Grants in Place of Taxes for Social Housing
NOW THEREFORE BE IT RESOLVED THAT the Alberta Urban Municipalities Association urge the provincial government to reinstate grants in-lieu-of taxes for housing units operated by public housing management bodies.
FURTHER BE IT RESOLVED THAT the Alberta Urban Municipalities Association call upon the provincial government to revise the Alberta Housing Act by amending section 27(1) by taking the word “may” out of the clause and replacing it with “shall” and by deleting section 27(2).
WHEREAS section 362 of the Municipal Government Act (MGA) exempts any interest held by the Crown in right of Alberta as exempt from property taxation;
WHEREAS section 20 of the Alberta Housing Act (AHA) states that the Alberta Social Housing Corporation (Corporation) is an agent of the Crown in right of Alberta;
WHEREAS 27(1) of the AHA provides that the Corporation may each year pay to any municipality within which any of the Corporation’s real property is situated a grant not exceeding the amount that would be recoverable by the municipality if the property were subject to the property taxes of the municipality for that year;
WHEREAS section 27(2) of the AHA states that no municipality is entitled as of right to a grant under this section; and
WHEREAS the majority of revenue that is raised by a municipality to cover the cost of its operations is from property taxes and any reduction in revenues must be borne by the other property tax payers of the municipality.
Historically, the province has provided a municipality with a grant in lieu of taxes for social housing owned by the Alberta Social Housing Corporation. This grant generally provided the municipality the funds that it would have received if the owner were subject to the payment of property taxes.
In a letter dated March 31, 2015, the province advised that the Alberta Social Housing Corporation would no longer be providing these grants. This amounted to a total revenue loss to municipalities of $16 million. Although grants in-lieu-of taxes are not mandatory, the properties and residents within these properties receive the same level of services as the rest of the community. Municipalities have used these grants in-lieu-of taxes to help offset the cost of providing these services.
At the time, the government noted that these funds would be utilized in the much needed lodge renewal program. The lodge renewal program is a Provincial responsibility. Taking these funds from municipalities to fulfill their obligation in essence places part of this burden on municipalities. This is another form of downloading that municipalities are forced to fund by increasing property taxes, which in many cases have reached capacity. The lodge renewal program is important but the Province needs to find alternate funding sources for this program.
In a smaller municipality, which contains properties that fall into this category, the loss of these monies is significant as it causes an increase to rate payers who must make up that shortfall. In the Town of Black Diamond, the 2014 assessed value of the properties impacted exceeded $4 million and represented $37,230.00 in property taxes.
While the letter of March 31, 2015 was from the previous government and was part of their unapproved budget and it remains to be seen what the newly elected government’s budget will contain, the optional payment of property taxes for properties owned by the Alberta Social Housing Corporation needs to be made mandatory. This provides for greater financial certainty for the municipality and prevents the province from downloading the financial responsibility onto the municipality.
In December 2015, The Minister of Seniors indicated that “our decision was to eliminate the grants rather than reduce funding in areas like tenant supports and property maintenance. This will ensure that our Housing Management Bodies are able to keep tenants in units”.
Subsequently at the at the March 2016 Mayors Caucus, the Minister stated that the province has no interest in reinstating the GILT.
The requirement for the grant to be legislated was outlined in AUMA’s and AAMDC's joint submission to the Minister of Municipal Affairs in September 2015 on key MGA policy changes. Municipal Affairs declined this request and did not include in the MGA amendments.
AUMA coordinated an advocacy campaign in spring 2016 that enabled municipalities to profile their local impacts with their citizens, MLA and Ministers. However, the province did not reinstate GILT funding in the 2016 budget.
In AUMA’s submission on Bill 21:Modernized Municipal Government Act, we noted the need for stable, predictable grant funding. However, the Act included amendments such that the properties that formerly received this grant funding are no longer included as part of equalized assessment (Bill 21 Section 46, which amends Section 317 of the MGA).