Council to consider request for LHA funding to cover property taxes

By Al Beeber - Lethbridge Herald on November 17, 2023.

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

The Economic and Finance Standing Policy Committee of Lethbridge city council is recommending council approve one-time funding of $180,000 from the Corporate Budget Contingency for affordable housing properties operated by the Lethbridge and Region Community Housing Corporation and Lethbridge Housing Association.
The SPC consists of all members of council.
Lethbridge Housing needs the money, which includes $20,000 to cover penalties, to pay its property taxes.
The approved motion at SPC also calls on City administration to develop a non-profit affordable housing tax grant program with funding options. Administration is being asked to report back to the SPC, formerly known just as Economic SPC, by the end of the second quarter of 2024.
A presentation by Chief Financial Officer Darrel Mathews said a Canadian Mortgage Housing Corporation grant which funded the LHA units in the Southgate project limits rent to a maximum of 65 per cent of market price – about 26 per cent of income.
The property doesn’t collect enough rent to cover its mortgage as well as property taxes. Without payment of the tax, the mortgage would be defaulted.
The presentation said that LHA has numerous properties which are taxable under the Municipal Government Act.
Numerous LHA and L&RCHC have outstanding property taxes which has resulted in penalties of $21,546 being owed by November.
The SPC heard from Mathews that affordable housing is taxable under existing provincial legislation governing municipal property taxes with few exceptions.
Under Section 362 of the MGA, the province does allow exemptions for government, churches and other bodies.
Those exemptions are for properties that are “used for a charitable or benevolent purpose that is for the benefit of the general public, and owned by a non-profit organization or are “held by a non-profit organization and used to provide senior citizens with lodge accommodation as defined in the Alberta Housing Act property.” Such properties must also meet qualifications and conditions in MGA regulations.
The Community Organization Property Tax Regulation lists restrictions that make taxable properties that are otherwise exempt.
Use is restricted when for more than 30 per cent of time that a property is in use that individuals are restricted from using it on any basis including restrictions based on race, culture, ethnic origin or religious belief, ownership of property, requirement to pay fees of any kind other than minor entrance or service fees and the requirement to become a member of an organization.
While LRCHC properties, Mathews said, are used for charitable and benevolent purposes they are restricted to the general public because they require leases and the payment of rent – restrictions which have been tested through legal cases, the CFO pointed out.
LHA, he said, doesn’t meet requirements to be considered tax exempt because it doesn’t meet the qualifications in COPTER regulations.
Mathews outlined several options to support affordable housing projects here, the first and recommended one being an affordable housing tax grant. Other options include exemption granted by bylaw, creating a residential subclass, annual tax cancellations and continuing to provide affordable housing capital grants and advocate to the province.
A tax grant, Mathews said, would have several benefits including that such a program can have annual funding limits that allow it to cease applications if funding has been allocated for the year, or pro-rate funding if applications exceed budgetary allocations.
Eligibility requirements can be develop to suit a community’s specific needs is another benefit.
Such a grant would also “utilize existing assessment and tax processes as a reasonable measure of the scope and size of a property,” the SPC heard.
Challenges include the need to develop application processes and systems and processes and procedures for grant administration. Demand from non-profits that provide affordable housing could exceed the funding allotment.
Such a program would also require hiring a 0.5 full-time employee to manage the program which had mayor Blaine Hyggen questioning Mathews about that need given the financial situation of the city.
Mathews said the position would be needed because of work behind the scenes. That includes developing the grant as well as ongoing reporting and compliance pieces.
Developing such a plan will require consideration of what entities would qualify for affordable housing and defining not only what is considered affordable housing but also “how affordable is affordable.”

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