CANMORE – A potential plan for phasing out tourist homes, hiking taxes for vacant or second homeownership and supporting purpose-built rentals took another step forward in Canmore.
Town council directed municipal staff to develop policy intended to increase the housing supply in the mountain town. But while council has directed staff to bring back new policy to discuss, the complexity and legal review of the work will likely not see potential next steps until 2025.
“I think a lot of people think the answers to our housing issues are quite simple and what we should do as leaders are quite simple and I don’t subscribe to that thinking,” said Coun. Joanna McCallum, who was one of three council members on the Livability Task Force that brought forward the recommendations.
“I really appreciated sitting in the complexity of the topic and having these complete conversations about this housing ecosystem we’re struggling to manage.”
Among the task force’s recommendations for tourist homes were taxing all at a commercial rate, removing the personal use declaration option and allowing tourist homeowners to switch permanently to a residential class. In addition, a ban on future tourist homes will be considered, though exisiting ones would be grandfathered in.
Though tourist homes account for a small amount of housing in the community – 4.4 per cent or 611 units of the Town’s 14,005 units – it has become a divisive issue among residents, particularly as the cost of housing has soared and become far more difficult to find.
The task force’s report noted it was also higher than the number of apartment rental units, which as of 2022 was 587.
“It’s not insignificant, but still a small proportion,” said Ben Brunnen, the principal and founder of Verum Consulting, of the tourist homes.
The report added from 2013-22, tourist homes grew from 515 to 685. Short-term accommodation also grew from 2,668 in 2014 to 3,334 in 2022. In the same timeframe, multi-family condos went from 3,949 to 5,418.
Statistics from Tourism Canmore-Kananaskis outlined more visitor spending contributed $763 million in 2022, but when excluding accommodation it was $322.75 million and the total spending for 685 tourist homes was $26.5 million.
The Canmore retail gap analysis and light industrial and commercial land review study had visitor retail spending in 2022 at $256 million, while seasonal resident households were $25 million.
Mayor Sean Krausert said an emphasis for the municipality is to find ways to make housing available for residents. Though tourist homes make a small percentage of homes in Canmore, it’s still an option that needs to be explored.
“The purpose here is to limit the type of growth of use,” he said. “It’s not in effect yet, so those currently with that use and those approved before it comes into effect, they will be allowed to continue. It’s really about limiting the growth of this type of use.”
Though tourist homes could see potentially the class phased out, Three Sisters Mountain Village Properties Limited (TSMVPL) area structure plans (ASPs) would be immune.
The Three Sisters Village ASP, which was approved by council in October after the Court of Appeal supported the Land and Property Rights Tribunal’s decisions, calls for between 650 and 950 tourist homes to be built.
Brunnen and the staff report emphasized it would be “subject to discussions with the developer.”
For possible tax structure to incentivize the long-term use of residential units, the task force recommended a primary residence rebate be created, a new primary residence property tax subclass established and higher taxes for people who don’t qualify for the primary residence subclass.
Brunnen said any higher taxes for a subclass should be gradually brought in rather than all at once, which allows the property owner to decide if it’s worth maintaining a property in that subclass.
“It’s really going to come down to people making decisions on the margin. How much marginal cost is it to them and is it worth it for them to change their behaviour?” he said.
“That tends to be the most effective way, but not necessarily the fastest way. It’s the most effective and thoughtful way to implement something like this, so you start to see people make those decisions.”
In British Columbia, the speculation and vacancy tax allows 59 authorized municipalities to collect money from people who own property in the province but don’t pay the majority of their taxes in Canada.
It was first introduced in 2018 and combined with recent legislation to restrict short-term rentals is designed to add more housing supply to communities and reduce the number of vacant homes.
The City of Vancouver’s empty homes tax annual report for 2022 stated of the 1,755 vacant homes in 2020 it was reduced to 1,156 in 2022. Principal residences went from 132,205 in 2020 to 135,238 in 2022, while homes with tenants were 56,660 in 2020 and 58,819.
Data from the report stated between the tax levy and fines the City collected $32.5 million in 2022, while 12,806 audits were completed and 871 complaints were made about property owners.
