A vacant home tax and phasing out of Canmore’s tourist home tax designation is moving forward.
But the tax rate and the amount to be collected will have to wait until council discusses its budget, while the likelihood of a legal challenge could arrive in the coming months.
Canmore council repealed and updated its division of class 1 property bylaw, which will see the creation of a new primary residence tax program and removal of the tourist home personal use tax subclass.
“We’ve been very thoughtful. We’ve been very measured in our approach and I look forward to the impacts that this does have on our community,” said Coun. Wade Graham. “We do have funding shortfalls for a lot of our affordability projects and everybody has a part in that solution. I look forward to seeing the impacts and hopefully decreasing vacancy rates in the town.”
Though Alberta doesn’t allow vacancy taxes similar to Vancouver or Toronto, the Municipal Government Act enables tax subclasses to be created and each taxed at different rates.
The bylaw will have four subclasses, including the new primary residential subclass that council can set at a specific tax collection rate. All homeowners will have to declare themselves as primary residents or incur the larger municipal property.
“By setting a lower tax rate for [residential] properties, it is anticipated owners will be incentivized to either live in them long-term, full-time, or rent to someone who will,” stated a staff report. “Once converted to residential, former tourist homes used as a primary residence could qualify for inclusion in the primary residential subclass.”
Declarations of residential properties – except for apartments, parking stalls and storage units, tourist homes and vacant serviced land – are needed by Dec. 31 each year.
The report noted a declaration can be audited going back three years and if there was a false declaration, a fine of up to $10,000 can be issued.
For a property to be a primary residence, it must have an owner or renter live in the unit for a minimum 183 days in a year and at least 60 be continuous.
The bylaw will allow some exemptions if an owner can’t live or rent their property due to medical reasons, if they died, a catastrophic event such as a natural disaster, if it’s undergoing permitted repairs that don’t allow anyone to live in the unit and an order didn’t allow someone to live in the unit.
“We need serious tools to help us with the affordability crisis and this gives us another tool in the toolbox,” said Coun. Jeff Mah.
The Town has 718 tourist homes – including 75 for personal use – and eight development permits ongoing or issued will add 67 more.
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 expanded from 3,949 to 5,418.
“Recognizing some may not be able to afford the higher tax level, I’m comforted by the fact that recommended by the Livability Task Force … is those properties can change their use without paying a fee in the next two years, so they can get the residential tax rate,” said Canmore Mayor Sean Krausert. "They just won’t be zoned as a tourist home.”
Though tourist homes will be 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 900 to 1,300 tourist homes to be built.
Coun. Tanya Foubert, the lone opposition vote, said she was supportive of the work completed and its objectives, but was concerned about the likelihood of a legal challenge, increasing confusion for residents with the primary residency program and tourist homes likely not being converted to residential use.
“When I look at current value of tourist homes on the market, and I put myself in the situation, I would not be converting my tourist home to a residential unit. I would be selling it on the market as a tourist home and using the money to buy a residential unit,” she said. “I’m not necessarily convinced that the transition of tourist homes to residential homes through this particular change is going to be achieved and could result in more pressure on residential real estate instead of more housing units.”
She noted she supported removing the personal use for tourist homes and a vacancy tax similar to Ontario or British Columbia, but Alberta had stricter and more restrictive legislation.
“I believe a vacancy tax is exactly what we need as a community and I know what we have explored and what we have put together in the tax policy is as close as we can get in Alberta to a vacancy tax for our community,” Foubert said. “I also look at the system that’s being proposed, and for me, I have intense apprehension that it will make it more difficult to be a resident in Canmore and that it will as a result see people who can’t afford increased tax rates being unintentionally in a situation where their taxes go up because they didn’t realize they have to register and they have to go through an appeal process. It is a lot more processes.”
Graeme McElheran, director of communications for the Ministry of Municipal Affairs, said the MGA has a framework to give elected officials the ability to “provide for the needs of their community, balanced by their accountability to the citizens who elect them.”
He said councils have discretion and legislation allows them to create subclasses.
“Municipalities must tax according to the rules in the MGA. The MGA does not specifically enable a vacant home tax, but it does enable the municipality to divide its residential class into subclasses by any means it considers appropriate, and apply a separate tax rate to each subclass.”
McElheran noted council’s can annually determine money to assist with programs and services, and “are expected to conduct themselves in a fiscally responsible manner and ensure council policies are equitable for residents and taxpayers.”
“Ultimately, councils are accountable to residents when making a decision such as the secondary home sub-class.”
“Residents and property owners may not always support the decisions of a locally elected council. However, if a municipal council is operating within its legislated authority, the MGA does not authorize the Minister of Municipal Affairs to intervene in local decision-making except in very specific circumstances. Electors may request action through the petition process for bylaws or a recall of elected officials, and of course by voting in a municipal election or running as a candidate.”
Town staff recommended the fee – $330 plus $1.35 per square metre – to switch a tourist home to residential be waived for two years.
A tax rebate program for full-time and long-term residents was examined, but deemed to create more workload and confusion on taxes owed.
The Livability Task Force’s recommendations were accepted by council in January, with Town staff directed to create a plan to implement its objectives.
Two of the recommendations were to phase out tourist homes and look at tax structures to incentivize full-time and long-term use of residential units.
Rather than attempt rezoning, which would require public hearings, the bylaw impacts taxation and would grandfather existing properties.
The intent is to use the added taxation generated towards affordability initiatives in the community. Council will determine the funding revenue needed each year at budget, with tax rates finalized each spring.
Toronto, Vancouver and Ottawa collect a small percentage – between one to three per cent – of assessed value in their vacancy taxes, which goes towards affordable housing initiatives.
The report emphasized the funding would be for Town-led initiatives and not more funding for Canmore Community Housing (CCH) since it has access to the vital homes property tax. Council, however, could direct money to various initiatives such as CCH.
“While specific initiatives have not yet been determined and will likely change as opportunities arise, they may include things such as the purchase of property for non-market housing, funding community affordability programs … and increasing the non-market housing supply including supporting infrastructure such as a pedestrian underpass, which is currently budgeted at $14 million,” the report stated.
No decision on money collected is part of the proposed bylaw, but Town staff are recommending council to “consider setting a tax rate that makes the effort worth it” to ensure full-time and long-term residents declare each year.
Ben Brunnen, principal of Verum Consulting, gave Town staff revenue estimates during the Livability Task Force work. His research using 2023 utility accounts found of the 8,578 residential units in Canmore, 2,260 didn’t appear to be used for full-time residents.
When mailing addresses were used, it found 2,150 residential properties had non-Canmore addresses “indicating properties were likely not occupied full-time by the owners.”
The 2023 utility data had the assessed value of those homes from non-permanent residents at about $3 billion and municipal taxes collected at $6.1 million. If between 0.10 per cent and 0.40 per cent of assessed value were additionally collected, it would lead to $3-12 million in extra revenue.
“To collect the revenue budgeted to fund livability initiatives from non-primary residences, increased tax rates on these properties would be required.”
The report stated if personal use tourist homes were removed using the 2024 mill rates and assessed values, it would’ve shifted $249,000 in municipal taxes to tourist homes from residential units. The average municipal tax on tourist homes would’ve jumped from $1,550 to $4,760.
The report noted all tourist homeowners would be notified of the changes by the Town after the bylaw passed. All other property owners who could take part in the primary residential subclass would also be notified.
“Every door in this community has a responsibility to contribute to helping solve our housing crisis … We will see how this roles out in the coming years, but I’m happy to put my hand in the air to take a step forward in finding new resources to help fund and support our housing crisis,” said Coun. Joanna McCallum.