Item - 2023.EX8.7

Tracking Status

  • City Council adopted this item on October 11, 2023 with amendments.
  • This item was considered by the Executive Committee on October 3, 2023 and adopted without amendment. It will be considered by City Council on October 11, 2023.
  • See also By-law 979-2023

EX8.7 - Vacant Home Tax: Status Update

Decision Type:
ACTION
Status:
Amended
Wards:
All

City Council Decision

City Council on October 11 and 12, 2023, adopted the following:

 

1. City Council affirm that the ultimate goal of the vacant home tax is to collect zero dollars.

 

2. City Council approve the following changes to the Vacant Home Tax, effective for the vacancies occurring in the 2023 Taxation Year unless specified otherwise, and City Council amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, accordingly:

 

a. change the payment due dates to the 15th of May, June and July, from the 1st of each of those months;

 

b. change the definition of current value assessment to reference the current value assessment of the Residential Unit, as shown on the most recently returned assessment roll for the Taxation Year, rather than as of the Payment Date;

 

c. by clarifying that six months means 183 days for the purposes of determining vacancy, so as to avoid confusion regarding longer and shorter months;

 

d. by expanding the definition of Tenant to include a business tenant, to account for situations where a property is assessed in the Residential Tax class, but is occupied by a tenant and operating as a business;

 

e. by adding a new exemption for newly built or constructed housing inventory that is vacant, which exemption applies for up to two consecutive taxation years;

 

f. reduce the notice of complaint period to the last business day in the year of the Payment Date from the 10th business day of April of the following year;

 

g. by extending the declaration deadline to the last business day of February of the year following the Taxation Year in respect of which the Declaration is made;

 

h. change the requirement for the exemption for repairs and renovations from obtaining an opinion from the Chief Building Official and Executive Director, Toronto Building to a requirement that repairs or renovations are being actively carried out without unnecessary delay; and

 

i. increase the tax rate for vacant properties from one percent to three percent effective for vacancies occurring in the 2024 Taxation Year.

 

3. City Council amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, to change the current two-year exemption from the vacant home tax where a property owner has passed away in the reference taxation year, to provide a three year exemption from the tax following the death of the property owner in a taxation year.

 

4. City Council amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, so that any property that is not a short-term rental, as defined by Toronto Municipal Code Chapter 547, Licensing and Registration of Short-term Rentals, and is being rented for 28 consecutive days or more but does not have a lease in place, is subject to the Vacant Home Tax, and City Council request the Chief Financial Officer and Treasurer to include information about these rental properties in the 2024 annual report on the Vacant Home Tax, including potential revenues that could be achieved from collecting the Vacant Home Tax from these rental properties.

 

5. City Council amend City of Toronto Municipal Code Chapter 441, Fees and Charges, Appendix C, Schedule 5, Revenue Services, effective January 1, 2024 to include a new fee for failing to provide a declaration of occupancy status by the declaration due date; the fee is to be set at $21.24 per taxation year, effective for the 2023 Taxation Year, and approved for annual automatic inflationary adjustment.

 

6. City Council direct any additional revenue generated from the 2023 Vacant Home Tax above the budgeted amount to be directed to the Multi-Unit Residential Acquisition program and City Council request the Mayor to factor such additional revenues into the 2024 Budget process so as to increase the budgeted allocation to Multi-Unit Residential Acquisition.

  

7. City Council request the Mayor to consider directing a minimum of 10 million dollars of additional revenue, to be generated from the increase in the Vacant Home Tax to 3 percent, to the Multi-Unit Residential Acquisition program in the City’s annual budget, in addition to the ongoing annual funding and any remainder be directed to affordable and supportive housing.

  

8. City Council request the Interim Chief Financial Officer and Treasurer to review the feasibility of creating a new vacant home tax exemption for a Secondary Residence for Medical Reasons, and report to City Council at a point which allows sufficient time to enable this exemption for the upcoming 2024 tax year.

