Motion – Councillor L. Dudas - Vacant Unit Tax

The recitals

• on March 23, 2022, Council approved adopting the Vacant Unit Tax program beginning on January 1, 2023, which included direction to the Deputy City Treasurer, Revenue Services, to apply to the provincial Minister of Finance requesting that Ottawa be designated as an eligible municipality to levy a residential vacant unit tax, in accordance with section 338.1 of the Municipal Act, 2001
• the provincial Minister of Finance subsequently designated the City of Ottawa, by way of Ontario Regulation 458/22, as an eligible municipality to implement a residential vacant unit tax by-law
• the net revenue from the VUT will be directed toward affordable housing initiatives as outlined in the Housing Services Long Range Financial Plan
• the financial impact of a VUT incentivizes owners to return vacant properties to the housing market or to redevelop properties to help improve the housing rental supply
• during the first year of the VUT, additional benefits have been realized such as the updating of outdated property assessment information, updated contact information for property owners, and a threefold increase in enrollment in the paperless billing through MyServiceOttawa
• in the Vacant Unit Tax report approved by Council in 2022, the document establishing the Vacant Unit Tax in Ottawa, stated that staff: Until the program begins, and the first annual declaration is in, the City will not have concrete data on how many vacant properties are subject to the residential vacant unit tax. Staff have, however, attempted to estimate the number of properties that would be vacant using various approaches and data sources. These approaches all suggest that the number of vacant properties in Ottawa subject to the residential vacant unit tax would be between 0.5% and 0.75% of the 330,000 eligible units. In Vancouver, 1% of the eligible properties are subject to the tax. Toronto expects the tax to apply to 1% of their units. Using Vancouver's results as a proxy for measurement, staff adjusted the results for multiple factors, such as the balance between condo apartment units and single dwellings
• staff noted in the report that they had no concrete data on vacancy in Ottawa and estimated a vacancy rate of 0.5% and 0.75%
• the preliminary vacancy rate for Ottawa is 1.8% but that vacancy rate will fluctuate until the appeal and audit phase is complete
• the preliminary vacancy rate for Vancouver, the city in which Ottawa’s VUT is based on, was 1.8% as well and their final vacancy rate, after the appeal and audit phase, was 1.2%
• the preliminary vacancy rate for Toronto was 6.1%, mainly attributable to a declaration rate of 95% compared to 99.1% for Ottawa
• Ottawa had the highest percentage of declarations received and the lowest operating costs for a VUT in Canada
• some residents have raised concerns about the declaration process including the requirement to report annually and that declarations are required to be made primarily online
• the development industry representatives have been seeking clarification on the application of the VUT to new builds and the impact on housing affordability
• two to three years of data would be required to analyze trends and the possibility of moving towards an effective targeted or periodic declaration approach