Just the tip of the iceberg

Opinion

One of the benefits of following the news closely is that it enables you to see connections that may not be readily apparent by reading just one report. Those connections often contribute to a more complete understanding of an issue.

A report in Wednesday’s Sun revealed that increased demand for hotel rooms in the city has caused rates to soar. While the multi-week stay of wildfire evacuees, along with the presence of those working on refurbishment of the Koch fertilizer plant, were identified as key factors behind the spike in demand, a spokesperson for the Manitoba Hotel Association pointed to higher property taxes, utility expenses and financing costs as reasons for the rise in rates.

It was also reported on Wednesday that some Brandon University students are having difficulty finding rental accommodations due to high rents and few options. The report indicated that the rental vacancy rate in the city was just 1.5 per cent last year, the lowest since 2018, and the situation appears to have worsened since then. That may explain why some students are facing monthly prices of $1,500 and higher — far higher than last year’s average rent of $1,055.

Also in Wednesday’s Sun, the City of Brandon published an advertisement that listed the properties scheduled to be auctioned off for unpaid property taxes. The list is among the longest I have seen in many years. To be on that list, properties must be in tax default for three years. The amount owed in each case is in the thousands of dollars.

On Thursday, it was reported that Maple Leaf Foods has finalized its spinoff of Canada Packers Inc., and that the pork processing plant in Brandon has become part of the new company. Dennis Organ, the president and CEO of Canada Packers, told the Sun that his company plans to “unleash” the pork business and add more staff at its Brandon plant, which has already bolstered its workforce over the past year.

Finally, it was also reported this week that the minimum wage in Manitoba rose by 20 cents on Oct. 1, and now stands at $16 per hour. Some business groups have complained that the hike will cause higher labour costs, but labour groups argue the hike does not keep pace with the cost of living.

If you take a moment to digest all that news, some “connecting points” should be apparent. For starters, the rise in demand for hotel rooms has caused higher rates, fuelling the perception that Brandon hoteliers are either gouging their customers or there is an urgent need for more hotels in the city.

Neither suggestion makes sense in the long run, given that this summer’s demand may not be repeated in future years. There is no guarantee that wildfire evacuees will be coming to the city next year, and it is unlikely that Koch will be carrying out another major refurbishment with so many workers for the next several years. Without that unusual demand, another room shortage appears unlikely.

Lower demand may help to keep hotel rates down, but we can’t ignore the reality that hoteliers’ costs are rising. Property taxes and water bills have risen for Brandon homeowners, but imagine how much they have risen for hotels. Those increased costs, along with higher labour costs because of the minimum wage hike, will be passed onto hotel guests, in the form of higher room rates.

A similar challenge exists with respect to rental accommodations in Brandon. There is obvious demand for more apartments in the city, but construction costs have soared and so have ongoing costs such as maintenance, staff, property taxes, water, natural gas and electricity.

Landlords can’t be expected to voluntarily lose money. Nor can they be expected to build new rental housing units if the rents they are able to charge in this market won’t cover their costs.

With one of the lowest average wages in Western Canada, Brandon has reached the point where a growing number of its residents are unable to pay rents that many landlords would have to charge in order break even, let alone turn a small profit. That largely explains the shortage of rental properties and high rents.

This is a serious problem for those seeking rental accommodations, but the situation will only worsen with the addition of even more low-wage workers. It will also increase pressure on our understaffed health-care system and overcrowded education system.

With respect to the long list of properties scheduled for tax sale, that is a clear signal of the financial pressure that many home and business owners are now experiencing, and it may be just the tip of the economic iceberg.

Just as there is a limit as to how much landlords and hotel owners can charge in our low-wage city, there is also a limit as to how high property taxes and utility rates can climb before residents can no longer afford to pay those bills. The growing tax sale list may be a sign that many more Brandonites are approaching that limit.

If that is the case, don’t be surprised if the list of properties up for auction is even longer next year.

What does all of this news tell us? It means that the city has painted itself into a corner. Our understaffed health-care system can’t keep pace with our growing population. We have increasing demand for rental housing, yet landlords can’t afford to build more apartments and many residents can’t afford the rent.

This is a serious problem that threatens the long-term viability of Brandon, and will be difficult to solve. Given that reality, it is surprising that few, if any, of our leaders are discussing it, let alone taking steps to fix it.

Doing nothing — or worse, waiting for somebody else to solve the problem — won’t work. We need to acknowledge the problem exists and start finding solutions quickly. The future of our city and many of its residents depends on it.