Archive for September, 2009

‘That’s a lot of money’ for new concourse

Tuesday, September 15th, 2009

Weatherproof walk cost $38m

Ian Austin
Province

A $38-million concourse now connects the old and new convention centres on the Vancouver waterfront. Photograph by: Wayne Leidenfrost, The Province

At $100,000 a stride, it’s B.C.’s costliest concourse.

The week-old, 90-metre-long walkway connecting Vancouver’s twin convention centres is more proof that $38 million doesn’t buy what it used to.

So The Province went to see what you get for the equivalent of 100 Rolls-Royce Corniche Convertibles — or 2,750 Hyundai Accents.

The two escalators at the east end of what government calls “The Connector” are certainly gleaming, and the two wide-screen overhead TVs give tourists useful information — except one wasn’t working yesterday.

The carpets are nice, and there are quite a number of outstanding pieces of native art lining the waterproof, windproof tunnel — but $38 million?

“That’s a lot of money,” said Kitty van der Meer, visiting the new venue for the first time. “My first impression was, ‘It’s really nice,’ but I don’t see that much worth.”

How else besides a walkway can you spend $38 million?

Well, according to recent stats, for that kind of coin you could raise 150 children to the age of 18.

Or, if expensive government projects are your thing, it’ll buy you just one-tenth of the proposed retractable roof for B.C. Place.

Warren Buckley, CEO of the B.C. Pavilion Corp., said most of the cost is hidden.

“You’re only seeing half of it — behind the wall with the native art is a second corridor where we have equipment going back and forth,” said Buckley. “To appreciate the steel beams that support it you have to go to the convention centres on either side. After the Games are over, where there’s a plaza above, there’s going to be landscaping, so they need all the beams to support that extra weight.”

What’s undeniable is the Connector has a stunning, $38-million view, with floor-to-ceiling windows revealing an unobstructed view of the North Shore mountains.

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© Copyright (c) The Province

Village takes exception to Street View

Monday, September 14th, 2009

England community stops Google photo program in its tracks and ignites privacy concerns across Europe

HENRY CHU
Sun

BROUGHTON, England — The good folk of Broughton don’t take kindly to being photographed without permission. Just ask Google.

When the search-engine giant sent one of its special vehicles to take pictures of the village for its Street View program, residents swung into action. They stopped the car in its tracks, called the police and quizzed the bewildered driver for nearly two hours before finally letting him go.

“I don’t think this guy anticipated how angry people would get,” said Edward Butler-Ellis, 28. “We didn’t stand there with pitchforks or anything and block the road with bales of hay, but obviously people were agitated. … A car with a pole with a camera on top of it causes suspicions.”

Those suspicions are being raised across Europe as Google proceeds with its project to document the Earth at ground level. Through Street View, the company offers 360-degree images of roads, landscapes and buildings (including, probably, your own home) to go along with its popular map function.

Privacy concerns, however, have delayed or disrupted the program’s launch in countries in Europe, where, in general, stricter laws on privacy and online data apply than in the U.S.

In May, Greece’s privacy watchdog ordered Google to stop collecting images until it satisfied questions on how long the information would be stored. German regulators have demanded stronger measures to guard against any infringement of privacy.

Last month, Switzerland became the latest to put a check on Street View. A few days after its launch, Swiss authorities told Google to take the program down until conditions could be met, including better blurring of the faces of bystanders.

The issues in Switzerland echo those elsewhere: People’s fears of being photographed in embarrassing or ambiguous circumstances, of having private spaces spied on and of not knowing how the published images might be used by strangers.

“We received many complaints,” Hanspeter Thuer, the Swiss federal data-protection commissioner, said. “In some cases, individuals complained the cameras saw into their gardens. Others complained that they had to justify themselves because the photographs on Google Street View were seen by the public.”

In one image, a Swiss politician was photographed with a blonde who was not his wife, which forced him to explain the woman is his secretary. In another case, a photo was reprinted in a newspaper, and “as a result, a restaurant owner had to explain how he was photographed in a known drug-dealing area,” Thuer said.