  

9. City Council direct the City Manager and the Executive Director, Housing Secretariat to continue to work with other orders of Government and the philanthropic non-profit sector for additional funding and expansion of the Multi-Unit Residential Acquisition program in addition to the Vacant Home Tax.

Public Notice Given

Background Information (Committee)

(September 19, 2023) Report from the Interim Chief Financial Officer and Treasurer on Vacant Home Tax: Status Update
https://www.toronto.ca/legdocs/mmis/2023/ex/bgrd/backgroundfile-239435.pdf
Public Notice
https://www.toronto.ca/legdocs/mmis/2023/ex/bgrd/backgroundfile-239482.pdf

Communications (Committee)

(October 3, 2023) E-mail from Miguel Avila-Velarde (EX.New)
(October 3, 2023) E-mail from Miguel Avila-Velarde (EX.New)
https://www.toronto.ca/legdocs/mmis/2023/ex/comm/communicationfile-172471.pdf

Communications (City Council)

(October 10, 2023) Letter from Danielle Binder, Director, Policy and Advocacy, Building Industry and Land Development Association (CC.New)
https://www.toronto.ca/legdocs/mmis/2023/cc/comm/communicationfile-172719.pdf

Motions (City Council)

1 - Motion to Amend Item (Additional) moved by Mayor Olivia Chow (Carried)

That

 

1. City Council direct any additional revenue generated from the 2023 Vacant Home Tax above the budgeted amount be directed to the Multi-Unit Residential Acquisition (MURA) program and request the Mayor to factor such additional revenues into the 2024 Budget process so as to increase the budgeted allocation to MURA. 

 

2. City Council request the Mayor to consider directing a minimum of 10 million dollars of additional revenue, to be generated from the increase in the Vacant Home Tax to 3 percent, to the Multi-Unit Residential Acquisition program in the City’s annual budget, in addition to the ongoing annual funding and any remainder be directed to affordable and supportive housing.

 

3. City Council direct the City Manager and the Executive Director, Housing Secretariat to continue to work with other orders of Government and the philanthropic non-profit sector for additional funding and expansion of the MURA program in addition to the Vacant Home Tax.

Vote (Amend Item (Additional)) Oct-11-2023 2:51 PM

Result: Carried Majority Required - EX8.7 - Mayor Chow - motion 1
Total members that voted Yes: 23 Members that voted Yes are Paul Ainslie, Brad Bradford, Alejandra Bravo, Jon Burnside, Shelley Carroll, Lily Cheng, Olivia Chow, Mike Colle, Vincent Crisanti, Paula Fletcher, Ausma Malik, Nick Mantas, Josh Matlow, Jennifer McKelvie, Chris Moise, Amber Morley, Jamaal Myers, Frances Nunziata (Chair), James Pasternak, Gord Perks, Anthony Perruzza, Jaye Robinson, Dianne Saxe
Total members that voted No: 1 Members that voted No are Stephen Holyday
Total members that were Absent: 1 Members that were absent are Michael Thompson

2a - Motion to Amend Item (Additional) moved by Councillor Stephen Holyday (Carried)

That City Council affirm that the ultimate goal of the vacant home tax is to collect zero dollars.


2b - Motion to Amend Item (Additional) moved by Councillor Stephen Holyday (Carried)

That City Council request the Interim Chief Financial Officer and Treasurer to review the feasibility of creating a new vacant home tax exemption for a Secondary Residence for Medical Reasons, and report to Council at a point which allows sufficient time to enable this exemption for the upcoming 2024 tax year.


3 - Motion to Amend Item (Additional) moved by Councillor Anthony Perruzza (Carried)

That City Council amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, to change the current two-year exemption from the vacant home tax where a property owner has passed away in the reference taxation year, to provide a three year exemption from the tax following the death of the property owner in a taxation year.

