Posted July 6, 2021
Hamilton residents will have a chance to decide how the city will implement a vacant home tax next year.
Councillors agreed, at their July 5 general issues committee meeting, to draft a bylaw to establish a vacant home tax in an effort to force property owners to create more affordable housing in the city. The draft bylaw would be circulated for the public to review and comment on.
“The bottom line here is to get vacant properties into residential use,” said Mayor Fred Eisenberger.
Ward 3 Coun. Nrinder Nann first introduced a motion in December 2019 requesting staff study the idea of crafting a vacant building tax after Vancouver became the first Canadian municipality to implement such a tax in 2018.
Several representatives of ACORN Hamilton, a tenant rights group, backed the idea of a vacant housing tax.
Dayna Sparkes, ACORN’s east Hamilton chair, said the tax would “discourage landlords from keeping units vacant. This is an important tool Hamilton can use to prevent speculation.”
The preliminary tax on any vacant building would be about one per cent, said finance planning director Brian McMullen. That would mean an extra tax of $3,800 on an average property.
It is estimated that the city would earn between $3.3 million and $6.7 million in revenues. But McMullen said the revenues would decline once the tax was introduced, since the idea is to reduce the number of vacant properties. McMullen said a report on how to implement the tax could be available to councillors after receiving public input, sometime in the fall of 2022. Councillors are scheduled to vote on the recommendation at their July 9 meeting.
The city already has a vacant building registry, which was approved in 2010, that requires property owners to register their properties. Failing to register can cost owners a $300 fine, which, if ignored, can escalate as high as $50,000.
There are currently about 325 vacant buildings, with 221 of them monitored by the city’s municipal law enforcement.
Monica Ciriello, director of licensing and bylaw services, said 183 are single-family dwellings, 11 are duplexes and 27 are multiple dwellings.
Most of the vacant buildings are located in the downtown, particularly in wards 1, 2, 3 and 4.
Flamborough Coun. Judi Partridge, who backed the tax, questioned, though, how it will encourage property owners in rural areas to convert their residences into affordable housing units.
“I’m really pushed to see a farmhouse in the rural area could be affordable,” said Partridge. “I’m scratching my head on that.”
Imposing the tax will cost the city about $1.3 million, including hiring about eight full-time staff, an expense Mountain Coun. Tom Jackson had difficulty accepting.
“I’m struggling with the upfront costs,” said Jackson.
Jackson, along with Ward 5 Coun. Chad Collins, voted against the idea.
McMullen said homeowners who leave their homes unattended for part of the year, such as snowbirds, could be excepted from the bylaw. He said staff will examine what other municipalities have done to implement the tax, and how they have defined vacancy.
For instance, Ottawa has identified a residential unit vacant if it has been unoccupied for more than 184 days in the previous calendar year. It has set a one per cent tax rate in 2021 and expects an estimated revenue of $6.6 million in the first year.
Vancouver officials have stated that city's tax has proven effective in tackling the city’s housing crisis. The tax has increased from 1 per cent, since it was introduced in 2018, to 3 per cent for 2021. Since it was introduced, the tax has raised $61.3 million to support affordable housing projects, while vacant properties have dropped by 25 per cent.
Article by Kevin Werner for the Hamilton Spectator