Edmonton eyes property taxes based on density with cuts for rental property owners and hikes for single-family homes

Council is also eyeing new tax categories for low-, medium- or high-density residences. If Edmonton proceeds it would be the only municipality in the country to take this tax approach.

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Tax bills for single-family homes could rise alongside a larger dip for apartment buildings as the city looks at an unconventional way to address density in Edmonton.

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City council is mulling over shedding a decades-old “other residential” property subclass that charges rental apartment building and mobile-home owners more money than those who own a house. Changes would slash taxes by 11.7 per cent for companies owning multi-unit rentals and hike rates for single-family homeowners by 1.6 per cent, if these changes came into effect in one year rather than a gradual increase.

On top of doing away with the old category, council is also eyeing new tax categories for low-, medium- or high-density residences. If Edmonton proceeds it would be the only municipality in the country to take this tax approach, according to staff.

Coun. Anne Stevenson, who tabled a motion asking staff to investigate further, said keeping the residential tax system as-is penalizes renters. However, she hoped any tax increase to homeowners would be spread out over multiple years.

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“Phasing out the other residential (category) is an excellent opportunity for greater equity in our community … there are many different groups that would benefit from this,” she said.

Speaking to Postmedia Wednesday, Stevenson said changing rates would only be fair to rental building owners who are taxed higher than individuals who own a single condo unit. Decreasing rental companies’ tax burden, she believes, may decrease rents and allow companies to invest in improvements.

Rents didn’t drop

But staff urged caution about expecting behavioral changes through taxation in a presentation to executive committee on Feb. 16. Creating tax categories based on density would be unprecedented in Canada, staff said, and most municipalities tax multi-residential at higher rates because they are businesses.

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Cate Watt, branch manager for assessment and taxation, said property owners could pass tax savings to renters but historically this hasn’t happened in Edmonton.

“Previous councils implemented strategies to eliminate the other residential rate but canceled those strategies after rental rates did not actually decrease,” she said last month. “It is… unlikely that the city would be able to measurably attribute any impact on rents to this potential policy change.”

Mayor Amarjeet Sohi said council needs to consider how changes would impact individual homeowners.

“There are also a lot of low-income people who own single-family properties and seniors on fixed incomes,” he said. “How do we make sure that they are not burdened with additional tax pressures at a time when they’re struggling as well?”

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At the Feb. 16 meeting, developers with Urban Development Industry Edmonton told councilors they wouldn’t have built some new rental projects if they knew tax rates would be as high as they are currently.

“I believe our current property tax structure is the single greatest impediment to further infill growth,” said Henry Edgar, owner of Edgar Development and UDI member.

Staff Told Council last year subclasses not based purely on wealth may distort the real estate market and offset intended benefits.

On Wednesday, councilors asked staff to bring back a report on possible tax options toward the end of this year.

Mobile homes

Coun. Andrew Knack also suggested creating a subclass for mobile home communities who are taxed twice: firstly on the home and secondly on the land.

“This is disproportionately impacting mobile home communities — I happen to represent one of them — and I think it is time we get rid of that,” he said.

Scrapping the other residential subclass, Knack said “benefits renters, I think it benefits others, but it’s the mobile home communities that’s been sitting in the back of my mind from the beginning.”

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