By TERRY PUGH
Warman City Council is hoping a change to the policy regarding how vacant lots held by developers are taxed will ensure a “healthy inventory” of land continues to be available to meet future housing demands.
Warman councillors voted at their June 8 meeting to amend the city’s ‘vacant lot policy’ that’s been in place for the past eight years. The amendment will allow developers with 10 or more lots to apply for a tax abatement on 100% of vacant lots in a subdivision.
The original policy, implemented in 2018, stated that once 50% of the lots in a subdivision had active building permits, the remaining undeveloped lots would become taxable.
A report from the city administration to the June 8 council meeting noted that the original policy was implemented in 2018 in response to a request from the development community.
“At the time, developers were trying to balance maintaining a healthy inventory of lots with the costs of holding them, the most significant of which was property tax,” stated the report. “The policy was designed to allow developers holding 10 or more lots to apply for a tax abetment on vacant properties.
“This reduced the carrying costs until a building permit was issued. Alternatively, once 50% of the subdivision had active permits, the remaining undeveloped lots became taxable.”
The policy encouraged developers to retain excess inventory, which ensured a consistent supply of vacant land ready for development, according to the report.
However, Warman’s hot housing market and rapid development of residential subdivisions over the past few years has whittled down the supply of vacant lots.
The city administration suggested there is merit in a request from developers to extend the property tax abatement on vacant lots until 100% of the subdivision has active permits. The intent is not to provide a financial incentive to developers, but rather to support the maintenance of an adequate supply of serviced lots available for residential construction.
“Extending the abatement could continue to encourage developers to maintain a healthy supply of lots while reducing concerns about carrying costs, particularly in the event of a market slowdown that requires them to hold inventory longer than anticipated,” stated the report.
The policy change would have minimal impact on the city’s financial coffers, since costs such as snow removal are negligible during the early stages of development. Once construction begins, properties are assessed and taxed prior to occupancy, increasing revenue as the subdivision is built out.
During discussion on the policy change, Warman Mayor Gary Philipchuk said it’s important to ensure land is available to meet future demand, adding the policy adopted in 2018 has allowed developers to respond quickly to today’s market demand.
City Councillor Marshall Seed asked whether the policy change would provide an unfair advantage to large developers.
Warman Planning and Development Manager Brad Toth responded that the policy actually creates a fairer playing field for all developers, including smaller firms as long as they have 10 or more lots, because it reduces carrying costs.
City Councillor Richard Beck proposed an amendment to the policy aimed at clarifying its application. The amendment was passed at the council meeting.
The revised policy now reads:
“The following selection criteria and guidelines shall be referenced when reviewing an application for tax abatement:
“a) the impact that the business will have on the city;
“b) the increase to business services or products available;
“c) the potential job creation as a result of the development;
“d) esthetic improvements to land or property the development will bring; and
“e) to ensure a 3-year supply of inventory is maintained.
“Application of abatement:
“Upon application for a building permit the specific properties will be taxed at 100%.
“Maximum abatement of up to 5 years for any phase, and at the end of the final year the subdivision will be fully taxed.”