“Imagine that someone is photographed as they just happen to walk past a sex shop, or if someone enters a hospital,” he said.

Google says Street View breaches no laws and the company works hard with data-protection regulators to make sure the program enjoys official sanction wherever it operates. Since its unveiling in 2007, Street View has expanded to cities, towns and villages around the world.

Privacy concerns have dogged the program from the start. In Japan, the company agreed to re-shoot its photos after numerous complaints that the original ones peeked into people’s yards.

Kay Oberbeck, chief spokesman for the company’s operations in Germany, Switzerland and Austria, said Street View’s suspension in Switzerland came as a surprise following a “really long history of discussions” between Google and Thuer’s office.

The company has promised to improve the technology that automatically scrambles people’s faces and car licence plates.

“The blurring technology is very, very effective and catches most faces and licence plates in the millions of pictures we take,” Oberbeck said. “We give everybody the opportunity to inform us of any problematic image they might see, and usually it is taken down within hours.”

Google will also publish more detailed schedules and itineraries of its Street View cars, Oberbeck said.

When the Google car trundled down Butler-Ellis’ street in April, he and other residents of Broughton, a snug village north of London, were already jittery from a rash of burglaries.

Troubled Jameson House project at 838 Hastings on the rise again after recovering lost financing

Monday, September 14th, 2009

Derrick Penner
Sun

Concrete forms now poke above ground at 838 West Hastings St. as signs that the landmark Jameson House condominium development is back from the financial intensive care of court protection from creditors.

The project suffered the loss of financing last fall and then a lengthy struggle to restructure under court protection, which included a battle with presale buyers, who argued the turmoil ought to have given them the right to opt out of their contracts.

And it all coincided with Metro Vancouver’s housing market downturn that saw sales collapse and property values contract.

However, Jameson House’s new partner and construction manager, Bosa Properties, vows that construction is back on track at what appears to be at a turning point in the market, although the manager hasn’t re-launched marketing efforts to unload the building’s 35 units that remain unsold.

“What is a priority for us is building [the project], and doing a great job of building the homes that people are expecting,” said Daryl Simpson, vice-president of sales and marketing for Bosa Properties Inc.

Bosa has been on site since March building the 37-storey, $180-million tower’s parking garage. Simpson said the company completed negotiations for construction financing through TD Bank and BMO and has begun drawing funds on the loan.

In the interim, Bosa has put considerable effort into appeasing the project’s presale buyers, who were compelled to stick with the project by the B.C. Supreme Court order that approved Jameson’s restructuring.

One condition of its restructuring was that the project’s 103 presale contracts be held in force though a significant number fought for the right to rescind their agreements and get their deposit money back.

“I think there were buyers in this project that were deservingly upset because they weren’t communicated with as well as perhaps they ought to have been,” Simpson added.

Part of bringing presale buyers back on board has involved offering them discounts ranging from a low of $29,000 to a high of $575,000, Simpson added, with the amount depending on when during the presale marketing phase buyers signed on and at what prices.

Buyers who signed on later at the height of the market, Simpson said, would see the bigger discounts, which Bosa was able to offer in part because of the amount it was able to shave off of construction costs.

“We think it’s fair and equitable and the right thing to do,” he said, which will allow buyers to obtain pre-approved financing to close their purchases when the project completes, which is scheduled for May of 2011.

Simpson is adamant though that they will not be skimping on the interior design elements that purchasers bought into, such as the exterior and interior finishings designed by the firm of renowned architect Norman Foster.

Vancouver‘s Pappajohn family, under the name Jameson House Properties Ltd., is still officially the developer.

However, Bosa became an equity partner in the project during its restructuring and has become the onsite construction manager with Bosa affiliate Axiom Builders Inc. stepping in as its general contractor.

Simpson said they won’t be in a hurry to sell the remaining 35 units and perhaps won’t until the project is complete in 2011.

He added that the recent rebound of sales and prices, despite a general improvement in the economy, have emboldened the developer into believing the market has “turned a corner.”

