City to seek provincial approval for Hamilton vacant homes tax

The city will hold off on launching a one per cent vacant-homes tax in Hamilton until it knows the province will give it a green light.

That's council's direction after consideration of the tool meant to push more empty homes into the rental market amid a housing crisis.

Mayor Fred Eisenberger argued Wednesday it made sense to have the province's approval before committing resources in the 2022 budget.

Staff have pegged the tax program's implementation cost at $2.6 million, which includes 16 full-time positions to run the program.

Cost is a consideration, but Eisenberger also argued Hamilton nowhere near" the massive" problems Vancouver and Toronto have with vacant homes.

But others contended the city should make use of the tool as soon as possible to tackle the housing crisis.

The tax is a small step" the city can take to address Hamilton's affordability crunch, Coun. John Paul Danko said. I think we have a moral duty to act."

Finance staff said it's not possible to know the exact number of vacant homes without launching the program, which would require owners to declare if their homes were vacant for more than six months during the previous year.

Apartments and vacant land wouldn't qualify. There are exemptions, including properties under renovation; vacancies due to deaths or hospital stays; vacancies that spring from court orders; and homes that are up for sale and empty.

Staff estimate the annual gross operating cost of the new tax program would be $2.2 million, but in its first year, it would draw an expected revenue of $4.3 million.

If the goal of reducing the number of vacant homes is achieved, there would be diminishing returns. By 2027, the net revenue would dip to $653,000, but over the five-year stretch, it would be $3.3 million overall, staff reported.

This forecast is based partly on Vancouver, which found that, of unoccupied properties reported in the 2016 census, only 10 per cent were actually deemed vacant."

Of Hamilton's 176,000 residential properties, 11,350 were unoccupied, according to the census, but following Vancouver's example, that would work out to 1,135 taxable properties.

But staff say a more conservative scenario of 0.5 per cent - or 880 properties - is also plausible. That would lead to an annual loss of $13,000 in 2027, they estimated.

So far, Vancouver is the only city in Canada with a vacant-homes tax. But in Ontario, Ottawa and Toronto are pursuing similar programs.

Toronto can impose its tax under the City of Toronto Act, but other municipalities need provincial designation to do so under Ontario legislation that introduced the tool.

City staff say provincial officials have not indicated either way whether Hamilton's tax would be approved. It that green light comes late this year, it could push implementation to 2023, said Kirk Weaver, manager of budgets and fiscal policy.

Of 3,867 responses to a city survey, 91.4 per cent supported the idea of a tax on vacant homes.

Coun. Nrinder Nann, who has pushed for the tax, said the end game is it won't be needed. Because the goal is to get people into those empty homes."

Housing has become a vehicle to park and grow capital," Coun. Maureen Wilson said.

The cost of that commodity is being downloaded onto local taxpayers," Wilson said, noting vacant homes led to bylaw complaints over poorly kept properties and unshovelled sidewalks.

However, Lou Piriano, president of the Realtors Association of Hamilton-Burlington said he was skeptical" of how much the tax would increase supply.

It involves a lot of money" and risk for very little return," he said.

Coun. Tom Jackson said he was really nervous" about the cost of implementing the tax during a budget year that's already leading to hikes, including an 8.8 per cent increase for transit alone.

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com