VACANT UNIT PROPERTY TAX REBATE CONSULTATION

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1 Vacant Unit Property Tax Rebate VACANT UNIT PROPERTY TAX REBATE CONSULTATION JUNE 22, 2017

2 AGENDA 1. Welcome 2. Vacant Unit Property Tax Rebate Program 3. Provincial Amendments 4. Current Program Challenges And Considerations 5. Program Costs 6. Future Program Options 7. Next Steps Slide 2

3 1. Welcome The City of Vaughan, the City of Markham and the Town of Richmond Hill are considering the merits of the Vacant Unit Property Tax Rebate Program We are soliciting feedback from commercial, industrial and residential property owners There are two ways for you to provide feedback on these proposed changes: A. Public Consultation Meetings: 1. City of Vaughan - June 22, 2017 from 7pm 9pm, City Hall, Multi-Purpose Room, 1 st floor 2. City of Markham - June 26, 2017 from 7pm to 9pm, Markham Civic Centre, Council Chambers 3. Town of Richmond Hill - July 13 from 7pm to 9pm, Rouge Woods Community Centre, Aspen Room B. Online Survey: June 5, 2017 July 31, 2017 Slide 3

4 2. Vacant Unit Property Tax Rebate Program Overview Introduced in 2001, the Vacant Unit Property Tax Rebate Program provides property tax relief to owners of vacant commercial and industrial buildings Lower-tier municipalities are mandated to have a program to provide tax rebates to owners of commercial or industrial property that have vacant portions. Property owners may apply to the municipality for a tax rebate for periods of vacancy. For commercial or industrial buildings to be eligible, the property or a portion of property must be vacant for a period of at least ninety (90) consecutive days Applications are also required to meet specific municipal evidentiary requirements that must be satisfied for the owner to be entitled to the rebate. The current rebate percentage amount for vacant commercial space is 30% and vacant industrial space is 35% Slide 4

5 3. Provincial Amendments In 2016, the Province, in consultation with municipal and business stakeholders, undertook a review of the vacant unit property tax rebate program. The review was initiated in response to municipal concerns of any unintended implications this may have for local economies. On November 14, 2016, the Province released its Fall Economic Statement which provided municipalities with broader flexibility to tailor the Vacant Unit Rebate program to reflect community needs and circumstances. Staff report(s) for local municipal Council(s) consideration were tabled as follows; The City of Vaughan staff report on March 21, 2017 The City of Markham staff report on February 21, 2017 The Town of Richmond Hill staff report on May 1, 2017 Local Municipal Council(s) directed staff to report back in the fall of 2017 with the feedback received from the consultation meetings Slide 5

6 4. Current Program Challenges And Considerations Vacancy allowance, chronic vacancy and/or reduced income due to vacant space are factors considered and adjusted for when establishing the individual property assessments for the property as established by Municipal Property Assessment Corporation (MPAC) o When a vacancy rebate is granted, on top of the CVA considerations provided for with the property assessment, this can be viewed as double-dipping The 90 day continuous vacancy requirement can discourage landlords from seeking and/or accepting short-term, pop-up and/or seasonal rentals This is a business benefit that is largely subsidized by the residential class This is not a benefit which is afforded to other property classes which may experience a form of vacancy from time-to-time, such as residential or multi-residential properties Slide 6

7 5. Program Cost Average Five-year Program Cost ( ) Municipality Municipal Share of Program Cost Regional Share of Program Cost Provincial Share of Program Cost Total Program Cost Vaughan $309,000 $551,000 $1,237,000 $2,097,000 Markham $216,433 $426,244 $960,351 $1,603,028 Richmond Hill $124,206 $220,048 $494,186 $838,439 Total $649,639 $1,197,292 $2,691,537 $4,538,467 The costs above do not include administrative costs associated the Vacant Unit Property Tax Rebate Program The administrative costs are equivalent to approximately 1/3 of a full time employee (FTE) Slide 7

8 6. Future Program Options The City of Vaughan, the City of Markham and the Town of Richmond Hill are considering the merits of the Vacant Unit Property Tax Rebate Program We are soliciting feedback from commercial, industrial and residential property owners on possible changes to the program Options a. Status Quo Program b. Phase-out Program (1 3 years) c. Targeted Program New Office Development (3 5 years) d. Class Funded Program e. Eliminate Program Slide 8

9 6. Future Program Options (a). Status Quo Program No change to the existing program Property owners would still be entitled to apply for a: 30% rebate for eligible vacant space within commercial buildings, and 35% rebate for eligible vacant space within industrial buildings Slide 9

10 6. Future Program Options (b). Phase-out Program (1 3 years) Program would be phased-out over three years with a declining benefit each year Program would not be offered in the fourth year and beyond Example Application Year Tax Year Rebate Percentage (Com / Ind) Year % / 35% Year % / 25% Year % / 15% Year % (exit program) Slide 10

11 6. Future Program Options (c). Targeted Program New Office Development Maintain a targeted program for New Office Development only Eligible new office developments would be entitled for a define 3-5 year period Example Application Year Tax Year Rebate Percentage % % % % % % (exit program) Slide 11

12 6. FUTURE PROGRAM OPTIONS (d). Class Funded Program All costs of the program, as well as the rebates, will be borne by the commercial and industrial classes alone Realigning cost of the program so that the residential class and multi-residential classes are no longer burden The funding methodology of this option would need to be developed with both the Region and Province Slide 12

13 6. FUTURE PROGRAM OPTIONS (e). Elimination of the Current Program This option would conclude the Vacant Unit Property Tax Rebate Program No program offering for 2018 application year and beyond Application Year Tax Year Rebate Available Yes No (exit program) No Slide 13

14 7. NEXT STEPS Analysis of all feedback from in-person consultations and online survey Staff will summarize feedback into themes and report back to respective local municipal Council(s) in the fall of 2017 Each local municipal Council will formalize a recommendation that will be forwarded to the Region of York which will aid the development of a recommendation expected to be presented to Region Council in Q If Regional Council approves any changes to the vacant unit property tax rebate program, a resolution will be sent to the Minister of Finance, indicating that the Region of York in consultation and agreement with its lower-tier municipalities wish to; o o Modify vacant unit property tax rebate program; or, Eliminate the vacant unit property tax rebate program Slide 14

15 THANK YOU We also encourage you to provide further input by completing the on-line survey at: o o o Vaughan.ca Markham.ca RichmondHill.ca Slide 15

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