“We’re cautiously optimistic about the market today and tomorrow,” he added, and the project will be in a better position in 2011.

© Copyright (c) The Vancouver Sun

Revival on the Fraser St. frontier

Sunday, September 13th, 2009

Hot on Heritage: Four-Storey Century Development Aims to Preserve Old-World Appeal

Lena Sin
Province

Granite countertops and Whirlpool appliances in Century condos are standard. Buyers have a choice of shaker-style or contemporary flat-panel cabinets. Photograph by: Jason Payne, The Province

Century’s bathrooms feature Kohler fixtures and a porcelain-tiled wall accented with a tile insert of either marble or woodgrain. Photograph by: Jason Payne, The Province

THE FACTS

What: Century, 213 condos and 32 townhouses

Where: Fraser Street and 30th Avenue, Vancouver

Developer: Ledingham McAllister

Builder: Marcon

Sizes: One bedrooms, from 630 to 639 sq. ft.; one bed plus den from 719 to 731 sq. ft.; two bedrooms at 871 sq. ft.; and two bedrooms plus den at 850 sq. ft.

Prices: Starting in the low $300,000s.

Open: Presentation centre and show suite opens Sept. 19. Open daily from noon to 6 p.m. except Friday at 4305 Fraser St.,Vancouver.

More information:

www.ledmac.com/century

It’s been widely predicted among those who know and love Vancouver’s Main Street that Fraser Street was always going to be the next frontier.

Now Ledingham McAllister is the first major developer to put that theory to the test with its latest development, a four-storey condo project at Fraser and 30th Avenue, aptly named Century.

Ledingham McAllister started in 1905, building many of Vancouver’s first developments. And about the same time, Fraser Street was just getting started. That neighbourhood itself is one of the oldest in Vancouver so we saw a lot of synergy,” says Manuela Mirecki, senior vice-president of marketing.

Century is likely to attract buyers who crave the authenticity of Main Street, located just a few blocks west, but can no longer afford its prices. But it’s also just as likely to appeal to those who grew up in the culturally diverse neighbourhood and are looking to return.

Mirecki says it has been neat to see the excitement from some of the area’s current residents — even those who have no interest in buying — who view the arrival of a major developer as a sign that Fraser Street is on the cusp of revival.

Even though it’s not yet open, area residents regularly come knocking on the doors of the presentation centre, says Mirecki.

“The neighbourhood’s ripe for recognition, it’s an unpolished gem,” she says. “It’s a microcosm of Vancouver as a whole and it’s right smack in the middle of the city.”

Fraser Street started out 100 years ago as a dirt road with a streetcar track running down the middle to a small village on the south slope, according to the South Hill-Fraser Street Business Association.

Since then, this rural pocket has grown organically to reflect its residents — European, Indian and Chinese immigrants since its earliest days.

Strolling down Fraser Street today, you still get the sense that this is essentially an old-world neighbourhood with a small-community feel. Shopkeepers sit outside their storefronts while long-timers hang out at neighbourhood coffee houses.

Shoppers can find everything from saris to spices, and restaurants cover the regions from Vietnam to Greece. Meanwhile, the Polish Community Centre and a Buddhist temple off Fraser Street on 49th Avenue serve as cultural anchors.

It’s this decades-old character that no developer can re-create — and is seen as one of the most valuable assets of Fraser Street.

Recognizing this fact, Mirecki is quick to point out that Ledingham McAllister has no intention of changing the character of the neighbourhood, but rather sees itself as well positioned to add amenities, including a grocery store and pharmacy on the ground level.

“We’re not trying to change it. We’re just trying to reflect it and fill in a few missing pieces,” she says. “Even the building is very respectful of the heritage of the community. It’s got the commercial store-fronts on the bottom, which was what Fraser Street was even in the beginning, and an old-brick feel to the building.”

The development consists of three structures: A condo building that fronts onto Fraser Street and a second, U-shaped building behind, separated by an inner courtyard.

Century will also consist of 32 townhouses on Prince Albert Street, which will be released at a later date.

