Incentives like property tax exemptions and reduced development cost charges can help encourage more affordable housing in your community.
Property Tax Exemptions
Section 226 of the Community Charter provides authority to exempt property from municipal property value taxes.
To use this authority, a Council must establish a revitalization program, enter into agreements with property owners, and then exempt their property from taxation once all specified conditions of the program and the agreement have been met.
Exemptions may apply to the value of land or improvements, or both. Councils are free to specify, within their revitalization programs, the amounts and extent of tax exemptions available. This can help achieve social objectives, such as encouraging affordable housing or the construction and preservation of affordable rental housing.
Review the following guides for more details:
- Revitalization Tax Exemptions: A Primer on the Provisions in the Community Charter (PDF)
- A Guide to Community Revitalization (PDF)
Large Community Example: The City of Victoria has a Permissive Tax Exemption Policy (PDF) that offers exemptions to certain properties if they meet the policy criteria. Special needs and supportive housing properties – including short-term emergency or crisis protection for members of the community, supportive housing for people with special needs, halfway houses, transitional homes and group homes – can be eligible for exemption if they meet the eligibility criteria. There's also a Tax Incentive Program to offset seismic upgrading costs for eligible downtown heritage-designated buildings being converted into residential units.
Reduce Development Cost Charges
Under the Local Government Act (sections 932, 937), a development cost charge (DCC) is a fee local governments can charge to help offset the capital costs of local government services or infrastructure – especially when a development directly or indirectly affects these. Development cost charges can be established for providing, constructing, altering, or expanding facilities related only to: roads, other than off-street parking, sewage, water, drainage, and parkland acquisition or improvement.
Not all local governments require development cost charges. Those that do, can use a flexible approach – charges can be:
- Specified according to different zones or areas as they relate to different classes and amount of development
- Base on the area or volume of the unit so that development cost charges for smaller units are lower (because they're typically more affordable)
Local governments are automatically allowed to exempt them for self-contained living units of up to 29 m2 – because these units generally use existing infrastructure, are more energy efficient and are more affordable.
Mid-Size Community Examples
The City of Langford’s DCC Bylaw No. 26 (PDF, 1MB) provides reduced fees for the development of rental housing. Units in apartment buildings that provide either for-profit or not-for-profit rental housing are eligible for reductions in DCCs. Developers must register a covenant on title that restricts the use to rental for at least 10 years from the date of payment of the charge. Rental housing developed by a non-profit organization receives a 100% reduction in fees, while rental developed by for-profit organizations are eligible for reductions of 25-30%, depending on their location.
Penticton's DCC Reduction Bylaw for affordable housing (PDF) offers a 100% reduction in fees for rental housing that meets certain conditions. Developments are subject to a housing agreement under Section 905 of the Local Government Act which means the units will remain rental for at least 20 years.
Large Community Examples
The Regional District of Nanaimo and its municipalities offer a number of incentives to support affordable housing (PDF). For example, the City of Parksville waives 100% of the fees for developments that meet their bylaw’s definition of affordable housing, and that guarantee the affordability of the housing for at least 15 years by means of a housing agreement. Read more about the region's affordable housing.
Surrey's Development Cost Charge Bylaw (PDF, 5.4MB) states that “a development cost charge is not payable if any of the following applies in relation to a development authorized by a building permit: ... (e) the permit authorizes the construction, alteration or extension of a building or part of a building that is, or will be ... used for not-for-profit rental housing.” Read more about the City's DCCs.