Hamilton politicians cleared the way Wednesday to implement a citywide bylaw that taxes vacant homes.
The one per cent vacant unit tax (VUT), approved by council, will apply to residential units in the city whose owners don’t identify a dwelling as occupied.
The levy will take effect in January and aims to discourage properties from being left unattended and free up an estimated 1,000 empty units for rentals.
The approval comes six months after initial legislation didn’t pass a council ratification vote following debate and information sessions in 2023, which saw thumbs up at other levels.
At issue was the principle behind how the city planned to collect the tax, by sending out some 177,000 letters to owners with the expectation that close to 100 per cent would come back with a response.
Eastside (Ward 5) Coun. Matt Francis, who was one of the six voting against the tax in November, previously said the process was too complicated to be implemented.
“So that takes a lot of manpower to do that, and it costs a lot of money to do that,” he said.
A case in point was the rollout of year two of a similar tax in Toronto, which resulted in city staff and politicians inundated with complaints from frustrated and stressed residents who received incorrect bills saying they owed thousands of dollars.
The city apologized for the implementation after tens of thousands of homes were erroneously declared vacant.
Staff admitted there were fundamental problems in the design of the program, especially with alerts that failed to flag the dramatic rise in vacant homes compared with the 11,000 identified the previous year.
“It should not have been sent out to 167,000 people,” admitted Toronto’s chief financial officer, Stephen Conforti.
Toronto politicians ultimately voted to overhaul the program, with staff reporting back later in the year to detail their progress.
Prior to a vote Wednesday, Flamborough Coun. Ted McMeekin told councillors he wants assurances Hamilton can avoid that chaos.
“I don’t want to see something that’s touch and go on whether it will work or not,” he said.
Mike Zegarac, general manager of finance and corporate services, told councillors that the city will continuously reach out to the other three Canadian cities, Vancouver, Toronto and Ottawa, to learn about the rollouts of their tariffs.
He suggested the recent Toronto gaffe was due to not having a dedicated communication system for identifying vacancies, but rather relying on declarations through property tax bills.
With the province’s recent budget opening the door for other municipalities to implement VUT programs, Zegaric believes that might inspire a more foolproof collection routine in the future.
“We will continue to engage with those municipalities that are continuing to have a vacant home tax or vacant unit tax … (and) try to learn from their experiences,” Zegarac said.
Although the program is not intended to generate revenue for the city, director of financial planning, administration and policy Brian McMullen said annual updates will allow for rate changes.
“The bylaw does have to be approved every year, so that’s an opportunity next year to then change the rate to what we might want to include,” McMullen explained.
“We have knowledge that the City of Toronto has passed the rate for next year to be three per cent.”
City staff estimate there are more than 1,000 vacant units in Hamilton, which should generate revenue of about $4 million in the first year.