By Lethbridge Herald on March 1, 2021.
The Building Industry and Land Development Association of Lethbridge is asking city council to consider giving local developers a 50 per cent tax break on vacant serviced lots in the city.
Bridget Means, executive officer of BILD Lethbridge, made the request on behalf of her members to city council’s Economic Standing Policy Committee on Wednesday.
Currently the City has two classes of mill rates for empty lots. One is for unserviced farm or green field land, and the other is for lots which have been serviced for development. The savings to the developer comes on the assessment value– if no house is built on the property it is taxed lower because it is assessed lower, but ultimately the vacant serviced lot is taxed at the same mill rate as a lot with a house on it.
BILD is asking city council to create a new in-between mill rate which is 50 per cent higher than the unserviced farm land, but 50 per cent lower than than it would be if a structure stood on the site.
Mearns requested committee members consider reducing this mill rate on serviced, vacant land as a COVID relief measure for the local building industry.
“Because the industry has had a significant slow down,” she explained, “and because those lots don’t draw from any city services, the premise around this is that vacant serviced land would be treated differently, and taxed differently, because of its lower impact. And that would decrease the carrying cost to the developers– which over time would help manage the cost of land.”
Mearns was challenged on this point by Coun. Jeffrey Carlson, who asked her to state what fewer services were being offered when the sites were already fully serviced by the City with all utility plug-ins installed and access roads built to them?
“Going back about 10 years ago, I had discussions around this exact topic with the then president of what was then the Homebuilding Association of Lethbridge,” explained Carlson. “And they kept saying the same thing: ‘Our empty lots don’t use municipal services, why are we having to pay any taxes?’ I asked them the question: ‘What don’t you use?’ He said, ‘Well, garbage, recycling.’ I said, ‘Well, you don’t pay for that through taxes, that’s your utility bill.’ I just need clarity on what services, if we put roads, and streets, and infrastructure out to these lots, what services aren’t they utilizing?”
“There is no snow clearing,” responded Mearns. “There is no street cleaning, and they are not drawing on any of the grids or any of the other utilities. And I recognize there is a user-pay component to that as well. Basically, the property is maintained by the developer. It is not maintained by the City.”
City of Lethbridge director of Infrastructure Services Doug Hawkins told committee members the current tax assessment process already delivers substantial tax savings to developers which, he and his staff feel, accounts for the lower usage rate on these properties as well, without having to change the mill rate on them.
“The assessed value of a serviced, vacant lot is lower than the assessed value of an approved lot,” he explained. “In other words, one with a house on it. It has been our position that while it is true a vacant lot doesn’t draw as much on municipal, taxable, services in its vacant state that is reflected in the fact the assessment is lower, and so the tax bill for that lot is lower than when a home is constructed, and the assessment obviously goes up. And, by extension, the tax bill goes up. That would be our view: that the draw on services is reflected in the current way in which we assess, and ultimately tax, vacant properties.”
On the broader issue of budget, if council agreed to a 50 per cent less mill rate for vacant serviced lots that this would save the building industry approximately $500,000 in taxes per year, but, as was pointed out by City Treasurer Hailey Pinksen to committee members during Wednesday’s meeting, the revenue shortfall would have to be made up by other taxpayers in the city– either through an increase in taxes to other property owners or through drawing on the City’s reserves– to make up for the projected 0.25-0.35 per cent “upward tax pressure” this would create.
The Economic Standing Policy Committee voted to accept the BILD request as information, and Coun. Jeffrey Coffman said he would bring a motion on this matter forward for further discussion and decision at the next full sitting of city council.
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