Council to consider tax subclasses for vacant lots

At its Corporate Priorities Meeting held this week, Council directed administration to draft a bylaw that would create tax subclasses for “vacant residential” and “vacant non-residential” properties. The discussion was prompted by community feedback regarding the status of vacant lots throughout the community, as well as the growing need for more housing and a greater diversity of housing options.

If passed, the new subclasses would allow Council to set an alternative tax rate for undeveloped properties to incentivize development. Undeveloped, or vacant, properties for the purpose of the tax classes are considered properties that have been zoned for residential or commercial uses, but on which no improvements have been built to serve the function for which they are zoned. They would not include properties that have buildings constructed, but whose structures are vacant.

These proposed tax classes can also include timelines to ensure that only properties which have been zoned for certain uses, but have remained undeveloped for a certain number of years, are taxed at the different rate.

“The purpose here is to prevent land banking residential and commercial property that would slow growth in the community,” Mayor Craig Copeland said. “The examples that administration provided us were for properties that have remained undeveloped for a significant period of time – properties that have seen no construction for seven years or more. In that case, a slightly higher tax rate can kick in to incentivize some type of development on the property.”

The City of Cold Lake currently has 347 properties that could be classified as vacant for the purposes of the proposed tax subclasses, dependent on the timelines that a potential bylaw might establish. Administration noted that the tax subclasses can be used to achieve a more targeted distribution of property taxes in the community, or to fund incentive programs that could assist with development.

“These tax subclasses can mean that developed properties which are actively contributing to our local economy pay a little less, while properties that have sat undeveloped for a long period of time pay a little more,” Copeland said. “Or, the money collected from vacant properties can be earmarked for incentive programs to encourage development. That money can be returned through grants to help with development plans, building permits, or other fees that might help speed up development.”

With council’s direction, staff will continue to research and draft a bylaw to establish separate subclasses for “vacant residential” and “vacant non-residential” properties, and bring the findings and a draft bylaw to a future meeting for further discussion.

“This is very early in the process, and we will be carefully considering how similar tax subclasses have worked in other communities, how we might want to see them function in our community, and whether we want to bring them in at all,” Copeland said.