Council creates tax subclasses, provides tax incentive to market vacant land for development

Cold Lake City Council passed a bylaw and two policies that together create a program aimed at encouraging building and growth on empty, but ready-to-develop land within the community.

Firstly, the council passed a bylaw that created tax subclasses for vacant commercial and vacant residential properties. In this case, vacant property is defined by policy as property that is subdivided for commercial or residential uses, but which has not been built upon or developed for any of its approved uses. To fall into a vacant tax subclass, the property must have remained undeveloped for seven years or more since its final subdivision, or be vacant of improvements which have been demolished for seven years or more. The property must also be fully serviced, or directly serviceable, and developable.

The subclasses allow for Council to set tax rates for vacant residential property and vacant commercial property that are separate from the non-vacant residential and commercial tax classes. Tax rates themselves are generally set by Council in May of each year, after assessments have been finalized.

“The purpose here is to motivate people to develop land that is ready for development,” Mayor Craig Copeland said. “We have an increase in interest from people with the means to take on significant developments in our community, but we also increasingly find that developable land is not for sale, despite the fact that it has been sitting for several years with no building or other activity. This creates a burden on the rest of the community when it comes to supporting the city’s infrastructure and services. At the same time, the community does not get to benefit from the jobs, services, and the tax base that could be provided by developing the vacant properties.”

City staff have determined that there are 182 residential properties and 45 commercial properties that would meet the definition of vacant for the purposes of the new tax subclasses.

“We heard from some people who had concerns that we were using too much of the stick approach versus using a carrot,” Copeland said. “They would rather see an incentive program instead of a penalty, and so we also created a policy to provide an incentive to sell empty land that has sat for such a long time with no building or construction that it falls into one of the vacant tax subclasses.”

The bylaw and policies considered the need for an incentive, and with that, the Vacant Lot Sale Incentive Program Policy was also passed by Council at its last meeting. This policy ensures that if any property within the City of Cold Lake falls within one of the vacant tax subclasses, but is up for sale on the Multiple Listing Service (MLS), the property owner can receive a grant rebate. The grant rebate would equal the amount of the difference between the taxes paid at the vacant rate and the non-vacant rate, plus five per cent.

In order to qualify, the property must be listed on the MLS for at least 180 days in the tax year, or be listed for any number of days on the MLS and sold in the taxation year. The property owner must apply for the rebate between July 1 and Dec. 31 in the eligible tax year. Owners can receive one tax rebate per year for each eligible property, provided the requirements are met and that applications are made annually, provided the policy remains in effect.

The rebate policy will be considered for renewal by Council annually.

“We’ve heard from people who are concerned about stifling development, but the truth is that there is no lack of interest in investing in Cold Lake,” Copeland said. “What we do lack is developable land that is for sale, and I think that we have struck the right balance: We’ve given ourselves the tools that we need to discourage land banking, while also providing an incentive for people to put empty land on the market. This will help people and business groups who are ready to build and grow this community do so.”