Councillors vote to discontinue expensive tax break for owners of vacant commercial property

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Last year the provincial program cost the city $17 million.

Haley Ritchie, Metro

City councillors voted today to end a property-tax break enjoyed by landlords whose buildings have vacancies.

Last year commercial and industrial property owners in Ottawa submitted 920 applications for the rebate. The cost to municipal taxpayers was $17 million.

City staff had recommended that the program, which until recently was mandated by the Ontario government, be phased out over three years in order to give property owners time to adjust.

At Tuesday's meeting of the city’s finance and economic development committee, however, councillors voted to end the rebate program in 2018.

Property owners who benefit from the program were disappointed.

Dean Karakasi, representing the Building Owners and Managers Association, said the change “will have a negative impact on industry.”

Karakasi said property owners are struggling because of federal-government cutbacks and the ongoing rise of online retailers, whose businesses require relatively little commercial space.

“This is not a good time in terms of industry,” said Karakasi. “This was a nice partnership with the city in terms of transitioning space.”

Several people presenting to the committee expressed hope that the end of the program will motivate landlords to find tenants for vacant properties.

Coun. David Chernushenko said landlords in some areas are being too choosy with tenants, to the “overall detriment to the street health of the retail environment.”

Karakasi said the idea that landlords are forgoing leases so as to realize a 30 per cent of their tax break is “absurd.”

“It may happen, there may be examples, but we can’t quantify them,” he said. “But, overall, why would anybody want to pay a dollar so they get 30 cents back?”

Other Ontario municipalities, including Toronto and Prince Edward County, plan to cut the rebate program as well.

The final decision on the program will be made at city council on May 10.