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Vacancy Rebate Program Review  -  Frequently Asked Questions

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What is a vacancy rebate?

Since 1998, Municipalities in Ontario have been required to participate in a Vacancy Rebate Program that provides financial relief to owners of Commercial and Industrial properties through a rebate of property taxes.

A property owner may apply to the rebate program to receive 30% (commercial properties) and 35% (industrial properties) of total property taxes back from the municipality, including the educational portion.


Who benefits from the vacancy rebate?

Owners of commercial or industrial properties that are entirely or partially vacant are eligible for a rebate. A property becomes eligible for a vacancy rebate once it has been declared vacant for 90 consecutive days. It is not a requirement that the property be capable of being leased for immediate occupation. Seasonal and leased properties are not eligible for the rebate.

70 - 80 
properties receive 
the rebate in Cornwall
14
properties receive a
rebate over $10,000
Shopping centre collect
60% of the overall
rebate refunded

 

Are there inequities with the current program?

Critics of the Vacancy Rebate Program argue it is unfair for taxpayers to compensate other taxpayers for their vacant properties. Currently, it is not mandatory for the property receiving the rebate to be in a condition for immediate leasing. This means properties currently in disrepair are eligible for the rebate. The program may discourage some property owners from leasing their vacant property, or facilitating renovations and repairs to make the property fit for lease.

The rebate also creates a negative incentive for property owners to entertain short-term leases, or rent to 'pop-up' or seasonal tenants.

Since MPAC accounts for vacancies as a factor in determining assessment values for some properties, in effect, this creates a situation for these properties to potentially benefit from two sources.

Proponents of the program argue against suggestions that the rebate is a subsidy or a disincentive to improve the marketability of properties. The program supports businesses in difficult or transitional times. Vacant properties do not generate revenue. There are no tenants making lease payments to share the tax bill. The program was formed when the business occupancy tax was eliminated and the lost revenue was added to the property tax.

There is an administrative cost associated with the program. Staff must conduct due diligence on each application, which includes verifying the duration of the stated vacancy and ensuring applicants satisfy all eligibility criteria.


How does the vacancy rebate impact taxes?

The City currently budgets $400,000 for vacancy rebates. When the education portion is included, the total rebate amount is over $600,000. Though residential and multi-residential property owners also experience vacancies, these properties are not eligible for the rebate. Residential and multi-residential property classes fund 62% of this program through the tax levy. The average residential home would pay approximately $13 annually.


What was the rationale for instituting vacancy rebates in the first place?
The Province of Ontario initiated the Vacancy Rebate Program in 1998. The policy emerged as a trade-off from landlords' expanded property tax liability resulting from the abolishment of charging business occupancy taxes directly to tenants.


What has the Province proposed?

In response to Municipal and stakeholder requests, the Province of Ontario has reviewed the Vacancy Rebate Program and is providing municipalities with flexibility for 2017 and future years by allowing municipalities to review the program. Proposed changes are to reflect community needs and circumstances, while considering the interests of businesses.



What are some options?

  • Keep the program as is.
  • Maintain the program but require more stringent eligibility standards - e.g., a property must be vacant for six consecutive months, not three.
  • Reduce the rebate from 30% Commercial, 35% Industrial to a lesser amount; such as 10%.
  • Amend the program to reduce the vacancy rebate over time (e.g., 30% year 1, 20% year 2, 10% year 3 and thereafter).
  • Limit the number of years a property is eligible for rebate (e.g., a maximum of three years within a ten year period).
  • Limit the geographic area within which properties are eligible for a vacancy rebate.
  • Increase the evidentiary documentation required with the application process to reduce administrative costs and enhance the reliability of the applications.
  • Incorporate a combination of above alternatives.
  • Phase out the program entirely over a period of years.
  • Eliminate the rebate program effective immediately.

 

What are my comments being used for?

Public input is being sought to inform City staff and Council about the community's opinion - especially local business stakeholders - towards the rebate and potential alternatives. City staff's final recommendation to Council concerning future iterations of the program will be formed by public input, precedent across Ontario municipalities, and an analysis of the program's fiscal ramifications in the context of the overall budget.

 

Additional Information

For additional information on the Vacancy Rebate Program review, please contact:

finance@cornwall.ca

or

Stephen Rand  
City Collector   
City of Cornwall
(613) 930-2787 ext. 2315  
srand@cornwall.ca

Brad Maloney
City Assessor
City of Cornwall
(613) 930-2787 ext. 2212
bmaloney@cornwall.ca

Tracey Bailey
General Manager, Financial Services
City of Cornwall
(613) 930-2787 ext. 2501
tbailey@cornwall.ca

 

 

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