Item - 2017.EX26.4

The Executive Committee recommends that:

1.  City Council direct the Deputy City Manager and Chief Financial Officer to:

a.  undertake consultation on the potential implementation and possible public policy benefits of a tax on vacant residential units in Toronto;

b.  give consideration to tax design features that includes the following possible administrative approaches for identifying vacant units:

1.  the Vancouver Approach (i.e. mandatory declaration for all properties); or,

2.  self-reporting Model; and/or,

3.  complaints basis; and

c.  report back to the September 26, 2017 Executive Committee meeting with the results of the public consultations, recommendations on whether to proceed with a Toronto tax on vacant residential units and, if such a tax is recommended, on detailed tax design.

2.  City Council authorize the allocation of funding in the amount of $75,000 from Non-Program Account NP2135 (Corporate Studies) for consulting and technical support to undertake public consultation regarding imposing a tax on vacant residential units in Toronto.

City Council at its meeting of May 24-26, 2017 requested a report on the feasibility of the City implementing a vacant home tax.  Vancouver, facing similar housing affordability issues as Toronto, adopted an Empty Home Tax in late 2016.

The biggest challenge facing such an initiative is in identifying vacant residential units.  Water or hydro meter data was originally collected for the purpose of determining appropriate billing amounts, and not for tracking the presence of individuals in specific residential units.  The City would face significant restrictions due to individuals' privacy rights on the use of personal information contained in water or hydro meter to track the presence of individuals within a residential unit as a means of identifying potentially vacant units for tax purposes, as that was not the original purpose for the collection of the data. 

Vancouver's administrative approach for identifying vacant units is to require all residential property owners to make a mandatory Status Declaration of their property on an annual basis.  Owners are required to declare their property's occupancy status for the preceding year.  Failure to declare status after a notice period would deem the property vacant and trigger tax liability ("negative billing").  Substantial penalties act as deterrence from making false declarations. 

Other less intrusive administrative approaches to identifying vacant units could include a self-identification approach, and/or a complaint based approach.  Under a self-identification approach, property owners would be encouraged to self-identify vacant units to the City for the purposes of the tax.  A complaint based approach would have the City commence an investigation of a property where a complaint was received of suspected vacant units, to confirm compliance with the requirements of vacant unit tax by-law.  Provision for substantial penalties could also be used as deterrence against failing to self-identify.  These approaches, however, are likely to be less effective than requiring all property owners to complete a mandatory status declaration.

This report seeks Council direction on the potential implementation of a vacant residential unit tax in Toronto, and if so, which of the administrative approaches for identifying vacant units should be considered.