The condos range in size from one bedroom to two bedrooms plus den, with prices starting in the low $300,000s.

The suites come standard with granite kitchen countertops and Whirlpool appliances. In homage to classic details, the kitchen cabinets are shaker-style or contemporary flat panels, contrasted with charming penny round tiles.

Meanwhile, bathrooms feature Kohler fixtures and a porcelain-tiled wall accented with a tile insert of either marble or woodgrain tiles.

Century’s grand opening is set for Sept. 19.

Completion is expected in 2011 for the condos and fall of 2010 for the townhouses.

© Copyright (c) The Province

Check warranties and inspect on time

Sunday, September 13th, 2009

As part of building envelope, roof has a five-year warranty

Tony Gioventu
Province

Dear Condo Smarts: We live in a new strata development of 33 units in Surrey that was built in 2007. A roofing problem has come up with four units, so we filed a warranty claim with our developer. The developer has come back to us and advised that the roof is not part of the building envelope and was only covered under the first two years of the warranty, which expired in April 2009.

— BR

Dear BR: The statutory requirements for warranty coverage are set out by the Homeowner Protection Act and its regulations. The roof is most definitely included in the building envelope as part of the definitions under the legislation and is covered by warranty for a five-year period.

Here is part 23 of the act, which defines building envelope under the regulations that sets out the mandatory warranty protection:

“A residential builder or an owner builder and a vendor of a new home are both deemed to have agreed with the owner of the new home, to the extent of the labour, materials and design supplied, used or arranged by the residential builder, owner builder or vendor, that the new home, except to the extent prescribed by the regulation,

(a) is free from defects in materials and labour and will remain so for a period of at least two years after

(i) the date an occupancy permit with respect to the new home was first issued, or

(ii) if no occupancy permit has been issued with respect to the new home, the date the new home was first occupied,

(b) is free from defects in the building envelope, including defects resulting in water penetration, and will remain so for a period of at least five years after

(i) the date an occupancy permit with respect to the new home was first issued, or

(ii) if no occupancy permit has been issued with respect to the new home, the date the new home was first occupied, and

(c) is free from structural defects, and will remain so for a period of at least 10 years after

(i) the date an occupancy permit with respect to the new home was first issued, or

(ii) if no occupancy permit has been issued with respect to the new home, the date the new home was first occupied.”

“Building envelope” means the assemblies, components and materials of a new home which are intended to separate and protect the interior space of the new home from the adverse affects of exterior climatic conditions.

It is important for any new strata council or owner of a warranty-covered home to a) make sure to keep copies of the warranty documents, b) review the documents and determine when the warranty periods of two, five and 10 years run out; c) annually meet your warranty obligations of inspection and maintenance; d) provide documentation in the strata minutes and reports verifying the inspection and maintenance; e) file all warranty claims in writing to both the owner-developer and the warranty provider.

The warranty period is going to start running from either the first transaction or the first occupancy, so the first two-year period and the five-year envelope period may come sooner than you think.

Your strata might also want to retain a qualified consultant specific to the claim to ensure the repairs are completed to your satisfaction.

E-mail: [email protected]

© Copyright (c) The Province

Seduced by San Miguel’s rich heritage and artistic vibe

Sunday, September 13th, 2009

many charms: Art galleries, festivals and colonial architecture lure visitors who end up becoming residents

Lisa Monforton
Province

La Parroquia, the iconic parish church in San Miguel, glows with lights and the setting sun. — BALD MOUNTAIN DE MEXICO

La Parroquia San Miguel, the Disney-esque — or, more accurately, pseudo-gothic — pink church is the centrepiece of San Miguel. BETSY MCNAIR — MY MEXICO TOURS

A luxurious patio at a model home for the Rosewood Artesana project, which will consist of private luxury homes on the edge of a five-star resort.

Drivers use the honour system to get around the narrow, cobblestoned streets — where there are no traffic lights. — CANWEST NEWS SERVICE PHOTOS

An old man in a black beret and white sneakers slouches on a velvet couch smeared with daubs of dried acrylic paint. He politely greets his visitors in a living room strewn with framed and unframed paintings, worn furniture, knick-knacks and piles of books and papers. A cat pokes at a plate of unfinished breakfast on an ottoman; boiled egg in a cup, fruit and toast.

