Empty commercial space in Smiths Falls comes with a heavy cost to local taxpayers, so the town is seeking what one council member calls “a made-in-Smiths Falls solution.”
The town hosted an open house the evening of June 6 to gather feedback on plans to change or eliminate a tax rebate paid to owners of vacant commercial and industrial properties. The provincial government introduced the rebate in 2001, and late last year announced that local municipalities have the authority to opt out of the program.
Chairing the open house, which drew an audience comprised mainly of town staff and councillors, Mayor Shawn Pankow stated the town has had an “alarming” number of vacancy rebate applications since 2006 due to the loss of industries such as Hershey Canada.
“We’re aware that the rebate itself is abused,” said Pankow, adding that some property owners continue to collect it while making little effort to market their empty properties.
Smiths Falls Chief Administrative Officer Malcolm Morris said municipalities across Ontario have been lobbying the provincial government to make changes to the vacancy rebate program. The rebate was intended as a way to assist businesses through tough economic times, and not to become a perpetual benefit, he said.
As it currently operates, the vacancy rebate program provides owners of commercial properties with a rebate of 30 per cent of their property taxes. For industrial properties, the rebate is 35 per cent.
Local officials are becoming alarmed because Smiths Falls has experienced a 520 per cent increase in the value of rebates from 2005 to 2014, said Morris. The value of rebates paid in 2012 (when the Hershey plant was fully vacated) equated to a one per cent increase in Smiths Falls property taxes. In 2015, Smiths Falls paid out a total of $148,309 in rebates.
Morris said the town has lobbied for the province to restructure the eligibility requirements for vacancy rebates to ensure that the buildings are actually marketable and not derelict. The town would also like to place a limit on the number of consecutive years a property owner can apply for rebates.
“If someone is applying for decades, something is clearly wrong,” said Morris.
“The commitment from council so far is to pursue this further,” said Pankow. He said the town has several options, including keeping the rebate program in its current form, eliminating it completely, or phasing it out over four years with a declining benefit each year.
Any proposed changes to the program will require provincial approval. The provincial Ministry of Finance has encouraged municipalities to engage the local business community fully in any proposed changes.
Town Clerk Kerry Costello said comments gathered from the business community will be compiled in a report to council on June 12. Any changes to be made to the rebate program will be voted on in a resolution to be brought forward on June 19, at which time the town will inform the Ministry of Finance of its plans.
A note of caution was sounded by Moira Hogan, owner of Elizabeth Interiors, who commented that, “If you don’t have the rebate, you don’t have the funds to put into the building to fix it up.”
Councillor John Maloney responded that the rebate should be tied to property standards, and that the “bad apples” should not be eligible.
Councillor Chris Cummings expressed concern that if Smiths Falls cancels the rebate program while neighbouring municipalities keep it, developers may choose to invest elsewhere, which would drive down the value of property in Smiths Falls.
Town Treasurer Janice Koziel proposed that the amount of money paid out in vacancy rebates could be reallocated to an expanded Community Improvement Program, in which the funds would be awarded to developers to improve their properties. That, said Cummings, could be a “made-in-Smiths Falls solution” to the epidemic of empty buildings.