we got eliminated. And since the finals are the finals, and since I have an open crush on France, I figured this would also be a good game to watch. Turns out I was right. And now, I am fairly certain that it has turned me into a true fan -- or at the very least a "I could watch a finals game every 4 years" kind of fan. Who knew that soccer, I mean football, could be so thrilling?

Photo by  Florian Wehde  on  Unsplash

"On some level, we’re [Toronto] still trying to be a Victorian city." -- Peter Clewes

It is not an exaggeration to say that Peter Clewes, of architects-Alliance , is one of the most important architects working in Toronto today. Over the last two decades, Toronto has built a lot of new condominiums and Peter's firm has been behind many of them.

I mean, I currently live in a building designed by architects-Alliance. My mom lives in a building designed by architects-Alliance. And the first condominium I ever lived in around 2005 or so, was naturally also designed by architects-Alliance.

Peter's work is everywhere. And it has been instrumental in helping to define this new Toronto. But what is this new Toronto? It's hard to say really.

Toronto may have built a lot of new things and added a lot of new people over the last two decades, but it has done so almost begrudgingly and without the confidence to say, "we are building this way because this is the kind of global city we want to become."

I think Peter gets a lot right in this excellent interview with Azure about Toronto, condominiums, and city building. Despite everything that has changed, on some level, we are still trying to be a Victorian city.

Of course, we are no longer that city. It's long gone. Time to think much bigger.

Photo by  Dillon Kydd  on  Unsplash

If you're looking to pass a new ordinance and/or create a new tax, it's important to have the right name. Take, for example, Los Angeles' new "mansion tax." The majority of people do not have a so-called "mansion." And so signaling to people that you're going to tax this thing and then redistribute the funds to help others with better housing is, not surprisingly, attractive to many. Here's how the new tax works:

Known as  Measure ULA  — for “United to House LA” — the ordinance marketed as a “mansion tax” will impose a 4% tax on property sales above $5 million, rising to 5.5% on sales above $10 million. So a $5-million sale would include a $200,000 tax, and a $10-million sale would include a $550,000 tax, which is typically paid by the seller.

Of course, if you're a rich person with a mansion, your first thought is going to be, "how do I avoid having to pay this?" Here are two unproven and possibly illegal options that I am not condoning in any way:

For example, if a homeowner is selling a mansion for $15 million, they’d be slapped with a $825,000 tax bill. But if they split up the property into three parts owned by three different entities and sold all three pieces for $4.999 million each, they would hypothetically elude the tax since it only kicks in at $5 million.

Another strategy might be to hatch deals off the books to keep a sale under $5 million. For example, if a seller wanted $7 million for their house, they could reach a deal with a buyer to sell it for $4.999 million, thus avoiding the tax, but then sell the furniture in the home for $2 million.

I don't have a mansion, so I'm fortunate enough not to have to worry about such things. But I do think about the impact on things like new rental supply. My understanding of the ordinance is that if you're a developer of rental housing, and you buy a lot for $4.99 million, build a mid-market apartment, and then turn around and sell it to a pension fund for $10.01 million, you would be subject to this new tax.

Hmm. I wouldn't call this a mansion.