The painter leans back and swings his feet up onto the couch to take a look at his unfinished work.

“I think it needs more yellow . . . in the egg,” he says mostly to himself about his painting, tentatively titled “Sir Nobby (the cat) and Breakfast.”

And then, to me, who’s begun to ask a question: “Didn’t anyone tell you I don’t do interviews any more? I’ve said it all. It’s in the books.”

At 97, legendary war artist Leonard Brooks doesn’t have much interest in or need for more fame.

People have been known to come for a holiday and never leave

Commissioned in 1944 by the Canadian government, he made his mark sketching the men working on board the navy’s minesweepers and corvettes.

But for more than half a century, Brooks has lived in the artsy tranquillity of San Miguel de Allende. He is considered one of the early drivers of the colonial city’s lively art scene, along with his late wife Reva, a photographer whose stark black-and-white portraits of rural Mexican life hang throughout the house. (For more stories about Brooks, check out John Virtue’s Artists in Exile in San Miguel de Allende).

Brooks still paints nearly every day, occasionally puts on an exhibit, and will only meet with a Canadian if he feels like accepting visitors. (Brooks is just one of many artists who make SMA their home, including the eccentric Toller Cranston, known to Canadians of a certain age as the Canadian national figure skating champion from 1971 to 1976.)

Brooks and his wife found themselves in this 500-year-old sun-drenched city located on the altiplano (high plain) ringed by the Sierra Madre mountains in the late 1940s, around the same time Second World War veterans were returning home.

Thousands of them were drawn to this city with a perpetual springlike climate, by the thermal springs on the edge of town, and also the fact that their GI education grants could stretch a lot further here than in the United States.

The Disney-esque (actually pseudogothic) La Parroquia San Miguel is the iconic pink-hued parish church that dominates San Miguel de Allende’s historic centre. In its shadow they rebuilt their lives and pursued an education in the arts or music. For Leonard and Reva it became home, where they were surrounded by contemporaries and could pursue their artistic passions. That is with one exception — a temporary deportation from their borrowed city during the Communist “witch-hunting” years of the McCarthy era in the 1950s.

The students might have studied at the Esquela Bellas de Artes (School of Fine Arts), where he taught or at the Instituto Allende. To this day, both facilities attract art, language and music students from around the world and provide residents and travellers alike with art classes, galleries, stages and open-air cafes where patrons while away the hours reading or catching up on gossip with friends.

Just as it did for many war vets, San Miguel de Allende is a place where people come to reinvent themselves, says the man with a distinct American accent as he leads us through the cobblestone streets, while everyone else appears to be either coming or going from the daily outdoor market.

In a past life, Steve Weisberg was a social worker in the United States; now he’s a theatre volunteer, and on this day he’s telling us stories about the bloody battles for independence from Spain, the stories behind the city’s hand-carved doors, and the once-booming silver mining trade, on a walking tour of the historic city centre.

Over and over, I would hear this refrain from expats that SMA–as it’s informally known–is a place where people start life anew, many of whom are retired or have made it their second or new home. There are just as many anecdotes about those who came for a holiday and couldn’t leave the sounds of the celebratory fireworks (there are more than 100 festivals a year in San Miguel), or the clanging church bells, the beauty of the colonial architecture and narrow and crooked cobblestone streets with the profusion of the bougainvillea that spills over the walls that surround the mansions and modest homes.

Many of the homes, painted in yellows, blues, greens and terra cottas, are adorned with ornate wooden doorways throughout the historic district and in the neighbourhoods carved out of a hill called El Monteczuma.

Many have beautiful door knockers in the shape of a bejewelled hand, a dragon, a lizard or a lion.

As to why these transplants fall in love with the city, it could be as simple as the drivers’ honour system, in which cars, SUVs and even ATVs that chug up the hilly, uneven cobblestone streets don’t have to obey traffic lights –because there are none. Or the fact that there is even a San Miguel shoe, invented by an enterprising family so that people could walk without turning an ankle on the rugged streets.

