Putting the brakes on tax breaks

A vote on a proposed property tax break for new residential development has been delayed two weeks. City council sent the proposal back for more study on Monday.

A vote on a proposed property tax break for new residential development has been delayed two weeks.

City council sent the proposal back for more study on Monday.

The tax incentive policy offers tax breaks of up to $10,000 for garden suites and in-home suites, up to $50,000 for new multi-family units, and $500,000 for large rental developments.

If it had gone to a vote this week, there was a chance that council might kill the proposal, said Mayor Bev Buckway.

“Delaying it two weeks gives us a chance for more discussion rather than simply turning it down,” she said.

Delaying the incentives is disappointing development for the Whitehorse Chamber of Commerce, which has been calling for an incentive policy like this for years.

“We’ve done enough thinking, enough consulting, enough studies, it’s just time to take action,” said Rick Karp, president of the chamber. “We’ve lost that mobility within the housing market and that’s what we have to get back.”

With a vacancy rate of 1.2 per cent, the severe lack of affordable housing is having a serious effect on business in the city.

“It’s a big detriment to us,” said Karp. “Quite honestly businesses are really suffering right now in terms of getting and keeping the staff because of this housing issue.”

More than 40 per cent of businesses surveyed by the chamber are having trouble attracting and retaining employees because of the housing shortage.

“We are not going to sustain the transfer payments from the federal government,” said Karp. “The only way to keep our lifestyle in the Yukon is to develop the private sector. In order to do that we’ve got to resolve the housing issue.”

Since the government helped create this problem, by not making enough land available to meet demand, it has to be part of the solution, said Karp.

But Coun. Doug Graham disagrees with the tax breaks.

“I don’t really agree with incentives,” he said. “If it isn’t economically feasible without government help, believe me, it’s not going to be economically feasible with a little help from government.”

His opposition to the policy is ideological, but it is informed by experience.

“All we have to do is look back at the old Watson Lake sawmill and the attempt to restart the Faro mine,” said Graham. “There were millions of dollars and subsides that went into that, and you see what happened there. None of them are with us anymore.”

Council met on Wednesday to tweak the proposal.

Amendments were added that require the policy to be reviewed by council after a set period of time, and to clarify how it could be applied to things like phased developments.

“I suspect that there are enough councillors to support it and the policy will go through,” said Buckway.

However, Graham remains opposed.

While he may disagree with the chamber on how best to spur development, they both agree that it is something best left to the private sector.

“Governments are supposed to be there to give incentives to kick-start development,” said Karp. “We researched many other jurisdictions and all of them have incentive programs for private developers to get downtown revitalization and to get entry-level apartment buildings put up. There’s all sorts of incentives out there, everywhere but here.”

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