City to axe vacancy rebate tax program

on .

Blais motion moved timeline up by year

Somerset House, on Bank, has long been one of the properties that has been demolished by neglect, something made easier through the city's vacancy rebate program, says David Jeanes.

Jennifer McIntosh, Ottawa Community News

Dean Karakasis, executive director of Building Owners and Managers Association of Ottawa, said he’s disappointed with the finance and economic committee’s decision to end the vacancy rebate program.

Karakasis said the program is an offshoot of the nineties business occupancy program, which would give businesses a break on their tax bill for vacant buildings.

“The money was never theirs to play with,” Karakasis said of the vacancy rebate program.

The rebate system would return taxes to business owners through a grant if they met certain criteria.

Other municipalities such as Toronto and Hamilton had already voted in favour of phasing out the program.

Rideau-Goulbourn Coun. Scott Moffatt was the only dissenting vote on May 2. The rest of the committee approved the recommendation to phase out the program, which city staff says has paid out $76 million since 2009.

The city’s treasury department recommended the program be phased out over three years, but a motion from Cumberland Coun. Stephen Blais moved the timeline to two years.

In advance of the report to committee, staff said there was very little participation on the surveys they sent out to affected businesses. Only 14 per cent were returned.

The current vacancy rate for Ottawa businesses is 11 per cent, which is far more than the usual three or four per cent, says Karakasis.

Councillors and city staff suggested part of the reason for the higher vacancy rate could be partly due to federal government downsizing.

He says landlords are adjusting to changing trends in the commercial market, such as the growth of online shopping and a decreased reliance on physical retail space.

Karakasis added the city should be a partner and working on some solutions.

Today, property owners can claim a 30 per cent tax break for commercial land and a 35 per cent tax break for industrial land if parts of the buildings are vacant for 90 consecutive days.

West Carleton Coun. Eli El-Chantiry, who works with the city's business improvement areas, said smaller businesses or “mama and papa shops” don’t get to take advantage of the rebate program.

The BIAs don’t have a clear position because the smaller shops don’t benefit, he said.

The committee’s recommended plan would decrease the vacancy rebate to 15 per cent in 2017 and eliminate the discount in 2018.

Capital Coun. David Chernushenko wondered whether getting rid of the program would help fill vacant storefronts in the Glebe.

Chernushenko said the program could mean landlords are more willing to let a space sit idle because they know they can get the rebate.

Karakasis said that isn’t the case, and he’s certainly willing to talk about working on some of the committee’s concerns, like demolition by neglect in heritage properties, and work on solutions.

David Jeanes, president of Heritage Ottawa, is in support of eliminating the program.

Joshua Thatcher, from the Lansdowne Whole Foods, also said the program should be eliminated.

“That money could be re-invested in entrepreneurs, so small start ups could fill that commercial space,” he said.

Council will get final approval on the elimination of the program on May 10.