For these reasons and more “everyone falls in love with it,” says Linda Lowry, a writer from Colorado, one of those who came and never left.

Even though there has been a large influx of North Americans, it’s “Mexicanness” has not been erased.

“It’s not a gringo town,” she says, even though 8,000 to 10,000 nonresidents live in the city, designated a World UNESCO heritage site in 2008.

The only nods to the influence of its northern neighbour are the many locals who speak some English and the not-too-busy lone Subway and Starbucks, tucked into colourful stucco buildings, each surrounded by stone courtyards, art galleries, churches (there are close to 300 in the city) or locally owned boutiques.

“It’s the other way around,” says Victor Cortes. “People come here to integrate themselves.”

The many expats I met have immersed themselves in the community, helping or working alongside the locals, volunteering at the orphanages or helping a local family create a lavender farm whose products will eventually be made into soaps and other products at a resort being built in the historic city centre.

So successful was this endeavour, says Lowry, that the wives with whom she helped get the project off the ground were able to bring their husbands back from the United States, where they’d gone to find work.

“They’re coming home to help with the business,” she says, one anecdote that tells me, not only is it the non-residents who can carve out a new life for themselves, but the local residents can, too.

© Copyright (c) The Province

House prices climb in B.C. – average up 11.7 per cent

Sunday, September 13th, 2009

Province

B.C.’s average house price climbed 11.7 per cent to $471,078 in August from the same month last year, the B.C. Real Estate Association said.

“Home prices edged higher in many markets over the summer months as declining inventories created competition among homebuyers for the best properties,” association chief economist Cameron Muir said.

Across B.C., the number of active residential listings on the Multiple Listing Service fell 20.2 per cent from a year earlier, the association said. In the Greater Vancouver Real Estate Board, the year-over-year average price rose 9.1 per cent.In a separate report, Statistics Canada said Vancouver posted the nation’s largest monthly new-homes price gain in July, up 1.2 per cent from June.

© Copyright (c) The Province

House prices climb in B.C. – average up 11.7 per cent

Sunday, September 13th, 2009

Province

B.C.’s average house price climbed 11.7 per cent to $471,078 in August from the same month last year, the B.C. Real Estate Association said.

“Home prices edged higher in many markets over the summer months as declining inventories created competition among homebuyers for the best properties,” association chief economist Cameron Muir said.

Across B.C., the number of active residential listings on the Multiple Listing Service fell 20.2 per cent from a year earlier, the association said. In the Greater Vancouver Real Estate Board, the year-over-year average price rose 9.1 per cent.In a separate report, Statistics Canada said Vancouver posted the nation’s largest monthly new-homes price gain in July, up 1.2 per cent from June.

© Copyright (c) The Province

NOTICE TO ALL EXPATRIATES OR U.S. TAXPAYERS WITH OFFSHORE INVESTMENT, BANK, CORPORATE, TRUST, LLC OR BUSINESS INTERESTS

Saturday, September 12th, 2009

THE IRS OFFSHORE VOLUNTARY DISCLOSURE PROGRAM’S DEADLINE TO PARTICIPATE ENDS 9/23/09.

Other

If you wish to participate in this program in order to reduce possible interest and very high penalties for not reporting foreign income, foreign corporations, foreign investment or bank accounts, foreign trusts, fideicomisos, foreign partnerships, investment companies or LLCs, you must act now and send the required letter to the IRS by the deadline date of September 23, 2009. The returns and/or appropriate forms can then be prepared and filed afterwards. But they cannot be submitted after the deadline without the required letter being submitted by the deadline – no extensions will be available.

* Read more about the program and all of its details at http://www.taxmeless.com/IRS%20Disclosure.htm. You can then determine if this program applies to your particular situation. This web page lists the 52 questions which explain most aspects of the program and how to send a letter if you wish to participate by the deadline. If you do have undisclosed income and have not filed the Offshore IRS forms (some of which are listed below) the IRS will limit your penalties to 20% of the highest value of your offshore assets during any one of the six year period plus taxes, interest and the 20% negligence penalty.


