City to prepare draft bylaw for Hamilton vacant homes tax

City staff will prepare a draft bylaw for a potential vacant homes tax in Hamilton.

The would-be policy, modelled on similar efforts in Ottawa, Toronto and Vancouver, is meant to prevent residences from sitting empty during a housing crisis.

It's not necessarily a revenue tool. It's a policy tool for housing," Brian McMullen, Hamilton's director of financial planning, administration and policy, told council Monday about Vancouver's program.

The exploration of a draft bylaw and accompanying policies was spurred by Coun. Nrinder Nann, who first pitched the idea in 2019 as a way to prevent land speculators from keeping homes vacant.

Under Ontario's Municipal Act, a vacant home tax can only be applied to the residential property class, which includes condos, but not units in rental buildings or vacant land.

On Monday, a city staff report noted the most challenging piece" of a vacant homes tax is identifying vacant units.

Hamilton has 221 residential addresses on its vacant building registry, which is meant to discourage owners from letting property standards slip.

But according to data from the last census in 2016, Hamilton had 11,350 unoccupied private dwellings. This leaves a range of estimates for how much revenue a vacant home tax would generate for the city.

Based on an average assessed value of $381,000, with 221 properties as the marker, a tax rate of one per cent would bring in $800,000 (a rate of two per cent would bring in $1.6 million).

Ottawa used 0.5 per cent to estimate how many total residential units are vacant. In Hamilton, that would be 883, which would mean tax revenue at $3.3 million for the one per cent rate ($6.7 million at two per cent).

Staff expect it would cost the city $1 million to $1.3 million to operate the tax program.

Vancouver had 2,538 vacant residential properties in 2017, when the program started. That dropped to 1,989 empty homes in 2018 and then to 1,893 in 2019.

They've been generating significant revenues from the program," said McMullen, noting those funds are meant to go toward housing initiatives.

Revenue decreased as the number of empty residences dipped, but still amounted to $36 million in tax dollars in 2019, plus $1.9 million in penalties and fines.

Several delegates urged council to implement a similar program in Hamilton to help put more homes on the market during a local affordability crisis.

Municipalities need to step up and use all tools available to address the growing challenges that have been created by the financialization of housing," said Lynda Lukasik, executive director of Environment Hamilton.

A vacant homes tax would also help create more housing within the existing urban boundary and help prevent sprawl, Lukasik added.

Homes are for people, not for speculation."

Karl Andrus said he lost his home of five years on West Avenue South for renovations.

That building, one next door and another on the same street have nearly 50 units of what was once deep, affordable market housing."

Just walking the streets reveals there are many more empty homes in Hamilton that just a few hundred, Andrus suggested, noting some have held building permits for years.

Stop incentivizing gentrification and landlords keeping properties empty. Tax them, permit or not, and force them back onto the market."

Council backed Mayor Fred Eisenberger's suggestion to pursue a draft bylaw and policy, which was incorporated into Nann's motion, before asking the public for feedback. I think it needs some focus and direction."

Teviah Moro is a Hamilton-based reporter at The Spectator. Reach him via email: tmoro@thespec.com