A joint meeting of the Finance and Corporate Services and Planning and Housing committees has voted to approve a plan that would strengthen the city’s Vacant Unit Tax.
The VUT was implemented by council in 2022 to encourage homeowners to occupy or rent their properties to address the affordable housing crisis in the city. Properties that are declared vacant for more than 184 days in the previous calendar year are charged a fee equivalent to 1 per cent of the property’s assessed value on their final property tax bill.
The new measures approved by committee on Wednesday would implement a graduated VUT rate that increases by one per cent a year for repeat vacancies, up to a maximum of five per cent of assessed value. The changes would also add approximately 1,200 more units to the rolls, add new exemptions for certain properties, and extend the appeal process.
Staff say adding a graduated tax rate would generate up to $4 million of additional revenue. The first full year of taxation on vacant properties raised $12.6 million in revenue, with $10.3 million being allocated to the city’s housing long-range financial plan. It cost $2.28 million to administer the VUT program in its first year.
Osgoode Ward Coun. George Darouze proposed changes that would remove some properties from eligibility for being taxed, including managed forest properties and farmland with a non-farm residence with a portion being farmed. He also moved that the owners of rural residential century homes, recreational hunt camps, or structures significantly damaged and not capable of being used for housing be eligible to apply for an exemption from the VUT under certain circumstances.
Both items were approved.
Capital Ward Coun. Shawn Menard moved a motion calling on the mayor to request the Premier of Ontario and the Minister of Municipal Affairs and Housing for the authority to extend the VUT to the multi-residential class. That motion was also passed, with dissent from councillors Riley Brockington and Laura Dudas.
Barrhaven East Coun. Wilson Lo attempted to apply new the exemptions to the tax retroactively to property owners who were subject to the VUT in 2023, but his motion was opposed by the mayor and was voted down 11 nays to six yeas.
The vote on strengthening the VUT passed 15 to 2, with councillors Laura Dudas and Riley Brockington voting against. Councillors Matt Luloff, Clarke Kelly and George Darouze dissented against adding more properties to the rolls and adding the graduated taxation. Wilson Lo also dissented against adding graduated taxation.
Strengthening the VUT was one of the commitments the City of Ottawa made in exchange for a deal with the province to provide the city with $543 million in funding.
The changes must still be approved by full city council, which meets on Nov. 13.