The attempt to tax second homeowners will soon take shape in Canmore.
The municipality will soon have its first run with its new vacancy tax and endeavour to phase out tourist homes as council is set to start its budget process.
Whether or not it’s a success will take time to determine, but it is clear the status quo has long not been working in Canmore.
The community is in one of the most scenic areas of the country, which can also be a curse as second homeownership has soared.
In using 2023 utility accounts, a consultant for the Town of Canmore indicated 2,260 of 8,578 residential accounts were not for full-time residents. When mailing addresses were used, 2,150 had non-Canmore addresses.
A Statistics Canada study from earlier this year also found at least 15 per cent of Canmore’s housing market is being used for short-term rentals.
Given its proximity to one of the largest international airports in Canada and Banff National Park and Kananaskis Country having more strict rules to reside and develop, if someone wants to have a home in the mountains Canmore is a prime location after areas such as Whistler and Mont-Tremblant.
Depending on the word choice – encourage, incentivize, motivate – the goal is clear if someone owns a second home in Canmore, you either find someone to consistently live in it or you pay extra to keep a bedroom off the market.
A legal challenge is all but inevitable, which Town staff has consistently said it expects to face.
Without a provincially legislated vacancy tax – as is the case in British Columbia and Ontario – a new tax subclass is the only real option for an Alberta municipality.
Of course, a vacancy tax enshrined in provincial legislation would allow for less administrative burden, but the province wields the hammer and it’s not a path they’ll soon go down.
The Ministry of Municipal Affairs has repeatedly said the Municipal Government Act allows elected officials to create subclasses since they’re ultimately accountable to their residents, must be fiscally responsible and be equitable to residents and taxpayers.
In short, if you don’t like it, vote those elected officials out or run yourself, but a municipality shouldn’t get too greedy in taxing one specific group.
There remains an unknown element of how much the tax will actually be, with rates still months away from being formally approved, and how many staff will be needed to administer it.
The impact of vacancy taxes is still being studied, particularly since they’re relatively new in Canada.
Earlier this year, a study from the C.D. Howe Institute – Ripple Effects – indicated vacancy taxes did assist in housing availability, but had little impact on affordability. The study analyzed Vancouver’s empty homes tax and highlighted other measures were needed to address help with affordability.
To say other municipalities have had steep learning curves may be an understatement. Any new policy is bound to have errors, so careful planning and implementation are crucial.
Toronto’s vacant home tax received a major overhaul after a disastrous rollout. In 48 hours, the City of Toronto received nearly 72,000 complaints and ultimately had more than 120,000 filed.
The new policy saw thousands of taxpayers erroneously billed for having a vacant home, leading the City and Mayor Olivia Chow to issue a public apology.
In Canmore, the reality is few, if any, will rezone their tourist homes to residential to take advantage of a tax cut in the new subclass. With a tourist home able to reap financial benefits, it’s far more advantageous to keep it at the existing zoning or sell it.
The potential to have them reintroduced into the rental market, at least for months at a time, is far greater, which could see community benefit.
While second homeowners were informed after the bylaw was passed, it signifies a missed opportunity for consultation with impacted parties before a decision. Other than an information session a year ago, there was little to no consultation.
The vacancy tax can be one such measure to help availability. In addition to speedy permit timelines, a good working relationship between the private and public sectors working together are key to providing housing.
Globally countries are facing significant housing issues.
In the coming months, the rollout of the vacancy tax will determine the level of initial success.
