In January 2017, the Province of Ontario informed all municipalities of their opportunity to review the Vacancy Rebate Program (VRP) and make changes to reflect each municipality’s unique circumstances. Effectively the Province is allowing each municipality to determine their vacancy rebate policy. Most municipalities in Ontario are reviewing their VRP history, meeting with stakeholders and interested parties in order to recommend changes to the program.

Many municipalities across Ontario are moving on the chance to conduct reviews of their VRP. There appears to be a trend across the Province to either eliminate the VRP altogether or to phase it out over a one or two-year period.

Background

Established in 1998, the Vacant Unit Rebate and Vacant/Excess Land Subclasses have provided property owners who have vacancies in commercial and industrial buildings or land with tax rebates a reduction in their assessment.

The Vacant Unit Rebate provides an opportunity for a tax rebate to property owners who have vacancies in commercial and industrial buildings. This program is administered by municipalities and is dependent on the owner submitting the appropriate application. Currently the rebate amount is 30% of the property tax for vacant commercial space and 35% for vacant industrial space.

Municipalities’ decisions include:

Belleville, Prince Edward County and Quinte West:
The City of Quinte West is following the leads of Prince Edward County and the City of Belleville when it comes to the Commercial and Industrial Vacancy Rebate Program. After consulting with the local business community, Quinte West’s Corporate Finance Committee voted to end the rebate program.

Region of Halton:
The Region has decided to eliminate the program using a phasing out approach for the 2018 tax year. The existing rebate amount will remain in place for the 2017 tax year. For the 2018 tax year the rebate will be reduced to 15% for commercial and 20% for industrial with the program being fully eliminated in 2019.

Kawartha Lakes:
The City of Kawartha Lakes Council approved a report dated April 18, 2017 to phase out the vacancy rebate program over a two-year period, commencing in 2017. The vacancy rebate percentages for 2017 will remain as prescribed and in 2018 they will be zero.

City of Ottawa:
In a report to the council it was recommended that the City of Ottawa’s VRP be phased out over a period of three years. The proposed phase out schedule would mean the rebate amount would be reduced to 20% in 2017, 10% in 2018, and eliminated in the 2019 tax year.

Parry Sound:
On April 18, 2017 the Council of Parry Sound passed a council resolution to eliminate the program as of January 1, 2017.

Region of Peel:
The Region began consultations in May, 2017 and is currently reviewing its program.

Port Hope:
Port Hope has passed a Council resolution requesting the Province remove section 364, and thereby removing the program, from the Municipal Act. In doing so, the vacancy rebate program would be eliminated.

City of Toronto:
The City of Toronto has confirmed through a Council motion that it will eliminate the VRP as of 2018. From January 1 to June 30, 2017, the City will continue to offer the full vacancy rebate amount and as of July 1, 2017, the vacancy rebate percentages will be reduced by half. They are currently in the process of consulting with the local business community but appear to have reached a final decision on the matter.

Region of York:
The Region of York is also reviewing its rebate program. Local municipalities are seeking direction from their respective Councils regarding the future of the program and the Region is now preparing to begin consultation with local businesses and interested parties.

The phasing out of the VRP across Ontario will dramatically impact the budgeting and fiscal planning of many commercial and industrial property owners. Please contact your Altus Group client representative for more information or to address any questions or concerns you may have.