Vote (Amend Item (Additional)) Oct-11-2023 2:53 PM

Result: Carried Majority Required - EX8.7 - Perruzza - motion 3
Total members that voted Yes: 18 Members that voted Yes are Paul Ainslie, Brad Bradford, Alejandra Bravo, Jon Burnside, Olivia Chow, Mike Colle, Vincent Crisanti, Paula Fletcher, Stephen Holyday, Nick Mantas, Josh Matlow, Jennifer McKelvie, Amber Morley, Jamaal Myers, Frances Nunziata (Chair), James Pasternak, Gord Perks, Anthony Perruzza
Total members that voted No: 6 Members that voted No are Shelley Carroll, Lily Cheng, Ausma Malik, Chris Moise, Jaye Robinson, Dianne Saxe
Total members that were Absent: 1 Members that were absent are Michael Thompson

4 - Motion to Amend Item (Additional) moved by Councillor Paula Fletcher (Carried)

That City Council amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, so that any property that is not a short-term rental, as defined by Toronto Municipal Code Chapter 547, and is being rented for 28 consecutive days or more but does not have a lease in place, is subject to the Vacant Home Tax, and request the Chief Financial Officer and Treasurer to include information about these rental properties in the 2024 annual report on the Vacant Home Tax, including potential revenues that could be achieved from collecting the Vacant Home Tax from these rental properties.

Vote (Amend Item (Additional)) Oct-11-2023 2:55 PM

Result: Carried Majority Required - EX8.7 - Fletcher - motion 4
Total members that voted Yes: 18 Members that voted Yes are Paul Ainslie, Alejandra Bravo, Jon Burnside, Lily Cheng, Olivia Chow, Mike Colle, Paula Fletcher, Ausma Malik, Nick Mantas, Josh Matlow, Jennifer McKelvie, Chris Moise, Amber Morley, Jamaal Myers, Frances Nunziata (Chair), Gord Perks, Jaye Robinson, Dianne Saxe
Total members that voted No: 6 Members that voted No are Brad Bradford, Shelley Carroll, Vincent Crisanti, Stephen Holyday, James Pasternak, Anthony Perruzza
Total members that were Absent: 1 Members that were absent are Michael Thompson

Motion to Adopt Item as Amended (Carried)

Adoption of Executive Committee Recommendation 1.i. only:

 

1.i. increase the tax rate for vacant properties from one (1) percent to three (3) percent effective for vacancies occurring in the 2024 Taxation Year.

Vote (Adopt Item as Amended) Oct-11-2023 2:58 PM

Result: Carried Majority Required - EX8.7 - Adoption of Executive Committee Recommendation 1.i. only
Total members that voted Yes: 21 Members that voted Yes are Paul Ainslie, Brad Bradford, Alejandra Bravo, Shelley Carroll, Lily Cheng, Olivia Chow, Mike Colle, Paula Fletcher, Ausma Malik, Nick Mantas, Josh Matlow, Jennifer McKelvie, Chris Moise, Amber Morley, Jamaal Myers, Frances Nunziata (Chair), James Pasternak, Gord Perks, Anthony Perruzza, Jaye Robinson, Dianne Saxe
Total members that voted No: 2 Members that voted No are Vincent Crisanti, Stephen Holyday
Total members that were Absent: 2 Members that were absent are Jon Burnside, Michael Thompson

Motion to Adopt Item as Amended (Carried)

Vote (Adopt Item as Amended) Oct-11-2023 2:59 PM

Result: Carried Majority Required - EX8.7 - Adopt the balance of the Item, as amended
Total members that voted Yes: 21 Members that voted Yes are Paul Ainslie, Brad Bradford, Alejandra Bravo, Shelley Carroll, Lily Cheng, Olivia Chow, Mike Colle, Paula Fletcher, Ausma Malik, Nick Mantas, Josh Matlow, Jennifer McKelvie, Chris Moise, Amber Morley, Jamaal Myers, Frances Nunziata (Chair), James Pasternak, Gord Perks, Anthony Perruzza, Jaye Robinson, Dianne Saxe
Total members that voted No: 2 Members that voted No are Vincent Crisanti, Stephen Holyday
Total members that were Absent: 2 Members that were absent are Jon Burnside, Michael Thompson

Point of Privilege by Councillor Josh Matlow

Councillor Matlow, rising on a Point of Privilege, stated that he was taking his seat as the vote was closed in the Clerk’s Meeting Portal and requested that the recorded vote reflect his vote.

