Ottawa council votes to keep vacant unit tax with some changes

City council returns after summer break City council returns after summer break

The owners of vacant homes in the city of Ottawa will continue to face a new tax, after council voted to maintain the vacant unit tax.

Coun. Laura Dudas introduced a motion calling on the city to rescind the tax in 2024 and not charge the owners of vacant properties the one-per-cent tax on their 2023 assessment.

However, council voted 15 to 8 in support of a replacement motion from Coun. Glen Gower, seconded by Mayor Mark Sutcliffe, to maintain the vacant unit tax, and direct staff to "improve and further simplify the declaration process" and open the declaration portal earlier in December.

"I do think it's a very important and significant policy to address the housing crisis, and also an important funding tool," Gower said during the council debate.

"I think it is too early to fully declare it a success or a failure, it will take 2 or 3 years of data to understand."

The previous council approved the vacant unit tax in March 2022, a move designed to address homes sitting empty and neglected.

Homeowners are required to submit a declaration every year indicating whether the home is occupied or vacant. Any property empty for more than 184 days during the previous year will be taxed the equivalent of one per cent of its assessed value, with the funding supporting affordable housing.

Staff said in June that 3,268 homes were declared vacant by homeowners and 2,836 were deemed vacant by the city because no declaration was received. More than 1,900 notices of complaints were filed about the tax, according to the city.

Dudas wanted to scrap the vacant unit tax, suggesting the administration of the levy is a "bureaucratic burden" on households, and claimed residents were "blindsided by having the VUT applied to them."

"Ottawa has a housing crisis and all tools at our disposal need to be explored. We didn't know specific numbers but on a leap of faith we passed a program believing that the quote, unquote bad guy would be the target," Dudas said on Wednesday.

"We have all heard from residents who were never intended to pay this tax, but because of their specific situation have been caught up in this net and have to.

"The VUT can be an amazing tool to help tackle our housing crisis, but something has gone wrong and whatever happens today the status quo cannot be allowed to continue in Ottawa."

Coun. Riley Brockington was one of the eight councillors that voted against the motion to maintain the vacant unit tax.

"I want to see people living in homes; not in shelters, not on the streets, wrap around services. The question is, is the vacant unit tax the right way to get there?" Brockington said.

"I have a huge issue in us telling people how to use their homes. I just think it is wrong to do that, but yet I take criticism because it looks like I'm not wanting to help solve this crisis that we have, and nothing could be further from the truth."

Coun. Shawn Menard noted council needs to use all the tools at its disposal to address the housing crisis.

"I went on there, it was relatively easy to click that box and declare," Menard said about the process to submit the declaration.

"That wasn't a huge burden on me, but the burden of homelessness, the burden of people that are precariously housed now that's the real burden we should be trying to tackle and this is one of the only tools that we have to do that. At the end of the day, my priority is trying to end that form of human suffering with the limited tools we have."

The motion from Gower and Sutcliffe recommends staff also look at increasing access by allowing declarations to be completed at Client Service Centres and leveraging phone number and email data obtained in the first year to improve customer service.

Staff will also look at considering a reduction in the frequency of the declaration and look at other ways to streamline targeted or periodic declaration.  Council also wants staff to amend the vacant unit tax to exempt newly built homes that are listed for sale and not sold in the reference year of vacant from the VUT.

"The last time I checked the priority of this council is to end the homelessness which we all recognize requires multifaceted solution – it's not one size fits all," Coun. Theresa Kavanagh said.

"There's no question that we need more affordable housing. This is why council supported the vacant unit tax in the first place."

According to statistics provided by the city, Rideau Vanier and Somerset had the highest vacancy rates in Ottawa at 2.3 per cent. There were 355 vacant units in Rideau-Vanier and 313 in Somerset.