* If you reported all foreign income, business income, interest, etc on your tax return, or if the offshore activity produced no income, but you failed to file the required forms (some of which are listed below) you must file those forms before 9/23/09 with your personal tax returns for those years showing that income was reported or risk possible large penalties. If you follow the procedure set forth in the 52 questions listed above you can avoid any of the huge penalties which are often attached to those forms.


* Just a few of the IRS forms which you may not have filed but should file now include 5471 (foreign corporation ownership), 3520 and 3520A ( foreign trusts or Mexican Fideicomisos), TDF 90-22.1 (foreign bank and financial account report), 8865 (foreign partnership), Form 926 (contribution of capital to a foreign corporation), 8621 (Return of Passive Foreign Investment Company, and others too numerous to mention. Most of these are listed in the 52 FAQ on the program which can be reviewed at the link listed above or at the IRS website at http://www.irs.gov/newsroom/article/0,,id=206012,00.html

 

* The IRS has stated that those who fail to participate and later attempt to amend returns to report unreported foreign income that involve the listed forms which were not timely filed will be assessed the penalty that is associated with such a late filed form -which can be $10,000 or more per year depending on the form.

* The IRS has now also stated that taxpayers who in the past years have attempted to catch up and file past due returns that involve offshore income and the forms listed in the 52 questions should also enter the voluntary disclosure program to limit their penalties, or risk the even greater penalties the IRS can impose for late filing those forms, which are stated in the instructions to such forms. The IRS has indicated they plan to go back and locate those people who have attempted “private disclosure” and assess those penalties. How many years back they will look has not been disclosed by the IRS. 

Get ready for steep rate hikes in 2011: economist

Saturday, September 12th, 2009

Paul Vieira
Other

OTTAWA — When the Bank of Canada does start raising its key policy interest rate in either late 2010 or early 2011, Canadians should brace for “aggressive” increases of up to a percentage point at a time, says a report from the chief economist at Laurentian Bank Securities.

The call, from Carlos Leitao, adds a new wrinkle to the debate as to whether the central bank will be able to keep its pledge to leave its key policy rate at 0.25%, or the lowest level possible, until June 2010 in an effort to stimulate the economy. This analysis kicks off a debate in terms of how aggressively the central bank needs to act once it believes rate increases are in order.

The Montreal-based economist said he believes Mark Carney, the Bank of Canada governor, will be able to keep his June 2010 promise, based on the amount of spare capacity in the economy and continuing job losses that are likely to peak early next year.

The Bank of Canada is likely to begin hiking rates after unemployment peaks (in early 2010) and before inflation hits the preferred 2% target (sometime in mid-2011). Once that period comes, Canadians should prepare for steep rate hikes.

“An aggressive tightening – rather than a gradual one — will be necessary because rates are extremely low,” Mr. Leitao said in LBS’s weekly note to clients released Wednesday. “A ‘measured pace’ would not be appropriate to ‘normalize’ rates when the starting point is virtually zero.”

Analysts say one of the key causes of the financial crisis was that the U.S. Federal Reserve kept its key policy rate too low for too long. When it did begin raising rates in 2004, they say, the Fed opted by gradual increases of 25 basis points – not nearly aggressive enough, in retrospect, to cool down the white-hot housing bubble that resulted in the financial market meltdown almost a year ago.

Mr. Leitao said should the Bank of Canada take a similar path like the Fed did earlier this decade, its key policy rate would be at just over 3% by the end of 2011.

“This could well prove to be too low for an economy that would be running at a decent pace with inflation already at the 2% target,” he said. “This means we are likely to see a mix of 50, 75 and even 100 basis points hikes — when the time comes.”

The Bank of Canada releases its latest interest-rate statement on Thursday, and analysts are near unanimous that it is unlikely to contain much change. The central bank will leave its target rate unchanged and reiterate its commitment to leave it there until mid-2010.