Region offering tax breaks to encourage affordable housing
IN AN EFFORT TO INCREASE the number of affordable housing options, the region plans to waive its share of property taxes, along with the school board levy, for qualifying rental units.
The new program will apply to both already existing and yet-to-be-built affordable units. It can also apply to those who provide affordable housing options in their market-rate developments and nonprofit and cooperative providers.
Exactly how many affordable units the program approved last week by regional council will provide remains to be seen. Similarly, the cost of waiving the taxes will be determined by the uptake of developers.
“It’s hard to tell. Part of it will be on the interest level in the community,” said Ryan Pettipiere, the region’s director of housing services, of the numbers.
“We do know that there are existing affordable homes across the community that are not under any sort of terms of agreement, so it’s buildings and landlords like that that we’re interested in partnering with. We know that one of the problems that contributed to creating the affordable housing crisis that we’re in is that we’re losing affordable housing stock faster than we’re able to build or replace it.”
The program is not expected to impact the regional tax levy, but the plan means that taxes that would normally be collected from those that qualify will be “shifted to all other property classes, resulting in slightly higher tax rates.”
The reduction in taxes is one tool that the region has to preserve and expand affordable housing options, said Pettipiere, who drafted the plan approved by council.
“I think that taxes and property taxes are a big expense for anybody that is an owner of housing, and certainly for residential rental units. As such, it’s a tool that we can adjust to preserve and create more, so that’s why we think it will be impactful,” he said.
According to Pettipiere, the country saw a reduction of 46,000 affordable units – defined as costing less than $1,000 per month – between 2016 and 2021. In that time, just 20,000 units were added, leading to a substantial net loss.
“What we’ve seen over the last number of years is that we’re losing that stock at a rate much faster than when we build it to the speculative market.
So if we’re able to work on both fronts, preserving what’s already there, and building new, it’s just a two-path approach to solving the same problem. I think it’s impactful from both of those two, to keep what’s already there in the system, and also incentivize building more,” Pettipiere said.
Woolwich Mayor Sandy Shantz said the township already waives taxes for nonprofit housing, however there is only one property that fits the description outlined in the report, the recent Beyond
Housing project in St. Jacobs.
Just what the region’s new plan means for affordable housing in Woolwich remains to be seen.
“What was difficult for me was that we were we were given budget numbers, but we weren’t giving specifics, and I’m anxious to see that report and see what it means,” she said, noting that a report on the region’s plan to end chronic homelessness is set to be released before the next council meeting.
Woolwich has a target of 886 new homes by 2027, including 190 under the federal Housing Accelerator Fund.
The region reports that between 2001 and 2021, 21 buildings were constructed by private developers who received capital grants from the region under 20- to 25-year agreements in exchange for providing some affordable units in those buildings. However, those agreements are starting to expire. In order to qualify for the tax exemption, units will have to remain affordable for 60 years. The waiver applies to “naturally occurring” affordable units built before 1990 and generally have longer-term tenants.
“We know that not a lot of these exemptions exist in our community because it’s time consuming and it’s an expensive process for them to go through. So this particular program that we’re proposing would make it a bit more efficient for the not-forprofit sector, but also open it up more broadly to anybody else that wouldn’t qualify for that particular tax exemptions for that path,” Pettipiere said.
The waiving of education taxes could impact school board budgets. If all properties that had previously entered into a funding agreement with the region enter into new agreements, the school boards could lose around $127,000 in property tax revenue. If all current nonprofit and cooperative housing providers in the region that are subject to the Housing Services Act sign on, the loss would be $489,000.
That represents a small fraction of the total operating budgets for the boards, with the public school board having a 2023-2024 budget in excess of $848 million and the Catholic board’s set at $338 million.
According to Pettipiere, the region has engaged with the school boards, and he is confident that the loss will be made up at the provincial level.
“As it stands, it’s not an insignificant amount, but we would expect that with the province now having this information on the impact, they’ll be able to address that through their provincial tax process,” he said.
Intake applications for the program will begin in the second quarter of 2024 for the 2025 tax year.