Vacant commercial and industrial lands and properties

The United Counties of Prescott and Russell (UCPR) is seeking the public’s feedback related to the property tax treatment of vacant commercial and industrial lands and properties.

Since 2017, the Province of Ontario has provided municipalities with broad flexibility to tailor the treatment of unimproved and/or underutilized commercial and industrial properties. Property owners are therefore invited to provide their feedback on the potential implications of these changes, to better inform the final decision-making process.

Vacant Unit Rebate

The tax rate reduction system for vacant land and the rebate program for vacant units were introduced in 1998 and 2001 respectively as means of more closely mimicking the effects of the Business Occupancy Tax system that was repealed at the end of 1997.

The Vacant Unit Rebate program allows owners of commercial and industrial buildings to apply for a partial rebate of property taxes if all or part of the property was vacant for at least 90 consecutive days and various other criteria are met.

The rebate program has been marked by some critical weaknesses since its inception and has become increasingly problematic over time. Conceived to address temporary and sporadic conditions, many properties remain eligible for years at a time or indefinitely, thereby receiving ongoing vacancy rebates, while also realizing assessment-based reductions to reflect persistently low occupancy rates.

The Counties, like many municipalities across the province, have found the program to be increasingly difficult to manage, budget for, and administer. The application and enforcement of eligibility criteria have become particularly difficult due to loosely defined rules and limited compliance provisions.

Vacant and Excess Commercial and Industrial Land

Vacant commercial and industrial class land is currently subject to discounted property tax rates compared to similarly classified property on which there are buildings. This is administered by way of property sub-classes assigned by the Municipal Property Assessment Corporation (MPAC) based on regulated criteria.

Reductions are currently applied to unimproved commercial and industrial property, or portions of property that qualify to be included in one of the following property sub-classes:

• The Vacant Land sub-classes capture properties included in one of the commercial or industrial classes, but which have no assessable improvements (buildings) on them whatsoever.
• The Excess Land sub-classes apply to portions of improved property that is not improved and is in excess of the amount of land required to support the existing buildings under municipal planning rules.

Unimproved land in all property classes is subject to lower overall taxation than comparable lands with buildings because the property values (Current Value Assessment) tend to be lower. These sub-classes currently convey an additional reduction for unimproved commercial and industrial land through discounted property tax rates.