Barrie’s tax break for vacant commercial and industrial land could end abruptly.
City councillors have given initial approval to a motion which eliminates vacant land tax discounts this year, rather than phasing them out during the next two years.
“The discount is a disincentive,” said Coun. Keenan Aylwin. “I think if we got rid of the discount that it would maybe push some landowners to reconsider whether they want to hold that land.”
City council will consider final approval of this motion at Monday night's meeting; the motion passed 6-5 last Monday at general committee.
Aylwin said the tax discount is 30 per cent for vacant commercial property and 35 per cent for vacant industrial land.
“Some landowners hold onto their land for future development or to flip their property down the road, and that is preventing development from happening,” said the Ward 2 councillor. “There are interested parties wanting to come in and buy the land for commercial and industrial development and these landowners are sitting there, and I guess part of the reason is they are receiving a discount to do so, to keep it vacant.
“How do we incentivize our commercial and industrial development to support good-paying jobs in our community? Currently on the books, we have an active disincentive to that development, which is to provide a discount for vacant land," he added.
But Coun. Sergio Morales wasn’t buying that argument.
“To frame this as we’re losing out on potential development of jobs because they’re getting a discount… that’s not how the market works,” he said. “I would hate to think there are landowners out there who are land-banking, passing on millions of dollars and holding future, potential jobs hostage.”
“It’s one piece of the bigger picture,” Aylwin said, “an issue with our employment land, that landowners are holding their lands, waiting for potential development down the road, or not willing to sell land to an interested buyer, and this (discount) could be one factor.”
Coun. Clare Riepma said he favoured ending the discounts this year.
“I think that as a municipality, we need to be very consistent,” he said. “You don’t give breaks for other categories and for vacant land. If that property isn’t serviced or isn’t capable of being developed, obviously the assessment is much lower. So it balances itself out and I don’t think we ought to be favouring one commercial or industrial property in favour of another one.”
But Coun. Gary Harvey disagreed.
“I think it sends a bit of a mixed message here, too, because we adopted this (discount phase-out in two years) not that long ago and now we’re having a discussion about clawing it back,” he said. “That sends a wrong message. Unless we made some grave mistakes, I think it’s important that we follow through with what we’ve approved.”
Mayor Jeff Lehman said he sees both sides of the argument.
“We did pass what we are going to do with this, and I’m going to guess that there are at least a few property owners out there that counted on the discount,” he said. “To have it pulled away will cost them real dollars. Those dollars may not be insignificant for some vacant commercial and industrial landowners.
“(But) we shouldn’t have any incentives to keep your land vacant and most municipalities are going in this direction,” Lehman added. “We might hear a few howls of outrage on this one.”
Staff will gather information on how many properties in Barrie are affected and how much tax money this motion would involve.
City treasurer Craig Millar said the effect of eliminating the discounts doesn’t change the total amount of commercial or industrial property tax collected; it shifts the tax burden within the commercial/industrial tax class.
“Vacant property (owners) will pay more and occupied properties less,” he said. “There will be some shifting within other tax classes, but the main impact will be within commercial/industrial.”
Discounts on vacant commercial and industrial land used to be mandated by the province until a few years ago.
