By Troy Gillard

Phasing in over five years

Tax rate going up for multi-family properties in Red Deer

Oct 14, 2020 | 9:58 AM

A property tax rate increase is on the way for owners of multi-family residential properties in Red Deer.

City council on Tuesday approved a phased-in increase for these properties in a bid to create more equity. Property tax rates for buildings with three or more family dwellings will increase by 15 per cent over the next five years.

The change does not apply to condos, townhouses or duplexes.

Joanne Parkin, the city’s revenue and assessment services manage, told council that multi-family properties seem be to retaining their value more than single-family units, creating inequity in the tax system.

Parkin noted that because multi-family properties are owned for the purpose of generating income, owners are able to deduct property taxes for income tax purposes and can write off expenses like other businesses.

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Council heard that Red Deer differs from many other cities by not taxing multi-family properties at a higher rate than single-family properties. Multi-family property owners in the city are paying about 34 per cent less in property taxes than the provincial average.

Council passed the plan to increase the multi-family property tax rate by a 5-3 vote. Councillors Ken Johnston and Buck Buchanan opposed it over concerns that the increase will be downloaded onto renters.

“What we would be doing is contributing to a rent increase every year for the next five or six years in a demographic of seniors, young starting couple, single-parent families, newcomers to the city, folks getting back on their feet,” Johnston said. “Our own council has said that we value economic leadership and (being) a destination of choice. Why don’t we let our rental rates stand as part of that particular part of our strategy.”

Councillor Dianne Wyntjes said she didn’t like the optics of making the change while economic times are tough during the COVID-19 pandemic.

“It’s never a good time,” Councillor Lawrence Lee acknowledged while saying the tax rate increase was prudent and responsible. “It’s incumbent on us to make sure that we are maintaining that equity between the classes or else simply get rid of the classes.”

According to the National Rent Report for August, Red Deer continues to have some of the lowest rental rates among comparable cities across Canada.

There are 492 multi-family properties in Red Deer that make up five per cent of the city’s tax base.