Ruling by Speaker Frances Nunziata
Speaker Nunziata accepted the Point of Privilege and ruled that the Clerk would record Councillor Matlow’s vote.


Point of Order by Councillor Stephen Holyday

Councillor Holyday, rising on a Point of Order, stated that he would like a separate vote on Recommendation 1.i.

Ruling by Speaker Frances Nunziata
Speaker Nunziata accepted the Point of Order and ruled that Council would take a separate vote on recommendation 1.i.

EX8.7 - Vacant Home Tax: Status Update

Decision Type:
ACTION
Status:
Adopted
Wards:
All

Public Notice Given

Committee Recommendations

The Executive Committee recommends that:  

 

1. City Council approve the following changes to the Vacant Home Tax, effective for the vacancies occurring in the 2023 Taxation Year unless specified otherwise, and amend City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, accordingly:

 

a. change the payment due dates to the 15th of May, June and July, from the 1st of each of those months;

 

b. change the definition of current value assessment (CVA) to reference the current value assessment of the Residential Unit, as shown on the most recently returned assessment roll for the Taxation Year, rather than as of the Payment Date;

 

c. by clarifying that six months means 183 days for the purposes of determining vacancy, so as to avoid confusion regarding longer and shorter months;

 

d. by expanding the definition of Tenant to include a business tenant, to account for situations where a property is assessed in the Residential Tax class, but is occupied by a tenant and operating as a business;

 

e. by adding a new exemption for newly built or constructed housing inventory that is vacant, which exemption applies for up to two (2) consecutive taxation years;

 

f. reduce the notice of complaint period to the last business day in the year of the Payment Date from the 10th business day of April of the following year;

 

g. by extending the declaration deadline to the last business day of February of the year following the Taxation Year in respect of which the Declaration is made;

 

h. change the requirement for the exemption for repairs and renovations from obtaining an opinion from the Chief Building Official and Executive Director, Toronto Building to a requirement that repairs or renovations are being actively carried out without unnecessary delay; and

 

i. increase the tax rate for vacant properties from one (1) percent to three (3) percent effective for vacancies occurring in the 2024 Taxation Year.

 

2. City Council amend City of Toronto Municipal Code Chapter 441, Fees And Charges, Appendix C, Schedule 5, Revenue Services, effective January 1, 2024 to include a new fee for failing to provide a declaration of occupancy status by the declaration due date; the fee is to be set at $21.24 per taxation year, effective for the 2023 Taxation Year, and approved for annual automatic inflationary adjustment.

Origin

(September 19, 2023) Report from Interim Chief Financial Officer and Treasurer

Summary

City Council, at its meeting of December 15 – 17, 2021, considered item EX28.2 – Final Tax Design and Steps to Implement a Vacant Home Tax in Toronto and approved the implementation of a Vacant Home Tax (VHT), with direction to report back in the fourth quarter of 2023 with findings from the first year of tax collections as part of an annual reporting requirement. This report includes an update on the implementation of the VHT, learnings from other jurisdictions that have implemented a similar tax, and recommendations for required changes to the VHT program.

 

This report also details the communication plan to promote awareness of the VHT from its approval in July 2021 to its implementation throughout 2022 and building towards 2023. In addition, it addresses the online declaration portal that is accessible using the property assessment roll number and unique customer number on the owner’s tax bill or mailed VHT notice. The declaration portal for the 2023 Taxation Year is expected to open at the end of October/early November.

 

As this was the first year of the Vacant Home Tax declaration period, there was compelling interest to provide property owners with a grace period to provide their declarations and help moderate the financial impact on property owners who are required to pay the tax. This resulted in City Council extending the filing deadline by four weeks and amending the payment schedule from a single instalment to three instalments.

