Sault council looks at options for vacant home tax

Meeting next week, city council in Sault Ste. Marie will get an overview of what to expect if it decides to implement a new tax on empty homes in the city. (File)

Meeting next week, city council in Sault Ste. Marie will get an overview of what to expect if it decides to implement a new tax on empty homes in the city.

The proposed tax is part of the city’s strategy to combat the housing crisis, with the idea that homes should not be left empty when there is a shortage of housing.

While sounding logical in theory, the practicalities of implementing the tax is more complicated in practice.

For example, exactly how would the city determine when a residence is vacant?

Some municipalities deem a property vacant when it is unoccupied for six months, the report said.

Under that standard, “the City of Sault Ste Marie has 27,420 properties in the residential class, 89 of which, are estimated to be vacant,” the report said.

Other communities tax empty homes between one and three per cent of the property’s value. So a vacant home valued at $100,000 would be taxed at a rate of $1,000 to $3,000 a year.

Another consideration is exactly how a home would be declared vacant. The city could require all property owners to declare each year whether their property is vacant.

But that puts a new onus on all homeowners to make the declaration every year – and the potential for a home to be declared vacant if the owner fails to respond.

Toronto tried this method for its tax, the staff report said, with “disastrous” results because of billing errors and the declaration process.

In the Sault, it would create “significant staff administration costs to review, audit, enforce, track and bill the tax,” and could end up costing the city money.

Another approach would be to require only the owners of vacant properties to make the declaration. The problem, the report said, is there is no motive for vacant property owners to step forward and volunteer to pay the new tax.

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The final – and recommended – approach is one based on complaints from the public.

“A complaint-based enforcement is being implemented by the City of Windsor in 2024,” the report said.

“After a review of the Windsor program and the administrative requirements to manage it, staff recommend that this would be an effective and efficient program for the city.”

In terms of costs, while staff estimated there are 90 vacant homes in the Sault, roughly half would likely qualify for the new tax. In order to break even, the tax would have to be at least two per cent to cover the roughly $100,000 it will take to administer the new bylaw.

If council moves ahead with the plan, the goal would be to implement the tax in 2025.

City council meets Monday. Read the full report here.