CANMORE – A tax program designed to help fund affordability and housing initiatives and reduce vacant homes in Canmore could return for council approval as soon as this fall.
An update at Canmore’s June committee of the whole meeting outlined the potential of the permanent resident program, which will see a new tax subclass created to incentivize long-term residency of residential units in the community.
The program would have homes not used for permanent residents – estimated to be 26 per cent in the community, according to the 2021 federal census – be taxed at a higher rate with revenue generated going into council initiatives.
“It ultimately comes down to a choice of use for your property. If you choose to use it for a primary residence for yourself or someone else, you get the benefits of it. If you choose not to, there’ll be an extra cost,” said Canmore Mayor Sean Krausert.
Though similar to a vacancy tax – which isn’t allowed by Alberta’s Municipal Government Act (MGA) – it permits a subclass to tax certain properties at different rates.
While it’s normal for residential and non-residential to have different rates, it would effectively break down residential use into permanent and non-permanent, giving long-term residents a lower tax rate than those not using properties in Canmore for permanent residents.
However, if a second home became a primary residence or was used by a renter living in the community, the property could declare itself for the permanent resident subclass.
“As long as there is a primary resident, then they get the benefit of the subclass with the lower rate,” Krausert said.
Once approved, long-term residents will have to declare themselves as such through an online or manual process.
Therese Rogers, the Town’s general manager of corporate services, said “ease of use is our No. 1 priority, recognizing we’ll be touching every residential taxpayer.”
The process will also have to be done annually, with residents declaring what they used a property for in the current year for the upcoming year of taxes.
“Each year has to be taken into consideration separately by the assessor and what we’re envisioning is people declare on what they did use and not what they’re going to use,” said the Town’s financial strategy manager Katherine Van Keimpema.
Town staff said there won’t be consultation, with the intent to inform the public of changes.
A vacant home tax has been instituted by some municipalities such as Toronto, Ottawa and Vancouver. The federal government has its underused housing tax, while British Columbia has its speculation and vacancy tax, but Alberta’s MGA doesn’t have a clause to allow a similar tax.
However, Alberta municipalities are allowed to tax subclasses at a higher rate than a residential one, which is what Canmore does with tourist homes.
The permanent resident tax program is part of council’s housing action plan that was approved last year. The other two key aspects of the plan are developing tax policy options to incentivize purpose-built rental units and
Council approved $550,000 in May to be drawn from reserves to help with its housing action plan initiatives. The money will add temporary staff and legal costs for developing programs such as the permanent resident initiative as well as a tax structure to encourage purpose-built rentals and phase out tourist home designation.
First reading to phase out tourist home class is expected on Aug. 20.
Council also directed staff to look at a comprehensive planning process to promote infill, potentially eliminate the building of single-family homes and look at changing residential districts in the land use bylaw to help create more housing.
“Empty and infrequently occupied housing contributes to Canmore’s housing crisis by removing potential long-term rental units from the market,” states the report. “Incentives to occupy housing units full-time by the owner or by long-term tenants can directly impact the housing crisis.”
The staff report highlighted more staffing in finance, communications and municipal enforcement would be needed to run the program. However, Van Keimpema said costs raised from the program would fund itself.
“We’re not going to be able to manage this off the side of an existing staff member’s desk, especially with the enforcement,” she said. “It’s a whole new program as well as the declaration is a whole new program. We’ve gone from 716 possible tourist homes declaring personal use to thousands and thousands of residential homes in town. We can’t do that with the existing resources we have.”
A staff report noted the two options looked at were a rebate program and creating a primary subclass for taxes, which was the recommended choice.
A rebate program would be applied retroactively, so taxes collected at a specific rate and then a council-approved amount of it returned, while an appeal process would be needed and it is likely to “be administratively burdensome and may cause taxpayer confusion over taxes owing.”
A subclass for residents could be done so proactively, using the Assessment Review Board for appeals and allowing for tax notices to be provided with the final tax number.
Both options would need residents to declare a status each year and council could impose fines if someone lied about their status.
“Given that subclasses are expressly permitted in the MGA, the administration of a subclass program is not as onerous as a rebate program, and that it would minimize taxpayer confusion over taxes owing, administration is pursuing the subclass program and has developed an implementation plan,” stated the report.
The resident subclass will require the division of class 1 property bylaw to return to council in the fall, create guidelines for the housing initiative revenue to be directed toward, create a budget for the anticipated revenue and update the Town’s property tax policy.
Town staff will create the declaration process, develop an enforcement and audit process, a communications plan, an education program and determine the way to set taxes for the different classes.
“I think it’s important for you to start thinking of what are the type of initiatives you want to budget for and if you want to be acquiring land or you want to help fund a housing development, that’s not $100,000. We’re talking of millions,” said Van Keimpema. “You start to wrap your head around how fast do you want to collect the money because how fast do you want to do some of the initiatives?”
She noted Vancouver charges three per cent of assessed value. Canmore’s would be a dollar amount, which would then be converted into the mill rate and applied to the non-primary resident subclass.
Krausert cautioned that anything Canmore collects will be significantly less than Vancouver or Toronto.
He said it’s likely to be “a couple of hundred dollars per house” that isn’t declared for permanent residency.
All money collected will have a separate reserve to be used with the council-approved initiatives.
Rogers noted patience will be needed as the program begins and becomes easier each year it’s active.
“The first year is going to be the most challenging,” she said. “We’ll be setting the budget before we’ve actually had property owners declare if they’re a permanent resident or not and moving every year beyond that, we’ll get more information to make the process easier.”
