SUNDRE – A $2-plus million apartment building in Sundre’s southwest has received a partial tax-exempt designation through a new provincial government program intended to incentivize landlords to provide more affordable rental options and retain them.
“This is a recent designation by the province,” Chris Albert, director of corporate services, told council on April 7 during a regular meeting, adding that property owners “who want to take advantage of this apply to the province.”
The province then decides if applicants qualify, said Albert, adding chief among the caveats are providing rentals at a minimum percentage below market value.
“That was the biggest criteria,” he said.
“The default is that these properties are exempt from all taxes,” he said, referring to the municipal portion as well as the education and seniors requisitions.
“However, as part of this designation, the province has said that town councils can choose to pass a bylaw which removes the exemption for municipal portions of the taxes,” he said, adding there is only one such property in town.
Located at 503, 6th Street SW, the amount of the property valued at nearly $2.2 million that is now exempt from taxes is almost $1.09 million.
“The exemption is for approximately 50 per cent of the valuation of that property,” he said. “So, half the property is exempt, (and) half of it is still paying … taxes.”
That by extension removes from the budget approximately $8,000 in municipal property tax revenue that was previously being generated as well as roughly $400 from the seniors lodging requisition, he said.
“Those two amounts then of course have to be recovered from the other tax-paying properties in town when we’re setting the rates,” he said.
While administration recommended receiving the report for information, council ultimately had the discretion to decide whether to draft a bylaw that would establish a percentage of the town’s tax rate ranging from one to 100 per cent, he said.
In other words, council had the option not to exempt the $8,000 if the decision was made to charge the full 100 per cent, or for example recover $4,000 by setting a percentage of 50 per cent, he explained.
The matter “will be brought forward to council every year, based on the list of exempt properties and valuations that we get from province,” he said, adding that for as long as any designations remain in place, “This will always be a topic of conversation.”
Providing clarification following a question from mayor Richard Warnock, Albert said requisitions are not being reduced.
“We need to collect $3.7 million across all properties,” he said. “When somebody is exempt, we don’t get to collect from that property and it increases how much we have to collect from everybody else.”
The same applies for the seniors lodging requisition. Mountain View Seniors’ Housing gives the municipality a number and that is the total dollar amount the town must pay, he said.
“How we collect that is up to us.”
While Coun. Paul Isaac said he was agreeable to accept the report for information, he asked whether the owner of the property would be the one paying should council decide to impose a percentage, which Albert confirmed.
Isaac asked if that would then not go against the provincial government.
Albert said that by default, the province has determined that any property that receives the designation is automatically exempt from all three components of tax bill – the municipal, education and seniors portions.
“But they’ve put the caveat in that says councils can go against that and apply whatever rate they choose,” he said.
“Basically, what they said is that council can pass a bylaw to charge municipal portions. But no matter what, the education portion is exempt.”
Coun. Chris Vardas said that should council opt to impose its own percentage, the property’s owner would pass the cost along to tenants.
“So, the residents that are supposedly there for the affordable housing, are the ones that are going pay for that,” said Vardas, adding that would negate the program’s purpose.
“The landlord’s got to pay for it somehow,” he said.
But while the property owner would indeed be the one having to pay, the cost would not necessarily be passed onto renters in affordable units.
“Would they eat that cost, (or) would they pass that cost onto the non-affordable residents,” said Albert, adding the owner is in an agreement with the province.
“They have to meet the criteria of staying affordable,” he said.
“They can’t get this designation from the province and then turn around two months later, hike up the rents on those affordable housing units to market value,” he said, adding that would run the risk of losing the tax-exempt designation.
During an ensuing discussion, council heard that based on the information from the province, the portion of the apartment building that has been designated as affordable includes 12, one-bedroom units as well as four, two-bedroom units.
“As a municipality, we want affordable housing here, so that’s good. We’re glad,” said Isaac.
But the councillor harboured some concern about how the program was rolled out.
“What I don’t like what’s happened is, they (the provincial government) have deemed a building that has not (historically) had that tax break, and then in the middle of it some point down the road, now all of a sudden some of the suites are getting a tax break,” he said.
Isaac said he could more easily get behind a program intended to incentivize building starts and spur on new projects, which then would not have a negative impact on the municipality’s budget that leaves a shortfall other taxpayers must now make up for.
“When you have a building that’s been there for X amount of years and now all of a sudden they’re paying less to that municipality on the permission of the province … I don’t really like the way this is coming out,” he said.
However, the councillor said he supports not giving any increases to support affordable housing.
“I just don’t like the way this process has happened, because it’s putting us in a position to make this decision,” he said. “We should never have been put in this position.”
The mayor said, “I too struggle with this one.
“We want affordable housing to be in our municipality, but we’re giving one (property owner) a competitive edge over others in the town that are trying to do that as well,” said Warnock.
“I’d have been more in favour of splitting that cost with the owner, rather than giving them a full exemption,” he said.
Council ended up carrying a motion to accept the report for information with Coun. Todd Dalke opposed.
