With nearly half of city residents losing work, Vancouver could face insolvency: mayor

Mayor warns of economic impacts of COVID-19 The mayor of Vancouver has revealed the extent of the economic impact of COVID-19 on the city. He’s warning the city could face insolvency.

Vancouver — The mayor of Vancouver says he's deeply concerned that the city could face insolvency, after a survey of residents showed that nearly half of all homeowners may not be able to pay their mortgages in May.

Kennedy Stewart is repeating his call for the province to immediately give financial help to the city -- a call echoed by other B.C. municipalities -- to stave off that possibility.

An online survey shows that nearly half of city residents -- 46 per cent -- have lost their job or are working much less, meaning their income has dropped. A quarter of residents surveyed said their income had significantly decreased.

The survey showed 68 per cent of homeowners were able to pay their full mortgage in April, and 55 per cent say they will be able to make a full payment in May.

When it comes to renters, 70 per cent said they could make a full rent payment in April, and 63 per cent said they would be able to pay their full rent amount in May.

Those figures point to the possibility of a widespread default on property taxes, Stewart said, which is a key funding source for city coffers.

B.C. municipalities are not legally allowed to run a deficit: according to the Local Government Act and the Vancouver Charter, local governments can’t run a budget deficit without special approval from voters or from the province.

"The only way we can stay afloat is with the help of the federal and provincial governments," Stewart said. "Otherwise, local governments will be forced to take drastic measures that will hurt residents and businesses and significantly slow any post-pandemic economic recovery.”

Earlier this week, a report to Vancouver City Council made a grim tally of the estimated total cost in three separate scenarios.

In the first scenario, the physical distancing restrictions are lifted and everything is able to open by May 31. In that case, the city would lose $61 million.

In a scenario where restrictions are not lifted until August, the city would be hit with a loss of $111 million.

And if restrictions are not lifted until December, that amount rises to $189 million.

But Stewart said the extent of job loss and financial losses are pointing to a potentially much larger number.

"If 25 per cent of homeowners do end up defaulting on their property taxes, we could shed up to an additional $325 million in revenues," he said. "Losing more than half-a-billion dollars in operating funds in 2020 would devastate the City's financial position, forcing us to liquefy assets and exhaust every reserve fund we have -- just to avoid insolvency."

Vancouver Mayor Kennedy Stewart asked the province for $200 million dollars on Wednesday.

The online survey was conducted by Research Co. between April 9 and April 10, 2020. The results for employed residents are based on a sample of 421 Vancouver residents, with a margin of error of plus or minus 4.7 per cent. The results for homeowners are based on a sample of 278 Vancouver residents, with a margin of error of plus or minus 5.9 per cent. The results for renters are based on a sample of 301 Vancouver residents, with a margin of error of plus or minus 5.7 per cent.

With files from CTV News Vancouver`s Jon Woodward.