Downtown Tax Exemption Program

Q: What portions of property taxes are exempt? 

A: Only the municipal portion of property taxes are exempt. In 2020, the municipal portion makes up 51.24 per cent of property taxes. The remaining taxes are for education (48.34 per cent) and seniors (0.42 per cent). 

Q: Does the exemption apply to the building and the land? 

A: No, the tax exemption applies only to new commercial development improvements, specifically the construction of or addition of a new building. Property taxes, including the municipal portion, will continue to be collected on the land. 

Q: If a developer constructs a new commercial building on a parcel already occupied by a structure that includes a restaurant (which serves alcohol), would the new development be eligible for the tax exemption?

A: No, the new commercial development would not be eligible, because the tax exemption is granted on the parcel on which the development is constructed. In this example, the parcel has an existing structure (the restaurant) that is authorized under the GLC Act, so any new development would be ineligible. 

Q: Can the applicant be a tenant? 

A: The applicant can be the owner or the authorized agent of the owner. So, yes, if the owner gives authorization to the tenant to apply, the tenant can be the applicant. However, the tax exemption is issued to the owner of the parcel, not the tenant of the building. 

Q: Why does the program end on Dec. 31, 2021 – is this enough time for people to apply given they must obtain an occupancy permit prior to application acceptance? 

A: An applicant can submit an incomplete application, which Planning and Development will hold as a placeholder until an occupancy permit (or any other required permits) are issued. In this way, the owner will have proof they applied within the program deadline and they will have an assurance that, as long as the program requirements are followed, they should receive an exemption upon development completion. 

Q: Why is the exemption for only five years when Bill 7 allows for up to 15 years?

A: Limiting the duration of the tax exemption period stimulates development. It acts as an incentive when the economy is slow. On average, economic cycles (period of expansions and contractions) last about five and a half years.*Therefore, to extend the program beyond five years could result in the Municipality continuing to give tax breaks when the economy improves, and there is less need for incentives. Also, there is little empirical evidence to support that longer exemptions produce stronger incentives.* US National Bureau of Economic Research, US Business Cycle Expansions and Contractions (May 2020)

Q: What does commercial development include?

A: Commercial development is defined under Part 9 of the Land Use Bylaw 99/059. The definition encompasses restaurants, service commercial operations (i.e., servicing of cars or photocopiers), offices, commercial recreational operations (i.e., indoor recreation centers), retail, personal services (i.e., salons, dry cleaners, health and counseling services) and tourism operations (i.e., hotel, bed and breakfast). 

Q: Why are properties licensed under the Gaming, Liquor and Cannabis (GLC) Act excluded from the program? 

A: Section 365(1) of the Municipal Government Act (MGA) prohibits municipalities from granting property tax exemptions to properties that require a licence under the Gaming, Liquor and Cannabis (GLC) Act.For example, if someone constructs a new commercial building for a retail store, that development would be eligible for a tax exemption for five years. If, after three years, that retail store was later repurposed to act as a restaurant that serves liquor (thus requiring a licence under the GLC Act), then the RMWB would be legally obligated to cancel the certificate. However, the owner would not have to pay back the amount of the property taxes for the three years that the development was eligible for the exemption, but they would have to begin to pay the property tax in full from the date the licence came into effect. 

Q: What is the purpose of the pre-application meeting? 

A: The pre-application meeting is a vital step in the program. At the meeting, the applicant will inform Planning and Development of their intent for the parcel and type of development that is to occur. The applicant will be informed of the requirements of the program for eligible developments. 

Q: What permits are needed?

A: The applicant will need all required municipal permit approvals. This includes a development permit and trade permits. The Community Development Planning branch is responsible for issuing development permits and the Safety Codes Services branch is responsible for issuing all Trade Permits (building, electrical, plumbing, gas, and ventilation).

The requirement of an occupancy permit covers all required trades permits. 

Q: What is an occupancy permit?

A: An occupancy permit is the final permit issued by Safety Codes Services that closes off the trades permits. An occupancy permit issuance means the development has obtained and passed all the trades permits that are required and is compliant with the Alberta Building Code. If there are any discrepancies in any of the five trades permits (i.e., building, electrical, gas, plumbing, and ventilation), then an occupancy permit cannot be issued.

Q: What is the agreement? 

A: The agreement will be signed after the application is deemed complete. The agreement requires the owner to abide by the rules set out in the bylaw. If the owner and the Municipality execute the agreement, a certificate will be issued for the parcel. The agreement addresses the term and amount of the exemption and the specifics of the certificate’s issuance and cancellation. 

Q: Why would a certificate be cancelled? 

A: A certificate would be cancelled when there has been a breach of the bylaw and/or agreement. For example, if there is a change of use of the development to one requiring a GLC licence. The certificate would be cancelled when the licence is obtained.

Note: The certificate is “attached” to the parcel (area of land described in the Certificate of Title registered in a land titles office), not to the development. Therefore, the certificate could be invalidated if the parcel plays host to an activity requiring GLC licensing.