Hamilton council strikes down vacant home tax in the works for 4 years. Here's what happened

In a surprise twist, Hamilton council struck down a vacant unit tax that city staff have been developing for four years and is ready to roll out this winter.

The tax isdesigned to crack down on investors who buy homes and let them sit empty instead of renting them out for more than half a year, staff say. It is one of many programs the city has beenimplementing to use to ease the affordable housing crisis.

In January, council approved the vacant unit tax bylaw in a 9-5 vote, giving staff the green light to get it ready to go for 2024.

But on Wednesday, when council voted on whether to confirm the bylaw a procedural step for an initiative that's already been set into motion it was defeated in a 6-6 tie.

"I was as surprised as anyone," said Coun. Tom Jackson.

He's a vocal opponent of the tax and voted against it several times without successuntil Wednesday when a number of factors swung in his favour.

In a rare move, he'd requested the bylaw be voted on separately from the nearly two dozen other bylaw items, which he said he'd given councillors a head's up about the day before in an email.

Councillor switched sides

Two supporters of the tax, Coun. CameronKroetsch and Coun. Nrinder Nann, both weren't in the chamber at the time of the vote and weren't aware it would be voted on separately. Kroetsch said he had to leave due to a scheduling conflict and Nann said she'd stepped away to attend to matters for her mother who is in the hospital.

"It was wild," Nann said of the vote. "I found it quite disrespectful of the professional staff who've been working for four years on the path of implementation."

She said the city has already gotten public feedback, which was overwhelmingly supportive, approval from the province, and had sent out notices to households.

Coun. Jeff Beattie switched sides, as well. In January he'd supported the tax and on Wednesday he opposed it. He said in that time he'd heard concerns from his constituents about how the tax was going to work.

The tax would require all homeowners to declare if their properties are occupied for more than half of the year, according to a staff report outlining the program last January. If they don't make this declaration, they'll face the tax even if their homes aren't vacant, but can appeal.

Vacant properties would be exemptifthe owner died recently, it's undergoing amajor renovation, the property has been sold, the principal resident is in care or hospitalized, or there's a court order nobody can live there.

"There's a lot of confusion and a general misunderstanding of how it works," Beattiesaid. "Some folks haven't received the initial documents or don't understand what they're supposed to do."

Jackson said he'd been hearing the same concerns from residents in his ward who are "overwhelmingly, universally upset about it."

A 'procedural hiccup'

Staff have estimated the bylaw would apply to over 1,100 property owners, who'd be required to pay an annual tax of one per cent of their property's assessed value. That would generate enough revenue to pay for the cost of the program, as well as millions of dollars over five years to be put toward other affordable housing initiatives.

At the January meeting, Coun. Brad Clark expressed concern the program wouldn't pay for itself and if it wouldn't be worth the risk. He voted against it both times.

But Hamilton's vacant unit tax is based on those implemented in Vancouver, Toronto and Ottawa and is one of the few levers that municipalities can use to get vacant homes occupied and generate additional revenue, said Nann.

She said Wednesday's vote turned on "speculation" and "people's individual opinions and assumptions" and not on evidence-based decision making.

It's unclear what will happen to the bylaw and when or if another vote will occur, Nann said. Councillors are waiting for direction for city clerks, she added.

"I'm eternally an optimist and believe this is a procedural hiccup that will be clarified," Nann said.

Coun. John-Paul Danko also supports the tax. He said the situation is "very messy" but is confident it will be fixed.

Acting city clerk Janet Pilon said council could decide to not vote again, which would mean the vacant unit tax is defeated and no bylaw would be enacted. Alternatively, a councillor could bring forward a motion at the next meeting to reconsider the bylaw and have another vote.

Staff have spent about $300,000 on preparing to roll out the vacant unit tax, said Brian McMullen, director of financial planning and administration policy.

Mayor Andrea Horwath has abstained from voting on the vacant unit tax as she has a conflict of interest. Coun. TedMcMeekin was absent for both votes.

How they voted on Wednesday

For: Hwang, Tadeson, Danko, Cassar, M. Wilson, A. Wilson

Against: Jackson, Pauls, Clark, Francis, Spadafora, Beattie

Absent: McMeekin, Nann, Kroetsch

Abstained: Horwath