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London, Ont. committee endorses hiring consultant to study how to handle vacant homes

London city hall in June 2020. Matthew Trevithick / Global News

A London, Ont. city committee has endorsed a plan that would see a consultant hired to assess the feasibility of a vacant home strategy and tax.

The motion, endorsed by a vote of 4-2 at Monday’s meeting of the corporate services committee, directs city staff to begin a ‘request for proposal’ process for consultant services, and to have the findings of said consultant brought back before the committee at a later date.

Read more: Oct. 21, 2021: City of Toronto looking for feedback on vacant home tax in effort to increase housing supply

Staff are also directed to continue monitoring the implementation of a vacant home tax in other Ontario municipalities. None currently have such a tax, however two, Ottawa and Toronto, are expected to implement one next year. Several others, like London, are examining its feasibility.

Vancouver is currently the only Canadian city to have a vacant home tax, and implemented it in 2017, according to a report from city staff which went before Monday’s meeting.

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The hiring of a consultant isn’t a done deal. Full city council still has to vote on the motion.

City staff estimate the hiring of a consultant will cost between $100,000 and $150,000, with the RFP process taking up to five months, based on timelines seen in other municipalities.

The text of the original recommendation from city staff (top), and the amended motion voted on by committee members (bottom). City of London

The move to hire a consultant came as a result of an amendment put forward during the meeting by Ward 5 Coun. Maureen Cassidy.

In their initial report, city staff recommended that council not move ahead with a vacant home tax, saying it would cost more annually to implement, than it would bring in to city coffers, “possibly creating an additional cost to the property taxpayer.”

In calculating the cost, city staff assumed that roughly 0.5 per cent of residential properties in the city are vacant, or 783.

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Based on that, staff estimate that a one per cent vacant home tax would bring in $2 million annually in tax revenue, but cost $2.1 million per year in administration costs to pay for inspectors, administrative and audit staff, IT services, and material costs.

Staff also estimated that implementing the tax itself would cost a one-time $5.5 million for “public education, and technology build and support for tax administration, audit capabilities, and online declaration.”

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In Vancouver, where property owners are required to declare their property status as occupied or not occupied, implementing the vacant home tax cost $7.4 million, and $2.9 million per year to administer, according to the staff report presented Monday.

The report notes the tax generated an average of $37.8 million annually for the City of Vancouver between 2017 and 2019, with more than $30 million applied to affordable housing initiatives. The number of vacant properties there has dropped from three to one per cent. The city rose the tax rate to three per cent last year.

It’s not entirely clear how many vacant homes there are in London, as the city does not keep a registry of vacant properties. The staff report notes that the city is only aware of 62 vacant residential units in the city, identified based on inspections and public complaints.

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“Procurement of a consultant would provide a more accurate estimate of both the number of vacant properties in London and the associated costs of administering a Vacant Home Tax,” the staff report says. More accurate information would also aid in determining the tax rate itself.

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The tax is meant to encourage property owners to sell or rent out their unoccupied residential properties to increase the city’ housing supply, or pay a tax to keep them vacant.

Mayor Ed Holder questioned the purpose of implementing such a tax, arguing that it wouldn’t help deal with real estate speculation, or make much of a dent in the city’s homelessness problems, if those were issues the tax was aimed at helping alleviate.

“If the issue was demolition by neglect or properties that have property standards issues, I can get there. I can see why we might want to put some more teeth, if in fact we do not feel that there’s sufficient penalties or encouragement to comply,” Holder said.

“If I can speculate on it — forgive the pun — I don’t know what we’re trying to solve with this.”

Ward 6 Coun. Mariam Hamou, who along with Holder voted against the motion to hire a consultant and monitor other municipalities, said she too was having “a hard time understanding what the purpose is.”

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“If we’re looking for a solution for homelessness, or using another tool in the toolbox, can we compare how much money we’re going to be spending on this to some other homelessness remedying solutions?”

“If it’s about the other issue of derelict owners, then we’ve dealt with that in another bylaw,” she said, referring to the city’s vacant buildings by-law, which was updated in March of last year.

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Committee Chair and Ward 2 Coun. Shawn Lewis argued that a vacant home tax could be a tool to deal with multiple issues. Lewis and Ward 12 Coun. Elizabeth Peloza put forward the initial motion last summer to have staff examine the idea of a vacant home tax.

“It can be used to address the demolition by neglect. It can also be used to put a financial penalty for the cost of homes sitting vacant on to speculators,” he told the committee.

Lewis noted it may also incentivize some landlords to lower rental rates to fill vacant units rather than face the burden of a tax, which may cost them more than the reduced rent.

“What (this report) really highlights is we don’t have nearly enough information to know whether or not we should go forward,” he said.

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“That’s why I think it’s a worthwhile investment to move forward and get some more information put together so that it can come back to us and we can make an informed decision at that time.”

Near the end of the discussion, Ward 13 Coun. John Fyfe-Millar proposed that the wording of Cassidy’s amendment be itself amended to avoid using the word “tax,” which he argued “limits our scope.”

“I’d be much more open to having a discussion or having some direction over a vacant home strategy. Taxes … tells us this is the only path we have to move forward. But if the actual goal here is to fill vacancies, then I’d like to see, if we’re going to go to a consultant, to say, ‘give us some options,'” he said.

The motion was later revised to direct staff to hire a consultant to study and review “a Vacant Home Strategy including but not limited to the implementation of a Vacant Home Tax.”

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