The City of Victoria is moving toward offering a 10-year tax holiday to encourage construction of affordable rental units.
Councillors agreed in principle this week to a tax exemption for developers who are willing over the next couple of years to build affordable housing that would be run in partnership with a non-profit organization.
The 10-year tax break will apply to new affordable housing built during 2009 and 2010 and exclude renovations of existing buildings. Affordable housing is defined as housing where the rent is equal to 30 per cent or less of a household's gross annual income, targeting the $30,000 to $60,000 range.
Coun. Lynn Hunter said the policy has two goals: to help increase the stock of affordable rental housing and to help stimulate the economy. "I note that it's a one-time policy, so it's stimulate now or lose out." City director of finance Brenda Warner said that's why the exemption would be offered over a short time frame. "There's a need now. With the economic downturn there are developers out there that are trying to keep their crews busy. So there's an opportunity to have affordable, rental housing built over the next few years," she said The city already offers a 10-year tax exemption for developers renovating downtown heritage buildings. The policy follows a $250,000 city program approved earlier this year to give grants to homeowners creating secondary suites. Under that program, the city will provide grants of up to 25 per cent of construction costs, to a maximum of $5,000.
To be eligible, owners would have to agree to register an agreement on the property title that the unit remain a rental for 10 years.