The City of Toronto also has a vacant home tax, which its council approved in 2021. A report to its City council last September stated the City had collected $54 million and had 2,336 properties declared vacant in February, 2022 with it dropping to 2,161 as of August 2023.
The federal government announced in November plans to remove income tax deductions from non-compliant short-term rental properties and $50 million over three years to support municipal enforcement of short-term rentals. However, no legislation has been passed.
Brunnen noted Alberta’s Municipal Government Act doesn’t allow for municipalities to create a vacant property tax, but they do have authority to create subclasses for residential properties.
He said “it’s likely within this authority for the Town to create a primary residence subclass,” but that he “would not be surprised to see someone try to challenge this legally.”
Therese Rogers, the Town’s general manager of corporate services, added the proposal has undergone initial legal review, and while it’s likely to be challenged, anything brought for council consideration will be legally vetted and within municipal authority.
“Administration will be working with legal counsel to make sure what we’re bringing forward is within our authorities and you all as councillors are aware of what we can and can’t do and how we structure programs to make sure we’re compliant,” she said.
The final recommendations included the Town looking at a tax structure to incentivize purpose-built rental units such as tax relief, policies and incentives.
Council has already given direction on previous purpose-built rentals, including for 900 Railway Ave in 2023. In exchange for a 75 per cent reduction in municipal property taxes for a 10-year period for a 59-unit mixed-use building, 95 per cent of the units will be earmarked specifically for Canmore residents.
“The tax incentives are impactful and they can be very meaningful, but there are a pile of other incentives and tools that are available to the Town that you can bring to bear, and if they’re brought to bear in a cohesive strategic approach, we think that will be the most effective,” Brunnen said.
Brunnen, Town staff and council emphasized any financial collection from such measures would be specifically used to help with affordability in the municipality.
“All housing units need to be part of the solution either in housing a primary resident as owner or tenant or by paying more in taxes that we can use 100 per cent of those additional revenues to go to funding housing solutions,” Krausert said.
A public information session is expected in February, and any amendments to the Municipal Development Plan, land use bylaw and area structure or redevelopment plans would require a public hearing.
The task force also looked at zoning, land use and approval policy, land supply recommendations, employee housing and additional tools to support purpose-built rentals, but felt it was out of its scope.
The task force met four times in 2023. Members included Krausert, McCallum and Coun. Wade Graham as well as the Town’s senior staff of general managers Whitney Smithers, Rogers, Scott McKay and CAO Sally Caudill.
Six community representatives were Tourism Canmore-Kananaskis CEO Rachel Ludwig, local developer Frank Kernick, Dan Sparks representing real estate, Darren Potter of Asset West Property Management and former Town CAO Lisa de Soto for Canmore Community Housing.
One of the community representatives, Charla Tomlinson with Rockies Rentals, a short-term rental property management company, left the task force early in the process and wasn’t replaced.
According to Statistics Canada data, eight per cent of homes in Alberta are non-owner occupied, but in Canmore it comes in at 26 per cent. There are also 34 per cent of households renting in 2021 compared to 29 per cent in 2011, while monthly housing costs have jumped by 65 per cent since 2006 in Canmore.
Property values have also exploded, increasing 80 per cent since 2006, with a median residential assessed home in Canmore now $969,000.
In the 2016 and 2021 federal censuses, Canmore was measured as having the highest income inequality in the country. The Gini index – also known as the Gini coefficient – is a metric that measures income.
The Alberta Living Wage Network has consistently ranked Canmore as needing the highest hourly wage of participating municipalities in the province, with the latest study outlining an hourly wage of $38.80 being needed to live in the community.
Rental costs have also soared with the Job Resource Centre’s fall labour market review showing the average rental rate for a one-bedroom in Canmore is $2,347 and $2,886 for a two-bedroom unit. A three-bedroom is $4,439 and a studio or bachelor unit is averaged at $900.
The Town has attempted to address affordability through free local transit, affordable housing with Canmore Community Housing and programming from Family and Community Support Services.
Additional information will be available as potential policy returns to council for approval.
“These are very real areas where our community feels tension and has an interest in, and I look forward to the implementation plan administration is going to develop,” said Coun. Tanya Foubert of the recommendations. “That’s where we get information to answer some of the questions that will come up and creating the mechanisms that we need to reach these objectives.”