 

The declaration period was extended to February 28, 2023 and when the portal was closed, 2,336 property owners declared their residential units vacant, and 44,902 properties failed to provide a declaration and were deemed vacant at the time of billing. This represented approximately $283.7M of possible revenue. As of August 1, 2023, the number of properties deemed vacant has been reduced to 17,437, as declarations were received through the Notice of Complaint process. To date, the City has collected $54M in VHT, which is consistent with the estimated and budgeted revenues for 2023.

 

By the end of February 2022, the City received approximately 95% compliance on 818,937 notices mailed, including 774,662 declarations and 2,336 declared vacant. City Council also amended the by-law to extend the deadline for the 2022 taxation year to February 28, 2023. Lessons learned from the first declaration period include various administrative improvements, which will be implemented for the 2023 declaration period. Staff are also recommending a new fee for failing to provide a declaration of occupancy status by declaration due effective January 1, 2024.

 

As of August 1, 2023, 2,161 accounts are declared vacant with 17,437 deemed vacant. Both numbers are lower when compared to February 2022 and are expected to decrease as the number of declarations increases. Property owners are also able file a Notice of Complaint until April 15, 2024, along with a three-year period for audit activities. As such, actual revenues generated by VHT will not be finalized until all Notice of Complaints and audits for the taxation year is complete. As of August 1, 2023, the City has processed 24,641 of a total of 28,033 Notice of Complaints received, with audit activities for the 2022 taxation year to begin once onboarding of new staff is completed.

 

The report also reviewed Vancouver’s Empty Homes Tax, which was implemented in 2017. Toronto’s VHT program was designed using similar elements and used lessons learned from Vancouver’s experience, including the adoption of a self-declaration model, many of the same exemptions, and the administrative processes for filing a declaration, complaints, appeals and audit. The City of Ottawa also implemented a Vacant Unit Tax in 2022 and designed a program similar to Vancouver’s model. As this is their first taxation year, data on Ottawa’s Vacant Unit Tax is not publicly available at this time. One notable difference is in declaration requirements; property owners in Ottawa are required to submit a declaration for each unit within properties in the residential tax class with two to six units.

 

The issue of multi-unit residential buildings was also deliberated at Executive Committee’s consideration of EX7.1: Updated Long-Term Financial Plan on August 24, 2023, which was not included in Toronto’s plan at implementation due to the complexities to bill and assess the appropriate value of each individual unit within a multi-unit residential property. Based on analysis, a change to include residential properties with two to six units in the VHT program would require the City to process and assess an additional 41,130 declarations without the benefit of an assessed unit value within the overall property. Staff are not recommending any changes in the VHT program to include residential properties with two to six units at this time.

 

Following Council’s request for analysis as part of the Updated Long-Term Financial Plan, this report also recommends increasing the tax rate from 1% to 3% of the Current Value Assessment (CVA) effective for the 2024 Taxation Year, in support of increasing housing supply.

Background Information

(September 19, 2023) Report from the Interim Chief Financial Officer and Treasurer on Vacant Home Tax: Status Update
https://www.toronto.ca/legdocs/mmis/2023/ex/bgrd/backgroundfile-239435.pdf
Public Notice
https://www.toronto.ca/legdocs/mmis/2023/ex/bgrd/backgroundfile-239482.pdf

Communications

(October 3, 2023) E-mail from Miguel Avila-Velarde (EX.New)
(October 3, 2023) E-mail from Miguel Avila-Velarde (EX.New)
https://www.toronto.ca/legdocs/mmis/2023/ex/comm/communicationfile-172471.pdf

Speakers

Ali Minaei
Suzette Mafuna
Sheila Farr
Alejandra Ruiz Vargas
Miguel Avila-Velarde, Regent Park Neighbourhood Association

Motions

Motion to Adopt Item moved by Mayor Olivia Chow (Carried)
Source: Toronto City Clerk at www.toronto.ca/council