Canmore approves tax incentive to spark rental construction amid housing crisis

As Canmore residents grapple with a lack of affordable housing, the town will start offering tax breaks to developers that add new units to the community's bleak rental market. 

On Tuesday, town council approved a new incentive policy that makes development companies eligible for grants worth 75 per cent of municipal property taxes for 10 years. 

To qualify, housing development projects must set aside 95 per cent of new units as long-term rentals for Canmore primary residents. 

Construction costs must also exceed $300,000.

"I'm very supportive of this new policy, as it's yet one more step that the Town of Canmore is taking to address its housing crisis," said Canmore Mayor Sean Krausert. 

Monthly housing costs in Canmore have ballooned by 65 per cent since 2006, compared to a 37 per cent increase across Alberta, according to town administration.

The median assessed property value in Canmore has climbed to over $1,000,000, said Mayor Krausert.

"Our housing crisis in Canmore is largely due to the high cost of land, which then translates into high cost of housing," he said. 

"Because of the high cost of land, it's not economical to build purpose-built rentals."

Krausert said no purpose-built rentals have gone up in Canmore in the last three decades without some form of variance or accommodation, like a height allowance, to make the numbers work for developers. 

The mayor acknowledged the lack of land available for development in Canmore will limit the number of projects built because of the new incentive, but he believes more land could become available in the future. 

The new incentive policy is based on a tax exemption granted to accommodate a rental housing development currently under construction. 

In November 2023, Canmore Town Council agreed to exempt 900 Railway Avenue from 75 per cent of municipal property taxes for 10 years, in exchange for filling at least 95 per cent of its units with primary residents signed to long-term leases.

If the property shifts away from long-term rentals to focus on other uses, then the exempted taxes will become due. 

Development association says it should have been consulted

Town staff did not engage the Bow Valley Builders & Developers Association (BOWDA) while developing the incentive policy, according to the trade group. 

"It seems like a valuable incentive for developers, but it may have other detrimental effects," said Jessica Karpat, chair of BOWDA's governmental affairs committee.

Karpat questioned whether the incentive was too big or too small, and said industry players should have been consulted on the town's policy approach. 

"There seems to be almost a desperation of the town of Canmore to kind of just get something done versus actually working with people who understand the market, who understand why things haven't been constructed," she said. 

Krausert said the town respects the opinions of all stakeholders, but this policy is in the best interest of residents. 

The Canmore mayor added the town will listen to BOWDA if the group has any specific concerns about the policy or has any other policy changes it wants to see to spur rental development.