© COLCO: Coalition of Leaky Condo Owners - www.myleakycondo.com
AN OVERVIEW ANALYSIS OF THE DIRECT AND INDIRECT ECONOMIC IMPACT OF THE
LEAKY CONDO DISASTER ON BRITISH COLUMBIA.
We are frequently asked why all taxpayers should "bail out" leaky condo
owners. The problem with this question is that it assumes that everyone
isn't already paying for the disaster. This is a false assumption.
Everyone is already paying for the disaster and we are going to pay
far more for it than direct 100% compensation to leaky condo owners.
The Barrett Commission estimated that total direct repair costs will amount
to $1 billion. The Barrett Commission also noted that the leaky condo
disaster has caused and will continue to cause substantial direct and indirect
costs on the BC economy. While the direct costs may run $1
Billion, the cumulative direct and attributable indirect costs will
be $3 Billion at a minimum. Does it make economic sense to pay $3
Billion over a long period of time when $1 Billion could immediately solve
disaster and end the suffering of Western Canadians?
We derived the following items from various sources about the direct
and indirect impact on the British Columbia economy.
1. The more than $1 Billion in direct repair costs has and will continue
to reduce the disposable income of leaky condo owners. This is $1
Billion dollars that is going to a very small portion of the BC economy
and not going out to the broader economy.
This loss of disposable income will shake consumer confidence for years.
This loss of disposable income means that these leaky condo owners are
not purchasing new furniture, new appliances, or upgrading their homes.
British Columbia was the only region in North America where appliance sales
decreased in 2000.
This loss of retail revenue causes lost jobs, business failures, and bankruptcy.
2. The loss of confidence in the BC Condo market has also destroyed
the confidence of consumers who are not purchasing condos.
This loss of confidence means that people who are not purchasing new condos
are not purchasing furniture and other major purchases for their new homes.
3. New home construction was the second largest industry in British
When running at full capacity, the residential construction industry generated
more than $10 Billion in economic activity and $2.4 Billion in wages and
Housing starts in 1994 were 45,000 - in 2000 it was below 14,000.
This translates into $1 Billion in lost income tax revenues
This translates into lost property tax revenues for municipalities.
4. Property values have decreased on leaky condos.
Municipalities have to make up the revenue losses from other sources. The
municipalities must collect $X and it is divided among all property owners.
The share is spread around based on dollar value of your property (s).
If owners of leaky home's values are depressed (reduced assessments), mille
rates must be increased. As a result other property owners will bear the
majority of revenue not collected from the depressed values of 'leaky homes".
5. Bankruptcies are soaring. Thousands of families are
being forced out of their homes and into financial ruin.
It costs CMHC, on average, $65,000 for each leaky condo bankruptcy
but the average leaky condo repair is $23,000. Does it make sense
to pay nearly three times more and forcing a leaky condo owner into bankruptcy?
Taxpayers are already paying an estimated $600 million in legal costs alone
Bankruptcy hurts in many ways -
The soaked homeowner forced into bankruptcy loses their good credit rating
for 7 years. This limits their ability to buy a vehicle, purchase a home,
or start a business. In some cases it means loss of employment. Creditors
lose monies that are owed to them. The stress of bankruptcy often causes
families to break up
6. Litigation costs are soaring.
The litigation costs alone are expected to exceed direct compensation costs.
Why should we pay lawyers in place of leaky condo victims?
The already overloaded court system is being inundated with leaky condo
Municipalities are being sued and have to settle cases out of court to
avoid going to court.
7. The Health and Social Services costs are massive.
An already overburdened Health Care system will have to deal with the physical
and emotional problems caused by the leaky condo disaster.
The social costs of our most vulnerable citizens (seniors, people with
disabilities, low income earners) forced into financial ruin or bankruptcy
who are no longer able to provide a standard of living must look to the
tax payer funded social system for relief.
Toxic Mould will cause long-term health problems in thousands of leaky
Depression and suicides are becoming a common problem among leaky condo
The stress on families from living in leaky condos and leaving leaky condos,
from bankruptcies, and other personal indignities, will cost Social Services
an estimated $250 million.