How should Yellowknife deal with its vacant land?

As Yellowknife struggles with a lack of available land for housing, City Hall is considering possible solutions to spur development of vacant property.

While the city is rezoning underutilized land and pursuing residential intensification on land under its control, critics have pointed to vacant lots, particularly in the downtown core, as a preferred location for development.

Many of those lots are not owned by the city.

Yellowknife councillor Tom McLennan proposed the idea of a vacant land tax earlier this year as one way to encourage private owners to develop unused land.

During a meeting at City Hall on Monday, city staff recommended that council approve work toward creating a new tax class for vacant land, as well as a bylaw to regulate unoccupied and abandoned buildings.

City manager Stephen Van Dine said while the municipality currently offers development incentives such as grants and tax abatements as “the carrot,” the city is now “getting into the stick department” to encourage development.

“The two work hand in hand,” he said.

Inventing the wheel

Kerry Thistle, the city’s director of economic development and strategy, said Yellowknife will be “kind-of inventing the wheel” in creating a vacant land tax.

She said city staff could not find any examples of taxes targeting vacant residential land elsewhere in Canada. She said while some cities do have taxes on underused or empty housing, that is not quite the same thing.

City documents note that with a 1.8-percent residential vacancy rate last year, unoccupied homes are not an issue in Yellowknife.

Thistle said a new vacant property tax will need clear definitions so the tax does not “over-capture or under-capture things.” She added that exceptions would need to be considered, such as for vacant properties where a development permit has been submitted to the city.

As a vacant land tax would not address land containing unoccupied or abandoned buildings, staff say that could create a loophole by which property owners could avoid taxation by retaining derelict structures.

Charlsey White, Yellowknife’s director of planning and development, said the city has limited tools to encourage owners to bring buildings up to code.

White said implementing a tax may not be the best solution to address that issue. Instead, she recommended that the city look at a bylaw similar to one passed in Whitehorse, which requires owners to maintain properties and hold a permit for vacant and unoccupied buildings.

Several councillors at Monday’s meeting expressed support for the city to develop a vacant land tax and bylaw to address unoccupied structures.

“This is sort-of the stick element that we’ve left out for getting some of these sites moving, getting some development happening,” McLennan said.

Mayor Ben Hendriksen stressed there would be “months and months of work” before councillors see drafts of the proposed bylaws. Public consultation would be required before any bylaws are passed.

Councillors have not yet formally voted to give city staff the green light to advance work on the proposals.

Parking and contaminated land

Several councillors said another challenge that needs to be addressed is the amount of space dedicated to parking in the city’s downtown.

White said around 40 percent of the downtown area is dedicated to surface parking due to previous zoning bylaw development requirements.

She said while that requirement has since been reduced, it is up to current property owners – mostly REITs and the NWT and federal governments – to now develop those lots.

White said councillors could consider a new tax class related to surface parking lots to encourage development.

She said the “short-term pain” of that tax would be an increased need for street parking, but long-term benefits could include increased use of public transit and active transportation.

Another barrier to development discussed on Monday is that two vacant properties in Yellowknife, comprising 13 lots, are contaminated.

A potential solution city staff suggested was a new contaminated vacant lots tax.

White said while that could generate tax revenue, it would likely not encourage development.

She said the same for development incentives currently offered by the city to help with the cleanup of contaminated sites. Over more than 15 years, the city said, it has not received any applications for those incentives.

“What I hope everybody understands is, it’s not just a couple or tens of thousands of dollars. Some of these cleanups can be millions of dollars,” White said.

“So us offering $10,000 through a development incentive really means nothing in the grand scheme of things. The better option for them is to just pay the taxes on the land as it sits there.”